AR TIeLI': 250

D:mger to Persons, P'r{)p,el!~Y or~~~'f~ronment

, ,

~.s .J

- ~ ~, ~ - .. ::

Ifany.works ,ori~nsran~dons erected by Licensee or amy OrH:>m1:~O!fls. cgnd.Uit~ed by

Licensee ,~d~:ng;ef or may endanger persons '0"1' third party - pro-reriy :OICfl~)Se pollution ~r ~ahn \'ii'iMHfe or the environment to a degree lfiipcGeptabh~ ,to Government in accordance with international environmentaf standards and local circumstances the Licensee shall take appropriate remedial measures approved by Government within a. reasonable period and to repair as far as it isreasonably possible any damage to the ertvironment so. caused, If~ and [0 the extent necessary

- ..

for this: purpose,. ieensee shall discontinue Petroleum Operations in whole orin

part until Licensee has taken such remedial measures or has repaired. any damage. In flte event that Licensee fans to take the appropriate remedial measures within a reasonable time ·~eriod. the Gevemment may, after consultation wtth Licensee, carry out such remedial measures for Licensee's account,

5.2 Befon: eornmencing ooy worlc...:s or operations hereunder, or recommelli.!cing,aJmlY works or operntlolllS whiC:h have boon discontinued for mere than tilree 0) Ca~endar Months, in. any Pain. of the Contract Area "'moh inc~udes tile area. ofa National Parle or Game Res~ (as so designated under applicable Uganda law), Licensee shill[ C()tnlsu[~ w~tlh. the Oovemment rega:niin,g tbe nature and extent of Jhe work or. Qpemt' ons ~o be condacted in. sllch areas taking il!l~'Q ,considemil:[QJJ. Good Oilfield Practices, J~ carnying out such worksand opemlt~(D!ns .in siJ!Jch areas) Licensee shallgive due regaed te the importance of m.inimising the damage and distutbMlCe to the envireoment and wildlife and, where any damage or dis·mrmn1ice would resuU. 'shaffil take an reasonable steps to Hmwt the extent of dli damage or disnerbanee so caused

5..3 In the event of protest ft'om les_PoillSible concerned third parties within or outside Uganda. regarding the' cenduet of Petroleum Operations in any NationalPark O'T. Game Reserve and the consequeat effects il:POJ!l. the- environment or wildlife, the Government <lind Licensee shall meet to determine what if any action should betaken.

:. )

56

(01) conduct the Pesroleum OPClI<Il[jOIJilS: in a manner iwcIDy w premote conservatmn ofthe n:ll~IJII""i!l1 1'¢SO'UfC,es; of Ugamtdii atlitd t~ll# prot:elc:tian enviroruneut;

~') crnph,y the most ad'llllllcedi technilQ1~Ie:s for' the pn;:,'ention ofe.llll'lnI!Ol'llmm da.lllagc ",,,,'hich ~Ila)' be caused lby Petroh;!~11il'I .operaitions, and for ]1I1iuin~i:mlioi1 .of tilile c(iiG1;;l of relro~w:m Op~ra.ti!l)ns on adjoining il~'igihit:;.ollil!'ilng lawlds: and

I(C) ImIJl,omc!'H, (he p:ropooSa]s c'Onmilfl.ed in :n~s D~velop\Tinl!lilt iPJ'an .regarding' prell en I iQIlof p'ol~lJtion Rlld rake allil)" furtlul1!" aetionas J:nilY be necessary Ibe tre,alnlcllt of \lIl,as~~s,,, tll'G'·'SQ{eguardiing of natumJ- N$o1!lrc:es and progsesslve reclatMallio]JJ aJlld l;"~hi!libiUtdol'il, of lands d,i~mlUrbooby De'I,:ro,leLdl proIJu UOll'iI,

.

25.5 The Licensee ulr:ldertaikes} fn.r d.e P'~es ,of tbi1s AgR:e~emJt, tiOl'~ i1J1~ n~~esS3~

3Ed adeq llI'alle steps

lil) to ensure a:deql1~(e compensalruom for itlljlUC,l( to P{;:[-SOIRS ,0:1" damage pl',t)I)C~[y caused 'by :llu~ effe(!: ot~he .!P"etrolelJm OpenliQIliS,; aJitd

(b) ~o avoid im;~!1ediahle enviroamental damage to tile CO!i1~met Ar-ea. adjoini:nlg fir neig'bbourin.S lands.

2'516 U th0 Licensee fails to. ,cu!lnpi.y with the tmns Oifpllmgt'iil,PiliI. (b~ of'Clal!se 2:5.5 .

QUII'tliU1IJCrlCS tilily law 0;11 tht' pr{i~~I1I'lio:n of e~vi'r~nmc.ni:at] d.!inil18~e .BInd $l\iIcb or c,t)ntrnvcfllriOIi' results In a,ny iID'lI.iroj]_m:~n1all d'amtlge, t'I\ie Licrosoo slflal'r mike 31 necessary and reasonable mc.1S;1I.[CS: 10 lIf.:mooy sue'li. fail:l!lr-e or co:alm'll'enlion l~h,1;; c«t;,o,cls R1~rc~~(

25" 7 The measulre-s and, n11lelh~~ Jo :~~" IJs~4 ~ll. ~h~ Lice:rns;ee fotl' p~ipm:-cs 0,( complying

wi!ththe lenns of patta:gmph (0) of C!alj~e 25.:5 sholl be delcrmified. ln 'li.i1ilc]y COlil'5Uiltlition willi. t~le Minilstler UJ,Pon "he ,commem.c:~tnent of P'e1rQ-JeuM Opo/fOl:ions or wih,enever !!here is 8. siW1ificant Cl1_gt0 ii1J tl~e $Ope o:r method o( clll')'i"g our i"elrolcllnrn Opo'l"oI!iQIlS, ,~ind t111i~, Licensee shall tab lnto aocQIUIit the in1iei1~tiotllil s(and'al'd's ~Ipplicable' in silIDliiaf c·irelll'lls.ta:nces and Ifhe role"\I,3nt enviromMenmal impSlc't

" '

____________________________ ~57 =_ ~ __

surdy C,I111'1.c=d' (lUI in accor ranee wiih Clause 25.8.. The Lieensee shal1 notil)~ lite M-inis'er jn wFilling ,of the nature of the measures and' metheds i1l'mUy determined by the Licensee and shall cause snch measures and m,etJj1o Is to be rcvmcwoo from time ~o time in vii \'If ofpril:'I.·ailimng ci'l .unrstances, provid.ed! ho.weve1f. that any OOl1lsl~hait;ons or <lPP~) fiJI given IlUfSU£IIIl'lt to ttlis Agrt..'"eonerl'~shall not- i1c deemed to Ilim"t. the o9~ig;:l~[tQns ofl'lriIIc Licensee as provided !herein ffl, the righ~ or lhe Mi'i!liis~er 10 ta\:;e

~ aJppropliia1e r,e.gubrtory or otheractian where :pck.o;IIC~~l Opi.>rn.li.OIllS pose III mat,mal ·~;.dangerto pClMic helil~1i and sa.f.ety Or may remit in sit,'lfit1caililtirre'lll'ers:ib.le d\afli1la~e' to

I he en inll'n Clill. -:

15.S he icensee shan cause a cOTilSl!Ilt'ing firm or indiv~dmi.s, r jlnletnaJriol!l!al stan'Ciil'illg

'[I,) cany out. en:vi;roIlII'Jlen'UIi Impact studies (tog;cilier wi{ih~\he Ipdi:i!tin.£. ,~)rf\hc J:2i!tter referred te mn CI:atlsG 25.1 n. in. ,order

(a) ~ del:eili"lit'!imte the p:rewu.iling sirUition relating to dle e«'It~liOmnen~. human b~.i:mgs. wUdlife or marine Ufeiin the Centraet A~ DiDd in the adjoiliJiing or ne~.gbbollrilng areas ,al tle time llilf tb.e :studies; and

{b) W estlbli.sh wlia:t ibhl.> ,effect win he O~ the envi:n:mml~lIlt. OO...IDiID beings" wildlife' er marine m' m ill the GOD.tract Are-a, mill OOMCq_oo.ltce of !!he Pemolli!1.Im OlPemlioEls to be: unde:rtak>en under this Apement., and Uri .bmi't, 'fnr ,consideration by the Parties nm.aSUJre$ and- methods ,ooJtlrempJated in paiagrapb 25 .. 1' filr miin~mj :ing elll.v1roili"lJfitenta:1 ,damage 31l1d ,ca.rryi:og 'QiU:t site m'esl:o:rltto:nil1J t.be Contmd Area ..

25.10 Sucb srudies shan be updamed i"i.litd sl:Ib.miljted to dre Ministe-r.:

(~) wi'1h ea:i~~ ,3pplic.al~O;Il f{'iF ,11 :sl.ib~ql1.eDt Productmo:n Uoenee (sue. '·updated

slud'y,w funn pallt of.its De¥eJ.OiJlme'~t Plan relati'ng fhe:re~o)~ "-

'.

(ii:) wi:dil. each app~ictlitjo.n for <:I renewal of the EX.plQration LiCl~9e: under Artlc~e 3.2:, '0(1' rQr relinqei.shmcllit iI~lnd~ Aniele 3.S·

C1U not i,~sl> than throe _ ffi11Imn.h.s p.riol.o the. 'termination of the EXp['ORtion Lieenee: a;nd

2.5.11 11,. ,Iudi", 1I1enliohed ill CI"se 25.8 Bholl COBl.I. Pl'<>J!oo«i e nv iron"'"" .. 1 ;:Oid.li"es '0 be [011",""<1 in oni." 10 a",id iRe.,",,;"ble 'OIi'l'imnm ..... 1 ,,"mage

• '.md' ShllH indudc, ill!.ll(nol, be ~imit,f!'d ~i}

,

(m)

(u) Co) (p) (q)

-"'~'."".1 '1,I~y request in II.he ,Iiglilt of """'''u:'I1 (J eill\'Imnmerlll.! d'sJrniilge :reStlJdng fi'o .. rn Qt" [Ja:IJug !.o tile P'r:!,r-olctllUl Opera~ion~, _ . 'q " ,

1 - I ~

(;1) (1:1) (c) (d) (c) (t) (g) (n)

(U)

(i)

(k)

OJ

o:U::OCS5 Cll!U Ing;

d,e-Bring and dlflber salv"g,~; wlildJUi: .and IlJlbjl~u p:rot.etltioll; fu eol :!iltut',uge and ria ndHi1_g;

use Qf.~pl'OiSj!,f~S;:

C~tHP:!il alf~d stagl i1g tl'reas;

~~q ujd Bind .!iloJidw<1Sle djs,p"O&IiJ; cufturaJ lUld atchj}co!ogi,ca!~ "'ires; "'e/,~tloli of d1imllg,Ues;

~:efl:n.iJ! sl ... Ib~~;i:sa ti,on;.. _ .~, ..

' "

IJro[ec~iol~ of freshwater kO!lii:lllolllS;

iJ.!owo{a,t PlifWei]rio'liI pJa<IJ;' ,

lI.ring dun"8 COmpJoli"" and -"lI of gas and oil '">11.; \:ell' aib,QrldoilI1:1,onr;

I"ig disDlimUing and sjlle com,p~etiol1.; r:ecr,3mitlll\~0J1 folt 3Ihil1do!lli'nel'ililj !'lind ullJse COJ;Jtrot

2.5 .. 12 In.adidil~on to the sn~tIks mentioned in pa-rnSi'.wp~ 25_8, I.tJ~ Llccnsee .'>11~<)1~ include in each Work Pn;)gmmmme and Bl!!ld'g";l tu br.: s~lbmill~' l"iilll~~mU}' to ;~llc MUlJflistef~J1 ;iu::,em'iliI1!JDoe with Aiiilnck: 6:'~lI1Id ill any iiUl1'1eri.4:mneJln tlllcl"'cto,.3'11 efl'll'imlil'iitlenUl] :impOlciD

: .

s[J[cJl1ent reiill:~jng ~l,} due work. te be ul1dertake;} .11~ provided in ~:hi.t[-d!oc1)J]nefU <ilIad!

reportil"lg OJii. wfllrk !b1m:idelft~k.enil1 accorda ~lCe wirll l~!t;: pl1eeedl.ng Wark Progran}lti:e.

