exhb1031.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit
10.31

    


    


     

    


    PRODUCTION
SHARING CONTRACT

     

    BETWEEN

     

    GOVERNMENT
OF INDIA

     

    AND

     

    OIL
& NATURAL GAS CORPORATION LIMITED

     

    AND

     

    GUJRAT
STATE PETROLEUM CORPORATION LIMITED

     

    AND

     

    HINDUSTAN
OIL EXPLORATION COMPANY LIMITED

    


    


    WITH
RESPECT TO CONTRACT AREA

    


    IDENTIFIED
AS

    


    BLOCK
CB-ON-2

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


     

    


     

    TABLE OF
CONTENTS

     

    


     

    
      	
              ARTICLE

            	
              CONTENTS

            	
              PAGENO.

            
	 
      	
              Preamble

            	 
      
	
              1.

            	
              Definitions

            	
              3

            
	
              2.

            	
              Duration

            	
              12

            
	
              3.

            	
              Relinquishment

            	
              14

            
	
              4.

            	
              Work
      Programme

            	
              15

            
	
              5.

            	
              Management
      Committee

            	
              17

            
	
              6.

            	
              Operatorship,
      Operating Agreement and Operating Committee

            	
              20

            
	
              7.

            	
              General
      Rights & Obligations of the Parties

            	
              21

            
	
              8.

            	
              Government
      / Licensee Assistance

            	
              24

            
	
              9.

            	
              Discovery,
      Development and Production

            	
              25

            
	
              10.

            	
              Unit
      Development

            	
              29

            
	
              11.

            	
              Measurement
      of Petroleum

            	
              30

            
	
              12.

            	
              Protection
      of the Environment

            	
              31

            
	
              13.

            	
              ONGC
      Participation

            	
              35

            
	
              14.

            	
              Recovery
      of Cost from Petroleum

            	
              37

            
	
              15.

            	
              Production
      Sharing of Petroleum

            	
              40

            
	
              16.

            	
              Taxes,
      Royalties, Rental etc.

            	
              42

            
	
              17.

            	
              Custom
      Duties

            	
              46

            
	
              18.

            	
              Domestic
      Supply, Sale, Disposal and Export of Crude Oil and
    Condensate

            	
              47

            
	
              19.

            	
              Valuation
      of Petroleum

            	
              51

            
	
              20.

            	
              Currency
      and Exchange Control Provisions

            	
              54

            
	
              21.

            	
              Natural
      Gas

            	
              56

            
	
              22.

            	
              Employment,
      Training and Transfer of Technology

              Employment,
      Training and Transfer of

            	
              60

            
	
              23.

            	
              Local
      Goods and Services

            	
              62

            
	
              24.

            	
              Insurance
      and indemnification

            	
              63

            
	
              25.

            	
              Records,
      Reports, Accounts and Audit

            	
              64

            
	
              26.

            	
              Information,
      Data Confidentiality, Inspection and Security

            	
              66

            


    

    


    


    


    


    


    


    


    (i)

    


    


    


    


    


    
      	
              27.

            	
              Title
      to Petroleum, Data and Assets

            	
              69

            
	
              28.

            	
              Assignment
      of Interest

            	
              71

            
	
              29.

            	
              Financial
      and Performance Guarantees

            	
              73

            
	
              30.

            	
              Termination
      of Contract

            	
              75

            
	
              31.

            	
              Force
      Majeure

            	
              77

            
	
              32.

            	
              Applicable
      Law and Language of the Contract

            	
              79

            
	
              33.

            	
              Sole
      Expert, Conciliation and Arbitration

            	
              80

            
	
              34.

            	
              Entire
      Agreement, Amendments and Waiver

            	
              82

            
	
              35.

            	
              Certificates

            	
              83

            
	
              36.

            	
              Notices

            	
              84

            


    

    


    


    


    


    
      	
              APPENDICES

            	
              CONTENTS

            	
              PAGENO.

            
	 
      	 
      	 
      
	
              Appendix
      A

            	
              Description
      of Contract Area

            	
              86

            
	
              Appendix
      B

            	
              Map
      of Contract Area

            	
              87

            
	
              Appendix
      C

            	
                  Accounting
      Procedure to Production Sharing Contract

               

            	
              88

            
	
              Appendix
      D

            	
                  Calculation
      of the Post Tax Rate of Return and

                  Investment
      Multiple for Production Sharing Purposes

            	
              117

            
	
              Appendix
      E

            	
                  Form
      of Parent Financial and Performance Guarantee

               

            	
              119

            


    

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    ( ii
)


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              This
      Contract is made this 12th
      day of April, 2000 between:

            


    

    


    


    
      	
              1.

            	
              The President of India,
      acting through the Secretary, Ministry of Petroleum and Natural Gas
      (hereinafter referred to as Government) of the FIRST
    PART;

            


    

     

    
      	
               
      

            	
              AND

            


    

     

    
      	
              2.

            	
              Oil & Natural Gas
      Corporation Ltd., a body corporate incorporated under the
      Companies Act. 1956 having its registered office at Jeevan Bharti
      Building
      Tower II, 124, Indira Circus (Connaught Circus) New Delhi
      (hereinafter referred to as ONGC) which expression shall include
      its successors and such assigns as are permitted under Article 28 hereof,
      of the SECOND
      PART;

            


    

     

    
      	
               
      

            	
              AND

            


    

     

    
      	
              3.

            	
              GUJARAT STATE PETROLEUM
      CORPORATION LTD., a body corporate incorporated under the
      Companies Act 1956, having its registered
      office at Block No. 15, 2nd Floor, Udyog Bhavan
      Sector -11 Gandhinagar-382 O11 (hereinafter referred to as
      GSPC),

            


    

     

    
      	
               
      

            	
              AND

            


    

     

    
      	
              4.

            	
              HINDUSTAN OIL EXPLORATION
      COMPANY LTD., a body corporate incorporated under the
      Companies Act, 1956, having its registered
      office at Tandalja Road, Off: Old Padra Road, Baroda (hereinafter
      referred to as HOEC) and GSPC and HOEC are collectively referred herein as
      COMPANIES, which expression shall include their successors and such
      assigns as are permitted under Article 28 hereof, of the THIRD
    PART;

            


    

    
      	
               
      

            	
              WITNESSETH:

            


    

    


    
      	
               
      

            	
              WHEREAS

            


    

    
      	
              (1)

            	
              The
      Oil Fields (Regulation and Development) Act, 1948 (53 of 1948)
      (hereinafter referred to as "the Act") and the Petroleum and Natural Gas
      Rules, 1959, made thereunder (hereinafter referred to as "the Rules") make
      provision inter alia for the regulation of Petroleum Operations and the
      grant of licences and leases for exploration and development of Petroleum
      in India;

            


    

     

    
      	
              (2)

            	
              The
      Rules provide for the grant of petroleum exploration licences and
      petroleum mining leases in respect of land vested in a State Government by
      that State Government with the previous approval of the Central
      Government, and ONGC is being duly granted an exploration licence to carry
      out Exploration Operations in association with other companies in that
      area onshore identified as Block CB-ON/2 and more particularly described
      in Appendix A;

            


    

     

    
      	
              (3)

            	
              The
      Rules provide for an agreement between the Government and the Licensee
      with respect to additional terms and conditions in regard to the licence
      or lease;

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              (4)

            	
              The
      Government desires that the Petroleum rcsources which may exist in lndia
      be discovered and exploited with the utmost expedition in the overall
      interest of India in accordance with good petroleum industry
      practices;

            


    

     

    
      	
              (5)

            	
              COMPANIES
      have represented that they have, or will acquire and make available, the
      necessary financial and technical resources and the technical and
      industrial competence and experience necessary for proper discharge and or
      performance of all obligations required to be performed under this
      Contract in accordance with good international petroleum industry
      practices and will provide guarantees as required in Article 29 for the
      due performancc of its undertakings
hereunder;

            


    

     

    
      	
              (6)

            	
              As
      a result of discussions between representatives of the Government and
      COMPANIES on the proposal of COMPANIES, the Government and ONGC have
      agreed to enter into this Contract with COMPANIES with respect to the said
      area referred to in paragraph (2) above on the terms and conditions herein
      set forth.

            


    

     

    
      	
              (7)

            	
              The
      initial undivided percentage Participating Interest of each of the
      Companies in the Contract shall be as
follows:

            


    

     

    
      	
              GSPC :

            	
              50
      %

            


    

     

    
      	
              HOEC
      :

            	
              50
      %

            


    

    


    NOW, THEREFORE in
consideration of the premises and covenants and conditions herein contained, IT
IS HEREBY AGREED between the Parties as follows:

    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    


    


    ARTICLE
- 1

     

    DEFINITIONS

    


    


    In this
Contract. unless the context requires otherwise, the following terms shall have
the meaning ascribed to them hereunder:

     

    
      	
              l.1

            	
              "Accounting
      Procedure" means the principles and procedures of accounting set out in
      Appendix C.

            


    

     

    
      	
              1.2

            	
              "Affiliate"
      means a company that directly or indirectly controls or is controlled by a
      Party to this Contract or a company which directly or indirectly controls
      or is controlled by a company which controls a Party to this Contract, it
      being understood that "control" means ownership by one company of more
      than fifty percent (50%) of the voting securities of the other company, or
      the power to direct, administer and dictate policies of the other company
      even where the voting securities held by such compmy exercising such
      effective control in that other company is less than fifty percent (50%)
      and the term "controlled" shall have a corresponding
    meaning.

            


    

     

    
      	
              1.3

            	
              '"Appendix'
      means an Appendix attached to this Contract and made a part
      thereof.

            


    

     

    
      	
              1.4

            	
              "Appraisal
      Programme" means a programme, approved by the Management Committee,
      carried out following a Discovery of Petroleum in the Contract Area for
      the purpose of delineating the Petroleum Reservoirs to which the Discovery
      relates in terms of thickness and lateral extent and determining the
      characteristics thereof and the quantity of recoverable Petroleum
      therein.

            


    

     

    
      	
              1.5

            	
              "Appraisal
      Well" means a Well drilled pursuant to an approved Appraisal
      Programme.

            


    

     

    
      	
              1.6

            	
              "Arms
      Length Sales" means sales made freely in the open international market, in
      freely convertible currencies, between willing and unrelated sellers and
      buyers and in which such buyers and sellers have no contractual or other
      relationship, directly or indirectly, or any common or joint interest as
      is reasonably likely to influence selling prices and shall, inter alia,
      exclude sales (whether direct or indirect, through brokers or otherwise)
      involving Affiliates, sales between entities comprising the Contractor,
      sales between governments and governmentowned entities, counter trades,
      restricted or distress sales, sales involving barter arrangements and
      generally any transactions motivated in whole or in part by considerations
      other than normal commercial
practices.

            


    

     

    
      	
              1.7

            	
              "Article"
      means an article of this Contract and the term "Articles" means more than
      one Article.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              1.8

            	
              "Associated
      Natural Gas" or "ANG" means Natural Gas occurring in association with
      Crude Oil either as free gas or in solution, if such Crude Oil can by
      itself be commercially produced.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              1.9

            	
              "Barrel"
      means a quantity or unit equal to 158.9074 litres (forty two (42) United
      States gallons) liquid measure at a temperature of sixty (60) degrees
      Fahrenheit (15.56 degrees Centigrade) under one atmosphere pressure (14.7
      p.s.i.a.).

            


    

     

    
      	
              1.10

            	
              "Basement"
      means any igneous or metamorphic rock, or rocks or any stratum of such
      nature, in and below which the geological structure or physical
      characteristics of the rock sequence do not have the properties necessary
      for the accumulation of Petroleum in commercial quantities and which
      reflects the maximum depth at which any such accumulation can be
      reasonably expected in accordance with the knowledge generally accepted in
      the international petroleum
industry.

            


    

     

    
      	
              1.11

            	
              "Calendar
      Month" means any of the twelve months of the Calendar
  Year.

            


    

     

    
      	
              1.12

            	
              "Calendar
      Quarter" means a period of three consecutive Calendar Months commencing on
      the first day of January, April, July and October of each Calendar
      Year.

            


    

     

    
      	
              1.13

            	
              "Calendar
      Year" means a period of twelve consecutive Months according to the
      Gregorian calendar, commencing with the first day of January and ending
      with the thirty-first day of
December.

            


    

     

    
      	
              1.14

            	
              "Commercial
      Discovery" means a Discovery of Petroleum reserves which, when produced,
      are likely to yield a reasonable profit on the funds invested in Petroleum
      Operations, after deduction of Contract Costs, and which has been declared
      a Commercial Discovery in accordance with the provisions of Article 9 and
      or Article 21, after consideration of all pertinent operating and
      financial data such as recoverable reserves, sustainable production
      levels, estimated development and production expenditures, prevailing
      prices and other relevant technical and economic factors according to
      generally accepted practices in the international petroleum
      industry.

            


    

     

    
      	
              1.15

            	
              "Commercial
      Production" means production of Crude Oil or Natural Gas or both from a
      Development Area and delivery of the same at the relevant Delivery Point
      under a programme of regular production and
  sale.

            


    

     

    
      	
              1.16

            	
              "Company"
      for the purpose of this Contract means a company (excluding the Nominee)
      which is a Party to this Contract and, where more than one Company is a
      Party to the Contract, the term "Companies" shall mean all such Companies
      (excluding the Nominee)
collectively.

            


    

     

    
      	
              1.17

            	
              "Condensate"
      means those low vapour pressure hydrocarbons obtained from Natural Gas
      through condensation or extraction and solely refers to those hydrocarbons
      that are liquid at normal surface temperature and pressure conditions
      (provided that in the event Condensate is produced from an Oil Field in
      the Development Area and is segregated and transported separately to the
      Delivery Point, then the provisions of this Contract shall apply to such
      Condensate as if it were Crude
Oil).

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              1.18

            	
              "Contract"
      means this agreement and the Appendices attached hereto and made a part
      hereof and any amendments made thereto pursuant to terms
      hereof.

            


    

     

    
      	
              1.19

            	
              "Contract
      Area" means, on the Effcctivc Date, the area described in Appendix "A" and
      delineated on the map attached as Appendix "B", or any portion of the said
      area remaining after relinquishment or surrender from time to time
      pursuant to the terms of this
Contract.

            


    

     

    
      	
              1.20

            	
              "Contract
      Costs" means Exploration Costs, Development Costs and Production
      Costs.

            


    

     

    
      	
              1.21

            	
              "Contract
      Year" means a period of twelve consecutive months counted from the
      Effectivc Date or from the anniversary of the Effective
    Date.

            


    

     

    
      	
              1.22

            	
              "Contractor"
      means:

            


    

     

    
      	
               
      

            	
              (a)

            	
              prior
      to exercise by Government of its option to participate pursuant to Article
      13, the Companies, and

            


    

     

    
      	
               
      

            	
              (b)

            	
              in
      the event that Govenunent exercises its option to participate pursuant to
      Article 13, the Companies and the Nominee
  collectively.

            


    

     

    
      	
              1.23

            	
              "Cost
      Petroleum" means the portion of the total Petroleum produced and saved
      from any Development Area which the Contractor is entitled to take in
      particular period for the recovery of Contract Cost as provided in Article
      14.

            


    

     

    
      	
              1.24

            	
              "Crude
      Oil" means crude mineral oil, asphalt, ozokerite and all kinds of
      hydrocarbons and bitumens, both in solid and in liquid form, in their
      natural state including distillate or obtained from Natural Gas by
      condensation or extraction, including distillate and Condensate when
      commingled with the heavier hydrocarbons and delivered as a blend at the
      Delivery Point but excluding verified Natural
  Gas.

            


    

     

    
      	
              1.25

            	
              "Delivery
      Point" means, except as otherwise herein provided or as may be otherwise
      agreed between the Government and the Contractor, the point at which
      Petroleum reaches the outlet flange of the delivery facility, either
      offshore or onshore and different Delivery Points may be established for
      purposes of sales to the Government and export
  sales.

            


    

     

    
      	
              1.26

            	
              "Development
      Area" means that part of the Contract Area which encompasses one or more
      Commercial Discovery(ies) and any additional area within the Contract Area
      that may be required for proper development of such Commercial
      Discovery(ies) and establish as such in accordance with the provision of
      the Contract.  It is hereby expressly understood that
      Development Area can contain one or more Commercial Discovery(ies) only if
      the same set of constituents of the Contractor have elected to participate
      in the development of such Commercial Discovery (ies) proposed to be
      located in the same Development
Area.

            


    

     

    
      	
              1.27

            	
              "Development
      Costs" means those costs and expenditures incurred in carrying out
      Development Operations, as classified and defined in Section 2 of the
      Accounting Procedure and allowed to be recovered in terms of Section 3
      hereof.

            


    

     

    
      	
              1.28

            	
              "Development
      Operations" means operations conducted in accordance with the Development
      Plan and shall include the purchase, shipment or storage of equipment ard
      materials used in developing Petroleum accumulations, the drilling,
      completion and testing of Dcvelopmcnt Wells, the drilling and completion
      of Wells for Gas or water injection, the laying of gathering lines, the
      installation of offshore platforms and installations, the installation of
      separators, tankage, pumps, artificial lift and other producing and
      injection facilities required to produce, process and transport Petroleum
      into main Oil storage or Gas processing facilities, either onshore or
      offshore, including the laying of pipelines within or outside the Contract
      Area, storage and Delivery Point(s), the installation of said storage or
      Gas processing facilities, the installation of export and loading
      facilities and other facilities required for the development and
      production of the said Petroleum accumulations and for the delivery of
      Petroleum at the Delivery Point and also including incidental operations
      not specifically referred to herein as required for the most efficient and
      economic development and production of the said Petroleum accumulations in
      accordance with good petroleum industry
  practices.

            


    

     

    
      	
              1.29

            	
              "Development
      Plan" means a plan submitted by the Contractor containing proposals
      required under Article 9 and/or Article 21 for the development of an Oil
      Field or Gas Field which has been approved by the Management Committee or
      Goverrment.

            


    

     

    
      	
              1.30

            	
              "Development
      Well" means a Well drilled, deepened or completed after the date of
      approval of the Development Plan pursuant to Development Operations or
      Production Operations for the purposes of producing Petroleum, increasing
      production, sustaining production or accelerating extraction of Petroleum
      including production Wells, injection Wells and dry
  Wells.

            


    

     

    
      	
              1.31

            	
              "Discovery"
      means the finding, during Exploration Operations, of a deposit of
      Petroleum not previously known to have existed, which can be recovered at
      the surface in a flow measurable by conventional petroleum industry
      testing methods.

            


    

     

    
      	
              1.32

            	
              "Discovery
      Area" means that part of the Contract Area which, based upon Discovery and
      results obtained from a Well or Wells drilled and other such subsurface
      information in such part, both the Licensee and the Contractor are of the
      opinion that Petroleum exists and is likely to be produced in commercial
      quantities.

            


    

     

    
      	
              1.33

            	
              "Effective
      Date" means the later of the Contract execution date and the date of issue
      of the Petroleum exploration license by the State
      Government(s).

            


    

     

    
      	
              1.34

            	
              "Environmental
      Damage" means soil erosion, removal of vegetation, destruction of
      wildlife, pollution of groundwater or surface water, land contamination,
      air pollution, noise pollution, bush fire, disruption to water supplies,
      to natural drainage or natural flow of rivers or streams, damage to
      archaeological, palaeontological and cultural sites and shall include any
      damage or injury to, or destruction of soil or water in their physical
      aspects; together  with vegetation  associated
      therewith, aquatic or  terrestrial
  mammals,

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    fish,
avifauna or any plant or animal life whether in the sea or in any othcr water
or, in or under land.

     

    
      	
              1.35

            	
              "Exploration
      Costs" means those costs and expenditures incurred in carrying out
      Exploration Operations, as classified and defined in Section 2 of the
      Accounting Procedure and allowed to be recovered in terms of Section 3
      thereof.

            


    

     

    
      	
              1.36

            	
              "Exploration
      Operations" means operations conducted in the Contract Area Pursuant to
      this Contract in searching for Petroleum and in the course of an Appraisal
      Programme and shall include but not be limited to aerial, geological,
      geophysical, geochemical, palaeontological, palynological, topographical
      and seismic surveys, analysis, studies and their interpretation,
      investigations relating to the subsurface geology including structure test
      drilling, stratigraphic test drilling, drilling of Exploration Wells and
      Appraisal Wells and other related activities such as surveying, drill site
      preparation and all work necessarily connected therewith that is conducted
      in connection with Petroleum
exploration.

            


    

     

    
      	
              1.37

            	
              "Exploration
      Period" means a period not exceeding seven years commencing from the
      Effective Date during which Exploration Operations may be carried out by
      the Contractor as provided in Article 2
hereof.

            


    

     

    
      	
              1.38

            	
              "Exploration
      Well" means a Well drilled for the purpose of searching for Petroleum
      accumulations on any geological entity (be it of structural,
      stratigraphic, facies or pressure nature) to at least a depth or
      stratigraphic level specified in the Work
  Programme.

            


    

     

    
      	
              1.39

            	
              "Field"
      means an Oil Field or a Gas Field in respect of which a Development Plan
      has been duly approved in accordance with Article 9 and/or Article 21
      hereof.

            


    

     

    
      	
              1.40

            	
              "Financial
      Year" means the period from the first day of April to the thirty-first day
      of March of the following Calendar
Year.

            


    

     

    
      	
              1.41

            	
              "Foreign
      Company" means a Company within the meaning of Section 591 of the
      Companies Act, 1956.

            


    

     

    
      	
              1.42

            	
              "Gas"
      means Natural Gas.

            


    

     

    
      	
              1.43

            	
              "Gas
      Field" means an area within the Contract Area consisting of a single Gas
      Reservoir or multiple Gas Reservoirs all grouped on or related to the same
      individual geological structure or stratigraphic conditions, designated by
      agreement between the Companies and the Licensee and approved by the
      Management Committee (to include the maximum area of potential
      productivity in the Contract Area in one or more simple geometric shapes
      in respect of which a Commercial Discovery has been declared and a
      Development Plan has been approved in accordance with Article 21
      hereof.

            


    

     

    
      	
              1.44

            	
              "Investment"
      shall have the meaning assigned in paragraph 3 of Appendix
      `D'.

            


    

     

    
      	
              1.45

            	
              "Investment
      Multiple" means, in relation to any Development Area, the ratio of
      accumulated  Net  Cash Income  from  the
       Development  Area to
   accumulated

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     investment
in the Development Area, earned by the Companies as determined in accordance
with Appendix 'D'.

     

    
      	
              1.46

            	
              "LIBOR"
      means the London Inter-Bank Offer Rate for six-month deposits of United
      States Dollars as quoted by the London office of the Bank of America (or
      such other Bank as the Parties may agree) for the day or days in
      question.

            


    

     

    
      	
              1.47

            	
              "Licensee"
      means any person or body corporate to whom a licence is issued under the
      Petroleum and Natural Gas Rules 1959, or the purpose of carrying out
      Petroleum Operations in the Contract Area in association with the
      Companies.

            


    

     

    
      	
              1.48

            	
              "Management
      Committee" means the committee constituted pursuant to Article 5
      hereof.

            


    

     

    
      	
              1.49

            	
              "Month"
      means Calendar Month.

            


    

     

    
      	
              1.50

            	
              "Natural
      Gas" means wet gas, all other gaseous hydrocarbons, and all substances
      contained therein, including sulphur and helium, which are produced from
      Oil or Gas Wells, excluding those condensed or extracted liquid
      hydrocarbons that are liquid at normal temperature and pressure
      conditions, and including the residue gas remaining after the condensation
      or extraction of liquid hydrocarbons from
Gas.

            


    

     

    
      	
              1.51

            	
              "Net
      Cash Income" shall have the meaning assigned in paragraph 2 of Appendix
      'D'.

            


    

     

    
      	
              1.52

            	
              "Nominee"
      means a government company or a body corporate appointed for the purpose
      of acquiring Government's Participating Interest pursuant to Article
      13.

            


    

     

    
      	
              1.53

            	
              "Non
      Associated Natural Gas" or "NANG" means Natural Gas which is produced
      either without association with Crude Oil or in association with Crude Oil
      which by itself cannot be commercially
produced.

            


    

     

    
      	
              1.54

            	
              "Oil"
      means "Crude Oil".

            


    

     

    
      	
              1.55

            	
              "Oil
      Field" means an area within the Contract Area consisting of a single Oil
      Reservoir or multiple Oil Reservoirs all grouped on or related to the same
      individual geological structure, or stratigraphic conditions, designated
      by agreement between the Companies and the Licensee and approved by the
      Management Committee (to include the maximum area of potential
      productivity in the Contract Area in one or more simple geometric shapes)
      in respect of which a Commercial Discovery has been declared and a
      Development Plan has been approved in accordance with Article 9 hereof and
      a reference to an Oil Field shall include a reference to the production of
      Associated Natural Gas from that Oil Field as if such Associated Natural
      Gas was being produced from a separate
Field.

            


    

     

    
      	
              1.56

            	
              "Operating
      Agreement" means the Operating Agreement entered into by the Companies and
      the Licensee in accordance with Article 6, with respect to the conduct of
      Petroleum Operations.

            


    

     

    
      	
              1.57

            	
              "Operating
      Committee" means the committee established by that name in the Operating
      Agreement pursuant to Article 6.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              1.58

            	
              "Operator"
      means one of the Parties so designated under Article
  6.

            


    

     

    
      	
              1.59

            	
              "Participating
      Interest" means a Party's percentage of participation, as it may exist at
      any given time, in the Contractor's rights and obligations under this
      Contract.

            


    

     

    
      	
              1.60

            	
              "Partics"
      means the parties signatory to this Contract including their successors
      and permitted assigns under this Contract and the term "Party" means any
      of the Parties.

            


    

     

    
      	
              1.61

            	
              "Petroleum"
      means Crude Oil, Condcnsate and Natural Gas existing in their natural
      condition.

            


    

     

    
      	
              1.62

            	
              "Petroleum
      Operations" means, as the context may require, Exploration Operations,
      Development Operations or Production Operations or any combination of two
      or more of such operations, including construction, operation and
      maintenance of all necessary facilities, plugging and abandonment of
      Wells, environmental protection, transportation, storage, sale or
      disposition of Petroleum to the Delivery Point, Site Restoration and all
      other incidental operations or activities as may be
    necessary.

            


    

     

    
      	
              1.63

            	
              "Production
      Costs" means those costs and expenditures incurred in carrying out
      Production Operations as classified and defined in Section 2 of the
      Accounting Procedure and allowed to be recovered in terms of Section 3
      thereof.

            


    

     

    
      	
              1.64

            	
              "Production
      Operations" means all operations conducted for the purpose of producing
      Petroleum from a Development Area after the commencement of prMuction from
      the Development Area including the operation and maintenance of all
      necessary facilities thereof.

            


    

     

    
      	
               
      

            	
              1.65
      "Profit Petroleum" means all Petroleum produced and saved from any
      Development Area in a particular period as reduced by Cost Petroleum, and
      calculated as provided in Article
15.

            


    

     

    
      	
              1.67

            	
              "Quarter"
      means Calendar Quarter.

            


    

     

    
      	
              1.68

            	
              "Reservoir"
      means a naturally occurring discrete accumulation of
      Petroleum.

            


    

     

    
      	
              1.69

            	
              "Section"
      means a section of the Accounting
Procedure.

            


    

     

    
      	
              1.70

            	
              "Self-sufficiency"
      means, in relation to any Year, that the volume of Crude Oil and Crude Oil
      equivalent of Petroleum products exported from India during that Year
      either equals or exceeds the volume of Crude Oil and Crude Oil equivalent
      of Petroleum products imported into India during the same
      Year.

            


    

     

    
      	
              1.71

            	
              "Site
      Restoration" means all activities required to return a site to its natural
      state or to render a site compatible with its intended after usc (to the
      extent reasonable) after cessation of Petroleum Operations in relation
      thereto and shall include, where appropriate, proper abandonment of wells
      or other facilities, removal of equipment, structures and debris,
      establishment of compatible contours and drainage, replacement of top
      soil, revegetation, slope stabilization, infilling of excavations or any
      other appropriate actions in the
circumstances.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              1.72

            	
              "Statement"
      or "Statements" refers to the statements rquired to be furnished in
      accordance with Appendix C of this
Contract.

            


    

     

    
      	
              1.73

            	
              "Subcontractor"
      means any company or person contracted by the Operator to provide goods or
      services with respect to Petroleum
Operations.

            


    

     

    
      	
              1.74

            	
              "Well"
      means a bore-hole, made by drilling in the course of Petroleum Operations,
      but does not include a seismic shot
hole.

            


    

     

    
      	
              1.75

            	
              "Work
      Programme" means all the plans formulated for the performance of the
      Petroleum Operations.

            


    

     

    
      	
              1.76

            	
              "Year"
      means a Financial Year.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 2

            


    

     

    
      	
              DURATION

            


    

    


    
      	
              2.1

            	
              The
      term of this Contract, subject to the terms hereof and the applicable law,
      shall be for a period of twenty five (25) years from the Effcctive Date
      unless the Contract is terminated earlier in accordance with its terms.
      The period of Contract may be extended for a further period of five (5)
      years, on same terms and conditions as set out in this agreement upon
      mutual agreement by the Parties.  Provided however, that in the
      event of Commercial Production of Non Associated Natural Gas, the Contract
      may by mutual agreement between Parties be extended for a period upto but
      not exceeding thirty five (35) years from the Effective
    Date.

            


    

     

    
      	
              2.2

            	
              The
      Exploration Period shall begin on the Effective Date and shall consist of
      three (3) exploration phases for a total period not exceeding seven (7)
      consecutive Contract Years unless extended pursuant to the terms of this
      Contract.

            


    

     

    
      	
              2.3

            	
              Except
      as otherwise provided in this Contract, the term of the first exploration
      phase shall be one and one half (1.5) consecutive Contract Years
      (hereinafter referred to as Phase
I).

            


    

     

    
      	
              2.4

            	
              Except
      as otherwise provided in this Contract, the term of the second exploration
      phase shall be three (3) consecutive Contract Years from the end of Phase
      I (hereinafter referred to as Phase
II).

            


    

     

    
      	
              2.5

            	
              Except
      as otherwise provided in this Contract, the term of the third exploration
      phase shall be two and one half (2.5) consecutive Contract Years from the
      end of Phase II (hereinafter referred to as Phase
  III).

