HECO Exhibit 10(a)

 

FIRST AMENDMENT TO

LOW SULFUR FUEL OIL SUPPLY CONTRACT

BY AND BETWEEN

BHP PETROLEUM AMERICAS REFINING INC.

AND

HAWAIIAN ELECTRIC COMPANY, INC.

 

This First Amendment to Low Sulfur Fuel Oil Supply Contract (“Amendment”), dated
March 29, 2004 is entered into between Tesoro Hawaii Corporation fka BHP
Petroleum Americas Refining Inc., a Hawaii corporation (referred to as “Tesoro”
or “SELLER”), and Hawaiian Electric Company, Inc., a Hawaii corporation,
(referred to as “HECO” or “BUYER”).

 

WHEREAS, BHP Petroleum Americas Refining Inc. entered into that certain Low
Sulfur Fuel Oil Supply Contract dated November 14, 1997, effective as of January
1, 1998 (the “Contract”); and

 

WHEREAS, on or about June 1, 1998, Tesoro Petroleum Corporation purchased all
the stock of BHP Petroleum Americas Refining Inc., and thereafter changed the
name of BHP Petroleum Americas Refining Inc. to Tesoro Hawaii Corporation; and

 

WHEREAS, the Contract provided for the sale by SELLER and purchase by HECO of
Low Sulfur Fuel Oil (referred to as “LSFO” or “Product”) for the period from
January 1, 1998 through December 31, 2004, with provision for additional terms
of 12-months each, beginning each successive January 1, unless BUYER or SELLER
gives written notice of termination at least 120 days prior to the expiration of
the then current term; and

 

1

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

WHEREAS, SELLER and BUYER desire to extend the original term of the Contract for
an additional ten-year period under the existing terms and conditions of the
Contract, subject to the amendments noted herein;

 

NOW THEREFORE, the parties agree to amend the Contract as follows, effective as
of January 1, 2005:

 

1. All references to “BHP” or “BHP Petroleum Americas Refining Inc.” in the
title of and throughout the Contract shall be replaced by “Tesoro Hawaii
Corporation”.

 

2. Article I (“Definitions”) is hereby amended by amending the definition of
“Original Term” in its entirety to read as follows:

 

“22. “Original Term” means the first term of this Contract, which commenced
January 1, 1998 and concludes December 31, 2014.”

 

3. Article III (“Term”) is hereby amended in its entirety to read as follows:

 

“The Original Term of this Contract shall be from January 1, 1998 through
December 31, 2014, and shall continue for Additional Terms, unless BUYER or
SELLER gives written notice of termination at least one hundred twenty (120)
Days prior to the beginning of an Additional Term.”

 

2

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

4. Article V (“Quantity”), Section 5.1 (“Quantity”) is hereby amended in the
first paragraph by replacing the phrase “2000-2004” in the table with
“2000-2014/Additional Term”, by replacing the phrase “Years 2001, 2002 and 2003”
with “Years 2001, 2002, 2003, 2005, 2006, 2007, 2009, 2010, 2011, 2013, and
2014”, and by replacing the phrase “Years 2000 and 2004” with “Years 2000, 2004,
2008, and 2012”; in the second paragraph, by replacing the phrase “Year 2004”
with “Year 2014”; and in the fourth paragraph, by replacing the phrase “Years
2000, 2001, 2002, 2003 and 2004” with “Years 2000 through 2014.”

 

5. Article VI (“Price”), Section 6.1 (“Determination of Product Price”) is
hereby amended by replacing all references to [___] and [___] therein with [___]
and by replacing their respective definitions with the definition of [___]
below.

 

[___]

 

6. Article VI (“Price”), Section 6.1 (“Determination of Product Price”) is
hereby further amended by replacing the phrase “2000-2004” in the table
following the definition of price component [___] with “2000-2014/Additional
Term”; and by amending the sentence immediately following the definition of
price formula component [___] by replacing the phrase “2004” with “2014”.

