<PAGE> 1
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
DECIDES
ARTICLE FIRST-. Granting GHK COMPANY COLOMBIA, an Environmental License for
Exploitation, or for Developing the Guaduas Field, formed by the Dindal and Rio
Seco blocks, located in the West of the department of Cundinamarca, in the
jurisdiction of the municipalities of Guaduas, Chaguani,Viani, Villeta, Quebrada
Negra, Utica, and Caparrapi, whereas within the following coordinate vertex:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Vertexes Flat Coordinates Geographic Coordinates
Dindal Block North East North East
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Vertexes Flat Coordinates Geographic Coordinates
Dindal Block North East North East
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------
</TABLE>
PARAGRAPH FIRST: The total project area is 43.620 hectares, whereby 26.155
hectares correspond to Dindal Block and 17.465 hectares correspond to Rio Seco
Block.
The activities whereby this Environmental License is granted are as follows:
1. 120 development development wells, whereby 67 shall be located in the Rio
Seco Block and 53 in the Dindal Block.
2. Drilling 13 injection wells, and construction and operation of their gas
injection lines.
3. Use of water and oil-based muds for the well drilling.
4. Access Road improvement and construction to each of the wellsite
development areas.
5. Improvement and Construction of 21 platforms for development drilling (7 in
Rio Seco and 14 in Dindal), and 13 injection well locations.
6. Production of 12 drilled wells in the exploration phase, and the
construction and operation of their flow lines.
7. Construction and Operation of a second Production Facilities phase PF-1 to
expand the production capacity up to 50000 BFPD and 15 MMSPCD.
8. Construction and Operation of a third Production Facilities phase PF-2 to
expand the production capacity up to 100000 BFPD and 20 MMSPCD.
9. Construction of the Exploration Area Logistic Center (CLEX) whereby the
containers, dining rooms, cafeteria, pipe supply yards, chemical product
storage warehouse, machinery maintenance and repairing areas.
10. Seismic Prospective Programs
<PAGE> 2
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
PARAGRAPH SECOND: Flow line Construction and Operation from each of the drilled
wells to the production facilities and main multiphases.
a) GHK COMPANY COLOMBIA is authorized to construct and operate the flow lines
from ES-4 to TP-1 as follows:
GHK COMPANY COLOMBIA is authorized to initially install two provisional threaded
3 1/2" flow lines, surface along the edge of the road, as indicated in the
drawing No. 54113 as required by for the production tests, at which time the
company shall remove the threaded piping.
b) The activities for the flow lines of ES-4 to TP-1authorized herein are
as follows:
o Location and stacking
o Equipment mobilization and piping transportation
o Right of way, preparation, and layout
o Local transportation and pipe placement
o Bending, alignment, and welding
o x-ray control
o Valve installation
o Joint Coating and pipe protection
o Ditch opening
o Pipe Lowering and burying
o Special crossings
o Final cleaning
o Acceptance tests and drills
o Hydrostatic tests
o Filling and operation
o Operation
c) The Company GHK COMPANY COLOMBIA, shall follow the following standards
for constructing and operating the Flow lines for ES-4 to TP-1 wells:
o For the hydrostatic tests, the Company GHK COMPANY COLOMBIA shall only take
the required volume (310m(3)) of the El Hoyon aquifer located in TP-1.
(TP-1 has the corresponding environmental licenses)
o The used water discharge shall be done by re-injection in the well ES-1,
upon treatment in accordance with the provisions set forth in Decree 475/98
and pursuant to the Environmental Management Plan.
o No discharge of any of these waters in superficial or irrigation flows is
authorized.
o The Company GHK COMPANY COLOMBIA, shall to all possible extent reutilize
the test water for different portions of the pipeline, thus decreasing the
amount of water to be collected and thus reducing the use of reactants for
its further treatment.
o The Company GHK COMPANY COLOMBIA, shall bury the pipe where there are
dwellings close to the right of way.
o In the event that they may be cutting wastes during the construction, such
wastes must be transported to the ZODMES authorized in the field of Guaduas
for its proper disposal.
o The Company GHK COMPANY COLOMBIA, shall revegetate 880 m(2), in the
involved areas as follows:
--------------------------------------------------------------------------------
STRETCH ABSCISSA AREA
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<PAGE> 3
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
o The Company GHK COMPANY COLOMBIA, as a compensation measure for the removal
of herbal and tree coverage on some areas (15.5 m(3)), shall establish 5
HAS of the surrounding involved areas of the main streams and creeks
intercepted by the flow lines.
The final areas shall be determined by the Corporacion Autonoma Regional de
Cundinamarca (CAR), by using tree and bush species as determined by the
Environmental Management Plan (EPM), as follows: Madre de agua, Hojiancho,
cordoncillo, Amarillo pena, Pyande, rayado, Moho, Mario, Velero.
o For selecting the flow line routes, the Company GHK COMPANY COLOMBIA, shall
take into account the following environmental criteria:
o Use the existing road infrastructure
o Minimizing intervention in forest belts of secondary and pioneer succession
stages in streams and creeks
o Minimize the number of special crossings
o Burying the pipe in the areas where there are dwellings close to the right
of ways, observing the security areas
o Avoid new transfer lines to the Guaduas-La Dorada Pipeline, provided that
such lines would further deteriorate the environment to a comparison of
layout alternatives
o Minimize the fractionating of lots devoted to agricultural activities
o Apply the established principles of ASME b382 standard
PARAGRAPH THIRD-. Constructing and operating the Early Production Facilities EPP
for a production estimated in 20000 BFPD and 6 MMSPCD.
