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

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

 

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

Exhibit 10.19

JOINT OPERATING AGREEMENT

BETWEEN

GUJARAT STATE  PETROLEUM CORPORATION LIMITED

AND

JUBILANT ENPRO LIMITED

AND

GEOGLOBAL RESOURCES (INDIA) INC.
 
 

 
WITH RESPECT TO THE CONTRACT AREA

BLOCK : KG-OSN-2001/3

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

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

Page 2

     
Page
Article 1
 
Definitions and Interpretation
5
Article 2
 
Effective Date, Duration and Scope
8
Article 3
 
Participating Interests and Joint Operations
9
Article 4
 
Operator
10
Article 5
 
Operating Committee
19
Article 6
 
Work Programmes and Budgets
22
Article 7
 
Costs, Expenses and Default
25
Article 8
 
Ownership of Assets
 
30
Article 9
 
Information, Reports and Confidentiality
 
31
Article 10
 
Work Programme Commitment
35
Article 11
 
Relinquishment
36
Article 12
 
Withdrawal
 
37
Article 13
 
Sale, Transfer and Assignment
39
Article 14
 
Force Majeure
44
Article 15
 
Operations by less than all Parties
 
46
Article 16
 
Insurance and Indemnification
 
55
Article 17
 
Disposition of Production
 
57
Article 18
 
Notices
 
58
Article 19
 
Sole Expert, Conciliation and Arbitration
 
59
Article 20
 
Applicable Law
 
61
Article 21
 
Relationship of Parties, Mutual Indemnities and No Partition
62
Article 22
 
General
 
63

Page 3

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

       
Exhibit "A" Accounting Procedure
 
Article I
 
General Provisions
66
Article II
 
Basis of Charges to the Joint Account
72
Article III
 
Disposal of Materials
73
Article IV
 
Inventories
74
Article V
 
Forms in which Accounts shall be Maintained
75
       
Exhibit "B" Carried Interest Agreement
76

Page 4

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

JOINT OPERATING AGREEMENT

THIS AGREEMENT is made this 7th day of August 2003 by and between:

 
GUJARAT STATE PETROLEUM CORPORATION LIMITED, a body corporate established under
the Companies Act 1956, having its registered office at  Block 15, 2nd Floor,
Udyog Bhavan, Sector-11, Gandhinagar – 382 011, INDIA (hereinafter referred to
as "GSPC" and unless the context otherwise require shall include its successors
and permitted assignees), of the FIRST PART,

AND

2.
JUBILANT ENPRO LIMITED, a body corporate established under the Companies Act
1956, having its registered office at 1A, Sector-16A, Institutional Area, Noida
- 201 301, Uttar Pradesh (hereinafter referred to as “JEL” and unless the
context otherwise require shall include its successors and permitted assignees),
of the SECOND PART.

AND

3.
GEOGLOBAL RESOURCES (INDIA) INC., a body corporate established under the laws of
Canada having its registered office at 35-22 Street NW, Calgary, Alberta, T2N
4W7, Canada  (hereinafter referred to as “GGR” and unless the context otherwise
require shall include its successors and permitted assignees), of the THIRD
PART.

All of which are collectively referred herein as Parties, which expression shall
include their successors and such assignees as are permitted under Article 13
hereof.

WITNESSETH

WHEREAS, the Parties have financial and technical capabilities to explore,
develop, produce, transport, refine and market the petroleum products and
Parties have entered into the Production Sharing Contract (hereinafter referred
to as "Contract") with respect to Contract Area identified as Block
KG-OSN-2001/3 on 4th February, 2003 with the President of India acting through
the Joint Secretary, Ministry of Petroleum & Natural Gas (hereinafter referred
to as "Government"); and

WHEREAS, the Parties wish to define their respective rights and obligations
under this Joint Operating Agreement (JOA) (hereinafter referred to as
"Agreement") with the object to conduct & perform their mutual rights and
obligations pursuant to the Contract in a manner which is consistent with the
provisions of the Contract.

NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter contained, the Parties agree as follows:

Page 5

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

ARTICLE 1 - DEFINITIONS AND INTERPRETATION

Unless the context otherwise requires, for the purposes of this Agreement, each
term listed below shall have the meaning stated therefore, whenever used in this
Agreement. The words not specifically defined herein but defined in the Contract
shall have the same meaning herein.

1.1
"Abandonment" means all or any action or conduct for the purpose of Site
Restoration, abandoning Fields, Joint Operations, Joint Property, or any other
operations and/or property relating thereto under this Agreement whether by way
of discontinuation, demolition, removal, destruction, conversion, placement on
temporary or permanent care and maintenance, or other basis, or any action or
conduct, necessary to comply with all applicable laws, Governmental
requirements, or Good International Petroleum Industry Practices (GIPIP).

 
"Accounting Procedure" means the Accounting Procedure attached hereto as Exhibit
A

 
"Work Program" means the work program as given in the Contract.

 
"Advance" means each payment of cash required to be made pursuant to a cash
call.

1.5
"Agreement" means this Joint Operating Agreement (JOA) including Exhibits,
Schedules, Annexures and any amendments thereto.

 
"Approved Budget" means a budget that has been approved by the Operating
Committee with respect to the Approved Work Programme.

 
"Approved Work Programme" means a Work Programme that has been approved by the
Operating Committee.

 
"AFE" means an authorization for expenditure as envisaged in Article 6.6 hereof.

 
"Budget" means a budget formulated in relation to a Work Programme. The term
"Budget" shall mean, as the context requires, preliminary, proposed or finally
adopted versions thereof, and any revisions or supplements thereto.

 
"Business Day" means a day on which the banks in India are customarily open for
business.

 
"Cash Call" means any request for payment of cash made by the Operator, in
accordance with an Approved Work Programme and Approved Budget to the Parties in
connection with the Joint Operations (as per the format to be decided by the
Operating Committee).

1.12
“Carried Interest Agreement” means the agreement executed between GSPC and GGR
on 27th August 2002, a copy of which is enclosed as Exhibit “B”

Page 6

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

1.13
"Confidential Information" means all legal, financial, commercial, technical and
other data, knowledge and information (including any and all information)
obtained and/or acquired by any Party(ies) relating to this
Agreement including but not limited to geological, geophysical, seismic and
other data, maps, models, diagrams and modeling exercises and all reports or
other documents created from such data and information and exercises and
analyses carried out using such data and information.

1.14           "Effective Date" means the date as provided in the Contract.

1.15
"Gross Negligence" means any act or failure to act (whether sole, joint, or
concurrent) by a Party which was intended to cause, or which was in reckless
disregard of or wanton indifference to, harmful consequences such party knew, or
should have known, such act or failure would have had on the safety or property
of another person or entity, but shall not include any error of judgment or
mistake made by such Party in the exercise in good faith or any function,
authority or discretion conferred on the Party under this Agreement.

1.16
"Joint Account" means the set of accounts maintained by the Operator in
accordance with the provisions of this Agreement to record all revenues,
expenditure or other monetary transactions conducted on behalf of the Parties as
provided herein.

1.17
"Joint Operations" means those operations and activities, including Petroleum
Operations, to be carried out by the Operator pursuant to and in terms of this
Agreement.

1.18
"Joint Property" means, at any point in time, the Contract Area, all wells,
facilities, installations, equipment, materials, information, funds and the
property held for the Joint Account for use in Petroleum Operations.

1.19
"Operator" means a Party designated or otherwise appointed under Article 4.2 of
this Agreement to conduct Joint Operations or any successor appointed under this
Agreement.

1.20
"Non-Operator(s)" means at any time the Party or Parties to this Agreement other
than the Operator.

1.21
"Party" or "Parties" means Parties to this Agreement and the respective
successors and permitted assigns of each.

1.22
"Willful Misconduct" means an intentional and conscious or reckless disregard by
the supervisory or management staff or any director of any Party, of the terms
of this Agreement or of Good International Petroleum Industrial Practice but
shall not include any act or omission reasonably required to meet emergency
conditions, including without limitation the safeguarding of life, property and
Joint Operations or, for the avoidance of doubt, any error of judgment or
mistake made by any such person in the exercise, in good faith of any function,
authority or discretion conferred upon the Party.

Page 7

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

INTERPRETATION

1.23
Unless the context otherwise requires, reference to singular shall include a
reference to the plural and vice-versa, and reference to any gender shall
include a reference to all other genders.

1.24
Unless the context otherwise requires, reference to an Article or Clause shall
be an Article or Clause of this Agreement.

1.25
In the event of any inconsistency between the main body of this Agreement and
any Exhibits attached hereto, the provisions of the main body of the Agreement
shall prevail.

1.26
Reference to any law or regulation having the force of law includes a reference
to that law or regulation from time to time amended, extended or re-enacted.

1.27.
Terms used but not defined herein shall have the meaning attributed to them
under the  Contract. In case of any conflict of any term/provisions of this
Agreement with that of the Contract the provisions of the Contract shall prevail
and be binding on the Parties to this Agreement.

1.28
Headings of the Articles are titles to each of the Articles to this Agreement
and are solely for the convenience of the Parties hereto and shall not be used
with respect to the interpretation of the said Articles.

1.29
Words and abbreviations which have well known technical or trade/commercial
meanings are used in the Agreement in accordance with such meanings

 
Page 8

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

 
ARTICLE 2 - EFFECTIVE DATE, DURATION AND SCOPE

2. 1
This Agreement shall be effective from the Effective Date and shall continue in
effect for the term of the License and any Lease granted including their
extensions and thereafter until a final settlement of all accounts among the
Parties has been made or terminated earlier in accordance with the terms of this
Agreement or Contract.

2.2
The scope and purpose of the Joint Operations are limited to the prospecting,
exploring and drilling for Petroleum; developing, operating, producing and
abandoning the oil and gas fields in the Contract Area; treating, field
processing and transporting of Petroleum produced to the delivery point and
appropriate supporting activities for any of the foregoing.

2.3
Except otherwise provided herein, each Party shall share in all costs,
obligations and benefits in proportion to its Participating Interest and shall
include any interest being carried by any of the parties.

Page 9

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

 
ARTICLE 3 - PARTICIPATING INTEREST AND JOINT OPERATIONS

3.1
The Participating Interest of the Parties on the Effective Date shall be as
follows:-

    GSPC                                :           80 %

            JEL                          :           10 %

    GGR                                :           10 %

3.2
The Parties agree to undertake and to complete the Work Programme as described
in the Contract.

3.3
GeoGlobal Resources ( India ) Inc.’s  10% participating interest is in
accordance with Carried Interest Agreement (CIA) signed between GSPC and
GeoGlobal Resource (India ) Inc. dated 27th August, 2002 and Articles
specifically  2 & 29 of the Production Sharing Contract dated 4th February,
2003. CIA between GSPC and GGR shall be part of this agreement in order to
determine the relationship and rights and obligations of GSPC and GGR towards
each other in terms of GGR’s 10% participating interest vis-à-vis Carried
Interest Agreement.

3.4
For greater certainty, for the purposes of this Agreement, the  Contract and the
Carried Interest Agreement as referred in Article 3.3 above, GSPC and GGR
acknowledge and agree that :

3.4.1
GSPC shall be solely liable and agree to pay on behalf of GGR, all of GGR’s
obligations, costs and expenses of whatsoever nature and kind, arising out of or
attributable to, this Agreement and the Contract, including without limitation,
all of GGR’s Participating  Interest share of the Contract Cost and any
applicable royalty payments to the Government.

3.4.2
GSPC shall be entitled to recover all of the cost and expenses after deducting
all statutory  payments, out of the proceeds from sale of oil & gas if any from
the Contract Area, and as mentioned in Article 3.4.1, shall also be entitled to
recover costs incurred towards GGR’s 10% of Participating  Interest Share
including applicable royalty payment made to Government,  out of
GGR’s  Participating Interests share of Cost Petroleum.

3.4.3
At such time  after GSPC has recovered GGR’s Participating Interest Share of all
the cost and GGR’s Participating Interest share of the applicable royalty
payment to the Government, as mentioned in Article 3.4.1 above, GGR shall be
entitled to its Participating Interest share of joint account, joint property,
profit petroleum and proceeds of the sale thereof.

 
 

 
Page 10

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

3.5
Reference to the term “Participating Interest” and any rights and obligations in
connection with a party’s Participating Interest under this Agreement shall take
into account the terms and conditions of the Carried Interest Agreement between
GSPC and GeoGlobal Resources (India) Inc. dated 27th August 2002.

Page 11

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

 
ARTICLE 4 - OPERATOR

4.1
All Joint Operations shall be conducted by the Operator in accordance with
policies, Work Programmes and Budgets approved in accordance with the provisions
of this Agreement, the directions of the Operating Committee and in accordance
with Good International Petroleum Industry Practices (GIPIP).

4.2
GSPC is designated and shall act as the Operator, in accordance with the
provisions of the Contract and this Agreement. The Parties shall provide the
Operator with such powers of attorney or any other documents that it may need,
from time to time, in order to carry out Joint Operations pursuant to this
Agreement.

4.3
Subject to Article 4.5, the Operator shall have the right to resign by giving
not less than one hundred and eighty (180) days prior written notice to the
other Parties, or  such shorter period of notice as mutually agreed by the
Parties.

4.4
Removal/Change of Operator

4.4.1
Subject to Article 4.5, Operator shall be removed forthwith and another Operator
appointed upon receipt of notice of occurrence of any of the following events:

i)  
An order is made by a court or any effective resolution is passed for
dissolution, liquidation, or winding up of Operator;

ii)  
Operator dissolves, liquidates or terminates its corporate existence;

 
iii)
Operator becomes insolvent, bankrupt or makes an assignment for
the benefit of creditors;

 
A receiver is appointed for a substantial part of Operator's assets; or

 
v)
If Operator becomes the holder of Participating Interest of less than ten
percent (10%).

4.4.2
If the Operator has committed a material breach of this Agreement, any Party may
give written notice of such breach to the Operator, specifying the breach
committed.  If it is determined pursuant to Article 19 of this Agreement that
Operator has committed such material breach and further, failed to rectify such
breach within sixty (60) days of receipt of notice from a Party, Operator may be
removed by the unanimous vote of the Parties, other than the Operator and its
Affiliates.

Page 12

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

4.5           When a change of Operator occurs pursuant to Article 4.3 or
Article 4.4:

 
i)
The Operating Committee shall meet as soon as possible to appoint a successor
Operator provided that only the Non-Operators shall have the right to vote to
appoint the successor Operator. Such appointment shall be by the unanimous vote
of those Parties entitled to vote.

ii)  
The Operating Committee shall arrange for the taking of an independent inventory
of all Joint Property and an audit of the books and records of the removed
Operator. Such inventory and audit shall be completed, if possible, no later
than the effective date of the change of the Operator. The liabilities and
expenses of such inventory and audit shall be charged to the Joint Account.

iii)  
The resignation or removal of Operator or replacement by the successor Operator
shall not become effective prior to receipt of any approval of the Government,
if same is required.

iv)  
Upon the effective date of the resignation, or removal or change of the
Operator, the successor Operator shall succeed to all duties, rights and
authority of Operator. The former Operator shall transfer to the successor
Operator all Joint Property, books of accounts, records and other documents
maintained by the outgoing Operator pertaining to the Contract Area and to Joint
Operations. Upon delivery of the above described property and data, the former
Operator shall be released and discharged from all obligations and  liabilities
as Operator.

v)  
The outgoing Operator shall be liable for all obligations and liabilities as
Operator incurred till the effective date of appointment of the successor
Operator.

POWERS AND DUTIES OF OPERATOR

4.6  
Subject to Article 4.1, Operator shall perform and carry out the functions and
shall, for this purpose, have the following powers and authorities :

 
4.6.01 Exert its bonafide efforts to explore the Contract Area in accordance
with Good International Petroleum Industry Practices (GIPIP) to discover
commercial accumulations of Petroleum.

4.6.02  
Subject to the provisions of this Agreement and Contract, exercise control and
exclusively manage and carry out the Joint Operations.

4.6.03  
Comply with the respective obligations imposed upon the Parties by the laws of
India including the timely filing of reports and payment of all fees, levies,
taxes, royalty, cess, if any, (except income taxes payable by the Parties), and
charges of every nature payable by the Parties under the said laws provided that
Parties have honoured Cash Calls and funds are available in Joint Account.

4.6.04  
Take all appropriate steps to obtain, maintain in force, renew or extend
consents, approvals, and authorizations in accordance with the terms of this
Agreement.