 

3

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

7. Article VIII (“Payment”), Section 8.1 (“Invoices”) is hereby updated by
amending the identity of and address information for the “SELLER” in the second
paragraph as follows:

 

“SELLER:   

TESORO HAWAII CORPORATION

P.O. Box 3379

Honolulu, Hawaii 96842

Attn: Manager Utility Fuel Sales

Facsimile: (808) 547-3336”

 

8. Article VIII (“Payment”), Section 8.2 (“Method of Payment”) is hereby updated
by amending the SELLER’s wire transfer information as follows:

 

“Bank One, Chicago, Illinois

ABA# 071000013

Tesoro Hawaii Corporation

Account # 5563631”

 

9. Article IX (“Notices”) is hereby clarified and updated by replacing it in its
entirety with the following:

 

“Except as otherwise expressly provided herein, all notices shall be given in
writing, by letter, electronic mail or facsimile to the following addresses, or
such other address as the parties may designate by notice, and shall be deemed
to have been duly given upon receipt, provided that notice sent by mail shall be
deemed to have been given on the date of actual delivery or at the expiration of
the fifth day after the date of mailing, whichever is earlier.

 

4

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

BUYER:   

Hawaiian Electric Company, Inc.

P. O. Box 2750

Honolulu, Hawaii 96840

Attn: Director Fuels Resources, Power Supply Process Area, Mail

Stop WP-2/IF

Facsimile: (808) 543-4207

SELLER:   

Tesoro Hawaii Corporation

P.O. Box 3379

Honolulu, Hawaii 96842

Attn: Manager Utility Fuel Sales

Facsimile: (808) 547-3336”

 

10. Exhibit A (“Product Specifications”) is hereby replaced by the Exhibit A
attached hereto and incorporated herein by reference.

 

11. Exhibit B (“Illustrative Schedule Of Prices”) is hereby clarified and
updated by replacing it with the Exhibit B attached hereto and incorporated
herein by reference.

 

12. Exhibit C (“Illustrative Computation of Price Formula Component”) is hereby
clarified and updated by replacing it with the Exhibit C attached hereto and
incorporated herein by reference.

 

13. Except as expressly amended in this First Amendment, the provisions of the
Contract shall remain in full force and effect, and exactly as written.

 

5

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IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the
Low Sulfur Fuel Oil Supply Contract as of the day and year first written above.

 

HAWAIIAN ELECTRIC COMPANY, INC. By   /s/    THOMAS C. SIMMONS            

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

    Thomas C. Simmons     (Printed or Typed Name)

Its

  Vice President, Power Supply By   /s/    RICHARD A. VON GNECHTEN            

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

    Richard A. von Gnechten     (Printed or Typed Name)

Its

  Financial Vice President     BUYER

 

TESORO HAWAII CORPORATION By   /s/    STEVE L. WORMINGTON            

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

    Steve L. Wormington     (Printed or Typed Name)

Its

  EVP Marketing     SELLER

 

6

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EXHIBIT A

 

PRODUCT SPECIFICATIONS

 

LSFO Specification – Test Item

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

   Measurement Unit

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

   Limits

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

   ASTM Method

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

GRAVITY @ 60 DEGREES F.

   Degrees API    12 Min.
24 Max.    D-4052

 

[_____________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________]

 

HEAT VALUE, GROSS

   MM BTU/BBL    6.0 million
Min.   D-240,
D-4868

FLASH POINT

   Degrees F.    150 Min.   D-93,
D-6450

POUR POINT

   Degrees F.    125 Max.   D-97,
D-5949

ASH

   Percent, Weight    0.05 Max.   D-482

SEDIMENT & WATER

   Percent, Weight    0.50 Max.   D-1796

 

[____________________________________________________________________________________________]

 

[_____________________________________________________________________________________________________
_________________________________________________________________________________________________]

 

 

1

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EXHIBIT B

 

ILLUSTRATIVE SCHEDULE OF PRICES

 

Illustrative Price Calculation for Product Delivered to Meet the Nominated
Commitment of

October 2003

 

Determination of Product Price Under Article VI. The Product Price in U.S.
Dollars (USD) per barrel shall be determined according to the following price
formula:

 

[_________________________________________________________________]

 

Where:

 

[_____________________________________________________________________________________________________