The activities for production facilities authorized herein are:
Fluid Receipt System
Liquid and Gas Hydrocarbon Treatment System
Production Water Treatment System
Crude Tankage System (at least 1 day of production)
Nitrogen Injection Plant
Auxiliary Systems (chemical injection, diesel fuels, main electric system,
emergency electric system, instrumental air system, flaring system, rainwater
management system, tank level measurement automatic system, communication
system)
PARAGRAPH FOURTH-. Transfer line Constructing and operating at TP-1 well up to
k2+428 of the Guaduas-La Dorada Pipeline.
The crude transfer line activities authorized herein are:
o Location and stacking
o Equipment mobilization and tubing transportation
o Right of way opening, preparation, and layout
o Local transportation and pipe placement
o Pipe lowering and burying
o Special crossings
o Ditch opening
o Hydrostatic tests
o Pumping
For the transfer line between TP-1 and k2+428 of the Guaduas-La Dorada Pipeline,
the Company GHK COMPANY COLOMBIA shall:
<PAGE> 4
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
o For the hydrostatic tests take only the required volume (18.84m(3)) of the
El Hoyon aquifer located in the TP-1 well (TP-1 has the corresponding
environmental licenses).
o The used water discharge shall be done by re-injection in the well ES-1
upon treatment in accordance with the provisions set forth in Decree 475/98
and pursuant to the Environmental Management Plan.
o No discharge of any of these waters in superficial or irrigation flows is
authorized.
o Reutilize, to the extent possible, the test water for different portions of
the pipe, thus decreasing the amount of water used and thus reducing the
use of reactants for its further treatment.
o Bury the pipes where there are dwellings close to the right of way.
o In the event that there may be cutting wastes during the construction, such
wastes must be transported to ZODMES authorized in he field of Guaduas for
its proper disposal.
o Revegetate 5680 m(2) in the involved areas as follows:
------------------------------------------------------------------
ABSCISA AREA
------------------------------------------------------------------
------------------------------------------------------------------
o As a compensation measure for the removal of herbal and tree coverage on
some areas, shall establish 6 HAS of the involved areas of the main streams
and creaks intercepted by the flow lines.
The final areas shall be determined by the Corporacion Autonoma Regional de
Cundinamarca (CAR), using tree and bush species.
PARAGRAPH FIFTH-. The following are the coordinates of the new 34 drilling
locations to be built. From each of them, the Company GHK COMPANY COLOMBIA shall
only be able to drill a maximum of 4 development wells. From the injection well
locations the Company shall be able to drill 1 injection well
COORDINATES OF THE AREAS OF INTEREST FOR THE DEVELOPMENT WELLS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
LOCATIONS COORDINATES RURAL AREA MUNICIPALITY
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------
</TABLE>
ARTICLE SECOND-. The Environmental License granted herein also includes the
activity of removing washout and quarry material.
The Company GHK COMPANY COLOMBIA shall purchase such material from authorized
suppliers within the area.
PARAGRAPH FIRST-. For the purpose of obtaining washout and quarry material, all
the environmental management measures shall be taken strictly into account, so
as to develop an activity in accordance with the environmental standards and to
prevent from affecting the environment.
PARAGRAPH SECOND-. Prior to obtaining the abovementioned material, a copy of the
mining title or permit issued to the third party by the Ministry of Mines and
Energy shall be sent the Ministry of Environment.
<PAGE> 5
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
PARAGRAPH THIRD-. The Environmental License granted to the Company GHK COMPANY
COLOMBIA, includes the permits, authorizations, and assignments of environmental
nature, required for the use, exploitation or impact of the natural renewable
resources required in developing the project as indicated below
1. Hydric Resources:
UNDERGROUND WATER CONCESSION
The underground waters collection of the El Hoyon aquifer is hereby authorized
through the upper part of the ES-4o , ES-6E, ES-9, TP-2E, TP-5, TP-11, and TP-14
wells in a 2.5 lps flow each, in order to meet the residential consumption needs
of the camp and cafeteria, and the industrial well needs only when the drilling
activities are being carried out.
Likewise, the underground water use of the El Hoyon aquifer along the upper part
of the TP-3E well in a 5 lps flow to meet the residential and industrial
consumption needs as part of the activities to be carried out in the production
facilities (under current CAR's consession)
The exploitation of the resource is authorized for a period of 12 hours per day,
in order to grant enough time for recovering the aquifer. The Company GHK
COMPANY COLOMBIA, shall install a flow meter at the wellhead and shall daily log
the exploitation conducted. This data shall be sent to this Ministry as well as
the water monitoring reports.