 

 
Page 13

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

4.6.05
Represent the Parties before the Government and any and all courts,
administrative departments, bureaus and agencies whatsoever in India in matters
related to the Joint Operations, and in so doing prepare and sign, file and
receive any affidavits, undertakings, contracts, petitions, requests,
certificates, authorizations, reports or other documents in connection
therewith; advise the Parties in a timely fashion of any such acts which in the
Operator's opinion may significantly affect the Parties; and perform all other
acts of a similar nature necessary and proper in connection therewith, except to
the extent any Party has indicated its desire to represent itself in connection
with any of the foregoing. Non-Operators shall be entitled to attend for the
purposes of observation, meetings between the Operator and the Government and
any court appearance of the Operator where such meetings or appearances pertain
to matters relating to this Agreement.

 
4.6.06 Establish and maintain such relationship with the Government, local
authorities and with the public as shall be necessary or appropriate to assure
that the Joint Operations are conducted and carried out to the best advantage of
the Parties.

 
4.6.07 Prepare and submit to the Operating Committee, Work Programmes and
Budgets as provided in Article 6.

 
4.6.08 In accordance with the procedure outlined by Operating Committee,
establish and maintain such offices, installations and facilities in India or
abroad as are necessary, adequate and appropriate for the efficient performance
of Joint Operations and service hereunder.

 
4.6.09 Establish and maintain such books, records and accounts as are required
by this Agreement and Contract, if any, together with such additional books,
records and accounts as from time to time may be reasonably specified by the
Parties. Maintain such production records, well and reservoir data, field
reserves and rate of production studies and estimates, and the like as will
reflect a thorough and accurate history of Petroleum Operations, together with
such additional similar records and data as from time to time may be specified
by the Operating Committee or required under the Agreement.

4.6.10
Employ, administer, use and have sole responsibility for all the selection,
employment, administration and compensation for all personnel reasonably
required for the Joint Operations. Also obtain when appropriate, such occasional
or part-time services of experts, consultant, retainers, loan employees and
others as operational requirements may, in Operator's opinion, dictate, required
while always keeping in mind the Parties desire to conduct Joint Operations in
an efficient and cost effective manner.

 

 
Page 14

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

4.6.11
Acquire on behalf of the Parties and utilize in the Joint Operations all
equipment, materials and supplies necessary or desirable for carrying on the
Joint Operations.

 
4.6. 12 Acquire such lands, leases, surfaces rights, easements and rights-of-way
as may be necessary or desirable for the Joint Operations; provided, however,
that Operator shall not acquire for the Joint Operations any lands, surface
rights, easements or rights-of-way involving a total commitment in excess of the
equivalent of One hundred thousand United Sates Dollars (U.S. $ 100,000) for
each such acquisition without prior approval of Operating Committee; and
provided, further, that Operator shall not acquire for the Joint Operations any
lease for a longer period of time than ten (10) years at an annual rental in
excess of the equivalent of fifty thousand United States Dollars (U.S. $50,000)
without prior approval of the Operating Committee.

4.6.13  
Enter into contracts with others in its own name as principal or as agent for
the Parties, as appropriate and in the interest of the Parties following the
procedure, for the performance of services or supply of facilities, equipment,
materials, or supplies by such others, provided that there is a reasonable basis
to believe that such others shall be competent and capable technically and
financially, to perform properly their obligations under such contracts, and
that the selection of such contractors is to be made on the basis of the
Procedure for Acquisition of Goods and Services contained in Appendix "F" of the
Contract.

4.6.14
In case of emergency, Operator may award subcontracts without following the
procedure set out in the Procedure  for Acquisition of Goods and Services
contained in Appendix “F” of the Contract.  Operator shall, however, provide the
following information to the other Parties at the earliest opportunity after the
emergency  having been occurred – (i) the nature of the emergency and actions
taken/proposed to be taken by Operator; and (ii) intimation of the transactions
entered into/proposed to be entered into, together  with the estimated financial
impact thereof and shall submit written detailed reasons for awarding such
subcontracts along with the actual financial implications thereof.

4.6.15
Promptly pay and duly discharge all costs and expenses incurred in connection
with the Joint Operations and keep and maintain the Contract Area and any
property acquired for the Joint Operations free of all liens, charges and
encumbrances except as permitted under this Agreement or the Contract arising
out of the Joint Operations or in connection therewith.

4.6.15.1  
The Operator shall obtain and maintain in respect of the Joint Operations and
the Joint Property, insurance as required under this Agreement or any applicable
laws and such other insurance as the Operating Committee may from time to time
determine. All such required insurance shall name all the Parties having a
Participating Interest as additional insured with appropriate waivers of
subrogation.  No other insurance shall be carried by the Operator for the Joint
Operations.   Each Party individually may maintain such additional insurance or
self-insurance as it deems proper to protect its own interests in the Joint
Operations, the costs of which shall not be charged to the Joint Account.

4.6.15.2  
The policies of any such insurance shall be endorsed with waivers of all
explicit or implicit rights of subrogation to eventual rights against Government
and the Non-Operators and, alternatively, to the extent possible, the Operator
shall have Government and the Non-Operators named as additional insured.  The
Operator shall take care that Subcontractors while taking insurance shall have
the Parties and the Government named as additional insured.

 

 
Page 15

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

4.6.15.3  
Each Party shall be solely liable for any loss or damage or liability of
whatsoever nature when such loss, damage or liability is caused by such Party's
Gross Negligence or Willful Misconduct and in such event such Party shall
indemnify the other Parties against all claims in respect of any loss or damage
so arising.

4.6.15.4  
Subject to Article 4.6.15.3 and to Article 4.9.1, all damage, loss and liability
incurred in the Joint Operations which are not completely covered by insurance
policies procured or furnished under Article 4.6.15.1 shall be borne by the
Parties in proportion to their respective Participating Interests.

 
4.6.16  Open, maintain and operate a bank account or accounts  as may be
appropriate for the Joint Operations.

4.6.17
Keep the Parties informed regarding the Joint Operations and prepare  and submit
reports, technical studies and production forecasts,
including significant changes in production forecasts, and other data and
information as required under this Agreement.

4.6.18
Subject to Article 9, allow at the sole risk and expense of the concerned
Party(s), authorized representatives of the Parties full access to Joint
Operations, data and information pertaining to Joint Operations including
derivative maps, reports, books, records, accounts at all reasonable times and
conduct audits as provided for in the Accounting Procedure at the sole risk and
expense of the concerned Party (s).

4.6.19
Give timely notice to the Parties prior to physically demarcating the location
of a Well (including coordinates, and all other relevant information), as well
as reasonable advance notice of the commencement of drilling operations and give
notice of proposed testing.

 

 
Page 16

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

4.6.20
Take prompt and necessary action and measures to protect and safeguard life,
health, the environment and property and interests of the Parties and the Joint
Operations.

4.6.21
Make such recommendations from time to time to the Operating Committee for the
efficient carrying out of the Joint Operations, as Operator may consider
advisable.

 
4.6.22 Perform duties for the Operating Committee set out in Article 5, submit
Work Programmes, Budgets and AFEs as provided in Article 6 and perform such
additional operations and services as Operating Committee may from time to time
direct.

4.7
Operator undertakes to carry out each Joint Operations programme within the
limits of the Approved Work Programme and Approved Budget in accordance with the
Good International Petroleum Industry Practices (GIPIP) and shall not undertake
any operations hereunder not included in the Approved Work Programme or make any
expenditure as to a Year in excess of the amounts budgeted in the Approved
Budget except as follows:

4.7.1  
If necessary to carry out an Approved Work Programme, Operator is authorized to
make expenditure in excess of the Approved Budget up to but not exceeding ten
percent (10%) of each budget item.

4.7.2  
Operator in a Year is also authorized to make expenditures for operations in the
Contract Area not included in Approved Work Programme or not provided in an
Approved Budget, limited, however, to a total not exceeding one hundred thousand
United States Dollars (US $ 100,000) provided that the expenditures are not for
purposes previously rejected by the Operating Committee and provided such
expenditures shall be reported promptly to the Operating Committee by the
Operator. Once the itemized report of such expenditures has been approved by the
Operating Committee, the amount of expenditure limit shall be increased back to
one hundred thousand United States Dollars (U.S. $100,000).

4.7.3  
Operator shall annually submit a forecast of operating expenses (also called
operating expenditure budget) to Operating Committee. Should actual or
anticipated operating expenses for any annual period be in excess of such
forecast by ten percent (10%) or two hundred thousand United States Dollars
(U.S. $200,000), whichever is less, appropriate explanation of the over
expenditure shall be presented to the Operating Committee as soon as such
overrun is evident and Operating Committee shall determine corrective actions to
be taken, if any. Operator shall furnish to the Parties quarterly statements of
actual versus budgeted expenditures with appropriate explanations for variances.

4.8
Operator shall promptly provide the Parties all duplicate samples, properly
packed, of rocks and fluids collected during operations.  Operator shall always
be mindful in the conduct of Petroleum Operations of the rights and interest of
India.

 

 
Page 17

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

4.9
If a claim is made against any Non-Operator or if any Party is sued on account
of any matter arising from operations hereunder over which such Party has no
control because of the rights given to the Operator by this Agreement, such
Party shall immediately notify all other Parties and the claim or suit shall be
treated as any other claim or suit involving operations hereunder.  Operator
shall (except in the case of class actions) without admission of liability,
either compromise, settle or defend claims and litigation (to the extent not
covered by insurance) arising out of Joint Operations provided, however, that
Operator shall not pay or waive rights to more than the equivalent of one
hundred thousand United States Dollars (US $100,000) in full settlement of any
claim or suit without approval of the Operating Committee. Any claim or
litigation involving an amount in excess of the equivalent of two hundred fifty
thousand United States Dollars (US$ 250,000) shall be reported promptly to the
Operating Committee and shall not be settled without approval of the Operating
Committee. The above is without prejudice to the legal rights available to a
Party to  be represented by their own counsel at their expense to participate in
the defense of any such claim, demand, suit, or action. Any costs and expenses
incurred shall be treated as part of the Joint Account.

4.9.1  
The Operator shall not be liable to the Parties or any of them for any loss or
damage arising in connection with the conduct by the Operator of Joint
Operations hereunder, and, further each Party shall, to the extent of its
Participating Interest, indemnify the Operator against any action, claim or
demand arising in connection therewith except in the case of any loss or damage
or any action, claim or demand, aforesaid arising directly out of Gross
Negligence or Wilful Misconduct on the part of the Operator.

4.9.2  
In the event a claim, demand, action is made by the Government or any third
party or arising out of a liability is made against or incurred by or demanded
from any Party who is not the Operator under the terms of this Agreement, then
such Party shall upon receipt of any such claim or demand or upon receipt of
notification of such suit or action, promptly report the same to the Operator
and all of the other Parties and provide therewith details of such claim,
demand, suit or action. Any compromise, settlement or waiver of any rights in
respect of any such claim, demand, suit or action made by such Party without the
prior approval of the Operating Committee, shall be solely to the account of
such Party and the other Parties hereto shall not be responsible or liable
therefor or any part thereof. The aforesaid is without prejudice to legal rights
as may be available to the Parties to be represented by their own counsel at
their expense in the participation or defense of any such claim, demand, suit or
action.

4.10  
Each of the Parties shall obtain and maintain, in respect of its Participating
Interest share of any liability to third parties which may arise in connection
with the Joint Operations, such insurance or other evidence of ability to
meet  any such liability as shall from time to time be mutually agreed by the
Parties. Each of the Parties shall, as and when required by the Operator,
produce to it such evidence as it shall reasonably require to establish that
such insurance or such ability exists and is being maintained.

 

 
Page 18

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

 
4.11
The Parties agree that non-operating party may desire to second their personnel
to JV operation.  Such secondment of personnel by a Non-Operating party to
Operator’s organizations shall be subject to a terms and conditions which shall
be mutually agreed to and covered under a separate agreement/arrangement between
Operator and concerned non-operating party:

 
4.12
The Parties agree that costs incurred by the Operator in relation with the
performance of its obligations under Article 4 shall be chargeable to the Joint
Account.

Page 19

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

 
ARTICLE 5 - OPERATING COMMITTEE

5.1
To provide for the overall supervision and direction of Joint Operations, there
shall be established an Operating Committee consisting of one (1) representative
of each of the Parties to this Agreement. The nominee of the Operator shall be
the convenor and chairman of the Operating Committee.

Each Party shall within two weeks of the signing of this Agreement notify the
other Party (s) in writing of the name and address of its representative and may
at any time and from time to time replace its representative by notice to the
other Party and may designate one or more alternate representatives to act in
the absence of its representative. A representative shall be deemed authorized
to bind the Party nominating such representative for the purposes of this
Agreement.

The Operating Committee is the coordinating body for the direction, control and
administration of the Joint Operations. The principal functions of the Operating
Committee shall be:

5.1.1
To establish policies from time to time governing various aspects or activities
of the Joint Operations.

5.1.2
To review, approve and revise annual Work Programmes and corresponding Budgets,
as proposed by the Operator.

5.1.3
To appoint such technical, financial, accounting, legal or other sub­committees
as the representatives may deem appropriate for studies, analyses, reports,
etc., on matters pertaining to the Joint Operations.

5. 1.4                      To review reports on Joint Operations conducted in
the Contract Area.

5.1.5
To review and approve any proposal for the appraisal of an area and to delineate
any Discovery.

5.1.6
To review, revise and approve Work Programmes and Budgets for Exploration,
Development and Production Operations as defined herein and as proposed by the
Operator.

5.1.7                      To review and approve Exploration Wells and locations
(including location of Wellsrequired for any purposes whatsoever).

5.1.8                      To review and approve Well stimulation programmes.

5.1.9                      To review and determine the area to be relinquished
 

Page 20

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

 
5.1.10
To approve appointment of Subcontractors for carrying out any Petroleum
Operations by Operator beyond the authority vested in the Operator under this
Agreement.

5.1.11                      To review and approve the declaration of a Discovery
as a Commercial Discovery.

5.1.12                      To review and approve any proposed plan for joint
development.

5.1.13                      To review and determine the area that may be
voluntarily relinquished.

5.1.14
To review and approve such other matters with respect to Joint Operations in the
Contract Area as may be referred to the Operating Committee by any member of the
Operating Committee.

5.1.15
Any other matter which is required by the terms of this Agreement to be approved
by the Operating Committee.

5.2
Unless otherwise agreed, the Operating Committee shall meet at least once every
three months at the office of the Operator or elsewhere as the Parties shall
unanimously decide. The Operator shall call such meetings and shall give at
least twenty (20)  days prior notice  of the time and date of each meeting,
together with the agenda and all supporting data/information etc. Additional
meetings may be requested and convened by any Party.  A Party which wishes to
hold an additional meeting shall give notice at least twenty (20) days before
the proposed meeting date, specifying the proposed time, place and agenda of the
meeting. In case of emergency, a meeting shall be convened whenever necessary,
upon such notice as shall be reasonable in the circumstances. Matters not
included in the agenda may be taken up with the unanimous consent of all Parties
(whether present at the meeting or otherwise).

5.3  
The Chairman of the Operating Committee, who shall preside over the meeting and
prepare the minutes, shall be a representative of the Operator. The minutes
shall include the names of the representatives present, the Parties they
represent and any formal action taken by the Operating Committee. The minutes
shall be deemed correct and approved when the Operator receives written, telex
or facsimile approval from the Parties. The Chairman shall maintain a permanent
file of all Operating Committee determinations.

5.4  
Any of the Parties may submit matters for determination without holding a
meeting provided such matters are submitted by facsimile, telex or acknowledged
telegram to the other Parties. In such event, the other  Parties shall vote by
giving advice by facsimile, telex or acknowledged telegram of such vote to the
submitting Party within thirty (30) days with copies to all the other parties
unless the communication relates to the deepening, completing, sidetracking,
plugging back, reworking, coring, testing or abandoning of a well on which
drilling equipment is located, in which case each Party shall vote within forty
eight (48) hours. A failure to vote shall be deemed to be a negative response.

 

 
Page 21

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

5.5  
Each representative or alternate representative at the cost and expense of the
Party he represents, shall be entitled to have present at any Operating
Committee meeting such reasonable number of advisors as he may desire and which
are appropriate to the Joint Operations matters under consideration.

5.6  
Subject to Article 11 of this Agreement, all decisions of the Operating
Committee shall be made by unanimous vote.  In case of difference of opinion all
decision shall be taken by affirmative vote of 70% or more of the participating
interest with each party voting according to its participating interest and such
decisions shall be final and binding on the Parties.

5.7  
The lodging, food, transportation and incidental costs incurred by
representatives on the Operating Committee to attend meetings of the Operating
committee shall be borne by the respective Parties they represent.