__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

__________________________________________________________________________________________________
__________________________________________________________________________________________________

__________________________________________________________________________________________________
__________________________________________________________________________________________________

__________________________________________________________________________________________________
__________________________________________________________________________________________________

__________________________________________________________________________________________________
__________________________________________________________________________________________________

__________________________________________________________________________________________________
__________________________________________________________________________________________________

__________________________________________________________________________________________________
__________________________________________________________________________________________________

__________________________________________________________________________________________________
__________________________________________________________________________________________________

__________________________________________________________________________________________________
__________________________________________________________________________________________________

__________________________________________________________________________________________________
__________________________________________________________________________________________________

__________________________________________________________________________________________________
_______________________]

 

[_]  =  market price referencing a component (base price) of the price of
[_____________________________________________
____________________________________________________________________________________________________
____________________________________________________________________________________________________
_____________________________________________________________________________________________],
expressed in USD per barrel.

 

1

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

i.
[______________________________________________________________________________________________
_______________________________________________________________________________________]
during the period beginning the 21st Day of the second Month preceding the
Nominated Month of Delivery and ending the 20th of the Month immediately
preceding the Nominated Month of Delivery.

 

Date of Price

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

 

Price in USD per Barrel

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

Date

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

 

Low

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

 

High

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

 

Average

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

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]           [________]

 

ii.
[______________________________________________________________________________________________
_______________________________________________________________________________________]]
during the period beginning the 21st Day of the second Month preceding the
Nominated Month of Delivery and ending the 20st of the Month immediately
preceding the Nominated Month of Delivery.

 

2

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

Date of Price

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

 

Price in USD per Barrel

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

Date

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

 

Low

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

 

High

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

 

Average

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

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

       

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]           [________]

 

iii. Compute the
[___________________________________________________________________________________________
______________________________________________________________________________________________________
_______________________________________________________________________________________________________
_________________________________________________]

 

[___________________________________________________________________________]

 

[_]  =  market price referencing a component
[___________________________________________________________________
______________________________________________________________________________________________________
_______________________], expressed in USD per barrel.

 

Determination of
[____________________________________________________________________________________________
_________________________________________________________________________________________]

 

3

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

Date of Price

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

 

Price in USD per Barrel

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

Date

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

 

Low

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

 

High

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

 

Average

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

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

       

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]

 

[________]

 

[________]

 

[________]

[________]       [________]

 

[_______________________________]

 

F1 = a factor to reflect
[_____________________________________________________________________________________
__________________________________], expressed in USD per barrel.

 

A factor for
[________________________________________________________________________________]
which is computed in accordance with the following formula:

 

[_______________________________________________]

 

Where:

 

    
[___________________________________________________________________________________________________

      
________________________________________________________________________________________________

      
________________________________________________________________________________________________

      
________________________________________________________________________________________________

      
________________________________________________________________________________________________

      
________________________________________________________________________________________________

       ______________________________]

 

4

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

    
[___________________________________________________________________________________________________

      
________________________________________________________________________________________________

      
________________________________________________________________________________________________

      
________________________________________________________________________________________________

      
________________________________________________________________________________________________

      
________________________________________________________________________________________________

      
________________________________________________________________________________________________

      
________________________________________________________________________________________________

       ___________________________________________________________________]

 

i. Determination of the
[___________________________________________________________________________________
_______________________________________________]

 

Date of Price

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

 

Price in USD per Metric Ton

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

Date

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

 

Low

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

 

High

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

 

Average

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

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

[________]

 

[________]

 

[________]

 

[________] [__]

 

[______] in USD per metric ton: [________]

 

ii. Conversion of
[________________________________________________________________] from USD per
Metric Ton to USD per barrel

 

Expressed in USD per Bbl: = [__________] / 6.368 Bbl/MT

 

[_____________________________________]

 

5

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

iii. Computation using price formula

 

[_____________________________________]

 

[____________________________________________________]

 

[______________________________________________]

 

[__________________________________________]

 

[________________________________________________________________________________________________________

    
____________________________________________________________________________________________________

    
__________________________________________________________________________________],
expressed in USD per barrel.

 

A factor for [______________] which is computed in accordance with the following
formula:

 

[_______________]

 

Where:

 

  [__] [_____________] derived by
multiplying [_______________________________________________________________

      
__________________________________________________________________________________________________

      
_______________________________________________________________________________________________]
for the three Months in the calendar quarter immediately preceding the calendar
quarter of the Nominated Month of Delivery, by
the [_________________________________________________________________________________________

      
_________________________________________________________________________________________],
applicable to the Year of the quarter of the referenced [___] data, expressed in
USD per barrel.