2. RAINWATER AND WASTE INDUSTRIAL AND RESIDENTIAL TREATED WATERS DISPOSAL
The rainwater, waste industrial and residential water disposal for operating the
Guaduas field is authorized as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
WASTE TYPE MANAGEMENT AND VOLUME
DISPOSAL
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Rainwater These are collected by a slope Variable
top trench system and a
perimetral ditch system, towards
skimmers acting as by 3 chambers
that act as grease tramps
sedimenting and storage. These
can at last be taken to natural
drainage by drain outlet and
energy dispersers
-----------------------------------------------------------------------------------------------------------
Residential Waste Waters These waters coming from 1.5 l/s per well and 1.5 lI/s for
bathrooms, laundry, kitchens are facilities is for production
initially collected in a septic tank,
and then to a Red Fox activated type
mud plant. The final disposal shall
be made to an infiltration field,
spraying, in adjacent areas or by
irrigation on unpaved roads upon
compliance with the standards set
forth in TABLE No.1
-----------------------------------------------------------------------------------------------------------
Industrial Waste Waters It covers the waters resulting
from the mud drilling treatment,
hydrostatic tests, and
water-related production, oily
waters, waters used for equipment
cleaning and maintenance. These
waters shall be treated by
physical, chemical sedimentation
-----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 6
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------------------
processes, coagulation,
flocculation and aeration. in a
pool system to be ultimately
disposed through a reinjection
process to the Guaduas formation
by injection wells, spraying in
adjacent areas or by irrigation
of unpaved roads. This latter
shall be done in accordance with
the standards set forth in Table
No. 1. The production related
waters reinjection to the Guaduas
formation shall comply with the
standards set forth in CHART No. 2
-----------------------------------------------------------------------------------------------------------
</TABLE>
The Company GHK COMPANY COLOMBIA shall comply with the following standards in
disposing the residential and industrial waste waters, through spraying in
adjacent areas in the access roads.
CHART NO, 1
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
STANDARD EXPRESSED AS MAXIMUM PERMISSIBLE
VALUE
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
(ph) Units
-----------------------------------------------------------------------------------------------------------
DBO
-----------------------------------------------------------------------------------------------------------
DQO Absent
-----------------------------------------------------------------------------------------------------------
Grease and oils
-----------------------------------------------------------------------------------------------------------
Chlorides
-----------------------------------------------------------------------------------------------------------
Conductivity
-----------------------------------------------------------------------------------------------------------
Total hydrocarbons Absent
-----------------------------------------------------------------------------------------------------------
Tensoactives
-----------------------------------------------------------------------------------------------------------
Cadmium
-----------------------------------------------------------------------------------------------------------
Phenol
-----------------------------------------------------------------------------------------------------------
Mercury
-----------------------------------------------------------------------------------------------------------
Lead
-----------------------------------------------------------------------------------------------------------
Barium
-----------------------------------------------------------------------------------------------------------
Total solids
-----------------------------------------------------------------------------------------------------------
Sulfate
-----------------------------------------------------------------------------------------------------------
Coliformes fecales
-----------------------------------------------------------------------------------------------------------
Coliformes totales
-----------------------------------------------------------------------------------------------------------
Cyanide
-----------------------------------------------------------------------------------------------------------
</TABLE>
Provided by CAR. 1999
The Company GHK COMPANY COLOMBIA shall comply with the following standards when
disposing the industrial waste waters through reinjection.
TABLA NO. 2
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
STANDARD EXPRESSED AS MAXIMUM PERMISSIBLE VALUE
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Conductivity
-----------------------------------------------------------------------------------------------------------
Total solids
-----------------------------------------------------------------------------------------------------------
Particles
-----------------------------------------------------------------------------------------------------------
Oil in water
-----------------------------------------------------------------------------------------------------------
Water pressure
-----------------------------------------------------------------------------------------------------------
Sulfates
-----------------------------------------------------------------------------------------------------------
Chloride
-----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 7
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------------------
Phenols
-----------------------------------------------------------------------------------------------------------
Color Units
-----------------------------------------------------------------------------------------------------------
Turbidity Units
-----------------------------------------------------------------------------------------------------------
Ph
-----------------------------------------------------------------------------------------------------------
</TABLE>
PARAGRAPH FIRST-. The production related waters reinjected in the Guaduas
formation is authorized in the ES1-S and TP-1S wells, in accordance to that set
forth in the study "Environmental Evaluation of the waste residential waters in
ES-1S by a numerical simulation."
Whereby the Company GHK COMPANY COLOMBIA shall:
1. Determine the porosity and permeability of the Hoyon formation and
particularly in the Guaduas formation, during the drilling of a well, in
order to balance the completed samples.
2. Keep a daily log of the water level through the annular, each time water is
injected in order to semiquantatively determine the draw down horizon
injection pressure.
3. Build up a monitoring well network, with a minimum of six monitoring wells,
close to the injection area, enabling the physical chemical quality
monitoring of the water chart and measuring monitoring well levels, whereby
there is a way to monitor any changes in the chemical composition of water.
The estimated depth of such monitoring shall be the minimum corresponding
to the top of the Guaduas formation, and the standards to be measured are
contained in the obligations set forth in the monitoring program for
underground waters.
4. Keep itemized records of the physical chemical quality of the injection
water at the authorized injection wells, as well as of the water production
wells. To ensure that the injected water in the authorized wells complies
with the minimum standards of quality standards set forth in Table No. 2.
5. The authorized reinjection flow (Q) ranges between five thousand (5000) to
Ten thousand (10000) barrels per day per well.
6. Isolate completely the new injection wells in the Hoyon formation, thus
ensuring that the injected fluid migration towards the formation be
non-existent even in the long run.
Likewise, (if technically possible) not cementing the base sand and coal
base horizons of Guaduas formation (tkg) since these enable a rapid
injected fluid storage given its hydraulic conditions.