            


    

     

    
      	
              2.6

            	
              At
      the expiry of any exploration phase of the Exploration Period, provided
      that the Contractor has completed the minimum agreed Work Programme for
      that exploration phase, the Contractor shall have the option, exercisable
      by giving written notice to the Government at least thirty (30) days prior
      to the expiry of the relevant phase,
either:

            


    

     

    
      	
              (a)

            	
              to
      terminate the Contract without obligation in respect of any subsequent
      phases of the Exploration Period;
or

            


    

     

    
      	
              (b)

            	
              to
      proceed to the next exploration phase on presentation with the notice
      referred to above of the relevant guarantee as provided for in Article 29;
      or

            


    

     

    
      	
              (c)

            	
              to
      relinquish the entire Contract Area except for any Discovery Area and any
      Development Area and to conduct Development Operations and Production
      Operations in relation to any Discovery in accordance with the terms of
      this Contract.

            


    

     

    If
neither of the options provided for in paragraphs (b) and (c) is exercised by
the Contractor, this Contract shall terminate at the end of the then current
exploration phase.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              2.7

            	
              If,
      at the end of any exploration phase, drilling or testing operations are in
      progress on a Well, included in a minimum Work Programme, and the
      exploration phase expires, such exploration phase may, subject to prior
      approval of Management Committee be extended for a period not cxceeding
      six (6) months and the period of such extension will be subtracted from
      the period of the next succeeding exploration
  phase.

            


    

     

    
      	
              2.8

            	
              If,
      at the end of any exploration phase, drilling or testing operations are in
      progress on a Well not included in the minimum Work Programme, such
      exploration phase may be extended for a period not exceeding six (6)
      months provided that the minimum work commitment for such phase has been
      completed or the Licensee gives its consent to the said extension. Such
      extension period shall be subtracted from the next succeeding exploration
      phase.  In the event of an extension as provided for herein, the
      notice referred to in Article 2.6 shall be given at least thirty (30) days
      prior to the expiry of the relevant
extension.

            


    

     

    
      	
              2.9

            	
              Where
      sufficient time is not available prior to the expiry of the Exploration
      Period to complete the appraisal work after the Discovery, at the request
      of the Contractor, the Government shall extend the Exploration Period for
      such period, as may be mutually determined by the Licensee and the
      Contractor, for the appraisal work to be carried out and for the
      Management Committee, the Licensee, and the Contractor to comply with the
      provisions of Article 9 and Article 21, provided that the period of
      extension shall not exceed (30) thirty contract
  months.

            


    

     

    
      	
              2.10

            	
              If
      no Commercial Discovery has been made in the Contract Area by the end of
      the Exploration Period, the Contract shall
  terminate.

            


    

     

    


     

    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 3

            


    

     

    
      	
              RELINQUISHMENT

            


    

    


    
      	
              3.1

            	
              At
      the end of Phase I of the Exploration Period, in the event that the
      Contractor elects, pursuant to Article 2.6, to continue Exploration
      Operations in the Contract Area in Phase II, the Contractor shall retain
      upto seventy five percent (75%) of the original Contract Area including
      any Development Area and Discovery Area in not more than three (3) areas
      of simple geometrical shapes, and relinquish the balance of the Contract
      Area prior to thc commencement of Phase
II.

            


    

     

    
      	
              3.2

            	
              At
      the end of Phase II of the Exploration period, in the event the Contractor
      elects, pursuant to Article 2.6, to continue Exploration Operations in the
      Contract Area in Phase III, the Contractor shall retain twenty five
      percent (25%) of the original Contract Area, including any Development
      Area and Discovery Area in not more than three (3) areas of simple
      geometrical shapes and relinquish the balance of the Contract Area prior
      to the commencement of Phase III.  However, the Government shall
      agree for retaining fifty percent (50%) of the Contract Area, if the same
      is approved by Management
Committee.

            


    

     

    
      	
              3.3

            	
              At
      the end of Phase III of the Exploration Period, the Contractor shall
      retain only Development Areas and Discovery
  Areas.

            


    

     

    
      	
              3.4

            	
              If
      the Contractor exercises the option provided for in paragraph (c) of
      Article 2.6, the Contractor shall, after any Field and Development Area
      have been designated, relinquish all of the Contract Area not included
      within the said Field and Development
Area.

            


    

     

    
      	
              3.5

            	
              As
      and when the Contract is terminated under the provisions of Article 2 or
      in accordance with any other provisions of this Contract, the entire
      Contract Area remaining with the Contractor shall be deemed to have been
      relinquished by the Contractor as on the date on which the Contract is
      terminated.

            


    

     

    
      	
              3.6

            	
              Relinquishment
      of all or part of the Contract Areas or termination of the Contract shall
      not be construed as absolving the Contractor of any liability undertaken
      or incurred by the Contractor in respect of the Contract Area prior to the
      date of such relinquishment or
termination.

            


    

     

    
      	
              3.7

            	
              Subject
      to Article 12.9, the liability of the Contractor in respect of claims
      arising out of any act of negligence, commission, or ommission, during the
      course of Petroleum Operations in a Contract Area, shall be limited for
      the period between the Effective Date and relinquishment of such area. The
      Contractor shall not be liable for any claims in respect of any part of
      the block arising out of a liability allegedly incurred subsequent to the
      date of relinquishment of that
part.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 4

            


    

     

    
      	
              WORK
      PROGRAMME

            


    

    


    
      	
              4.1

            	
              The
      Contractor shall commence Petroleum Operations not later than six (6)
      months from the Effective Date.

            


    

     

    
      	
              4.2

            	
              During
      the currency of Phase I, as per Article 2.3, the Contractor shall complete
      the following Work Programme:

            


    

     

    
      	
              (a)

            	
              detailed
      study of the seismic data, identification of the possible structural,
      stratigraphic combination
prospects.

            


    

     

    
      	
              (b)

            	
              a
      programme consisting of the special re-processing and interpretation of
      seven hundred fifty (750) line kilomctres of seismic data in relation to
      the exploration objectives:

            


    

     

    
      	
              4.3

            	
              During
      the currency of Phase II, as per Article 2.4, the Contractor shall
      complete the following Work
Programme:

            


    

     

    
      	
              (a)

            	
              One
      (1) Exploration Well shall be drilled to at least one of the following
      depths

            


    

     

    
      	
               
      

            	
              (i)

            	
              to
      depth of 3000 m: or

            


    

     

    
      	
               
      

            	
              (ii)

            	
              to
      the top of Deccan Trap Formation:
or

            


    

     

    
      	
               
      

            	
              (iii)

            	
              that
      point below 3000 m at which further drilling becomes impractical due to
      geological conditions encountered and drilling would be abandoned by a
      reasonable and prudent Operator in the same or similar
      circumstances.

            


    

     

    
      	
              4.4

            	
              During
      the currency of Phase III, as per Article 2.5, the Contractor shall
      complete the following Work
Programme:

            


    

     

    
      	
              (a)

            	
              Two
      (2) Exploration Wells shall be drilled to at least one of the following
      depths

            


    

     

    
      	
               
      

            	
              (i)

            	
              to
      depth of 3000 m: or

            


    

     

    
      	
               
      

            	
              (ii)

            	
              to
      the top of Deccan Trap Formation:
or

            


    

     

    
      	
               
      

            	
              (iii)

            	
              that
      point below 3000 m at which further drilling becomes impractical due to
      geological conditions encountered and drilling would be abandoned by a
      reasonable and prudent Operator in the same or similar
      circumstances.

            


    

     

    
      	
              4.5

            	
              The
      actual depth objective for each of the Wells shall be determined by the
      Contractor in the light of the advice, if any, of the Management Committee
      before the commencement of the drilling.  Each Well which
      reaches the geological objective for which the depth objective was
      determined shall be deemed to have been drilled to the depth objective or
      to actual total depth. whichever is greater. The Contractor shall ensure
      that all relevant subsurface, geological, geochemical and geophysical
      information necessary for the attainment of the exploration objectives in
      accordance with good oilfield practices is obtained during exploratory
      drilling.

            


    

     

    
      	
              4.6

            	
              If
      the depth/geological objective of the Well is not achieved for any reason,
      in that case, a substitute Well shall be drilled, of the same
      specifications as stipulated in Articles 4.2, 4.3 and
  4.4.

            


    

     

    
      	
              4.7

            	
              The
      Contractor undertakes to complete the minimum Work Programme in accordance
      with Articles 4.2, 4.3, 4.4 and 4.6, as the case may be. In the event that
      the Contractor fails to fulfil the said minimum Work Programme by the end
      of the relevant exploration phase, the Companies shall pay to the Licensee
      within sixty (60) days following the end of the relevant phase, an amount
      which, when evaluated in terms of the minimum Work Programme specified for
      the relevant phase, is equal to the amount which will be required to
      complete the said minimum Work Programme, in accordance with sound
      petroleum industry practices, reduced by the arnount of the bank guarantee
      referred to in Article 29.1 (a).

            


    

     

    
      	
              4.8

            	
              If
      the minimum Work Programme commitment for the Phase III of exploration has
      been completed earlier than eighteen months from the end of the phase, the
      Contractor shall meet with the Government to discuss the possibility of
      early relinquishment unless the Contractor undertakes further work,
      subject to approval of the Management
Committee.

            


    

     

    
      	
              4.9

            	
              In
      the event that the Contractor has carried out work in excess of the
      minimum Work Programme specified in Articles 4.2 or 4.3, as the case may
      be, the excess work done shall be set off against the minimum Work
      Programme and the corresponding budgeted expenditure for the following
      exploration phase.

            


    

     

    
      	
              4.10

            	
              The
      Companies shall furnish to the Government an irrevocable unconditional
      letter of guarantee, in respect of each of their Participating Interests,
      from a reputable bank for a sum equal to thirty five percent (35%) of
      estimated expenditure for each Year of the Exploration Period as provided
      in Article 29, in respect of the actual Work Programme obligations
      specified in Article 4 for the relevant exploration
  phase.

            


    

     

    
      	
              4.11

            	
              As
      soon as possible after the Effective Date, in respect of the period ending
      with the last day of the Year in which the Effective Date falls and
      thereafter ninety (90) days before commencement of each following Year,
      the Contractor shall submit to the Management Committee, through the
      Operating Committee, the Work Programmes and budgets relating to Petroleum
      Operations to be carried out during the relevant phase, or as the case may
      be, the ensuing Year. The Yearly Work Programme and budget for the
      Exploration Period shall include the minimum Work Programme specified in
      this Article-4.

            


    

     

    
      	
              4.12.

            	
              The
      Contractor may propose amendments to the details of an approved Work
      Programme and budget in the light of then existing circumstances and shall
      submit to the Management Committee, through the Operating Committee,
      modifications or revisions to the Work Programme and budgets referred to
      in Article 4.11.

            


    

     

    
      	
              4.13

            	
              Work
      Programmes and budgets related to Development Operations and Production
      Operations shall be submitted as provided in Article 9 and Article
      21.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
               
      

            	
              ARTICLE
      - 5

            


    

     

    
      	
              MANAGEMENT
      COMMITTEE

            


    

    


    
      	
              5.1

            	
              For
      the purpose of proper performance or Petroleum Operations under
      the  provisions of this Contract, there shall be constituted,
      within thirty (30) days from the Effective Date of the Contract, a
      committee to be called the Management
Committee.

            


    

     

    
      	
              5.2

            	
              The
      Management Committee shall consist of four (4) members, two (2) nominated
      by and representing Government and the Licensee taken together and two (2)
      members nominated by and representing the Companies. As and when
      necessary, the size of the Management Committee mav be increased hy mutual
      agreement between the Parties.

            


    

     

    
      	
              5.3

            	
              A
      representative of the Licensee shall be designated as the Chairman of the
      Management Committee and a Deputy Chairman shall be designated from
      amongst the representatives of the Government or the
    Licensee.

            


    

     

    
      	
              5.4

            	
              Government,
      the Licensee and the Companies may nominate alternate members with full
      authority to act in the absence and on behalf of the members nominated
      under Article 5.2 and may, at any time, nominate another member or
      alternate member to replace any member nominated earlier by notice to
      other members of the Management
Committee.

            


    

     

    
      	
              5.5

            	
              The
      Management Committee shall review and have advisory functions in the
      following matters:

            


    

     

    
      	
               
      

            	
              (a)

            	
              the
      annual Work Programme and budget proposed during the Exploration Period
      and any revisions or modifications thereto submitted to it by the Operator
      through the Operating Committee:

            


    

     

    
      	
               
      

            	
              (b)

            	
              proposals
      for surrender or relinquishment of any part of the Contract Area by the
      Contractor:

            


    

     

    
      	
               
      

            	
              (c)

            	
              any
      other matter required by the terms of this Contract to be submitted to it
      for review or advice:

            


    

     

    
      	
               
      

            	
              (d)

            	
              any
      other matter which the Contractor or the Operating Committee decides to
      submit for review or advice including matters concerning inter­party
      relationships:

            


    

     

    
      	
               
      

            	
              (e)

            	
              any
      other matter which requires review by the Management Committee under this
      Contract.

            


    

     

    
      	
              5.6

            	
              The
      following matters shall be submitted to the Management Committee for
      approval:

            


    

     

    
      	
               
      

            	
              (a)

            	
              annual
      Work Programmes and budgets and any modifications or revisions thereto, as
      proposed by the Operating Committee, for Development Operations and
      Production Operations;

            


    

     

    
      	
               
      

            	
              (b)

            	
              proposals
      for an Appraisal Programme, the declaration of a Discovery as a Commercial
      Discovery and the: approval of Developmen: Plans as may
  be

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    required
under this Contract, or revisions or additions to an Appraisal Programme or a
Development plan:

     

    
      	
               
      

            	
              (c)

            	
              delineation
      of a Field and a Development Area.

            


    

     

    
      	
               
      

            	
              (d)

            	
              appointment
      of auditors:

            


    

     

    
      	
               
      

            	
              (e)

            	
              collaboration
      with licensees or contractors of other
areas:

            


    

     

    
      	
               
      

            	
              (f)

            	
              claims
      or settlement of claims for or on behalf of or against the Contractor in
      excess of limits specified in the Operating Agreement or fixed by the
      Management Committee from time to
time:

            


    

     

    
      	
               
      

            	
              (g)

            	
              any
      proposed mortgage, charge or encumbrance on petroleum assets, petroleum
      reserves or production of
Petroleum;

            


    

     

    
      	
               
      

            	
              (h)

            	
              any
      other matter required by the terms of this Contract to be submitted for
      the approval of the Management
Committee;

            


    

     

    
      	
               
      

            	
              (i)

            	
              any
      other matter which the Contractor or the Operating Committee decides to
      submit to it;

            


    

     

    
      	
              5.7

            	
              The
      Management Committee shall take decisions in respect of matters submitted
      to it for approval and indicate the same with utmost expedition to the
      Parties.  However, where prior approval of the Government is
      required under this Contract or any applicable Law (including rules and
      regulations). the Management Committee shall obtain such approval as
      expeditiously as possible.

            


    

     

    
      	
              5.8

            	
              The
      Management Committee shall meet at least once in every six months or more
      frequently at the request of any member. The Chairman shall convene each
      meeting by notifying the members at least twenty eight (28) days prior to
      such a meeting (or a shorter period of notice if the members unanimously
      so agree) of the time and place of such meeting and the purpose thereof
      and shall include in such notice a provisional agenda for such meetings.
      The Chairman shall be responsible for processing the final agenda for such
      meeting and the agenda shall include all items of business requested by
      the members to be included, provided such requests are received by the
      Chairman at least ten (10) days prior to the date fixed for the meeting.
      The Chairman shall foward the agenda to the members at least nine (9) days
      prior to the date fixed for the meeting. Matters not included in the
      agenda may be taken up at the meeting by any member with the unanimous
      consent of all the members.

            


    

     

    
      	
              5.9

            	
              The
      Chairman or Deputy Chairman, as may be the case, shall ordinarily preside
      over the meetings of the Management Committee and in their absence another
      member nominated by the Chairman shall preside over the
      meetings.

            


    

     

    
      	
              5.10

            	
              The
      Chairman shall appoint one of the members nominated by the Companies as
      Secretary to the Management Committee with responsibility, inter alia, for
      preparation of the minutes of every meeting in the English language and
      provision to every member of the Management Committee with two copies of
      the minutes not later than twenty eight (28) days after the date of the
      meeting.

            


    

     

    
      	
              5.11

            	
              Within
      twenty one (21) days of the receipt of the minutes of a meeting, members
       shall notify the  Chairman and the  other members of their
      approval of

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    the
minutes by putting their signatures on one copy of the minutes and retuming the
same to the Chairman or by indicating such approval to the Chainnan by telex,
cable, or facsimile, with copies to the other members. Any member may suggest
any modification, anundmcnt or addition to the minutes by telex. cable or
facsimile to the Chairman and other members or by indicating such suggestions
when returning the copy of the minutes to the Chairman. If the Chairman or any
other member does not agree with the modification, amendment or addition to the
minutes suggested by any member. the matter shall be brought to the attention of
the other members and resubmitted to the, Management Committee at the next
meeting and the minutes shall stand approved as to all other matters.If a member
fails to appropriately respond within the aforesaid twenty one (21) day period
as herein provided, the minutes shall be deemed approved by such
member.

     

    
      	
              5.12

            	
              The
      meetings of the Management Committee shall ordinarily be held in New Delhi
      or at any other place mutually agreed to between. the members of the
      Management Committee.

            


    

     

    
      	
              5.13

            	
              All
      matters requiring the approval of the Management Committee shall he
      approved by unanimous vote of all the members of the Management
      Committee.

            


    

     

    
      	
              5.14

            	
              A
      member of the Management Committee not present at a meeting may vote on
      any matter on the agenda in such meeting
hy:

            


    

     

    
      	
               
      

            	
              (a)

            	
              appointing
      in writing, including by telex, cable or facsimile, another member of the
      Management Committee as his proxy for that meeting
  or

            


    

     

    
      	
               
      

            	
              (b)

            	
              giving
      notice of such vote to the Chairman prior to the submission of such matter
      for vote at such meeting.

            


    

     

    
      	
              5.15

            	
              The
      Management Committee may appoint legal, financial or technical
      subcommittees comprised of such representatives as may be agreed by the
      Management Committee to consider any matter requiring approval or decision
      of the Management Committee.

            


    

     

    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
               
      

            	
              ARTICLE
      - 6

            


    

     

    
      	
              OPERATORSHIP,
      OPERATING AGREEMENT

            


    

    
      	
              AND OPERATING
      COMMITTEE

            


    

    


    
      	
              6.1

            	
              Except
      as provided in Article 6.2 and subject to the terms of the Operating
      Agreement, Guiarat State Petroleum Corporation Ltd. (GSPC) shall be the
      Operator for the Exploration Operations, Development Operations and
      Production Operations within the Contract Area during the term of the
      Contract.

            


    

     

    
      	
              6.3

            	
              In
      respect of each Development Area in which the Licensee is participating,
      the Licensee shall have the option to become the Operator of the
      Development Area at any time after ten years have elapsed from the date of
      commencement of Commercial Production from that Development
      Area.

            


    

     

    
      	
              6.3

            	
              In
      the event Licensee elects to exercise the option specified in Article 6.2,
      it shall so notify the Companies in writing at least one hundred and
      eighty (180) days prior to the date from which the Licensee would like to
      assume the operatorship and the transfer of operatorship shall be effected
      in accordance with the provisions of the Operating
    Agreement

            


    

     

    
      	
              6.4

            	
              Except
      as provided in Article 6.2, no change in operatorship shall be effected
      without the consent of the Licensee & Management Committee and such
      consent shall not be unreasonably
withheld.

            


    

     

    
      	
              6.5

            	
              The
      operating functions required of the Contractor under this Contract shall
      be performed by the Operator on behalf of all constituents of the
      Contractor subject to, and in accordance with, the terms and provisions of
      this Contract and generally accepted international petroleum industry
      practice.

            


    

     

    
      	
              6.6

            	
              On
      the Contract execution date, the Companies and the Licensee shall execute
      a mutually agreed Operating Agreement.  The said agreement shall
      be consistent with the provisions of this Contract and shall provide for,
      among other things:

            


    

     

    
      	
              (a)

            	
              The
      appointment, resignation, removal and responsibilities of the
      Operator;

            


    

     

    
      	
              (b)

            	
              The
      establishment of an Operating Committee comprising of an agreed number of
      representatives of the Licensee and the Companies respectively, chaired by
      a representative of the Company acting as
  Operator;

            


    

     

    
      	
              (c)

            	
              functions
      of the said Operating Committee taking into account the provisions of the
      Contract, procedures for decision making, frequency and place of meetings;
      and

            


    

     

    
      	
              (d)

            	
              accounting
      procedures, contribution to costs, default, sole risk, disposal of
      Petroleum and assignment, as between the parties to the Operating
      Agreement.

            


    

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 7

            


    

     

    
      	
              GENERAL RIGHTS AND
      OBLIGATIONS OF THE PARTIES

            


    

    


    
      	
              7.1

            	
              Subject
      to the provisions of this Contract, the Contractor shall have the
      following rights:

            


    

     

    
      	
              (a)

            	
              the
      exclusive right to carry out Petroleum Operations excluding the right for
      exploration and exploitation of Coal Bed Methane in the Contract Area and
      to recover costs and expenses as provided in this
  Contract;

            


    

     

    
      	
              (b)

            	
              the
      exclusive right to use, free of charge, such quantities of Petrolcurn
      produced from any Development Area as are reasonably required for
      conducting Petroleum Operations in the Contract area in accordance with
      generally accepted practices in the international petroleum industry. The
      quantities of Petroleum used for purpose of conducting Petroleum
      Operations in the Contract Area shall be subject to
  audit.

            


    

     

    
      	
              (c)

            	
              the
      right to lay pipelines, build roads. construct bridges, ferrics,
      aerodromes, landing fields, radio telephones and related communication and
      infrastructure facilities and exercise other ancillary rights as may be
      reasonably necessary for the conduct of Petroleum Operations subject to
      such approvals as may be required and the applicable laws in force from
      time to time for the regulation and control
  thereof:

            


    

     

    
      	
              (d)

            	
              the
      right to use all technical data, seismic and well information, maps,
      samples etc. in or relating to the Contract Area as on the Effective Date,
      free of charge. subject to nominal copying/reproduction costs for further
      Petroleum Operations.

            


    

     

    
      	
              (e)

            	
              such
      other rights as are specified in this
Contract.

            


    

     

    
      	
              7.2

            	
              The
      Government reserves the right to itself, or to grant to the Licensee or
      others the right, to prospect for and mine minerals or substances other
      than Petroleum within the Contract Area; provided. however, that if after
      the Effective Date, the Licensee or others are issued rights, or the
      Government proceeds directly to prospect for and mine in the Contract Area
      any minerals or substances other than Petroleum, the Contractor shall use
      its best efforts to avoid obstruction to or interference with such
      operations within the Contract Area and the third parties and/or
      Government as the case may be, shall use best efforts to ensure that
      operations carried out do not obstruct or unduly interfere with Petroleum
      Operations in the Contract Area.

            


    

     

    
      	
              7.3

            	
              The
      Contractor shall:

            


    

     

    
      	
              (a)

            	
              except
      as otherwise expressly provided in this Contract, conduct all Petroleum
      Operations at its sole risk, cost and expense and provide all funds
      necessary for the conduct of Petroleum Operations including funds for the
      purchase or lease of equipment, materials or supplies required for
      Petroleum Operations as well as for making payments to employees and
      Subcontractors;

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              (b)

            	
              conduct
      all Petroleum Operations within the Contract Area diligently,
      expeditiously, efficiently and in a safe and workmanlike manner, in
      accordance with good petroleum industry practice pursuant to the approved
      Work Programme;

            


    

     

    
      	
              (c)

            	
              ensure
      provision of all information, data. samples etc. which the Licensee may be
      required to furnish under the applicable
laws;

            


    

     

    
      	
              (d)

            	
              ensure
      that all equipment, materials, supplies, plant and installations used by
      the Contractor, the Operator, and Sub-contractors comply with generally
      accepted standards in the petroleum industry

            	
              and
      are of proper construction and kept in good working
  order;

            


    

     

    
      	
              (e)

            	
              in
      the preparation and implementation of Work Programmes and in the conduct
      of Petroleum

            	
              Operations,
      follow good international petroleum industry practices with such degree of
      diligence and prudence reasonably and ordinarily exercised by experienced
      parties enraged in a similar activity under similar circumstances and
      conditions;

            


    

     

    
      	
              (f)

            	
              establish
      and submit to the Management Committee for approval appropriate criteria
      and procedures for the purchase, lease or rental of machinery, equipment,
      assets and facilities required for petroleum operations based on economic
      considerations and generally accepted practices in the petroleum industry
      with the objective of ensuring cost and operational efficiency in the
      conduct of Petroleum Operations;

            


    

     

    
      	
              (g)

            	
              establish
      and submit for the approval of the Management Committee appropriate
      procedures including tender procedures for the acquisition of goods and
      services as provided in Article
23.2;

            


    

     

    
      	
              (h)

            	
              after
      the designation of a Field and a Development Area, pursuant to this
      Contract, forthwith proceed to take all necessary action for prompt and
      orderly development of the Field and the Development Area and for the
      production of Petroleum in accordance with the terms of this
      Contract;

            


    

     

    
      	
              (i)

            	
              appoint
      a technically competent and sufficiently experienced representative, and,
      in his absence, a suitably qualified replacement therefore, who shall be
      resident in India and who shall have full authority to take such steps as
      may be necessary to implement this Contract and whose name(s) shall, on
      appointment within ninety (90) days after commencement of the first
      Contract Year be made known to the Licensee and the
      Government;

            


    

     

    
      	
              (j)

            	
              provide
      acceptable working conditions, living accommodation and access to medical
      attention and nursing care in the Contract Area for all personnel employed
      in Petroleum Operations and extend these benefits to other persons who are
      engaged in or assisting in the conduct of Petroleum Operations in the
      Contract Area:

            


    

     

    
      	
              (k)

            	
              carry
      out such other obligations as are specified in the Contract, in particular
      those specified in Article 12; and

            


    

     

    
      	
              (i)

            	
              be
      always mindful of the rights and interests of India in the conduct of
      Petroleum Operations.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              7.4

            	
              The
      infrastructure facilities such as pipeline as may be developed established
      by the Contractor within the country may be mutual agreement and terms
      unanimously agreed upon be made available to the Government and/or any
      other entity, upon payment of compensation towards cost of operation,
      repair and maintenance of such facilities plus a mutually agreed fee to
      cover amortisation interest.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 8

            


    

     

    
      	
              GOVERNMENT/LICENSEE
      ASSISTANCE

            


    

    


    
      	
              8.1

            	
              Upon
      application in the prescribed manner, and subject to compliance with
      applicable laws and relevant procedures, the Government and the Licensee
      will:

            


    

     

    
      	
               
      

            	
              (a)

            	
              use
      their best endeavours to provide the right of ingress and egress from the
      Contract Area and any facilities used in Petroleum Operations, wherever
      located, and which may be within their
control;

            


    

     

    
      	
               
      

            	
              (b)

            	
              use
      their good offices, when necessary, to assist Contractor in procurement of
      facilities required for execution of Work Programmes including necessary
      approvals, permits, consents, authorisations, visas and work permits for
      foreign nationals, licences, rights of way, easement, surface rights and
      security protection, required pursuant to this Contract and which may be
      available from resources within the Government's control; however, when
      such services and equipments are not available or should there be any
      undue delay in obtaining such items or services when needed, or they are
      unsatisfactory for the operations hereunder as certified by the
      Contractor, equipments or services may be obtained from sources outside
      India, without prejudice to the other provisions of this
      Contract.

            


    

     

    
      	
               
      

            	
              (c)

            	
              use
      their good offices to assist in identifying and making available necessary
      priorities for obtaining local goods and services pursuant to Article
      23.

            


    

     

    
      	
               
      

            	
              (d)

            	
              in
      the event that onshore facilities are required outside the Contract Area
      for Petroleum Operations including, but not limited to, storage, loading
      and processing facilities, pipelines and offices, use their good offices
      in assisting the Contractor to obtain from the authorities of the State in
      which such facilities are required, such licences, permits,
      authorizations, consents, security protection, surface rights and
      easements as are required for the construction and operation of the said
      facilities by the Contractor.

            


    

     

    
      	
              8.2

            	
              Government
      will use their good offices to assist Contractor in obtaining approvals
      from the Reserve Bank of India to enable the Contractor to exercise its
      rights under Article 20.

            


    

     

    
      	
              8.3

            	
              Licensee
      shall keep the Companies timely informed
of:

            


    

     

    
      	
               
      

            	
              (a)

            	
              any
      act required under law to keep any existing licence or lease issued with
      respect to the carrying out of Petroleum Operations in the Contract Area
      valid and in good order and of any action taken by the Licensee in this
      regard;

            


    

     

    
      	
               
      

            	
              (b)

            	
              any
      request to the Licensee, or order of which the Licensee is aware from the
      public authorities concerning any matter related to the said licence or
      lease or Petroleum Operations in the Contract
  Area.

            


    

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 9

            


    

     

    
      	
              DISCOVERY, DEVELOPMENT
      AND PRODUCTION

            


    

    


    
      	
              9.1

            	
              If
      and when a Discovery is made within the Contract Area, the Contractor
      shall:

            


    

     

    
      	
              (a)

            	
              forthwith
      inform the Licensee and Government of the
  Discovery;

            


    

     

    
      	
              (b)

            	
              promptly
      thereafter, but in no event later than a period of thirty (30) days from
      the date of the Discovery, furnish to the Licensee particulars in writing
      of the Discovery;

            


    

     

    
      	
              (c)

            	
              promptly
      run tests to determine whether the Discovery is of potential commercial
      interest and, within a period of sixty (60) days after completion of such
      tests, submit a report to the Management Committee containing data
      obtained from such tests and its analysis and interpretation thereof,
      together with a written notification to the Licensee of whether in the
      Contractor's opinion, such Discovery is of potential commercial interest
      and merits appraisal.

            


    

     

    
      	
              9.2

            	
              If
      the Contractor determines to conduct a drill stem or production test, in
      open hole or through perforated casing with regard to the Discovery, it
      shall notify the Licensee of the time of such test at least twenty four
      (24) hours prior to the proposed test, and the Licensee shall have the
      right to have a representative present during such
  test.

            


    

     

    
      	
              9.3

            	
              If,
      pursuant to Article 9.1(c), the Contractor notifies the Licensee that the
      Discovery is of potential commercial interest, the Contractor shall
      prepare and submit to the Management Committee with due diligence within
      one hundred and twenty (120) days of such notification, a proposed
      Appraisal Programme with a Work Programme and budget to carry out an
      adequate and effective appraisal of such Discovery designed to achieve
      both the following objectives: (i) determine without delay, and, in any
      event. within the period specified in Article 9.5. whether such Discovery
      is a Commercial Discovery and (ii) determine, with reasonable precision,
      the boundaries of the area to be delineated as a Development
      Area.

