**PRODUCTION
      SHARING CONTRACT**








**BETWEEN**








**THE
      GOVERNMENT OF INDIA**








**AND**





**OIL
      INDIA LTD.**





**AND**








**GEOGLOBAL
      RESOURCES (BARBADOS) INC.**











**WITH
      RESPECT TO CONTRACT AREA**











**IDENTIFIED
      AS**





**BLOCK
      : RJ-ONN-2004/2**










**TABLE
      OF CONTENTS**


****


**ARTICLE**
            **CONTENTS**
            **PAGE
                NO.**Preamble
            **1-2****1**
            Definitions
            **3-12****2**
            Participating
                Interests
            **13****3**
            License
                and Exploration Period
            **14-16****4**
            Relinquishment
            **17****5**
            Work
                Programme
            **18-21****6**
            Management
                Committee
            **22-26****7**
            Operatorship,
                Operating Agreement and Operating Committee
            **27****8**
            General
                Rights and Obligations of the Parties
            **28-30****9**
            Government
                Assistance
            **31****10**
            Discovery,
                Development andProduction
            **32-36****11**
            Petroleum
                Exploration License and Mining Lease
            **37-38****12**
            Unit
                Development
            **39-40****13**
            Measurement
                of Petroleum
            **41****14**
            Protection
                of the Environment
            **42-46****15**
            Recovery
                of Cost Petroleum
            **47-49****16**
            Production
                Sharing of Petroleum
            **50-52****17**
            Taxes,
                Royalties, Rentals, Duties etc.
            **53-56****18**
            Domestic
                Supply, Sale, Disposal and Export of Crude Oil and
                Condensate
            **57-58****19**
            Valuation
                of Petroleum
            **59-61****20**
            Currency
                and Exchange Control Provisions
            **62****21**
            Natural
                Gas
            **63-68****22**
            Employment,
                Training and Transfer of Technology
            **69****23**
            Local
                Goods and Services
            **70****24**
            Insurance
                and Indemnification
            **71****25**
            Records,
                Reports, Accounts and Audit
            **72**








**ARTICLE**
            **CONTENTS**
            **PAGE
                NO.****26**
            Information,
                Data, Confidentiality, Inspection and Security
            **73-75****27**
            Title
                to Petroleum, Data and Assets
            **76****28**
            Assignment
                of Participating Interest
            **77-79****29**
            Guarantees
            **80-82****30**
            Term
                and Termination of the Contract
            **83-85****31**
            Force
                Majeure
            **86-87****32**
            Applicable
                Law and Language of the Contract
            **88****33**
            Sole
                Expert, Conciliation and Arbitration
            **89-90****34**
            Change
                of Status of Companies
            **91****35**
            Entire
                Agreement, Amendments and Waiver and miscellaneous
            **92****36**
            Certificates
            **93****37**
            Notices
            **94-95**











**APPENDICES**
            **CONTENTS**
            **PAGE
                NO.****Appendix
                A**
            Description
                of the Contract Area
            **96****Appendix
                B**
            Map
                of the Contract Area
            **97****Appendix
                C**
            Accounting
                Procedure to the Contract
            **98-128****Appendix
                D**
            Calculation
                of the Investment Multiple for Production Sharing purposes
            **129-130****Appendix
                E1**
            Form
                of Parent company Financial and Performance Guarantee
            **131-132****Appendix
                E2**
            Form
                of Company Financial and Performance Guarantee
            **133-134****Appendix-F**
            Procedure
                for acquisition of goods and services
            **135-138****Appendix-G**
            Proforma
                of Bank Guarantee to be provided pursuant to Article 29
            **139-141****Appendix-H**
            Cost
                estimates for Minimum Work Programe
            **142-**











This
                Contract made this 2ndday
                of March, 2007, between:





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





AND





M/s
                Oil India Limited, a Company incorporated under the Companies Act,
                1956
                having its corporate office at 5, Sikandra Road, New Delhi - 10001
                (hereinafter referred to as “OIL”) which expression shall include its
                successors and such assigns as are permitted under Article 28 hereof,
                of
                the SECOND PART;








AND





M/s
                GeoGlobal Resources (Barbados) Inc., a Company incorporated under
                the laws
                of Barbados, West Indies having its registered office at 310, 605
                - 1
                Street SW, Calgary, Alberta Canada T2P 3S9 (hereinafter referred
                to as
                “GGRB”) which expression shall include its successors and such assigns
                as
                are permitted under Article 28 hereof, of the THIRD PART;








**WITNESSETH:**





WHEREAS





(1)  The
      Oilfields (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 provisions, inter
      alia,
      for the regulation of Petroleum Operations and grant of Licenses and Leases
      for
      exploration, development and production of Petroleum in India;





(2)   The
      Rules
      provide for the grant of Licenses and Leases in respect of land vested in a
      State Government by that State Government with the prior approval of the Central
      Government;





(3)   Rule
      5 of
      the Rules provides for an agreement between the Central Government and the
      Licensee or Lessee containing additional terms and conditions with respect
      to
      the License or Lease;





(4)   The
      Government desires that the Petroleum resources which may exist in India be
      discovered and exploited with the utmost expedition in the overall interest
      of
      India and in accordance with modern oilfield and petroleum industry
      practices;





(5)   OIL-GGRB
      have committed that it has/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
      modern oilfield and petroleum industry practices and will provide guarantees
      as
      required in Article 29 for the due performance of its obligations hereunder;
      and





(6)   As
      a
      result of discussions between representatives of the Government and OIL-GGRB
      on
      the proposal of OIL-GGRB, the Government has agreed to enter into this Contract
      with OIL-GGRB with respect to the Contract Area identified as - block
      RJ-ONN-2004/2 and detailed in Appendix A and Appendix B, on the terms and
      conditions herein set forth.





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:





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





1.2  “Act”
      means Oilfields (Regulation and Development) Act, 1948 as amended from time
      to
      time.





1.3  "Affiliate"
      means a company or a body;





a)  which
      directly or indirectly controls or is controlled by a Company which is a Party
      to this Contract; or


b)  which
      directly or indirectly controls or is controlled by a company which directly
      or
      indirectly controls or is controlled by a Company which is a Party to this
      Contract.