3. SOLID WASTE TREATMENT, MANAGEMENT, AND DISPOSAL
a) BIODEGRADABLE ORGANIC WASTES
Part of the residential solid wastes generated in the cafeteria and dining rooms
shall be devoted to animal feeding. The remaining part of these wastes shall be
bioremedially and disposably treated in sanitary trenches, upon compliance with
the technical specifications regarding the final solid waste soil disposal.
The Company GHK COMPANY COLOMBIA shall install monitoring wells in the direct
area of influence of the final disposal site and shall prepare a quarterly
follow-up on the underground water quality.
<PAGE> 8
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
b) RECYCLABLE WASTES
Glass, plastic, paper bottles, and plastic wrappings shall be stored in 55
gallon bins in the disposal area, with the following color labels: WHITE for
paper and cardboard; YELLOW, for plastics, GRAY, for glass. This material shall
be transported on a daily basis to Guaduas to be delivered to the organized
recycling groups.
c) OILY MUDS
The wastes resulting from the maintenance activities of separation systems and
storage tanks and energy generation, shall be transported to the biodegradation
sites for the oily muds in the CLEX for its proper treatment.
d) HAZARDOUS WASTES
The hazardous wastes such as a filter, batteries, chemical product packaging,
fuels and oils, cement sacks, radioactive elements, etc., shall be daily stored
in the supply center and shall be returned to the suppliers or manufacturers for
its final reutilization or disposal.
e) FLAMMABLE WASTES
These are wastes such as: gloves, overall garment, burlaps, geomembrane cloths,
hydrocarbon -soaked cloths, toilet paper, gauzes and cottons, packages,
syringes, and first aid material. These shall be stored in 55-gallon red colored
bins, which shall be daily collected and taken to the supply center to be
burned.
The burner used to treat these wastes shall have combustion and post combustion
system ensuring the complete waste degradation as well as the control mechanisms
for particulates and emissions.
ARTICLE FORTH-. The Environmental License which is hereby granted. Conditions
the beneficiary of this Resolution to the fulfillment of the obligations
contained in the Environmental Impact Study and the Environmental Management
Plan submitted by the Company to the compliance of the current environmental
regulations, as well as to that established above to the compliance of following
obligations:
1. The Company GHK COMPANY COLOMBIA shall submit 30 days prior to initiating
the works, before this Ministry, an Environmental Management Plan and/or
the update (according to each case) for each drilling project that the
Company intends to carry out, including the respective flow lines,
enclosing the topographic drawings of the locations and the material
disposal sites, strictly complying with the following criteria:
o No well drillings in slope areas or with over 40% slopes are allowed.
o No well drillings at distances below 150 m of any riverbed are allowed.
o No drillings or detonations less than 500 m of any faulting that may be
detected in the area. are allowed
o leave a non-protected intervention area of 150 m in connection with natural
forest areas.
o Leave a minimum 150-m distance as to dwellings, populated home areas and
urban expansion areas, which are located in the area of direct influence.
o Graded sites, to locate drilling platforms of 1.5 ha maximum.
o Road widths of at the most 8 meters wide.
2. When selecting and conforming the disposal and management zones of sterile
material, the Company GHK COMPANY COLOMBIA shall implement the following
environmental measures for handling excavation material disposal zones,
(ZODMEs):
<PAGE> 9
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
o The areas determined, as ZODME's shall be preferably located in a flat
area; if this is not possible, due to the soil characteristics, a natural
slope area should be selected, and especially focusing on the adequate
management of the rainy waters.
o The location site should be far away from the water bodies and from
environmentally sensible areas set forth in the environmental zonings
o No ZODME's shall be located at a distance less than 30 meters of the
maximum flooding contour elevation of water bodies. This measure shall be
taken into consideration in flooding areas during winter season at which
time water dams take place.
o The ZODME's site location shall be previously negotiated and no other areas
may be used except those already established.
o For the ZODME's preparation, the vegetable and organic soil layer shall be
removed.
o If the selected area is of high slope, a terrace or soil grading shall be
carried out in order to provide support to the material that is going to be
placed, at which case a granular material filter is required to ensure a
normal area drainage, as well as energy dispersers and sedimentors in the
areas where the material is driven to the natural drainage.
o The Excavation materials shall expand over the area in loose layers, of not
more than 40 to 50 cm width; then these should be rammed down with a
bulldozer reaching at least an 80% compression.
o Upon the material disposal, the surface shall be revegetated, in accordance
with the established procedures for intervened areas.
3. The Company GHK COMPANY COLOMBIA, prior to returning the hazardous
material, shall submit before this Ministry agreements executed for this
purpose between the Company and the suppliers responsible for finally
disposing of such material.
4. In the specific location, facilities, and flow line management plans, the
species and volumes of the forest material to be exploited shall be
determined, and in case these are beyond those established in the standard
(article 60 of Decree 1791 of 1996, i.e. 20 m(3)), the Company GHK COMPANY
COLOMBIA shall process and obtain the authorization before the
corresponding environmental authority, prior to the execution of the works.