 

      
[_______________________________________________________________________________________________]
as defined in [________] to reflect the cost of the additional premium for full
USD 1 billion coverage of Oil Pollution Liability Insurance on vessels carrying
persistent oils to and from the U.S.A., consistent with a typical vessel derived
in Exhibit C attached to this Contract.

 

[_________________________________________________________________________________________________________

______________________________________________________________________________________________________

______________________________________________________________________________________________________

__] for the three Months in the calendar quarter immediately preceding the
calendar quarter of the Nominated Month of Delivery,
by [________________________________________________________________________________________

____________________________________________________________________________________________________]
applicable to the Year of the quarter of the referenced [___] data, expressed in
USD per barrel.

 

6

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

i.
the [________________________________________________________________________________________________

    
___________________________________________________________________________________________________

     _____________], for the three Monthly publications in the calendar quarter
immediately preceding the calendar quarter of the Nominated Month of Delivery

 

Date of Publication:
[_____________________________________________________________________________________

______________________________________________________________________________________________________

__________________________________________________________________________]

 

July 2003

   [____]

August 2003

   [____]

September 2003

   [____]

[_________]

   [______]

 

ii.
the [__________________________________________________________________________________________________

     ________________________________________________________________________],
applicable to the Year of the quarter of the referenced [____] data, expressed
in [__________________________________________________________________

     _________________________________________________________________________]

 

[_________________________________________________________________________________________]
effective January 1, 2003:

[______________________________________________________________________________________________________

_______________________________________________________________________________________________________

_______________________________________________________________________________________________________

_________________]

 

* prorated due
[__________________________________________________________________________________________

_________________________________________________________________________________________________]

 

iii. Computation using price formula

 

[________________________]

 

[____________________]

 

iv. Conversion of [_____________________________________] from USD per metric
ton to USD per barrel

 

[______________________]

 

[________________]

 

[_______________________________________________________________________________________________]
as defined

     in [_____] to reflect the cost of the additional premium for full USD 1
billion coverage of Oil Pollution Liability Insurance on vessels carrying
persistent oils to and from the U.S.A., consistent with a typical vessel derived
in Exhibit C attached to this Contract.

 

7

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

[_______________________], derived as illustrated in Exhibit C attached hereto.

 

[________________]

 

[______________]

 

[_____________________________]

 

[_] = a per barrel
[__________________________________________________________________________________________

     __________________________________________], applicable to volumes sold and
Delivered by SELLER and purchased and received by BUYER in each Year of the
Contract.

 

[_______________]

 

T = Taxes applicable to sale of Product

 

i. HGET = 4.166% of pre-HGET price, excluding the Hawaii Environmental Response
Tax;

 

ii. Hawaii Environmental Response Tax applied after HGET = $0.05 per barrel

 

A. Sample Product Price Computation for Delivery with Standard BTU Content of
[-] MM Btu Per Barrel

 

[_______________________________]

 

[__________________________________________________]

 

[__________________________________]

 

[_______________________]

 

[________________]

 

8

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

B. Sample Product Price Computation for Delivery with BTU Content Other than
Standard [__] MM Btu per Barrel

 

[___________________________]

 

Assume [__] gross heat content [_________________] Product Delivered against the
October 2003 Nomination, [________________

___________________________________________________________________________________________]

 

[________________________________________]

 

[________________________________________]

 

[_____________________]

 

[____________]

 

EXPLANATION OF TAXES:

 

Taxes in the LSFO price currently in effect include the Hawaii Environmental
Response Tax of $0.050 per barrel. Also, Hawaii State General Excise Tax of
4.166% will be paid on all components of the Product Price, except at the
execution of this Contract, the Hawaii Environmental Response Tax.