            


    

     

    
      	
              9.4

            	
              The
      proposed Appraisal Programme shall be considered by the Managemcnt
      Committee within forty five (45) days after submission thereof pursuant to
      Article 93. The said Appraisal Programme, together with the Work Programme
      and budget submitted by the Contractor, revised in accordance with any
      agreed amendments or additions thereto, approved by the Management
      Committee, shall be adopted as the Appraisal Programme and the Contractor
      shall promptly commence implementation thereof, and the Yearly budget for
      the Exploration Period, adopted pursuant to Article 4, shall be revised
      accordingly.

            


    

     

    
      	
              9.5

            	
              The
      Contractor shall unless otherwise agreed, in respect of each Discovery of
      Crude Oil, advise the Management Committee by notice in writing within a
      maximum period of twenty four (24) months from the date on which the
      notice

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    provided
for in Article 9.1 was delivered, whether such discovery is a Commercial
Discovery or not.  Such notice shall be accompanied by a report on the
Discovery setting forth all relevant technical and economic data as well as all
evaluations, interpretations and analysis of such data and feasibility studies
relating to the Discovery prepared by or for the Contractor, with respect to the
Discovery. If the Contractor is of the opinion that Petroleum has been
discovered in commercial quantities, it shall propose that the Managemcnt
Committee declare the Discovery as a Commercial Discovery based on the report
submitted.

     

    
      	
              9.6

            	
              The
      Management Committee shall, within forty five (45) days of the date
      of  the notice referred to in Article 9.5, consider the proposal
      of the Contractor and a one-time request for any other additional
      information it may reasonably require so as to reach a decision on whether
      or not to declare the Discovery as a Commercial Discovery. Such decision
      shall be made within the period of (a) ninety (90) days from the date of
      notice referred to in Article 9.5 or (b) ninety (90) days of receipt of
      such other information as may be required under this Article
      9.6.

            


    

     

    
      	
              9.7

            	
              If
      a Discovery is declared a Commercial Discovery, within two hundred (200)
      days of the declaration of the Discovery as a Commercial Discovery, the
      Contractor shall submit to the Management Committee a comprehensive plan
      for the development of the Commercial Discovery. Such plan shall contain
      detailed proposals by the Contractor for the construction, establishment
      and operation of all facilities and services for and incidental to the
      recovery, storage and transportation of the Petroleum from the proposed
      Development area to the Delivery Point together with all data and
      supporting information including but not limited
  to:

            


    

     

    
      	
              (a)

            	
              description
      of the nature and characteristic of the Reservoir, data, statistics,
      interpretations and conclusions on all aspects of the geology. Reservoir
      evaluation, Petroleum engineering factors, reservoir models, estimates of
      reserve in place, possible production magnitude, nature and ratio of
      Petroleum fluids and analysis of producible
  Petroleum;

            


    

     

    
      	
              (b)

            	
              outlines
      of the development project and/or alternative development projects, if
      any, describing the production facilities to be installed and the number
      of Wells to be drilled under such development project and/or alternative
      development projects, if any;

            


    

     

    
      	
              (c)

            	
              estimate
      of the rate of production to be established and projection of the possible
      sustained rate of production in accordance with generally accepted sound
      industry practices under such development project and/or alternative
      development projects, if any, which will ensure that the area does not
      suffer an excessive rate of decline of production or an excessive loss of
      Reservoir pressure;

            


    

     

    
      	
              (d)

            	
              estimates
      of Development Costs and Production Costs under such development project
      and/or alternative development projects, if
any;

            


    

     

    
      	
              (e)

            	
              Contractor’s
      recommendations as to the particular project that it would
      prefer;

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              (f)

            	
              Work
      Programme and budget for development proposal concerning the designation
      of the Development Area:

            


    

     

    
      	
              (g)

            	
              anticipated
      adverse impact on the environment and measures to be taken for prevention
      or minimization thereof and for general

            	
              protection
      of the  environment in conduct of
  operations:

            


    

     

    
      	
              (h)

            	
              the
      information required in Articles 21.4.1 and
  21.4.2.

            


    

     

    
      	
              9.8

            	
              Any
      proposed Development Plan submitted by the Contractor pursuant to Article
      9.7 may he approved by the Management Committee, with such amendments and
      modifications as it may decide, within two hundred seventy days (270) of
      the declaration of the Discovery as a Commercial Discovery.  If
      such a Development Plan has not been approved by the Management Committee
      within two hundred seventy (270) days period, the Contractor shall have
      the right to submit such plan directly to the Government for
      approval.  The Government shall accord its approval or rejection
      in writing of the said Development Plan with reasons within thirty (30)
      days of receipt of the submission failing which the Development Plan shall
      be deemed to be approved. In the event of rejection. the Contractor shall
      have the right to resubmit such plan, after taking due note of the reasons
      for rejections and remedying, where
necessary.

            


    

     

    
      	
              9.9

            	
              A
      Development Plan approved by the Management Committee or the Government as
      the case may be, from time to time shall commit the Contractor to the
      obligations stipulated in Articles 9.13 to
9.15.

            


    

     

    
      	
              9.10

            	
              The
      Management Committee shall obtain such approvals from the Government as
      may be required, except where this Contract provides that the Contractor
      may obtain such approvals directly.

            


    

     

    
      	
              9.11

            	
              If
      the Licensee considers a Discovery to be non-commercial while the
      Companies consider that it is commercial and the Management Committee
      fails to declare the Discovery as a Commercial Discovery within the time
      limit stipulated in Article 9.6 hereof, the Companies may declare the
      Discovery as a Commercial Discovery and submit development and production
      plans in respect of the Discovery to the Management Committee as per the
      provisions of Article 9.7 and after such plans have been approved by the
      Management Commitin or the Government, as the case may be, the Companies
      shall, acting solely, provide the entire Development Costs and undertake
      development of the said Oil Field.  If, however, the said Oil
      Field turns out to be non-commercial, the entire Development Cost of the
      said Oil Field shall be reckoned as expenditure on unsuccessful
      exploration but shall not count as Investment in the Contract Area and
      shall not be recoverable as Cost Petroleum from any other Development
      Area.

            


    

     

    
      	
              9.12

            	
              In
      the event that, at the end of the Exploration Period, the Licensee
      considers a Discovery to be commercial, but the Companies consider the
      same as non­commercial, the Licensee shall give notice to tlte
      Companies to that effect and thereafter the Oil Fields relating to such
      Discovery shall be excluded from the Contract Area and the Licensee may
      proceed acting solely, to develop that Oil Field, providing the entire
      Development Cost. In that event, the Companies shall have no claim on the
      production from such a Development Area and such an Oil Field shall be
      excluded from the Contract Area for all
  purposes.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              9.13

            	
              Work
      Programmes and budgets for Development and Production Operations shall be
      submitted to the Management Committee as soon as possible after the
      designation of a Development Area and thereafter not later than 31st
      December each Year in respect of the Year immediately
      following.

            


    

     

    
      	
              9.14

            	
              The
      Management Committee, when considering any Work Programme and budget, may
      require the Contractor to prepare an estimate of potential production to
      be achieved through the implementation of the said programme and budget
      for each of the three (3) years following the Year to which the Work
      Programme and budget relate. If major changes in year to year estimates of
      potential production are required, these shall be based on concrete
      evidence necessitating such
changes.

            


    

     

    
      	
              9.15

            	
              Not
      later than the fifteenth (15th)
      of January each Year, in respect of the Year immediately following, the
      Contractor shall determine the "Programme Quantity" with the approval of
      the Management Committee. The Programme Quantity for any Year shall be the
      maximum quantity of Petroleum based on Contractor's estimates as approved
      by the Management Committee, which can be produced from a Development Area
      consistent with sound petroleum industry practices and minimizing unit
      production cost, taking into account the capacity of the producing Wells,
      gathering lines, separators, storage capacity and other production
      facilities available for use during the relevant Year, as well as the
      transportation facilities up to the Delivery
  Point.

            


    

     

    
      	
              9.16

            	
              Proposed
      revisions to the details of a Development Plan or an annual Work Programme
      or budget in respect of Development and Production Operations shall, for
      good cause and if the circumstances so justify, be submitted to the
      Management Committee for approval, through the Operating Committee
      provided that revisions shall not be made so as to extend a designated
      Field or a Development Area or to substantively change any aspect of the
      Development Plan.

            


    

     

    
      	
              9.17

            	
              In
      the event the area encompassing the Commercial Discovery is reasonably
      expected to be greater than the area designated in the Development Plan
      under Article 9.7, either within the original Contract Area but
      subsequently relinquished or, outside the original Contract Area, the
      Management Committee may recommend to the Government about enlargement of
      the Development Area, provided the same was/is not awarded or offered
      under bidding or no license or lease has been issued or application has
      been filed under the relevant provision to any other company by the
      Government or is not held by any other
party.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 10

            


    

     

    
      	
              UNIT
      DEVELOPMENT

            


    

    


    
      	
              10.1

            	
              If
      a Reservoir in a Discovery area is situated partly within the Contract
      Area and partly in an area in India over which other parties have a
      contract to conduct petroleum operations, the Government may, for securing
      more effective recovery of Petroleum from such Reservoir, by notice in
      writing to the Contractor, require that the
  Contractor:

            


    

     

    
      	
              (a)

            	
              collaborate
      and agree with such other parties on the joint development of the
      reservoir as one Development Area;

            


    

     

    
      	
              (b)

            	
              submit
      such agreement between the Contractor and such other parties to the
      Government for approval; and

            


    

     

    
      	
              (c)

            	
              prepare
      a plan for such joint development of' the said reservoir, within one
      hundred and eighty (180) days of the approval of the agreement referred to
      in (b) above.

            


    

     

    
      	
              10.2

            	
              If
      no plan is submitted within the period specified in Article 10.1(c) or
      such longer period as the Parties may agree, or, if such plan as submitted
      is not acceptable to the Government and the parties cannot agree on
      amendments to the proposed joint development plan, the Government may
      cause to be prepared, at the expense of the Contractor and the other
      parties referred to in Article 10.1, a plan for such joint development
      consistent with generally accepted practices in the international
      petroleum industry which shall take into consideration any plans and
      presentations made by the Contractor and the aforementioned other
      parties.

            


    

     

    
      	
              10.3

            	
              If
      the parties are unable to agree on the proposed plan for joint
      development, then any party may refer the matter to a sole expert for
      final determination pursuant to Article 33, provided that the Contractor
      may in case of any disagreement on the issue of joint development or the
      proposed joint development plan, or within sixty (60) days of
      determination by a sole expert, notify the Licensee and the Government
      that it elects to surrender its rights in the Discovery Area in lieu of
      participation in a joint
development.

            


    

     

    
      	
              10.4

            	
              If
      a proposed joint development plan is agreed and adopted by the parties. or
      adopted following determination by the sole expert, the plan as finally
      adopted shall be the approved joint development plan and the Contractor
      shall comply with the terms of the said development plan as if the
      Commercial Discovery is
established.

            


    

     

    
      	
              10.5

            	
              The
      provisions of Articles 10.1, 10.2 and 10.3 shall apply mutatis mutandis to a
      Discovery of a Reservoir located partly within the Contract Area. which,
      although not equivalent to a Commercial Discovery, if developed alone,
      would be a Commercial Discovery if developed together with that part of
      the Reservoir which extends outside the Contract Area to areas subject to
      contract for Petroleum Operations by other
  parties.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      -11

            


    

     

    
      	
              MEASUREMENT OF
      PETROLEUM

            


    

    


    
      	
              11.1

            	
              The
      volume and quality of Petroleum produced and saved from a Development Area
      shall be measured by methods and appliances generally accepted and
      customarily used in sound petroleum industry practice and approved by the
      Licensee and the Management
Committee.

            


    

     

    
      	
              11.2

            	
              The
      Government may, at,all reasonable times, inspect and test the appliances
      used for measuring the volume and determining the quality of Petroleum,
      provided that any such inspection or testing shall be carried out in such
      a manner so as not to unduly interfere with Petroleum Operations. The
      Operator shall have right to have a representative present during such
      Government tests.

            


    

     

    
      	
              11.3

            	
              Before
      commencement of production in a Development Area, the Parties shall
      mutually agree on:

            


    

     

    
      	
              (a)

            	
              methods
      to be employed to optimize the measurement of volumes of Petroleum
      production;

            


    

     

    
      	
              (b)

            	
              the
      point at which Petroleum shall be measured and the respective shares
      allocated to the Parties in accordance with the terms of this
      Contract;

            


    

     

    
      	
              (c)

            	
              the
      frequency of inspections and testing of measurement appliances and
      relevant procedures relating thereto:
and

            


    

     

    
      	
              (d)

            	
              the
      consequences of a determination of an error in
  measurement.

            


    

     

    
      	
              11.4

            	
              The
      Contractor shall undertake to measure the volume and quality of the
      Petroleum produced and saved from a Development Area at the agreed
      measurement point consistent with generally accepted practices in the
      international petroleum industry, with the frequency and according to
      procedures agreed pursuant to Article 11.3.  The Contractor
      shall not make any alteration in the agreed method or procedures for
      measurement or to any of the approved appliances used for that purpose
      without the written consent of the Management Committee and the
      Government.

            


    

     

    
      	
              11.5

            	
              The
      Contractor shall give the Government timely notice of its intention to
      conduct measuring operations or any agreed alteration for such operations
      and the Government shall have the right to be present at and supervise,
      either directly or through authorized representatives, such
      operations.

            


    

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 12

            


    

     

    
      	
              PROTECTION OF THE
      ENVIRONMENT

            


    

    


    
      	
              12.1

            	
              The
      Government and the Contractor recognise that Petroleum Operations normally
      employed by the international oil and gas industry will cause some impact
      on the environment in the Contract Area. Accordingly, in performance of
      the Contract, the Contractor shall conduct its Petroleum Operations with
      due regard to concerns with respect to protection of the environment and
      conservation of natural resources.  Towards this end and in the
      furtherance of any laws promulgated or as the Government may otherwise
      require from time to time, the Contractor
shall:

            


    

     

    
      	
              a)

            	
              employ
      advanced techniques, practices and methods of operation for the prevention
      of Environmental Damage in conducting its Petroleum
      Operations:

            


    

     

    
      	
              b)

            	
              take
      necessary and adequate steps to:

            


    

     

    
      	
               
      

            	
              (i)

            	
              prevent
      Environmental Damage and, where some adverse impact on the environment is
      unavoidalbe, to minimize such damage and the consequential effects thereof
      on property and people;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              ensure
      adequate compensation for injury to persons or damage to property caused
      by the effect of Petroleum
Operations.

            


    

     

    
      	
              12.2

            	
              If
      the Contractor fails to comply with the provisions of paragraph (b)(i) of
      Article 12.1 or contravenes any relevant law, and such failure or
      contravention results in any Environmental Damage, the Contractor shall
      forthwith take all necessary and reasonable measures to remedy the failure
      and the effects thereof.

            


    

     

    
      	
              12.3

            	
              If
      the Government has, on reasonable grounds, good reason to believe that any
      works or installations erected by the Contractor or any operations
      conducted by the Contractor are endangering or may endanger persons or any
      property of any person, or are causing or may cause pollution, or are
      harming or may harm wildlife or the environment to a degree which the
      Government deems unacceptable, the Government may require the Contractor
      to take remedial measures within such reasonable period as may be
      determined by the Government and to repair any damage to the environment.
      If the Government deems it necessary, it may also require the Contractor
      to discontinue Petroleum Operations in whole or in part until the
      Contractor has taken such remedial measures or has repaired any damage
      caused.

            


    

     

    
      	
              12.4

            	
              The
      measures and methods to be used by the Contractor for the purpose of
      complying with the terms of paragraph (b) (i) of Article 12.1 shall be
      determined in timely consultation with the Government upon the
      commencement of Petroleum Operations or whenever there is a significant
      change in the scope or method of conducting Petroleum Operations and shall
      take into account the international standards applicable in similar
      circumstances and the relevant environmental impact study carried out in
      accordance with Article 12.5 below. The  Contractor
       shall   notify  the  Government in
       writing,  of  the  measures
   and

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    methods
finally determined by the Contractor and shall cause such measures and methods
to be rcvicwcd from time to time in the light of prevailing
circumstances.

     

    
      	
              12.5

            	
              The
      Contractor shall cause a person or persons with special knowledge on
      environmental matters approved by the government to carry out two
      environmental impact studies in
order:

            


    

     

    
      	
              a)

            	
              to
      determine at the time of the studies the prevailing situation relating to
      the environment, human beings and local communities, the wildlife and
      marine life in the Contract Area and in the adjoining or neighbouring
      areas; and

            


    

     

    
      	
              b)

            	
              to
      establish the likely effect on the environment, human beings and local
      communities, the wildlife and marine life in the Contract Area and in the
      adjoining or neighbouring areas in consequence of the relevant phase of
      Petroleum Operations to be conducted under this Contract, and to submit,
      for consideration by the Parties, methods and measures contemplated in
      Article 12.4 for minimizing Environmental Damage and carrying out Site
      Restoration activities.

            


    

     

    
      	
              12.5.1

            	
              The
      first of the aforementioned studies shall be carried out in two parts,
      namely, a preliminary part which must be concluded before commencement of
      any field work relating to a seismographic or other survey, and a final
      part relating to drilling in the Exploration Period.  The part
      of the study relating to drilling operations in the Exploration Period
      shall be approved by Government before the commencement of such drilling
      operations.

            


    

     

    
      	
              12.5.2

            	
              The
      second of the aforementioned studies shall be completed before
      commencement of Development Operations and shall be submitted by the
      Contractor as part of the Development Plan with specific approval of
      Government being obtained before commencement of Development
      Operations.

            


    

     

    
      	
              12.5.3

            	
              The
      studies mentioned in Article 12.5 above shall contain proposed
      environmental guidelines to be followed in order to minimize Environmental
      Damage and shall include, but not be limited to the following to the
      extent appropriate to the respective
study:

            


    

     

    
      	
              (a)

            	
              proposed
      access cutting;

            


    

     

    
      	
              (b)

            	
              clearing
      and timber salvage;

            


    

     

    
      	
              (c)

            	
              wildlife
      and habitat protection;

            


    

     

    
      	
              (d)

            	
              fuel
      storage and handling;

            


    

     

    
      	
              (e)

            	
              use
      of explosives:

            


    

     

    
      	
              (f)

            	
              camps
      and staging:

            


    

     

    
      	
              (g)

            	
              liquid
      and solid waste disposal,

            


    

     

    
      	
              (h)

            	
              cultural
      and archaeological sites;.

            


    

     

    
      	
              (i)

            	
              selection
      of drilling sites;

            


    

     

    
      	
              (j)

            	
              terrain
      stabilization;

            


    

     

    
      	
              (k)

            	
              protection
      of freshwater horizons;

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              (1)

            	
              blow-out
      prevention plan;

            


    

     

    
      	
              (m)

            	
              flaring
      during completion and testing of Gas and Oil
  Wells;

            


    

     

    
      	
              (n)

            	
              abandonment
      of Wells;

            


    

     

    
      	
              (o)

            	
              rig
      dismantling and site completion;

            


    

     

    
      	
              (p)

            	
              reclamation
      for abandonment;

            


    

     

    
      	
              (q)

            	
              noise
      control; and

            


    

     

    
      	
              (r)

            	
              debris
      disposal.

            


    

     

    
      	
              12.6

            	
              The
      Contractor shall ensute that:

            


    

     

    
      	
              (a)

            	
              Petroleum
      Operations are conducted in an environmentally acceptable and safe manner
      consistent with sound petroleum industry practice and that such Petroleum
      Operations are properly monitored;

            


    

     

    
      	
              (b)

            	
              the
      pertinent completed environmental impact studies are made available to its
      employees and to its contractors and Subcontractors to develop adequate
      and proper awareness of the measures and methods of' environmental
      protection to be used in carrying out the Petroleum Operations;
      and

            


    

     

    
      	
              (c)

            	
              the
      contracts entered into between the Contractor and its contractors and
      Subcontractors relating to its Petroleum Operations shall include the
      provisions stipulated herein and any established measures and methods flor
      the implementation of the Contractor's obligations in relation to the
      environment under this Contract.

            


    

     

    
      	
              12.7

            	
              The
      Contractor shall, prior to conducting any drilling activities, prepare and
      submit for review by the Government contingency plans for dealing with oil
      spills, fires, accidents and emergencies, designed to achieve rapid and
      effective emergency response. The plans referred to above shall be
      discussed with the Government and concerns expressed shall be taken into
      account.

            


    

     

    
      	
              12.7.1

            	
              In
      the event of an emergency, accident, oil spill or fire arising from
      Petroleum Operations affecting the environment, the Contractor shall
      forthwrith notify the Government and shall promptly implement the relevant
      contingency plan and perform such Site Restoration activities as may be
      necessary as provided in paragraph (b) of Article
  12.9.

            


    

     

    
      	
              12.7.2

            	
              In
      the event of any other emergency or accident arising from the
      Petroleum  Operations affecting the environment, the Contractor
      shall take such action as may be prudent and necessary in accordance with
      sound petroleum industry practice in such
  circumstances.

            


    

     

    
      	
              12.8

            	
              In
      the event that the Contractor fails to comply with any of the terms
      contained in Article 12.7 within a period specified by the Govemment, the
      Government, after giving the Contractor reasonable notice in the
      circumstances, may take any action which may be necessary to ensure
      compliance with such terms and to recover from the Contractor, immediately
      after having taken such action, all costs and expenditures  incurred
      in connection  with such action  together with such
       interest

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     as
may be determined in accordance with Section 1.7 or Appendix “C” of this
Contract.

     

    
      	
              12.9

            	
              On
      expiry or termination of this Contract or relinquishment of part of the
      Contract Area, the Contractor
shall:

            


    

     

    
      	
              a)

            	
              subject
      to Article 27, remove all equipment and installations from the
      relinquished area or former Contract Area in a manner agreed with the
      Government pursuant to an abandonment plan;
and

            


    

     

    
      	
              b)

            	
              perform
      all necessary Site Restoration activities in accordance with sound
      petroleum industry, practice and take all other action necessary to
      prevent hazards to human life or to the property of others or the
      environment.

            


    

     

    
      	
              12.10

            	
              In
      this Article, a reference to Government includes the State
      Government.

            


    

     

    
      	
              12.11

            	
              The
      Contractor hereby declares that it is aware that the Contract Area is
      partly located on areas forming part of certain national parks,
      sanctuaries, mangroves, wetlands of national importance, biosphere
      reserves and other biologically sensitive areas.  Passage
      through the above mentioned areas shall generally not be permitted.
      However, if there is no passage, other than through these areas, to reach
      a particular point beyond these areas, permission of the concerned
      authorities shall be obtained.

            


    

     

    
      	
              12.12

            	
              Within
      one hundred & twenty (120) days of the Effective Date, the Contractor
      shall retain a mutually acceptable third party environmental contractor to
      establish an environmental base line over the Contract Area. The cost of
      establishing this environmental base line shall be borne by the Contractor
      and will be cost recoverable.

            


    

     

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 13

            


    

     

    
      	
              ONGC
      PARTICIPATION

            


    

    


    
      	
              13.1

            	
              ONGC
      shall have the option to acquire a Participating Interest from the
      Companies in accordance with the provisions of this Article. If ONGC
      exercises such option to participate, its Participating Interest shall be
      transferred to the ONGC from the Companies in the proportion which each
      Company’s Participating Interest bears to the total Participating Interest
      of the Companies.

            


    

     

    
      	
              13.2

            	
              ONGC
      shall have an option to acquire Participating Interest of thirty percent
      (30%) in a Development Area by serving notice to that effect on the
      Company(ies) within ninety (90) days of the decision of the Management
      Committee under Article 9.6 or
21.5.4.

            


    

     

    
      	
              13.3

            	
              In
      the event that the ONGC exercises its option to participate pursuant to
      Article 13.2, the Nominee shall contribute to its Participating Interest
      share of all Development and Production Costs incurred with respect to the
      Development Area from the date of approval of the Development Plan for
      such Development Area and shall assume a share of rights and obligations,
      corresponding to its Participating Interest share from the said date, with
      respect to such Development Area but shall not be liable for any costs
      incurred prior to the said date.

            


    

     

    
      	
              13.4

            	
              If
      Contractor wants to include more than one Commercial Discovery in a
      Development Area or modify an existing Development Area in order to
      include a subsequent Commercial
Discovery:

            


    

     

    
      	
              13.4.1

            	
              (a)
      Development Area can contain more than one Commercial Discovery only when
      the same constituents of Contractor have elected to participate in the
      development of such Commercial Discoveries proposed to be located in the
      same Development Area.

            


    

     

    (b) If
ONGC has served notice under Article 13.2 to acquire a Participating Interest in
a Development Area and in the event Contractor proposes to modify such
Development Area to encompass a new Commercial Discovery pursuant to Article
9.5, then ONGC shall have option to serve notice to acquire such Participating
Interest also in such modified Development Area upon the date on which the
Contractor gave notice under Article 9 or Article 21 as the case may be, for
modification of such Development Area, unless ONGC otherwise decides in which
case there will be no modification of such Development Area.

     

    (c) If
ONGC has not served notice under Article 13.2 then ONGC shall have the right
pursuant to Article 13.2 to serve such notice with regard to modified
Development Area, which notice shall for the purposes of Article 13.2 be deemed
to have been served in respect of earlier Discovery(ies) on the last date upon
which a notice in regard of the relevant Discovery could have been served under
Article 13.2.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Upon
service of such notice by ONGC under Article 13.2, ONGC shall within forty-five
(45) days of such notice be obliged to make payment to the Companies of its
participating Interest share of Contract Costs incurred in respect of that
Development Area between the date of deemed service and the date of actual
service of such notice.

     

    
      	
              13.4.2

            	
              Notwithstanding
      provision of Article 13.3, ONGC shall not bear or pay any Exploration Cost
      with respect to any Development
Area.

            


    

     

    
      	
              13.5

            	
              Except
      as provided in this Article or elsewhere in this Contract, the rights and
      obligations to be assumed by the ONGC shall include but not be limited
      to:

            


    

     

    
      	
              (a)

            	
              the
      right to take Cost Petroleum in accordance with the provisions of Article
      14;

            


    

     

    
      	
              (b)

            	
              the
      right to take its total Participating Interest share of the Contractor's
      Share of Profit Petroleum in accordance with the provisions of Article
      15;

            


    

     

    
      	
              (c)

            	
              the
      right to receive its Participating Interest share of any incidental income
      and receipts arising from Petroleum
Operations;

            


    

     

    
      	
              (d)

            	
              the
      obligation to contribute its Participating Interest share of costs and
      expenses as provided in Articles 7.3, 13.3,
  13.4.

            


    

     

    
      	
              13.6

            	
              A11
      payments by the ONGC in any Year in respect of its Participating Interest
      share of Contract Costs, shall be made in United States Dollars. or in any
      other convertible currency agreed between the Parties, to the extent
      required, provided, that the ONGC shall be entitled to contribute its
      Participating Interest share of such costs in the relevant Year in Indian
      Rupees to the maximum extent that Rupees are required by the Contractor to
      meet its obligations in India.

            


    

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 14

            


    

     

    
      	
              RECOVERY OF COSTS FROM
      PETROLEUM

            


    

    


    


    
      	
              14.1

            	
              The
      Contractor shall be entitled to recover Contract Costs out of a percentage
      of the total volumes of Petroleum produced and saved from each Development
      Area in the Year, in accordance with the provisions of this
      Article.

            


    

     

    
      	
              14.2

            	
              Exploration
      Costs incurred by the Contractor in the Contract Area up to the date of
      Commercial Production of Petroleum from a Development Area in that
      Contract Area shall be aggregated, and the Contractor shall be entitled to
      recover the aggregate of such Exploration Costs out of the Cost Petroleum
      from the Development Area at the rate of one hundred percent (100%) per
      annum of such Exploration Costs beginning from the date of such Commercial
      Production, as provided in Article
14.4.

            


    

     

    
      	
              14.3

            	
              The
      Contractor shall be entitled to recover out of the Cost Petroleum from any
      Development Area in the Contract Area the Exploration Costs which it has
      incurred in that Contract Area in any Year after the date of Commercial
      Production from the Development Area at the rate of one hundred percent
      (100%) per annum of such Exploration Costs beginning from the date such
      Exploration Costs are incurred as provided in
  Article.

            


    

     

    
      	
              14.4

            	
              The
      Contractor shall be entitled to recover Exploration Costs as provided in
      Articles 14.2 and 14.3 either from the first Development Area or from
      other Development Area in a Contract Area in proportion to the values of
      the quantity of Petroleum produced and saved from each Development Area in
      that Contract Area as reduced by the Development Areas Production Costs,
      in the relevant Year, provided that such Exploration Costs once recovered
      shall not be allowable for recovery against any other Development
      Area.

            


    

     

    
      	
              14.5

            	
              Development
      Costs incurred by the Contractor in any Development Area, upto the date of
      Commercial Production from such Development Area shall be aggregated. and
      the Contractor shall be entitled to recover out of the Cost Petroleum from
      that Development Area the aggregate of such Development Costs at the rate
      of one hundred percent (100%) per annum of such Development Costs
      beginning from the date of such Commercial Production from the said
      Development Area.

            


    

     

    
      	
              14.6

            	
              The
      Contractor shall be entitled to recover out of the Cost Petroleum from a
      Development Area, the Development Costs which it has incurred on such
      Development Area. after the date of Commercial Production from the
      Development Area at the rate of one hundred percent (100%) per annum of
      such Development Costs beginning from the date such Development Costs are
      incurred.

            


    

     

    
      	
              14.7

            	
              The
      Contractor shall be entitled to recover in full, during any Year, the
      Production Costs incurred on a Development Area in that Year out of the
      Cost Petroleum from such Development
Area.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              14.8

            	
              If
      during any Year the Cost Petroleum from any Development Area is not
      sufficient to enable the Contractor to recover in full the Contract Costs
      due for recovery in that Year in accordance with the provisions of
      Articles 14.1 to 14.7 then, subject to the provisions of Article
      14.15:

            


    

     

    (a)           recovery
shall first be made of the Production Costs; and

     

    (b)           recovery
shall next be made of the Exploration Costs; and

     

    (c)           recovery
shall then be made of the Development Costs.

     

    The
unrecovered portions of Contract Costs shall be carried forward to the following
Year and the Contractor shall be entitled to recover such Costs in such Year or
the subsequent Years as if such Costs were due for recovery in that Year, or the
succeeding Years, until the unrecovered Costs have been fully recovered out of
Cost Petroleum from the Development Area.

     

    
      	
              14.9

            	
              The
      maximum amount of Cost Petroleum to which the Contractor shall be
      entitled, in accordance with the provisions of this Article, shall be
      eighty percent (80%) of the total value of the Petroleum produced and
      saved from a Development Area in a
Year.