5. The Company GHK COMPANY COLOMBIA shall inform this Ministry and the
Corporacion Autonoma Regional de Cundinamarca (CAR) about any changes that
may emerge in the management, disposal and treatment of solid, liquid,
atmospheric emissions, noise and waste
6. EXCLUSION ZONES
The Company GHK COMPANY COLOMBIA shall restrain from performing any oil-related
activity in the areas of:
a) San Francisco Forest Reserve and its compensation area.
b) The area declared as a forest, hydric, and agricultural reserves by the
municipality of Guaduas (set forth in accordance with the contract 024
of September 5, 1998)
c) Areas at a distance of approximately 100 meters to the water springs,
river bed forests and a 30-meter the water bodies, as of the maximum
flooding level.
d) Populated areas (urban areas), infrastructure utilities, inlets and
water catchment.
<PAGE> 10
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
7. The Company GHK COMPANY COLOMBIA shall ensure that prior to the initiation
of the well drilling, the foreseen residential and industrial waste water
management and disposal systems are operating (those technically feasible).
8. The Company GHK COMPANY COLOMBIA shall provide permanent maintenance to
those access roads used for the project and those roads that lead to
locations and/or facility areas, ensuring their stability, degradation
control processes, water management, and dust emission control.
9. The Company GHK COMPANY COLOMBIA shall implement the current environmental
regulations set forth for banners and advertisement.
10. The Company GHK COMPANY COLOMBIA shall avoid developing production
activities on the areas identified as high environmental sensitive areas as
set forth in the Environmental Impact Study (EIS), corresponding to the
Zoning Map for Environmental Activity Management.
11. The Company GHK COMPANY COLOMBIA shall ensure to permanently inform the
community of the area of influence of each of the activities, both of the
project itself and the various management measures and social management
plan.
12. The Administrative Act hereof, only authorizes the use of floor flares,
confined in a burning pit with a maximum area of 25 m(2) and a minimum of a
5 meter depth, which shall have a thermal, lightning, and sound insulation
system. The installation of high flares is by no means hereby authorized.
13. The Company GHK COMPANY COLOMBIA shall only mobilize crude on load trucks
from 6 am to 6 pm at a maximum speed of 30 km/hour. Likewise, the Company
shall comply with the current regulations set forth for hazardous substance
transportation (corresponding classes).
14. The Company GHK COMPANY COLOMBIA shall inform the dates for the simulacrums
to be performed in accordance with the obligations set forth in the
contingency plan.
15. The Company GHK COMPANY COLOMBIA shall strictly comply with the Social
Management Plan stated in the Environmental Management Plan submitted
before this Ministry as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
IMPACTS MEASURES POST-PROGRAMS
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
o Employment demand increase - Design and completion of a Information and communication
o Room and board demand local and regional labor
increase contracting policy
- Advertising and communication
of the local and regional
non-skilled labor hiring policy
- Information of the sectors
demanding labor
- Community Relations office Labor contracting
- Information Meetings
- Agreement execution and hiring
obligation compliance
- Agreements acting in favor of
observing coexistence standards
--------------------------------------------------------------------------------
</TABLE>
<PAGE> 11
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
<TABLE>
<S> <C> <C>
-----------------------------------------------------------------------------------------------------------------------
o Temporary increase of - Design and completion of Service offer and demand Management
external elements arrival specifications and the rules
of the game of the social
incersion/inclusion of the
external elements
--------------------------------------------------------------------------------
o Migration - Expectations - Designing and completing of Services
educational campaigns
- Information meetings
-----------------------------------------------------------------------------------------------------------------------
o Morbidity/ increase - Improvement project in
o Social service demand rendering of health services
increase
-----------------------------------------------------------------------------------------------------------------------
o Significant income increase - Designing hiring policy Education and training
o Price increase - Hiring Agreements
o Cost of living increase - Resolution agreement
issuance of price regulation
- Advertising material
--------------------------------------------------------------------------------
o Vehicle flow increase - Designing sign posting, and Institutional strengthening
accident prevention plans
- Advertising material
--------------------------------------------------------------------------------
o Solid and liquid waste - Information meeting
generation - Advertising material
o Superficial water
contamination/pollution
--------------------------------------------------------------------------------
o Public utilities demand - Educational campaigns on Archaeological interest zones
increase (water and sewage) "water management"
- Improvement project on the
offer in rendering water
service
- Educational/Teaching
material
-----------------------------------------------------------------------------------------------------------------------
o Deterioration of Vehicular - Designing of improvement
infrastructure and maintenance works
- Construction works for
improvement and
maintaining rural area access
roads
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
IMPACTS MEASURES
-----------------------------------------------------------------------------------------------------------------------
o Natural resource demand - Information meetings
increase - Educational campaigns
o Cultural increase on natural - Designing and performing reforestation projects
resources - Seed bed installation
- Community agreements
-----------------------------------------------------------------------------------------------------------------------
o Home transfers - Information meetings
- Negotiation Meetings
- Transfer designing
- Agreements
-----------------------------------------------------------------------------------------------------------------------
o Use of the land changes - Agreement and integration social projects with the community
- Information meetings
-----------------------------------------------------------------------------------------------------------------------
o Community conflict - Information meetings
generation and creation - Agreements and commitments
- Compliance meetings
- Contract execution and obligation compliance
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 12
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------------------------------
o Landscape damages - Information meetings
o Space occupation - Agreements and commitments
- Compliance meetings
- Space management agreements
-----------------------------------------------------------------------------------------------------------------------
o Damages on archeologically - Follow-up and supervision Plan
sensible zones - Rescue Plan
- Discovery Report, bordering interest area
- Oil activity staking
-----------------------------------------------------------------------------------------------------------------------
o Atmosphere and noise - Information meetings
pollution - Advertising material
-----------------------------------------------------------------------------------------------------------------------
o Offer and demand alteration, - Information meetings
productive processes - Productive process management support project
o Productive activity changes - Establishment of Productive and environmental management Foundation
-----------------------------------------------------------------------------------------------------------------------
o Community management - Meetings and agreements
demand increase - Joint cooperation agreements
-----------------------------------------------------------------------------------------------------------------------
o Institutional management - Meetings and agreements
demand increase - Technical, financial and managerial advisory
- Agreements and joint cooperation advisory
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
ARTICLE FIFTH-. The Company GHK COMPANY COLOMBIA. shall inform this Ministry
about changes for modifications of the Environmental License, when the
conditions of the area of intervention defined in the EIA vary with time towards
restrictive scenarios for the licensed activities.