Page 22

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

 
ARTICLE- 6 - WORK PROGRAMMES AND BUDGETS

6.1
On or before the 30th day of November of each Year Operator shall submit to the
Parties a proposed Work Programme and Budget for the Contract Area for the
subsequent Year, which Work Programme and Budget shall include as a minimum the
work and expenditure required to be performed or incurred during such Year. At
the same time as that Year's Work Programme and Budget are submitted, a
provisional Work Programme for the next succeeding Year shall be presented by
the Operator. Operator shall submit to the Parties a proposed Work Programme and
Budget as soon as possible after the execution of this Agreement for the
remainder of the Year in which this Agreement is executed.

6.2
On or before the 31st day of December of each Year, the Operating Committee
shall agree upon and adopt a Work Programme and Budget for the subsequent Year
which shall include as a minimum the work and expenditure required to be
performed or incurred under the Contract during such Year. At the time of
agreeing upon and adopting a Work Programme and Budget, the Operating Committee
shall provisionally consider, but not act upon or adopt, a Work Programme for
the next succeeding Year. As soon as possible after the adoption of a Work
Programme and Budget, Operator shall provide a copy thereof to each Party.

6.3
Each Budget shall be subdivided into two major functional categories, i.e.
exploration/ appraisal versus development & production, and within each of those
by sub-categories further broken down by programmed activity  and individual
projects. Purchases of materials and supply inventory not specifically made for
an Approved Budget project shall be budgeted as a separate item. Each individual
project costing more than one hundred thousand United States Dollars (U.S.
$100,000) per program shall be either labeled as "Firm" or "To Mature" depending
upon the degree of complete details furnished at the time of budget
presentation.

6.4
For a project to be considered "Firm" within the Budget, it will require program
description, objectives, cost estimates and economic justification sufficiently
complete and in such detail as to allow thorough evaluation of the project.

6.5  
Projects that do not meet this presentation standard at the time of Budget
formulation may also be included in the Budget to receive approval in principle,
and shall be labeled as "To Mature". Such projects must be subsequently fully
justified to the Operating Committee and receive its specific approval prior to
the physical commencement of the project.

6.6  
Operator shall submit to the parties holding a Participating Interest (except if
such interest is being carried by another party) for prior approval
Authorization For Expenditure Requests ("AFEs") covering each individual project
within the Approved Budget in the following categories and shall obtain approval
prior to undertaking the following projects:

Page 23

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

6.6.1  (a)                      Licenses - any initial cash   payment for a
license.

 
6.6.1  (b)
Exploration - quarterly projects for geological and geophysical work, core
drilling and concession rentals after any initial payment, and overhead charges
applicable to geological and geophysical operations.  Under special
circumstances Operator shall obtain separate approval for major geological or
geophysical projects, which are in themselves in excess of one hundred thousand
United States Dollars (U.S. $100,000).

6.6.1  (c)                      Drilling:

i)  
Each Exploration and

ii)           delineation Well.
 
iii)
Deepening of any Well below original target depth, involving exploratory
footage.

 
iv)
Workovers in excess of two hundred thousand United States Dollars (U.S.
$200,000) for any Well, including deepening in to development zones.

6.6.1  (d)                      Plant and equipment:

i)  
Individual construction projects and equipment purchases exceeding one hundred
thousand United States Dollars (U.S. $100,000) each.

 
ii)
Equipping of Wells exceeding two hundred thousand United States Dollars (U.S.
$200,000). Equipping of Wells includes generally the purchase and installation
of equipment and material for lifting, heating, storing and otherwise handling
production.

 
iii)
Projects and purchases costing less than one hundred thousand United States
Dollars (U.S. $100,000) each shall be approved by Operator but shall be included
for information purposes in approval requests submitted monthly to the Parties.

 
iv)
Storehouse stocks - quarterly commitments for purchases of advance materials for
projects not yet approved.

v)           Unusual commitments of any kind.

6.6.2
The AFEs shall be based on the best current estimates in hand and shall be
developed prior to the availability of firm contract rates. Operator shall also
submit supplements for approval when it is anticipated that AFEs will be
overextended by more than ten percent (10%).

 

 
Page 24

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

6.6.3
Approval of an AFE shall be confirmed within ten (10) days by returning a signed
copy of the AFE to the Operator failing which it shall be deemed to have been
approved.

Page 25

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

 
ARTICLE 7 - COSTS, EXPENSES AND DEFAULT

7. 1
Subject to the provisions of Article 3, all costs and expenses incurred by the
Operator on behalf of the Parties in carrying out Joint Operations under this
Agreement (whether or not specifically mentioned herein) shall be borne and paid
by the Parties in proportion to their Participating Interests.

7.2
In the event of any conflict between this Agreement and the applicable
provisions contained in the Accounting Procedure or in any supplemental
accounting instructions approved by the Operating Committee, the applicable
provisions in the body of this Agreement shall govern to the extent of such
conflict.

7.3
The terms and provisions of the Accounting Procedure may be changed or modified
as agreed in writing by the Parties from time to time .

7.4
Audits of Operator's accounts and records relating to the accounting made under
this Agreement shall be conducted as provided for in the Accounting Procedure.

7.5
Inventories of Joint Operations assets shall be taken as provided for in the
Accounting Procedure.

7.6           Default

7.6.1
If any Party (hereinafter called the "Defaulting Party") fails to pay in part or
full its share of any Cash Call by the date of payment thereof as provided in
the Accounting Procedure (the Due Date):

 
a)
The Operator shall notify all Parties of such default no later than the fifth
(5th) Business Day from the Due Date.

 
b)
The Parties with a Participating Interest other than the Defaulting Party
(hereinafter called the "Non-Defaulting Parties") shall contribute, as
hereinafter provided, to the amount in default.

 
c)
If the Defaulting Party fails to remedy its default within ten (10) days of the
Due Date, the Operator shall notify the Non-Defaulting Parties of the amount in
default and shall make further Cash Call to each of the Non-Defaulting Parties,
with a copy to the Defaulting Party, based on the proportions that such
Non-Defaulting Party's Participating Interest bears to the total of the
Participating Interest of the Non-Defaulting Parties.

 
d)
Unless the Operator notifies the Non-Defaulting Parties that such default has
been remedied, each of the Non-Defaulting Parties shall pay the amount specified
in the Cash Call issued pursuant to (c) above not later than twenty (20) days
from date of receipt of such notice, and shall continue to pay, in addition to
its share of subsequent Cash Call, the same proportions of that part of all
subsequent Cash Calls attributable to the Defaulting party until such time as
the Defaulting Party has remedied its default as hereinafter provided.

 
e)
The Operator shall promptly notify the Parties whenever a default has been
remedied.

 

 
Page 26

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

7.6.2
The Defaulting Party shall-have the right to remedy its default up to the time
of transfer of its Participating Interest under Article 7.7 by payment of the
amount due together with interest thereon calculated at the LIBOR rate on the
Due Date plus two percent (2%) per annum from and including the Due Date for the
Calendar Month in which the Due Date falls and thereafter at the LIBOR rate
ruling on the first day of each subsequent Calendar Month plus two percent (2%),
such interest being compounded on a Calendar Monthly basis throughout the period
of the default. All interest received by the Operator shall be paid to the
Non-Defaulting Parties as well as any funds advanced in respect of the amount in
default refunded.

7.6.3
The Non-Defaulting Parties shall at all times have a lien to the extent of
default on the Defaulting Party's Participating Interest share and property held
pursuant to this Agreement and the Defaulting Party's share of Petroleum
produced to secure the payment, in full, of the amount in default together with
interest as provided in Article 7.6.2 and, in the event of a sale of Petroleum
by the Defaulting Party, for the purpose of enforcing such lien, shall have the
right to require the purchaser of the Defaulting Party's share of Petroleum to
make payment in respect thereof to the Operator or whomsoever it nominates until
the Non-Defaulting Parties have recovered, in full, the amount in default
together with interest as provided in Article 7.6.2. Such purchaser shall be
entitled to rely upon information given to it by the Operator for and on behalf
of the Parties as to the amount in default and interest due, and the Operator or
whomsoever it nominates, shall be empowered to give such purchaser a full and
complete receipt in respect of such payment.

7.6.4
All sums which may become payable to Non-Defaulting Parties under Article 7.6.3
shall be paid by the Operator to them (to a designated bank account of the
Non-Defaulting Party's choice) as soon as possible, and any residual balance
shall be paid promptly to the Defaulting Party. Any foreign exchange gains or
losses as calculated by the Operator shall be for the account of the Defaulting
Party.

7.6.5
The Defaulting Party shall remain liable and obligated for its Participating
Interest share of all costs and obligations that in any way relate to the
abandonment of Petroleum Operations. Any sums paid in respect of abandonment by
the Non-Defaulting Parties on behalf of the Defaulting Party (together with
interest thereon pursuant to Clause 7.6.2) shall remain a debt due and owing by
the Defaulting Party.

 

 
Page 27

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

7.7           Continuation of Default

7.7.1
After any default has continued for thirty (30) Business Days from the date of
written notice of Default under Article 7.6 and for as long thereafter as the
Defaulting Party remains in default on any payment due under this Agreement, the
Defaulting Party shall not be entitled to vote on any matter coming before the
Operating Committee during the period such default continues. Unless agreed
otherwise by the Non-Defaulting Parties, the voting interest of each
Non-Defaulting Party shall be in the proportion which its Participating Interest
bears to the total of the Participating Interest of all the Non-Defaulting
Parties. Any matter requiring unanimous vote of the Parties shall be deemed to
exclude the Defaulting Party. Notwithstanding the foregoing, the Defaulting
Party shall be deemed to have approved, and shall join with the Non-Defaulting
Parties in taking any action to maintain and preserve the Contract.

7.7.2
In the event that the default continues for more than ninety (90) days (the
"Default Period") and the Defaulting Party does not pay the amount in default
plus accrued interest by the end of such time, a proportion of the Participating
Interest of such Defaulting Party shall, at the sole election of the
Non-Defaulting Parties be forfeited to the Non-Defaulting Parties to reflect the
ratio that the Participating Interest of the Defaulting Party bears to the
cumulative contribution made by the Defaulting Party to the cumulative
contribution made plus amount in default of the Defaulting Party.

Following such forfeiture the reduced Participating Interest of the Defaulting
Party shall be in accordance of the following formula, except that in the case
of a default on the first Cash Call made on a Party, ten percent (10%) of the
Participating Interest of the Defaulting Party shall stand forfeited:-

A           =           [B/(B+C)]                                x           
D           where:

A           =           the reduced Participating Interest of the Defaulting
Party.

 
B
=
the total contributions to the Joint Operations costs of the Defaulting Party up
to but not including the amount in default.

C           =           the amount in default.

D           =           Participating Interest of the Defaulting Party.

Such forfeiture shall not restore the Defaulting Party's powers andrights
forfeited under Article 7.7.1 until such Defaulting Party has paid the first
Cash Call following

including the obligations related thereto, in proportion to their Participating
Interests or in such other proportion as unanimously agreed by them. The
Defaulting Party shall execute such documents as are necessary to transfer its
Participating Interest at its sole cost.
 

 
Page 28

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

7.7.3
Notwithstanding the provisions of Article 7.7.2, in the event that as a result
of a forfeiture by the Defaulting Party of a part of its Participating Interest
pursuant to the provisions of Article 7.7.2, the remaining Participating
Interest of the Defaulting Party falls below ten percent (10%), or as permitted
under the Contract, the Non-Defaulting Parties shall assume such Participating
Interest of the Defaulting Party in proportion to their Participating Interest
or in such other proportion as unanimously agreed by them, subject to the
approval of Management Committee / Govt. of India.

 
7.7.4  (i)  The Defaulting Party shall be deemed to have surrendered its
Participating Interest in the Contract and each of the Non-Defaulting Parties
shall have the right to request the transfer to it and to acquire, with effect
from the date of default, subject to any necessary consent of the Government, as
beneficial owner and free of any liens, charges and encumbrances, the
Participating Interest of the Defaulting Party.

 
(ii)  The Defaulting Party shall promptly join in such actions as may be
required to obtain any necessary consent of the Government and shall do such
acts and execute such documents as may be necessary to transfer its
Participating Interest in the Contract to the other Parties in the proportions
agreed and all rights, title and interest derived there from in and under this
Agreement, and in any Petroleum produced and Joint Property. All costs and
expenses relating to such transfer shall be for the account of the Defaulting
Party.

 
(iii) Each Party hereby irrevocably appoints the Operator (and any successor
Operator) to act, in the event of default by such Party in the circumstances
described in that clause, as its lawful attorney to do such acts and execute
such documents as may be necessary to transfer all of its interest in accordance
with the provisions thereof.

7.8           Forfeiture to be Without Prejudice to Other Remedies and No Right
of Set  off

7.8.1
The foregoing provisions, including but not limited to the transfer of
Defaulting Party's Participating Interest, are without prejudice to any other
remedies or rights which the Non-Defaulting Parties may have against the
Defaulting party with respect to a default.

7.8.2
Each Party acknowledges and accepts that a fundamental principle of
this  Agreement is that each Party pays its Participating Interest share of all
amounts due under this Agreement as and when required.  Accordingly, any Party
which becomes a Defaulting Party undertakes that, in respect of either any
exercise by the Non-Defaulting Parties of any rights under or the application of
any of the provisions of this Article 7, such Party hereby waives any right to
raise by way of set off or invoke as a defense, whether in law or equity, any
failure by any other Party to pay amounts due and owing under this Agreement or
any alleged claim that such Party may have against Operator or any Non-Operator,
whether such claim arises under this Agreement or otherwise.  Each Party further
agrees that the nature and the amount of the remedies granted to the
Non-Defaulting Parties hereunder are reasonable and appropriate in the
circumstances.

 

 
Page 29

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

7.9
Any Party may make an additional contribution on behalf of another Party so as
to satisfy a Cash Call of such other Party in accordance with this Article.

Page 30

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

 
ARTICLE 8 - OWNERSHIP OF ASSETS

8.1
Subject to Article 2 and 8.3 hereunder, all assets acquired by Operator for the
Joint Operations shall be owned by the Parties in proportion to their respective
contributions to the costs of acquisition of such assets.

8.2
Unless the Operating Committee previously authorizes otherwise, Operator shall
acquire for the Joint Operations only such assets as are reasonably estimated to
be required in carrying out the Joint Operations provided for in Approved Work
Programmes and Budgets, or revisions thereof, it being intended that Operator
shall not unreasonably stockpile materials and equipment for future use without
the approval of the Operating Committee.

8 3
Whenever Operator considers that any Joint Operations' asset is no longer needed
in carrying out the Joint Operations, Operator shall notify the Parties and such
surplus assets shall be disposed of as provided in Article III of the Accounting
Procedure.

8.4
Any Party may delegate to Operator the authority to sell and dispose of such
asset and the proceeds of any such sale shall reflect the percentage ownership,
which the Parties have in such assets.

8.5  
Operator may also utilize in the Joint Operations equipment owned and made
available by any Party and charges to the Joint Account for use of such
separately-owned equipment shall be made as provided in Section 3 of the
Accounting Procedure of the Contract.

8.6  
In connection with work to be carried out pursuant to an Approved Work Programme
and Approved Budget, the Operator, or any Affiliate of the Operator, may,
subject to the provisions of the Contract, supply all necessary material and
services whether owned, leased or otherwise, from its own resources and shall
charge the costs thereof to the Joint Account in accordance with Section 3.1.8
of the Accounting Procedure of Contract.

Page 31

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

 
ARTICLE 9 - INFORMATION, REPORTS AND CONFIDENTIALITY

9.1           Operator shall furnish to the Parties data, information and
following reports:

9.1.1
Daily Well progress report (for Exploration and Appraisal Wells) which shall
include for the day concerned, a brief description of the work  performed, the
number of feet drilled, the type and depth of the formation penetrated, the size
and landed depth of any casing landed, the type and results of any tests made,
and such other Well information  or data  as  the Parties from time to time may
reasonably specify.

9.1.2
During drilling, daily reports of cumulative Well costs.

9.1.3  
Monthly report of Joint Operations, which shall include a summary of services,
and all Exploration, Appraisal, drilling and testing operations performed during
the period covered by such report.

9.1.4  
Immediate reports on Well developments of significance, such as blow-out or
Discovery, and immediate notice of special events of importanceto the Joint
Operations, such as fire, accident, sabotage or acts of God involving loss of
life or serious property damage; strikes and riots; significant competitor
activities; or Government actions threatening or adversely affecting the rights
and interests of the Parties. Such immediate reports or notices shall be given
by telex, telegraph, telephone or equivalent means and confirmed in writing.

9.1.5  
A comprehensive final report upon the completion of each significant phase in
the operations.

9.1.6
Such other reports as the Parties may from time to time request as to
all  lands,  concessions,  surface  rights, easements,
rights-of-way,  facilities, equipment, materials and supplies acquired by or
disposed of by Operator pursuant to this Agreement.