For
      the
      purpose of this definition it is understood that “control” means:





i)  ownership
      by one company of more than fifty percent(50%) of the voting securities of
      the
      other company; or


ii)  the
      power
      to direct, administer and dictate policies of the other company even where
      the
      voting securities held by such company exercising such effective control in
      that
      other company is less than fifty percent(50%) and the term “controlled” shall
      have a corresponding meaning.





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





1.5  "Appraisal
      Programme" means a programme, carried out following a Discovery in the Contract
      Area for the purpose of appraising Discovery and 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.





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





1.7  “Approved
      Work Programme” and “Approved Budget” means a Work Programme or a Budget that
      has been approved by the Management Committee pursuant to the provisions of
      this
      Contract.





1.8  "Arms
      Length Sales" means sales made freely in the open 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 Companies
      which are Parties to this Contract, sales between governments and
      government-owned 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.





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





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





1.11  "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 Celsius) and under one atmosphere pressure (14.70 psia).





1.12  "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.





1.13
            “Budget”
                means a budget formulated in relation to a Work
                Programme.





1.14  “Business
      Day” means any of the Calendar Day excluding holidays.





1.15  “Calendar
      Day” means any of the seven (7) days of a week.




1.16  "Calendar
      Month" means any of the twelve (12) months of the Calendar Year.





1.17  "Calendar
      Quarter" or “Quarter” means a period of three (3) consecutive Calendar Months
      commencing on the first day of January, April, July and October of each Calendar
      Year.








1.18  "Calendar
      Year" means a period of twelve (12) consecutive Months according to the
      Gregorian calendar, commencing with the first (1 st )
      day of
      January and ending with the thirty-first (31 st )
      day of
      December.





1.19  "Commercial
      Discovery" means a Discovery of Petroleum reserves which has been declared
      as a
      Commercial Discovery in accordance with the provisions of Article 10 and/or
      Article 21.




1.20  "Commercial
      Production" means production of Crude Oil or Condensate or Natural Gas or any
      combination of these from the Contract Area (excluding production for testing
      purposes) and delivery of the same at the relevant Delivery Point under a
      programme of regular production and sale.





1.21  "Company"
      for the purpose of this Contract means a company which is a Party to this
      Contract and, where more than one Company is Party to the Contract, the term
      "Companies" shall mean all such Companies collectively, including their
      respective successors and permitted assigns under Article 28.





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





1.23  "Contract"
      means this agreement and the Appendices mentioned herein and attached hereto
      and
      made an integral part hereof and any amendments made thereto pursuant to the
      terms hereof.





1.24  "Contract
      Area" means, on the Effective 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 (including any additional area as provided under Article
      11.3).





1.25  "Contract
      Costs" means Exploration Costs, Development Costs and Production Costs as
      provided in Section 2 of the Accounting Procedure and allowed to be cost
      recoverable in terms of Section 3 of the Accounting Procedure.





1.26  "Contract
      Year" means a period of twelve (12) consecutive months counted from the
      Effective Date or from the anniversary of the Effective Date.





1.27  "Contractor"
      means the Company(ies).








1.28  "Cost
      Petroleum" means, the portion of the total value of Petroleum Produced and
      Saved
      from the Contract Area which the Contractor is entitled to take in a particular
      period, for the recovery of Contract Costs as provided in Article
      15.





1.29  "Crude
      Oil" or “Oil” or “Crude” means all kinds of hydrocarbons and bitumen, both in
      solid
      and in liquid form, in their natural state 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 Natural Gas.





1.30  “Deepwater
      Area” (for deepwater blocks/areas) means area falling beyond four hundred (400)
      metre isobath.





1.31  "Delivery
      Point" means, except as otherwise herein provided or as may be otherwise agreed
      between the Parties having regard to international practice, the point at which
      Petroleum reaches the outlet flange of the delivery facility, either offshore
      or
      onshore and different Delivery Point(s) may be established for purposes of
      sales. Delivery Point(s) shall be approved by the Management Committee.





1.32  "Development
      Area" means part of the Contract Area which encompasses one or more Commercial
      Discovery(ies) and any additional area that may be required for proper
      development of such Commercial Discovery(ies) and established as such in
      accordance with the provisions of the Contract.





1.33  "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 thereof.





1.34  "Development
      Operations" means operations conducted in accordance with the Development Plan
      and shall include, but not be limited to the purchase, shipment or storage
      of
      equipment and materials used in developing Petroleum accumulations, the
      drilling, completion and testing of Development 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, tankages, 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 at 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 Crude Oil and/or Gas at the Delivery Point and also including
      incidental operations not specifically referred to herein but required for
      the
      most efficient and economic development and production of the said
      Petroleum





accumulations
      in accordance with modern oilfield and petroleum industry
      practices.





1.35  "Development
      Plan" means a plan submitted by the Contractor for the development of a
      Commercial Discovery, which has been approved by the Management Committee or
      the
      Government pursuant to Article 10 or Article 21.





1.36  "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.





1.37  “Directorate
      General of Hydrocarbons” or “DGH” means an organisation, including its
      successors under the Ministry of Petroleum and Natural Gas.





1.38  "Discovery"
      means the finding, during Petroleum 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.





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





1.40  "Effective
      Date" means the later of the date on which this Contract is executed by the
      Parties or the date of issue of **** License
      or date from which License has been made effective **** by
      the
      Central Government or State Government(s) as the case may be.





1.41  "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, avi-fauna or any plant or
      animal life whether in the sea or in any other water or on, in or under
      land.




1.42  "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.





1.43  "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 structural 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.





1.44  "Exploration
      Period" means the period mentioned in Article 3 during which Exploration
      Operations may be carried out by the Contractor as provided in Article 3
      hereof.





1.45  “Exploration
      Phase” or “Phase” means any of the periods specified in Article 3 in which the
      Contractor is required to complete the Minimum Work Programme specified
      therein.





1.46  "Exploration
      Well" means a Well drilled for the purpose of searching for undiscovered
      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.





1.47  “Field”
      means an Oil Field or a Gas Field or combination of both as the case may
      be.





1.48  "Financial
      Year" means the period from the first (1 st )
      day of
      April to the thirty-first (31 st )
      day of
      March of the following Calendar Year.