ARTICLE SIXTH-. During the time of the project completion, a permanent
environmental follow-up shall be done, by means of an Environmental Audit so as
to monitor the activities and to verify compliance with the obligations set
forth in the Environmental Impact Study, in the Environmental Management Plan,
and in this Resolution.
An environmental management and progress report shall be submitted, before this
Ministry and the Corporacion Autonoma Regional de Cundinamarca (CAR) every six
months, the report shall include an itemized exploitation activity description,
and its environmental management as well as the environmental incident reports.
This report shall include at least the measure implementation evaluation as
adopted in the Environmental Management Plan, follow-up, monitoring, result and
conclusion analyses report program. Likewise, any contingencies that may rise
shall be reported, and such contingencies shall be reported on a monthly basis.
The report shall be focused on the analysis of the implementation of the various
environmental management measures that are adopted. The semiannual report shall
include the progress in the Social Management Plan, by submitting not only the
progress report but also a copy of the various interinstitutional and community
agreements.
Likewise, such auditing shall develop a monitoring and follow-up program on
water, air, and soil quality as follows:
1. The surface water quality monitoring shall be quarterly prepared in the
streams within the area of influence of the project, during all the field
operation phase, based on the sample points submitted for the
characterization of the main line of the environmental impact study for the
development of Dindal and Rio Seco blocks.
2. During the drilling of the developing wells, the monitoring shall be done
in the streams adjacent to the location on a monthly basis, upstream and
downstream at the points where the tributaries enter the flows of the
stream.
<PAGE> 13
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
3. The standards to be followed are: pH, total suspended solids, dissolved
solids, fat and oils, dissolved oxygen, coliformes fecales, and totals,
temperature, heat, turbidity chlorides, sulfates, nitrates, nitrites an
conductivity, phenols, and hydrocarbons, which must comply with the
standards set forth in Decree 1594/84 articles, 38,39, 40, and 41.
4. The underground water quality monitoring shall be quarterly done both in
the drilling platform areas, production facilities, grease waste management
areas, and drilling cuttings, sanitary tanks, and industrial injection
waste water wellsites.
In each of these areas a minimum of six (6) monitoring wells shall be
installed per hectare. The measurement standards are: grease and oil
contents, pH, conductivity, sulfates, chlorides, and phenols.
5. Soil monitoring (quarterly frequency). GHK shall perform the following for
the oily muds and drilling cuttings by the biodegradation system:
6. Bearing in mind that in Colombia there are no standards which define the
soil quality control to evaluate the efficiency of the biodegradable
systems, the 29B Standard of Louisiana State (United States) from October
20, 1990 shall be followed. The following are the standards to be
evaluated:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
29B STANDARD - LOIISIANA- OCTOBER 20, 1990
------------------------------------------------------------------------------------------------
STANDARD UNITS VALUE
------------------------------------------------------------------------------------------------
<S> <C> <C>
------------------------------------------------------------------------------------------------
pH
------------------------------------------------------------------------------------------------
Sodium absorption reason less than 12
------------------------------------------------------------------------------------------------
Interchangeable sodium
percentage less than 15%
------------------------------------------------------------------------------------------------
Electric conductivity less than 4
------------------------------------------------------------------------------------------------
Oils and fats less than 1%
------------------------------------------------------------------------------------------------
Arsenic
------------------------------------------------------------------------------------------------
Barium (hilly/mountainous land)
------------------------------------------------------------------------------------------------
Cadmium
------------------------------------------------------------------------------------------------
Chromium
------------------------------------------------------------------------------------------------
Lead
------------------------------------------------------------------------------------------------
Mercury
------------------------------------------------------------------------------------------------
Selenium
------------------------------------------------------------------------------------------------
Zinc
------------------------------------------------------------------------------------------------
Silver
------------------------------------------------------------------------------------------------
</TABLE>
In addition to the standards described herein, a follow-up shall be done on the
class, fertility, and soil quality, prior, during and after the biodegradation
treatment, which shall be completed upon the compliance of the established
quality standards.
The land on which the biodegradation of oily wastes and drilling cuttings shall
be developed shall have a surface water drainage, which shall be collected in a
sump, from which these will be transported to the water treatment pools.