9.1.7
Copies of well logs, well completion reports, Core Analysis Reports and the G&G
studies

9.2
Subject to Article 9.3, the Parties shall have full access at their sole cost
and risk at all reasonable times to all of the Joint Operations and may:

9.2.1
Inspect all records, books and accounts, data studies, logs, surveys, files,
maps and other information kept by or available to Operator;

9.2.2                      Receive samples of cores, Well cuttings and
Petroleum;

9.2.3
Have copies made (first copy at Joint Operations expense) of all data or
information, including laboratory analyses and maps;

 
Have special  studies performed by Operator (at such requesting Party's expense,
unless approved by Operating Committee) to the extent when studies do not
interfere with or delay Operator's  performance of its duties under this
Agreement; and

9.2.5
Request and receive from Operator forecasts, schedules, statements or status
reports where reasonable and where not otherwise provided for in this Agreement,
preparation costs of which shall be for such  Party's account unless approved by
the Operating Committee.

9.3
Nothing in this Agreement shall require any Party to divulge proprietary
technology to the other Parties, and subject to Article 22 of the Contract, the
following principles as to utilization and protection of proprietary technology
in the Joint Operations shall apply:

9.3.1
Operator may from time to time utilize its proven proprietary technology at
Joint Operations expense in the conduct of Joint Operations and subject to
Article 9.3.2, may take such reasonable precautions as Operator deems necessary
or desirable (including agreement with or commitments from its employees,
contractors and agents against such disclosure) to prevent disclosure of or
entitlement to its proprietary technology including improvements and inventions
resulting from use hereunder to others.

9.3.2
Non-Operators shall have access to basic field data obtained through Operator's
utilization of such proprietary technology and to final maps, data, information
and conclusions resulting from any such utilization, with entitlement to copies
of such basic and final data, interpretations, maps, information and conclusions
as provided for in this Agreement.

9.3.3
Any Party may at its own expense utilize its proprietary technology in
developing from Joint Operations field data whatever information or conclusions
it desires without the obligations to disclose such information, its result or
conclusions to the Parties without adversely affecting Joint Operations.

9.3.4
Each Party utilizing proprietary technology as mentioned in this Article 9.3
shall hold all other Parties free and harmless from all third party claims,
charges and damages arising out of such utilization, including  but not limited
to claims based on patent infringement.

9.3.5
Should future difficulties or controversies between the Parties occur regarding
application of the principles of this Article 9.3, the Parties shall consult in
good faith with the view to best possible utilization of proprietary technology
in the Joint Operations, giving due regard to each party's right to protect the
proprietary nature of its technology and the Parties' right and need for access
to data and information as well as to final results for justifiable
determinations of programmes and budgets.

 

 
Page 32

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

9.4
Except as otherwise provided herein, each Party undertakes to treat as
confidential, and prevent disclosure to any third party of any and all
information and data obtained in the Joint Operations and relating to the
Contract Area or to operations undertaken pursuant to this Agreement.

9.4.1
In consideration a Party (Disclosing Party) allowing the receiving Party
(Receiving Party) access to the Confidential Information, the Receiving Party
agrees to keep the Confidential Information confidential and acknowledges that
the Disclosing Party considers the information disclosed to the Receiving Party
to be proprietary. The Receiving Party shall not disclose the Confidential
Information to any one except in accordance with the following terms:

 
a)
The Receiving Party agrees to keep the Confidential Information strictly
confidential and subject to sub-clause (b) to (d) inclusive, below, agrees not
to disclose such Confidential Information to any person in any manner or mode
whatsoever (including by means of photocopy or reproduction) without the prior
written consent of the Disclosing Party, such consent not being unreasonably
withheld.

 
b)
The Receiving Party may disclose the Confidential Information without the prior
written consent of the Disclosing Party to the extent such information

 
i)
is already in the public domain or comes into the public domain other than
through a breach of the terms of this Agreement by the Receiving Party or by any
person to whom disclosure of Confidential Information by the Receiving Party is
permitted pursuant to sub-Clause (c) or (d) below; or

 
ii)
is required to be disclosed under applicable law or by a governmental order,
decree, regulation or rule binding upon the Receiving Party provided that, as
soon as practicable, the Receiving Party shall give prior written notice to the
Disclosing Party that such disclosure is required and consults with the
Disclosing Party on whether, and if so what  action should be taken to resist
the requirement.

 
c)
The Receiving Party may disclose the Confidential Information without the prior
written consent of the Disclosing Party to the Receiving Party's Affiliate.

 
d)
The Receiving Party may also disclose the Confidential Information without the
prior written consent of the Disclosing Party to such of the following persons
who have a clear need to access it for the purpose of evaluating, negotiating or
advising on matters arising out of this Agreement e.g. employees, officers and
directors of the Receiving Party.

 

 
Page 33

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

 
e)
The Receiving Party may also disclose the Confidential Information without prior
intimation  to  any  professional  adviser or financial institution retained  by
the Receiving Party for the purpose of
evaluating the Confidential Information or evaluating, financing, negotiating or
advising on matters arising out of this Agreement.

 
f)
Prior  to  making  any  disclosure of Confidential  Information as permitted
under sub-Clause (c), (d) or (e) above, the Receiving Party shall procure an
undertaking that the proposed  recipient  of such  Confidential Information is
made  aware of the terms of this Article and adheres to and be bound by the
terms of this Article as if they were a party to the extent  of Agreement
contained in this Article.

9.4.2
Notwithstanding   anything contained hereinabove, the provisions of this
Article  shall continue and bind the Parties for a period not exceeding five(5)
years from the date of termination of the Agreement.

Page 34

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

 

ARTICLE 10 - WORK PROGRAMME COMMITMENT

The Parties shall carry out the Work Programme as given in the Contract. In case
of Minimum Work Programme, the Operator is authorized to take all decisions and
actions necessary as per the commitment made in the Contract.

Page 35

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

 
ARTICLE 11 - RELINQUISHMENT

11.1
When it becomes necessary pursuant to the terms of the Contract to relinquish
portions of the Contract Area:

 
11.1.1 The Parties holding a Participating Interest shall make reasonable best
efforts to reach agreement on the area proposed to be relinquished
one  hundred  twenty  (120)  days  before such relinquishment is required to be
made. If such Parties are unable to reach unanimous agreement ninety (90) days
prior to the date on which the area or areas must be relinquished, the following
procedure shall be observed, provided all selections of the area or areas to be
relinquished are within the requirements and restrictions of the Contract:

 
a)
In the event Parties holding at least seventy percent   (70%) of the total
Participating Interests agree on an area or areas to be relinquished, such area
or areas shall be relinquished.

 
b)
In respect to any area or areas to be relinquished on which the Parties holding
at least  seventy percent  (70%) of the total  Participating Interests cannot
agree, each Party shall select a proportionate part of the remaining area or
areas to be retained equal to its Participating Interest.

11.1.2
The Operator shall proceed in a timely manner to relinquish the area or areas
determined in accordance with the foregoing procedures and pursuant to Act and
Rules.

Page 36

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

 

ARTICLE 12 - WITHDRAWAL

12.1
Any Party may withdraw from this Agreement at any time provided that during any
Exploration Phase, no Party shall withdraw until all the Exploration Operations
obligations have been met and completed.

12.2
The Party desiring to withdraw (hereinafter called the "Withdrawing Party")
shall give notice of intention to withdraw to the other Parties at least forty
five (45) days in advance of the date of withdrawal and such notice shall
contain:

12.2.1
Designation of the effective date for withdrawal, which shall be the last day of
a Calendar Month;

12.2.2
An offer to assign, without compensation, to the other Parties having a
Participating Interest all of the Withdrawing Party's right, title and interest
in the Contract Area and all Joint Property; such offer to be conditioned on the
receiving Parties assumption, subject to Article12.4, of all future obligations
related to the right, title and interest offered.

12.2.3
The other Parties shall have thirty (30) days from date of receipt of such
notice to notify the Withdrawing Party whether they accept the offer and elect
to receive the assignment provided for in Article 12.2.2.

 
(a)
If one or more of the other Parties having a Participating Interest give notice
of acceptance and election to receive such an assignment within such thirty (30)
day period, the Parties shall promptly execute and deliver and do and perform
all acts and things necessary and appropriate to effect such assignment. If more
than one of the other Parties elect to receive the assignment, the Withdrawing
Party interest shall be apportioned among the assignees in the proportion that
the Participating Interest of each (prior to assignment) bears to the total of
the Participating Interest of all such assignees unless another apportionment is
agreed to by all the assignees.

 
(b)
If none of the other Parties having a Participating Interest gives notice of its
acceptance and election to receive such an assignment within the thirty (30) day
period, the Parties shall promptly cause Operator to wind up the Joint
Operations (unless the existing Parties mutually agree otherwise to continue the
Joint Operations) and the Parties shall do and perform all acts and things
necessary and appropriate to this end, including termination of the Contract,
subject to approval of Operating Committee. In such event all Parties, including
the Withdrawing  Party, shall continue to be responsible for their respective
ParticipatingInterest share of all financial and other obligations hereunder and
under the Contract until the Contract is terminated without further obligation
of the Parties and final settlement has been made among the Parties.

 

 
Page 37

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

12.2.4
In the event of an assignment under Article 12.2.3 (a), the Withdrawing Party
shall be responsible for its financial obligations accrued under the Contract
and this Agreement  until the Contract is  terminated, including but not limited
to payment of its full share of costs and expenses as to any particular Well,
geophysical survey or other individual project investment for which they were
committed either under the terms of the Contract or through an Approved Work
Programme or Budget which has been commenced  (or funds therefor committed)
before such date of notice of withdrawal, even though completion thereof may
post date such date of notice, except to the extent such obligations shall be
assumed or paid by any third party which acquired from the remaining Party or
Parties within three (3)  months of the effective date of withdrawal all or part
of the interest assigned by the Withdrawing Party. The Withdrawing Party shall
not be obligated for any obligations or commitments undertaken by the remaining
Parties after the date of giving notice of withdrawal, but the Withdrawing Party
shall be obligated for its Participating Interest share of any obligations which
may accrue under the Contract prior to the date of notice.

12. 3
The Withdrawing Party shall remain liable and obligated for its Participating
Interest share of all expenditure accruing to the Joint Account under any
relevant programme and budget prior to the date on which the notice of
withdrawal was given, and also to pay all reasonable costs and expenses incurred
by the other Parties in connection with such withdrawal.

12.4
A Withdrawing Party shall not be allowed to withdraw from the Contract and this
Agreement if its Participating Interest is subject to any lien, charges or
encumbrance other than those arising under the Contract unless the other Parties
are willing to accept the assignment subject to the additional lien, charges or
encumbrance.

12.5
In the event a Party or Parties elect to receive an assignment of the
Withdrawing Party's interest, all cost of the assignment, including notarial and
registration fees and transfer taxes, shall be the sole obligation of such
Party or Parties in the proportion of the Participating Interest each receives
to the total Participating Interest assigned and such Party or Parties shall
indemnify the Withdrawing Party against and hold it harmless from any further
costs, expenses or liabilities incurred under the Contract from the date of
notice.

Page 38

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

ARTICLE 13 - SALE, TRANSFER AND ASSIGNMENT

 
13.1
The right to sell, assign or transfer a Participating Interest (including any
Participating Interest in accordance with any Carried Interest Agreements /
Arrangements), in whole or in part, shall be subject to the consent of other
Parties which consent shall not be unreasonably withheld and to the terms of the
Contract and Article 11 and 12 and the following  provisions of Article 13.

 
13.2
Any Party shall have the right at any time, with  or without compensation, to
sell ,transfer and/or assign to an Affiliate all or part of its right, title and
interest in the Contract Area and in and under  this Agreement provided that (i)
proposed assignee expressly assumes all of the Party's obligation with respect
to such Participating Interest;  (ii)  such Affiliate is technically and
financially competent to undertake the obligations of the Assignor and (iii)
Assignee provides an unconditional bank guarantee to the extent of committed and
additional Work Programme.

13.3           Obligation to make First Offer

13.3.1
If  any Party ("Transferring Party") desires to Transfer to any person other
than an Affiliate, all or any part of its Participating Interest  ("Sale
Interest"),  it shall notify each of the other Parties (“Non Transferring
Parties”) in writing of its desire to Transfer such Sale Interest by way of a
written notice  (“Sale Notice”)  and the following conditions shall apply :

A.           Where the Transferring Party has a Third Party Offer

 
(i)
Where the Transferring Party has a bona fids offer from a responsible
prospective purchaser (herein referred to as “Third Party Offer”) then the Sale
Notice shall set forth the key terms and conditions of such Third Party
Offer.  The Non Transferring Parties receiving such Sale Notice shall have the
right and option for a period of  30 (thirty) Business Days from the date of
receipt of the Sale Notice (“Offer Period”) within which to agree, by a written
notice (“Acceptance Notice”)  to acquire the Sale Interest in the proportion
that their respective Participating Interests bear to the total Participating
Interests of the Non Transferring Parties or in such other proportion that they
may agree (within the Offer Period), at the price and upon the key terms and
conditions as set forth in such Sale Notice or on terms equivalent to the key
terms set forth in the Sale Notice, and these equivalent terms shall be
indicated in the Acceptance Notice.  Upon receipt of the Acceptance Notice(s)
for all or part of the Sale Interest, the agreement for sale shall be completed
and the Transferring Party shall transfer and complete the sale  of the Sale
Interest specified in the Acceptance Notice(s), to such Non Transferring
Party(ies) within the period specified in  Article 13.3.2 below and in the event
the Non Transferring Party(ies) failes to complete such  transfer within such
period,   the  Transferring  Party  shall  be  entitled   to  accept   the   Third   Party  Offer    and
complete   the   sale   to  such   Third   Party  on   the   same terms and
conditions as those set out in the Third Party Offer.  If no Non Transferring
Party or Parties gives an Acceptance Notice that it or they elect or elects to
acquire the Sale Interest within the Offer Period or alternatively a Non
Transferring Party or Parties confirm in writing that it or they are not
interested in issuing an Acceptance Notice , then the Transferring Party shall
be free to accept the Third Party Offer and complete the sale on the same terms
and conditions as those set out in the Third Party Offer.

 

 
Page 39

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

 
(ii)
In the event only on of the Non Transferring Parties gives an Acceptance Notice,
within the Offer Period, that it elects to acquire the Sale Interest then the
Transferring Party shall transfer and complete the sale of the Sale Interest
specified in the Acceptance Notice, to such Non Transferring Party within the
period specified in Article 13.3.2 below   and in the event the
Non  Transferring Party fails to complete such transfer within such period, the
Transferring Party shall be entitled to accept the Third Party Offer
and  complete the sale to such third party on the same terms and conditions as
those set out in the Third Party Offer.

 
(iii)
The Transferring Party shall be entitled to sell such part of the Sale Interest
in respect of which Acceptance Notices have not been received, to the third
party from whom the Third Party Offer has been received, on terms and conditions
specified in the Third Party Offer.

 
B.
Where the Transferring Party does not have a Third Party Offer

 
(i)
Where the Transferring Party does not have a Third Party Offer, then the Sale
Notice shall request offers from the Non Transferring Parties for acquisition of
the Sale Interest.  Pursuant to such Sale Notice, each of the Non Transferring
Parties shall have a period of 30 (thirty) Business Days from the date of
receipt of the Sale Notice to indicate if they are interest in acquiring all or
part of the Sale Interest (“Proposal Period”) and shall accordingly, within the
Proposal Period, make a firm and definite offer in writing (“Offer Notice”) to
the Transferring Party.  The Offer Notice shall contain the terms of the offer,
including as to price, and shall also indicate whether the offer is for purchase
of all or part of the Sale Interest.

 
(ii)
In the event more than one of the Non Transferring Parties send Offer Notices,
then the Transferring Party shall be entitled to consider only, what it
considers, the most favorable, beneficial and commercially acceptable offer(s)
and shall negotiate such offer with the concerned Non Transferring Party or
Parties, as the case may be.

 

 
Page 40

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

 
(iii)
Subject to sub-clause (v) below, in the event the Transferring Party arrives at
an agreement with one or more of the Non Transferring Parties, then the
agreement for sale of the Sale Interest shall stand completed and the
Transferring Party shall transfer and complete the sale of the Participating
Interest to such Non Transferring Party(ies) within the period specified in
Article 13.3.2 below and in the event a Non Transferring Party fails to complete
such transfer within such period, the Transferring Party shall be entitled to
transfer and sell the Participating Interest to a third party.