_"

TIle Licensee "viU ,~]so, on <I liCguJar basis n:pOrl 110w CrlVi:rol'iI:IlC:l]rl;aJ UII",lllers21J1e beieg OIdd-resilSOO with respeet '[0 '~,titeiE!'w~:rO:l1lt1!ent .. ill l~ni,ac:1 Slalerne!1l ~illiI.A'! ;)Jill)' new ~eel:$

.j

rh~iJ[ corrie Ii~p dluring tl~e 'operatio,'lls the[ nlifij' ~O~ hav'l;l> been ,e:i:I'V~5<lged .1:1 Uil:e' tim e of tiTle En.".iro'!Unell'~ j!11'I~t Assessment.

(3) FeIrol,e."UIlJ Op!:mriions:<lre ~1J;'milGIiI OIU:t W:l an en:vj~rmu:ellm~~yacoeptaible aocil. safe .<I!1U"IDer 'C'OIl'ISistIDll l!Viit.bgoo~~m~£itiN.atI.i;ncli;l8ky pl'~cltice ndl af!!p'Hcillb~~ ~.IiVS. a1Uld ~!U Sllc]uopm:ad'O:I)]!il aE pro~dy lUonho'red';

~)'tlire' .Ii'em~qt ,uomp]cI:cd '~'~i!£OThmellil~llimpaot stu.tIDi>es Hire Wilide' avan!l!b~e: ~'O its 'emp!o'yees amtd t.o its Stlb~lilt!;ell!Seeslo' d'l':""e~Q])i1.dJecltlale ;and lJlr~er ;lifwa~~ ,of wl1.em~'IIlres: oam.d !mt~Uioos, of enll'iro~me.al pro:l:ectliJll Il'(iio ibe 1lI~ i,n ¢1m)'iimg II!Jn~ 'the PNJO,leu:m OpiliE<ltll1~~ &mid

I(C)I . all,)!' a,gm-eeme.ntblernd ~~m btllw{i.cn the ,tioetlslI;!e qd ills S:ijb]~~eJilsee~

:rem~Uing m:o till", f',~]~u~ Opeml:io:ns shaJ] 1l1Cllilde iIlIIlC ~e<r11lS set O<NiI: ill 1~:ii~ :~ ~M~ a:1ld: alllY ~tI.hi'i'sllJ.>:d 1llC3iSIl!i.oos ~_nd ;'me~ihoos for the ~ imp~emfmratiolil of(he .tioelllsee~s ,ob~.i!<JII['OlJl!li~! re:latiO\l~ ito the env~[-Ol1me.n1:

: ruull.de:r. f1IDi:s~"Cmcnt. ,

5. J'4 The Uoens-ee' shall, befo!{e e-aJrwyi~g 0 ut <lJiI,), d:r:i~~iDmlflJprep.lOO and :s~ilnll it for revi,e!." by the· Mii)'isle'.f ,!I_!li (!!~J sp~~ il <.'i!l!ld ill"t!, conrtiing~llcy p!lIl'1 de.s:fgIved to Il.ch~e-ve rflpid and '~ff"()clc]ve etttle:rg~lU:cyre~~ hI '!he eve.l'n -of "l~ '011: SJiJi II Or fllire_

;, I

Hir; 1'lfi:~UBUc Q,j> UGANDA ~

('J '. "'''<rgOhC}' .r··'<Cid'~1 ';';Oiog r",,~ Pot .. I., .. Op.rnlio,,,

,rr''''i n .!l ~io .nvim"""o.~ III. u_. sh.1! f",,~ .. j'h ""'ify 'he Mi!~i S!c.r ~tCcord;ng!y;

(b)

""Y Ilro or oil ""'1, 'he U"",,,. sI",11 "'~mp~y i"ll>l .... ", "he n'ei~1l-:arl'l '~Oi'i~itl.g'C'AIC.'¥ pJofl;!lUdi

2$. j,6 If !he Uoe",,,,, fiJi'" '0' '."Wly wj Ih 'D)' I.",,, """'.i""d i" d,i. Aflicle Wilhi" •

period d·''''''in<d by 11>. !IIi.i,lor '.odor.,,!' sod ""'''' 'h. Mi,"i ..... "'oY. all., gi';na ,~. H" ... ·,," ..... bl ••• IiC<>, ".J., ".Y "";~" wWeh "'"Y ,!>o ""' essa ry " '.,.'" cO,"pli,"oe wj,h '''cI.,."", ''ld ree o'.er. iioll1od;',,",y oil ... h •• ilOg """'"

.".h,e'io.: an ."'''",<1;"". i ... """ in _""",j"" .. illl ""h 'clio. ~ Ill. Licon ... '"ge,I"" !>lib ··"'i"~., as "'Y b. d''''''''''i,lOd' ;., ,ccord....., with S"", ••• 1.4(0) of A"" .. c ,",hi. 11 ........ , .

(oj "')' o'h.,.. -'Ill .. ")' o. "',id"''''''1Ig f"'", 1l1e' P<'->Je"01

Op''''i"". all;",;,~ .1,. "';;ro.",."~ '"<license, ,b.il '.te .",~ '«;0', •• "'oy b"l'1ml',"I "n" ....... 'Y ito .... ""'''''. wi,b good 1 'lie",. lio"o' ""'role"", i~a..o::v P"'''i.., i~ '.0," ou"",,, .... ,.,...

'110. Li ..... ee .ball OD III. ""I>i,..6"" or "'''''i'''i~ •• f fill. "Icro."""", '., an 'O'inq. ;,1,.,,,,,, of pa" .f!b, 'a........ A""

... r.. , .... '"'I '., , ...

(·)"'''O~ •• 11 """;-, .nd 1101 ••• f""'l Ihe Con' .. <:t II"" Or

i'Olinq"isliod ;" • "' '18<<0<1 willi ,boW.;"<r;. ''''''', ,or

on .b.,ldo.", or d.''''''''''i'';o~i"g pI',..;

(b) 'ake .11 '.'i"" "_"'Y I. pre""", h ... ",. I. h.", .. , lill: O. '"

prQPc,ri),of othc~'ii Of the C~lVil'O'n.QJ:e:nJ!; ... ~:d

(0) !ake·lI,<:tio" n,,,,,,,"'Y i •• __ "ilh (lood OilC,.rd Pro.li ••

'0 ",cl';01 ,,'" I'<"'abil; .. ", oil J .... di"lurb«l I>YPetroJ."," dCVdoPJ1wrM ,a~ld P:r:od'I!.IICliiOI'l •

... ~, ~ .i':._ ... , . _

, .

• ny dispute arising under the A.grcenlCJ1il whiel1 caDlll:Pl be settl,cd amicably within

Dt~'Y (60) d,ays~ shall be referred to ArbitrallQliIl ',Il't]cOordnnce willl the Unjh~d ;a(iuns Commi!>Sioo ((lil" ]JiI:lematioJlal Trade Law tV;C[ !tAL)' Arbi'tl!:;U;:olfl ~lles_ The arb "tlrn'lio:n shall be CQl1.dliliCted by lbr~e (3) ,81f'b~tmtots :!P'Pointed in ~curdance with the ~ld Rnles. Ule said arb~lmtia:1f.I shall take pi.!!!ce in tomlon. ngl3.lIld. ludgemei1il on the aWiu.rd ir!.;tdel:erl may be ciUerN ill My ecnrt baYing IrlStiiCtiOIil OIl' ~ppli.ca:tio\DI may be JI1l!ade illl S!1.Dch ,(:olllmtfot a j~d~c:illl ,2Ioc~t:ilin[:e of ie award ,;'indam order QJf enfo1i"Cem,ent, as tDiIe C1lL!Se l1lay be, The AltlilMlion ~w,am Hd! betitilil~ and, bindill,g OIl (be ,Parties. l'Olb.i!l Agreement.

ny' lI11~u~er 1[1'1 dW~llte ~et1,:veen dlJe GO\'enlm~~ and Ucensee ari mg under ~aJphs 5.41~ 7.6, mO.3. l5'.2. :and ):),.2 !ii1ay • at ~l1e eleciion of either of su.Gh uties by writ~en oot~(ie to 1he otffiuef. be roterrod. for ,diZ~"'miI~nalili)n by a ,sOle :~ to be appoiintOO by agreemetlt bel:\'!t'Ie~-n '!he GovemmeJi'l~ a:lid Licensee. If e Gevernm~!il~ wKl Li!ll:ooooe rmrn ~o a_ppoin[ '!he exp~ '1vimirD .sixty 1(60) da,ys kr- rece~pt of such 'rYri~:eR 'notice. eidler of such panies mary have ~dl t".Xpen IpainitOO by .the~heu I~sidlffi,t of !he .Insijtule of P,ctroWetllm (Londol1l)" me lIiill,e o.£eS;!tid Pl'Iesident :;,'baH be diisqlllaliied to act by reason of'ijlro:fessio.f.!81, lP~rrollil!l

soC:iat ini'ec_Mt, or (:Q,_'QItractwitm.. ~e p:n1:i!;;'S ~n dJispru1e Of' .hellr AftlliaJteCil Jimp81f1~es" the: :next Iliiighest officer foil" Ile time ibcins of SilIri.d J1i1istitI.IIt~, 'of :troielilm. who is not djSqtlilif:ied~3J1 O!c1: 11m. UBI.I: of saidhes;id:eru. No 'P~on aill be hrppo~mJl:,ed: to act as ow ~rt l!lIlld.er this ~mu.;ri(lj:m.:

IlilliiIless he shaN be Qlli3.IUied by edlllc"~l!o]'i:; experieace MId '~:tainl.ng '00

delemni~!~tbe ,5lII:bj 131::·t llmll~.te:D' in d~spl1lte;. 'Oil' ..

:i.f ,3m. drie Unrue ,of 11m:'!: ~pOirl'lltlneDt 'OlJ' ,lite ,any time beferu he ~ake.i> I:rls deteliil1.i~~t1iQn unclei[' :\!iuchm ,ap;poi:ntmoot. he 111:. or may have some interest of dmy which conflict; or DlSY conflict wIlh his fUI'1Cli,oiW. under

smell appOblbn.ent. .

L'e e::<pclil: sham ttlL'U,d)er his dooisi,ofll wi'l!i.in 1(6,0) d3YS after the date of this poirrt.ment, !Unless lite f~rtics otherwise agree. ~tl. rendering his decision, the pen sh!!iri do so withiilll the «:o:n~ext uf ~he pro ]siol'l, of ~hi::; Agreement, the ct j the s:mll,dalids of Hood OiUieiti P'r.u:nioe!>. The decisien of the expert m::J1I be

62

~ ... : ...... .

rs o,l!.n.r,,, pre";d"'; ill a,i. ""1ioI0,<o0I> 1"010/ '&.11 b. """""". 110 ... "ompl}inB

!"''''' or ,'),[, A8'''''m."" """Pi fOI' 1I<."'".,..,.r "'''''i"" d.e" for •• ' 100'S as '"pli."," i. P'~··""d or "ol.yed hy .Iii""" ..... (dooJo,,,,, or und","'"",),

" blookade, ''''bargo, """,llability or ra ri"";1l8 'of "I>PI~ ""1<,;,1 •.. <flo, "' imp"" .. by' ..... ; dec,.." "'!i''''Ho ••• <IV,,, in.'ruorioll ., ,h. 1'15'""""" ar

• r "n Y Go '""II"."" •• ;, Io.ri'y, ;"."'-~o •• '[v; r cli"'r<lo" '.""'''ot,.,., "0."1', .re ""'.klio •• , epldemk., '''''id"" ... ""1<, 1,0,,", dj',,,,~, "IlJf "'.r r.il"",

'. Go".mOlen •• 1 "Ile'e, 0, 10,,1 looiIy; ."", of God, Peril. of naV;g.,io., "."", ,rlJ"I"'~C, ligh,,.rny .nd .'boor ''''.'pl;""., Od~"",. ",e;o;~ .. "".dilr ... , '.]>Io.oio", 'y alll' 0<1 0, ca ... Ih, i. '''<OJIlIWy b',...d ,tire ""'!I1Il1 of '..,h 1'lLtly, ,uoh'

,I'"""'uim ii,," "" d r"",n ;'or to lb ee , U" ••• bo...., boi"ll horel .• '.lled OF""",

': III .he e."", II ia , ,;,J,,,, ,,_ h_o i dered .".bl e, ""'o.'ly or i. p ... ,by