 

9

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

EXHIBIT C

 

ILLUSTRATIVE COMPUTATION OF PRICE FORMULA COMPONENT

 

Article VI of this Contract provides for the determination of the price per
physical barrel of LSFO, which price determination
[________________________________________________________________________________________________________

_________________________________________________________________________________________________________

_________________________________________________________________________________________________________

_______________________________________________________________________________________________].
The current edition of
[___________________________________________________________________] to reflect
the cost of additional insurance premium for oil pollution liability insurance
on vessels carrying “Persistent Oils” (a cargo category which would include any
grade of fuel oil, most fuel oil blending components as well as most types of
crude oil) applicable to voyages having a destination in the U.S.A. SELLER
acknowledges that any vessel used to transport LSFO that is sold and purchased
under this Contract, including its components and the crude oil from which the
LSFO is derived, shall be required to possess oil spill liability insurance
coverage in the maximum amount commercially available, $1 billion as of January
1, 2004.

 

The price formula component [____] refers to
[________________________________________________________________

___________________________________________________________________________________________________________

___________________________________________________________________________________________________________

___________________________________________________________________________________________________________

__________________________________________] In order to derive an approximation
of the relationship between Deadweight and Gross Registered Tons, the design
characteristic of tankers against which marine insurance, including oil
pollution liability insurance, is levied, for a nominal vessel consistent with
[_______________________], the average size characteristics of two vessels that
have transported LSFO or crude oil to Barbers Point, Hawaii are used as
reference data. These vessels are described as follows:

 

Name

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

  

Deadweight Tons

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

  

Gross Registered Tons(GT)

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

 

[____________________________________________________________________________________________________

__________________________________________________________________________________________________________]

 

[__________________________________________________________________________________________________________]

 

The [____________________________________________________]that is to be included
in the computation of [_______]

[___________________________________________]is consistent with the computation
of [__] and is to be derived in the same manner as the following illustrative
example calculations:

 

1. [__________________] rate in effect from February 20, 2003 (see note #1 at
end) onwards shall include a [______________] computed as follows:

 

1

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

[_____________________________________] with respect to the additional insurance
premium for oil spill liability insurance coverage in the maximum amount
commercially available, $ 1 billion as of January 1, 2004, on vessels carrying
Persistent Oils to and from the U.S.A., [____] is derived:

 

[_________________________________________________________________________________________________

___________________________________________________________________________________]

 

[_____________________]                                             

 

For illustrative purposes, this rate may be expressed in USD per barrel as
follows:

 

[__________________________________________

________________________________________________________________________________________________]

 

[_________________________________________]

 

2. The [________________________] and their related [______________________]
applicable for each calendar quarter are based upon an average of
[___________________________________] in the calendar quarter immediately
preceding the calendar quarter of the Nominated Month of delivery. Therefore the
[________________________] computed above may properly be prorated for certain
quarterly periods. Such proration may be computed as follows:

 

  A. With respect to volumes of
LSFO [______________________________________________________________________

_______________________________________________________________________________________]
(typically February 20th of each Year), the relevant
[______________________________________] to be included in the computation of
the [_______________________________________] shall be prorated for illustrative
purposes as follows (for the first calendar quarter of a Year which is not a
leap Year):

 

50/90 multiplied by the [______________________]computed prior to the rate
change and 40/90 multiplied by the [___________________] using the revised rate.

 

  B. With respect to volumes of [________________________], and continuing for
so long as the [______________________] as set forth in
[_________________________] shall be applicable, the relevant
[_____________________________] to be included in the computation of the price
component [_____________] shall be as derived as in part 1 above.

 

2

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

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

Note (1): [___________________________] are revised and applicable for each
calendar year, however the value of the [_________________________________] that
pertains to the cost of oil pollution liability insurance is revised in
accordance with the Protection & Indemnity Club (mutual marine insurance
organizations) premium year, generally February 20 through February 19 of the
following year. Reference [________________________] for the
[____________________________] in effect from February 20, 2003 onwards and
applicable to the October 2003 Product price.

 

3