 
(iv)
In the event the terms offered in the Offer Notices are not acceptable to the
Transferring Party, then the Transferring Party shall be entitled to negotiate
with a third party to explore whether it can obtain better terms and if the
Transferring Party then receives a Third Party Offer, the Transferring Party
shall issue a Sale Notice in terms of Article 13.3.1 A(i) above to the Non
Transferring Parties and allow them an opportunity, within 15( fifteen) days of
the aforesaid Sale Notice, to match such Third Party Offer and in the vent the
Non Transferring Parties match such Third Party Offer, then the agreement for
sale shall be completed and the entire or part of the Sale Interest, as the case
may be, shall be sold to such Non Transferring Parties in  the  proportion that
their respective Participating Interests bear to the total        that they may
agree, and the balance Sale Interest, if any, may be transferred to such third
Party that has made the Third Party Offer.  This sale to the Non Transferring
Parties shall be completed within the period specified in Article 13.3.2 below
and in the event a Non Transferring Party fails to complete such transfer within
such period, the Transferring Party shall be entitled to accept the Third Party
Offer and complete the sale on the same terms and conditions as those set out in
the Third Party Offer.

 
(v)
In the event the Transferring Party arrives at an understanding on the terms and
conditions with one or more of the Non Transferring Parties (“Final Non
Transferring Parties”) for sale of the entire or part of the Sale Interest,
then, before completing the agreement with such Non Transferring Party or
Parties, the Transferring Party shall be entitled to negotiate with a third
party to explore whether it can obtain better terms and if the Transferring
Party then receives a Third Party Offer, the Transferring Party shall issue a
Sale Notice in terms of Article 13.3.1 A(i) above to the Final Non Transferring
Parties and allow them an opportunity, within 15 (fifteen) days of the aforesaid
Sale Notice, to match such Third Party Offer and in the event the Final Non
Transferring Parties match such Third Party Offer, then the agreement for sale
shall be complete and the entire or part of the Sale Interest, as the case  may
be, shall be sold to such Final Non Transferring Parties in the proportion that
their respective Participating Interests bear to the total Participating
Interests of the Non Transferring Parties or in such other proportion that they
may agree, and the balance Sale Interest, if any, may be transferred to such
third Party that has made the Third Party Offer. This sale to the Final Non
Transferring Parties shall be completed within the period specified in Article
13.3.2 below and in the event a Final Non Transferring Party fails to complete
such transfer within such period, the Transferring Party shall be entitled to
accept the Third Party Offer and complete the sale on the same terms and
conditions as those set out in the Third Party Offer.

 
(vi)
Any transfer of Participating Interest to a third party in terms of this Article
13.3.1B shall be at a price and on other commercial terms no more favorable to
the third

Page 41

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

party than the price and terms of proposals received from the Non Transferring
Parties or Final Non Transferring Parties, as the case may be.

13.3.2
Any transfer of Participating Interest by a Transferring Party to a Third Party
or to a Non Transferring Party or to a Final Non Transferring Party, as the case
may be, in terms of Article 13.3.1 above, shall be completed, other than such
time period as may be required for receipt of Government approvals, within 120
days following the end of the Offer Period/ Proposal Period (as the case may
be).

13.3.3
Notwithstanding anything contained herein, any Party whose Participating
Interest is being carried by any other Party shall not have any right of first
refusal as per the terms of this Article 13.3 against any other Party.

13.3.4
The Parties intend to apply the principles of Article 13.3in good faith and be
bound by the spirit as well as the terms thereof and, in particular but without
limitation a fair cash equivalent shall be placed on any non-cash consideration
offered to the Transferee by an other Party or a third party, supported, if
requested by any Party, by a report from an internationally recognized
independent chartered accountant

13.4
No assignment, sale or transfer of Participating Interest shall be effective
unless the assignee/transferee shall
have agreed in writing to be bound by all the terms and provisions contained in
this Agreement and the Contract which shall include the assumption of all the
assigning Party's rights and obligations under this Agreement and the Petroleum
Exploration License (PEL) on and from the date of the Assignment.

13.5  
Each Party and third party where relevant, shall bear its own costs related to
the transaction of sale and purchase of Participating Interest as envisaged in
this Article 13.     All costs,   charges, fees, taxes, cess, duties etc.
leviable on the sale, transfer and/or assignment provided for in this Article
13, including  notaries and registration fees, tax or other expense of
whatsoever kind and nature, shall be the to the account of the buyer of the
Participating Interest.

13.6
All the Parties shall execute and deliver all documents, do and perform all acts
and things necessary and appropriate to validly effect the sales and assignments
provided in this Article 13.

13.7
Nothing contained in this Article 13 shall prevent a Party from mortgaging,
pledging, charging or otherwise encumbering all or part of its interest in the
Contract Area and in and under this Agreement for the purpose of security
relating to raising of finance so as to meet its obligations under this
Agreement provided that:

(1)           such Party shall remain liable for all obligations relating to
such interest;
 
(2)
the encumbrance shall be subject to any necessary approval of the Government;

 
(3)such Party shall  ensure that any such mortgage, pledge, charge or
encumbrance shall be expressed to be without prejudice and subject to the
provisions  of this Agreement.

Page 42

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

 
(4)
any encumbrance sought to be created shall be expressly subordinated to the
rights or the other Parties under the Contract and this Agreement

13.8
Notwithstanding any other provision of Article 13, an assignment or transfer
shall not be made where the Participating Interest to be retained by the
proposed assignor or the percentage interest of assignee shall be less than ten
per cent (10%) of the total Participating Interest of all the Parties or as
provided under the Contract, except where the Government, on the recommendations
of the Management Committee may, in special circumstances, so permit.

 
Page 43

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

 
ARTICLE 14 - FORCE MAJEURE

14.1
Any non-performance or delay in performance by any Party hereto of any of its
obligations under this Agreement or in fulfilling any condition of any license
or lease granted to such Party, or in meeting any requirement of the Act, the
Rules or any license or lease issued thereunder, shall, except for the payment
of money due under this Agreement or under the Act and the Rules or any law, be
excused if, and to the extent that, such non-performance or delay in performance
is caused by Force Majeure as defined in this Article.

14.2
For the purpose of this Agreement, the term Force Majeure means any cause or
event, other than the non-availability of funds, whether similar to or different
from those enumerated herein, lying beyond the reasonable control of, and
unanticipated or enforceable by, and not brought about at the instance of, the
Party claiming to be affected by such event, or which, if anticipated or
foreseeable, could not be avoided or provided for, and which has caused the
non-performance or delay in performance. Without limitation to the generality of
the foregoing, the term Force Majeure shall include natural phenomena or
calamities, earthquakes, typhoons, fires, wars declared or undeclared,
hostilities, invasions, blockades, riots, strikes, insurrection and civil
disturbance.

14.3
Where a Party is claiming suspension of its obligations on account of Force
Majeure, it shall promptly, but in no case later than seven (7) days after the
occurrence of the event of Force Majeure, notify the other Parties in writing
giving full particulars of the Force Majeure, the estimated duration thereof,
the obligations affected and the reasons for its suspension.

14.4
A Party claiming Force Majeure shall exercise reasonable diligence to seek to
overcome the Force Majeure event and to mitigate the effects thereof on the
performance of its obligations under this Agreement provided, however, that the
settlement of strikes or differences with employees shall be within the
discretion of the Party having the difficulty. The Party affected shall promptly
notify the other Parties as soon as the Force Majeure event has been removed and
no longer prevents it from complying with the obligations which have been
suspended and shall thereafter resume compliance with such obligations as soon
as possible.

14.5
The Party asserting the claim of Force Majeure shall have the burden of proving
that the circumstances constitute valid grounds of Force Majeure under this
Article and that such Party has exercised reasonable diligence and efforts to
remedy the cause of any alleged Force Majeure.

14.6
Where Party is prevented from exercising any rights or performing any
obligations under this Agreement due to Force Majeure, the time for the
performance of the obligations affected thereby and for performance of any
obligation or the exercise of any right dependent thereon, and the term of any
Exploration Phase or this Agreement, may be extended by such additional period
as may be agreed between the Parties. In case of difference, the decision of
operator shall be final and binding.

 

 
Page 44

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

14.7
Notwithstanding anything contained hereinabove, if an event of Force Majeure
occurs and is likely to continue for a period of thirty (30) days, the Parties
shall meet to discuss the consequences of the Force Majeure and the course of
action to be taken to mitigate the effects thereof or to be adopted in the
circumstances. In case no solution  emerges, matter shall be referred for
decision by a sole expert in terms of the Contract who shall decide the matter
within three (3) months from the date of acceptance to act as sole expert.

Page 45

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

 
ARTICLE 15 - OPERATIONS BY LESS THAN ALL PARTIES

15.1
Limitation on Applicability

 
(A)
Subject to the Contract, any operation beyond the Minimum Work Obligation can be
proposed as a Joint Operation.  In the event of difference of opinion among the
Parties for conducting the operation as Joint Operation, the same may be
conducted as Exclusive Operation by the willing Parties subject to provisions of
Article 15.  All operations shall be conducted as Joint Operations under Article
5, or as Exclusive Operations under this Article. No Exclusive Operation shall
be conducted which conflicts with Joint Operations.  Determination as to whether
or not a conflict exists shall be made by the unanimous vote of the Operating
Committee.  If the Operating Committee cannot agree, the matter can be referred
to a sole expert or arbitration.

 
(B)
Except as otherwise herein provided, operations which are required to fulfil the
Minimum Work Obligations must be proposed and conducted as Joint Operations
under Article 5, and shall not be proposed or conducted as Exclusive  Operations
under this Article.

 
(C)
No Party may propose or conduct an Exclusive Operation under this Article,
unless and until such Party has properly exercised its right to propose an
Exclusive Operation pursuant to this Agreement.

15.2           Procedure to Propose Exclusive Operations

(A)  
Subject to Article 15.1, if any Party proposes to conduct an Exclusive
Operation, such Party shall give notice of the proposed operation to all
Parties.  Such notice shall specify that such operation is proposed as an
Exclusive Operation, the work to be performed, the location, the objectives, and
estimated cost of such operation.

(B)  
Any Party entitled to receive such notice shall have the right to participate in
the proposed operation.

 
(1)
For proposals to deepen, test, complete, sidetrack, plug back, recomplete or
rework involving the use of a drilling rig that is standing by in the Contract
Area, any such Party wishing to exercise such right must so notify Operator
within twenty-four (24) hours after receipt of the notice proposing the
Exclusive Operation.

 
(2)
For proposals to develop a Discovery, any Party wishing to exercise such right
must so notify the Party proposing to develop within twenty (20) days after
receipt of the notice proposing the Exclusive Operation.

 

 
Page 46

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

 
(3)
For all other proposals, any such Party wishing to exercise such right must so
notify Operator within ten (10) days after receipt of the notice proposing the
Exclusive Operation.

(C)  
Failure of a Party to whom a proposal notice is delivered to properly reply
within the period specified above shall constitute an election by that Party not
to participate in the proposed operation.

(D)  
If all Parties properly exercise their rights to participate, then the proposed
operation shall be conducted as a Joint Operation.  The Operator shall commence
such Joint Operations as promptly as practicable and conduct it with due
diligence.

(E)  
If less than all Parties entitled to receive such proposal notice properly
exercise their rights to participate, then:

 
(1)
The Party proposing the Exclusive Operation, together with any other Consenting
Parties, shall have the right exercisable for the applicable notice period set
out in Article 15.2(B), to instruct Operator (subject to Article 15.9(G)) to
conduct the Exclusive Operation.

 
(2)
If the Exclusive Operation is conducted, the Consenting Parties shall bear the
sole liability and expense of such Exclusive Operation with each Consenting
Party bearing a fraction of such liability and expense, the numerator of which
is such Consenting Party's Participating Interest as stated in Article 3.1 and
the denominator of which is the aggregate of the Participating Interests of the
Consenting Parties as stated in Article 3.1, or in such other proportion
totaling one hundred percent (100%) of such liability and expense as the
Consenting Parties may agree.

 
(3)
If such Exclusive Operation has not been commenced within one hundred and eighty
(180) days (excluding any extension specifically agreed by all Parties or
allowed by the force majeure provisions of Article 14), the right to conduct
such Exclusive Operation shall terminate.  If any Party still desires to conduct
such Exclusive Operation, written notice proposing such operation must be
resubmitted to the Parties in accordance with Article 5, as if no proposal to
conduct an Exclusive Operation had been previously made.

15.3
Responsibility for Exclusive Operations

 
(A)
The Consenting Parties shall bear in accordance with the Participating Interests
agreed under Article 15.2(E) the entire cost and liability of conducting an
Exclusive Operation and shall indemnify the Non-Consenting Parties from any and
all costs and liabilities incurred incident to such Exclusive Operation
(including but not limited to all costs, expenses or liabilities  for
environmental, consequential, punitive or any other  similar indirect damages or
losses arising from business interruption, reservoir or formation damage,
inability to produce petroleum, loss of profits, pollution control and
environmental amelioration or rehabilitation) and shall keep the Contract Area
free and clear of all liens and encumbrances of every kind created by or arising
from such Exclusive Operation.

 

 
Page 47

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

 
(B)
Notwithstanding Article 15.3(A) each Party shall continue to bear its
Participating Interest share of the cost and liability incident to the
operations in which it participated, including but not limited to plugging and
abandoning and restoring the surface location, but only to the extent those
costs were not increased by the Exclusive Operation.

 15.4
Consequences of Exclusive Operations

 
(A)
With regard to any Exclusive Operation, for so long as a Non-Consenting Party
has the option to reinstate the rights it relinquished under Article 15.4(B)
below, such Non-Consenting Party shall be entitled to have access concurrently
with the Consenting Parties, to all data and other information relating to such
Exclusive Operation, other than G&G Data obtained in an Exclusive Operation. If
a Non-Consenting Party desires to receive and acquire the right to use such G&G
data, then such Non-Consenting Party shall have the right to do so by paying to
the Consenting Parties its Participating Interest share as set out in Article
3.1 of the cost incurred in obtaining such G&G Data.

 
(B)
With regard to any Exclusive Operations and subject to Article 15.4(C)  and
Article 15.7 below, each Non-Consenting Party shall be deemed to have
relinquished to the Consenting Parties, and the Consenting Parties shall be
deemed to own, in proportion to their respective Participating Interests in any
Exclusive Operation:

 
(1)
All of each such Non-Consenting  Party's right to participate in further
operations in the well or deepened or sidetracked portion of a well in which the
Exclusive Operation was conducted and any Discovery made or appraised in the
course of such Exclusive Operation; and

 
(2)
All of each  such Non-Consenting Party's right pursuant to the Contract to take
and dispose of Hydrocarbons produced and saved:

 
(a)
From the well or deepened or sidetracked portion of a well in which such
Exclusive Operation was conducted, and

 
(b)
From any wells drilled to appraise or develop a Discovery made or appraised in
the course of such Exclusive Operation.

 
(C)
A Non-Consenting Party shall have the following and only the following options
to reinstate the rights it relinquished pursuant to Article 15.4(B):

 

 
Page 48

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

 
(1)
If the Consenting Parties decide to appraise a Discovery made in the course of
an Exclusive Operation, the Consenting Parties shall submit to each
Non-Consenting Party shall submit to each Non-Consenting Party the approved
appraisal program.  For thirty (30) days (or forty-eight (48) hours if the
drilling rig which is to be used in such appraisal program is standing by in the
Contract Area) from receipt of such appraisal program, each Non-Consenting Party
shall have option to reinstate the rights it relinquished pursuant to Article
15.4(B) and to participate in such appraisal
program.  The  Non-Consenting  Party may exercise such option by notifying
Operator within the period specified above that such Non-Consenting Party agrees
to bear its Participating Interest share of the expense and liability of such
appraisal program, to pay the lump sum amount as set out in Article 15.5(A) and
to pay the Cash Premium as set out in Article 15.5(B).

 
(2)
If the Consenting Parties decide to develop a Discovery made or appraised in the
course of an Exclusive Operation, the Consenting Parties shall submit to the
Non-Consenting Parties a Development Plan substantially in the form intended to
be submitted to the Government under the Contract.  For sixty (60) days from
receipt of such Development Plan or such lesser period of time prescribed by the
Contract, each Non-Consenting Party shall have the option to reinstate the
rights it relinquished pursuant to Article 15.4(B) and to participate in such
Development Plan.  The Non-Consenting Party may exercise such option by
notifying the Party proposing to act as Operator  for such Development Plan
within the period specified above that such Non-Consenting party agrees to bear
its Participating Interest share of the liability and expense of such
Development Plan and such future operating and producing costs, to pay the lump
sum amount as set out in Article 15.5(A) and to pay the Cash premium as set out
in Article 15.5(B).