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





1.50  “Frontier
      Area” means any area identified, demarcated and so notified by the Government or
      its authorised agency(ies) for the purpose of exploration and exploitation
      of
      Oil and Gas, which is logistically and technically difficult and lacks
      infrastructural and/or marketing facilities, etc.





1.51  "Gas"
      means Natural Gas.





1.52  “Gas
      Field” means, within the Contract Area, a Natural Gas Reservoir or a group of
      Natural Gas Reservoirs within a common geological structure or
      feature.




1.53  “Government”
      or “Central Government” means Government of India unless otherwise stated.





1.54  “Investment"
      shall have the meaning ascribed to that expression in paragraph 3 of Appendix
      D.








1.55  "Investment
      Multiple" means, the ratio of accumulated Net Cash Income to accumulated
      Investment by the Contractor **,** as
      determined in accordance with Appendix D.





1.56  “Lease”
      means a petroleum mining lease referred to in the Rules and shall, unless
      otherwise stated therein, exclude right for exploration and exploitation of
      coal/ lignite bed methane (CBM).





1.57  “Lessee”
      means the Contractor to whom a Lease is issued under the Rules for the purpose
      of carrying out Petroleum Operations in a Development Area or Contract
      Area.





1.58  "LIBOR"
      means the London Inter-Bank Offer Rate for six-month maturates of United States
      Dollars as quoted by the International Swaps and Derivative Association or
      such
      other bank being a BBA LIBOR contributor panel bank as the Parties may agree.





1.59  “License”
      means a petroleum exploration license referred to in the Rules.





1.60  "Licensee"
      means the Contractor to whom a License is issued under the Rules for the purpose
      of carrying out Petroleum Operations in the Contract Area.





1.61  “Minimum
      Work Programme” means with respect to each Exploration Phase, the Work Programme
      specified in Article 5 with respect to such Phase.





1.62  "Management
      Committee" means the committee constituted pursuant to Article 6
      hereof.





1.63  "Month"
      means Calendar Month.





1.64  "Natural
      Gas" means wet gas, dry gas, all other gaseous hydrocarbons, and all substances
      contained therein, including sulphur, carbondioxide and nitrogen but excluding
      extraction of 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.





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





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








1.67  “Oil
      Field” means, within the Contract Area, an Oil Reservoir or a group of Oil
      Reservoirs within a common geological structure or feature.





1.68  “Operator”
      means one of the Parties comprising the Contractor, appointed as the Operator
      pursuant to Article 7.





1.69  “Operating
      Agreement” means the joint operating agreement entered by the constituents of
      the Contractor in accordance with Article 7, with respect to conduct of
      Petroleum Operations.





1.70  “Operating
      Committee” means the Committee established by that name in the Operating
      Agreement pursuant to Article 7.





1.71  "Participating
      Interest" means, in respect of each Party constituting the Contractor, the
      undivided share expressed as a percentage of such Party’s participation in the
      rights and obligations under this Contract.





1.72  "Parties"
      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.





1.73  "Petroleum"
      means Crude Oil and/or Condensate and/or Natural Gas existing in their natural
      condition but excluding helium occurring in association with Petroleum or
      shale.





1.74  "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, safety,
      environmental protection, transportation, storage, sale or disposition of
      Petroleum to the Delivery Point, Site Restoration and any or all other
      incidental operations or activities as may be necessary.





1.75  “Petroleum
      Produced and Saved” means gross Petroleum produced minus impurities such as
      water or solids produced along with Petroleum, Petroleum recycled to the
      reservoir, Petroleum used in Petroleum Operations or flared or otherwise
      unavoidably lost under the provisions of the Contract.





1.76  "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.





1.77  "Production
      Operations" means all operations conducted for the purpose of producing
      Petroleum from the Development Area after the commencement of





production
      from the Development Area including the operation and maintenance of all
      necessary facilities therefor.





1.78  "Profit
      Petroleum” means, the total value of Petroleum **** Produced
      and Saved from the Contract Area in a particular period, as reduced by Cost
      Petroleum and calculated as provided in Article 16.





1.79  “Recompletion”
      means an operation whereby a completion in one zone is abandoned in order to
      attempt a completion in a different zone within an existing Well bore.





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





1.81  “Rules”
      means the Petroleum and Natural Gas Rules, 1959 and any amendments made thereto
      from time to time.





1.82  "Section"
      means a section of the Accounting Procedure.





1.83  "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, as determined by
      Government.





1.84  "Site
      Restoration" shall mean all activities required to return a site to its state
      as
      of the Effective Date pursuant to the Contractor’s environmental impact study
      and approved by the Government or to render a site compatible with its intended
      after-use (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,
      re-vegetation, slope stabilisation, in-filling of excavations or any other
      appropriate actions in the circumstances.





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





1.86  “State
      Government” means any government of a state of the Union of India, which has
      control over the Contract Area for the purpose of grant of Licenses/ Leases.
      In
      case the Contract Area covers more than one state, the State Government shall
      include all such governments of those states.





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








1.88  “US
      $” or
“USD” or “US Dollar” or “United States Dollar” means the currency of the United
      States of America.





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





1.90  "Work
      Programme" means a work programme formulated for the purpose of carrying out
      Petroleum Operations.





1.91  "Year"
      means a Financial Year.








**ARTICLE
      2**





**PARTICIPATING
      INTERESTS**








2.1
            The
                initial Participating Interest of the Parties comprising the Contractor
                shall be as follows:





OIL   :  75%  (seventy
      five per cent)


GGRB   :  25%  (twenty
      five per cent)








2.2
            Except
                as provided in this Article or elsewhere in this Contract, the rights
                and
                obligations of the Parties comprising the Contractor shall include
                but not
                be limited to:





(a)  the
      right
      to take Cost Petroleum in accordance with the provisions of Article
      15;





(b)  the
      right
      to take its Participating Interest share of Profit Petroleum in accordance
      with
      the provisions of Article 16;





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





(d)  the
      obligation to contribute its Participating Interest share of costs and expenses
      including Contract Costs.