            


    

     

    
      	
              14.10

            	
              For
      the purposes of this Article, as well as Article
  15:

            


    

     

    (a)           costs,
receipts and income shall be converted into production unit equivalents, and
vice versa, using the relevant prices established pursuant to Article 19 for
Crude Oil and Article 21 for Natural Gas.

     

    (b)           revenue
received from the sale of Condensate produced from a Development Area (valued in
accordance with Article 19) shall be aggregated with the value of Crude Oil
produced and saved from the saId Development Area as though such revenues were
realised from Crude Oil.

     

    (c)           revenue
received from the sale, of Condensate produced from a Development Area (valued
in accordance with Article 19) shall be aggregated with the value of Non
Associated Natural Gas produced and saved from the said Development Area as
though such revenues were realised from Non Associated Natural Gas.

     

    
      	
              14.11

            	
              Pending
      completion of the calculations required to establish definitively the
      Contractor's entitlement to Cost Petroleum from any Development Area in
      any Year, the Contractor shall take delivery, provisionally, of volumes of
      Crude Oil or Natural Gas representing its estimated Cost Petroleum
      entitlement calculated with reference to estimated production quantities,
      costs and prices for the Development Area as established by the Contractor
      and approved by the Management Committee.  Such provisional
      determination of Cost Petroleum shall be made every Quarter on an
      accumulative basis. Within sixty (60) days of the end of each Year, a
      final calculation of the Contractor's entitlement to Cost Petroleum, based
      on actual production quantities, costs and prices for the entire Year,
      shall be undertaken and any necessary adjustments to the Cost Petroleum
      enti,ilement shall be agreed upon between the Government and the
      Contractor and made as soon as practicable
  thereafter.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              14.12

            	
              Where
      more than one Party constitutes the Contractor, the percentage of the
      total Cost Petroleum from any Development Area which shall be available to
      each such Party in any Year for recovery of its share of Contract Costs
      shall be determined on the basis of the respective proportions of each
      such Party's cumulative unrecovered Contract Costs on the Development Area
      as at the end of the previous Year or, where there are no unrecovered
      Contract Costs at the end of the previous Year, on the basis of the
      Participating Interest of each such Party in the Development
      Area.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 15

            


    

     

    
      	
              PRODUCTION SHARING OF
      PETROLEUM

            


    

    


    


    
      	
              15.1

            	
              The
      Parties to this Contract shall share in the Profit Petroleum separately
      from each Development Area in each Year in accordance with the provisions
      of this Article.  A Party's share of Profit Petroleum, in any
      Year, shall be calculated separately for each Development Area on the
      basis of the Investment Multiple actually achieved by the Companies at the
      end of the preceding Year for that Development Area, as provided in
      Appendix D.

            


    

     

    
      	
              15.2.1

            	
              When
      the Investment Multiple of the Companies at the end of any Year is less
      than one (1), the Government shall be entitled to take and receive zero
      percent (0%) and the Contractor shall be entitled to take and receive one
      hundred percent (l00%) of the total Profit Petroleum from that Development
      Area with effect from the start of the succeeding
  Year.

            


    

     

    
      	
              15.2.2

            	
              When
      the Investment Multiple of the Companies at the end of any Year is equal
      to or more than one (1) but is less than one and one half (1.5), the
      Government shall be entitled to take and receive ten percent (10%) and the
      Contractor shall be entitled to take and receive ninety per cent (90%) of
      the total Profit Petroleum from that Development Area with effect from the
      start of the succeeding Year.

            


    

     

    
      	
              15.2.3

            	
              When
      the Investment Multiple of the Companies at the end of any Year in respect
      of any Development Area is equal to or more than one and one half (1.5)
      but is less than two (2.0) the Government shall be entitled to take and
      receive fifteen percent (15%) and the Contractor shall be entitled to take
      and receive eighty five percent (85%) of the total Profit Petroleum from
      that Development Area with effect from the start of the succeeding
      Year.

            


    

     

    
      	
              15.2.4

            	
              When
      the Investment Multiple of the Companies in respect of any Development
      Area is equal to or more than two (2.0) but is less than two and one half
      (2.5), the Government shall be entitled to take and receive twenty percent
      (20%) and the Contractor shall be entitled to take and receive eighty
      percent (80%) of the total Profit Petroleum from that Development Area
      with effect from the start of the succeeding
  Year.

            


    

     

    
      	
              15.2.5
      When the Investment Multiple of the Companies at the end of any Year in
      respect of any Development Area is equal to or more than two and one half
      (2.5) but is less than three (3.0), the Government shall be entitled to
      take and receive thirty percent (30%) and the Contractor shall be entitled
      to take and receive seventy percent (70%) of the total Profit Petroleum
      from that Development Area with effect from the start of the succeeding
      Year.

            


    

     

    
      	
              15.2.6

            	
              When
      the Investment Multiple of the Companies at the end of any Year in respect
      of any Development Area is equal to or more than three (3.0) but is less
      than three and one half (3.5), the Government shall be entitled to take
      and receive forty percent (40%) and the Contractor shall be entitled to
      take and receive sixty percent (60%) of the total Profit Petroleum from
      that Development Area with effect from the start of the succeeding
      Year.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              15.2.7

            	
              When
      the Investment Multiple of the Companies at the end of any Year
      in  respect of any Development Area is equal to or more than
      three and one half (3.5), the Government shall be entitled to take and
      receive fifty percent (50%) and the Contractor shall be entitled to take
      and receive fifty percent (50%) of the total Profit Petroleum from that
      Development Area with effect from the start of the succeeding
      Year.

            


    

     

    
      	
              15.3

            	
              The
      value of the Companies' Investment Multiple at the end of any Year in
      respect of each Development Area shall be calculated in the manner
      provided for, and on the basis of the net cash flows specified in Appendix
      D to this Contract.  However, the volume of Profit Petroleum to
      be shared between the Government and the Contractor shall be determined
      for each Quarter on an accumulative basis. Pending finalization of
      accounts, delivery of Profit Petroleum shall be taken by the Government
      and the Contractor on the basis of provisional estimated figures of
      Contract Costs, production, prices, receipts, income and any other income
      or allowable deductions and on the basis of the value of the [Investment
      Multiple] achieved at the end of the preceding Year. All such provisional
      estimates shall be approved by the Management Committee.  When
      it is necessary to convert monetary units into physical units of
      production equivalents or vice versa, the price or Crude Oil, Condensate
      and Natural Gas respectively shall be used.  Within sixty (60)
      days of the end of each Year, a final calculation of Profit Petroleum
      based on actual costs, quantities, prices and income for the entire Year
      shall be undertaken and any necessary adjustments to the sharing of
      Petroleum shall be agreed upon between the Government and the Contractor
      and made as soon as is practicable
thereafter.

            


    

     

    
      	
              15.4

            	
              The
      Profit Petroleum due to the Contractor in any Year from any Development
      Area shall be divided between the Parties constituting the Contractor in
      proportion to their respective Participating
  Interests.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 16

            


    

     

    
      	
              TAXES, ROYALTIES,
      RENTALS, ETC.

            


    

    


     

    
      	
              16.1

            	
              Companies,
      their employees, persons providing any materials, supplies, services or
      facilities or supplying any ship, aircraft, machinery, equipment or plant
      (whether by way of sale or hire) to the Companies for Petroleum Operations
      or for any other purpose and the employees of such persons shall be
      subject to all fiscal legislation in India except where, pursuant to any
      authority granted under any applicable law, they are exempted wholly or
      partly from the application of the provisions of a particular law, or as
      otherwise provided herein.

            


    

     

    
      	
              16.2

            	
              Pursuant
      to the provisions of section 42 of the Income Tax Act. 1961, the
      allowances specified herein shall apply in computing income tax payable by
      a Company on its profits and gains from the business of Petroleum
      Operations in lieu of (and not in addition to) corresponding allowances
      provided for under the heading "Profits and Gains of Business or
      Profession" in the Income Tax Act,
1961.

            


    

     

    
      	
              16.2.

            	
              Subject
      to the provisions herein below, deductions at the rate of one hundred
      percent (100%) per annum shall be allowed for all expenditures incurred in
      respect of Exploration Operations and drilling operations.  The
      expenditure incurred in respect of Development Operations, other than
      drilling operations, and Production Operations will be allowable as per
      the provisions of the Income Tax Act, 1961.  The expenses so
      incurred are subject to the
following:

            


    

     

    
      	
              16.2.1.1

            	
              Where
      any expenditure is not solely incurred on Petroleum Operations or is
      incurred as part of or in conjunction with any other business, only that
      proportion of the total expenditure which can be proved to the assessing
      officer to represent a fair proportionate part thereof, having regard to
      all relevant facts and circumstances, shall be
  allowed:

            


    

     

    
      	
              16.2.1.2

            	
              Sections
      40A and 44C of the Income Tax Act 1961, shall
  apply.

            


    

     

    
      	
              16.2.2

            	
              A
      Company shall be entitled, for income tax purposes only, to deduct all its
      unsuccessful Exploration Costs in contract areas covered by other
      contracts with an Effective Date after the 15th of April 1992, in
      accordance with the provisions of the Income Tax Act, 1961, from the
      aggregate value of Petroleum allocable to the Company from any Development
      Area in the Contract Area in the manner as
  follows:

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              16.2.2

            	
              Unsuccessful
      Exploration Costs incurred in contract areas other than the Contract Area
      where Commercial Discovery has been made up to the date of commencement of
      Commercial Production shall be aggregated and the Company shall be
      entitled to deduct such costs at the rate of one hundred per cent (100%)
      per annum.

            


    

     

    
      	
              16.2.2.2

            	
              Unsuccessful
      Exploration Costs incurred in contract areas other than the Contract Area
      where Commercial Discovery has been made, after that commencement of
      Commercial Production, shall be deductible at the rate of one hundred per
      cent (100%) per annum of such costs beginning from the Year such costs are
      incurred.

            


    

     

    
      	
              16.2.3

            	
              All
      allowable expenditure incurred prior to the Year in which Commercial
      Production commences shall be aggregated and the assessed loss for
      that  year as well as the assessed loss, if any, incurred in the
      assessment year  relevant to the Year in which Commercial
      Production commences, or in any subsequent assessment year, shall be
      carried forward to succeeding assessment years and set off as provided in
      the Income Tax Act, 1961.

            


    

     

    
      	
              16.2.4

            	
              The
      revenue from the business consisting of Petroleum Operations shall be
      determined in accordance with Article 19 for the Participating Interest
      Share of Crude Oil saved and sold, or otherwise disposed of, from
      Development Area and from any revenue realized on the sale of ANG and/or
      NANG referred to in Article 21 as well as any other gains of receipts from
      Petroleum Operations as reduced by the deductions as specified within this
      Article, and, except as herein provided, all the provision of the Income
      Tax Act, 1961, shall apply.

            


    

     

    
      	
              16.3

            	
              For
      the purposes of Article 16.2 and section 42 of the Income Tax Act,
      1961:

            


    

     

    
      	
              16.3.1

            	
              The
      following terms used in section 42 of the Income Tax Act, 1961 shall have
      the meanings corresponding to the terms used in this Contract and defined
      in Article 1 as follows:

            


    

     

    
      	
              16.3.1.1

            	
              "agreement"
      mean this Contract as defined in Article
1;

            


    

     

    
      	
              16.3.1.2

            	
              "Commercial
      Production" shall have the meaning assigned in Article
  1

            


    

     

    
      	
              16.3.2

            	
              The
      terms "assessing officer", "assessed loss" and "'assessment year" shall
      have the meaning as defined in the income Tax Act,
  1961

            


    

     

    
      	
              16.3.3

            	
              The
      other terms used herein and defined in Article 1 shall have the meaning
      therein ascribed.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              16.4

            	
              Companies
      shall not be liable to the Government or State Government for payment
      of:

            


    

     

    
      	
              16.4.1

            	
              royalty,
      annual area rental charges or license

            	
              fees
      under the Rules as amended.

            


    

     

    
      	
              16.4.2

            	
              any
      other taxes, cess or any other levies of a similar nature calculated by
      reference to production of or to income from Petroleum. except income
      taxes payable to Government as specified
above.

            


    

     

    
      	
              16.5

            	
              The
      Contractor shall not be liable to the Govemment or the Statc Government
      for payment of any custom duties, export duties or other, statutory
      charges on the import or re-export of equipment, installations etc., as
      specified in Article 17, to be used solely and exclusively for Petroleum
      Operations.

            


    

     

    
      	
              16.5.1

            	
              Sales
      Tax, if any, payable under the relevant laws on the safe of Petroleum to
      Government or its nominee shall be borne by the Government or its nominee
      as the case may be;

            


    

     

    
      	
              16.6

            	
              The
      Contractor shall not be liable to the Government or the State Government
      for payment of any custom duties, export duties, sales tax, value added
      tax or other statutory charges on the export and subsequent import of
      Petroleum from the Contract Area or an equivalent
  amount

            


    

     

    
      	
              16.7

            	
              Subject
      to the provision hereinabove provided, Contractor shall be liable for
      payment of

            


    

     

    
      	
              16.7.1

            	
              Charges
      payable by specified industries or in connection with Petroleum Operations
      under applicable legislation;

            


    

     

    
      	
              16.7.2

            	
              payments
      for purchase, lease or rental of land or land rights in connection with
      Petroleum Operations;

            


    

     

    
      	
              16.7.3

            	
              taxes,
      fees or charges for specific services rendered on request or to the public
      generally;

            


    

     

    
      	
              16.7.4

            	
              customs
      duties, except for those items subject to exemption as provided
      in  Article 17, applicable at the rates specified from time to
      time.

            


    

     

    
      	
              16.7.5

            	
              stamp
      duties, registration fees, license fees, taxes such as taxes on property
      or assets (not calculated by reference to income or otherwise exempted) or
      other levies, fees or charges of a non-discriminatory nature and generally
      applicable in India or in the State where Petroleum Operations are being
      conducted

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              16.8

            	
              If
      any change in or to any Indian law, rule or regulation by any central,
      state and local authority dealing with income tax or other corporate tax,
      export/import tax, customs duty or tax imposed on Petroleum of dependent
      upon the value of Petroleum results in a material change to the economic
      benefits accruing to any of the Parties to this Contract after the
      Effective Date of the Contract, the Parties to this Contract shall consult
      promptly to make necessary revisions and adjustments to the Contract in
      order to maintain such expected economic benefits to each of the
      Parties.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
               
      

            	
              ARTICLE
      - 17

            


    

     

    
      	
              CUSTOMS
      DUTIES

            


    

    


    
      	
              17.1

            	
              Machinery,
      plant. equipment. materials and supplies imported by a Contractor or its
      Subcontractors solely and exclusively for use in Petroleum Operations
      shall be exempted from customs duties subject to compliance with
      procedures and conditions as may be determined pursuant to applicable
      customs duty legislation, Article 23 the terms herein
      specified.

            


    

     

    
      	
              17.2

            	
              Contractor
      shall submit to the Government a list of Subcontractors who are engaged by
      it for the purpose of obtaining the various categories of items specified
      herein pursuant to the conduct of Petroleum Operations and who may claim
      exemptions hereunder.

            


    

     

    
      	
              17.3

            	
              In
      order to qualify for the exemption from customs duties as provided, for in
      Article 17.1, all imported items for which duty exemption is being claimed
      shall be certified by a responsible representative of the Contractor to be
      imported in terms of this Contract solely and exclusively for use in
      carrying out Petroleum Operations and shall be approved by a
      representative of the Government to be eligible for such exemption
      pursuant to the terms of the
Contract.

            


    

     

    
      	
              17.4

            	
              The
      Government shall have the right to inspect the records and documents of
      the physical item or items for which an exemption is or has been provided
      under 17.1 to determine that such item or items are being or have been
      imported solely and exclusively for the purpose for which the exemption
      was granted.  The Government shall also be entitled to inspect
      such physical items wherever located to ensure that such items are being
      used for the purpose herein specified and any item not being so used shall
      immediately become liable to payment of the applicable customs
      duties.

            


    

     

    
      	
              17.5

            	
              Subject
      to Article 27, the Contractor and its Subcontractors may sell or otherwise
      transfer in India all imported items which are no longer required for
      Petroleum Operations, subject to applicable laws governing customs duties
      and sale or disposal of such items.

            


    

     

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 18

            


    

    
      	
              DOMESTIC SUPPLY, SALE,
      DISPOSAL AND EXPORT OF CRUDE OIL
  CONDENSATE

            


    

    


    


    
      	
              18.

            	
              Until
      such time as the total availability to the Government and government
      companies of Crude Oil and Condensate from all Petroleum production
      activities in India meets the total national demand, each Contractor or
      constituents of Contractor shall be required to sell to the Government or
      its nominee all of the Contractor or constituents of Contractor’s
      entitlement to Crude Oil and Condensate from each Development Area in
      order to assist in satisfying the national
  demand.

            


    

    


    
      	
              18.2

            	
              Pursuant
      to Article 18.1 and subject to Article 18.4, each constituent of
      Contractor shall offer to sell to the Government (or its nominee) its
      total Participating Interest share of Crude Oil and Condensate to which it
      is entitled under Articles 14 and 15 at the price determined in accordance
      with Article 19 for sales to Government and the Government shall have the
      option to purchase the whole or any portion thereof at the said
      price.

            


    

    


    
      	
              18.3

            	
              The
      aforementioned offer shall be made by a Contractor or constituents of
      Contractor, in writing, at least thirty (30) days after a discovery and
      thereafter at least six (6) months preceding the Year in which the sale is
      to be made, specifying the estimated quantities and grade of Crude Oil and
      Condensate being offered (based upon estimates which shall be adjusted
      within ninety (90) days of the end of each Year on the basis of actual
      quantities produced and saved). The Government shall exercise its said
      option to purchase, in writing, not later than ninety (90) days prior to
      the commencement of the Year in respect of which the sale is to be made,
      specifying the quantity and grade of Crude Oil and Condensate which it
      elects to take in the ensuing Year. Failure by the Government to give such
      notice within the period specified shall be conclusively deemed an
      election to take all of the Crude Oil and Condensate offered (adjusted as
      provided herein) in the ensuing
Year.

            


    

    


    
      	
              18.4

            	
              If,
      during any Year, India attains Self-sufficiency, the Government shall
      promptly thereafter, but in no event later than the end of the first
      Quarter of the following Year, so advise the Contractor or constituents of
      Contractor by written notice. In such event, as from the end of the second
      Quarter of the following Year, or such earlier date as the Parties may
      mutually agree, Government's option to purchase shall be suspended and the
      Contractor or constituents of Contractor shall have the right to lift and
      export its Participating Interest share of Crude Oil and Condensate until
      such time, if any, as Self-sufficiency shall have ceased to exist. If
      Self-sufficiency ceases to exist during a Year, the Government shall
      recover its option to purchase under Article 18.2 in respect of the
      following Year by giving notice thereof to the Contractor or constituents
      of Contractor as provided in Article
18.3.

            


    

    


    
      	
              18.5

            	
              All
      payments in respect of sales to the Government pursuant to provisions of
      this Article  shall be made  by the  Government 
      within  the  period for  credit
  applicable

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    in the
calculation of the price pursuant to Article 19. If no time frame for credit is
applicable in such calculation, payment shall be made within forty-five (45)
days from the date of delivery of Crude Oil
or Condensate to the Government at the Delivery Point. In the case of sales by a
Foreign Company, payment shall he made in United States Dollars or any other
convertible currency acceptable to the Government and the, Foreign Company, by
wire transfer, to the credit of the Foreign Company's designated account with a
bank within or outside India designated by the Foreign Company. Subject to any
changes in the relevant laws, in the case of sales by a domestic Company,
payment shall be made to the credit of the domestic Company's designated account
with a bank in India designated by the domestic Company in equivalent Indian
Rupees. Notwithstanding the above, a Contractor or constituents of Contractor
shall submit an invoice to the Government within fifteen (15) days from the date
of delivery of Crude Oil. All amounts unpaid by the Government by the due date
shall, from the due date, bear interest calculated on a day to day basis at the
LIBOR plus two (2) percentage points from the date due until paid.

    


    
      	
              18.6

            	
              If
      full payment is not received by a Contractor or constituents of Contractor
      when due as provided in Article 18.5, the Contractor or constituents of
      Contractor shall, at any time thereafter, notify the Government of the
      default and, unless such default is remedied within fifteen (15) days from
      the date of the said notice, the Contractor or constituents of Contractor
      shall have the right, unless otherwise agreed, upon written notice to the
      Government:

            


    

     

    
      	
              (a)

            	
              to
      suspend the Government's option to purchase under Article
      18.2;

            


    

     

    
      	
              (b)

            	
              to
      freely lift, sell and export all its Participating Interest share of Crude
      Oil and Condensate subject to the destination restrictions specified in
      Article 18.8, until the Government has paid the due amount plus interest
      as provided herein;

            


    

     

    
      	
              (c)

            	
              if
      the payment plus interest is not received by the Contractor or
      constituents of Contractor within one hundred and eighty (180) days from
      the date the said payment was due, to receive and export the Government's
      share of Profit Petroleum until such time as either Government has paid
      all amounts due plus interest, or the value, based on the price as
      determined in accordance with Article 19, of Government's share of Profit Petroleum
      so exported is equal to all amounts due plus interest, whichever first
      occurs; provided, however, that if the Government
      makes a payment to the Contractor or constituents of Contractor after the
      Contractor or constituents of Contractor has commenced export of
      Government's share of Profit Petroleum and such payment together with the
      value of Government's share of Profit Petroleum
      exported (based on the price determined in accordance with Article 19)
      exceeds the amount due plus interest, necessary adjustment shall be
      carried out to refund to the Government forthwith the excess amount
      received by the Contractor or constituents of
  Contractor.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              18.7

            	
              If
      in any Year India has not attained Self-sufficiency and the Government or
      any government company or agency of the Government exports or delivers to
      a third party for export any Crude Oil produced under the terms of this
      Contract for any purpose other than for the purpose of balancing Indian
      refinery requirements. Self-sufficiency shall be deemed to exist for
      purposes of this Article 18 and the Contractor or constituents of
      Contractor shall have the right of first refusal to acquire any Crude Oil
      to be so exported for the same consideration and upon the same terms which
      the Government, the Government Company or other agency of Government has
      offered or agreed to accept.

            


    

     

    
      	
              18.8

            	
              The
      Contractor or constituents of Contractor shall be entitled to freely lift
      and export any Crude Oil and Condensate which the Government has elected
      not to purchase pursuant to this Article 18, subject to Government's
      generally applicable destination restrictions to countries with which the
      Government, for policy reasons, has severed or restricted
      trade.

            


    

    


    
      	
              18.9

            	
              No
      later than sixty (60) days prior to the commencement of production in a
      Development Area, and thereafter no less than sixty (60) days before the
      commencement of each Year, the Contractor shall cause to be prepared and
      submitted to the Parties a production forecast setting out the total
      quantity of Crude Oil that it estimates can be produced from a Development
      Area during the succeeding Year, based on a maximum efficient rate of
      recovery of Crude Oil from that Development Area in accordance with good
      petroleum industry practice. No later than thirty (30) days prior to the
      commencement of each Quarter, the Contractor shall advise its estimate of
      production for the succeeding Quarter and shall endeavour to produce the
      forecast quantity for each Quarter.

            


    

    


    
      	
              18.10

            	
              Each
      Party comprising the Contractor shall, throughout the term of this
      Contract, have the right to separately take in kind and dispose of all its
      share of Cost Petroleum and shall have the obligation to lift the said
      Cost Petroleum and Profit Petroleum on a current basis and in such
      quantities so as not to cause a restriction of production or inconvenience
      to the other Parties.

            


    

    


    
      	
              18.11

            	
              The
      Government shall, throughout the term of this Contract, have the right to
      separately take in kind and dispose of its share of Profit Petroleum and
      of such portion of the Contractor's share of Crude Oil and Condensate as
      is purchased by the Government pursuant to Article 18, subject to Article
      18.6, and shall have the obligation to lift all of the said Oil on a
      current basis and in such quantities so as not to cause a restriction of
      production or inconvenience to the other
  Parties.

            


    

    


    
      	
              18.12

            	
              For
      the purpose of implementing the provisions of Articles 18.10 and 18.11,
      a Crude Oil lifting procedure shall be agreed upon by the Parties no
      later than six (6) months prior to the commencement of production in a
      Development Area. Such lifting procedure shall include, but not
      necessarily be limited to:

            


    

     

    
      	
              (a)

            	
              a
      procedure for notification by the Operator to the Government, and to each
      Party comprising the Contractor, of projected Crude Oil
      production;

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              (b)

            	
              a
      procedure for notification by the Government, and by each Party comprising
      the Contractor, to the Operator, of its expected off-take and the
      consequences of inability or failure to
  off-take.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


     

    
      	
              ARTICLE
      – 19

            


    

    
      	
              VALUATION OF
      PETROLEUM

            


    

    


    
      	
              19.1

            	
              For
      the purpose of this Contract, the value of Crude Oil, Condensate and
      Natural Gas shall be based on the price determined as provided
      herein.

            


    

     

    
      	
              19.2

            	
              A
      price for Crude Oil shall be determined for each Calendar Month or such
      other period as the Parties may agree (hereinafter referred to as "the
      Delivery Period") in terms of United States Dollars per Barrel, FOB
      Delivery Point for Crude Oil produced and sold or otherwise disposed off
      from each Development Area for each Delivery Period, in accordance with
      the appropriate basis for that type of sale or disposal specified
      below.

            


    

     

    
      	
              19.3

            	
              In
      the event that some or all of a Contractor's total sales of Crude Oil
      during a Delivery Period are made to third parties in Arms Length Sales,
      all sales so made shall be valued at the weighted average of the prices
      actually received by a Contractor, calculated by dividing the total
      receipts from all such sales FOB the Delivery Point by the total number of
      Barrels of the Crude Oil sold in such
sales.

            


    

     

    
      	
              19.3.1
      In the event that a portion of such third party Arms Length Sales are made
      on a basis other than an FOB basis as herein specified, the said portion
      shall be-valued at prices equivalent to the prices FOB the Delivery Point
      for such sales determined by deducting all costs (such as transportation,
      demurrage, loss of Crude Oil in transit and similar costs) incurred
      downstream of the Delivery Point, and the prices so determined shall be
      deemed to be the actual prices received for the purpose of calculation of
      the weighted average of the prices for all third party Arms Length Sales
      for the Delivery Period.

            


    

     

    
      	
              19.3.2

            	
              Each
      Constituent of Contractor shall separately submit to the designated
      government company, within fifteen (15) days of the end of each Delivery
      Period, a report containing the actual prices obtained in their respective
      Arms Length Sales to third parties of any Crude Oil. Such reports shall
      distinguish between term sales and spot sales and itemize volumes,
      customers, prices received and credit terms, and a Contractor shall allow
      the designated government company to examine the relevant sales
      contracts.

            


    

     

    
      	
              19.4

            	
              In
      the event that some or all of a Contractor's total sales of Crude Oil
      during a Delivery Period are made to the Government or a Government
      company, the price of all sales so made shall, unless otherwise agreed
      between the Parties, be determined on the basis of either the FOB selling
      price per Barrel of one or more crude oils which at the time of
      calculation, are being freely and actively traded in the international
      market and are similar in characteristics and quality to the Crude Oil in
      respect of which the price is being determined, such FOB selling price to
      be ascertained from Platt's Crude Oil Market Wire daily publication
      ("Platt's") or tile spot market for-the same crude oils ascertained in the
      same manner, whichever price, in the opinion of the Parties more truly
      reflects the current value of such Crude Oils. For any Delivery Period in
      which sales take place, the price shall be the arithmetic average price
      per Barrel determined by calculating the average for such Delivery
       Period  of  the  mean  of  the  high
       and  low  FOB  or  spot prices for each
       day of

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    the crude
oils selected for comparison adjusted for differences in the Crude Oil and the
crude oils being compared for quality, transportation costs, delivery, time,
quantity, payment terms, the market area into which the Crude Oil is being sold,
other contract terms to the extent known and other relevant factors. In the
event that Platt's ceases to be published or is not published for a period of
thirty (30) consecutive days, the Parties shall agree on an alternative daily
publication. In the event of changing market conditions. the Parties shall
review and mutually agree on changes to the period over which the average price
of comparable crude oils may be calculated.

     

    
      	
              19.4.1
      At least six (6) months prior to commencement of production from the first
      Development Area and from each Field thereafter in the Contract Area, the
      Parties shall meet in order to establish a provisional list of the crude
      oils to be selected for comparison with the Crude Oil to be sold and an
      appropriate mechanism for the purpose of giving effect to Article 19.4 and
      definitively establishing the price of the Crude Oil to be sold pursuant
      to Article 19.4. In determining the quality of crude oil, account shall be
      taken of all relevant characteristics including but not limited to
      gravity, sulphur and metal content, pour point and product
      yield.

            


    

     

    
      	
              19.4.2
      In the event that, at the relevant time, no crude oils of similar quality
      to the Crude Oil to be sold are being actively traded in the international
      markets where prices can be ascertained by international publication. or
      the official FOB selling prices and the international spot market price
      vary widely between producers, the Parties shall meet in good faith to
      determine an appropriate pricing
basis.

            


    

     

    
      	
              19.4.3
      The Parties shall meet annually or sooner upon notice served by any Party
      on the others, to review the list of selected crude oils or the mechanism
      established pursuant to Article 19.4.1 in light of any new facts since the
      date of selection of such crude oils or establishment of such mechanism
      and to determine what adjustment (if any) should be made to the said
      selection or mechanism by mutual agreement of the
  Parties.

            


    

     

    
      	
              19.5

            	
              In
      the event that in any Delivery Period, some but not all of a Contractor's
      sales of Crude Oil from a Development Area are made to the Government or a
      government company and some but not all are made to third parties in Arms
      Length Sales and the price as established in accordance with Article 19.4
      differs by more than one percent (1%) from the price as determined in
      accordance with Article 19.3 for the same Delivery Period, the Parties
      shall meet upon notice from any Party, to determine if the prices
      established for the relevant Delivery Period should be adjusted taking
      into account third party Arms Length Sales made by the Contractor of the
      same or similar Crude Oil from the relevant Development Area or other
      Fields and published information in respect of other genuine third party
      Arms Length Sales of the same or similar Crude Oil for that Delivery
      Period. Until the matter of an adjustment for the relevant Delivery Period
      is finally determined. the price as established in accordance with this
      Article will apply for that Delivery Period. Any adjustment, if necessary,
      will be made within thirty (30) days from the date the adjustment for that
      Delivery Period is finally
determined.

            


    

     

    
      	
              19.6

            	
              A
      Contractor shall determine the relevant prices in accordance with this
      Article and the calculation, basis of calculation and the price determined
      shall be supplied to the Government  or 
      the government  company  and  shall  be 
      subject  to  agreement
 by

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     the
Government or the government company before it is finally determined. Pending
final determination, the last established price, if any, for the Crude Oil shall
be used.