 
(D)
If a Non-Consenting Party does not properly and in a timely manner exercise such
option, including paying in a timely manner in accordance with Article 15.5 all
lump sum amounts and Cash Premiums,if any, due to the Consenting Parties, such
Non-Consenting  Party shall have forfeited the options as set out in Article
15.4(C) and the right to participate in the proposed program, unless such
program, plan or operation is materially modified or expanded. (In which case a
new notice and option shall be given to such Non-Consenting Party under Article
15.4(C)).

 
(E)
A Non-Consenting Party shall become a Consenting Party with regard to an
Exclusive Operation at such time as the Non-Consenting Party gives proper notice
pursuant to Article 15.4(C); provided that such Non-Consenting Party shall in no
way be deemed to be entitled to any lump sum amount Cash Premium paid incident
to such Exclusive Operation.  The Participating Interest of
such  Non-Consenting  Party in such Exclusive Operation shall be its
Participating Interest set out in Article 3.1.  The Consenting Parties shall
contribute in proportion to their respective Participating Interests in such
Exclusive Operation, the Participating Interest of the Non-Consenting party. If
all Parties participate in the proposed operation, then such  operation shall be
conducted as a Joint Operation pursuant to Article 5.

 

 
Page 49

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

 
(F)
If after the expiry of the period in which a Non-Consenting Party may exercise
its option to participate in a Development Plan, the Consenting Parties desire
to proceed with the said Development Plan, the Party chosen by the Consenting
Parties to act as Operator for such development shall give notice to the
Government under the appropriate provision of the Contract requesting a meeting
to advise the Government that the Consenting Parties consider Discovery to be a
Commercial Discovery.  Following such meeting such Operator for such development
shall apply for Development Area. Unless the Development Plan is materially
modified or expanded prior to the commencement of operations under such plan,
each Non-Consenting Party to such Development Plan shall not participate in such
Development  Area covering such development  and shall forfeit all interests in
such Development Area.  Such Non-Consenting Party shall be deemed to have
withdrawn from this  Agreement to the extent it relates to such Development
Area, even if the Development Plan is modified or expanded subsequent to the
commencement of operations under such Development Plan and shall be further
deemed to have forfeited any right to participate in the construction and
ownership of facilities outside such Development Area designed solely for the
use of such Development Area.

15.5
Premium to Participate in Exclusive Operations

 
(A)
Within thirty (30) days of the exercise of its option under Article 15.4(C),
each such Non-Consenting Party shall pay in immediately available funds to the
Consenting Parties who took the risk of such Exclusive Operations in proportion
to their respective Participating Interests in such Exclusive Operations a lump
sum amount payable in the currently designated by such Consenting Parties. Such
lump sum amount shall be equal to such Non-Consenting Party's Participating
Interest share of all liabilities and expenses, including overhead, that were
incurred in Exclusive Operations relating to the Discovery, or Well, as the case
may be, in which the Non-Consenting Party desires to reinstate the rights it
relinquished pursuant to Article 15.4(B), and that were not previously paid by
such Non-Consenting Party.

 
(B)
In addition to Article 15.5(A), if a Cash Premium is due, then within thirty
(30) days of the exercise of its option under Article 15.4(C) each such
Non-Consenting Party shall pay in immediately available funds, in the currency
designated  by the Consenting parties who took the risk of such
Exclusive  Operations, to such Consenting Parties in proportion to their
respective Participating Interests a Cash Premium equal to the total of:

 
(1)
Two hundred percent (200%) of such Non-Consenting Party's Participating Interest
share of all liabilities and expenses, including overhead, that were incurred in
any Exclusive Operations relating to the obtaining of the portion of the G&G
Data which pertains to the Discovery, and that were not previously paid by such
Non-Consenting Party; plus

 

 
Page 50

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

 
(2)
Four Hundred percent (400%) of such Non-Consenting Party's Participating
Interest share of all liabilities and expenses, including  overhead, that were
incurred  in any Exclusive Operations relating to the drilling, deepening,
testing, completing, sidetracking, plugging back, re-completing and reworking of
the Exploration Well which made the Discovery in which the Non-Consenting Party
desires to reinstate the rights it relinquished pursuant to Article 15.4(B), and
that were not previously  paid by such Non-Consenting party; plus

 
(3)
Two Hundred percent (200%) of such Non-Consenting Party's Participating Interest
share of all liabilities and expenses, including overhead, that were incurred in
any Exclusive Operations relating to the drilling, deepening, testing,
completing, sidetracking, plugging back, re-completing and reworking of the
Appraisal Well(s) which delineated the Discovery in which the Non-Consenting
Party desires to reinstate the rights it relinquished pursuant to Article
15.4(B), and that were not previously paid such Non-Consenting Party;

15.6
Order of Preference of Operations

 
(A)
Except as otherwise specifically provided in this Agreement, if any Party
desires to propose the conduct of an operation that will conflict with an
existing proposal for an Exclusive Operation, such Party shall have the right
exercisable for five (5) days, or twenty-four (24) hours if the drilling rig to
be used is standing by in the Contract Area, from receipt of the proposal for
the Exclusive Operation,  to deliver to all Parties entitled to participate in
the proposed operation such Party's alternative proposal.  Such alternative
proposal shall contain the information required under Article 15.2(A).

 
(B)
Each Party receiving such proposals shall elect by delivery of notice to
Operator within the appropriate response period set out in Article 15.2(B) to
participate in one of the competing proposals.  Any party not notifying Operator
within the response period shall be deemed to have voted against the proposal.

 
(C)
The proposal receiving the largest aggregate Participating Interest vote shall
have priority over all other competing proposals.  In the case of a tie vote,
the Operator shall choose among the proposals receiving the largest aggregate
Participating Interest vote.  Operator shall deliver notice of such result to
all Parties entitled to participate in the operation within five (5) days of the
end of the response period, or twenty-four (24) hours if the drilling rig to be
used is standing by in the Contract Area.

 

 
Page 51

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

 
(D)
Each Party shall then have two (2) days (or twenty-four (24) hours if the
drilling rig to be used is standing by in the Contract Area) from receipt of
such notice to elect by delivery of notice to Operator whether such party will
participate in such Exclusive Operation, or will relinquish its interest
pursuant to Article 15.4(B).  Failure by a Party to deliver such notice within
such period shall be deemed an election not to participate in the prevailing
proposal.

15.7
Stand By Costs

 
(A)
When
an operation has been performed, all tests have been conducted and the results
of such tests furnished to the Parties, stand by costs incurred pending response
to any Party's notice proposing an Exclusive Operation for deepening, testing,
sidetracking, completing, plugging back, re-completing, reworking or other
further operation in such well (including the period required under Article 15.6
to resolve competing proposals) shall be charged and borne as part of the
operation just completed.  Stand by costs incurred subsequent to all Parties
responding, or expiration of the response time permitted, whichever first
occurs, shall be charged to and borne by the Parties proposing the Exclusive
Operation in proportion to their Participating Interests, regardless of whether
such Exclusive Operation is actually conducted.

 
(B)
If a further operation is proposed while the drilling rig to be utilized is on
location, any Party may request and receive up to five (5) additional days after
expiration of the applicable response period specified in Article 15.2(B) within
which to respond by notifying Operator that such party agrees to bear all stand
by costs and other costs incurred during such extended response period Operator
may require such Party to pay the estimated stand by time in advance as a
condition to extending the response period. If more than one Party requests such
additional time to respond to the notice, stand by costs shall be allocated
between such Parties on a day-to-day basis in proportion in their Participating
Interests.

15.8
Deepening, Completing, Sidetracking, Plugging Back or Re-completing

If the Consenting Parties decide to deepen, complete, sidetrack, plug back or
re-complete an Exclusive Well and such further operation  was not included in
the original proposal for such Exclusive Well, the Consenting Parties shall
submit to the Non-Consenting Parties the approved AFE for such  further
operation.  For thirty (30) days (or forty-eight (48) hours if the drilling rig
which is to be used in such operation is standing by in the Contract Area) from
receipt of such AFE, each Non-Consenting Party shall have the option to
reinstate the rights it relinquished pursuant to Article 15.4(B) and to
participate in such operation.  The Non-Consenting Party may exercise such
option by notifying the Operator within the period specified above that such
Non-Consenting Party agrees to bear its Participating Interest share of the
liability and expense of such further operation, to pay the lump sum amount as
set out in Article 15.5(A).
 

 
Page 52

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

A Non-Consenting Party shall not be entitled to reinstate its rights in any
other type of operation.

15.9
Miscellaneous

 
(A)
Each Exclusive Operation shall be carried out by the Operator on behalf of and
at the expense of the Consenting Parties.  For Exclusive Operations, the
Consenting Parties shall act as the Operating Committee, subject to the
provisions of this Agreement applied mutatis mutandis to such Exclusive
Operation and subject to the terms and conditions of the Contract

 
(B)
The computation of liabilities and expenses incurred in Exclusive Operations,
including the liabilities and expenses of Operator for conducting such
operations, shall be made in accordance with the principles set out in the
Accounting Procedure.

 
(C)
Operator shall maintain separate books, financial records and accounts for
Exclusive Operations which shall be subject to the same rights of audit and
examination as the Joint Account and related records, all as provided  in the
Accounting Procedure.  Said rights of audit and examination shall extend to each
of the Consenting Parties and each of the Non-Consenting Parties so long as the
latter are, ore may be, entitled to elect to participate in such operations.

 
(D)
Operator, regardless  of whether it is participating in an Exclusive Operation,
if it is conducting that Exclusive Operation for the Consenting Parties, shall
be entitled to request cash advances and shall not be required to use its own
funds to pay any cost and expense and shall not be obliged to commence or
continue Exclusive Operations until cash advances requested have been made, and
the Accounting Procedure shall apply to Operator in respect of any Exclusive
Operations conducted by it.

 
(E)
Should the submission of a Development Plan be approved in accordance with
Article 5, or should any Party propose a development in accordance with Article
15, with either proposal not calling for the conduct of additional appraisal
drilling, and should any Party wish to drill an additional Appraisal Well prior
to development, then the Party proposing the Appraisal Well as an Exclusive
Operation shall be entitled to proceed first, but without the right to future
reimbursement of costs or to any Premium,   pursuant to Article 15.5.  If, as
the result of drilling such Appraisal Well as an Exclusive Operation, the Party
proposing to apply for a Development Area decides to not develop the reservoir,
then each Non-Consenting Party who voted in favour of such Development Plan
prior to the drilling of such Appraisal Well shall pay to the Consenting Parties
the amount such Non-Consenting Party would have paid had such Appraisal Well
been drilled as a Joint Operation.

 
(F)
In the case of any Exclusive Operation for deepening, testing, completing,
sidetracking, plugging back, re-completing or reworking, the Consenting Parties
shall be permitted to use, free of cost, all casing, tubing and other equipment
in the well, that is not needed for Joint Operations, but the ownership of all
such equipment shall remain unchanged.  On abandonment of a Well after such
Exclusive Operation, the Consenting Parties shall account for all such equipment
to the Parties who shall receive their respective Participating Interest shares,
in value, less the cost of salvage.

 

 
Page 53

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

 
(G)
If the Operator is a Non-Consenting Party to an Exclusive Operation to develop a
Discovery, then subject to obtaining any necessary Government approvals the
Operator may resign, but in any event shall resign on the request of the
Consenting Parties, as Operator for the Development Area for such Discovery and
the Consenting Parties shall select a Party to serve as Operator.

Page 54

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

 

ARTICLE 16 - INSURANCE AND INDEMNIFICATION

16.1
nsurance

16.1.1
The Operator shall, for the benefit and protection of the Parties hereto, and in
accordance with the requirement of Contract and in accordance with the Good
International Petroleum Industry Practices obtain such insurance with reputable
insurers upon reasonable and competitive terms from the Joint Account in
relation to Petroleum Operations as may be required under the Contract,
applicable laws, rules and regulations together with such other insurances which
the Operator may determine necessary for the Joint Operations.  Such insurance
policies shall include the Government as additional insured and shall waive
subrogation against the Government.

16.1.2
The said insurance shall, without prejudice to the generality of
foregoing,  cover the following as specifically required under the Article
24.1.1 of the Contract:

 
a)
Loss or damage to all installations, equipment and other assets for so long as
they are used in or in connection with Petroleum Operations provided, however,
that if for  any reason the Contractor fails to insure any such installations,
equipment or assets, it shall replace any loss thereof or repair any damage
caused thereto;

 
b)
Loss, damage or injury caused by pollution in the course of or as a result of
Petroleum Operations;

 
c)
Loss of property or damage or bodily injury suffered by any third party in the
course of or as a result of Petroleum Operations for which the Contractor may be
liable;

 
d)
Any claim for which the Government may be liable relating to the loss of
property or damage or bodily injury suffered by any third party in the course of
or as a result of Petroleum Operations for which the Contractor is liable to
indemnify the Government, or the State Government;

 
e)
With respect to Petroleum Operations offshore, the cost of removing wrecks and
cleaning up operations following any accident in the course of or as a result of
Petroleum Operations;

 
f)
The Contractor's and/or the Operator's liability to its employees engaged in
Petroleum Operations.

 

 
Page 55

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

16.1.3
The Operator shall duly file within time all claims with respect to insurance
arranged and maintained by the Operator and shall take all necessary and proper
steps to collect the proceeds.

16.1.4
The Operator shall at all times require its Subcontractors engaged in the Joint
Operations under this Agreement to obtain and maintain all such insurances
pertaining to such work as they may be required to carry by virtue of any
applicable law or regulation, Contract  and such other  insurances as the
Operator may deem advisable.

16.1.5
Each Party may for its own account and at its own expense, obtain such insurance
pertaining to the Joint Operations conducted and materials acquired under this
Agreement as it may deem advisable, provided, however, that obtaining of such
insurance shall not in any way directly interfere with Operator's placement or
insurance for the Joint Account in accordance with the terms of this Article
hereof.  The Operator shall use its best efforts to facilitate, in cooperation
with the Non- Operator Party, the orderly settlement of claims by their
respective insurers.

16.1.6
All damages, losses and liabilities incurred in the Joint Operations which are
not recoverable from insurance procured for the Joint Account under this Article
shall be charged to the Joint Account.

16.1.7
Operator shall supply a copy of all insurance to all the Parties and continue to
supply all the relevant information in this regard to the Parties, and keep all
insurance valid during the course of Petroleum Operations, provided such
insurance is available and approved by the Operating Committee. In the event
Operator fails to procure requisite insurance under this Article, Operator shall
be liable for all risk and consequences.

16.1.8
Subject to Article 4.7 of the Contract, the Contractor shall indemnify, defend
and hold the Government and State Government harmless against all claims,
losses, and damages of any nature whatsoever, including, without limitation,
claims for loss or damage to property or injury or death to persons caused by or
resulting from any Petroleum Operation conducted by or on behalf of the
Contractor.

Page 56

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

 
ARTICLE 17 - DISPOSITION OF PRODUCTION

 
17.1
Subject to the provisions hereof, each Party shall directly own and receive in
kind its Participating Interest share of Contractor's entitlement of each grade
and quality of all Petroleum produced and saved from the Contract Area and
subject to relevant Article of the Contract and to procedures of this Article
17, each Party shall separately and at its own expense take and dispose of its
full share of  Petroleum from the Delivery Point.

 
17.2
Petroleum produced and saved from the Contract Area shall delivered  by Operator
to the Parties at the Delivery Point.

 
17.3
It is the intent of the Parties that they shall act in concert and jointly as
sellers and shall therefore, not less than six (6) months prior to the start of
commercial production, in good faith negotiate or authorize the Operator to
negotiate  a Petroleum offtake agreement with potential buyers and such
Petroleum offtake agreement shall provide, among other things, detailed terms
and procedures for:

 
17.3.1
Short-term production forecasts,

 
17.3.2
Frequency of Petroleum nominations and period involved,

 
17.3.3
Ocean tanker nominations,

 
17.3.4
Lifting tolerances,

 
17.3.5
Under lift/ Over lift,

 
17.3.6
Demurrage, and

 
17.3.7
Penalties assessable to any Party or the buyer(s) which causes a production loss
due to its failure to perform.

Notwithstanding the above, in the event any of the Parties decides for any
reason whatsoever not to participate jointly and in concert with the remaining
Parties, as aforesaid, then such dissenting Party shall be entitled to enter
into an independent Petroleum offtake agreement on its own at its own cost and
risk.

Page 57

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

 
ARTICLE 18 - NOTICES

18.1
Any notice or other communication provided for in this Agreement shall be in
writing and shall be deemed to have been properly given or delivered when
delivered in person to an authorized representative of the Party to whom it is
addressed, or when sent by air mail, electronic mail, facsimile, telex, telegram
or cable to the Party at its address hereinafter specified:

 
a)
Managing Director

Gujarat State Petroleum Corporation Ltd.
Block No.15, 2nd Floor
Udyog Bhavan, Sector-11
Gandhinagar - 382 011
Gujarat.