",.. <, us os " o c 'IrY "" t 1" ,oblill"'u_ "1I<i<t lhi, ag""""',II, .,oc;h ""tty 81.,11 gi~. rd d'''''I, ofF"",. M'\ie .... in "';Ii"glo ~""" Pa~ ",;oI,i. -(1) ""l" 'Iio, "'"00, In '"oil e .... , Ih. obligalio,," "fille I';irty gi.iag ,,!,o ,,_ ;~." b. :d' .uriJlg Ih. """Ii"".,,,. of '.J' iD'~iJily '" ""_. _ SlIer. P.rly .1Ia1l "" .11

'Il' wi!hi. i', POI,,:, '0 _0", ""'" It """'"8il I' .... Mog._, rhe

'" ,by '''IOP'''i", of .ny "Hile obrigod"", un ,'iii, "'-..onl'oIlOl1 b. !Io1.),,,,,,

,d of ".ell <lel.y, • .h,1I be "'''"'' "'01" 6,. .I'~_ 'nd., thi. ~I f"r!L, ot of ",ch '.MIlO".'" 'or "tho ";"'l.hif ;;;,y';gb, <l<P"'d""I],"'~.,

A.IRTICLE, 2:1

2.9.l Licensee shall rn>ay an a!1nllal charg.e ~n respeej of slJIrface rentals :liQr ~he area stlbject to an Exploratsan Licetlce ,.or 31'1Y Plioou.ctioIll, Hc:ellcc g:mnaed hefcluJ1icle'l" aJS fb'llo'ws;

II <

(8.) annual 's'l!IrmC'e rental for the area \1I"hi.cb remains sUtbjl.1.:1 to an E/ p~or.uiol1, !licence:

(i.) First-Exploration Period;

USS2.5IO per s'll]~re kilo:metc[' or part tI:U!l[ieof,:

(ii) Second! Exr],lol.a:tiQI1 Proud:

US$5.00 per !>qual' _ kwlo1l(l~1iar Qf !p;a:nruhereof;

Omi) Thilld EX']Glc;a~io:ll'tJ'iiDCil:

USS,7.50 [pet S-QU31ie' kUofRetre: cr ;p-alil th~f.

, ' (b) AJilRoom £ooaoc reflta) i!o respect of 3 Devet~pment, Area subject ~ a ProdlJu.~O'n licence: US:$:500iOOper s([lpare kiilO"m~t[e or part (baoeoif.

29.2 Almmw 5iw.fiwi!, relltaJs fl<ill\8!J:le p:ur:sumt to tlilis Alitic~.;:shaU be paid to the 'Government in adl",!ll'u::e and witliJ.olJt ti'lIe!ImIDd l~oIl'lJ!l!llle-mc:i-ng with ~he dlare on whichtbeLioem;re or any TeQt'lwail th~f is ~ntoo and thereal.er ,OJili. each . anll' vem!i~ (If .slloh datte durili1gthe term of &aM! Li.oe~e.. No relbates of sw:mce . rentals shaH be made by the ,Gov;emment in re~oc~ o(ainy area \:\fil"iicYil eeases to , be slil-bjeC1l to a UCcfic'e mid-yea_r.

~9.3- °AI1:nliJ.al~ surface rentnls db lJIelt repFll1)6' O'lieJi cffitrges (hat ~ilY be Jevled for ,el1Dy ;into parts of the Licence AIlC:a, arising oarl, or.s~ecjaHZied Iland U8e, :suc.h as ml!tiOllkl~ parks. or nanne reserves, forpueposes other than Psmo1elinru Openrtioi1s.

66

THE REPUBUC OF UGANDA

AR.TICLE .3

Ag!"CCDucnt shall be deemed to have been" terminated if the Exploratin; ice granted to Licensee pursuant to Art[\Cle 3 and any Production Licence ed to Licensee under Article 7hav¢ either expired, or have uoder and "= "Liancewifh the- Act, 01' any relevant provision of~hru'S Agreement, .bee:: ndered by the Licensee or been ~awfuny cancelled or terminated. by the rnmcnt, but save as aforesaid s;ha:r~ conHnue in fuU force and ,effect so longas .see continues to Jrold, OJ" has a pending application for, a!uy of the sai.; -ces,

_.. ,.r.,!. __ .... i''! .. I _ ••• , ••

Government shaJ] have the right '!lto 'terminate this Agreement and an_ nation Licence- and Production Licences granted hereunder, upon grllm_; (30) days, written notice ofits intention to d~, so, if'Licensee:

, , "

fails to make any monetary payment."-requ~n~d by law or onder this. Agreement fbr a. period of. thirty (30) days after the due date fm' such payment unless Licensee' is ccntesting the obH.gation®o make such payment and has commenced arbitration proceedings in respect thereof pursuant to paragraph 26 .. ~.run which.' ease the period 'Of ~hiny (30) days after notice shall be counted from the .date of ~.ssuanCle of an arbitration awardrequiring Licensee to pay the amount in: dispute;

I,

! has otherwi se committed a material breach of "the terms and conditions of this Agreement or .any Licence granted pursuant to Articles :3, and 7;

. _..... I

, ..

. ~ fail til to comp ~y with the Act or any j~~ful acts, Re~latious~ orders Of.

instructions itiH'Jued by the Govemment"o~ the terms of this Agreement; or

l becomes bankrupt, Qt· goes ·:i'n.to_ HqlJ,lidati'Oin becauseqfiesolveney or makes a cempoeiticn with ] ts creditors.

" I

circumstances that WQuM result in. termination underparagraph .30.2.1 and 2~ are remedied by Licensee within the mh~rty (30) day period following the .:: ofterrnIDiination as afeeeaaid, such termination shall not become effeetive,

I,

_ltl,4 I.r the circumstance or crrcumstnnces llml wouM l'C?\uh ill'l termilJlllliQFI und~r

1)311lgraph 30,2.3 arid 30_2,-1 llrc remedied ;by Licensee \I.rj~hin mile ~iK!Y (60) d:;}y pl'riod !b!'lowin:g !ltlC Ilolice uftermination as uJorc:i~l'ildi or where-tile bre:a~h ~'l!1not be fcmedli(:d within ,II &ixfy lflO) ,JILl) period, Li t:J:"1 ee hJ:L commenced tiu:.wprks 01" steps IfI "'(;~!>3IyIO [cm.ediy such bfl.~dCh duringsucb period ,mild IS diHt;clillly c.of\liIDUI~ila, s1ltch \.Vo;r;!;;:S' [jhcrlr~cif, or, 1ivher,e II is otherwise rnm,o£silble 10 -t'em~-dr s,tlch breaeh, aJl,eq~I'lte iQ,IiI~pC;llIs3tiCln has been OO'C~'(lrl roo i!i:ooacccpi:ed .by [he (iiO'l'eI1Um~lt lin res):' ect thc~eof· wIthin such 5]X Iy (6U) d3JY period, slick termlillailio!ii sJmaU ]10:1 became

effective. .- -

30.5 If Iile circl:lm.sfance or elreumsiences dUll \1'Ould oth€J:"IIVwse resuit in tefili11namiol1 under paragrapJii 3Q,,2,] or 3.00.1.4· O!I.1C the :r;CSI!t'llt afForce M1:1!1j~Yre. lhell~el1l'li_i1filr~l[1in shall not tak,e place SQ long as. such Force Majeu:re continues ~L1d WI." su~h period th~reafl:er ns pl'O'I'ided In Anic[,e .28.

30 I) WIIiI.ere two or mt'Jlie 'PefSonsco,]['til~lte tii;en.!l~, du:is AgrecIlH~I1~ fllia,,Y not be h::,rminat~d;

3,0.6,.1 pursuant. to var.aJg"~-'pbs 30.2. I, 30.2.2 'OF 30..2:.3 ,abo1\l'e whr..'tie, in ~t .of a liability whiil::ltt iis: a, several lifllbility, one Of SQl1lie' only of the lJI~fSO'l1I!!ii c<mStitotingLiof!Mee is inlbn."adl of ~fI~ prov[!S:ions hCn3Qf orhas so falHe.d tn oornpiiarDc'e pro;yfded that the .'etro']~m OpemriolllS ,eontiflJue it'll aooordalWe w~th tlhe proll.isiDJilS .o.f this: Agree<!iNot.; or

:J,(~.6.1 pLlrsU;M~t 'tQ ~r~p·:It 30..2.·4, above, where ilil6 boolkm.plcy. I.i:QUlid:atiofl. w QompositiQn relates. to one (1,[ some Qnly of the per:solJs ,COIl\Surruting Liollinree,pm'rided lba~ :dle Pe'lroleum Operatiom; oon~jnLlic [11 ~ccordW1'Oe w~th ilhepwvisioiJIs oftbis Agreement.

3i1[),7 In any CilSli2 famng mWier p&agrapi!ll 3Q.6 abov~ *e GovennnellJt. su'bjed b) ;pam,graphll. 30.3·, )lOA :and 30.S~nay upon giving 1l1l!i.Jr.y 00)1 da.ys, 1WIIinefl I1Q:llce of :Its iRtenLioli to do sOI,tG:m1·ma.~ dre p'ofni¢iptlting Of Joint Venture lllia;;est ll~eil1. and ~n IU1Y related! Ucenees. of ~'he perso.n or peJ."SO]J5 iilll br-ead't. O'li whidil. have failed ill oompfis.ll~ or~ as tIte CUlS& ma.)' tOO, have beeorne bankrupt, gOfl,e into li<Qlliidatkm or made a ooll1pos\~~io:n ~s af<msatid. ("'the Defilllitin,g Party") bUIll. rlQ,tlli:ll!g ill Lbis :paJrugmph sball a.lffect m,lite rigltids and o1:ili'gatiolts of any other persolll who COI1S1i~utes Lieenseewhlch shall remain in fun fOKe 3!'ld effect.

,

""'ie,., "" d 011'<0" ""m", on i c at io", ''''I UI red @r pen"illed "."'"1000" Otamy ~"Ii."lh.1 P'''Y''''Y "coire 10 give 10 the oa,., 1'''1y s~.11 ~. I~ "'n'Ii,,!: in the- E~gJ;.~ I"'S"'8. deo,"'ed 10 I"". b""" proporly deliv.ted if .personally bo.ded I., an' '.,ho,I."

'''.IlI'' Ij". "r the P"1y r,"".hO!~ j" ''''''ed or ."",1 by "''g;'lered .i"".il '" by , ea ble, or I"x. ~~'.p, as 0'"<"""0 Jm>vided hordo, 01 or t~, Ih. odd""" or 'uch I'."y to. wh"111 nd.-d as ;'1"".lod bolo,"" or 'uch "'he, ."~_ .. as ony r."y m"y 6"m U"'" 10 ~m. g;Il .. te by notice in wrilj]i1lg [01 tbe other Plrty~

Jil,hn i ~lI)' of Ent.'\I"gy and M~~l'~11 [l:e velo prnerH P. 0_ Rox 7:no

Kam1pti,'li!

UGANOA

C(i!J!i'1,rrliSS:i>Qi\I~ fillt.elll:tm~lI_lUi1 E~pm~la~iol1lltliliC!! Pm~lrctio:n

.. ~ . .

" .

!~![e OU &. GOIDS Li.r:lllih;:d d Co~~rf

~c,rer Pon

t'm;cy

n !leJ Isl.JItids, U. K.

144 H») r4S I 727664, F'[lx; i-44 (0)' r,(U~f '724662

j

.-- ...... -- ..... -------------- .... --.- ...... -1;----.-.".---- -- - -'" ...... _ .... _-

,iierit<lge 0]] ,& Gas [,lmllil,oo u K. Rep're~uUh'e' Offi~e: t l, H£.Il'bOUI' 'lard

(:J~cls(.'la 1 klll'bo1,.l:1f

1-0000]1 SW 1 0 ClXn~~n~,;illfId

ForENERG'Y AFruCA

CO'mp.a~lY Se£"retary

Ef!~ '!\fii1::3 Ugp~a Lim:bed 5 Pa;rli1JmGn~ Squatre C~U~lO\vn

~sl:e; orMan

[M91LA

l'd: -M~, CO) ],624827310. Fax: +44 (0) 1624 82nOl

EneQzy Africa Limwtoo

2: l!ll! Plocr, Me"lm:D:po:~~tan <Cemw~re 7, Coen Steytrncr A'!i~eililU'e

P.O. Box 554.4,

Ca~eTown

Republic ofSoUith Africa

l'e~: +27 2W400 7600., !f<liX: +27 2~ 400 7660.