     

    
      	
              19.7

            	
              In
      the event that the Parties fail to reach agreement on any matter
      concerning selection of the Crude Oils for comparison, the calculation,
      the basis of, or mechanism for the calculation of the prices, the prices
      arrived at, the adjustment of any price or generally about the manner in
      which the prices are determined according to the provisions of this
      Article within thirty (30) days, or such longer period as may be mutually
      agreed between the Parties, from the date of commencement of Commercial
      Production or the end of each Delivery Period thereafter, any party may
      refer the matter or matters in issue for final determination, by a sole
      expert appointed as provided in Article
33.

            


    

     

    
      	
              19.7.1
      Within ten (10) days of the said appointment, the Parties shall provide
      the expert with all information they deem necessary or as the expert may
      reasonably require.

            


    

     

    
      	
              19.7.2
      Within fifteen (15) days from. the date of his appointment, the expert
      shall report to the Parties on the issue(s) referred to him for
      determination, applying the criteria or mechanism set forth herein and
      indicate his decision thereon to be applicable for the relevant Delivery
      Period for Crude Oil and such decision shall be accepted as final and
      binding by the Parties.

            


    

     

    
      	
              19.7.3
      Except for the adjustments referred to in Article 19.5; any price or
      pricing mechanism agreed by the Parties pursuant to the provisions of this
      Article shall not be changed
retroactively.

            


    

     

    
      	
              19.8

            	
              Any
      sale or disposal to Affiliates or other sale or disposal of Crude Oil
      produced from a Development Area, other than
      to the Government or government companies or to third parties in Arms
      Length Sales, in any Delivery Period, shall be valued on the same basis as
      sales to the Government or a government company. In the event of such a
      sale or disposal by a Contractor, such Contractor shall submit to the
      Government, within fifteen (15) days of the end of each Delivery Period,
      all relevant information concerning such sales or
    disposals.

            


    

     

    
      	
              19.9

            	
              In
      the event that in any Delivery Period there is more than one type of sales
      referred to in Articles 19.3, 19.4 and 19.8, then, for the purpose of
      calculating Cost Petroleum and Profit Petroleum entitlement pursuant to
      Articles 14 and 15, a single price per Barrel of Crude Oil for all the
      sales for the relevant Delivery Period shall be used. Such single price
      shall be the weighted average of the prices determined for each type of
      sale, weighted by the respective volumes of Crude Oil sold in each type of
      sale in the relevant Delivery
Period.

            


    

     

    
      	
              19.10

            	
              In
      this Article the term Government company shall include any other agency of
      Government to whom Crude Oil is to be
sold.

            


    

     

    
      	
              19.11

            	
              The
      provisions specified above for the determination of the price of sales of
      Crude Oil shall apply mutandis to
Condensates.

            


    

     

    
      	
              19.12

            	
              The
      price of Natural Gas shall be determined as provided in Article
      21.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


     

    
      	
              ARTICLE
      – 20

            


    

    
      	
              CURRENCY AND EXCHANGE
      CONTROL PROVISIONS

            


    

    


    
      	
              20.1

            	
              Subject
      to the provisions herein, and in compliance with the relevant provisions
      of the laws of general application in India governing currency and subject
      to treaties entered into by the Government of India with other countries,
      foreign exchange and related administrative instructions and procedures
      issued there under on a non-discriminatory basis, each Foreign Company
      comprising the Contractor shall during the term of this Contract. have the
      right to:

            


    

    


    
      	
              (a)

            	
              repatriate
      abroad, in United States Dollars or any other Foreign Currency, the net
      proceeds of sales of Crude Oil and Condensate in
  India;

            


    

    
      	
              (b)

            	
              receive,
      retain and use abroad the proceeds of any export sales of Petroleum under
      the Contract;

            


    

    
      	
              (c)

            	
              open,
      maintain and operate bank accounts with reputable banks, both inside and
      outside India, for the purpose of this
Contract:

            


    

    
      	
              (d)

            	
              freely
      import, through normal banking channels, funds necessary for carrying out
      the Petroleum Operations:

            


    

    
      	
              (e)

            	
              convert
      into foreign exchange and repatriate sums imported pursuant to (d) above
      in excess (if any) of its requirements:
and

            


    

    make
payments outside of India for purchases, services and loans obtained abroad,
without the requirement that funds used in making such payments must come from
or originate in India.

    


    
      	
              20.2

            	
              The
      rates of exchange for the purchase and sale of currency by the Companies
      shall be the prevailing rates of general application determined by the
      Reserve Bank of India or such other financial body as may be mutually
      agreed by the Parties and for accounting purposes under this Contract,
      these rates shall apply as provided in Section 1.6 of Appendix
      C.

            


    

    


    
      	
              20.3

            	
              Foreign
      company shall have full rights of control over movement of funds out of
      bank accounts established for the purpose of Petroleum Operations but
      shall provide to the Reserve Bank of India or any designated financial
      body, monthly bank statements, with an explanation of each deposit or
      payment from the account. and shall supply each Quarter or annually, in a
      form acceptable to the Reserve Bank, or such designated body, full
      particulars of foreign exchange transactions pursuant to this Contract in
      order to facilitate monitoring of such accounts. Such particulars shall
      include:

            


    

     

    
      	
              (a)

            	
              details
      of deposits of proceeds of sales of Petroleum, such as quantity of
      Petroleum sold, date of sale and unit
price;

            


    

    
      	
              (b)

            	
              the
      repayment of principal of loans made to the Companies in foreign currency
      for purposes of Petroleum
Operations;

            


    

    
      	
              (c)

            	
              payments
      of interest, charges, fees and expenses in respect of loans referred to in
      paragraph (b) above;

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    
      	
              (d)

            	
              payment
      in foreign currency to persons not resident in India for the supply of
      capital goods required for the purpose of Petroleum
      Operations;

            


    

     

    
      	
              (e)

            	
              payments
      in foreign currency to persons not resident in India for the supply of
      goods and services, other than capital goods, required for Petroleum
      Operations (including services of foreign employees and
      consultants);

            


    

     

    
      	
              (f)

            	
              amounts
      remitted to India or paid elsewhere at the request of the Government to
      meet obligations under the Contract;
and

            


    

     

    
      	
              (g)

            	
              retentions
      or disbursements to Affiliates in foreign currency representing the excess
      of net profits, depreciation and amortization over the payments made under
      paragraphs (b) through (f) above. The Government shall have the right to
      verify any statements and reports submitted by the Contractor pursuant to
      this Article and the Contractor shall promptly respond to any query in
      this regard.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    ARTICLE
- 21

    NATURAL
GAS

    


    
      	
              21.1

            	
              Subject
      to Article 21.2, the Indian domestic market shall have the first call on
      the utilisation of Natural Gas discovered pursuant to Petroleum Operations
      and produced from any Field. Accordingly, any proposal by the Contractor
      relating to Discovery and production of Natural Gas from a Field shall be
      made in the context of the Government's policy for the utilisation of
      Natural Gas and shall take into account the objectives of the Government
      to develop its resources in the most efficient manner and to promote
      conservation measures.

            


    

    


    
      	
              21.2

            	
              Contractor
      shall have the right to use Natural Gas produced from a Field for the
      purpose of Petroleum Operations including reinjection for pressure
      maintenance in the Oil Fields, gas lifting and power
      generation.

            


    

    


    
      	
              21.3

            	
              For
      the purpose of sales to the domestic market pursuant to this Article 21,
      the Delivery Point shall, unless otherwise provided herein or agreed, be
      the inlet flange of the facilities upstream of any facilities and
      operations established to extract or process products from the said
      Natural Gas.

            


    

    


    
      	
              21.4

            	
              Associated
      Natural Gas (ANG)

            


    

    


    
      	
              21.4.1

            	
              In
      the event that a Discovery of Crude Oil contains ANG, Contractor shall
      declare in its declaration of the said Discovery as a Commercial Discovery
      as specified in Article 9, whether (and by what amount) the estimated
      production of ANG is anticipated to exceed the quantities of ANG which
      will be used in accordance with Article 21.2 (such excess being
      hereinafter referred to as "the Excess ANG”). In such an event the
      Contractor shall indicate whether, on the basis of the available data and
      information, it has reasonable grounds for believing that the Excess ANG
      could by itself be commercially exploited in accordance with the terms of
      this Contract and whether the Contractor intends to so exploit the excess
      ANG.

            


    

    


    
      	
              21.4.2

            	
              Based
      on the principle of full utilisation and minimum flaring of ANG, a
      proposed Development Plan shall, to the extent practicable. , include a
      plan for utilisation of the ANG including, estimated quantities to be
      flared, reinjected, and to be used for Petroleum Operations; and, if the
      Contractor proposes to commercially exploit the Excess ANG for sale in the
      domestic market or elsewhere. the proposed plans for such
      exploitation.

            


    

    


    
      	
              21.4.3

            	
              The
      Contractor shall first offer such Excess ANG for sale to the Government
      (or its nominee) in writing, in accordance with the terms of this
      Contract. On receipt of such offer, the Government (or its nominee) shall,
      within six (6) months of the date of receipt thereof, notify the
      contractor, in writing, whether or not it wishes to exercise its option to
      purchase the Excess ANG.

            


    

    


    
      	
              21.4.4

            	
              If
      the Government exercises its option to purchase the Excess ANG
      as provided in Article 21.4.4.

            


    

    


     

    
      	
              (a)

            	
              The
      Government shall indicate in
      the notice exercising the option, the date it can commence purchase of the
      Excess ANG, which date shall not be later than the date the facilities for
      delivering Excess ANG are
commissioned.

            


    

     

    
      	
              (b)

            	
              The
      Contractor and the Government (or its nominee) shall promptly, commence
      negotiation of a Gas sales agreement and other technical and commercial
      arrangements required to develop such Natural
  Gas.

            


    

     

     

    
      	
              21.4.5

            	
              If
      the Government does not exercise its option to purchase the Excess ANG as
      provided in Article 21.4.3 and Contractor does not enter into a Gas sales
      agreement for the total amount of Excess ANG with any buyer as provided in
      Article 21.4.3, the Government shall be entitled to take and utilize such
      Excess ANG, at its own cost and expense, without impeding the production
      of Crude Oil and without affecting the shares of Crude Oil allocable to
      the Parties under the other provisions of this
  Contract.

            


    

     

     

    
      	
              21.4.6

            	
              If
      the Government elects to take the Excess ANG as provided in Article
      21.4.6.

            


    

     

    
      	
              (a)

            	
              the
      Contractor shall deliver such excess ANG to the Government at the
      downstream flange of the Natural Gas processing facilities, or, if there
      are no Natural Gas processing facilities, the downstream flange of the
      Gas/oil separation facilities;

            


    

     

    
      	
              (b)

            	
              the
      Contractor shall, based on sound petroleum engineering practices, install
      such facilities as would facilitate, in so far as practicable,
      uninterrupted delivery of such Excess ANG to the
    Government;

            


    

     

    
      	
              (c)

            	
              the
      cost associated with all facilities installed pursuant to paragraph (b)
      above shall be borne by the Government (or its nominee) and shall not be
      charged to the Contract Area from which the Excess ANG is being
      produced;

            


    

     

    
      	
              (d)

            	
              the
      Government shall bear all costs including gathering, treating, processing
      and transporting costs beyond the downstream flange of the Natural Gas
      processing facilities, or, if there are no Natural Gas processing
      facilities the downstream flange of the Gas/oil separation
      facilities;

            


    

     

    
      	
              (e)

            	
              the
      delivery of such Excess ANG shall be subject to procedures to be agreed
      between the Government or its nominee and the Contractor, prior to such
      delivery, such procedures to include matters relating to timing of
      off-­take of such Excess ANG.

            


    

     

    
      	
              21.4.7

            	
              If
      at any time, any Excess ANG is not utilized by Government or Contractor
      pursuant to this Article 21, the Contractor can flare such excess ANG,
      where such flaring is approved in the Development Plan by Management
      Committee or show to the satisfaction of Management Committee and
      Government that reinjection is inadvisable and/or
      impracticable.

            


    

     

    
      	
              21.5

            	
              Non
      Associated Natural Gas (NANG)

            


    

     

    
      	
              21.5.1

            	
              In
      the event of a Discovery of NANG, the Contractor shall promptly report
      such Discovery to the Management Committee and the provisions of Articles
      9.1 and 9.2 shall apply. The remaining provisions of Article 9 would apply
      to

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     the
discovery and development of NANG only, insofar as they are not inconsistent
with the provisions of Articles 21.

    


    
      	
              21.5.2

            	
              If,
      pursuant to Article 9.1(c), the Contractor notifies the
      Management Committee that the Discovery is of potential commercial
      interest, the Contractor shall submit to the Management Committee, within
      one (1) Calendar Year from the date of notification of the above said
      Discovery, the proposed Appraisal Programme, designed to determine (i)
      whether such Discovery is a Commercial Discovery and (ii) the boundaries
      of the Development Area.

            


    

    


    
      	
              21.5.3

            	
              The
      proposed Appraisal Programme referred to in Article 21.5.2 shall be
      reviewed by the Management Committee within sixty (60) days of its
      submission by the Contractor. The Management Committee may request any
      additional information as it reasonably requires within twenty one (21)
      days of the submission by Contractor of the said Appraisal Programme.
      Contractor shall furnish such information within twenty-one (21) days of
      the receipt of request from Management Committee for such information.
      Following review of the Appraisal Programme and related budget and any
      revisions agreed by the Contractor, the Contractor shall proceed to
      implement the said Appraisal Programme. During this appraisal period,
      Contractor shall endeavour to complete gas sales agreements whether with
      the Government or other buyers.

            


    

    


    
      	
              21.5.4
      If on the basis of the results of the Appraisal Programme, the Contractor
      is of the opinion that NANG has been discovered in commercial
      quantities:

            


    

     

    
      	
              (a)

            	
              It
      shall submit to the Management Committee, as soon as practicable but not
      later than sixty (60) months from the date of notification of the
      aforementioned Discovery, the notification for declaration of the
      Discovery as a Commercial Discovery and approval of the proposed
      Development Area. Such Development Area may either be a new Development
      Area or a modification of an existing Development Area so as to encompass
      the proposed Commercial Discovery within its boundaries based on the
      report submitted.

            


    

    Such
notification shall take into account the Government's policies on gas
utilisation and propose alternative options (if any) for use or consumption of
the NANG and be supported by, inter alia technical and economic
data, evaluations, interpretations and analyses of such data, and feasibility
studies relating to the Discovery prepared by or on behalf of the Contractor and
other relevant information.

    If no
notification of Commercial Discovery is submitted to the Management Committee by
the Contractor within sixty (60) months from the date of notification of the
said Discovery, the Contractor shall relinquish its rights to develop such
Discovery and the area relating to such Discovery shall be excluded from the
Contract Area.

    


    
      	
              (b)

            	
              Where
      the Contractor has submitted notification for the declaration of a
      Discovery as a Commercial Discovery, the Management Committee shall review
      the Contractor's proposal for the commercial utilisation of the NANG in
      the domestic market or elsewhere and in the context of Government's policy
      on gas utilisation and the chain of activities required to bring the NANG
      from

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    the
Delivery Point to potential end consumers in the domestic market or
elsewhere.

    


    
      	
              (c)

            	
              The
      Contractor shall within twelve (12) months of the declaration of the
      Discovery as a Commercial Discovery, submit a Development Plan to the
      Management Committee for its approval. Such Development Plan shall be
      supported by all relevant information including, inter alia, the
      information required in Article
9.7.

            


    

    


    
      	
              (d)

            	
              If
      the Management Committee is unable to agree on the Development Plan within
      one hundred eighty (180) days of submission, the Contractor shall be
      entitled to submit such Development Plan directly to the Government for
      approval. Government shall respond to the said submission within sixty
      (60) days of its receipt. If the Government disapproves the Contractor's
      proposed plan or plans, the Government shall state in writing the reasons
      for such disapproval and the Contractor shall have the right to resubmit
      the said proposal.

            


    

     

    
      	
              (e)

            	
              When
      the Management Committee or the Government approves the Contractor's
      comprehensive plan or plans for development of a Commercial Discovery for
      the utilisation of NANG in the domestic market or elsewhere, the said
      Discovery shall be promptly developed by the Contractor in accordance with
      the approved plan which shall be the Development
  Plan.

            


    

    


    
      	
              21.5.5

            	
              In
      the event the Contractor does not commence development of such Discovery
      within ten (10) years from the date of notification of the Discovery, the
      Contractor shall relinquish its rights to develop such Discovery and the
      area relating to such Discovery shall be excluded from the Contract
      Area.

            


    

    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    ARTICLE
– 22

    EMPLOYMENT, TRAINING AND
TRANSFER OF TECHNOLOGY

    


    


    
      	
              22.1

            	
              Without
      prejudice to the right of the Contractor, to select and employ such number
      of personnel as, in the opinion of the Contractor, are required for
      carrying out Petroleum Operations in a safe, cost effective and efficient
      manner, the Contractor shall, to the maximum extent possible, employ, and
      require the Operator and Sub-contractors to employ, citizens of India
      having appropriate qualifications and experience, taking into account
      experience required in the level and nature of the Petroleum
      Operations.

            


    

    


    
      	
              22.2

            	
              Contractor
      shall offer a mutually agreed number of Indian nationals the opportunity
      for on-the-job training and practical experience in Petroleum Operations
      during the Exploration Period. Not later than six (6) months after
      approval of the Development Plan, the Contractor shall, in consultation
      with the Licensee, establish and implement training programmes for staff
      positions in each phase and level of Petroleum Operations including
      skilled, technical, executive and management positions, with a view to
      ensuring employment of nationals of India and gradual and progressive
      reduction of foreign personnel.

            


    

    


     

    
      	
              22.3

            	
              Pursuant
      to Article 22.2, Contractor shall associate and involve mutually agreed
      numbers of the Licensee's personnel in the technological aspects of the
      then ongoing Petroleum Operations without charge of a fee for such
      association or involvement. Such aspects shall
  include:

            


    

     

    (a)
seismic data acquisition, processing and interpretation;

     

    (b)
computerised formation evaluation using Well logs;

     

    (c)
computerised analysis of geological data for basin analysis;

     

    (d)
laboratory core analysis;

     

    (e)
Reservoir simulation and modeling:

     

    (f)
geochemistry. including analytical methods, source rock studies, hydrocarbon
generation, modeling;

     

    (g)
measurement-while-drilling techniques;

     

    (h)
stimulation of Wells;

     

    (i)
production engineering including optimization methods for surface  and
subsurface facilities;

     

    (j)
Reservoir engineering and management including gas and water
injection;

     

    (k)
enhanced oil recovery techniques;

     

    (l) gas
production technology;

     

    (m)
pipeline technology;

     

    (n) Well
design and drilling technology;


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    (o)
design of offshore facilities.

     

    


    
      	
              22.4

            	
              Neither
      Party shall be obliged to disclose by Virtue of this Article 22 any data,
      process or information, whether owned by itself and of its Affiliates or a
      third party of a proprietary
nature.

            


    

    


    
      	
              22.5

            	
              At
      the request of the Government or a Government company, the Foreign
      Companies shall separately endeavour to negotiate in good faith, technical
      assistance agreements with the Government or a Government company setting
      forth the terms by which each Foreign Company constituting the Contractor
      may render technical assistance and make available commercially proven
      technical information of a proprietary nature for use in India by the
      Government or a Government company. The issues to be addressed in
      negotiating such technical assistance agreements shall include, but not be
      limited to, licensing issues, royalty conditions, confidentiality
      restrictions, liabilities, costs and method of
  payment.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      – 23

            


    

    


    
      	
              LOCAL GOODS AND
      SERVICES

            


    

    


    
      	
              23.1

            	
              In
      the conduct of Petroleum Operations, the Contractor
  shall:

            


    

    


    
      	
              (a)

            	
              give
      preference to the purchase and use of goods manufactured, produced or
      supplied in India provided that such goods are available on terms equal to
      or better than imported goods with respect to timing of delivery, quality
      and quantity required, price and other
terms;

            


    

    
      	
              (b)

            	
              employ
      Indian Subcontractors having the required skills or expertise to the
      maximum extent possible, insofar as their services are available on
      comparable standards with those obtained elsewhere and at competitive
      prices and on competitive terms; provided that where no such
      Subcontractors are available, preference shall be given to non-Indian
      Subcontractors who utilise Indian goods to the maximum extent possible
      subject however to the proviso in paragraph (a)
  above;

            


    

    
      	
              (c)

            	
              co-operate
      with domestic companies in India to enable them to develop skills and
      technology to service the petroleum
industry;

            


    

    
      	
              (d)

            	
              ensure
      that provisions in terms of paragraphs (a) to (c) above are contained in
      contracts between the Operator and its
  Subcontractors.

            


    

    


    
      	
              23.2

            	
              The
      Contractor shall establish appropriate procedures, including tender
      procedures, for the acquisition of goods and services which shall ensure
      that suppliers and Subcontractors in India are given adequate opportunity
      to compete for the supply of goods and services. The tender procedures
      shall include, inter alia, the financial amounts or value of contracts
      which will be awarded on the basis of selective bidding or open
      competitive bidding, the procedures for such bidding, and the exceptions
      to bidding in cases of emergency, and shall be subject to the
      approval of the Management
Committee.

            


    

    


    
      	
              23.3

            	
              Within
      one hundred and twenty (120) days after the end of each Calendar Year, the
      Contractor shall provide the Government with a report outlining its
      achievements in utilising Indian resources during that Calendar
      Year.

            


    

    


    
      	
              23.4

            	
              In
      this Article "goods" means equipment, materials and
    supplies.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      – 24

            


    

    


    
      	
              INSURANCE AND
      INDEMNIFICATION

            


    

     

    
      	
              24.1

            	
              Insurance

            


    

    


    
      	
              24.1.1

            	
              The
      Contractor shall, during the term of this Contract, obtain and maintain
      insurance coverage for and in relation to Petroleum Operations for such
      amounts and against such risks as are customarily or prudently insured in
      the international petroleum industry in accordance with good petroleum
      industry practices, and shall furnish to the Government certificates
      evidencing that such coverage is in effect. Such insurance policies shall
      include the Government and the Licensee as additional insured and shall
      waive subrogation against Government and the Licensee. The said insurance
      shall, without prejudice to the generality of the foregoing
      cover:

            


    

    


    
      	
              (a)

            	
              Loss
      or damage to all installations, equipment and other assets for so long as
      they are used in or in connection with Petroleum Operation; provided,
      however, that if for any reason the Contractor fails to insure any such
      installation, 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, subject, however, to Article
  3.7;

            


    

    
      	
              (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, the Licensee 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.

            


    

    


    
      	
              24.1.2

            	
              The
      Contractor shall require its Subcontractors to obtain and maintain
      insurance against the risks referred to in Article 24.1.1 relating mutatis
      mutandis to Subcontractors.

            


    

    


    
      	
              24.2

            	
              Indemnity:

            


    

    The
Contractor shall indemnify, defend and hold the Government and the Licensee
harmless against all claims, losses and damages of any nature whatsoever,
including without limitations, claims for loss or damage to property or injury
or death to persons caused by or resulting from any Petroleum Operations
conducted by or on behalf of the Contractor.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 25

            


    

    


    
      	
              RECORDS,
      REPORTS,
      ACCOUNTS AND AUDIT

            


    

    


    
      	
              25.1

            	
              The
      Contractor shall prepare and maintain at an office in India accurate and
      current books, records, reports and accounts of its activities for and in
      connection with Petroleum Operations so as to present a fair, clear and
      accurate record of all its activities, expenditures and receipts. The
      Contractor shall also keep representative samples of cores and
      cuttings.

            


    

    


    
      	
              25.2

            	
              Based
      on generally accepted and recognised accounting principles and modern
      petroleum industry practices, record books, accounts and accounting
      procedures in respect of Petroleum Operations shall be maintained on
      behalf of the Contractor by one of the Parties comprising Contractor,
      specifically designated for this purpose, at its business office in India,
      in accordance with the Accounting
Procedure.

            


    

    


    
      	
              25.3

            	
              The
      annual audit of accounts shall be carried out on behalf of the Contractor
      by a qualified, independent firm of recognised chartered accountants
      registered in India and selected by the Contractor with the approval of
      the Management Committee.

            


    

    


    
      	
              25.4

            	
              Accounts
      together with the auditor's report thereon, shall be submitted to the
      Parties for approval not later than the thirtieth (30th)
      September following the Financial
Year.

            


    

    


    
      	
              25.5

            	
              Any
      Party comprising the Contractor may, by giving notice to that effect to
      the Operator not later than twenty four (24) months following the end of a
      Year, undertake a separate audit of the accounts and the cost of such
      audit shall be borne by the Party requiring such
  audit.

            


    

    


    
      	
              25.6

            	
              Unless
      a Party comprising the Contractor notifies the other Party or Parties, in
      writing, before thirty-first (31st)
      December following the Year in which the separate audit was conducted that
      it has an objection to the accounts for which the separate audit was
      conducted, such accounts shall be deemed to have been approved as on that
      date.

            


    

    


    
      	
              25.7

            	
              Any
      objection to the accounts raised by a Party comprising the Contractor
      shall, unless settled by agreement between the Parties, be submitted for
      determination by a sole expert in accordance with the provisions of
      Article 33. If the matter is not submitted to a sole expert within thirty
      six (36) months following the Year to which such objection relates, the
      objection shall lapse.

            


    

    


    
      	
              25.8

            	
              The
      Government shall have the right to audit the accounting records of the
      Contractor in respect of Petroleum Operations as provided in the
      Accounting Procedure.

            


    

    


    
      	
              25.9

            	
              The
      accounting and auditing provisions and procedures specified in this
      Contract are without prejudice to any other requirements imposed by any
      statute in India. including, without limitation, any specific of the
      statutes relating to taxation of
companies.

            


    

    


    
      	
              25.10

            	
              For
      the purpose of any audit referred to in Articles 25.5 and 25.8, the
      Operator or the Companies shall make available to the auditor all such
      books, records, accounts and other documents and information as may be
      reasonably required by the
auditor.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    ARTICLE
– 26

    


    INFORMATION, DATA,
CONFIDENTIALITY INSPECTION AND SECURITY

    


    
      	
              26.1

            	
              The
      Contractor shall, promptly after they become available, provide the
      Licensee one reproducible copy of all data obtained as a result of
      Petroleum Operations under the Contract including, but not limited to
      geological, geophysical, geochemical, petrophysical, engineering, Well
      logs, maps, parts of cores and production data as well as all
      interpretative and derivative data including reports, analysis,
      interpretations and evaluation prepared in respect of Petroleum Operations
      (hereinafter referred to as "Data"). Data shall be the property of the
      Licensee, provided, however, that the Companies shall have the right to
      make use of such data, free of cost, for the purpose of Petroleum
      Operations under this Contract as provided
  herein.

            


    

    


    
      	
              26.2

            	
              Contractor
      may, for use in Petroleum Operations, retain copies or samples of material
      or information constituting the Data and, with the approval of the
      Licensee, original material, except that where such material is capable of
      reproduction and copies have been supplied to the Licensee. Contractor
      may, subject to the right of inspection by the Licensee, export samples or
      other original Data for processing or laboratory examination or analysis,
      provided that representative samples equivalent in quality, size and
      quantity, or, where such material is capable of reproduction, copies of
      equivalent quality have first been delivered to the
    Licensee.

            


    

    


    
      	
              26.3

            	
              Contractor
      shall keep the Licensee currently advised of all developments taking place
      during the course of Petroleum Operations and shall furnish the Licensee
      with full and accurate information and progress reports relating to
      Petroleum Operations (on a daily, monthly, yearly or other periodic basis)
      as the Licensee or the Government may reasonably require, provided that
      this obligation shall not extend to proprietary technology. Without
      prejudice to the generality of the foregoing, the Contractor shall submit
      regular Statements and reports relating to Petroleum Operations as
      provided in Appendix C. Contractor shall meet with the Licensee and the
      Government at a mutually convenient location to present the results of all
      geological and geophysical work carried cut as well as the results of all
      engineering and drilling operations as soon as such Data becomes available
      to the Contractor.

            


    

    


     

    
      	
              26.4

            	
              All
      Data, information and reports obtained or prepared by, for, or on behalf
      of, the Contractor pursuant to this Contract shall be treated as
      confidential and, subject to the provisions herein below, the Parties
      shall not disclose the contents thereof to any third party without the
      consent in writing of the other
Parties.

            


    

     

    


     

    
      	
              26.5

            	
              The
      obligation specified in Article 26.4 shall not operate so as to prevent
      disclosure:

            


    

    
      	
              (a)

            	
              to
      Affiliates, contractors, or Subcontractors for the purpose of Petroleum
      Operations;

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              (b)

            	
              to
      employees. professional consultants. advisors. data processing centres and
      laboratories, where required for file performance of functions in
      connection with Petroleum Operations for any Party comprising the
      Contractor.

            


    

    
      	
              (c)

            	
              to
      banks or other financial institutions in connection with Petroleum
      Operations.

            


    

    
      	
              (d)

            	
              to
      bonafide intending assignees or transferees of an interest hereunder of a
      Party comprising the Contractor or in connection with a sale of stock
      of a Party comprising the
Contractor;

            


    

    
      	
              (e)

            	
              to
      the extent required by any applicable law or in connection with any legal
      proceedings or by the regulations of any stock exchange upon which the
      shares of a Party comprising Contractor are
  quoted;

            


    

    
      	
              (f)

            	
              to
      Government departments for or in connection with the preparation by or on
      behalf of the Government of statistical reports with respect to Petroleum
      Operations, or in connection with the administration of this Contract or
      any relevant law or for any purpose connected with Petroleum
      Operations;

            


    

    
      	
              (g)

            	
              by
      a Party with respect to any Data or information which, without disclosure
      by such Party, is generally known to the
public.

            


    

    


    
      	
              26.6

            	
              Any
      Data, information or reports disclosed by the Parties comprising the
      Contractor to any other person pursuant to Article 26.5 (a) to (d) shall
      be disclosed on the terms that such Data, information or reports shall be
      treated confidential by the recipient. Prompt notice of disclosures made
      by Companies pursuant to Article 26.5 shall be given to the
      Licensee.

            


    

    


    
      	
              26.7

            	
              Any
      Data, information and reports relating to the Contract Area which, in the
      opinion of the Government, might have significance in connection with
      offers by the Government of open acreage or all exploration programme to
      be conducted by a third party in another area, may be disclosed by the
      Government for such purposes on conditions to be agreed upon between the
      Government and the Contractor.