Tel  #                      :           91-79- 3236371 / 3238651
Fax #                      :           91-79--3236375

b)           President
Jubilant Enpro Ltd.
1A, Sector-16A, Institutional Area
Noida - 201 301
Uttar Pradesh

Tel  #                      :           91-120-2511005
Fax #                      :           91-120-2511009

c)           President / C.E.O
GeoGlobal Resources (India) Inc.
35-22 Street NW
Calgary, Alberta
T2N 4W7

Tel #                      :           1-403-261-1942
Fax #                      :           1-403-770-7394

and shall be effective from the date of receipt thereof.

18.2
Any Party may from time to time change its address under this Article on fifteen
(15) days notice to the other Party (ies).

Page 58

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

 
ARTICLE 19 - SOLE EXPERT, CONCILIATION AND ARBITRATION

19.1
The Parties shall use their best efforts to settle amicably all disputes,
differences or claims arising out of or in connection with any of the terms and
conditions of this Agreement or concerning the interpretation or performance
thereof.

19.2
Matters which, by the terms of this Agreement, the Parties have agreed to refer
to a sole expert and any  other matters which the Parties may agree to so refer,
may be referred to  a sole expert who shall be an independent and impartial
person of international standing with relevant qualifications and experience,
appointed by agreement between the Parties and who shall not, by virtue of
nationality, personal  connection or commercial interest, have a conflict
between his/ her own interest and his/ her duty as a sole expert.  In the event
that the Parties fail or are unable, to agree on a sole expert within thirty
(30) days or such longer period as may be mutually agreed by Parties, the sole
expert shall be appointed by a body or an institution or an agency or a person,
mutually agreed by Parties.  In case, there is no agreement on the body or an
institution or an agency or a person for appointing sole expert or such body or
institution or agency or person fails to appoint a sole expert within thirty
(30) days or such longer period as may be mutually agreed by Parties, the sole
expert shall be appointed by the Chief Justice of India or by a person
authorized by him.  Any sole expert appointed shall be acting as an expert and
not as an arbitrator and the decision of the sole expert on matters referred to
him/ her shall be final and binding on the Parties and shall not be subject to
arbitration.

19.3
Subject to the provisions of this Agreement, the Parties hereby agree that any
controversy, difference, disagreement or claim for damages, compensation or
otherwise (hereinafter in this Clause referred to as "dispute") arising between
the Parties, which cannot be settled amicably within ninety (90) days after the
dispute arises, may (except for those referred to in Article 19.2, which may be
referred to a sole expert) be submitted to conciliation  or an arbitral tribunal
for final decision as hereinafter provided.

19.4
The arbitral tribunal shall consist of three arbitrators.  Each Party to the
dispute shall appoint one arbitrator and the Party or Parties shall so advise
the other Parties.  The two arbitrators appointed by the Parties shall appoint
the third arbitrator.

19.5
Any Party may, after appointing an arbitrator, request the other Party(ies) in
writing to appoint the second arbitrator.  If such other Party fails to appoint
an arbitrator within thirty (30) days of receipt of the written request to do
so, such arbitrator may, at the request of the first Party, be appointed by the
applicable Chief Justice or by a person authorized by him within thirty (30)
days of the date of receipt of such request, from amongst persons who are not
nationals of the country of any of the Parties to the arbitration proceedings.

19.6
If the two arbitrators appointed by or on behalf of the Parties fail to agree on
the appointment of the third arbitrator within thirty (30) days of the
appointment of second arbitrator and if the Parties do not otherwise agree, at
the request of either Party, the third arbitrator shall be appointed in
accordance with Arbitration and Conciliation Act, 1996.

19.7
If any of the arbitrators fails or is unable to act, his successor shall be
appointed by the Party or person who originally appointed such in the manner set
out in this Article as if he was the first appointment.

 

 
Page 59

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

19.8
The decision of the arbitral tribunal, and, in the case of difference among the
arbitrators, the decision of the majority, shall be final and binding upon the
Parties.

19.9
The arbitration agreement contained in this Article 19 shall be governed by the
Arbitration and Conciliation Act, 1996 (Arbitration Act).  Arbitration
proceedings shall be conducted in accordance with the rules for arbitration
provided in Arbitration Act and the United Nations Commission on International
Trade Law (UNCITRAL) rules may apply to the extent where corresponding rules are
not provided in the Act.

19.10
The right to arbitrate disputes under this Agreement shall survive expiry or the
termination of this Agreement.

19.11
Prior to submitting a dispute to arbitration, the Parties may by mutual
agreement submit the matter for conciliation in accordance with Part III of the
Arbitration and Conciliation Act, 1996.  No arbitration proceedings shall be
instituted while conciliation proceedings are pending provided that a Party
may  initiate arbitration proceedings in the event that dispute has not been
resolved by conciliation within twenty one (21) days of the date of agreement by
the Parties to submit such dispute to conciliation.

19.12
The venue of the sole expert, conciliation or arbitration proceedings pursuant
to this Article, unless the Parties agree otherwise, shall be New Delhi, India
and shall be conducted in the English language.  Insofar as practicable, the
Parties shall continue to implement the terms of this Agreement notwithstanding
the initiation of arbitral proceeding  before a sole expert, conciliator or
arbitral tribunal and any pending claim or dispute.

19.13
The fees and expenses of a sole expert or conciliator appointed by the Parties
shall be borne equally by the Parties.  The cost and expenses of arbitrator
appointed by  a Party in accordance with the provision of this Article shall be
borne by the respective Party and the cost and expenses of third arbitrator and
liability thereof shall be at the discretion of the arbitrators.

19.13
Notwithstanding anything contrary contracted herein above, in the event of
dispute among Government Company(s) and with the Government, such disputes shall
be settled in accordance with guidelines issued on the subject by Government
from time to time.

Page 60

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

 
ARTICLE 20 - APPLICABLE LAW

This Agreement shall be governed by, construed, interpreted and applied in
accordance with the  laws of Republic of India, both substantive and procedural.
The Courts in New Delhi, India, shall have exclusive jurisdiction in all matters
arising under this Agreement.

Page 61

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

 
ARTICLE 21 - RELATIONSHIP OF PARTIES, MUTUAL INDEMNITIES AND NO PARTITION

21.1           Several Liability

21.1.1
The rights, covenants, obligations and responsibilities of the Parties pursuant
to or arising under this Agreement unless other stated shall be several to the
extent of their respective Participating Interests and nor joint and several.

21.1.2
Each Party shall be individually responsible for its own covenants, obligations
and responsibilities to the extent of its Participating Interest except as
herein expressly provided. Subject to Article 15.2 and 4.9.01,  in the event a
claim, demand, action or liability is made against or incurred by or demanded
from any Party under the terms of or pursuant to the Contract or this Agreement
in excess of its Participating  Interest, such Party shall have the right of
recovery of such  excess by contribution from each of the Parties in proportion
to their respective Participating Interests.

21.1.3
Further, and except as expressly provided in this Agreement, nothing herein
contained shall be construed to create an association, trust or partnership
between the Parties.

21.1.4
No Party shall be under the control of, or be the agent of or have a right or
power to bind any other Party  without its express written consent, except as
herein expressly provided.

21.2           Mutual Indemnities

Subject to the                                provisions of this Agreement, each
Party shall indemnify and keep indemnified each of the other Parties from every
claim, demand, action, liability or loss resulting from each and every breach or
default by the indemnifying Party of any of its obligations under the Agreement.

21.3           No Partition

Unless unanimously agreed by the Parties no Party shall seek to partition any
Joint Property, whether by court order or otherwise.

Page 62

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

 
ARTICLE 22 - GENERAL

22.1           Waiver

 
No waiver by any Party of any provision of this Agreement, no consent to or
departure therefrom shall be binding unless made expressly and confirmed in
writing by authorized representatives of the Parties. Further, any such waiver
or consent shall relate only to such matter, non­compliance or breach as it
expressly relates to and for the purpose for which it is given and shall not
apply to any subsequent or other matter, non compliance or breach. No default or
delay on the part of either Party in exercising any rights, power or privilege
hereunder shall operate as a waiver thereof or of any rights or remedies
hereunder.

22.2           Amendments

 
This Agreement may be amended or varied only by an instrument in writing
executed by authorized representatives of all the Parties.

22.3           Language

The English language shall be the language of this Agreement and shall be used
in all communications between the Parties as well as in the Arbitral
proceedings.

22.4           Conflict of Interest

22.4.1
Each Party undertakes that it shall avoid any conflict of interest between its
own interests (including the interests of Affiliates) and the interests of the
other Parties in dealing with suppliers, customers and all other organizations
or individuals doing or seeking to do business with the Parties in connection
with activities contemplated under this Agreement.

22.4.2                      The provisions of the preceding paragraph shall not
apply to:

 
(a)
A Party's performance, which is in accordance with the local preference laws or
policies of the host government; or

 
(b)
A Party's acquisition of products or services from an Affiliate, or the sale
thereof to an Affiliate, made in accordance with the terms of this Agreement.

22.5           Public Announcements

22.5.1
Operator shall be responsible for the preparation and release of all public
announcements and statements regarding this Agreement or the Joint Operations;
provided that, no public announcement or statement shall be issued or made
unless prior to its release all the Parties have been furnished with a copy of
such statement

Page 63

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

or announcement and the
approval                                                                           of
Parties has been obtained. Where a public announcement or statement becomes
necessary or desirable because of danger to or loss of life, damage to property
or pollution as a result of activities arising under this Agreement, Operator is
authorized to issue and make such announcement or statement, without prior
approval of the Parties, but shall promptly furnish all the Parties with a copy
of such announcement or statement.

22.5.2
If a Party wishes to issue or make any public announcement or statement
regarding this Agreement or the Joint Operations, it shall not do so unless
prior to its release, such Party furnishes all the Parties with a copy of such
announcement or statement, and obtains the approval of all the Parties or at
least two (2) non-affiliated Parties holding fifty percent (50%) or more of the
Participating Interests; provided that, notwithstanding any failure to obtain
such approval, no Party shall be prohibited from issuing or making any such
public announcement or statement if it is necessary to do so in order to comply
with the  applicable laws, rules or regulations, legal proceedings or stock
exchange having jurisdiction over such party .

22.6           Severance of Invalid Provisions

If and for so long as any provision of this Agreement is deemed or declared to
be invalid for any reason whatsoever, such invalidity shall not affect the
validity or operation of any other provision of this Agreement except only so
far as shall be necessary to give effect to the construction of such invalidity,
and any such invalid provision shall be deemed severed from this Agreement
without affecting the validity of the balance of this Agreement.

Page 64

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

IN WITNESS WHEREOF  the Parties have caused this Agreement to be executed by
their duly authorized officers and representatives as of the day and year first
above written.

Signed by

For and on behalf of
Gujarat State Petroleum Corporation Ltd.

In presence of                                (1)

(2)

For and on behalf of
Jubilant Enpro Ltd.

In presence of                                (1)

(2)

For and on behalf of
GeoGlobal Resource (India) Inc.

In presence of                                (1)

(2)

Page 65

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

EXHIBIT  "A"

ACCOUNTING PROCEDURE

ARTICLE I

GENERAL PROVISIONS

1.1  
DEFINITIONS

The definitions contained in Article 1 of the Operating Agreement to which this
Accounting Procedure is attached shall also be applicable herein.  Furthermore,
as and when used in this Accounting Procedure the terms listed below shall have
the following meaning:

 
A.
The "said Agreement" means the Operating Agreement of which this Exhibit is a
part.

 
B.
"Material" shall mean all material, supplies and equipment acquired or held for
use in Joint Operations.

C.           "Outsider" or "Outsiders" means parties other than Operator and
Non-Operators.

 
D.
Other terms used in this Accounting Procedure which are defined or described in
said Agreement shall have the same meaning given them in said Agreement.

1.2           Inconsistency

In the event of any inconsistency or conflict between the provisions of this
Accounting Procedure and the other provisions of the Agreement, the other
provisions of the Agreement shall prevail.  The accounts will be in conformity
with accounting principles/standards and guidelines issued by the Institute of
Chartered Accountants of India from time to time.

1.3           Revision of the Accounting Procedure

By mutual agreement between the Operator and the Non-Operators, this Accounting
Procedure may be revised from time to time, in writing, signed by the Parties,
stating the date upon which the amendments shall become effective.

2.  
JOINT ACCOUNT RECORDS AND CURRENCY EXCHANGE

Operator shall maintain accounting records for the Joint Account in the English
language in accordance with generally accepted accounting practices used in the
petroleum industry and in such a manner that all expenditures will be segregated
or can be allocated to appropriate areas in connection with the Petroleum
Operations. Joint Account records shall be maintained in the Operator's office
in India, and stated in United States Dollars and Indian Rupees.  Expenditures
other than United States Dollars or Indian Rupees shall be translated into
United States Dollars and charged as United States Dollar expenditures.  Unless
mutually agreed otherwise by the Parties, translation of non United States
Dollars expenditure into United States Dollars and United States Dollar
expenditures into Indian Rupees shall be as follows:
 

 
Page 66

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

(A)  
Expenditure of currencies purchased by the Operator for the Joint Account with
Unites States Dollars shall be translated back into United States Dollars at the
rate of exchange at which the currency was purchased with individual currency
purchased deemed to be utilized on a first in/ first out basis to provide the
funds expended.

(B)  
Indian Rupees advanced pursuant to Indian Rupee calls shall be translated into
United States Dollars at the monthly average of the daily mean of the buying and
selling rates of exchange as quoted by State Bank of India (or any other
financial body as may be mutually agreed by the Parties) for the Month in which
the revenues, costs, expenditures, receipts or income are recorded.  However, in
case of any single non-US Dollar transaction in excess of the equivalent of
fifty thousand United States Dollar (US $ 50,000), the conversion into United
States Dollars shall be performed on the basis of the average of the applicable
rates for the day on which the transaction occurred.

(C)  
Expenditures of United States Dollars advanced pursuant to United States Dollar
Cash Calls shall be translated into Indian Rupees using the applicable exchange
rate for the month of disbursement based on the current procedure that the
Operator uses to translate United States Dollars as specified in clause (B)
above.

The intent of the procedures outlined in Paragraph 2 of this Article I is to
minimize any gain or loss on exchange chargeable to the Joint Account.

It is agreed, however, that any loss or gain resulting from the exchange of
currency required for the use of the Joint Operations or from the translation
above listed, shall be charged or credited to the Joint Account.  The matter of
translation rates shall be reconsidered if it is determined that the above
methods result in inequities, or burdensome administration, or do not provide
the proper value for stating expenditure under the terms of the Agreement.

3.           ADVANCES AND CASH CALLS

(A)  
Upon approval of Work Programmes and Budgets and subject to Article 4.7 of the
Agreement, Operator shall have the right at its option to require the Parties to
advance their share of Joint Operations net cash requirements by submitting to
the Parties, on or before the first day of any month an itemized estimate by
Budget categories of such requirements for the succeeding month.

(B)  
Each such Cash Call shall be equal to the Operator's estimate of the money to be
spent to perform its duties under the Approved Work Programme and Approved
Budget for the month concerned and shall specify the currency or currencies in
which the money shall be expended.  The Parties shall pay their Participating
Interest share of the cash requirements within thirty (30) days after receipt of
the estimates or by the first Business Day of the month for which advances are
required, whichever is the later.  A reconciliation between estimates and actual
cash requirements shall be made by Operator at the close of each Calendar Month
and any differences shall be adjusted in the subsequent cash requirement
request.

 

 
Page 67

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

(C)  
A Party shall have the right to make payment in the currency required to be
expended by the Operator where such Party's share of the payment required is US
$ 100,000 (United States Dollars one hundred thousand) or more.  The principles
referred to in para 2 of this Article shall apply in relation to the exchange
rate to be used by the Operator where a Party exercises its right pursuant to
this subparagraph (C).

(D)  
For information purposes the Cash Call shall contain an estimate of the funds
required for the succeeding two months.

(E)  
In the event that Operator subsequently determines that due to unanticipated
expenditures the estimated monthly requirements submitted to the Parties are
inadequate, Operator shall have the right to require the Parties to advance a
portion of additional requirements by submitting an itemized estimate by Budget
categories of such requirements.  Each Party shall pay its proportional share of
such advance within thirty (30) Business Days after receipt of such notice or
the date of requirement specified by the Operator whichever is later.