AR1'l t. '3

AppUcablc La \\l

33.1 This agreement shan be governed by) interpreted ;;'md construed in accordanee with tbe laws ofy,anliu.

33.2

H~ tonowing the Effc.ctivl! Dale, there is any change, or series of changes, in the' laws or reguJatio[ls of Uganda ~ hich mlll!terialUy reduces the economic benchil! derivcU or lobe' tlCI ~\j~-d by icensce her"¢under. Lie ... n_BC mlaiy nolify l11e Go cmmcl1t Qcco;rdinglynd ~.he,I1; .. .f\e[ tb~.Par-ties shaU meet to negotiate' in good\ fa.iUl and agree UPOIl" the 'neceSS:ary m~difica;tjQI'I!S to this Agreement to restore Licensee to substantiaUythe same overall eeosomic 'plJ'sition as p~vaHcd nereumierprior to such cbange(s) .: m Itfte event. SUIt tbe Pan·e.G ,a.Ie ultlable 1:0 ,agree thoft Licensee B ceo lomic ben _ 11 Its have b _ en llateriaUy iI.ffecled and/or are unable' "to agJ"Ce on the nlodifictions required ~o restore Licel'lwe \0 the sasne economic position B\S prevailed prior to sucll change., ,whbin mnety (91)) days ofthe receipt of the notiee referred ;(0 helel nabove, then either 'a_fly may refer tbe m,atter for determmation pursua: to pan.ISI'apih 26.1 ,

..

• I

,,'

73

--------------------------------

111 ~S AgreememBI'Ddl any oonfidei1ltii~~ ~ Ilrforln a ~ iO:ll of a Ur)l' Pa lily ~-treto which

h~omes :knO\\'!I1I to the ether ~fil.y III t"onneetiolfl wi~h dl.e pe!1'u['m::mce oflmis j

Agrc~~l1cm shall riot be pIJblishet1 or' ,(!isdosoo to I:hliril. panics wit~lO!lJ~ the FQr!'IiI,er

Party's !,l.1ri~te:1I"J eonsent, acep:!" <IS otherwise pmvide.d herein, and PJ1ovi:J€!d lloweV'iB[ tw-mul such O~bI.T P,OIlrty motliy c(iW!~n~ILil1k:;Jle c1J:tlt:idem:ial infoi:IiJrgatiOI1 to III;lg.i!Ii~ counsel, accountanrs, oil,tiler pm IC&sjo'l1ial (mnSl.lrl~:lBDl~. II!.Ifld!l;!.:jjW~irulCfS, ~emid.~rs. ~g.ei;U~$.

~Ii·cellisees Of sl1:ipping eompanies lOlllu;~1 C.x.i:cDl DI{~arry in cennecnon '!\riiIJl. this Agt'ce:m£nJ,wirh the (fbHgation of~he'~E1ie£ I'ece:iv~"g. suc!h ill.FoiITli!,atiton l(l maintarun conrflderUll1Uily, O'r to 8:ii1I ab~(;}I' of i~:l'a.e g<lY'en1_DeiIU of ~]je COllil'ltry of Licensee having ;;)JUJt.horily to r-equli~ su.t,~ ~isc~los1lJre.

I

The l.eDil!n;S 1·,co.nfkle:nti,EI~ ~rnt7(lf.ll!'l'£lli.Qill"' as used i]c;.re:ill1i shill! ~e.aJ1l ~l1fQmla;[i(}n kle:m~i fied as "coI]1]fideJ[!:ial"' by dllie Party orig]f!!lIrnly ila!pooses$i'(lIIIof it and d~.scloiS~d to the: other rl<~]Jly" 'elIic]udjmghiUfal1iiilot~PJ1!i pro",.i01lU;~' blOlli!fllm the l)~beE P.~rty or il'lfom}a~iolill. wi'il]cll ms plllbl1iJ::ly mO'll'l'Jli (eroceptlill)ougb d1J.sdosl!Jl_R; ofthe otliter Pa.Tty in vi.oll3!la;on of 'lffitjs: A:I'1il'ide) Oii fnfG:mt.!aJtio:n ~naloom~ iiaito 1'1m:~ po.s:ses13]on of :iltu::itI. (lIther P'alIy other than through a breach oflhi:s colllfid.l]~1:.iarnity lllud.eI1aJti:mg.

Excqn M Il)th~w.ise pro,vrud.edI [11 A:r~i~~~ 8, ttl!!i oOlflfidlfll1it:i.I)]:ity obligations. of thi s Arne.le shall exphe ~Jpoon rel1~([I.I:ishm(![l1: ofr]te ,~OO'3 to whieh me illfomlaltiotl rel'ame;s.

37.1 Any review" proviDon of data o. r<q_" fur illiiormJlli,." d .... r O!h"""'!le Ifom llle LiCeJlSee by the GOV(3;.rnITIeJ11 or ,flppr:ol;!,,.1s; by the Govemnumll Or .its NQ[JiMJlee' under ~MsAgrceITIem is ~o~e]y far Uu:e; .mf'OrtnllklmJ. of :the GO~mtnrtem alnd ~Is S'f![jsf .... ctron tiul'l [fie H;qiUlirel1il'e1i~s ,of tih~ (fuc\limu~i'J~ ,a'!j set fb.rth herefn ~!!:!ve been

'. ,s.E)[j,s,iicci by d),e L4censee;.. By Dl'ldiing S-'!,!!,cih :rev:iew8, requests, Oil apP'lO'\fiOliiiSi, the 00,"",,,,,,,", make .no "''''''''''oli,," .!id1Ihe Li"".""'ill!oIl ill.., ""'Y'" "'P'.""" 1:0 third pa'llllies t~~( ~1IJ!ch Ir(':views, requests, '~pmvab or o:thernliise ~ p.roofof ithe-

eCQIDQrniic and ~e:clll1~c3J1 viabiUi:y ofllleP,e.1:rio]etlm Openti!D~s to be Uindetil~k~n by the U!Cellse~.

37.2 Th. GO'·.l'I1menl or.all no; b.~abl. 10 til. Li ee usee fur and th~ Ue", ... ,- ,1,011 de:fe.nud ,1Jnd ][ldeII'l1J!ij~ l~t OO',e~elU· fiom uy cial_m" c«St" 1015'S" d'amtqe 'or ImabiUty arisi:Bg out of alDy 'Contrllry fepr-e~!llJf,ado!1 by die LiOO.iJ.SCf;l~

37,3. Th. Lie", see ls 001.1y resp0;";bl. fur III. ee ... omio .. d I ""hoi .. I' Iloambilil3'. ri2'lili!bil~ty or ,illl1 C,'1:!~ of dl~Q'. reWi~lB.tiOfi of m~ v:ilbi!!ity '0'1 t.he pe!roJ~I1m produ:Olion and p.r-od.uctfO.lIlIa(:livi'ltites.

, .... "'j •• ' .. '

ThT '\'lTNf.;;~S WH F.REOF. the Pmie!; hereto ba\'~ QIlI.ISOO {IaU$ Ag:reoijj1et1t prt:pared~f1 the Repu bI,ilC (If Ug<lndO'l. i 1'1, the: English languag,e to be ~l'\;ec!Ji:ed in six (6» ,origina[is b)! their respecti ve dl,]ly lI!Ud~ori sed representanves as. of the dayand ye:ac first above ""',"'Ilelt

S:igIDl~ for and 011 b~lf of

I :

By: --~-.-~-- --~ ~_ . ~ ~ .... ~ ~~~;;;_'"

nON. S\'UABBlJJiI;mA

MmISffiR Of El\IER!GY AND MrnlER:AL DE'VR:OPMENT

I~I~he presence of;

Siigoa.tllre: ~ ~ __ ~~ __ ~ __ ..._:_ __ ~ _

; S:i~m~:._ ~"--_~ ~ ~_

S~~:C~ ~ __ ~ _

Name: .~

~---~--~----~-----~-----=--

Name: ~_~ ~ ......... __ =- __

Si~~lUfe: ~~ ........ __ '--- ~ _

,Nairne:

~--------------~----~---

18

-,

•• I,' ,

• ~' I

! ~ ..

iIo~ • I II II

_. _ _." if:l .- '. .1_ .. ' !II.

,\rca 3A comprises some 3,71 ·I-} OilS \[8 . outer margin' by a Cl

:al\ points and co-ordinates:

r •

I .

Jganda / Democratic Republic 30° 15"l~ to

30° t 5'E to

)to° 25'E to

30° 25/E to

30°' 30'E to

30° 30'E to

30° 35/E to

30° 35'E to

.30° 40'E to

300. 40'E to

30° 45'E to

'. .

3· 0- ·0 45· IE''''''

'_. c ..•. - ... to

, .... '~ fJ.~.l .. p a· . III . "'I~,' ~ e e ,I!

30° 50" E to then'

oint due North to the UgandaIDl I

... a 3A excludes "the retained area ises some I 1.0 souare lrtlnrnof. .... l. ...

• Mltiltskt or EIl~rgy a:ifld! !\lljIii,e~'al11 lJe¥elopnle;~~ll, j'lt.il"illam -ii-e-p-O-\-:¥-'~i-;5-' -C-g'In-' fj-,e-rrc--'-d-, -IJ-po .... ,. n. me ~y Section 8 of tlle Peuoleum (Eltp:lorlil!tio,l] and

!Jictioiml) AClcl"baiPter W 5-0 L~!ws' o.f Ugand .. , 2000 fdlc 1\0[") heIie'by ~!ll 1'0

__ ~ ,<l, iComparJiY duTy orgarnuS('d <l!lld eXlst~ng~lIinclelr the laws of

~-~---' ("Ucefl8'ee'~ ]11is E1':plol"atirolil Licence ~~)r conduet E"'p~ora'!jofl juium-: ~:\I'ith]jillal~cI "ji~lmlf'CSpecl 10 the Contnu;:! A~ descl'ilb~"d 111 111,(; P:t'Ddl~C~irO!1r ~ - ilg A,greem~JJi'!: entered [nlo- by ,001'ld b~!we~l])e Go;v~mmenl of dl(l ReplIDDiic of ldi::ll and Liree['lSce, da:l,ed____,__. -.200~,_ rtl'l~ A.:grec:melillt"), ~6reby ciQl'lfel1:i~ 'U!ilOIl isee mfue exclusive right: ~l) explere fOJ;" pe!ml,el:!llil iin tile said CO~~[:~ Are.1 ,nu'l to

OJi1l, such op~:E3i1:ions and exeeute such works as Ji!ooessary for rffiill.l pllrpo:re for IlI1.cmD. ~---_,] years, fmm tlile Efrectti,le .~.I!e hen..~f [subjee~ to relJ!e'lIval] lin .\lico:;n'l13!11u:::e tile JJ'ruvi<'l:ions of the Act and due terms ,[IlJdoondiUtio!'!s of SSiid A~m6l[l, wn~ch ~ ,!lttl in:ltegroJ p~ 'onl1~8 Lieenee.

'YrI'NESS WHE,REOF, I hav-c ,grn'lIDttxi. tlru~ Ueenoeaf.Qresai.d wirth effect fmrn.1

--' 200_' _ ::ulld set om my ~aT!d and! seal. this ! &yof 20,0

"eJiipt:io'I1J of Exploratiof.! Area!(s) } of EJ1plo:ratiJQ:n Aliea(!:i)

SCI

1 I

.,'

(;1' The UOVCl1l1n]~!H shall h .. rve ~Ilc light, (!JIP0.ll Jiin0en (U]I dil)'fl~ prior written notice 110 Licensee, to ~lIdl'[ uireclly orthrQt!~ an ~l1dePe::ooein[ Um,1O:Qllt'H~I:, ~]ti is owncost, Liccnseiis' a!! .. xcmn1i:'s· andr(lCQu:isllla:iD"nlliaimllcd ~]I, reladon ~Q tihl(; Petrol curn Opera,! ions csrrled O~~ helOC lirnlde;,\:vj~h respect ~,O' each Cah~l'ltd!lr Year wilhin lw~my fQIl,r (24) Qj~etl!dla!t" MO!1tffiIDs a!f'lcr theelosare of lile s~,bject yemls D(-COlJn~. Noti!C~ of !:lily e:ux:,pIliiOll to Li,~e!lS~~'ii accouues 'Of .Jny C<1Jiend<!lf Year rnus;i: he ntJ~ij~ed to l:ic-enSiee wHh~n t!hjltily ,(~O) COl I ender Mo~Jhsoft~~e ck~sine ofdt~Sl!.ibjooi: yt'l .. r'saccouats,

FOir purposes of fmdliling,I'he ·'Go'vemme'.l1Jt ma,:y examine ,;!"il'ld verify ,iI~ r~"SO'!1ilblc times 011 chi!lr£es ar~;d crod~:~i!Ol1e[al:ifig to thcP.enl'lc~m 0pCI';;l(iollmS such 11£ beoks of aCOOl!lnt" aet.otliflHi~!Il eJ1ltries. :maJteri3!i. recoeds and in'l;',en:torics, \'iouc'h~"t. ]lOiyroll:s. h1iv,~ic>e5 aiodamiy o{~1iIer dolt:l!Imllellts" co rrespendenee and rc:(lords ~:coe~!lairy ~.Q!llJ!([it and. verifY the' 'ch:a.rg,es and credits, Fu:t1]-IoI~rUlOm~ the all:c]~tQ!.'s 8~aJI have U'o,e liigiu. iH cOIll~!e!Clj(l!1! with such iludil ~g, \1 i:si~(, and f nspe~t atre8l:'ilOMbrne time:s a[~ sI~:GS, pWt.1Jts, lacll itles, 'li7V<lrellOlIS';;:S and OmC'ei! ofLice:r!Jslee: dimctly 011' ~ndilru>GU)' serving' ihC'l~atrolc;tll])!J, Ope.l"iuiol~~ ]1t1C111.I:di!'l,g, 'Vis;il~ing pernonRe[ assoc'h,uedl will:h 1]i1,OSC opaml~!ons.