7. AIR QUALITY MONITORING
ATMOSPHERIC EMISSIONS: For the Early Production Facility (EPP) monitoring shall
be done in the areas established in the specifications No. 4-01 of the
supplementary EIS document. For the Industrial Complex of Santacruz, the
following places shall be taken as reference for the air quality monitoring:
Police station in Guaduas, Facilities area entrance, TP.3 location, and half way
to the Western border of the complex. The frequency for the air quality
monitoring is semiannual and the standards to be analyzed are those established
as follows:
<PAGE> 14
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
QUALITY AIR STANDARDS (ug/m(3)) Decree 02 of 1982
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Contaminator Schedule Standard Daily Standard Annual
Standard
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Particled Material
--------------------------------------------------------------------------------------------------
PM10
--------------------------------------------------------------------------------------------------
Nitrogen Oxide
--------------------------------------------------------------------------------------------------
Sulfur Oxides
--------------------------------------------------------------------------------------------------
Carbon monoxide
--------------------------------------------------------------------------------------------------
Ozone
--------------------------------------------------------------------------------------------------
Hydrocarbons
--------------------------------------------------------------------------------------------------
</TABLE>
8. NOISE MONITORING: For the EPP area, this will be done as set forth in the
specifications 4.01 of the supplementary EIS document. For the Industrial
Complex of Santacruz, the following places shall be taken as reference for
noise monitoring: Police Station in Guaduas, facilities entrance, TP.3 well
and half way to the Western complex border.
ENVIRONMENTAL NOISE STANDARDS RESOLUTION 8321 OF 1983
<TABLE>
<CAPTION>
Nivel de presion sonora de decibeles/Sound
pressure level in decibels
<S> <C> <C>
----------------------------------------------------------------------------------------------------
Receipt Areas Day period Night period
----------------------------------------------------------------------------------------------------
Zone 1- Residential
----------------------------------------------------------------------------------------------------
Zone 2 -Commercial
----------------------------------------------------------------------------------------------------
Zone 3 - Industrial
----------------------------------------------------------------------------------------------------
Zone 4 - Peaceful
----------------------------------------------------------------------------------------------------
</TABLE>
The water, air, and soil monitoring results shall be informed to this Ministry
and the Corporacion Autonoma Regional de Cundinamarca (CAR) in each of the
progress and environmental management reports, by attaching an isonoice map at a
maximum interval of 25 meters and a 200- meter radio as of the borders of the
facilities, for the EPP and the industrial complex of Santacruz; for the areas
during the drilling phase the noise monitoring shall be done as of the well
axis, by enclosing an isonoise map with a maximum interval of 25 meters and a
200-meter radio. Such monitoring shall take into account other emissions sources
such as generators, flares, and compressors.
Likewise the Environmental Auditors shall submit the results of the
characterization of the atmospheric emissions produced by the incinerator,
contained in the progress environmental management reports.
Upon the completion of the flow line hydrostatic test of ES-4 to the TP-1, the
auditing shall prepare the physical-chemical quality analysis of the surface
sources in the sampling sites defined in the drawing No. 5 CB-1425, and in
accordance with the standards set forth in the Environmental Management Plan
(EMP) as follows:
o Punto 1.y 2 Cano NN7........
o Punto 19 Cano NN2......
In order to complete the hydrostatic test, the Transfer line from the TP-1 up to
k2+428 of the Guaduas-La Dorada Pipeline, the Environmental Auditors shall
prepare the physical-chemical quality analysis of the surface sources in the
following sampling sites:
o Punto 1 Cano........
o Punto 7 Rio Guaduero......
<PAGE> 15
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
ARTICLE SEVENTH-. The beneficiary of the Environmental License shall pay to the
Corporacion Autonoma Regional de Cundinamarca (CAR), the corresponding amount
for the retributive tax, compensatory rates, and for the amount of water used,
damages or usgee of the renewable natural resources.
ARTICLE EIGHTH-. In the event that while the works or operation are being
carried out, any unforeseen environmental aspect may occur, the Environmental
License and Environmental Management Plan beneficiary shall suspend the works
and inform the Ministry of Environment immediately, so that the Ministry shall
determine and request the corrective measures that the Ministry may deem
necessary, without prejudice against the measures that the Company GHK COMPANY
COLOMBIA may take, to avoid the environmental deterioration.
Non-compliance with these measures, may be a strong reason to apply existing
legal penalties, sanctions and fines.
ARTICLE NINTH: The Company GHK COMPANY COLOMBIA shall be liable for any damages
and/or environmental damages created by the company or by the its contractors,
and shall perform all the necessary activities required to correct the
environmental effects which may have been caused.
ARTICLE TENTH-. The Environmental License granted herein covers only the works
and activities set forth in the Environmental Impact Study, in the Environmental
Management Plans and in the Resolution herein.
Any modification to the conditions of the Environmental License, the
Environmental Management Plan, shall be informed immediately in writing to the
Ministry of Environment for an evaluation and approval. Except for the
modifications referred to in the Resolution No. 1137 of October 23, 1996, at
which case the beneficiary of the environmental License and the Environmental
Management Plans shall only inform, in advance, this Ministry about the
fulfillment of any such modifications.
Likewise, the Environmental License modifications shall be requested and
obtained, whenever a natural renewable resource is intended to be used,
exploited or affected, as opposed to those resources honored herein, or under
conditions which are different from those set forth in the Environmental Impact
Study, and in the decision herein.
ARTICLE ELEVENTH-. The Company GHK COMPANY COLOMBIA shall previously inform this
Ministry in writing about any modifications that may entail changes in the
project for its evaluation and approval.