**ARTICLE
      3**





**LICENSE
      AND EXPLORATION PERIOD**








3.1
            The
                Exploration Period shall begin on the Effective Date and shall consist
                of
                two Exploration Phases, first exploration Phase shall be for a period
                not
                exceeding four (4) consecutive Contract Years and second Exploration
                Phase
                shall be for a period not exceeding three (3) consecutive Contract
                Years,
                for a total period not exceeding seven (7) consecutive Contract Years
                unless extended pursuant to the terms of this
                Contract.





3.2
            Except
                as otherwise provided in this Contract, the term of the first Exploration
                Phase shall not exceed 4 (four) consecutive Contract Years (hereinafter
                referred to as the first Exploration
                Phase).





3.3  Except
      as
      otherwise provided in this Contract, the term of the second Exploration Phase
      shall not exceed 3 (three) consecutive Contract Years from the end of the first
      Exploration Phase (hereinafter referred to as the second Exploration
      Phase).





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





(a)
            to
                proceed to the next Exploration Phase on presentation of the
                requisite****guarantees
                as provided for in Article 29; or


(b)
            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 Commercial Discovery in accordance
                with the
                terms of this Contract, and the Contractor shall have no further
                obligation in respect of the Minimum Work Programme under Article
                5 for
                any subsequent Exploration Phases of the Exploration
                Period.





If
      neither of the options provided for in paragraphs (a) and (b) hereof is
      exercised by the Contractor, this Contract shall terminate at the end of the
      then current Exploration Phase and the License shall be automatically
      cancelled.








3.5  If
      at the
      end of an Exploration Phase the Minimum Work Programme for that phase is not
      completed, the time for completion of the said Minimum Work Programme shall
      be
      extended for a period necessary to enable completion thereof but not exceeding
      six (6) months, provided that the Contractor submits his request by giving
      a
      written notice to the Government at least thirty (30) days prior to the expiry
      of the relevant Phase and can show technical or other good reasons for
      non-completion of the Minimum Work Programme and the Management Committee gives
      its consent to the said extension and provided further that the period of such
      extension shall be subtracted from the next succeeding Exploration Phase, if
      any. In case the Minimum Work Programme of any particular Exploration Phase
      is
      completed before stipulated time as provided in the Article 3.2, the time so
      saved will be added to the next Exploration Phase, if so requested by the
      Contractor giving a notice in writing to the Government thirty (30) days prior
      to such early completion of the Phase and in that event the provision of the
      Article 3.4 (a) shall apply immediately after such early completion of the
      Phase.





3.6   If,
      at
      the end of an Exploration Phase, execution of any Work Programme is in progress
      and which is in addition to the Minimum Work Programme, such Exploration Phase
      shall be extended for a period not exceeding six (6) months to enable completion
      thereof provided that the Minimum Work Programme for such Phase has been
      completed and **** the
      Management Committee gives its consent to the said extension as provided in
      the
      Article 3.5. In the event of an extension as provided for herein, the notice
      referred to in Article 3.4 shall be given at least thirty (30) days prior to
      the
      expiry of the relevant extension.





3.7   Where
      sufficient time is not available prior to the expiry of the Exploration Period
      to complete an Appraisal Programme, at the request of the Contractor, the
      Government shall extend the Exploration Period for such period, not exceeding
      eighteen (18) months, as may be mutually agreed between the Parties for the
      Appraisal Programme to be carried out and for the Contractor and the Management
      Committee, to comply with the provisions of Article 10 and Article
      21.





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





3.9  If
      this
      Contract is terminated in accordance with its terms, the License shall be
      automatically cancelled.





3.10   If
      at the
      expiry of the Exploration Period a development plan for development of a
      Commercial Discovery and an application for Lease is under consideration by
      the
      Management Committee or Government, as the case may be, pursuant to Articles
      10,
      11 and 21 respectively, the License shall continue in force with respect to
      that
      part of the Contract Area to which the application for the Lease relates,
      pending a decision on the proposed development plan and the application for
      the
      Lease, but





shall
                cease to be in force and effect with respect to the remainder of
                the
                Contract Area.





**ARTICLE
      4**





**RELINQUISHMENT**





4.1
            If
                at the end of the first Exploration Phase, the Contractor elects,
                pursuant
                to Article 3.4, to continue Exploration Operations in the Contract
                Area in
                the second Exploration Phase, the Contractor shall have the option
                to
                relinquish a part of the Contract Area in simple geometrical shape.
                In
                case, the Contractor exercises its option to relinquish a part of
                the
                Contract Area at the end of the first Exploration Phase, then such
                area to
                be relinquished shall not be less than twenty five percent (25%)
                of the
                original Contract Area and the Contractor shall be entitled to retain
                the
                balance area including any Development Area and Discovery Area in
                not more
                that three (3) areas of simple geometrical shapes. Notwithstanding
                the
                provision of this Article 4.1, the Contractor shall be permitted
                to retain
                the Development Areas and Discovery Areas in accordance with Article
                3.4.





4.2
            At
                the end of the third Exploration Phase, the Contractor shall retain
                only
                Development Areas and Discovery
                Areas.





4.4
            If
                the Contractor exercises the option provided for in paragraph (b)
                of
                Article 3.4, the Contractor shall, after any Discovery Areas or
                Development Areas have been designated, relinquish all of the Contract
                Area not included within the said Discovery Areas or Development
                Areas.





4.5
            As
                and when the Contract is terminated under the provisions of Article
                3 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.





4.6
            Relinquishment
                of all or part of the Contract Area 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 during
                the
                period between the Effective Date and the date of such relinquishment
                or
                termination.




4.7
            Subject
                to Article 14.9, the liability of the Contractor shall be limited
                to any
                liability undertaken or incurred in respect of, relating to or connected
                with the Contract, and/or any claim arising out of or in relation
                to the
                act of negligence, misconduct, commission or omission in carrying
                out
                Petroleum Operations during the period between the Effective Date
                and the
                date of relinquishment of the Contract Area or termination or expiry
                of
                the Contract, as the case may
                be.





**ARTICLE
      5**





**WORK
      PROGRAMME**








5.1
            The
                Contractor shall commence Petroleum Operations not later than six
                (6)
                months from the Effective Date.