            


    

    


    
      	
              26.8

            	
              Where
      an area ceases to be part of the Contract Area, the Contractor shall
      continue to treat Data and information with respect to the said area as
      confidential and shall deliver to the Licensee copies or originals of all
      Data and information in its possession with respect to the said area. The
      Government shall, however, have the right to freely use the said Data and
      information thereafter.

            


    

    


    
      	
              26.9

            	
              The
      Government and the Licensee shall at reasonable times, through duly
      authorised representatives, be entitled to observe Petroleum Operations
      and to inspect all assets, books, records, reports, accounts, contracts,
      samples and Data kept by the Contractor or the Operator in respect of
      Petroleum Operations under the Contract, provided, however, that the
      Contractor shall not be required to disclose any proprietary technology.
      The duly authorised representatives shall be given reasonable assistance
      by the Contractor for such functions and the Contractor shall afford such
      representatives all facilities and privileges afforded to its own
      personnel in the Development Area including the use of office space and
      housing, free of charge, for a maximum period of one (1) man month per
      year. The said representatives
      shall be entitled to make a reasonable number of surveys, measurements,
      drawings, tests and copies of documents, take samples, make reasonable use
      of equipment and instruments of the Contractor provided that such
      functions shall not
      interfere with the Contractor's Petroleum
  Operations.

            


    

    


    
      	
              26.10

            	
              Contractor
      shall give reasonable advance notice to the Government, or to any other
      authority designated by the Government, for such purpose, of its programme
      of conducting surveys by aircraft or by ships, indicating inter alia, the
      name of the survey to be conducted, approximate extent of the area to
      be covered, the duration of the survey, the commencement date, and
      the name of the airport or port from which the survey aircraft or ship
      will commence its voyage.

            


    

    


    
      	
              26.11

            	
              The
      Government, or the authority designated by the Government for such
      purpose, shall have the right to inspect any aircraft or ship used by the
      Contractor or Subcontractor carrying out any survey or other operations in
      the Contract Area and shall have the right to put on board such aircraft
      or ship Government officers in such number as may reasonably be necessary
      to ensure compliance by the Contractor or the Subcontractor with the
      security requirements of India.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    
      	
              ARTICLE-
      27

            


    

     

    
      	
              TITLE TO PETROLEUM.
      DATA AND ASSETS

            


    

    


    
      	
              27.1

            	
              The
      Government is the sole owner of Petroleum underlying the Contract Area and
      shall remain the sole owner of Petroleum produced pursuant to the
      provisions of this Contract except as regards that part of Crude Oil or
      Gas the title whereof has passed to the Contractor or any other person in
      accordance with the provisions of this
Contract.

            


    

     

    
      	
              27.2

            	
              Title
      to Crude Oil and/or Gas to which Contractor is entitled under this
      Contract, and title to Crude Oil and/or Gas sold to Government or its
      nominee by the Companies shall pass to the relevant party or, as the case
      may be, to Government or its nominee at the Delivery Point. Contractor
      shall be responsible for all costs and risks prior to the Delivery Point
      and each party shall be responsible for all costs and risks associated
      with such party's share after the Delivery Point and where the Government
      or its nominee purchases all or some of the Companies' share of Crude Oil
      or Condensate in accordance with Article 18, Government or its nominee
      shall be responsible for all costs and risks in respect of the amount
      purchased, after the Delivery
Point.

            


    

     

    
      	
              27.3

            	
              Title
      to all Data specified in Article 26 shall be vested in the Licensee and
      the Contractor shall have the right to use thereof as therein
      provided.

            


    

     

    
      	
              27.4

            	
              Assets
      purchased/acquired by the Contractor for use in Petroleum Operations shall
      be owed by the Parties comprising Contractor in proportion to their
      Participating Interest provided that the Licensee shall have the right to
      require vesting of full title and ownership in it, free of charge and
      encumbrances, of any or all assets, whether fixed or movable, acquired and
      owned by the Contractor for use in Petroleum Operations inside or outside
      the Contract Area, such right to be exercisable at Licensee's option
      either on recovery of the costs of the assets or upon expiry or earlier
      termination of the Contract.

            


    

     

    
      	
              27.5

            	
              Contractor
      shall be responsible for proper maintenance, insurance and safety of all
      assets acquired for Petroleum Operations and for keeping them in good
      repair, order and working condition at all times, and the costs thereof
      shall be recoverable as Contract Costs in accordance with Appendix
      C.

            


    

     

    
      	
              27.6

            	
              So
      long as this Contract remains in force, the Contractor shall, free of any
      charge for the purpose of carrying out Petroleum Operations hereunder,
      have the exclusive use of assets which have become the property of the
      Licensee subject, however, to Article
27.5

            


    

     

    
      	
              27.7

            	
              Equipment
      and assets no longer required for Petroleum Operations shall first be
      offered to the Licensee at no cost and if not required by the Licensee,
      shall be sold or exchanged by the Contractor, provided however that prior
      consent of the Management Committee shall be obtained for each transaction
      in excess of US $5,000 or such other amounts as may be agreed from time to
      time, and such consent to be accorded within 90 days from the date of
      application submitted by the Contractor in this behalf, and provided
      further that the proceeds of sale shall be credited to Petroleum
      Operations as provided in Appendix
C.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              27

            	
              Assets
      required by the Licensee pursuant to the terms of this Article may be sold
      or otherwise disposed of subject to the terms of this
      Contract.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    
      	
              ARTICLE
      - 28

            


    

     

    
      	
              ASSIGNMENT OF
      INTEREST

            


    

    


    
      	
              28.1

            	
              Subject
      to the terms of this Article and other terms of this Contract, any Company
      may assign, or transfer, a part or all of its Participating Interest, with
      the prior written consent of the Government, which consent shall not be
      unreasonably withheld, provided that the Government is satisfied
      that:

            


    

    


    
      	
              (a)

            	
              the
      prospective assignee or transferee is comparable to the assignor in terms
      of financial standing and its capacity and ability to meet its obligations
      hereunder, and is willing to provide an unconditional undertaking to
      assume its Participating Interest share of obligations and to provide
      guarantees in respect thereof as provided in the
  Contract;

            


    

    


    
      	
              (b)

            	
              the
      prospective assignee or transferee is not a company incorporated in a
      country with which the Government, for policy reasons, has restricted
      trade or business;

            


    

    


    
      	
              (c)

            	
              the
      prospective assignor or transferor and assignee or transferee respectively
      are willing to comply with any reasonable conditions of the Government as
      may be necessary in the circumstances with a view to ensuring performance
      under the Contract; and

            


    

    


    
      	
              (d)

            	
              the
      assignment or transfer will not adversely affect the performance or
      obligations under this Contract or be contrary to the interests of
      India;

            


    

    


    
      	
              (e)

            	
              the
      requirements of Joint Operating Agreement have been
    satisfied.

            


    

    


    
      	
              28.2

            	
              An
      application by a Company for consent to assign or transfer shall
      accompanied by all relevant information concerning the proposed assignment
      or transfer including detailed information on the proposed, assignee or
      transferee and its share holding and corporate structure, as was earlier
      required from the Companies constituting the Contractor, the terms of the
      proposed assignment or transfer and the unconditional undertaking referred
      to in (a) above. The applicant shall also submit such information relating
      to the prospective assignee or transferee of the assignment or transfer as
      the Government may reasonably require to enable proper consideration and
      disposal of the application. The Government shall accord its approval or
      reject the said application for assignment, in writing, within one hundred
      eighty (18O) days of receipt of such application. In the event no written
      communication rejecting the assignment is received by the Contractor, the
      application shall be deemed to have been approved, after lapse of the said
      one hundred eighty (180) days, subject to however that the said assignment
      is meeting all other conditions laid down elsewhere in this
      agreement.

            


    

    


    
      	
              28.3

            	
              Upon
      assignment or transfer of its Participating Interest in this Contract. the
      assignor or transferor shall be released and discharged from its
      obligations hereunder only to the extent that such obligations are assumed
      by the assignee or transferee with the approval of the
      Government.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              28.4

            	
              Upon
      prior notice to the Companies, a government company may assign or transfer
      all or any part of its rights and interest under this Contract to any
      other government company, authorised by the Government, to explore for and
      exploit Petroleum in the Contract
Area.

            


    

    


    
      	
              28.5

            	
              An
      assignment or transfer shall not be made so as to reduce the Participating
      Interest of a constituent of the Contractor, at any time, to less than ten
      percent (10%) of the total Participating Interest of all the constituents
      of the Contractor, except where such reduction would occur by virtue of a
      transfer of a proportion of a Company’s interest to a Nominee of the
      Government pursuant to Article 13, or where the Government, on the
      recommendations of the Management Committee may, in special circumstances,
      so permit.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    
      	
              ARTICLE
      – 29

            


    

     

    


     

    
      	
              FINANCIAL AND
      PERFORMANCE GUARANTEES

            


    

     

     

    
      	
              29.1

            	
              Each
      of the Companies constituting the Contractor shall procure and deliver to
      the Government within 45 days from the Effective Date of this Contract, in
      respect of its Participating
Interest:

            


    

     

    
      	
              (a)

            	
              an
      irrevocable, unconditional bank guarantee from a reputable foreign or
      domestic bank or financial institution of good standing in India,
      acceptable to the Government, in favour of the Government and the
      Licensee, for the amount specified in Article 29.2, in a form and
      substance acceptable to the
Government;

            


    

     

    
      	
              (b)

            	
              a
      financial and performance guarantee, from a Company of good financial
      standing acceptable to the Government, in favour of the Government and the
      Licensee, in the form and substance set out in Appendix
  E;

            


    

     

    
      	
              (c)

            	
              a
      legal opinion from its legal advisors, in a form satisfactory to the
      Government, to the effect that the aforesaid guarantees have been duly
      signed and delivered on behalf of the guarantors with due authority and is
      legally valid and enforceable and binding upon
  them.

            


    

     

    
      	
              29.2

            	
              The
      amount of the guarantee referred to in Article 29.1(a) above shall be an
      amount equal to thirty five percent (35%) of the Company's Participating
      Interest share of the total estimated annual expenditure in respect of the
      Work Programme to be undertaken by the Contractor in the Contract Area
      during the relevant Year of a phase, subject to Article
    29.3.

            


    

     

    
      	
              29.3

            	
              The
      guarantee referred to in Article 29.2 shall provide
  that:

            


    

     

    
      	
              (a)

            	
              at
      the end of each Year it shall be automatically renewed for an amount equal
      to a Company's Participating Interest share of thirty five percent (35%)
      of the total estimated expenditure in respect of the Work Programme to be
      undertaken for the following Year of an exploration phase, unless the
      Contractor has terminated the Contract in accordance with the terms
      thereof. The guarantee shall be renewed at the end of each Year positively
      thirty (30) days before the expiry of the guarantee
  period.

            


    

     

    
      	
              (b)

            	
              that,
      at the end of the phase, the guarantee will be released in favour of the
      Company on presentation to the bank of a certificate from the Licensee
      that the obligation of the Contractor has been fulfilled and the guarantee
      may be released.

            


    

     

    
      	
              29.4

            	
              If
      the Contractor elects to proceed to the second and third phases
      respectively of the Exploration Period, a bank guarantee for the
      succeeding phase in terms of Article 29.1 (a), 29.2 and 29.3 shall be
      delivered to the Government with the notice of such election and if such
      guarantee is not so delivered, the provisions of Article 29.5 shall
      apply.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    
      	
              29.5

            	
              If
      any of the documents referred to in Article 29.1 is not delivered within
      the Period specified herein, this Contract may be cancelled by the
      Government upon ninety (90) days written notice of its intention to do
      so.

            


    

     

    
      	
              29.6

            	
              Notwithstanding
      any change in the composition or share holding of the parent company
      furnishing the guarantees herein, it shall, under no circumstances, be
      absolved of its obligations contained in the guarantees furnished pursuant
      to this Article.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      – 30

            


    

    


    
      	
              TERMINATION OF
      CONTRACT

            


    

    


    
      	
              30.1

            	
              Without
      prejudice to the provisions of Article 30.6 or any other provisions of
      this Contract, Companies shall have the right to terminate this
      Contract:

            


    

    


    
      	
              (a)

            	
              with
      respect to any part of the Contract Area other than a Development Area
      then producing, or that prior thereto had produced Petroleum, upon giving
      ninety (90) days written notice of its intention to do so;
    and

            


    

    
      	
              (b)

            	
              with
      respect to any Development area in which Petroleum is being produced, or
      that prior thereto had produced Petroleum, upon giving at least one
      hundred and eighty (180) days written notice of its intention to do
      so.

            


    

    


    
      	
              30.2

            	
              This
      Contract may, subject to the provisions herein below and Article 31, be
      terminated by the Government upon giving ninety (90) days written notice
      of its intention to do so in the following circumstances, namely, that a
      Company:

            


    

    


     

    
      	
              (a)

            	
              has
      knowingly submitted any false statement to the Government in any manner
      which was a material consideration in the execution of this Contract;
      or

            


    

     

    
      	
              (b)

            	
              has
      intentionally and knowingly extracted or authorised the extraction of any
      mineral not authorised to be extracted by the Contract or without the
      authority of the Government except such extractions as may be unavoidable
      as a result of operations conducted hereunder in accordance with generally
      accepted international petroleum industry practice which, when so
      extracted, were immediately notified to the Government and to the
      Licensee; or

            


    

     

    
      	
              (c)

            	
              is
      adjudged bankrupt by a competent court or enters into any agreement or
      scheme of composition with its creditors or takes advantage of any law for
      the benefit of debtors; or

            


    

     

    
      	
              (d)

            	
              has
      passed a resolution to apply to a competent court for liquidation of the
      Company unless the liquidation is for the purpose of amalgamation or
      reconstruction of which the Government has been given notice and the
      Government is satisfied that the Company's performance under this Contract
      would not be adversely affected thereby and has given its approval
      thereto; or

            


    

     

    
      	
              (e)

            	
              has
      assigned any interest in the Contract without the prior consent of the
      Government as provided in Article 28;
or

            


    

     

    
      	
              (f)

            	
              fails
      to make any monetary payment under this Contract within the specified
      period after the due date; or

            


    

     

    
      	
              (g)

            	
              fails
      to comply with or contravenes the provisions of this Contract in a
      material particular; or

            


    

     

    
      	
              (h)

            	
              fails
      to comply with any final determination or award made by a sole expert or
      arbitrators subject to Article 33:
or

            


    

     

    
      	
              (i)

            	
              on
      notice of cancellation as provided in Article
  29.5.

            


    

    


    PROVIDED
THAT where the Contractor comprises two or more Companies, the Government shall
not exercise its rights of termination pursuant to Article 30.2. on the
occurrence, in relation to one or more, but not all, of
the Companies, of an event entitling the Government to terminate the Contract,
if any other Company or Companies constituting the Contractor satisfies the
Government that it, or they, is/are willing and would be able to carry out the
obligations of the Contractor.

    


    
      	
              30.3

            	
              This
      Contract may also be terminated by the Government on giving the requisite
      notice specified above if the events specified in Article 30.2 (c) and (d)
      occur with respect to a company which has given a financial and
      performance guarantee pursuant to Article 29 subject however to Article
      30.4.

            


    

    


    
      	
              30.4

            	
              If
      the circumstance or circumstances that give rise to the right of
      termination under Article 30.2(f) or (g) or Article 30.3 are remedied by
      the Contractor within the ninety (90) days period or such extended period
      as may be granted by the Government, following the notice of the
      Government's intention to terminate the Contract as aforesaid, such
      termination shall not become
effective.

            


    

    


    
      	
              30.5

            	
              If
      the circumstance or circumstances that would otherwise result in
      termination are the subject matter of proceedings under Article 33, then
      termination shall not take place so long as such proceedings continue and
      thereafter may only take place when and if consistent with the arbitral
      award.

            


    

    


    
      	
              30.6

            	
              On
      termination of this Contract, for any reason whatsoever, the rights and
      obligations of the Contractor shall cease but such termination shall not
      affect any rights of any Party which may
      have accrued or any obligations incurred and not discharged by the
      Contractor prior to the date of
termination.

            


    

     

    
      	
              30.7

            	
              In
      the event of termination pursuant to Articles 30.1, 30.2 or
      30.3:

            


    

     

    


    
      	
              (a)

            	
              the
      Government may require the Contractor for a period not exceeding one
      hundred and eighty (180) days from the date of termination, to continue,
      for the account and at the cost of the Government, Crude Oil or Natural
      Gas production activities until the right to continue such production has
      been transferred to another entity;

            


    

     

    
      	
              (b)

            	
              in
      case of a Foreign Company, which is a constituent of the Contractor, it
      shall, subject to the provisions hereof, have the right to remove and
      export all its property, which has not vested in the Licensee provided
      that in the event that ownership of any property is in doubt, or disputed,
      such property shall not be exported unless and until the doubt or dispute
      has been settled in favour of the Foreign
  Company.

            


    

     

    


    
      	
              30.8

            	
              Within
      ninety (90) days after the termination of this Contract, pursuant to
      Article 30.1, 30.2, or 30.3 or such longer period as may be mutually
      agreed to between the Parties, the Contractor shall comply with Article
      12.9 and perform any reasonably necessary action as directed by the
      Government to avoid environmental damage or hazards to human life or the
      property of others.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      - 31

            


    

     

    
      	
              FORCE
      MAJEURE

            


    

     

    


     

    


     

    
      	
              31.1

            	
              Any
      non-performance or delay in performance by any Party hereto of any of its
      obligations under this Contract, or in fulfilling any condition of any
      licence or lease granted to such Party, or in meeting any requirement of
      the Act, the Rules or any licence or lease issued thereunder, shall,
      except for the payment of monies due under this Contract 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.

            


    

     

    
      	
              31.2

            	
              For
      the purpose of this Contract, the term Force Majeure means any cause or
      event, other than the unavailability of funds, whether similar to or
      different from those enumerated herein, lying beyond the reasonable
      control of, and unanticipated or unforeseeable 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 disturbances
      but shall not include the unavailability of
  funds.

            


    

     

    
      	
              3l
      .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.

            


    

     

    
      	
              31.4

            	
              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 Contract 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.

            


    

     

    
      	
              31.5

            	
              The
      Party asserting the claim of Force Majeure shall have the burden of
      proving circumstances that 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.

            


    

     

    
      	
              31.6

            	
              Where
      a Party is prevented from exercising any rights or performing any
      obligations under this Contract 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

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    phase of
the Exploration Period or this Contract. may be extended 6y such additional
period as may be agreed between the Parties.

     

    
      	
              31.7

            	
              Notwithstanding
      anything contained else where in this agreement. if an event of Force
      Majeure occurs and is likely to continue for a period in excess of thirty
      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.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              ARTICLE
      – 32

            


    

    


    
      	
              APPLICABLE LAW AND
      LANGUAGE OF THE CONTRACT

            


    

    


    
      	
              32.1

            	
              This
      Contract and any other subsequent agreements or contract based on or in
      pursuance of or for better fulfillment of this Contract shall be governed
      and interpreted in accordance with the laws of
  India.

            


    

    


    
      	
              32.2

            	
              Nothing
      in this Contract shall entitle the Contractor to exercise the rights,
      privileges and powers conferred upon it by this Contract in a manner which
      will contravene the laws of India.

            


    

    


    
      	
              32.3

            	
              The
      English language shall be the language of this Contract and shall be used
      in arbitral proceedings. All communications, hearing or visual materials
      or documents relating to this Contract shall be written or prepared in
      English.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              ARTICLE
      – 33

            


    

    


    
      	
              SOLE EXPERT,
      CONCILATION AND ARBITRATION

            


    

    


    
      	
              33.1

            	
              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 Contract or concerning the interpretation or
      performance thereof.

            


    

    


    
      	
              33.2

            	
              Except
      for matters which, by the terms of this Contract, the Parties have agreed
      to refer to a sole expert and any other matters which the Parties may
      agree to so refer, any dispute, difference or claim arising between the
      Parties hereunder which cannot be settled amicably may, subject to Article
      33.11, be submitted by any Party to arbitration pursuant to Article 33.3.
      Such sole expert shall be an independent and impartial person of
      international standing with relevant qualifications and experience
      appointed by agreement between the Parties. 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 shall be final and binding on
      the Parties and not subject to arbitration. If the Parties are unable to
      agree on appointment of a sole expert. the matter may be referred to
      arbitration.

            


    

    


    
      	
              33.3

            	
              Subject
      to the provisions herein, the Parties hereby agree that any unresolved
      dispute, difference or claim which cannot be settled amicably within a
      reasonable time may, except for those referred to a sole expert under
      Article 33.2 and subject to Article 33.11, be submitted to an arbitral
      tribunal for final decision as hereinafter
  provided.

            


    

    


    
      	
              33.4

            	
              The
      arbitral tribunal shall consist of three arbitrators. The Party or Parties
      instituting the arbitration shall appoint one arbitrator and the Party or
      Parties responding shall appoint another arbitrator and both Parties shall
      so advise the other Parties. The two arbitrators appointed by the Parties
      shall appoint the third arbitrator who shall act as presiding
      Arbitrator.

            


    

    


    
      	
              33.5

            	
              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 Chief Justice of India or any person or institution
      designated by him within thirty (30) days of the receipt of such request
      in case of an international commercial arbitration as defined in the
      Arbitration & Conciliation Act 1996 and where Parties to the
      arbitration comprise of only domestic companies/bodies, the appointment
      of. the arbitrator referred in this sub-article shall be done by the Chief
      Justice of the High Court having jurisdiction or any person or institution
      designated by him within thirty (30) days of receipt of such
      request.

            


    

    


    
      	
              33.6

            	
              If
      the two arbitrators appointed by the Parties fail to agree on the
      appointment of the third arbitrator within thirty (30) days of the
      appointment of the second arbitrator and if the Parties do not otherwise
      agree, the Chief Justice of India or any person or institution designated
      him in case of an international commercial arbitration or the Chief
      Justice of High Court or any person or institution in case of  an
       arbitration  involving  only  domestic
       companies  at  the  request  of
       either

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Parties
and in consultation with both, appoint the third arbitrator keeping in
view that he is not a national of a country of any of the Parties to the
arbitration proceedings where the Parties to the dispute belong to different
nationalities.

     

    
      	
              33.7

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

            


    

     

    
      	
              33.8

            	
              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.

            


    

     

    
      	
              33.9

            	
              The
      arbitration agreement contained in this Article 33 shall be governed by
      the Arbitration & Conciliation Act, 1996 ("Arbitration Act''). In the
      event of any conflict between the Arbitration Act and the provisions of
      this Article 33, the provision of the Arbitration Act shall
      prevail.

            


    

     

    
      	
              33.10
      The right to arbitrate disputes and claims under this Contract shall
      survive the termination of this
Contract.

            


    

     

    
      	
              33.11
      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 8 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 the
      dispute has not been resolved by conciliation within twenty one (21) days
      or such longer period as may be agreed between the Parties of the date of
      agreement by the Parties to submit such dispute to
      conciliation.

            


    

     

    
      	
              33.12

            	
              The
      venue of conciliation or arbitration proceedings pursuant to this Article,
      unless the Parties otherwise agree, shall be Delhi, India,
      and shall be conducted in the English language. Insofar as practicable,
      the Parties shall continue to implement the terms of this Contract
      notwithstanding the initiation of arbitral proceedings and any pending
      claim or dispute.

            


    

     

    
      	
              33.13

            	
              The
      fees and expenses of a sole expert or conciliator appointed by the Parties
      shall be borne equally by the Parties. Assessment of the costs of
      arbitration including incidental expenses and liability for the payment
      thereof shall be at the discretion of the
  arbitrators.

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE
      – 34

            


    

    


    
      	
              ENTIRE
      AGREEMENT, AMENDMENTS WAIVER AND
      MISCELLANEOUS

            


    

    


    
      	
              34.1

            	
              This
      Contract supersedes and replaces any previous agreement or understanding
      between the Parties, whether oral or written, on the subject matter
      hereof, prior to the Effective Date of this
  Contract.

            


    

    


    
      	
              34.2

            	
              This
      Contract shall not be amended, modified, varied or supplemented in any
      respect except by an instrument in writing, signed by all the Parties,
      which shall state the date upon which the amendment or modification shall
      become effective.

            


    

    


    
      	
              34.3

            	
              No
      waiver by any Party of any one or more obligations or defaults by any
      other Party in the performance of this Contract shall operate or be
      construed as a waiver of any other obligations or defaults whether of a
      like or of a different character.

            


    

    


    
      	
              34.4

            	
              The
      provisions of this Contract
      shall inure to the benefit of and be binding upon the Parties and their
      permitted assigns and successors in
interest.

            


    

    


    
      	
              34.5

            	
              In
      the event of any conflict between any provisions in the main body of this
      Contract and any provision in the Appendices, the provision in the main
      body shall prevail.

            


    

    


    
      	
              34.6

            	
              The
      headings of this Contract are for convenience of reference only and shall
      not be taken into account in interpreting the terms of this
      Contract.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              ARTICLE
      - 35

            


    

    
      	
              CERTIFICATES

            


    

    


    
      	
              35.1

            	
              Company
      shall furnish, prior to execution of this Contract, a duly authorized copy
      of a resolution properly and legally passed by the Board of Directors of
      each Company authorizing its Managing Director or any other person duly
      constituted with power of attorney to execute this Contract along with a
      certificate duly signed by the Secretary or an Assistant Secretary of the
      Company under its seal in this regard and to the effect that the Company
      has the power and authority to enter into this Contract and to perform its
      obligations thereunder and has taken all necessary action to authorize the
      execution, delivery and performance of the
  Contract.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    


    
      	
              ARTICLE
      – 36

            


    

    


    
      	
              NOTICES

            


    

    


    
      	
              36.1

            	
              All
      notices, statements, and other communications to be given, submitted or
      made hereunder by any Party to another shall be sufficiently given if
      given in writing in the English language and sent by registered post,
      postage paid, or by telegram, telex, facsimile, radio or cable, to the
      address or addresses of the other Party or Parties as
    follows:

            


    

    


    
      	
              (a)

            	
              To
      the President of
      India through the

            


    

     

    Secretary
to the Government of India

     

    Ministry
of Petroleum and Natural Gas, Shastri Bhavan, Dr. Rajendra P.rasad Marg. New
Delhi- 110001. INDIA

     

    Facsimile
No.: O11-3383585

     

    (b)           The
Company Secretary

     

    OIL & NATURAL GAS CORPORATION
LIMITED

     

    Jeevan
Bharti Tower II, 8th Floor,
Connaught Circus, New Delhi.

     

    Tel No.:
91-11-3310156

     

    Facsimile
No.: 91-11 -3316413

     

     

    (c)           GUJARAT STATE PETROLEUM CORPORATION
LTD.

     

    Block
No.15, 2nd
Floor, Udyog Bhavan, Sector-11

     

    Gandhinagar-382
011 INDIA.

     

    ATTN:
Managing Director

     

    Tel. No.:
(02712) - 36371/36372/36373/36374

     

    Facsimile
No.: (02712) - 36375

     

    (d)           HINDUSTAN OIL EXPLORATION COMPANY
LTD.

     

    Tandalja
Road (Off Old Padra Road), Baroda, 390 020, INDIA.

     

    ATTN:
Managing Director

     

    Tel. No.:
(265) 330766

     

    Facsimile
No.: (265) 333567

     

    
      	
              36.2

            	
              Notices
      when given in terms of Article 36.1 shall be effective when delivered if
      offered at the address of the other Parties as under Article 36.1 during
      business hours on working days and, if received outside business hours, on
      the next following working day.

            


    

     

    
      	
              36.3

            	
              Any
      Party may, by reasonable notice as provided hereunder to the other
      Parties, change its address and other particulars for notice
      purpose.

            


    

    


    


    


    


    


    


    
      	
              IN
      WITNESS WHEREOF, the representatives of the Parties to this Contract being
      duly authorised have hereunto set their hands and have executed these
      presents this 12th day of April
2000.

            


    

     

    
      	
              Signed
      for and on behalf of The
      President of India

            


    

    
      	
              By:

            


    

    
      	
              Name:

            


    

    
      	
              in
      presence of:

            


    

    


    
      	
              Name:

            


    

    


    


    
      	
              Signed
      for and on behalf of Oil
      and Natural Gas Corporation
Limited

            


    

    
      	
              By:

            


    

    
      	
              Name:

            


    

    
      	
              in
      presence of :

            


    

    
      	
              Name:

            


    

    


    
      	
              Signed
      for and on  behalf of Gujarat State Petroleum
      Corporation Ltd.

            


    

    
      	
              By:

            


    

    
      	
              Name:

            


    

    


    
      	
              in
      presence of :

            


    

    


    
      	
              Name:

            


    

    


    


    
      	
              Signed
      for and on behalf of
      Hindustan Oil Exploration Co.
Ltd.