"

!'f the Gorvcmmcll!t desires v€'rifica!tioll of' cl~I'!es. reprUeiltl:i:11,g a proportiOI1ill,G; $h~lI'e . i IL tI1te,. 0051.' ,of. Liil!::em,et'-SOldi.'I!'~t~():S (Jlhe.~: than tOOSle ca fried out lUla:e1,.mdJelr, lt liTI~yreq~I~f'e' s:nlICl1Iver:ificaJlkrl1.to ~]w G)!lG<rU!t Licensee ~s a blete p:rese:Jrru1 the requ~~D;Il:l!brmg:ti{Ul witboUil. i:nfrin,g;!liIg ihe '!I;:onl1dIDlJtia]o:i pmplfietrilll")i' n.llure (II! 8'lD:ch~~rQRmlati.,olIl" I_1i! the ,eVG:Dit 'liIDlt sueh infl:ir'ls,e:[I'IIBt'!.~ \V(I;uid OOC1Jl!if. ~J].e Go¥CfN~e[lt .m~:yr'Gquire Li,ce.li1l5:eO {a:t Licensee's ,ex:ljl~ru:;e) to obtain an a;1A(j!~toortificiH:e from ilniilld!e'p~em elile-I1flal' audil:or (if il~~em~,tiil)na~! s[3~ing {sGI~c!bed: Iby Licensee and. at1cep~ab~~~n lhe (JOV¢LDl'!i!!em) verifYing such dl8.fgIB(:S).. If Oov-emme.m

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desires ven,£kaJtiOIil of d~rgles, fro:~ Amrnitf~es of LWeRsee, Licensee SiW~],

upon the Govemlnilleul"s l'eql!!les;l: II!t~.d <\It' :Uc(;ijj$eets e}:;pmse, oIbla.l!111 nn li!udJJI: een i ncate ~o !>lIC.~l, effect frol1i!~.!te: s":~:tutory !3!udiJl:of'S of ~JIw:. Affili~t~ CQI1C~rne..d liIIUCSl]]]g ~hOil ~ycll ml~, do DOlt IDfic'ililde a p'rofi~ e]eme:illi~ 00lid. haV',~ bC'C1l OOI]S~8tl'.J'I.!]y ~lUl :remJS(!I!J1l!1!bily appUed. HOillVever. ~i}l.e perceill!f.I~11l :rares ~n ;bc ~p'pHed pIl!,rnU3Ilit ~:o p~mgr~p]~ 2 . .5(1b) oif th~s Acc(liiljlnt~l1g rliOOOdu~e wi II not be, ::mlbjectro ~,udwt

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TIiEREI~ euco LGA" ill A

Ch) The iovemmcnt shall rna kc every reasonalblc !!:.flol'il to conduct auc its ill a

manner, \~-hich wm rcsuh mn the mil'lli'mulJ1 of hlco:rnv4;ni!cm:elo ieensee. l.i'l"CI1S!I;;C shall III'~~.kc every J!e.asonable cffon to co-aperate with ... he Govf;l\nu~1lcf1lt and wts s( tllltOry auditors Qir th!e indlependenl 8~ditO!r!;.,3s lille: case m.ay be., \lvii'll pm' id~e reasaaable faoHirics ,;md assistance, S.ubject IlO the pro",isions 'f 'par<l!~mpll LS(e) mleround!er oniy, (line audit may be carried Qu,l by (lie GO'l!'c.mm.e:nt in respect of the accounts for any singlle Cll.~endar Y car"

.A.ny: overneient alud~t ShOl,~~be conlprn~'ed within (o) Calelldar Momt1'ms of its cemmencemcnt. At: the~c'Ondusiolll ,of ea!cb audit- the Governmenl' aDd Licensee shall endeavor '10 jiettle olJlltslanding ~ aUeTS and a written [if4!)l,}rt wm .bi~ cirelW~a~ed. tn. aU 1pMiIies wii1lbaio ·dttee (3) Odend3JM'o:n~ih_s lor the o(!l!J1clu.sio:t1l Of'lef;ldlJ 3JU(Ut. 1l1e rqrort 5'ha)l i'nc[u:ide al] daihl)S, lI1ri.5~ng fifo. suc~ audllt together witb 'COlJ'}M.enlS pen1inent to tl1e opern~io.D 10J the aeeounts S!n.d reooms. licensee !ibaD Mp~y to' Ithe repotll ill wriUncg as SOOJ:ill ,3£: possible lIift:d in amy ~¥,oou mnl .l\ateld:wtn three' (3)1 C2Ilmdu M:o.nthI'J foll~owit1g MQ0jpit Olr Ulereport. Shonld dtI,e GOYemme!11: consid~wthat tlie Ii!port or rep:fy reqlUllFeS fUrther inv~stiJ;I;rii)n (,If ,allY ~t.ems thete~n, tbe Government shan hlV1c lu:e 'rligiht to oolltduet further isves'tigruiOlls mn re~atl@~lto ,such i[oolnoMitilistaJlding 'tbat, I!h~ saidperied oil tWIMty-enu.1f (24) Mon~ihs m y have ex.plr«l..

S!I.I.'(:;]l further jnve~l'~i:gatioo shan be' (om_men,oed withlin tbi\rty (30) days 3f!:d be lconc~udoo wiilhin 51ix~ (60~1 darys o,r llhe receipt ,of Reh reply ,ami the report related, till) sll!.IiCh ftl~e'f inYesription $J:wtU be cir-oulllltoo. wiU:\in Jilmety· (90; days of the ooJlcliUsion of sucb filll1:I~ei-invIl!'Slig~tiorl. AU adjmr~tmJen:ts resulting .from an a.udilt, W!l 2!!feOO bG'tvileelil L' censee and the GO")MRnum~J sha~l be .made prill'mp(ly !by Licensee ,l;1u[ befep@,noo' to 'the Government. A~)' umesolved dispute arisin,g in connaction wid} aD iludit shan be referred tOi the Advisory C~nnTIJiiMee u:nd iif liot resolved thereby :s!h8!U be r~fem:d for e.~I)C'rt de1orruina~ion pursl.l.i\ln~ to paragraph 26 of tile Agreement

,.

W[t~10url:lJrejUlrlce te the :liinaHty of ]1UmeL"S. as';deooribed in sahseetieu tS{a)., aU docnmmts ref~lTed. ~Q in that :s,ub~e~tioil sh.all be marnmawlIlloo !by " -the licensee <lInd nmdle available for inspecli~n by I venlment fOT fivle (5) Callcnd1am- y~jJrs foUowing their dale o(iJSSUf: ..

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(l<) .. "\ II infnr:lI1:llinn ubtai.n,,"ll D} the G~"'l;rm;l'D1CIli~ pursuasu h) tht:. :pmvisi'Qfi~ of lhis p:rr:J:gr~ph U ,) sh.d~ !:)~_ $li:bl~d to the Qonfidegml;[i.~Juty H;:quir'~men[l::;; ~P~'cJ fiil't~ i 11 p:uilgmp i I ~ J 6 .. 1 and 36_2' o®:f t1][S A.gJ',oeM1!etlt'"

i F I

Ali booh. <lOC::OUnlS and records :i5b~1I he: p.J'q:wf\Jd on an acerua] basis, Cl:)ln'or:ac:~ RCV'~bll,_lICS sha U be anrlbuted to the aCC(!II]iI1Iit~lg: period in which they are eamed, .;lIul costs and O1xpcnscs to [he ijceolilllUii[1g [perio<ffi in which tlle:y' are incurred, without uhe need 10 di:Slo'nYlJish whetIDJ,e:r CiilS11 is received or disbursec Jn L'fllllllt .. dion \V1111 <1 p!i!ri;~,cuhu'lri:lID1sact]OIl" Cq:SlS and expenses shall be deemed '00 1:,:1 ve b t:en ]~cu~'ilted, in the case of ph!ysicam items,iln the 'ilicCioumi~g peiiod wllit~1J'Ji LlC~n.SCC' 1.u::(lILilires: ~iU~ ~ffi~lcrl,;lf). and ll]1 tl'l0J case 'of services, in (hie acco1!l!nli,n:g period when SIJI.i.c:h services are performed,

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E){ccp~. U!ll nUll)' 00 mhc.rwis.e .dg,t-eedlin Wnl]~g between ~m]e CO'Vlem.m1~ <lind Licensee 01' ·!lJS BiIlaJY be poolo'.idled ill Article 13 ,of t~'Il Agr.el!l'l!l!cm!." aU tftl1l1lslC~io!]'IS siving rise to re~nllIGS~ C.JO\S;[S 'or expenses undJer tlii~ Agreem.en;[ which wi~] be credacd or ch.:SJrgai tQ tE~i\i: books, a:C-(!:Ol!11ItS., flroO,rdiS !lin.d reports p[\ep~lled, IilrUII,UnlaIlIJiG'tII or 8LJ,hm[lIiUe(i ~ctGlliin:dc:f' :Sihal~·be c~t:lJdl!!.cted at iiMln!g, lfmgilh or Oill. SIIII.c:h ,3. basis as will assure thet aU such J1il:¥e:!'llJes. CO'its QI' 'expenses: wimJIIIi(lli[ be .~ler[I~.]y hi ghcL" or I,Qw(l1' > ~s~he ease 1!J;ruaylDe". :tl:ian WQ1!II[d result fmm a tl'ansacl~on eond uered ;UflrtllS Ieun..S1,hcn a com!p~t~tive b~.s:[s wHh. ~'h~t-d pf!"i'II~s+

To [~le extent th,n eosts aJm~d exIfJ'OOSIf-S BIN ~nc~nie(l by Lieensee in r.e£p~c1 .of actrvi l[l3su~hllich ·wQuid omly hru pan qooll.fy as Co:nnct EXpi:]'IDses here'I!!lJDdier" fl;l!Ech eostsand expenses shal ~ be alleeated to tJlt,e oook~~ acccums, recerdeand reports maintai ned hcre..ruJlldar l~ru sucJ!ru I ma:m!l.eras 00 aV(l~d a:ny dl!.!ipLtca:~~Oi1i of cost, ItO t~ir~y end eqluita.bly refJ,ec~ dhJ~ (10sts,Utriibtlif",~!ibleIO Pe,1im~eum O]le[:"~Jilam. cflim(,)d out 1!~cr'C-l~~]dcr and to exelude any costs ~!Dld expenses which sho:lIIIM. (IIilBe.rwise be 1lI1~IQc~tcd ~o those a:ClHvijl[ies\1!lhkhwo~~d not oO'mHitntePet:roIlllum O'per:adota:s

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Cia ssiflcation Definlrlon and Allocation

l'ontract xpenses incurred in connection with Petroleu r .rcunder shall be classified, defined and allocatedas follows:

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l~xplo.ration Expenditures are an necessary, appropriat,€

allocated indirect costs incurred in the search for Pen Discoveries in the Contract Area, including;

it ...

(a)

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aerial" geophysical, geochem ical , palae topographical and seismic surveys and studies a~

(b) core hole drilling and water well drilling;

(c)

o.