(F)  
Each Cash Call shall indicate the AFE pursuant to which it is made. If a Party
believes that the Cash Call exceeds the AFE to which it relates such Party may
within five (5) Business Days of receipt of such Cash Call send notice to all
other Parties including the Operator advising that it believes that all or a
part of the Cash Call exceeds the applicable AFE and providing its reasons
therefor. If within a further three (3) days all Non-Operators agree that all or
a part of the Cash Call does not fall within an AFE then that part of Cash Call
on which the Non-Operators have unanimously agreed exceeds the AFE shall be
invalidated. The Parties shall not be subject to Articles 7.6 and 7.7 for
failing to pay within the time required that part of a Cash Call invalidated
pursuant to this provision and in such event within a further five (5) Business
Days the Operating Committee shall meet to resolve the issue.

(G)  
Where separate Joint Operations bank accounts are maintained as provided in para
3(K) of Article I of this Accounting Procedure, any interest earned from
deposits of cash advances will be for the benefit of the individual Parties'
account in proportion to their contributions. However, any Party may require
that funds it has advanced in excess of its proportionate share of actual cash
required by the Joint Operations, should said excess funds exceed fifty thousand
United States Dollars (U.S.$50,000) or their equivalent in Indian Rupees, be
returned in the currency of their original denomination within a period of
fifteen (15) Business Days from the date of receipt of the request at the
Party's expense. If the Operator does not make arrangements in good faith to
return such funds in fifteen (15) Business Days then the Operator shall pay the
Party requesting the refund the difference between the interest specified in
Article 7.6.2 of the Agreement and the interest earned on the bank account of
the Joint Account.

 

 
Page 68

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

(H)  
If the Operator does not request advance funds from the Parties, then the
monthly billing referred to in Paragraph 4(A) of Article I shall be paid by the
Parties in accordance with their Participating Interests within thirty (30) days
after receipt thereof.

(I)  
Cash requirements shall be specified by the Operator in United States Dollars
and/or in Indian Rupees as required for the Joint Operations and the Parties
shall advance their share of United States Dollars and Indian Rupees as so
specified.

(J)  
Subject to paragraph 3(E) of this Article I, if any Party fails to pay in full
its share of any Cash Call by the due date as provided above, it shall be in
default, and Article 7.6 and 7.7 of the Agreement shall apply.

(K)  
Funds under the said Agreement held by Operator outside of India shall be
segregated into a separate bank account or accounts, and shall not be commingled
with Operator's other funds. Funds under the Agreement held by the Operator
within India shall be held in separate bank accounts maintained solely for the
respective purposes of the Joint Account. A monthly statement summarizing
receipts, disbursements, transfers to each Joint Account and beginning and
ending balances thereof shall be provided by the Operator to the Parties.

(L)  
The Operator shall endeavor to maintain funds in bank accounts for the Joint
Account at a level consistent with that required for the prudent conduct of
Joint Operations.

4.           STATEMENTS AND BILLINGS

 
(A)
Unless otherwise agreed by the Parties, Operator shall render monthly to all the
Parties, by the twenty fifth (25th) day of each Month, a billing statement of
the costs and expenditure incurred during the prior Month, indicating by
appropriate classification the nature thereof and the portion of such costs
charged to each of the Parties.

These statements shall contain the following information:

                      (a)            advances of funds setting forth the
currencies received from each Party;

(b)           the share of each Party in total expenditures on a cash and
accrual basis;

(c)            the current cash balance of each Party; and
 

 
Page 69

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

 
(d)
a summary of costs, credits and expenditure on current month, year to date, and
inceptions to date basis or other periodic basis, as agreed by the Parties for
each activity of the Approved Work Programme and Approved Budget.

 
(B)
Each Party shall be responsible for preparing its own accounting and tax reports
to meet the requirements of India and other applicable countries. Operator, to
the extent that the information is reasonably available from the Joint Account
records, shall provide in a timely manner, Non-Operators with the necessary
statements to facilitate the discharge of such responsibility.

 
(C)
The "cash" rather than "accrual" basis for accounting shall be used in charging
the Joint Account. "Cash" basis as used herein means that expenditures for the
Joint Operations are regarded as applicable to the period in which cash
disbursements are made, whereas "accrual" basis means that expenses are
regardless of when paid. For Non-Operator's internal accounting purposes, the
Operator shall reflect accruals applicable to the Joint Account as memorandum
items.

(M)  
The billing statement is to be accompanied by billing schedules which shall be
schedules dividing such expenditures and income into main classifications of
expenditure as indicated by Approved Budget and AFEs. The billing schedule shall
also show cumulative totals of all payments linked to AFEs Budget categories and
Programmes.

5.           ADJUSTMENTS

Payments of any such bills shall not prejudice the right of Non-Operators to
protest or question the correctness thereof. Subject to the exception noted in
paragraph 6 of this Article I, all statements rendered to Non-Operators by
Operator during any Year shall be presumed to be true and correct after twenty
seven (27) months following the end of such Year, unless within said twenty
seven (27) month period any Non-Operator requests for adjustment. Failure on the
part of Non-Operators to make claim on Operator for adjustment within such
period shall establish the correctness thereof and preclude the filing of
exceptions thereto or making of claims for adjustment thereon. No adjustment
favorable to the Operator shall be made unless it is made within the same
prescribed period. The provisions of this paragraph shall not prevent any
adjustments resulting from amongst others, physical inventory of property as
provided for in Article IV hereof, and exchange gains or losses as contemplated
by Article I (2).

6.           AUDITS

Non-Operators, upon written notice to the Operator, shall have the right to
audit Operator's accounts and records relating to the accounting hereunder for
any Year within twelve (12) month period following the end of such Year;
provided, however, that Non-Operators must take written exception to and make
claim upon the Operator for all discrepancies disclosed by said audit within the
said twelve (12) month period. Non-Operators shall make every reasonable effort
to conduct audits in a manner, which will result in a minimum of inconvenience
to the Operator. Audits by Non-Operators shall be at Non-Operators' expense.

Page 70

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

At the conclusion of each such audit, the Non-Operators and the Operator shall
endeavor to settle outstanding matters and a written report shall be circulated
to all the Non-Operators and the Operator within three (3) months of the
conclusion of the audit and shall also be placed before the Operating Committee.
In addition, a written statement of settlement reached between the Non-Operators
and the Operator after the outstanding matters have been settled between the
Non-Operators and the Operator shall be placed before the Operating Committee.
The report shall include all claims arising from such audit together with
comments pertinent to the operations of the accounts and records. The Operator
shall reply to the report in writing as soon as possible and in any event not
later than three (3) months following the receipt of such report.

Should the Non-Operator consider that the report or reply requires further
investigation of any item therein, the Non-Operator shall have the right to
conduct further investigation in relation to such matter notwithstanding that
such period of twenty four (24) months has expired. Such further investigations
shall be commenced within thirty (30) days and be concluded within sixty (60)
days of receipt of such reply or report.

Notwithstanding that the said period of twenty four (24) months may have
expired, if evidence exists that the Operator has been guilty of Wilful
Misconduct, the Non-Operators shall have the right to conduct further audits in
respect of any earlier period.

All adjustments resulting from audit agreed between Operator and Non-Operators
conducting the audit shall be rectified promptly in the Joint Account by the
Operator and reported to other Non-Operators as well as to the Operating
Committee. If any dispute shall arise in connection with an audit, it shall be
discussed by the Parties and if a settlement between the Operator and the
Non-Operators or among the Parties is not unanimously agreed, the item or items
in dispute shall be referred to arbitration.

 
Operator will get accounts audited in three months from closure of financial
years and submit the same to non-operating partners.

 
Operator shall also file tax returns or returns/forms as applicable under Indian
Laws.

Page 71

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

 
ARTICLE II - BASIS OF CHARGES TO THE JOINT ACCOUNT

The Operator shall fully charge the Joint Account with all direct costs and
expenses incurred in accordance with all Approved Work Programmes and Budgets
and the provisions of this Agreement and in connection with Contract, Materials
and Joint Operations. Without in any way limiting the generality of the
foregoing, chargeable direct and indirect costs shall include all costs set
forth in Sections 2 and 3 of the Accounting Procedure annexed to the Contract
and all costs and expenses incurred by the Operator as a result of carrying
another party’s interest and any other costs approved by the Operating
Committee.

 
Page 72

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

ARTICLE III - DISPOSAL OF MATERIALS

The Operator shall be under no obligation to purchase for its owe account
surplus, new or second hand Material. The disposition of major items of surplus
equipment and Material, such as derricks, tanks, engines, pumping units and
tubular goods shall be subject to determination by the Operating Committee,
provided the Operator shall have the right to dispose of normal accumulations of
junk and scrap material either by transfer or sale for the Joint Properties,
subject to relevant provisions of the Agreement.

1.           MATERIAL PURCHASED BY OPERATOR OR NON-OPERATOR

Material purchased by either Operator or Non-Operators for use in operations
outside this Agreement shall be credited by Operator to the Joint Account for
the month in which the Material is removed by the purchaser.

2.           DIVISION IN KIND

Division of Material in kind, if made between Operator and Non-Operators, shall
be in proportion to their respective interests in such Material. Each Party
shall thereupon be charged individually with its share of the agreed value of
Material received or receivable by each Party, and corresponding credits shall
be made by Operator to the Joint Account. Such credits shall appear in the
monthly statement of Joint Operations.

3.           SALE TO OUTSIDERS

Sale to Outsiders of Material from the Joint Properties shall be credited by the
Operator to the Joint Account at the net amount collected by the Operator from
vendee. If such sale is priced lower than the basis stipulated in Section 3.1.8
of the Accounting Procedure annexed to the Contract, then such sale shall be
approved by the Operating Committee prior to such sale. Any claims by vendee for
defective Materials or otherwise shall be charged back to the Joint Account if
and when paid by the Operator.
 
Page 73

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

ARTICLE IV - INVENTORIES

1.           PERIODIC INVENTORIES, NOTICE AND REPRESENTATION

Unless otherwise agreed by the Parties, the Operator shall take physical
inventory of Joint Account assets as are ordinarily considered controllable by
operators of oil and gas properties at the following intervals:

A.           Storehouse stocks - annually.
 
B.
Other assets - cyclical basis so that all controllable assets shall be
inventoried at intervals of not more than five (5) years.

 
C.
Completed construction projects - within sixty (60) days following physical
completion of project.

Written notice of intention to take inventory shall be given by the Operator at
least thirty (30) days before any inventory is to begin so that the
Non-Operators may be represented when any inventory is taken.

Failure of the Non-Operators to be represented at an inventory shall bind the
Non-Operators to accept the inventory taken by the Operator.

2.           RECONCILIATION AND ADJUSTMENT OF INVENTORIES

Reconciliation of inventory with charges to the Joint Account shall be made by
the Operator, and the Operator shall furnish the Non-Operators a copy of the
inventory and a price list of overages and shortages. Inventory adjustments
shall be made by the Operator to the Joint Account for overages and shortages
except that any particular item exceeding twenty five thousand United States
Dollars (US $25,000) or class of Material adjustment exceeding fifty thousand
United States Dollars (US $50,000) or net total adjustments of both overages and
shortages for any particular inventory exceeding in the aggregate an amount
equivalent to one hundred thousand United States Dollars (US $100,000) shall
require the approval of the Non-Operator(s). The Operator shall be held
accountable to the Non-Operator(s) only for shortages due to lack of reasonable
diligence.

3.           SPECIAL INVENTORIES

Special inventories may be taken, at the expenses of the purchaser, whenever
there is any sale or change of interest in the Joint Properties; and it shall be
the duty of the Party selling to notify all other Parties hereto as quickly as
possible after the transfer of interest takes place. In such cases, both the
seller and the purchaser shall be represented and shall be governed by the
inventory so taken.

Page 74

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

 
ARTICLE V - FORM IN WHICH ACCOUNTS SHALL BE MAINTAINED

The form of the accounts as required for the purpose of complying with
provisions of the Agreement shall include:

1.
Accounts recorded through Operator's Uniform Chart of Accounts or an equivalent
system of accounts. A manual of Operator's accounts shall be maintained at
Operator's office in India.

2.
Statements produced from the Operator's accounts of income and expenditure. Such
statements produced from the Operator's accounts must be developed over time to
reflect actual progress and circumstances.

Page 75

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

EXHIBIT  - B
CARRIED INTEREST AGREEMENT

THIS AGREEMENT MADE this 27 day of August, 2002.

BETWEEN:

Gujarat State Petroleum Corporation Limited, a company incorporated in India
and  having its registered office at Block 15, Second Floor, Udyog Bhavan,
Sector 11, Gandhinagar, Gujarat 382011, India (hereinafter referred to as “GSPC)

OF THE FIRST PART

AND:

GeoGlobal Resources (India) Inc, a company incorporated in Alberta, Canada, and
having its registered office at 35 – 22 Street NW, Calgary, Alberta, T2N 4W7,
Canada ,(hereinafter referred to as “GGR)

OF THE SECOND PART

Whereas the broad principles and special provisions to be incorporated in the
joint operating agreement referred to in clauses 5.1 of the Joint Bidding
Agreement are as follows:

 
(a)   Subject to clause (e) of this Agreement, GSPC shall be the Operator if
Production Sharing Contract is awarded with respect to the Bid made jointly by
the parties.  GSPC shall perform petroleum operations on behalf of the parties
pursuant to the terms of mutually agreed joint operating agreement effective as
of the date of signing the Production Sharing Contract for exploration block no.
KG-OSN-2001/3 offered under NELP-III, or completion of all three exploration
phases which ever is earlier.  The Non operating party, GGR shall be carried for
100% of all of its share of any costs during the Exploration phase prior to the
start date of initial commercial production. However, all of GGR’s share of any
capital costs for the development phase will be paid back to GSPC as operator
without interest and repayment of these costs shall be prorated over the
forecast production life or ten years whichever is less.

Now therefore this agreement witnesseth that in consideration of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:

 
Page 76

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

Carried Working Interest
 

The interest retained by GGR in the said exploration block as provided in this
agreement shall be a carried working interest, that is to say:

(a)           GSPC covenants and agrees that upon being successful in the
development of the said block, GGR shall be entitled to and have earned a 10%
carried working interest;

(b)           GSPC shall advance and pay for the joint account of the parties,
all costs and expenses which are made by GSPC pursuant to the terms of this
agreement including, without in any way whatsoever limiting the generality of
the foregoing, all costs and expenses of whatsoever nature or kind for
exploration phase carried out on the said block, for development of an
operations on the said block for the discovery and recovery of petroleum
substances (which for the purposes of this agreement includes all petroleum,
natural gas and related hydrocarbons and such other substances as are granted by
the said block);

(c)           after deducting all royalties payable under the said block, GSPC
shall be entitled to recover all such costs and expenses out of the production
if any, from wells drilled by GSPC on the said block pursuant to the terms
hereon;

(d)           GGR shall not be entitled to receive any share of production of
petroleum substances until GSPC has recovered GGR’s share of the costs and
expenses that were paid by GSPC as aforesaid and after such costs and expenses
have been recovered, GGR shall be entitled to a 10% interest in all wells
drilled on the said block, in all equipment placed in and on the said block and
in all petroleum substances produced from wells drilled by GSPC on the said
block;

(e)           if petroleum substances are not produced from the said block or if
production ceases before GSPC has recovered all of GGR’s share of costs and
expenses, it is understood and agreed that GSPC shall bear all of the aforesaid
costs and expenses and that GGR shall have no obligation or liability to pay,
repay or bear any portion thereof;

(f)           it is understood and agreed that any and all rental payments made
in respect of the said block shall be borne and paid solely by GSPC and shall
not be charged to the  joint account.

(g)           all costs and expenses and all income in connection with the said
block shall be computed and accounted for in accordance with the standard
industry accepted accounting principals and agreements.

Termination:

The term of this Agreement shall commence on the date of this Agreement and
shall be a period equal  to the same term of the Exploration Period of Block
KG-OSSN-2001/3 offered under NELP-III and the joint operating agreement referred
to above.

Page 77

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

Amendment:
 
No amendment to this Agreement shall be valid and binding unless set forth in
writing and duly executed by the parties.
 

Governing Law and Arbitration:

a)  
The laws of India shall govern this Agreement. GSPC and GGR submit to
the  exclusive jurisdiction of its courts at Delhi.

b)  
Any dispute arising in connection with or with respect to validity of this
agreement shall be finally resolved through Arbitration in accordance with the
rules under Arbitration & Conciliation Act, 1996 .  Proceedings of
Arbitration  shall be held in New Delhi and conducted in English language.

EXECUTED in Gandhinagar

Signed for and on behalf
of                                                                                                
 
Gujarat State Petroleum Corporation Limited by:

 
Witness:

 
Signed for and on behalf of

 
GeoGlobal Resources (India) Inc. by:

 
Witness:

Page 78

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