            


    

    


    
      	
              By:      

            


    

     

    
      	
              Name:

            


    

     

    
      	
              in
      presence of :

            


    

     

    
      	
              Name:

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              APPENDIX
      A

            


    

    


    
      	
              DESCRIPTION
      OF CONTRACT AREA

            


    

    


    The area
comprising approximately 1618 Sq. Km. onshore India identified as Block CB-ON/2
described herein and shown under map attached as Appendix B. Latitude and
Longitude measurements commencing at point A, B, C, D, E, F, G, H, 1, J, K, L,
M, N and O are respectively as follows:

    


    


    POINTS                      LATITUDE                                LONGITUDE

    A                      22°
36'
52"                                72°
57' 45"

    B                      22°
46’
20”                                72°
43' 00"

    C                      22°
31’
26”                                72°
26' 50"

    D                      22°
25’
00”                                72°
36' 55"

    E                      22°
25’
00”                                72°
40' 50"

    F                      22°
18’
56”                                72°
40' 50"

    G                      22°
18’
56”                                72°
39' 50"

    H                      22°
17’
10”                                72°
39' 50"

    I                      22°
15’
40”                                72°
42' 30"

    J                      22°
14’
30”                                72°
44' 45"

    K                      22°
15’
40”                                72°
47' 00"

    L                      22°
20’
16                                72°
47' 00"

    M                      22°
20’
16                                72°
44' 45"

    N                      22°
22’
45”                                72°
44' 45"

    O                      22°
22’
45”                                72°
58' 10"

    


    
      	
              Excluding
      the area bounded by the following
co-ordinates:

            


    

    


    P                      22°
21’
18"                                72°
45’ 36"

    Q                      22°
19’
42"                                72°
45’ 36"

    R                      22°
19’
42"                                72°
48’ 12"

    S                      22°
21’
18"                                72°
48’ 12"

    


    


    


    
      	
              Excluding
      the area bounded by the following
co-ordinates:

            


    

    W                      22°
33’
36"                                72°
31’ 42"

    X                      22°
31’
48"                                72°
31’ 42"

    Y                      22°
31’
48"                                72°
31’ 48"

    Z                      22°
33’
36"                                72°
32’ 48"


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              APPENDIX
      B

            


    

     

    
      	
              MAP
      OF CONTRACT AREA CB-ON/2

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    [Missing Graphic Reference]

    
      	
              APPENDIX
      C

            


    

    


    


    


    
      	
              ACCOUNTING
      PROCEDURE

            


    

    


    


    


    


    


    
      	
              PRODUCTION
      SHARING CONTRACT

            


    

    


    


    
      	
              BETWEEN

            


    

    


    


    
      	
              THE GOVERNMENT OF
      INDIA

            


    

    


    


    


    


    
      	
              ONGC

            


    

    


    
      	
              AND

            


    

    


    
      	
              GSPC

            


    

    


    


    


    


    


    
      	
              HOEC

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    


    
      	
              APPENDIX
      C

            


    

     

    
      	
              TABLE OF
      CONTENTS

            


    

     

    
      	
              Sections

            	
              Contents

            


    

    


    
      	
              Section
      1:

            	
              General
      Provisions

            


    

    
      	
              l.
      l

            	
              Purpose

            


    

    
      	
              1.2

            	
              Definitions

            


    

    
      	
              1.3

            	
              Inconsistency

            


    

    
      	
              l.4

            	
              Documentation
      and Statements to be submitted by the
Contractor

            


    

    
      	
              1.5

            	
              Language
      and Units of Account

            


    

    
      	
              1.6

            	
              Currency
      Exchange Rates

            


    

    
      	
              1.7

            	
              Payments

            


    

    
      	
              1.8

            	
              Arms
      Length Transaction

            


    

    
      	
              1.9

            	
              Audit
      and Inspection Rights of the
Government

            


    

    
      	
              1.10

            	
              Revision
      of Accounting Procedure

            


    

    


    
      	
              Section
      2:

            	
              Classification,
      Definition and Allocation of Costs and
  Expenditures

            


    

    
      	
              2.1

            	
              Segregation
      of Costs

            


    

    
      	
              2.2

            	
              Exploration
      Costs

            


    

    
      	
              2.3

            	
              Development
      Costs

            


    

    
      	
              2.4

            	
              Production
      Costs

            


    

    
      	
              2.5

            	
              Service
      Costs

            


    

    
      	
              2.6

            	
              General
      and Administrative Costs

            


    

    


    
      	
              Section
      3:

            	
              Costs,
      Expenses, Expenditures and incidental Income of the
    Contractor

            


    

    
      	
              3.1

            	
              Costs
      Recoverable and Allowable Without Further Approval of
      Government

            


    

    
      	
              3.1.1

            	
              Surface
      Rights

            


    

    
      	
              3.1.2

            	
              Labour
      and Associated Costs

            


    

    
      	
              3.1.3

            	
              Transportation

            


    

    
      	
              3.1.4

            	
              Charges
      for Services:

            


    

    
      	
              (i)
      Third party Contracts

            


    

    
      	
              (ii)
      Affiliated Company Contracts

            


    

    
      	
              3.1.5

            	
              Communications

            


    

    
      	
              3.1.6

            	
              Office,
      Bases and Miscellaneous Facilities

            


    

    
      	
              3.1.7

            	
              Environmental
      Studies

            


    

    
      	
              3.1.8

            	
              Materials:

            


    

    (i)
General

    (ii)
Warranty

    (iii)
Value of Materials

    
      	
              3.1.9

            	
              Duties,
      Fees and Other Charges

            


    

    
      	
              3.1.10

            	
              Insurance
      and Losses

            


    

    
      	
              3.1.11

            	
              Legal
      Expenses

            


    

    
      	
              3.1.12

            	
              Training
      Costs

            


    

    
      	
              3.1.13

            	
              General
      and Administrative Costs

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              3.2

            	
              Costs
      Not Recoverable and Not Allowable Under the
  Contract

            


    

    
      	
              3.3

            	
              Other
      Costs Recoverable and Allowable Only with Management Committee
      Approval

            


    

    
      	
              3.4

            	
              Incidental
      Income

            


    

    
      	
              3.5

            	
              Non-duplication
      of charge and credits

            


    

    


    
      	
              Section
      4:

            	
              Records
      and Inventories of Assets

            


    

    
      	
              4.1

            	
              Records

            


    

    
      	
              4.2

            	
              Inventories

            


    

    


    
      	
              Section
      5:

            	
              Production
      Statement

            


    

    


    
      	
              Section
      6:

            	
              Value
      of Production and Pricing Statement

            


    

    


    
      	
              Section.7:

            	
              Statement
      of Costs, Expenditures and Receipts

            


    

    


    
      	
              Section
      8:

            	
              Cost
      Recovery Statement

            


    

    


    
      	
              Section
      9:

            	
              Production
      Sharing Statement

            


    

    


    
      	
              Section
      10:

            	
              End
      of Year Statement

            


    

    


    
      	
              Section :

            	
              Budget
      Statement

            


    

    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ACCOUNTING
      PROCEDURE

            


    

    


    
      	
              SECTION
      1

            


    

    


    
      	
              GENERAL
      PROVISIONS

            


    

    


    
      	
              1.1

            	
              Purpose

            


    

     

    Generally,
the purpose of this Accounting Procedure is to set out principles and procedures
of accounting which will enable the Government of India to monitor effectively
the Contractor's costs, expenditures, production and income so that the
Government's entitlement to Profit Petroleum can be accurately determined
pursuant to the terms of the Contract. More specifically, the purpose of the
Accounting Procedure is to:

    


    


    -
classify costs and expenditures and to define which costs and expenditures shall
be allowable for cost, production sharing and participation
purposes;

     

    


     

    
      	
               
      

            	
              -
      specify the manner in which the Contractor's shall be prepared and
      approved; and

            


    

    


    


    


    - address
numerous other accounting related matters.

    


    This
Accounting Procedure is intended to apply to the provision of the Contract and
is without prejudice to computation of income tax under applicable revisions of
the Income Tax Act, 1961, as amended.

    


    


    


    
      	
              1.2

            	
              Definitions

            


    

     

    For
purposes of this Accounting Procedure, the terms herein which are defined in the
Contract shall the same meaning when used in this Accounting
Procedure.

    


    


    
      	
              1.3

            	
              Inconsistency

            


    

    


    
      	
               
      

            	
              In
      the event of any inconsistency or conflict between provisions of this
      Accounting Procedure and the provisions of the Contract, the other
      provisions of the Contract shall
prevail.

            


    

    


    


    
      	
              1.4

            	
              Documentation
      and Statements to be submitted by the
Contractor

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              1.4.1

            	
              Within
      sixty (60) days of the Effective Date of the Contract, the Contractor
      shall submit to and discuss with the Government a proposed outline of
      charts of accounts, operating records and reports, which outline shall
      reflect each of the categories and sub­categories of costs and income
      specified in Sections 2 and 3 and shall be in accordance with generally
      accepted standards and recognized accounting systems and consistent with
      normal petroleum industry practice and procedures for joint venture
      operations. Within ninety (90) days of receiving the above submission, the
      Government shall either provide written notification of its approval of
      the proposal or request, in writing, revisions to the
      proposal.

            


    

     

    Within
one hundred eighty (180) days from the Effective Date of the Contract, the
Contractor and the Government shall agree on the outline of charts of accounts,
records and reports which shall also describe the basis of the accounting system
and procedures to be developed and used under this Contract. Following such
agreement, the Contractor shall expeditiously prepare and provide the Government
with formal copies of the comprehensive charts of accounts, records and reports
and allow the Government to examine the manuals and to review procedures which
are, and shall be, observed under the Contract.

     

    
      	
              1.4.2

            	
              Notwithstanding
      the generality of the foregoing, the Contractor shall make regular
      Statements relating to the Petroleum Operations, as
    follows:

            


    

     

     

    (i)
Production Statement (see Section 5 of this Accounting Procedure).

     

    (ii)
Value of Production and Pricing Statement (see Section 6 of this Accounting
Procedure).

     

    (iii)
Statement of Costs, Expenditures and Receipts (see Section 7 of this Accounting
Procedure).

     

    (iv) Cost
Recovery Statement (see Section 8 of this Accounting Procedure).

     

    (v)
Production Sharing (see Section 9 of this Accounting Procedure).

     

    
      	
               
      

            	
              (vi)
      End of Financial Year Statement (see Section 10 of this Accounting
      Procedure).

            


    

     

    (vii)
Budget Statement (see Section 11 of this Accounting Procedure).

     

    
      	
              1.4.3

            	
              All
      reports and Statements shall be prepared in accordance with the Contract
      and the laws of India and, where there are no relevant provisions in
      either of these, in accordance with generally accepted practices in the
      international petroleum industry.

            


    

    


    
      	
              1.4.4

            	
              Each
      of the entities constituting the Contractor shall be responsible for
      maintaining its own accounting records in order to comply with all legal
      requirements and to support all returns or any other accounting reports
      required by any Government authority in relation to the Petroleum
      Operations. However, for the  purposes of  giving effect, 
      to this  Accounting  Procedure, Operator
     shall

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     be
responsible for maintaining, at its business office in India, on behalf of the
Contractor, all the accounts of the Petroleum Operations in accordance with the
provisions of the Accounting Procedure and the Contract.

    


    
      	
              1.5

            	
              Language
      and Units of Account

            


    

     

    All
accounts, records, books, reports and Statements shall be maintained and
prepared in the English language. The accounts shall be maintained in United
States Dollars, which shall be the controlling currency of account for cost
recovery, production sharing and participation purposes. The accounts shall also
be maintained in Indian Rupees. Metric units and Barrels shall be employed for
measurements required under the Contract. Where necessary for clarification, the
Contractor may also maintain accounts and records in other languages, currencies
and units.

    


    
      	
              1.6

            	
              Currency Exchange
      Rates

            


    

    


    
      	
              1.6.1

            	
              For
      converting transactions between United States Dollars and Indian Rupees or
      any other currency, the monthly average of the daily mean of the buying
      and selling rates of exchange as quoted by the Reserve 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, shall be used. However, in the case of any single non-US Dollar
      transaction in-excess of the equivalent of fifty thousand (50.000) US
      Dollars, the conversion into US Dollars shall be performed at the average
      of the selling and buying rates for the day on which the transaction
      occurred. If there were no such quotations on the date of transaction,
      then the average rate on the last banking date prior to such date shall be
      applicable.

            


    

    


    
      	
              1.6.2

            	
              Any
      realized or unrealized gains or losses from the exchange of currency in
      respect of Petroleum Operations shall be credited or charged to the
      accounts. A record of the exchange rates used in convening Indian Rupees
      or any other currencies into United States Dollars as specified in Section
      1.6.1 shall be maintained by the Contractor and shall be identified in the
      relevant Statements required to be submitted by the Contractor in
      accordance with Section 1.4.2.

            


    

    


    
      	
              1.7

            	
              Payments

            


    

     

    


     

    
      	
              1.7.1

            	
              Subject
      to Articles 13.6 and 18.5 of the Contract and the foreign exchange laws
      and regulations prevailing from time to time, all payments between the
      Parties shall, unless otherwise agreed, be in United States Dollars and
      shall be made through a bank designated by each receiving
      Party.

            


    

     

    
      	
              1.7.2

            	
              Unless
      otherwise specified, all sums due under the Contract shall be paid within
      thirty (30) days from the date of receipt of the
  invoice.

            


    

     

    
      	
              1.7.3

            	
              All
      sums due by one Party to the other under the Contract shall be made on or
      before the due date. If these sums are not received by the due date, the
      unpaid

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     amount
shall bear interest from the due date until payment is received at the
applicable LIBOR plus two (2) percentage points.

     

     

    
      	
              1.8

            	
              Arms
      Length Transactions

            


    

     

    Unless
otherwise specifically provided for in the Contract, all transactions giving
rise to the revenues, costs or expenditures which will be credited or charged to
the accounts prepared, maintained or submitted hereunder shall be conducted at
arms length or on such a basis as will assure that all such revenues will not be
lower and all such costs or expenditures will not be higher than would result
from a transaction conducted at arms length on a competitive basis with third
parties.

     

     

    


     

     

    1.9           Audit
and Inspection Rights of the Government

     

     

    
      	
              1.9.1

            	
              Without
      prejudice to statutory rights, the Government, upon at least fifteen (15)
      days advance written notice to the Contractor, shall have the right to
      inspect and audit during normal business hours, all records and documents
      supporting costs, expenditures, expenses, receipts and income, such as
      Contractor’s accounts, books, records, invoices, cash vouchers, debit
      notes, price lists or similar documentation with respect to the Petroleum
      Operations conducted hereunder in each Financial Year, within two (2)
      years (or such longer period as may be required in exceptional
      circumstances) from the end of such Financial
  Year.

            


    

     

    


    
      	
              1.9.2

            	
              The
      Government may, undertake the conduct of the audit either through its own
      representatives or through a qualified firm of recognized chartered
      accountants,  registered in India, appointed for the purpose by
      the Government.

            


    

     

     

    
      	
              1.9.3

            	
              In
      conducting the audit, the Government or its auditors shall be entitled to
      examine and verify, at reasonable times, all charges and credits relating
      to Contractor's activities under the Contract and all books of account,
      accounting, entries, materials records and inventories, vouchers,
      payrolls, invoices and any other documents, correspondences and records
      considered necessary by the Government to audit and verify the charges and
      credits. The auditors shall also have the right, in connection with such
      audit, to visit and inspect, at reasonable times, all sites, plants,
      facilities, warehouses and offices of the Contractor directly or
      indirectly serving the petroleum operations and to physically examine
      other property, facilities and stocks used in Petroleum Operations,
      wherever located and to question personnel associated with those
      operations. Where the Government requires verifications of charges made by
      an Affiliate, the Government shall have the right to obtain an audit
      certificate from an internationally recognized firm of public accountants
      acceptable to both the Government and the Contractor. which may be the
      Contractor's statutory auditor.

            


    

     

     

    
      	
              1.9.4

            	
              Any
      audit exceptions shall be made by the Government in writing and notified
      to the Contractor within one hundred and twenty (120) days following
      completion of the audit in
question.

            


    

     

     

    
      	
              1.9.5

            	
              The
      Contractor shall answer any notice of exception under Section 1.9.4 within
      one hundred and twenty (l20) days of the receipt of such notice. Where the
      Contractor has, after the said one hundred and twenty (120) days, failed
      to answer a notice of exception, the exception shall
    prevail.

            


    

     

    
      	
              1.9.6

            	
              All
      agreed adjustments resulting from an audit and all adjustments required by
      prevailing exceptions shall be promptly made in the Contractor's accounts
      and any consequential adjustments to the Government's or the Nominee's
      entitlement to Petroleum shall be made as promptly as
      practicable.

            


    

     

    
      	
              1.9.7

            	
              If
      the Contractor and the Government are unable to reach final agreement on
      proposed audit adjustments, either Party may refer any dispute thereon to
      a sole expert as provided for in Article 33.2. So long as any issues are
      outstanding with respect to an audit, the Contractor shall maintain the
      relevant documents and permit inspection thereof until the issue is
      resolved.

            


    

     

    
      	
              1.10

            	
              Revision
      of the Accounting Procedure

            


    

     

    
      	
               
      

            	
              1.10.1
      By mutual agreement between the Government and the Contractor, 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.

            


    

     

    
      	
              1.10.2

            	
              Following any Discovery of
      Petroleum in the Contract Area, the Parties shall meet in order to
      establish specific principles and procedures for identifying all costs,
      expenditures, receipts and income on a Development Area by Development
      Area (and if appropriate, separately for Oil and Associated Natural Gas
      within a Development Area) basis, it being understood that costs,
      expenditures, receipts and income which do not uniquely arise in respect
      of any one Development Area shall be apportioned between Development Area
      in a reasonable, equitable and consistent
  manner.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    


    
      	
              SECTION
      2

            


    

     

    CLASSIFICATION,
DEFINITION AND ALLOCATION OF COSTS AND EXPEDITURES

     

    
      	
              2.1

            	
              Segregation
      of Costs

            


    

     

    Costs
shall be segregated in accordance with the purposes for which such expenditures
are made. All costs and expenditures allowable under Section 3 relating to
Petroleum operations shall be classified, defined and allocated as set out below
in this Section.

     

    
      	
              2.2  

            	
              Exploration
      Costs

            


    

     

    
      	
              Exploration
      Costs are all direct and allocated indirect expenditures incurred in the
      search for Petroleum in an area which is, or was at the time when such
      costs were incurred, part of the Contract Area, including expenditures
      incurred in respect of:

            


    

     

    


     

    
      	
              2.2.1

            	
              Aerial,
      geophysical, geochemical, palaeontological, geological, topographical and
      seismic surveys, analyses and studies and their
      interpretation.

            


    

     

    


     

    
      	
              2.2.2

            	
              Core
      hole drilling and water Well
drilling.

            


    

     

    


     

    
      	
              2.2.3

            	
              Labour,
      materials, supplies and services used in drilling and evaluating Wells
      with the object of finding Petroleum or in drilling Appraisal Wells
      provided that if such Wells are completed as producing Wells, the costs of
      completion thereof shall be classified as Development
    Costs.

            


    

     

    


     

    
      	
              2.2.4

            	
              Facilities
      used solely in support of the purposes described in Sections 2.2.1, 2.2.2
      and 2.2.3 above, including access roads, all separately
      identified.

            


    

     

    


     

    
      	
              2.2.5

            	
              Any
      Service Costs and General and Administrative Costs directly incurred on
      exploration activities and identifiable as such and a portion of the
      remaining Service Costs and General and Administrative Costs allocated to
      Exploration Operations determined by the proportionate share of total
      Contract Costs (excluding General and Administrative Costs and Service
      Costs) represented by all other Exploration
  Costs.

            


    

     

    


     

    
      	
              2.2.6

            	
              Geological
      and geophysical information purchased or acquired in connection with
      Exploration Operations.

            


    

     

    


     

    
      	
              2.2.7

            	
              Any
      other expenditures incurred in the search for Petroleum not covered under
      Sections 2.3 or 2.4.

            


    

     

    
      	
              2.3

            	
              Development
      Costs

            


    

     

    


     

    Development
Costs are all direct and allocated indirect expenditures incurred with respect
to the development of the Development Area including expenditures incurred on
account of:

     

    
      	
              2.3.1

            	
              Drilling
      Development Wells, whether these Wells are dry or producing, and drilling
      Wells for the injection of water or gas to enhance recovery of
      Petroleum.

            


    

     

    
      	
              2.3.2

            	
              Completing
      of Wells by way of installation of casing or equipment or otherwise or for
      the purpose of bringing a Well into use as a producing Well or as a Well
      for the injection of water or gas or other chemicals or solvents to
      enhance recovery of Petroleum and re-entry, completion or working over of
      existing Wells.

            


    

     

    
      	
              2.3.3

            	
              Purchase,
      installation and constriction of production, transport, delivery and
      storage facilities for Petroleum from a Development Area, such as
      pipelines, flow lines, production and treatment units, wellhead equipment,
      subsurface equipment, delivery and measurement facilities, enhanced
      recovery systems, onshore platforms, export terminals and piers, harbours
      and related facilities and access roads for production
      activities.

            


    

     

    


     

    
      	
              2.3.4

            	
              Any
      geological and geophysical activities in connection with approved
      Development Operations.

            


    

     

    


     

    
      	
              2.3.5

            	
              Engineering
      and design studies for facilities referred to in Section
    2.3.3

            


    

     

    


     

    
      	
              2.3.6

            	
              Any
      Service Costs and General and Administrative Costs directly incurred in
      Development Operations and identifiable as such and a portion of the
      remaining Service Costs and General and Administrative Costs allocated to
      development activities, determined by the proportionate share of total
      Contract Costs (excluding General and Administrative Costs and Service
      Costs) represented by all other Development
  Costs.

            


    

     

    


    
      	
              2.4

            	
              Production
      Costs

            


    

    


    Production
Costs are expenditures incurred on Production Operations in respect of the
Contract Area after the start of production from the Development Area (which are
other than Exploration and Development Costs). The balance of General and
Administrative Costs and Service Costs not allocated to Exploration Costs or
Development Costs shall be allocated to
Production Costs.

    


    
      	
              2.5

            	
              Service
      Costs

            


    

     

    Service
Costs are direct and indirect expenditures incurred in support of Petroleum
Operations in the Contract Area, including expenditures on warehouses, piers,
marine vessels, vehicles, motorized rolling equipment, aircraft, fire and
security stations, workshops, water and sewerage plants, power plants, housing,
community and recreational facilities and furniture and tools and equipment used
in these activities and other like expenditures. Service Costs in any Financial
Year shall include the costs incurred in such Financial Year to purchase and/or
construct the said facilities as well as the annual costs of maintaining and
operating the same, each to be identified separately. All Service Costs shall be
regularly allocated as specified in Sections 2.2.5, 2.3.5 and 2.4 to Exploration
Costs. Development Costs and Production Costs and shall be separately shown
under each of these categories. Where Service Costs are made in respect of
shared facilities, the basis of allocation of costs to Petroleum Operations
hereunder shall be specified.

    


    
      	
              2.6

            	
              General
      and Administrative Costs

            


    

     

    General
and Administrative Costs are expenditures incurred on general administration and
management primarily and principally related to Petroleum Operations in or in
connection with the Contract Area, and shall include:

     

    
      	
              2.6.1

            	
              main
      office, field office and general administrative expenditures in India or
      elsewhere including supervisory, accounting and employee relations
      services; and

            


    

     

    
      	
              2.6.2

            	
              an
      overhead charge, to be charged on monthly basis, for services rendered by
      the parent company outside India or an Affiliate of the Operator outside
      India to support and manage Petroleum Operations under the Contract, and
      for staff advice and assistance including financial, legal, accounting and
      employee relations services, but excluding any remuneration for services
      charged separately under this Accounting Procedure at the rate of one
      percent (1%) of total Contract Costs incurred and qualifying for recovery
      pursuant to section 3.

            


    

     

    
      	
              2.6.3

            	
              All
      General and Administrative Costs shall be regularly allocated as specified
      in Sections 2.2.5, 2.3.5 and 2.4 to Exploration Costs, Development Costs
      and Production Costs respectively, and shall be separately shown under
      each of these cost categories.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              SECTION
      3

            


    

    


    COSTS,
EXPENSES, EXPENDITURES AND INCIDENTAL INCOME OF THE CONTRACTOR

    


    


    
      	
              3.1

            	
              Costs
      Recoverable and Allowable Without Further Approval of the
      Government

            


    

     

    Costs
incurred by the Contractor an Petroleum Operations pursuant to the Contract as
classified under the headings referred to in Section 2 shall Ix,
allowable far the purposes of the Contract except to the extent provided in
Section 3.2 or elsewhere in this Accounting Procedure, and subject to audit as
provided for herein.

     

    
      	
              3.1.1

            	
              Surface
      Rights

            


    

     

    All
direct costs necessary far the acquisition. renewal or relinquishment of surface
rights acquired and maintained in force far the purposes of the Contract except
as provided in Section 3.1.9.

     

    
      	
              3.1.2

            	
              Labour
      and Associated Labour Costs

            


    

     

    (a)
Contractor's locally recruited employees based in India.

     

    Costs of
a1l Contractor's locally recruited employees who are directly engaged in the
conduct of Petroleum Operations under the Contract in India. Such costs shall
include the costs of employee benefits and Government benefits for employees and
levies imposed on the Contractor as an employer, transportation and
relocation costs within India of the employee and such members of the employee's family
(limited to spouse and dependent children) as required by law or customary
practice in India. If such employees are engaged in other activities in India,
in addition to Petroleum Operations, the cost of such employees shall be
apportioned on a time sheet basis according to sound and acceptable accounting
principles.

     

    (b)
Assigned Personnel

     

    
      	
              Costs
      of salaries and wages, including bonuses, of the Contractor's employees
      directly and necessarily engaged in the conduct of the Petroleum
      Operations under the Contract, whether temporarily or permanently
      assigned, irrespective of the location of
      such employees, it being understood that in the case of those personnel
      only a portion of whose time is wholly dedicated to Petroleum Operations
      under the Contract, only that pro rata portion of applicable salaries,
      wages, and other costs, as specified in Sections 3.1.2(c), (d), (e), (f)
      and (g), shall be charged and the basis of such pro rata allocation shall
      be specified.

            


    

     

    


     

    (c) The
Contractor's costs regarding holiday, vacation, sickness and disability benefits
and living and housing and other customary allowances applicable to the salaries
and wages chargeable under Section 3.1.2(b) above.

     

    (d)
Expenses or contributions made pursuant to assessments or obligations imposed
under the laws of India which are applicable to the Contractor's cost of
salaries and wages chargeable under Section 3.1.2(b) above.

     

    (e) The
Contractor's cost of established plans for employees' group life insurance.
hospitalization, pension, retirement and other benefit plans of a like nature
customarily granted to the Contractor's employees provided, however, that such
costs are in accordance with generally accepted standards in the international
petroleum industry, applicable to salaries and wages chargeable to Petroleum
Operations under Section 3 .1.2(b) above.

     

    (f)
Personal income taxes where and when they are paid by the Contractor to the
Government of India for the employee, in accordance with the Contractor's
standard personnel policies.

     

    (g)
Reasonable transportation and travel expenses of employees of the Contractor.
including those made for travel and relocation of the expatriate employees,
including their dependent family, personal effects, assigned to India whose
salaries and wages are chargeable to Petroleum Operations under Section 3.1.2(b)
above.

     

    Transportation
cost as used in this Section shall mean the cost of freight and passenger
service and any accountable incidental expenditures related to transfer travel
and authorized under Contractor's standard personnel policies. Contractor shall
ensure that all expenditures related to transportation costs are equitably
allocated to the activities which have benefited from the personnel
concerned.

     

    
      	
              3.1.3

            	
              Transportation
      Costs

            


    

     

    The
reasonable cost of transportation of equipment, materials and supplies within
India and from outside India to India necessary for the conduct of Petroleum
Operations under the Contract, including directly related costs such as
unloading charges, dock fees and inland and ocean freight charges.

     

    
      	
              3.1.4

            	
              Charges
      for Services

            


    

     

    (i)
Third Parties

    The
actual costs of contract services, services of professional consultants,
utilities and other services necessary for the conduct of Petroleum Operations
under the Contract performed by third parties other than an Affiliate of the
Contractor, provided that the transactions resulting in such costs are
undertaken pursuant to Section 1.8 of this Accounting Procedure.

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (ii)
Affiliates of Contractor

     

    a)
Professional and Administrative Services and Expenses

     

    Cost of
professional and administrative services provided by any Affiliate for the
direct benefit of Petroleum Operations, including, but not limited to, services
provided by the production, exploration, legal, financial, insurance, accounting
and computer services divisions other than those covered by Section 3.1.4
(ii)(b) which Contractor may use in lieu of having its own employees. Charges
shall be equal to the total actual cost of providing their services; shall not
include any element of profit and shall not be any higher than the most
favourable prices charged by the Affiliate to third parties for comparable
services under similar terms and conditions elsewhere and will be fair and
reasonable in the light of prevailing international petroleum industry and
experience.

     

    b)
Scientific or Technical Personnel

     

    Cost of
scientific or technical personnel services provided by any Affiliate of
Contractor for the direct benefit of Petroleum Operations, which cost shall be
charged on a cost of service basis. Charges therefore shall not exceed charges
for comparable services currently provided by outside technical service
organizations of comparable qualifications. Unless the work to be done by such
personnel is covered by an approved budget and Work Program. Contractor shall
not authorise work by such personnel without approval of the Management
Committee.

     

    c)
Equipment, facilities and property owned and furnished by the Contractor's
Affiliates, at rates commensurate with the cost of ownership and operation
provided, however, that such rates shall not exceed those currently prevailing
for the supply of like equipment, facilities and property on comparable terms in
the area where the Petroleum Operations are being conducted. The equipment and
facilities referred to herein shall exclude major investment items such as (but
not limited to) drilling rigs, producing platforms, oil and gas treating
facilities, oil and gas loading and systems, storage and terminal facilities and
other major facilities, rates for which shall be subject to separate agreement
with the Government.

     

    
      	
              3.1.5

            	
              Communications

            


    

     

    Cost of
acquiring. leasing, installing. operating, repairing, and maintaining
communication systems including radio and microwave facilities between the
Contract Area and the Contractors nearest base facility.

     

    
      	
              3.1.6

            	
              Office,
      Shore Bases and Miscellaneous
Facilities

            


    

     

    


    Net cost
to Contractor of establishing, maintaining and operating any office, sub-office, shore base
facility, warehouse, housing or other facility directly serving the Petroleum
Operations. If any such facility services contract areas other than the Contract
Area, or any business other than Petroleum Operations, the net costs thereof
shall be allocated on an equitable and consistent basis.

     

    
      	
              3.1.7

            	
              Environmental
      Studies and Protection

            


    

     

    Costs
incurred in conducting the environmental impact studies for the Contract Area
and in taking environmental protection measures pursuant to the terms of the
Contract including sinking funds established for abandonment.

     

    
      	
              3.1.8

            	
              Materials
      and equipment

            


    

     

    (i)
General

     

    So far as
is practicable and consistent with efficient and economical operation, only such
material shall be purchased or furnished by the Contractor for use in the
Petroleum Operations as may be required for use in the reasonably foreseeable
future and the accumulation of surplus stocks shall be avoided. Material and
equipment held in inventory shall only be charged to the accounts when such
material is removed from inventory and used in Petroleum Operations. Costs shall
be charged to the accounting records and books based on the "First in, First
Out" (FIFO) method.

     

    (ii)
Warranty

     

    In the
case of defective material or equipment, any adjustment received by the
Contractor from the suppliers or manufacturers or their agents in respect of any
warranty on material or equipment shall be credited to the accounts under the
Contract.

     

    (iii)
Value of materials charged to the accounts under the Contract

     

    
      	
              a)

            	
              Except
      as otherwise provided in subparagraph (b) below, materials purchased by
      the Contractor for use in the Petroleum Operations shall be valued to
      include invoice price, less trade and cash discounts, if any , purchase
      and procurement fees plus freight and forwarding charges between point of
      supply and point of shipment, freight to port of destination, insurance,
      taxes, custom duties, consular fees, other items chargeable against
      imported material and, where applicable, handling and transportation costs
      from point of importation to warehouse or operating site, and these costs
      shall not exceed those currently prevailing in normal arms length
      transactions in the open market.