ARTICLE TWELFTH-. In the event that there may be archaeological traces while the
project works are being developed, the Company GHK COMPANY COLOMBIA shall
immediately inform the Instituto Colombiano de Antroplogia-ICAN from the
Ministry of Culture eras well as this Ministry. ICAN shall determine the need to
perform an excavation phase or archaeological rescue.
ARTICLE THERTEENTH: The Company GHK COMPANY COLOMBIA shall execute a performance
insurance policy to the name of the Ministry of Environment for each of the
activities performed in the Guaduas field in the Dindal and Rio Seco blocks, for
equivalent to a 30% annual cost of the Environmental Management Plan and valid
for the project lifetime and two more years. Such insurance policy shall be
renewed every year.
ARTICLE FORTEENTH-: The Ministry of Environment shall monitor the fulfillment of
the works and shall verify, at any time, the compliance of the provisions set
forth herein, and in the contents of the Environmental Impact Study and in the
Environmental Management Plans.
Any non-compliance of the above shall give rise to the application of existing
legal penalties.
<PAGE> 16
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
ARTICLE FIFTEEHTH- The Environmental License hereby granted does not cover the
capturing or extracting of fauna specimens or wild flora.
ARTICLE SIXTEENTH-. The Company GHK COMPANY COLOMBIA shall invest one (1%) of
the project's total investment, in recovery, preservation, and monitoring
activities of the basin(s) nurturing the respective hydric source, in accordance
with that set forth in article 43 of the Law 99 of 1993.
The Company shall present an investment plan with its corresponding activity
timeline, in a maximum period of 4 months upon the execution of this order,
whereas the Company determines which of the following activities shall be
developed: reforestation, erosion control and soil recovery works, management of
forest regeneration process, and other similar activities.
These activities in which the investment shall be made, must be agreed upon with
the Corporacion Autonoma Regional de Cundinamarca (CAR) and shall be directly
performed by the beneficiary company of the Environmental License.
ARTICLE SEVENTEENTH.- In order to prevent forest fires field personnel shall
abstain from lightning fires, felling trees or supplying vegetal material.
ARTICLE EIGHTEENTH - The Company GHK COMPANY COLOMBIA shall inform, in writing,
the contractors and in general all the personnel involved in the project about
the obligations, control and prohibition means determined by the Ministry of
Environment the Resolution herein, as well as those obligations defined in the
Environment Impact Study and in the Environmental Management Plans submitted by
the company, and shall demand the compliance of said obligations.
ARTICLE NINETEENTH.- The Company GHK COMPNY COLOMBIA may not perform works
within the fringe owned by the State referred to in article 83 of the Decree
2611 of 1974, or in the retrieval areas of the surface waters established by the
territorial entity of the jurisdiction where the project will be developed.
Anyhow for crossings of water beds identified in the Environmental Impact Study,
submitted by the beneficiary of this License before the Ministry of Environment,
this fringe may be intervened taking, into account that GHK has the permits for
usage and exploitation or damage of the natural resources needed in performing
the works.
ARTICLE TWENTIETH. - Upon the completion of the various field works, the Company
GHK COMPANY COLOMBIA shall duly have all the evidence of waste elements and
materials, so that the landscape is not altered or the environment deteriorated.
ARTICLE TWENTYSECOND. - The Company GHK COMPANY COLOMBIA shall perform the
project in accordance with the information submitted before this Ministry.
ARTICLE TWENTYTHIRD. - The validity of the Environmental License herein shall be
that of the time that will take the project.
ARTICLE TWENTYFOURTH. - The beneficiary of the Environmental License shall
inform the municipal authorities of the region about the project and its scope
aimed towards obtaining the required permits necessary for the completion of the
planned works.
ARTICLE TWENTYFIFTH. - The Environmental License hereby granted by means of this
administrative act, shall confer no actual rights upon the lands affected by the
project.
ARTICLE TWENTYSIXTH. - The Company GHK COMPANY COLOMBIA shall inform in advance
and in writing this Ministry and the Corporacion Autonoma Regional de
Cundinamarca (CAR), the date when the works will be initiated.
<PAGE> 17
RESOLUTION NUMBER 0732 OF JULY 19, 2000
"WHEREBY A HYDROCARBON EXPLOITATION ENVIRONMENTAL LICENSE IS
GRANTED"
ARTICLE TWENTYSEVENTH. - Send copies of this Resolution, by the Environmental
License Legal Secretariat, to the Governor's office of the Department of
Cundinamarca, to the Municipal Mayor`s office of Guaduas, Chaguani, Viani,
Villeta, Quebrada Negar, Utica, and Caparrapi, and the Corporacion Autonoma
Regional de Cundinamarca (CAR).
ARTICLE TWENTYEIGHTH. - Notify the contents of this Administrative Act to the
Legal Representative of the Company GHK COMPANY COLOMBIA, or to its attorney
duly appointed.
ARTICLE TWENTYNINTH. - The Company GHK COMPANY COLOMBIA shall advertise at its
expense in a nation-wide newspaper the heading and the resolution portion of
this order, and of which copy shall be sent to the Ministry of Environment
destined to file No. 679.
ARTICLE THIRTIETH. The right of petition-may be filed against the present
Administrative Act by governmental action, which may be filed before the
Ministry of Environment in writing in the 5 first days following its
notification pursuant to article 50 and following, of the Administrative Law
Code.
TO BE ENTERED ACCORDINGLY
JUAN MAYR MALDONADO
Minister of Environment