I (d)

(e) -

I

labour, materials and services used in drilling

finding newPetroleum Reservoirs or for tll,e 'p extent. of or subsequently ... p,'ftl?4\lOing,. Petrok discovered provided such wens aredry or are ,otl producing wells;

.

j

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facilities used solely in support of these' .purpose

and purchased geologica'} and. .geophysioal inforrna

I

a portion of all . Service Costs (as hereinaftp.f Exnl()r~t1n'n A- --_ .•

2.2 Dcvclenmem and PI,"Oduction . 'xpemditures sh .. 11 oO!']s.iSl of all necessary, apP"'I)p,rlaicand economical e:.:.rH;:nd~lUJres (other than I hose rel:errtdio in pm1!graph 2.3) ineurred in Devclop:mellilOI,e;lI'atI(Hns in. relation '0 a De\o'elop.1lI1~1Il )'\ rea indoo~!1g:

(a) driningw,ells which are ODlilj:ll]e.tedas pn:~d\lcit1g wens, and drill~ing wells for purpases .of J1l1OduciUiij a Petoo,1elillm Reservoir already discovered provided such well are completedas producing ~,;'ell s;

'.

(b)

comp1,eti:nn.g those' 'wens ilescribOO in l)aLragrapilt 2.1(c) by way of installation of casing 011' eqlJipmullt or Qthef'l!;'~se aBer a well ih.a.s. been drilled TlOr ·the pl!lIpMll of !bringing the '\'Vel~ into use 85 a 'prodllCiIllg weU;

. . _

(I:) the costs of field faci~i~es il'l.-Ol~d!i,ng ti,eMga~II1£oring s.ystmmms"fj~td, prodl!!ction and ~rc.al:m~t lm!i~. wdllh.ead equipment" subsuT:i£aoe equ.ipltleJlt~ Nart~:ml Gas sep.arotio~ fad IlitiJ~. enhanoedreoolVer:Y 'systems, .' onshore. pta:tfOifmS Petroleum s10:r~ge facil tilles: iJm thefield ad rela~0d faciliilt;ies,. and field acress roadls (Of p:roduclion aCli.\,mties;

~

(f) ,8, pgrliio:~ or.au Service Cos;~ i!!~tOO. 10 tll~De:\le~oplnelllf O-peU'ltiOllLs (~Ji1 ;<!!ll equitSib~e 1b~i s ,and ctllmistently ~plli~d;_

(d)t the costs of tmlfl:S(l<lil1illtjtln~ f:a~mties rnsroUed up to*~'te; Delivery fo,mt" inclw::li~ bu~ not Wll1lUed (0 pipelill1es. con~pl'@ssors, and stnn u ~g-e fucHibes;

{sJ, ;iii portien of ~lJ Genera] and Ad'miniiSh':altive ENiPeJi!se5. ,aHoca,ted ~JI) the Deve~op:menf Opemtlort' ilOOooJ onp.roj:ec1i~d 'blll.dlget eX~flditu!res: wihiicib wm be adjusted to :IlCfll3ii e~pl:ndi~l!Ires al Odendac_r Year end; and

(111)

.. ny Otllet" expenditure i;ii:icuned til D .vcllopmeuL OpemliQns prior lome 'commencemem {)f GommercialP;ro(iluction ~I!l .~ Development Area, '(i'!hQl than {hose incurred in re:Jpeetof_ o;per:a~onii .. cilm.,ed out be~nd the

Deliy,ery Po~nt ~ .. f

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.,iJ Operati!lg EXPM~ are nil nooes:;ary.~prij1)le taJi:d '~1;ol!nical expeaditures : illctIIl!Too in the iPelTQL!lruIm, .• Opemriol!l!s Ili~reu]lder afh::I tho sIan of Ij1.0 'Commerc'al r -Production ,(bt!~ irliDdud.ing int.ling~b]e d['iin~n,g cosss ::iilu111' as, bat lmiort iilmiltoo to, labour.

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i'l~) una l~J and 2.2(f) and (g) above; Operating Expenses shan n. riff charges, if any, imposed by the P:i;~'eline,CO:1llPaJly.ass iciated wi 'Petroleum from. the Delivery Point to the seaboard termi tal point. 0

. ,

. Service Costs are all necessary, appropriate and vconomieal

expenditures in SttpP011 of the Petroleum Operation: including warehouse, piers, marine vessels, vehicles, motoriscd rolling , fire and security stations, workshopa watee and sewage pl, housing" community and recreational :faciUti,es and furniture, t~ used in these activities. Service Costs, in any Calen.Iar Year sh <costs incurred in such year to purchase and/or con.truct said i annual. costs to maintain and operate the same .. AU Service Cos allocated as specified in subparagraphs 2. 1 (e), ;~.2(f)and 2 Expenditures, Development and Production 1 .xpenditures Expenses.

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G'cllcral and Admlnlstratlve Expenses

AU main office, field office and assoeiat :.l general a' costs incurred in relation to Petroleum. Operations, if limited to, supervisory, accounting and employee relation

~ - ".-~ """~ .~·".''''II.· ll"~ ......

out by Licensee in Uganda. '~" " :

(a)

11

(b), (1)

(H) .

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Licensee's Affiliated Companies' p:)rsonnet an( (other than those otherwise provided for in paragi this. Annex) incurred in connection .. ith the Petro carried out hereunder .. and I

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Reasonable travel expenses of such Affiliat

personnel in the general and. adm ~ nistrative cat subparagraph (1) above, in C~nti.;ctionwith Operations carried out hereunder, '.

92

~];I C0mU(l Tn. ,~nld AI lo "1;~bllC Con~r.a(:t IE.1(P<ClIl!dWtUF~

... n _ __ ~ '"'~

3.1 'rall Aorcolllntil'lg r:ril~'c~pl!e,'Ii

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.lJ1CQIllC Tax sha~~! !be assessed on t.tl.e basis of ll1_e T~xaiblle Jneom e of all 'ooJ,1J1Jalltiollil!Sj,.:iIDdi.v:idllUll:s~pall'i[.ne:rs" je inl~ ''''e.J~tlll~. ,OI~OC i~~es Ol!' othcr crui tmGs COifl1!lp:ri:sifl!Uc'~.I1;!i1ee from P''etro:Jle<1!lL1Tl OperaHons Fie-IeUlldeli if! 8:Ccoro!J!nII!ce wilili IIJ1el~:nvs of Uga]ni<ll,

.3 .. i.2

I,

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Income lax. in each Tax Y.ear shaWl be a~es~ed Oil! &~ ~tlIsfs o.f'dle Aggrog~(e eOifl:~r~ct R'~:\!ienoos clerliv,ed fr-Q:DI:1I" a_OO.aU~w01ibl~ Contrae tExpend, t!ili~ Wl~i;)'liUn:d i~,_ ~ihe Pla:lrn](ilum 0iPera~il!l;lil1'" carried O:I!U hei:'ie~acndef.

:3d . .3

.".' " .. ~ ~"."

OilJlirJ.f:Il~ntc;i ng wruth lin: Tax Ylealli"~i:1i l:vihich :inwtil.'d Co:mD]ercial iPmdllll:cHQinC(lmmen£~j an}' d~dlJctiolr1l~ feu' mCQme Tax. pUofPOl\1iE:S in rcsp!:lct oQj! AUo:wable C'QiffiltJatt E:x!p€:nd~~Q!I!_re.ll' wMc.]} remain ~mllil]"ecorYiered ien. aniy Ta:x Year' fr,om O]:n~ra:Cit Reve~liIe::::: s:ha~~ be' l1'eii!!~:odas an OpelatWIiU(g loss a~d lilIDay~e l(lamied I!onv:anl as :Eiil'il ,1IIlloi\vaJbk:: dleduclion. tOI $u1isequ!e.nt Tax Years !!iIntiln!lnyre~overod frorn CQntrac( Re-vemlIJll:-:5i.,

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3..1.,1 ~'~lr()lcllm C .. pil,:]ll~xpl:<~aJ:ilil!.l!lrcs

~}el,'"O!cum Ca:~hi11 F)!pell.c1lhlr!;:~ are (hose Contract Exp~II!t}tS which f:il!~~ wilhin title c<!t:egory of Development a'r!.ti Production Expendi'llIlI~S as rlcsc'Libodi in pa,rngrilph 2.2 of thus Arn!l.e.x"C"'.

3.2.2 Pe~ro]e~m Oper:aling EXPCRriihiJt[;l

Pelrolet,~ Opern~i.llig EK~:mru1~tH~ al'e those Contract ExpeTl;s~ \:vlllCh~n wh~l~ln the ca:Degories o.f~plom~i!on EX!pM.\IDi'hllJoo and Op'emihi~ lIEl\:penses as d.esrnbed in pa~gQlphs 2.13111d 2,3 ord~:s

.ARI~ex "'C'. ;

rekoleg!1ll Caipfulril'l iExpeifldili~1rure5, as ~~fiOO i.1fii~!H11Igntp.h ,;3,.2.1 or fhis A~nrue'X. "C", .' s11a.U be cliep.teciia[oo mill' lllnOOJiJ.le T~xiP·u.upaiSes. .Ilill di!!lierm~!Iliin.,g rttln.e amount. of dep~iailiotl whiOili ~s aUowahloas ,II dlecluc~io.ll in any Tax Year" th~ J)Q:nomg ,riirl(:ipl~ sffila.11 apply:

3.3. ~ r~~lelum CaJ1i'1a] Ex,ipeJldffiuu'C$ win be d.e;prot;:!3Jt..ed. lu;i.ng the s1Ea~gh~ li.n£ method OVeE six. (6~ yearrs, sa.ve il1!ie~~g1f d1Qse ,e~pel'ldrutlUIes i!"e"ji'~ued to 1tnl subpam:;mp!1I1 2.2{d) of~h~s.!Ume~ !ten whri.c:b wiil be dtlll,ttCimoooln <!! 'lJumd~ ,o,fp:rodlUotieml1' bas,;s" De "llrut Ofpjl\"i{h~{lli<m" deprGC~a$i.G\!III ~urge in eadl Ta'X. y,~ sHIl he determined 'by dlividi:llIg the ttlIl;]L e:li!.pemWltuIe re&r~ ro ilJ ~bpimllgmph, :t2.(d) whri.ch RrrWm; U!!'!!l'GW¥'lil:rodat the begi~.fii~1 of each sueh ye.1l!f bylh~ ~ill.elil 'recavemb~e res~e$ l(imlOOITcLs: of (!lim or ~arrelso,f tKirueqUi.va:IOOit) lill~he Cmlllil'rnict A~and. JI1ili!ltiplyi'ng~he rtisl:illing (lgure b:"y~he ~.oial uumW!I;(I" {If bWls of .on tprodll!.OOO lin. the Tax Yeail" 1111. qlJesti'qr!.

3 . .3 .. 2 DOOllCitioil1JS wi,~11 respoot ~o the dqprtc:iati~ otff'eirolelll!m Ui:p~tal ~\peifld~[l!Ires: shalll be .aHa~Jb.le 'C(.llm'lim:e:Ii'lC~ng wiUw (~)lhe: Twx. y.~~ in ""rucla tbec-apiitd assetis placed iil!t1('1 serviceor ifrm~ C~:iial. nEli:..pelidi1Jt!rr,e does nl!J['r1lo:IDal'~c ~o 3.lfl.aSiSe~ whh::h ~loml! .. ]]yh.a5 II useful ~ifc ooyond thl': ~a!1i ~Il 'I'i'hich :itt ~S:~~8ced ~IW. :s:eiyiGe" "the ·'filll'!. y~!, in whic'ITIllhe ,ea!pitall cxpe;l!Iditl!lm i.siltiul1I!n"Cu OJ'' (b) the T!l:K. - Year in which CO:liumerda'l Plroducliofl co~rn:leru::es {10m Ule CO:i~Uli.ct Area, ..... hidte"rlc;[i81~tt:L

9.5

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.",E: _IO~ 4

Costs, E:I.pense'" lE:tpudilml"(!,$. and OrcdU o:f d~e l.icene>e

.\lbjecl t '. d\e p«IIi\,i,sioP£ of the Agreemel1L; Licensee shaU bear aJ[ld pay thiQ. lo]loli'fil1lg co~1S :ailiuj expehses in [,e".'ip~t ofthe Petro~eull11 Operations. Theseeests and! expenses '(\1m be c~i$sil:ied: I1ndler the lleadings l)cfef(,gd to itn pam~pi1 2 00' this AmJ:ex_ TI[e'y a~ :;r:ecO'lJIenlbl,e CQUkil,cl EliOpen_ses by Licensee under 1h~

This, COV(;'"fS al~ direct costs attdbutabJic' to' the acqIl1s1tiOTI,. renewal 'OJ re6nqu:isbm.oot ,or su:rfa..:e ri.gbtsa~l!lli[ed 3!ndtnaintained mtl foree for ®b.e·

Conhact Area. I

t

ifb) .Labour andl A~~o£:i:ated labortNi 'Ci)!i~

(rn)

gm;oo.s. S<lI]a:ri.es ..md wages ~nctuding iboMses and reos~ of' liviing, hoo:;u1g and '(I,tlle'.r cu;sW,rI.~ry .aUowuce atTn·ll1ed to ,expatriate· en1p~oyees in similar opera/lions ~]@ewhere o,fuoe:nsee's emp'loyoos ,di;rrecdy enga~ed 11m the f,eIro~G:l!llm OlpeJ:a:niom, ilfr05pGctiv,e IJI the looatmoill of Su,c'h employees;

{iii)

Licensee's ,I;OO!fS regardimg sicbH::SS and] disibmly pay:nqenq. appl icalbltt ~o tll~ .s a hn;cs l!Jiliid wages ,c:m.~'fgeablrt;: IiUl,:der sUlbpamgraph U) ilOOV~;

(""")'

1111.

expenses or' eonuibatlons ~!ad.e f,lUfSll!3:n1lo Ol>"lsesslfI:I£llbi or obliga'ti.o:rl.'3. iiln\posedl I!Utaiew ~Ile laW'S :of dte l{ep'II!bUc of Uganda whic~l are .appUtab~e to " 'fCJsee~s 'co t o,falla:ries3I11ldi wales c:haflle.iblre tinder (I) a:bo've;, _

97

~----~------------~--~ -----------------------------

, "

.. .- - ~

(\ " , il..· 'I see's cost uf cstabrm!i~Ii,:ll pl:m:-; tor 1.'i1lpl\1);~CS' liIi; ill~UnllU, hll~P~I·ili53tioll. pensions. $tock ptli~l"h:l'sC muf llliil\ ,1.;111;-; 'mtl ollu.:r

(v reasonabte travcl and PCI'SOllI'H:l expense of employees ()t"\ ,i,c:~n:;c, 3nd their families including N10SI; rmH.I~ ':1)1" tl'H\'d mh.1 rcl! .. KUlil.'<n 0 U e e.xp'~triatee'f'I\ployt'C· assigned to 'he Republic l\f ll';;t!1&a. till (,l ,which shall be in accordance with UOCI1SCC'S I1i Jot'J1Ita! practice. pmvided 'Su:ch is consistent \ ith generally ae _cpted pl'lclI.i!;C'.s in tht.' inltcrnatiOI1:al p-ch'1(J'ICLJ,m imluslry; and

vO any personaf ~ncome taxes of tho!! Republic r Uganda in ,011\.'d : . y

empi'oyecs o.fUcen'Sce and paid Qr reimou . ed by Licensee. "

(c) Ollie", Camps, Warebouses and' other facilities

The cost jJ)f ~5tablisi1ing, JilIJ;\1f11lJui1!iin,g and. operating .my offices, camps,' ware.hc'tses. work..Shops; hous,ing. water sys.tems and otlwr f<1ciHtic.s for :the purpos<.. of carrying 'D,ut th,e Pelro(eil!lm Operotio,ns. 1111: cost of thosefaciHti ... :. \vhi.cn are 110t used rortbe cx!I;I'usfve 'lUrpoSC of currying .o.,l the " Petro·fel OpemtiohS, s'l'laU be apportioned on q consistent and etluilnMu , basis I ctween the l()etrohml11 Operations andlhc Licensee's 'l!)th'er' opemti< 18 ,awl those of'lt5, Af1lUillles.

I(d) Transp ration

The cost of mlflsportaition of cmploy,ees; equipmen"t, mulefia~s and uppHcs', necesse for 'the coltduot ,Qfthe Petmfcum Ope,rn,tioos ..

(e) Cha:Jgl.. for Services .

(i) Third flh . Contracts

; I

The QJct -al 'CQsts o.f conuacts for ;teclmi,cal atn.d omhc.l" services entered llUO ,

by LiCCH 00 Cor the Pletrolt:u.m .opemtions, mad0 widU! third parties other than Al riuted 'Compa:nies of Licensee' are -n~oovei'aMe. p'ro idccl.that the'

• _.' .. -.. ',II,,. I • i' • ~

98

_-

priecs pEl~d hy Licensee arc in ~ilUG \Ioihh those' g!:!I\i.'1!<lII~y chi,aged!)y other internetianal or dnrl)c::;li,e suppliers (:'or cQrnpan1lil)T~wol:r.: and services,

Wi'r1ho~r~ ]lrejlw.1ice 1:0 the ,d);Olrges to be msde :iii! 3:("Wjj,um:e wi=11 p~mgrnIph 2 . .5 of thi,s l\.ru'Dc;~..iil!l tim C!I&e of :specU'ic St:IVD,CCS l"end';J'0d IiO Hie Petroleum Operaliolls undler cenuaetwirh, afld ~m'Qiced to, Lleensee by an AffHli1tcd Comp<l.ny of Lk(;[I!ii~e:,the aUolI~,alli):I,e cllilrg;es win lbeb:r!s~d. Q(nw actual costs \\"illthout prnr..ts" w[JII. ~Jc' I~O h.iglll.:.ij' than til,e most fuvoillroble prices, c~'-'Irged by ilbe Amliruted ColftliP~ny ~ third [pI~rti,e!>fulV ooTwpamb.!e seeviees IJI.Ima:er si:!Wlilaw terms ad cCiI1lt,IDi ti'om .~Jsewb.ere ... wm be iillChldJ~d. in a:1l2" budg~ sllbmh~~j! ~Q' lI:1~e A.clIvicSQQ Co:mrnii~I'ee tr~JSru.!a:n:( [0 ArtilC'le S or ~lie J\gJUmiWiIt 3illld wli~W JilQl;1: eseeed ~lhl:l:' c.lill8'~g bilrlJst! te aJiLj' Jloi~!t O~rn:tiO:I1i5 in .respect (If 5!l!Jch services plli',sijjIDiilllOl any 1J()II!.JnU:t O,peratrul1g Agreement [tdatingl:o the Pelro~eum Opemliol'U' catrr.ied! '!inn h~1!I]!d:~r. TheLicensee w~1 i.i f requestedllbf GO'vemm>mt. spec~fy tlile antomu of such clliliar.g.es. wllinJich ~:I'~lS ,[11'1 ~t~~wd iPropcnti.o.fll @;f rilne ge4il1mll mam.e.r.ial.

• 9l!(]ltlQ,gemenl:; t:e<:hmi:eal, ;!lIll:di '~tl~ef eesrs .orf ~lte Am[rn~~d 'Company •. aad th:~ MnO~'lTllt wlil:icb.i:s '~]ue dlll[-ect 0051: 0r pm'l!'idirulEllgfhe services CI!)Il~emed,. .If necessary (but sllbjoot~l) (b.e iP11'Ovis[OIll. of p\fltag(:ll!Pb, 1, 5 (~) of ~hi8 Armex]\, ,[lcmfidevide:nce 'rega.mwng Illib:~ bO'lsi.s of p:rices ,cliJ.argoo .!SIY k Qbtd:nn,~ from,the au(l]~n_]'S .g,f'dlle Affiil~a'l:i!ll~.Gompany.

So f.:illF ,,.8 is' prJa,e,'!]co,b.lJ.'l aoo. I[}I(lillHlI.-i8lent ~itjbl ~m;C~~m( 8i.l1dI oo()·lIi.Qmilt:~1 OillJ>Cf;:IDli.oft!l, only 3uchll'Hlitelriai slllaU be plilre~!I.seJ or flIDna1shed ~:y Licensee Whr use inthe 'e~role!!lltn Open:lio:tls as may be ooq~~£ed for use in ~h.e re<lsolilab'ly ~o[,~sel3aMe£u!lm.!rea:nd the lu:x::lI!.i:mll!.!.W"tlo~l of 8I1J1lfl,du!'l SI~J;...):5 will be a voided.

~

. .

Wa:r:rnJllj ofMa.~e:U'iaru

.-

"

~ ~ ._ . ;

Licfn~ db~ 1101 wail'mHt rna:iie,:ni,~d beyond the sllpplic;l"s or i:na~1JUfacWrer'f> guarautaeaad', ir.i case of defecuve nl~k:ti~l.o[ cqU.iPl'll'CI~t, any Olidjus1m'ID!lil1t lFoo1,u~c-d :by ] JO~lseerm:rn the s~IP:Pl'iers{m<liIiULra'Cture1;S Ot thcitill~t::nl,8\\1'in !be crooned! to the a;ccuulnt,..,. under the Agreement.

________________ ~ __£99 _

, ,

1;'<'1'1 •• "then.i se p""icl,,' i n s "bp""W".h (0' bolow• "".,.,;.,

- -, ,

purcilas-cd by L.rCoC11Se(! for l~Sil' ~H the P!.!'I.iU.lcl'tl~ Opl.:l'aH'llms 5if~.a1i be

,·.1,"", 'oin.'ude t~c ;nvo'c" "';,'" '''''' I,.de '''''e.s!. di."",,"", (if ""Y)'P"rch ... and p,oo._,., 1< es P"." fl~igI" "".' ron'''dj"~ , cha 'II" b .. ",,,,," poi", of '''pply • nd poi'" ,.r .hi 1'"".',1"". i IIg '''~ " ""'b.din! f_, dock c""lIes. forwarding "nd d""n,nen,.,ioIO I"e., , ' >aeici"ll c.o's, freigh, 10 port ef d'''''''OI'on,., ;","","""",3«0:

''''''0''', d.'ies, con.", .. fees, o,h.r i.",.. c"."~c.bl<,",g.i"" ' ' " ''''I'''''''''''' rna ""l. , ''"'" wh.... P'3ctieaWol""dling '~d' '",n,pC>llll'io", '""po, .... rrom poi", of inll'<"'.a,," IQ~'~">llo",., 01'

"p''''~'l!l: .i' e, ond i", .""IS ohollid "0' o ... eed [110'. t"""'"'1i1'

' H"

r<ev.il;,,! i""o"".lo.o,., 1",1~lh' """""io", Oil 'tho ope, morkoi.

(L1)

(b)

Mo"',i, I ' .. P~I"£I>;>~~.fr_ Aflili'IO<! COh,poni es of tie,,,,,",, .holl he 1~;tg\8rgred' ~.I pnior~ not i1~g~e;r r'lu:m Um f(llim,lIh,g;

N,,,, Mr • ..,,,,,, "C""dj~oJl "JI.") ,1,.11 ,be ."!Jot! .1 the eo"",,, , i"''''''.I;'''',1 price which sh.""", hoi ""<ocd !he ""cc P"Ov.ilillg !n OO:m!!!iI] ,arms le.nSi!J~ '!rn'llsactJeml\'; on tr:.c opelll liT~all'"k~t

(2)

(il l\ifu;ori.'wlli<h is j~ •• ""~ .nd ...".;".,1>1 •• ""diti." and is

'OI'ifiiblefur ""''''' f.ril, orig'in.' y,,"".joll '.i!ho", ;""onditio""l! .!mal] be .' .... ifi"',- as Co"difion "B" mid" PriI'«i.1 '''''''''!)I·live po re em (75%l of ;,lIe CU!Te"' price of , ,ill.'1i\Y material' de-fiil']!i.ld .i1~ SUbP'Eli~g!'aph OJ iibo'~'c.

(ii) liI."",., "'hich oa""", b. ela ss illed as CO!lditio," "Il'" bul: wh~chlil:&f rcpajii' and' recOlld'il:io,tili!1g \llili I}e Jlii~rthel' .eJ"I\i eea I>J~fi>, ,.rigj""" fu"",ion as good ,oco~d'I"nd': m1ail)eda~ (Cbnd~rion ~'BIJ} sh:aii be c.lassifleu as Condirrou

"C" mdprioe<l ,I fillypol'OeJ>t (5Il0/0) or tho 0"",,11' price of.

".;... .... 1.l'iM ',j ~.ti';.d in ,ubI" ral!l".ph (I) a boo.. .

f

I'!

--_

." "

.\~I~ .mcn: Illlic:;s such cost" h3\IC I"CSU I ted: wkly fn.m", .. I'll act ,I)f wmf~IJ 1111: "~mducu or negligence of'Lsceusce,

'. 0)

"

(i}

_tr'. I ,,~ ... ~ •• ' .'"

AL! cools and C'XI,llOIlS.eg of litigatruol'l3Jnd ~egal Q i'e'hued services nec~aly or e.l!£pcdiiel1l fur the Jl)1l)dMCil'llS~ penoori~)g. J:ict liOllallndp:I)@'lOOli.OIl of the Cmmac~ A.1:'1!;)J, and in defendilli,g or proSflC1UdT g ]IWSUii1:s hll\i\olvinlg the Area or any third pSlrty claim ~n'isi'!1g out '!i),1f acti· 'Lies undor the Agreement" or sums (Hli'd in 1'~,pcCl ofllc:,gu.1 lun,-ice;s 11,_Cl :~ar:y or expedient for ~he pretection of tho ,i.llllc.re-st. of Lieensee are rc -overable, Wh,er<e: les:al i'lcn'~(;'~_' ~]'oI;: reudcrcd in such, matters I):y sulllri,e,d or regUl~arly re~:l:i:nedl lawyers ul' Licensee or all ArnUa'~ed Compi.my of Liecnsee, sach comjpGl'Isa.liolll wil~ be j;ndltadedl in.stead uif!:d'er subpamgraph 4,. 1 (b) or 4d(d) above, as applicable'.

Training Costs.

IExt:q>t where otherwise ,pf-o:v]d~d bereill, all costs and expenses 'ill'i\c:un~ by Licensee in tn~in[ilrig ,c,f its Ugillllda!l\l em,loy~ 'engaged in 'the r~lmllcum OpoGI.Lions ~md such o~ef' t[ai'Ring as, 'required under Al1ic:f.e W 8: 0[[1.110 Ag.l)ecme:nt.

J

The ecsts described ill s'IIbpamgva,pib .2 . .5(aJ) andl the chqt described in subsection 2.5(b),.

(I) fl:'ile.ros.t RI,d' ether financial cb'arge.sr!U:clIITed en loens rn~sed by Lmce.f.lsoee itO finaace .Development Opemtima.s prov:ided tha:t such wn~~rest m4.t;s, and charges du; not exceed prevaimmg_ oOlllme.roi.aii .mte'S ifIt!l:d only to tbe extent that euch inierest. and fimnuiliiOll ('hiJIrges rel2l!:te '0 deb:t raised by Licensee ~o fi!lU:l!lice sueh operaUQtu.s (i~.'l!cludil]g loan'S from bOth AUi:,lj,al:es and NonoAffil,i,ales,) dll' I~ot exeeed fUry per cent (.50%) of the tOla~ fina.nc,ing: roquil:l'~me'll~~ An loans wnM Affi,li:alted Companies sliaU be !'itlhj.e>et tu rovj,o:w and approval or the GO'Vm1I1D~ltl' wbicilru ~pp,roVQ! shan be given pro'Viided tfuU: the terms of such loaliils .al~ c{)Mplr,abk~ to 1110$1.: whmch ,C(IUl,ld be ,dbtained on an arms lenglh il:msis fi'iOnl ill 11.00- . AnillllHcdl CortJ'Ip!.my lender .

... ~ .. ... I ":' • ,'''

rJ'"

I, m~ REl'UALle,gr U::;,\ND,\

tl1i1)CO'lllr:misskIJlS p,lid to il1l,lermed;(iries. byl .icersce tml~$ £lIC~ oomWlil55ior~s .1;.));.GC'Gd lite: levels tlSI~l,1I1iy paidiI'llhe ~1l~em~J'li!li~:l) ~ oil indusuy under si ~tl i hID" cOllldil~OIiS ill which ,cJ.~en~ tlte: approval of the: Govenlffillcnt 511 .. 11 IDe I:eqUi~'ICd, \V hich appruvaJ shall nat be 1J areas o ua 11 ly \V ithheld.

(111} EXpe<[ldi~tlrre· 011 iII~arejl~. -:i~lO aad devclopm1erlll of new C'qllipnle!'ll,

mf3Jl,erial :lIIlld ~'lChr'!iqlJ]!ei> for 'usC in sea:oc:hin£, for d~v,~lopmeln\\ and .producing Pe'iroh::llIm d'~1)6~Hy [~~mI[ed. 1'0 (he cond!ll!c, of Petroleum ,Opeil1l1iom c:!Iiiiicdi mit 1J.!1I1de.r [hi!; Agreement

'(OJ ~Ecomogjcal and Mvi:rollme:lilirn~c~arges~ CO~I;". for :!li]] !nC}3S'lIliCS taken to ·.~av'Qi.di W.IIStti liNd prev,ent &n'l~Ji4.e o:r~U!lil.:iOfi ililrhre:~~o:lld~t::~ of ~<JtIe " 'Petroleum Opm:atlliomt

(p) LeasiTtlig e:xfe;mes:: Co(!Ol~inCll!rrod jn con.rreci!:roIll wi,tbd!e l:easi'J1l_g of pro]')etty i:lild eijUirpm,e1!I:l pr-.o'vidtd il'lw~~: such eosis 00 not ~(;~ pl;il'1i!MliiHrtl£ cornm:eoci;:)J! rates Si!il;d that any stich [ells1lll1g aa,aJol£:,emeJB:!s afe oondaclJed 'W~th ~r:ltie$ wlit1.cJh ere not .AffiliatOO Co_pa:rrwies of Uoef!~,

r

(q) I,O:n:mtll!,u:uiC;)Jtlon charge": COSi~S ofacq1!!i.riil'n~, ~e&li~ •. ,@pem~iiO.g 8!nd

mlli:lltii1J]n:lngc.oifilmm.rwi.c<l!t1.o:mt sysn'GMS indl!l)dJi~g, !but no~ liimhecl [0, radio, 1dep!:1.o1i!,e" 'lelec:optet' .and e-meil s;llslems.

(Ill) PemJileul'1ll D1arke~ing or tr.m~Qrt~(~OD biri&'f clii1ifges,imHti.ilPed beyo:l1ld 1['iI.~ De~~i:very fui1mJ1.

The costs a.s&lc1(l~ed 'Wi~h ~1~e'~'iI'is}ioil'i11 Qf tlt~ Bank GlJilJra:llt~e p'lll:'SlII;anrll:O p@.HlgB'3ipb 4.7 of the Agr,e:emliUmillillt-d any pa)'l1ilent~ 'I1Il<1dlc thereunder in respect of f~i!llI!lre by liuc1iIsee 1:1(} comply wi~h its comlll.("(Wil~ oblig.ilitiou:i' tmdlcr ~b~ Agre~.ellli (and I,!I!liIfy oti!LC[' a:._QII,ITIllSf>ipeot on ir'ldemn1in!1liJdes, wi'lb '[ie,~rdIQ fililUi Ihi~e.TI~ ,or'(;~Iil~Jtl'iIjC1!1,1a~ dbli;gOilltiO!lsby l.iiJcCI'i~ce:l,

103,,--' _----- _-_-----"----

!

~ ~ I}
L'
tC)
(I")
, " (g)
,
(J~) 1,""'1''-11 and l1111cr costs of Olrbinrul.ioll ,ana lIu: nnd~pcilrJetll expert in I'1:SI](."CI, t~f ,;:my dispute n:lencd for determination pursm'l~1 to A.l'nidc 26 of the

. "', .. ,. -

The GOVC'lil.lr:llll'Cllt. lcJro'G.u,cUlon Share detenniaed pl!illfSlIl:I!lJl to Arti,cle B of the AgJret:nu!'1H,

Costs iltcLlrn,"'(j as a res 1.1 It of Willnd Miscondluc~ 0:1' Gro\Ss Neglige'nce of Llcensee: and

0), r!l~CI"CSI im;ulm"'t(~ on Ilmul1Is raised by Licensee 10 u!IIaince Explaratiun Opel.,,(·il'l\i,

nlia.;:r 'cm.lIIS .uld 'expenses :1101 covered or deah W~(f,j, t.1!lI the :pt'Ov'ision~ of tllils ramgrnpb ,and! wh~c:hl are ineu~d iby Licili'IUSee' fof' the nooe:ssEIi,)' and :pro,pe,r conduct (DifPellro.leum Operati·ons:are ~oYleJahLe ..

4,4

. I

: ..... :, .

The net proceeds of (li1e 10BQ''l. ins tram~ct!iQ!Iil'8 will be: cre<iired tothe accounts tll1.der!lHl Ag~rneI:llt:

(iii' The net pmoeccls ,ofalilj' i IJ!su:ml1!~e 01 C"tainm~ in c.onnectno':I1i with tile Pl!",;(oollell.llRl OperntimlS or ,!!ny ,n&SllJtsi eha:r~oo to 'Ihe ;l!lm;:Ql4lnts UI'I.d,iliF tlae t\g;ru~mcnt whc,~ sm,;:h opel'am~O\lls cr asstlU were 'jQil!U',ed ,and! ~he plIelllia c:h.<lrg:ed 00' ~he accounts: iUllId:er:the A.g!leemeJ~t.

(b) RC\'CllIllC received ft-om out~]de for. ~1l11;! use OrprQ.perty or assets charged to the ilI";:QOlJfJ:!:.S under the ~r«moJrut.

(c)

"

.-

Any ,ailjUlsln1C!1Iit rcc·e4\v-oo by Ucen~\ OOM [!IDe ,s.u:pplierslnil!a[IUifa:cti~lrei:'S or Ih..:i aJg~nns. iii cOIll;o,eclio;H w.ilt.8. ddect:ive 1~~eJi<li:r. the ,CO<Slt of lNhich was prevlQusly ¢ha~ed by lJic'ensc~ to the ,aceolm(.son{i,er the Ag:reeme1!lt.

•• i'!. I

J04

J\1.~jU,j8hJ' ~l€ EUII!ir"JY ~llId MiICl'e~'TIJ DeVte~@p'Ollemlt PO Ni)JiI 7liO

J(;I ~n P';IJ'-!

" ' rt~J]I~lbM~ (>f tJ:r.;:;I~ld;!1

.; r I .f ...... ~ •• ,_.

I I

By ,hi, B.n. 've .. _ .•• -._ ....• _ •.... _ __ .. _ ....•......••.•...... - ••. (h"",r ~.,.

""""DO '0 ••• 110 5",..1') are 1",,10 ,.d r,""'1' b"u"" • .,11> ,I,. GOI'I!~NI\1"I!N:r OfF 'flU Rm"lJBLIC 01' UGANJ)", rep,,,,,,,, .... by lho Mini.try of 1ln0lJly ami Mio era , Do'·'QP,""", or 1',0. II"" i2i,D, K"mpol. (lI-i.oller reielJ'ad '" .. '.Go .. fllm •• t") in .he f.11 ODd j,,,, '''''' of IJlli •• d S, .... Doli .... -- . __ ~. '(IlS$-~_

···--I .. "ly", .ho PIIlf!i1C1]' .fwhieh .lJc .. id '''''' oflll" .. oy well .od "'.Iy 10 be modo' ' ""<I 1Iu". ,.1" S"",,y bind .11,","", ves '.,oi, ... c ees ,,'"'' snd ''';go, jOin,'y ... d ,.e~e""Il'

- ' tirvnl y by !he~e iPn::SCill"," , _

WHEI!l';As 'h. G,v""'.,"n, I"" """'rem·loj,,, '~".!io. Sh,ning A " (il_"'ilb

' "f.n~d to 's th. "A8 ....... , " ""'h - ••.• __ •• _._._._ ••. _ •.• -0,,,,,"'.""< retouod

' , . <0 ., 'be .. Li.," .... ) bearing ,h. d.te .f [,lie -- •• -- __ •• _. mr, .""og ,.It"" 1lI'"g, ' , ""r"""J'I'ly sho,,.,, in ,I", ''';11", W.rk Pr"!lr",,,,,,,,. lOrd, •• __ ._._ •• __ •••. __ .•• _

' '0' Y'ar ··--of the soid "ril"'n Ag'~'"'''''t ""'jol, "'o.r. ~g.a",,,,. '0<1 \Orill ••

. '!It<ie.'.ni ""il~ .11 H,.,;, OO.l<Ii,",", .'" 1""~bJ' .,,"'" • p." o>f'lhooo pres,nt, '0 all in! .... , .lnd P III ~"'es .

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