            


    

     

    


     

    
      	
              b)

            	
              Material
      purchased from or sold to Affiliates or transferred to or from activities
      of the Contractor other than Petroleum Operations under the
      Contract:

            


    

    
      	
               
      

            	
              (aa)

            	
              new
      material (hereinafter referred to as condition A) shall be valued at the
      current international price which shall not exceed the price prevailing in
      normal arms length transactions in the open
  market;

            


    

     

    
      	
               
      

            	
              (bb)

            	
              used
      material which is in sound and serviceable condition and is suitable for
      re-use without reconditioning (hereinafter referred to as condition B)
      shall be priced at not more than seventy five per cent (75%) of the
      current price of the above mentioned new
  materials;

            


    

     

    
      	
               
      

            	
              (cc)

            	
              used
      material which cannot be classified as condition B, but which, after
      reconditioning, will be further serviceable for original function as good
      second-hand condition B material or is serviceable for original function,
      but substantially not suitable for reconditioning (hereinafter referred to
      as condition C) shall be priced at not more than fifty per cent (50%) of
      the current price of the new material referred to above as condition
      A.

            


    

     

    The cost
of reconditioning shall be charged to the reconditioned material, provided that
the condition C material value plus the cost of reconditioning does not exceed
the value of condition B material.

    


    Material
which cannot be classified as condition B or condition C shall be priced at a
value commensurate with its use.

    


    Material
involving erection expenditure shall be charged at the applicable condition
percentage (referred to above) of the current knocked down price of new material
referred to above as condition A.

    


    
      	
              When
      the use of material is temporary and its service to the Petroleum
      Operations does not justify the reduction in price in relation to
      materials referred to above as conditions B and C, such material shall be
      priced on a basis that will result in a net
      charge to the accounts under the Contract consistent with the value of the
      service rendered.

            


    

    


    
      	
              3.1.9

            	
              Duties,
      Fees and Other Charges

            


    

    


    Any
duties, levies, fees, charges and any other assessments levied by any
governmental or taxing authority in connection with the Contractor's activities
under the Contract and paid directly by the Contractor except:

     

    (i) those
charges and assessments for which ONGC is solely liable under the terms of the
Contract; and

     

    (ii)
corporate income tax payable by the constituents of the Contractor.

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              3.1.10

            	
              Insurance
      and Losses

            


    

     

    Insurance
premia and casts incurred for insurance pursuant to Article 24 of the Contract,
provided that such insurance is customary, affords prudent protection against
risk and is at a premium no higher than that charged on a competitive basis by
insurance companies which are not Affiliates. Except as provided in Sections
3.2(ix), Section 3.2(x) and Section 3.2(xi), actual costs and losses incurred
shall be allowable to the extent not made good by insurance. Such costs may
include, but are not limited to, repair and replacement of property resulting
from damages or losses incurred by fire, flood, storm, theft, accident or such
other cause.

     

    
      	
              3.1.11

            	
              Legal
      Expenses

            


    

     

    
      	
              All
      reasonable costs and expenses except Section 3.2 (xi) resulting from the
      handling, investigating, asserting, defending, or settling of any claim or
      legal action necessary or expedient for the procuring, perfecting,
      retention and protection of the Contract Area and in defending or
      prosecuting lawsuits involving the Contract Area or any third party claim
      arising out of Petroleum Operations under the Contract, or sums paid in
      respect of legal services
      necessary for the protection of the joint interest of Government and the
      Contractor, shall be allowable. Such expenditures shall include attorney's
      fees, court costs, costs of investigation and procurement of evidence and
      amounts paid in settlement or satisfaction of any such litigation and
      claims provided such costs are not covered elsewhere in the Accounting
      Procedure. Where legal services are rendered in such matters by salaried
      or regularly retained lawyers of the Contractor or an Affiliate, such
      compensation shall be included instead under Section 3.1.2 or 3.1.4 (ii)
      above as applicable.

            


    

     

    
      	
              3.1.12

            	
              Training
      Costs

            


    

     

    
      	
              All
      costs and expenses incurred by the Contractor in training as is required
      under Article 22 of the Contract..

            


    

     

    
      	
              3.1.13

            	
              General
      and Administrative Costs

            


    

     

    The costs
described in Section 2.6.1 and the charge described in Section 2.6.2 of this
Accounting Procedure.

     

    
      	
              3.2
      Costs not recoverable and not allowable under the
  Contract

            


    

     

    The
following costs and expenses shall not be recoverable or allowable (whether
directly as such or indirectly as part of any other charges or
expense) for cost recovery and production sharing purposes under the
Contract:

     

    
      	
              (i)

            	
              costs
      and charges incurred before the Effective Date including costs
      in respect of preparation, signature, or ratification of this
      Contract;

            


    

    


    
      	
              (ii)

            	
              expenditures
      in respect of any

            	
              financial
      transactions to negotiate, float or otherwise obtain or secure funds for
      Petroleum Operations including, but not limited to, interest, commission,
      brokerage and fees related to such transactions as well as exchange losses
      on loans or other financing, whether between Affiliates or
      otherwise:

            


    

     

    
      	
              (iii)

            	
              costs
      of marketing or transportation of Petroleum beyond the Delivery
      Point;

            


    

     

    
      	
              (iv)

            	
              expenditures
      incurred in obtaining, furnishing and maintaining the guarantees required
      under the Contract and any other amounts spent on indemnities with regard
      to non-fulfillment of contractual
obligations;

            


    

     

    
      	
              (v)

            	
              attorney's
      fees and other costs and charges in connection with arbitration
      proceedings between the Parties and sole expert determination pursuant to
      the Contract;

            


    

     

    
      	
              (vi)

            	
              fines,
      interest and penalties imposed by Courts of law of the Republic of
      India;

            


    

     

    
      	
              (vii)

            	
              donations
      and contributions;

            


    

     

    
      	
              (viii)

            	
              expenditures
      on creation of any partnership or joint venture
    arrangement;

            


    

     

    
      	
              (ix)

            	
              amounts
      paid with respect to non-fulfillment of contractual
      obligations;

            


    

     

    
      	
              (x)

            	
              costs
      incurred as a result of failure to insure where insurance is required
      pursuant to the Contract, or where Contractor has elected to self insure,
      or has under-insured;

            


    

     

    
      	
              (xi)

            	
              costs
      and expenditures incurred as a result of misconduct or negligence of the
      Contractor.

            


    

     

    
      	
              3.3

            	
              Other
      costs recoverable and allowable only with Management Committee
      approval

            


    

     

    Any other
costs and expenditures not included in Section 3.1 or 3.2 of this Accounting
Procedure but which have been incurred by the Contractor far the necessary and
proper conduct of Petroleum Operations shall be allowed to be recovered only
with the express prior approval in writing of the Management
Committee.

     

    
      	
              3.4

            	
              Incidental
      Income and Credits

            


    

     

    All
incidental income and proceeds received from Petroleum Operations under the
Contract, including but not limited to the items listed below, shall be credited
to  the  accounts  under  the  Contract and
 shall  be taken  in to  account  for
 cost


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    recovery,
production sharing and participation purposes in the manner described in
Articles 13, 14 and 15 of the Contract;

    


     

    (i) The
proceeds of any insurance or claim or judicial awards in connection with
Petroleum Operations under the Contract or any assets charged to the accounts
under the Contract where such operations or assets have been insured and the
premium charged to the accounts under the Contract;

     

    (ii)
Revenue received from third parties for the use of property or assets, the cost
of which has been charged to the accounts under the Contract;

     

    (iii) Any
adjustment received by the Contractor from the suppliers/manufacturers, or their
agents in connection with defective material, the cost of which was previously
charged by the Contractor to the accounts under the Contract;

     

    (iv)
Rentals, refunds or other credits received by the Contractor which apply to any
charge which has been made to the accounts under the Contract;

     

    (v)
Prices originally charged to the accounts under the Contract for materials
subsequently exported from the Republic of India without being used in Petroleum
Operations under the Contract;

     

    
      	
              (vi)
      Proceeds from the sale or exchange by the Contractor of assets, plant or
      facilities, the acquisition costs of which have been charged to the
      accounts under the Contract;

            


    

     

    (vii)
Legal costs charged to the accounts under Section 3.1.11 of this Accounting
Procedure and subsequently recovered by the Contractor.

     

    
      	
              3.5

            	
              Non-Duplication
      of Charges and Credits

            


    

     

    Notwithstanding
any provision to the contrary in this Accounting Procedure, it is the objective
of the Parties that there shall be no duplication of charges or credits to the
accounts under the Contract.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              SECTION
      4

            


    

    


    
      	
              RECORDS
      AND INVENTORIES OF ASSETS

            


    

    


     

    
      	
              4.1

            	
              Records

            


    

     

    
      	
              4.1.1

            	
              The
      Contractor shall keep and
      maintain detailed records of property and assets in use for or in
      connection with Petroleum Operations under the Contract in accordance with
      normal practices in exploration and production activities of the
      international petroleum industry. Such records shall include information
      on quantities, location and condition of such property and assets, and
      whether such property or assets are leased or
  owned.

            


    

     

    
      	
              4.1.2

            	
              The
      Contractor shall furnish particulars to the Government by notice in
      writing as provided in the Contract, at six (6) monthly.
      intervals of all assets acquired by the Contractor to be used far or in
      connection with Petroleum
      Operations during the period immediately preceding the delivery of such
      notice.

            


    

     

    
      	
              4.2

            	
              Inventories

            


    

     

    
      	
              4.2.1

            	
              The
      Contractor shall make an inventory
far:

            


    

     

    (a) not less than once every
twelve (l2) Months with respect to movable assets: and

     

    (b) not
less than once every three (3) Financial Years with respect to immovable assets,
take an inventory of the assets used for or in connection with Petroleum
Operations in terms of the Contract and address and deliver such inventory to
the Government together with a written statement of the principles upon which
valuation of the assets mentioned in such inventory has been based.

     

    
      	
              4.2.2

            	
              The
      Contractor shall give the Government at least thirty (30) days notice in
      writing in the manner provided for in the Contract of its intention to
      take the inventory referred to in Section 4.2.1 and the Government shall
      have the right to be represented when such inventory is taken, failing
      which it shall be deemed that the inventory taken by the Contractor is
      binding on all the Parties.

            


    

     

    
      	
              4.2.3

            	
              When
      an assignment of rights under the Contract takes place, a special
      inventory shall be taken by the Contractor at the request of-the assignee
      provided that the cost of such inventory is borne by the assignee and paid
      to the Contractor.

            


    

     

    
      	
              4.2.4

            	
              In
      order to give effect to Article 27 of the Contract, the Contractor shall
      provide the Government with a comprehensive list of all relevant assets
      when requested by the Government to do
so.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              SECTION
      5

            


    

    


    
      	
              PRODUCTION
      STATEMENT

            


    

    


    
      	
              5.l

            	
              From
      the date of first production of Petroleum from the Development Area, the
      Contractor shall submit a Monthly Production Statement to Government
      showing the following information separately for each producing
      Development Area and in aggregate for the Contract
  Area:

            


    

     

    
      	
              5.1.1

            	
              The
      quantity of Crude Oil and Condensate produced and
  saved.

            


    

     

    
      	
              5.1.2

            	
              The
      quality and characteristics of such Crude Oil and Condensate produced and
      saved.

            


    

     

    
      	
              5.1.3

            	
              The
      quantity of Associated Natural Gas and Non Associated Natural Gas produced
      and saved.

            


    

     

    
      	
              5.1.4

            	
              The
      quality, characteristics and composition of such Natural Gas produced and
      saved.

            


    

     

    
      	
              5.1.5

            	
              The
      quantities of Crude Oil, Condensate and Natural Gas used for the purposes
      of carrying on drilling and production operations and pumping to field
      storage, as well as quantities
reinjected.

            


    

     

    
      	
              5.1.6

            	
              The
      quantities of Crude Oil, Condensate and Natural Gas unavoidably
      lost.

            


    

     

    
      	
              5.1.7

            	
              The
      quantities of Natural Gas flared and
vented.

            


    

     

    
      	
              5.1.8

            	
              The
      quantity of Petroleum stocks held on the first day of the Month in
      question.

            


    

     

    
      	
              5.1.9

            	
              The
      quantity of Petroleum stocks held on the last day of the Month in
      question.

            


    

     

    
      	
              5.1.10

            	
              The
      quantities of Natural Gas reinjected into the Petroleum
      Reservoir.

            


    

     

    
      	
              5.1.11
      The number of days in the Month during which Petroleum was produced from
      each Development Area.

            


    

     

    
      	
              5.1.12

            	
              The
      Gas/Oil ratio for each Development
      Area for the relevant Month.

            


    

     

    
      	
              5.2

            	
              All
      quantities shown in this Statement shall be expressed in both volumetric
      terms (Barrels of oil and cubic metres of gas) and in weight (metric
      tonnes).

            


    

     

    
      	
              5.3

            	
              The
      Government may direct in writing that the Contractor includes other
      reasonable particulars relating to the production of Petroleum in its
      Monthly Production Statement, and the Contractor shall comply with such
      request.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              5.4

            	
              The
      Production Statement for each Month shall be submitted to Government no
      later than ten (10) days after the end of such
  Month.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              SECTION
      6

            


    

    


    
      	
              VALUE
      OF PRODUCTION AND PRICING STATEMENT

            


    

    


     

    
      	
              6.1

            	
              The
      Contractor shall for the purposes of Article 19 of the Contract prepare a
      Statement providing calculations of the value of Crude Oil and Condensate
      produced and saved during each Month. This Statement shall contain the
      following information:

            


    

     

     

    
      	
              6.1.1

            	
              The
      quantities, prices and receipts realized therefore by the Contractor as a
      result of sales of Crude Oil and Condensate to third parties (with any
      sales to Government being separately identified) made during the Month in
      question.

            


    

     

    
      	
              6.1.2

            	
              The
      quantities, prices and receipts realized therefore by the Contractor as a
      result of sales of Crude Oil and Condensate made during the Month in
      question, other than to third
parties.

            


    

     

    
      	
              6.1.3

            	
              The
      quantities of Crude Oil and Condensate appropriated by the Contractor to
      refining or other processing without otherwise being disposed of in the
      form of Crude Oil or Condensate.

            


    

     

    
      	
              6.1.4

            	
              The
      value of stocks of Crude Oil and Condensate on the first day of the Month
      in question.

            


    

     

    
      	
              6.1.5

            	
              The
      value of stocks of Crude Oil and Condensate on the last day of the Month
      in question.

            


    

     

    
      	
              6.1.6

            	
              The
      percentage volume of total sales of Crude Oil and Condensate made by the
      Contractor during the Month that are Arms Length Sales to third
      parties.

            


    

     

    
      	
              6.1.7

            	
              Information
      available to the Contractor insofar as required for the purposes of
      Article 19 of the Contract, concerning the prices of competitive crude
      oils produced by the main petroleum producing and exporting countries
      including contract prices, discounts and premium, and prices obtained on
      the spot markets.

            


    

     

    
      	
              6.2

            	
              The
      Contractor shall, for the purpose of Article 21 of the Contract, prepare a
      Statement providing calculations of the value of Associated Natural Gas
      and Non Associated Natural Gas produced and sold during each Month. This
      Statement shall contain all information of the type specified in Section
      6.1 for Crude Oil as is applicable to Natural Gas and such other relevant
      information as may be required by
Government.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              6.3

            	
              The
      Statements required pursuant to Sections 6.1 and 6.2 shall include a
      detailed breakdown of the calculation of the prices of Crude Oil,
      Condensate, Associated Natural Gas and Non Associated Natural
      Gas.

            


    

    


    
      	
              6.4

            	
              The
      Value of Production and Pricing Statement for each Month shall be
      submitted to Government not later than thirty (30) days after the end of
      such Month.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              SECTION
      7

            


    

    


    
      	
              STATEMENT
      OF COSTS, EXPENDITURES AND RECEIPTS

            


    

    


    
      	
              7.1

            	
              The
      Contractor shall prepare with respect to each Quarter a Statement of
      Costs, Expenditures and Receipts under the Contract. The Statement shall
      distinguish between Exploration Costs, Development Costs and Production
      Costs and shall separately identify all significant items of cost and
      expenditure as itemized in Section 3 of this Accounting Procedure within
      these categories. The Statement of Receipts shall distinguish between
      income from the sale of Petroleum and incidental income of the sort
      itemized in Section 3.4 of this Accounting Procedure. If the Government is
      not satisfied with the degree of desegregation within the categories, it
      shall be entitled to request a more detailed breakdown. The Statement
      shall show the following:

            


    

     

    
      	
              7.1.1

            	
              Actual
      costs expenditures and receipts for the Quarter in
    question.

            


    

     

    
      	
              7.1.2

            	
              Cumulative
      costs expenditures and receipts for the Financial Year in
      question.

            


    

     

    
      	
              7.1.3

            	
              Latest
      forecast of cumulative costs expenditures and receipts at the Financial
      Year end.

            


    

     

    
      	
              7.1.4

            	
              Variations
      between budget forecast and latest forecast and explanations of material
      variations.

            


    

     

    
      	
              7.2.

            	
              The
      Statement of Costs, Expenditures and Receipts of each Quarter shall be
      submitted to Government no later than twenty-one (21) days after the end
      of such Quarter.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              SECTION
      8

            


    

    
      	
              COST
      RECOVERY STATEMENT

            


    

    


    
      	
              8.1

            	
              The
      Contractor shall prepare with respect to each Calendar Quarter a Cost
      Recovery Statement for each Development Area containing the following
      information:

            


    

     

    
      	
              8.1.1

            	
              Unrecovered
      Contract Costs carried forward from the previous Quarter, if
      any.

            


    

     

    
      	
              8.1.2

            	
              Contract
      Costs for the Quarter in question.

            


    

     

    
      	
              8.1.3

            	
              Total
      Contract Costs for the Quarter in question (Section 8.1.1 plus Section
      8.1.2).

            


    

     

    
      	
              8.1.4

            	
              Quantity
      and value of Cost Petroleum taken and disposed off the Contractor for the
      Quarter in question.

            


    

     

    
      	
              8.1.5

            	
              Contract
      Costs recovered during the Quarter in
question.

            


    

     

    
      	
              8.1.6

            	
              Total
      cumulative amount of Contract Costs recovered up to the end of the Quarter
      in question.

            


    

     

    
      	
              8.1.7

            	
              Amount
      of unrecovered Contract Costs to be carried forward into the next
      Quarter.

            


    

     

    
      	
              8.2

            	
              Where
      necessary, the information to be provided under Section 8.1 shall be
      identified separately for each Development Area for Crude Oil, Condensate,
      Associated Natural Gas and Non Associated Natural
  Gas.

            


    

     

    
      	
              8.3

            	
              The
      cost recovery information required pursuant to subsection 8.1 above shall
      be presented in sufficient detail so as to enable Government to identity
      how the cost of assets are being recovered for the purposes of Article 27
      of the Contract.

            


    

     

    
      	
              8.4

            	
              The
      Cost Recovery Statement for each Quarter shall be submitted to Government
      not later than thirty (30) days after the end of such
    Quarter.

            


    

     

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              SECTION
      9

            


    

    
      	
              PRODUCTION
      SHARING STATEMENT

            


    

    


    
      	
              9.1

            	
              The
      Contractor shall prepare, with respect to each Quarter, a Production
      Sharing Statement for each Development Area containing the following
      information:

            


    

     

    
      	
              9.1.1

            	
              The
      calculation of the applicable Net Cash Income, as defined in Appendix D of
      this Contract, for the Quarter in
question.

            


    

     

    
      	
              9.1.2

            	
              The
      value of the Investment Multiple applicable in the Quarter in
      question.

            


    

     

    
      	
              9.1.3

            	
              Based
      on Section 9.1.2 and Article 15, the appropriate percentages of Profit
      Petroleum for the Government and Contractor in the Quarter in
      question.

            


    

     

    
      	
              9.1.4

            	
              The
      total amount of Profit Petroleum to be shared between the Government and
      Contractor in the Quarter in
question.

            


    

     

    
      	
              9.1.5

            	
              Based
      on Sections 9.1.3 and 9.1.4, the amount of Profit Petroleum due to the
      Government and Contractor as well as to each constituent of the Contractor
      in the Quarter in question.

            


    

     

    
      	
              9.1.6

            	
              The
      actual amounts of Petroleum taken by the Government and Contractor as well
      as by each constituent of the Contractor during the Quarter in question to
      satisfy their entitlements pursuant to Section
  9.1.5.

            


    

     

    
      	
              9.1.7

            	
              Adjustments
      to be made, if any, in future Quarters in the respective amounts of Profit
      Petroleum due to the Government and Contractor as well as to each
      constituent of the Contractor on account of any differences between the
      amounts specified in Sections 9.1.5 and 9.1.6, as well as any cumulative
      adjustments outstanding from previous
Quarters.

            


    

     

    
      	
              9.2

            	
              Where
      necessary the information to be provided under Section 9.1 shall be
      identified separately for Crude Oil and Condensate as distinct from
      Associated Natural Gas and Non Associated Natural
  Gas.

            


    

     

    
      	
              9.3

            	
              The
      Production Sharing Statement shall be submitted to Government not later
      than thirty (30) days after the end of such
  Quarter.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              SECTION
      10

            


    

    
      	
              END
      OF FINANCIAL YEAR STATEMENT

            


    

    


    
      	
              10.1

            	
              The
      Contractor shall prepare a definitive End of Financial Year Statement for
      each Development Area. The Statement shall contain aggregated information
      in the same format as required in the Production Statement, Value of
      Production and Pricing Statement, Statement of Costs, Expenditures and
      Receipts, Cost Recovery Statement and Production Sharing Statement, but
      shall be based on actual quantities of Petroleum produce,. income received
      and costs and expenditures
      incurred. Based upon this Statement, any adjustments that are necessary
      shall be made to the transactions concerned under the
      Contract.

            


    

    


    
      	
              10.2

            	
              The
      End of Financial Year Statement for each Financial Year shall be submitted
      to Government within ninety (90) days of the end of such Financial
      Year.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              SECTION
      11

            


    

    
      	
              BUDGET
      STATEMENT

            


    

    


    
      	
              11.1

            	
              The
      Contractor shall prepare a Budget Statement for each Financial Year for
      each Development Area. This Statement shall distinguish between budgeted
      Exploration Cost, Development Costs and Production Costs and shall show
      the following:

            


    

     

    
      	
              11.1.1

            	
              Forecast
      costs expenditures and receipts for the Financial year in
      question.

            


    

     

    
      	
              11.1.2

            	
              A
      schedule showing the most important individual items of total costs,
      expenditures and receipts for the said Financial
  Year.

            


    

     

    
      	
              11.2

            	
              The
      Budget Statement shall be submitted to Government with respect to each
      Financial Year not later than ninety (90) days before the start of the
      said Financial Year provided that in the case of the Financial Year in
      which the Effective Date falls, the Budget Statement shall be submitted
      within ninety (90) days of the Effective
Date.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              APPENDIX
      D

            


    

    


    
      	
              CALCULATION
      OF THE INVESTMENT MULTIPLE FOR PRODUCTION SHARING
  PURPOSES

            


    

    


    
      	
              1.

            	
              In
      accordance with the provisions of Article 15, the share of the Government
      and the Contractor, respectively, of Profit Petroleum from any Development
      Area in any Year shall be determined by Investment Multiple earned by the
      Companies from that Development Area in the end of the preceding Year.
      These measures of profitability shall be calculated on the basis of the
      appropriate net cash flows, as specified in this Appendix
    D.

            


    

     

    
      	
              Investment
      Multiple

            


    

     

    
      	
              2.

            	
              The
      "Net Cash Income" of the Companies from a Development Area in particular
      Year is the aggregate value of the
following:

            


    

     

    
      	
              i)

            	
              Cost
      Petroleum entitlement of the Companies as provided in Article
      14;

            


    

     

    
      	
               
      

            	
              plus

            


    

     

    
      	
              ii)

            	
              Profit
      Petroleum entitlement of the Companies as provided in Article
      15;

            


    

     

    
      	
               
      

            	
              plus

            


    

     

    
      	
              iii)

            	
              the
      Companies' share of all incidental income (of the type specified in
      Section 3.4 of the Accounting Procedure) arising from Petroleum Operations
      and apportioned to the Development
Area;

            


    

     

    
      	
               
      

            	
              less

            


    

     

    
      	
              iv)

            	
              the
      Companies' share of all Production Costs incurred on or in the Development
      Area;

            


    

     

    
      	
               
      

            	
              less

            


    

     

    
      	
              v)

            	
              the
      notional income-tax, determined in accordance with paragraph 8 of this
      Appendix, payable by the Companies on profits and gains from the
      Development Area.

            


    

     

    
      	
              3.

            	
              The
      "Investment" made by the Companies in a Development Area in particular
      Year is the aggregate value for the year
of:

            


    

     

    
      	
              i)

            	
              the
      Companies' share of Exploration Costs incurred in the
    Contract

            	
              Area
      and apportioned to the Development area in the same proportion that such
      costs recovered pursuant to Article
14.4;

            


    

     

    plus

     

    
      	
              ii)

            	
              The
      Companies' share of Development Costs incurred on or in the Development
      Area.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              4.

            	
              For
      the purposes of the calculation of the Investment Multiple, costs or expenditures
      which are not allowable as provided in the Accounting Procedure shall be
      excluded from Contract Costs and be
disregarded.

            


    

     

    
      	
              5.

            	
              The
      Investment Multiple ratio earned by the Companies as at the end of any
      Year from any Development Area shall be calculated by dividing the
      aggregate value of the addition of each of the annual Net Cash Incomes
      (accumulated, without interest, up to and including that Year starting
      from the Year in which Production Costs were first incurred or Production
      first arose on or in the Development Area) by the aggregate value of the
      addition of each of the annual Investments (accumulated without interest,
      up to and including that Year starting from the Year in which Exploration
      and Development Costs were first
incurred).

            


    

     

    
      	
              6.

            	
              Profit
      Petroleum from the Development Area in any Year shall be shared between
      the Government and the Contractor in accordance with the value of the
      Investment Multiple earned by the Companies as at the end of the previous
      Year pursuant to Articles
15.2-15.7.

            


    

     

    
      	
              General

            


    

     

    
      	
              7.

            	
              The
      applicable cash flows set out in paragraphs 2 and 3 of this Appendix shall
      be identified and calculated in respect of each Development
      Area.

            


    

     

    
      	
              8.

            	
              In
      determining the amount of notional income tax to be deducted in the
      applicable cash flows specified in paragraph 2 of this Appendix, a
      notional income tax liability shall be determined for each Company
      comprising the Contractor, as if the conduct of Petroleum Operations by
      the Company in that Development Area constituted the sole business of the
      Company and as if the provisions of the Income Tax Act, 1961, with respect
      to the computation of income tax on the basis of the income and deductions
      provided for in Article 16 of this Contract were accordingly applicable
      separately to that Development Area, disregarding any income, allowances,
      deductions, losses or set-off of losses from any other Development Area or
      business of the Company.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              APPENDIX
      E

            


    

    


    
      	
              FORM
      OF PARENT FINANCIAL AND PERFORMANCE
GUARANTEE

            


    

    
      	
               (to
      be furnished pursuant to Article 29 of the
  Contract)

            


    

    


    


    WHEREAS
.... a company duly organised and existing under the laws of ... having its
registered office at ...(hereinafter referred to as 'the Guarantor' which
expression shall include its successors and assigns) is (the indirect owner of
100% of the capital stock of XYZ Company and direct owner of its parent
company;) and

    


    


    WHEREAS
XYZ Company is signatory to a Production Sharing Contract of even date of this
guarantee in respect of an (onshore) area identified as Block CB-ON/2,
hereinafter referred to as 'the Contract') made between the Government of India
(hereinafter referred to as 'the Government'). ONGC (hereinafter referred to as
'Licensee' which expression shall include its successors and assigns) and XYZ.
Company (hereinafter referred to as XYZ which expression shall include its
successors and permitted assigns); and

    


    


    WHEREAS
the Guarantor wishes to guarantee the performance of XYZ Company or its
Affiliate Assignee under the Contract as required by the terms of the
Contract;

    


    


    
      	
              NOW,
      THEREFORE, this Deed hereby provides as
follows:

            


    

    


    


    
      	
              1.

            	
              The
      Guarantor hereby unconditionally and irrevocably guarantees to the
      Government and the Licensee that it will make available, or cause to be
      made available, to XYZ Company or any other directly or indirectly owned
      Affiliate of XYZ Company to which any part or all of XYZ Company's rights
      or interest under the Contract may be assigned ('Affiliate Assignee'),
      financial, technical and other resources required to ensure that XYZ
      Company or any Affiliate Assignee can carry out its obligations as set
      forth in the Contract.

            


    

    


    


    
      	
              2.

            	
              The
      Guarantor further unconditionally and irrevocably guarantees to the
      Government and the Licensee the due and punctual compliance by XYZ Company
      or any Affiliate Assignee, of any obligations of XYZ Company or any
      Affiliate Assignee under the
Contract.

            


    

    


    


    
      	
              3.

            	
              The
      Guarantor hereby undertakes to the Government and the Licensee that if XYZ
      Company or any Affiliate Assignee, shall, in any respect, fail to perform
      its obligations under the Contract or commit any breach of such
      obligations, then the Guarantor shall fulfill or cause to be fulfilled the
      said obligations in place of XYZ Company or any Affiliate Assignee, and
      will indemnify the Government and the Licensee  against all losses,
       damages, costs,  expenses  or  otherwise  which
       may

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     result
directly from such failure to perform or breach on the part of XYZ
Company.

    


    
      	
              4.

            	
              This
      guarantee shall take effect from the Effective Date and shall remain in
      full force and effect for the duration of the said Contract and thereafter
      until no sum remains payable by XYZ Company, or its Affiliate Assignee,
      under the Contract or as a result of any decision or award made by any
      expert or arbitral tribunal
thereunder.

            


    

    


    
      	
              5.

            	
              This
      guarantee shall not tie affected by any change in the articles of
      association and byelaws of XYZ Company or the Guarantor or in any
      instrument establishing the Company or
  Guarantor.

            


    

    


    
      	
              6.

            	
              The
      liabilities of the Guarantor shall not be discharged or affected by (a)
      any time indulgence, waiver or consent given to XYZ Company; (b) any
      amendment to the Contract or to any security or other guarantee or
      indemnity to which XYZ Company has agreed; (c) the enforcement or waiver
      of any terms of the Contract or of any security, other guarantee or
      indemnity; or (d) the dissolution, amalgamation, reconstruction or are
      organisation of XYZ Company.

            


    

    


    
      	
              7.

            	
              This
      guarantee shall be governed by and construed in accordance with the laws
      of India.

            


    

    


    IN
WITNESS WHEREOF the Guarantor, through its duly authorised representatives, has
caused its seal to be duly affixed hereto and this guarantee to be duly executed
the ... day of... 2000.

    


    


    The seal
of ... was hereto duly affixed by ... this ... day of ... 2000 in
accordance with its byelaws and this guarantee was duly signed by ...and ... as
required by the said byelaws.

    


    
      	
              _____________________

            	
              ____________________________

            


    

    
      	
              Secretary

            	
              President
      & Director

            


    

    


    


    


    
      	
              Witness: