Assignment 3

ENERGY AND
EMISSION TRADING

MBA Oil and Gas

Navya Raturi
500091068
1) IF CRUDE OIL IS PRODUCED FROM THE PROJECT, THE OPERATOR SHALL IN
GOOD FAITH, AND NOT LESS THAN THIRTY (30) -16- DAYS PRIOR TO FIRST
CRUDE OIL DELIVERY, NEGOTIATE AND ENDORSE THE TERMS OF AN
AGREEMENT TO COVER THE SALE OF CRUDE OIL PRODUCED UNDER THE
CONTRACT AND FOR THE CONTRACT AREA. The Government may, if needed and
INTERNATIONAL OPERATING AGREEMENT, MODEL FORM, 1995.

2) Delivery: defines the conditions and manner with which the seller delivers the crude
to the purchaser, such as:
a. FOB (FREE ON BOARD): the purchaser receives the crude at the terminal
where he must present himself with his ship on the agreed day, and he
becomes immediately its owner.
b. CFR (COST AND FREIGHT): the seller arranges on behalf of the purchaser
the transport of the crude from the loading terminal until the point of delivery.
c. CIF (COST, INSURANCE AND FREIGHT): as in the CFR case, but with
the addition of the insurance for the value of the cargo transported.
d. DES (DELIVERED EX SHIP): the seller loads the crude on a ship and tries
to sell it during the voyage (delivery takes place at destination).

3) MONTHLY PLANNING, SCHEDULING, AND SHORTFALL IN

QUANTITIES. 6.1 Monthly Planned Quantity will be decided in the monthly meetings
 under Industry Working Group. Scheduling, Planning and other related activities shall be
as per Schedule C of this COSA.

4) The quantity and quality of Crude Oil delivered by ocean-going vessel shall

be determined by shore tank receipt figures as determined by an Independent
Inspector mutually agreeable to both Parties, as provided below. All measurements shall
be in accordance with the latest API and ASTM standards and principles then in effect.
The delivered quantities shall be adjusted to a net standard volume by deducting sediment
and water, as determined by the Independent Inspector's analysis of a representative
sample of the Crude Oil taken by the inline sampler located at the LOOP or
St. Xxxxx receiving facility. The Independent Inspector shall ensure that the
line contents are not sampled as part of the delivered Crude Oil. In the event that an inline
sampler is not fitted, is out of order, malfunctions during the transfer or the Independent
Inspector deems that the samples drawn by the inline sampler are not or would not be
representative of the Crude Oil, then the sediment and water deduction shall be
determined from a representative sample based on a composite of samples obtained
from the vessel tanks prior to commencement of discharge.

5) Crude oil is one of the greatest commodities to trade on a futures contract because traders
all around the world are familiar with it. Due to its prices' tendency to change at the
slightest hint of pricing news, oil is a popular among swing and day traders searching for
an edge.
They are significant for the following reasons, among others:
The price of each type of oil that Seller will sell and Buyer will buy under this Agreement
shall be adjusted in accordance with Exhibit 3, the restricted market adjustment computed
in accordance with Article 6, and Exhibit 4.

6) Buyer agrees to make any and all payments required by this Agreement in immediately
available US dollars, without any discount or deduction, by wire transfer to an account at
a bank that Seller may from time to time designate. Payment for oil delivered and sold
must be made within thirty (30) days of the bill of lading's date (bill of lading date
excluded). All other payments to Seller shall be made within fifteen (15) days of the date
of Seller's written demand specifying the provisions of this Agreement leading to the
payment obligation, its type, and the amount thereof. Payments under this agreement
must be made on the following banking day if they are due on a day other than a banking
day. If Buyer fails to make any payment when due, interest will accrue daily on the
amount of the past-due payment, starting on the date such payment was due, at a rate per
annum equal to one percent (1%) above the prime rate in effect from time to time,
according to an announcement made by Citibank, N.A. at its main office in New York,
New York, United States. It is understood and acknowledged that each change in the
prime rate will take effect on the day Citibank, N.A. announces it, without limiting the
application of any other provision of this Agreement or any other remedy granted to
Seller under this Agreement or otherwise.
7) In spite of anything to the contrary in this Original Agreement, Seller may at any time,
upon written notice to Buyer, require an advance cash payment or sufficient security in
the form of a Letter of Credit or Letters of Credits, at Buyer's expense, from a bank
acceptable to Seller, to cover any or all crude oil deliveries.

8) Except for the payment required hereunder, neither party hereto shall be liable for failure
to perform under this agreement for the period of time and to the extent that such failure
is caused by war, insurrections, fire, explosions, strikes and other labour or industrial
disturbances, acts of God or the elements, governmental laws, regulations, requests, acts
in support of the International Energy Program, disruption or failure of production or
transportation facilities. Any such performance issues must be resolved as soon as
possible, but neither party is obligated to provide alternative quantities from additional
sources of supply. The terms of this Original Agreement will not be extended if
performance is hindered by events of Force Majeure.

9) Liquidation rights. The other party to the original agreement (the "Liquidating Party")
shall have the right, in its sole discretion, to liquidate this original agreement by
terminating this original agreement at any time following the occurrence of one or more
of the events listed in paragraph (2) of Section G, Financial Responsibility. Except for the
payment of the amount(s) (the "Settlement Amount" or "Settlement Amounts")
determined as provided in Paragraph (3) of this section, the parties shall have no further
rights or obligations with respect to this Original Agreement after termination.

 Date of Termination. The date the Liquidating Party terminates this Original
Agreement shall be deemed to be (a) the date on which the Liquidating Party sends
written notice of termination to the Defaulting Party, if such notice of termination is sent
by electronic mail or facsimile transaction; or (b) the date on which the Defaulting Party
receives written notice of termination from the Liquidating Party, if such notice of
termination is sent by facsimile transaction.
 The settlement amount is paid. Within two business days of the Liquidating Party
terminating this Original Agreement, any Settlement Amount that is due must be paid in
immediately accessible money. However, the Settlement Amounts payable to each party
for such Commodity Transactions and/or agreements shall be aggregated if this Original
Agreement calls for more than one Commodity Transaction or if Settlement Amounts are
due under other agreements that the Liquidating Party cancelled. Within two business
days of the day the Liquidating Party terminates this Original Agreement, the party owing
the net amount following such aggregation shall pay such net amount to the other party in
immediately available funds.

10) Any and all controversies arising out of or relating to this Agreement shall be resolved by
arbitration in accordance with the then-applicable Rules of Arbitration of the International
Chamber of Commerce (the "ICC Rules"). The location of confidentiality will be Paris,
France, and English will be the medium of communication. The merits of the case shall
be determined by three arbitrators applying Venezuelan substantive law. An arbitral
award addressing the performance by either party of its responsibilities under this
Agreement shall be: I in writing; (ii) final; and (iii) binding upon all parties to the
arbitration, in accordance with Article 25.2 of the ICC Rules. An arbitral award may be
confirmed or incorporated into any decision or judgement of a court having appropriate
jurisdiction.