5.2
            In
                addition to the Bid Work Programme Commitment in first Exploration
                Phase
                specified below in Article 5.2.1 and 5.3, the Contractor Shall be
                required
                to undertake and complete the 2D seismic - API, in grid size of**8
                (eight) KM x 8 (eight) KM**covering the entire Contract Area ( herein referred to as "Mandatory
                Work
                Programme") during first Exploration Phase. In case due to any reason
                intrinsic to the Contract Area reason(s), the Contractor is not able
                to
                cover any part of the contract Area by 2D seismic survey of grid
                size
                specified in this Article, the Contractor shall submit a proposal
                for
                substitution of the short fall in the Mandatory Work Programme to
                the
                Management Committee for approval. The Management Committee shall
                consider
                and take a reasoned unanimously decision on the proposal of the Contractor
                in a timely manner. The Management Committee may ask the contractor
                by
                giving a reasonable time, any relevant information / details / date
                to
                enable it to toke a decision on the proposal. The Management Committee
                shall ensure that the substituted work programme shall be at least
                equal
                to the shortfall in the mandatory Work Programme when evaluated in
                terms
                of efforts and expenditure. In case Management Committee is not able
                to
                decide unanimously, the matter may be referred for approval of the
                Government. In case no proposal is received from the Contractor for
                the
                substitution and fails to complete Mandatory Work Programme the provision
                of Article 5.6 shall apply.





5.2.1
            During
                the currency of the first Exploration Phase, as per Article 3.2,
                the
                Contractor shall complete the following Work
                Programme:


(a)  (i)  A
      seismic
      programme consisting of the acquisition, processing and interpretation of **250
      (two hundred fifty)** line
      kilometers of 2D and **700
      (seven humdred)** sq kms
      of 3D seismic data in relation to the exploration objectives;


(ii)
            Reprocessing
                of**463
                (four hundred sixty three)**line kilometer of 2D seismic;


(iii)
            Gravity
                magnetic survey (API) of**2500
                (two thousand five hundred)**stations;


(iv)
            Any
                other Surveys (API) : Geochemical survey of**500
                (five hundred)**samples





(b)  **Twelve
      (12)** Exploration Wells each shall be drilled to at least one of the following depths
      :





(i)
            One
                (1) Well -**2000
                (two thousand) meters**


One
      (1)
      Well - **2200
      (two thousand two hundred) meters**


One
      (1)
      Well - **2200
      (two thousand two hundred) meters**


One
      (1)
      Well - **2500
      (two thousand five hundred) meters**


One
      (1)
      Well - **2500
      (two thousand five hundred) meters**


One
      (1)
      Well - **2500
      (two thousand five hundred) meters**


One
      (1)
      Well - **2500
      (two thousand five hundred) meters**


One
      (1)
      Well - **2500
      (two thousand five hundred) meters**


One
      (1)
      Well - **2500
      (two thousand five hundred) meters**


One
      (1)
      Well - **2500
      (two thousand five hundred) meters**


One
      (1)
      Well - **2500
      (two thousand five hundred) meters**


One
      (1)
      Well - **2500
      (two thousand five hundred) meters,**


(ii)
            to
                Basement; and


(iii)
            that
                point below which further drilling becomes impracticable due to geological
                conditions encountered and drilling would be abandoned by a reasonable
                prudent operator in the same or similar circumstances. Abandonment
                of
                drilling under this provision by the Contractor would require unanimous
                approval of the Management
                Committee.





5.3  During
      the currency of the second Exploration Phase, as per Article 3.3, 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)
            One
                (1) Well -**2500
                (two thousand five hundred)**meters


(ii)  to
      Basement; and


(iii)  that
      point below which further drilling becomes impracticable due to geological
      conditions encountered and drilling would be abandoned by a reasonable prudent
      operator in the same or similar circumstances. Abandonment of drilling under
      this provision by the Contractor, would require unanimous approval of the
      Management Committee.





5.4  The
      actual depth objective for each of the Wells shall be determined by the
      Contractor in the light of the advice 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 modern oilfield and petroleum industry
      practices is obtained during exploratory drilling.








5.5
            If
                the depth/geological objective of the Well is not achieved for any
                reason,
                a substitute Well shall be drilled of the same specifications as
                stipulated in and subject to Articles 5.2 & 5.3, as the case may
                be.





5.6
            Subject
                to Article 31, the Contractor undertakes to complete the Mandatory
                Work
                Programme and Minimum Work Programme in accordance with Articles
                5.2,
                5.2.1, 5.3 and 5.5, as the case may be. In the event the Contractor
                fails
                to fulfill the said Mandatory Work Programme or Minimum Work Programme
                or
                both by the end of the relevant Exploration Phase or early termination
                of
                the Contract by the Government for any reason whatsoever, each Company
                constituting the Contractor shall pay to the Government, within sixty
                (60)
                days following the end of the relevant Exploration Phase or early
                termination of the Contract, as may be the case, its Participating
                Interest share for an amount which, when evaluated in terms of the
                Mandatory Work Programme or Minimum Work Programme specified for
                the
                relevant Phase, is equal to the amount which would be required to
                complete
                the said Mandatory Work Programme of Minimum Work Programme or both.
                For
                determination of this amount, available relevant information including
                the
                Budget and modern oilfield and petroleum industry practices may be
                taken
                into account.





5.7
            If
                the Minimum Work Programme for the second Exploration Phase 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
                with
                the approval of the Management
                Committee.





5.8
            In
                the event that the Contractor has carried out work in excess of the
                Minimum Work Programme in any Exploration Phase, the excess
                exploration****work
                done shall be set off against the Minimum Work Programme for the
                following
                Exploration Phase.





5.9
            As
                soon as possible after the Effective Date and thereafter within ninety
                (90) days before commencement of each following Year, the Contractor
                shall
                submit to the Management Committee the Work Programmes and the Budgets
                relating to Petroleum Operations to be carried out during the relevant
                Year. Work Programme and Budgets for the Exploration Period shall
                include
                work sufficient to meet the relevant Minimum Work Programme with
                respect
                to each Exploration Phase specified in this Article
                5.





5.10
            The
                Contractor may propose modifications or revisions to the details
                of a
                reviewed or an approved Work Programme and Budget, as the case may
                be, in
                the light of the then existing circumstances and shall submit to
                the
                Management Committee modifications or revisions to the Work Programme
                and
                Budget referred to in Article 5.9.








5.11  Work
      Programmes and Budgets and any modifications or revisions thereto relating
      to
      Exploration Operations shall be submitted to the Management Committee for review
      and advice as provided in Article 6.5. Work Programmes and Budgets related
      to
      Development Operations and Production Operations and any modifications or
      revisions thereto shall be submitted to the Management Committee for approval
      as
      provided in Article 10 and Article 21.





**ARTICLE
      6**





**MANAGEMENT
      COMMITTEE**








6.1  There
      shall be constituted a committee to be called the Management Committee with
      functions as stated herein below.





6.2  Government
      shall nominate two (2) members representing Government in the Management
      Committee, whereas each Company constituting the Contractor shall nominate
      one
      (1) member each to represent Company in the Management Committee provided that
      in case the Contractor constitutes only one Company, that Company shall have
      two
      (2) members. The Parties shall nominate the members to the Management Committee
      within thirty (30) days of the Effective Date.





6.3  Each
      Party may nominate alternate members with full authority to act in the absence
      and on behalf of the members nominated under Article 6.2 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.





6.4  One
      representative of the Government shall be designated as the Chairman of the
      Management Committee and the second representative of the Government shall
      be
      designated as the Deputy Chairman. The member of the Operator, or the member
      designated by the Operator where Operator has two (2) members in the Management
      Committee shall be designated as the Secretary of the Committee.





6.5  Operator
      on behalf of the Contractor with the approval of Operating Committee **,** if
      constituted under the Article 7.4, or in case of a single Party constituting
      the
      Contractor, then that Party shall submit following matters to the Management
      Committee for review and it shall have advisory functions:





(a)
            the
                annual Work Programmes and Budgets in respect of Exploration Operations
                and any revisions or modifications
                thereto;


(b)
            annual
                work progress and costs incurred
                thereon;


(c)
            proposals
                for surrender or relinquishment of any part of the Contract Area
                by the
                Contractor;


(d)
            proposals
                for an Appraisal Programme or revisions or additions thereto and
                the
                declaration of a Discovery as a Commercial
                Discovery;


(e)
            any
                other matter required by the terms of this Contract to be submitted
                to it
                for review or advice; and


(f)
            any
                other matter which the Contractor decides to submit for review or
                advice
                including matters concerning inter-Party
                relationships.








6.6  The
      following matters shall be submitted by Operator on behalf of the Contractor
      with the approval of Operating Committee, if constituted under the Article
      7.4,
      or in case of single Party constituting the Contractor, then by that Party
      to
      the Management Committee for approval:





(a)
            Annual
                Work Programmes and Budgets in respect of Development Operations
                and
                Production Operations and any modifications or revisions
                thereto;


(b) proposals
      for the approval of development plans as may be required under this Contract,
      or
      modifications or revisions to a Development Plan;


(c) determination
      of a Development Area;


(d) appointment
      of auditors along with scope of audit, approval and adoption of audited report
      submitted under Article 25.4.3;


(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 fixed by the Management Committee from time to time;


(g) proposal
      about abandonment plan/Site Restoration as required to be submitted under
      Article 14.10;


(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 decides to submit to it; and


(j) any
      matter, which Government refers to the Management Committee for its
      consideration and reasoned opinion.





6.7  Unless
      agreed otherwise by all the members of the Management Committee, the Management
      Committee shall meet at least once every six (6) months during the Exploration
      Period and thereafter at least once every three (3) months or more frequently
      at
      the request of any member. The Secretary, with the approval of the Chairman,
      shall convene each meeting by notifying the members 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 meeting. 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 Secretary at least ten (10) days
      prior to the date fixed for the meeting. The Secretary shall forward the agenda
      to the members at least seven (7) Business 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 whether present or
      not
      present at the meeting.





6.8  The
      Chairman or the Deputy Chairman, as may be the case, shall preside over the
      meetings of the Management Committee and, in their absence, any other member
      representing Government and present shall preside over the
      meetings.





6.9
            Secretary
                to the Management Committee shall be responsible, 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 (2)
                copies
                of the minutes approved by the Chairman within three (3) Business
                Days of
                the meeting. Unless agreed otherwise by all the members of the Management
                Committee, the minutes of a meeting shall be finalised by the Management
                Committee within three (3) Business Days thereafter. 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 returning
                the same
                to the Chairman. Members may suggest any modification to the minutes
                while
                returning the signed copy. Members may also communicate with the
                Chairman
                through telex, cable, or facsimile or any other effective mode of
                communication agreed by all the members of the Management Committee.
                If
                the Chairman or any other member does not agree with the modification
                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 respond within the aforesaid three
                (3)
                Business Day period, unless agreed otherwise by the Management Committee
                as herein provided, the minutes shall be deemed to be approved by
                such
                member.





6.10
            Any
                member shall be entitled, if either he/she or his/her alternate is
                unable
                to attend a meeting, to cast his vote by telex, cable, facsimile
                transmission or any other effective mode of communication agreed
                by all
                the members of the Management Committee and received by the Chairman
                prior
                to the date on which the vote is taken in the course of the meeting
                or by
                giving a prior written notice to all other members, appoint a member,
                with
                his/her prior consent, representing another Party in the Management
                Committee as its proxy to attend a meeting and to exercise the appointing
                member’s right to vote at the meeting whether as directed by the
                appointing member or otherwise. A member appointed as a proxy and
                attending a meeting shall be present in two separate capacities and
                vote
                accordingly. All such votes shall have the same effect as if that
                member
                had been present and so voted at the
                meeting.





6.11
            In
                case of urgency, where Operating Committee has made a recommendation
                together with reasons to the Chairman requiring consideration of
                a matter
                by the Management Committee without delay, Chairman, after being
                satisfied
                may waive the requirements of notice period for the meeting and
                circulation of agenda to such extent as would be consistent with
                the
                urgency and consideration of the matter by the Management Committee.
                Alternatively, Chairman may approve submission of notice and agenda
                to
                members by telex or facsimile transmission or any other effective
                mode of
                communication agreed by all the members of the Management Committee,
                receipt of which shall be confirmed by telephone by the Chairman
                requiring
                the members to confirm their decision by these modes of communication
                not
                later than three (3) Business Days from confirmation
                of





receipt
      of notice and agenda by the member. Any member failing to convey the decision
      within the time limits of three (3) Business Days shall be deemed to have voted
      in favour of the proposal. The result of any such vote shall be notified by
      the
      Chairman to all the members.





6.12
            The
                meetings of the Management Committee shall be held in India, unless
                otherwise mutually agreed by the members of the Management Committee.
                All
                expenses of the members of the Management Committee attending meetings
                shall be borne by the respective Party and shall in no event be cost
                recoverable.





6.13
            All
                matters requiring the approval of the Management Committee shall
                be
                generally approved by a unanimous vote of the members of the Management
                Committee present as well as the views of the members received by
                some
                other mode of communication. In case, unanimity is not achieved in
                decision making process within a reasonable period as may be required
                under the circumstances, the decision of the Management Committee
                shall be
                approved by the majority Participating Interest of seventy percent
                (70%)
                or more with Government representative having a positive vote in
                favour of
                the decision.





6.14
            There
                shall be a quorum of the Management Committee for holding a meeting
                and
                making decisions with each Party to the Contract represented by at
                least
                one of its nominated members in the Management Committee either present
                in
                person or represented as per Article 6.10. If there is no quorum
                in a
                meeting, the meeting shall stand postponed to the same day and time
                in the
                next week and if quorum is not present or represented even in the
                next
                meeting and subject to a Government member being present, the members
                present and represented will constitute the quorum and take decisions
                and
                decisions taken by such quorum shall be final and binding to all
                the
                absenting Parties or Parties not represented, notwithstanding the
                provisions of Article 6.13.


6.15
            The
                Management Committee, if it considers necessary, 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. Such sub-committee
                expenses shall form part of Contract Cost with relevant cost
                classification as decided by the Management Committee pursuant to
                the
                Section 2 of the Accounting Procedure and will be cost
                recoverable.





6.16
            In
                the event a Party to the Contract is not entitled to vote in the
                Operating
                Committee meetings being in default under the Operating Agreement,
                and
                Operator notifies Chairman of the default by the Party, then the
                issue of
                exercising voting right by such defaulting Party in the Management
                Committee meetings shall be discussed by the Management Committee.
                The
                Management Committee excluding the defaulting Party, after duly hearing
                the views of the defaulting Party on the matter of their default
                under
                Operating Agreement, shall





take
      unanimous decision on exclusion or otherwise of the defaulting Party from voting
      in the Management Committee meetings. For avoidance of any doubt, it is clearly
      understood that unanimous decision by the Management Committee referred to
      in
      this Article 6.16 excludes defaulting Party from such decision. Accordingly,
      if
      the Management Committee decides to exclude the defaulting Party from voting
      in
      the Management Committee, then the said Party shall not be entitled to vote
      in
      the meetings of the Management Committee under Contract. In that event,
      notwithstanding the provisions of Article 6.13, decisions of the Management
      Committee shall be made by vote of the members of the Management Committee
      excluding the member appointed by the said Party in default and any vote or
      purported vote by such member in the Management Committee shall be ignored.
      The
      said Party in default shall be bound by all decisions of the Management
      Committee. The non-defaulting Parties under the Operating Agreement shall
      indemnify Government against any claims of whatsoever nature which may arise
      due
      to exclusion of defaulting Party from voting in the Management
      Committee.





**ARTICLE
      7**





**OPERATORSHIP,
      JOINT OPERATING AGREEMENTAND OPERATING COMMITTEE**








7.1
            OIL
                shall be the Operator for the purpose of carrying out Petroleum Operations
                pursuant to this Contract during the term of the
                Contract.





7.2
            No
                change in the operatorship shall be effected without the consent
                of the
                Government and such consent shall not be unreasonably
                withheld.





7.3
            The
                functions required of the Contractor under this Contract shall be
                performed by the Operator on behalf of all constituent(s) of the
                Contractor subject to, and in accordance with, the terms and provisions
                of
                this Contract and generally accepted modern oilfield and petroleum
                industry practices, provided, however, that this provision shall
                not be
                construed as relieving the constituent(s) of the Contractor from
                any of
                its obligations or liability under the
                Contract.





7.4  Within
      forty five (45) days of the Effective Date or such longer period as may be
      agreed to by Government, the Companies constituting the Contractor shall execute
      a Joint 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 Companies chaired by a representative of the
      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)
            contribution
                to costs, default, sole risk, disposal of Petroleum and assignment
                as
                between the Parties to the Joint Operating
                Agreement.





7.4.1  Operator
      shall provide to the Government a copy of the duly executed Joint Operating
      Agreement within thirty (30) days of its execution date or such longer period
      as
      may be agreed to by the Government.





7.4.2  In
      case a
      single Company constitutes the Contractor, the provisions of Article 7.4 and
      7.4.1 shall not be applicable. However, in case of increase in the number of
      constituents of the Contractor, the provisions of Article 7.4 and 7.4.1 shall
      apply from the date of such increase in the number of the
      constituents.





**ARTICLE
      8**





**GENERAL
      RIGHTS AND OBLIGATIONS OF THE PARTIES**








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





(a)  subject
      to the provisions of Article 12, the exclusive right to carry out Petroleum
      Operations to recover costs and expenses as provided in this Contract. The
      right
      shall exclude exploitation of coal/lignite bed methane (CBM) by the Contractor
      in the Contract Area;


(b)  the
      right
      to use, free of charge, such quantities of Petroleum produced as are reasonably
      required for conducting Petroleum Operations in the Contract Area in accordance
      with generally accepted modern oilfield and petroleum industry
      practices;


(c)  the
      right
      to lay pipelines, build roads, construct bridges, ferries, 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 available technical data, seismic and well information, maps, samples
      etc. of the Contract Area as on the Effective Date, free of charge, subject
      to
      nominal copying/reproduction costs for further Petroleum Operations. The
      Contractor shall submit the list of all data required by them to Directorate
      General of Hydrocarbons (DGH) based on the list of data provided in the
      information docket for the block pertaining to the Contract Area as soon as
      possible but not later than one hundred and eighty (180) days from the execution
      of the Contract and the same, if available and reproducible, shall be made
      available to the Contractor in the office of DGH within ninety (90) days from
      the submission of such request for data by the Contractor, provided the
      Effective Date of the Contract has commenced and the Contractor has furnished
      relevant guarantees under Article 29 of the Contract.


(e)  such
      other rights as are specified in this Contract.





8.2  The
      Government reserves the right to itself, or to grant to 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, 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
      the
      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.





8.3  The
      Contractor shall having due regard to modern oilfield and petroleum industry
      practices :





(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, agents and Subcontractors;


(b)  conduct
      all Petroleum Operations within the Contract Area diligently, expeditiously,
      efficiently and in a safe and workmanlike manner pursuant to the Work Programme
      formulated in accordance with Contract;


(c)  ensure
      provision of all information, data, samples etc. which may be required to be
      furnished under the applicable laws or under this Contract;


(d)  ensure
      that all equipment, materials, supplies, plant and installations used by the
      Contractor, the Operator, and Subcontractors comply with generally accepted
      standards and are of proper construction and kept in safe and good working
      order;


(e)  in
      the
      preparation and implementation of Work Programmes and in the conduct of
      Petroleum Operations, follow modern oilfield and petroleum industry practices
      with such degree of diligence and prudence reasonably and ordinarily exercised
      by experienced parties engaged in a similar activity under similar circumstances
      and conditions;


(f)  the
      procedure for acquisition of goods and services, as of the Effective Date,
      shall
      be as per the Appendix-F of this Contract. Based on economic considerations
      and
      generally accepted practices in the international petroleum industry with the
      objective of ensuring cost and operational efficiency in the conduct of
      Petroleum Operations, the Appendix-F to this Contract may be modified or changed
      with the prior approval of the Management Committee when circumstances so
      justify;


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


(h)  appoint
      a
      technically competent and sufficiently experienced representative, and, in
      his
      absence, a suitably qualified replacement therefor, 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
      Government;





(i)  provide
      acceptable working conditions, living accommodation and access to medical
      attention and nursing care for all personnel employed in Petroleum Operations;


(j)  carry
      out
      such other obligations as are specified in this Contract, in particular those
      specified in Article 14; and


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








**ARTICLE
      9**





**GOVERNMENT
      ASSISTANCE**








9.1  Upon
      application in the prescribed manner, and subject to compliance with applicable
      laws and relevant procedures, the Government or its nominee will:





(a)  use
      their
      good offices 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 the Contractor in procurement or
      commissioning of facilities required for execution of Work Programmes including
      necessary approvals, permits, consents, authorisations, visas, work permits,
      Licenses including Licenses and Leases, rights of way, easement, surface rights
      and security protection at the Contractor’s cost, required pursuant to this
      Contract and which may be available from resources within its control;
      and


(c)  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 licenses, permits, authorizations, consents,
      security protection at the Contractor’s cost, surface rights and easements as
      are required for the construction and operation of the said facilities by the
      Contractor.











**ARTICLE
      10**





**DISCOVERY,
      DEVELOPMENT AND PRODUCTION**











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





(a)  forthwith
      inform the Management Committee 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 Management Committee and Government
      particulars, in writing, of the Discovery; and


(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
      of
      whether, in the Contractor's opinion, such Discovery is of potential commercial
      interest and merits appraisal.





10.2  If
      the
      Contractor determines to conduct a drill stem or production test, in open hole
      or through perforated casing, with regard to any Exploration Well, it shall
      notify the Government of the time of such test at least forty eight (48) hours
      prior to the proposed test, and the Government shall have the right to have
      a
      representative present during such test.





10.3  If,
      pursuant to Article 10.1 (c), the Contractor notifies the Management Committee
      that the Discovery is of potential commercial interest, the Contractor shall
      prepare and submit to the Management Committee 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 10.5,
      whether such Discovery is a Commercial Discovery and (ii) determine, with
      reasonable precision, the boundaries of the area to be delineated as the
      Development Area.





10.4  The
      proposed Appraisal Programme shall be reviewed by the Management Committee
      within thirty (30) days after submission thereof pursuant to Article 10.3.
      The
      said Appraisal Programme, together with the Work Programme and Budget submitted
      by the Contractor, which may be revised or modified or amended by the Contractor
      in light of the Management Committee review, shall be adopted as the Appraisal
      Programme and the Contractor shall promptly commence implementation thereof;
      and
      the annual Budget for the Exploration Period, adopted pursuant to Article 5,
      shall be revised accordingly.





10.5  The
      Contractor shall in respect of a Discovery of Crude Oil advise the Management
      Committee by notice in writing within a period of eighteen (18) months from
      the
      date on which the notice provided for in Article 10.1 (c) was delivered, whether
      such Discovery should be declared a Commercial Discovery or not. Such notice
      shall be accompanied by a report on the Discovery setting forth all relevant
      technical and economic data including estimated recoverable reserves,
      sustainable production levels, estimated development and production
      expenditures, prevailing and forecasted prices, and other pertinent technical
      and economic factors according to modern oilfield and petroleum industry
      practices as well as all evaluations, interpretations and analyses of such
      data
      and feasibility studies relating to the Discovery prepared by or for the
      Contractor, with respect to the Discovery and any other relevant information.
      If
      the Contractor is of the opinion that Crude Oil has been discovered in
      commercial quantities, it shall submit the proposal to the Management Committee
      for review that the Discovery be declared a Commercial Discovery. In the case
      of
      a Discovery of Gas, the provisions of Article 21 shall apply.





10.6  The
      Management Committee shall, within forty (40) days of the date of the notice
      referred to in Article 10.5, review the proposal of the Contractor and request
      any other additional information it may reasonably require so as to complete
      the
      review of the proposal made by the Contractor. The Contractor shall furnish
      the
      additional information within thirty (30) days from the date of the request.
      The
      review by the Management Committee shall be made and conveyed to the Contractor
      within the later of (a) ninety (90) days from the date of notice referred to
      in
      Article 10.5 or (b) forty (40) days of receipt of such other information as
      may
      be required under this Article.





10.7  If
      the
      Contractor declares the Discovery a Commercial Discovery after taking into
      account the advice of the Management Committee as referred in the Article 10.6,
      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 development plan of the Commercial Discovery which
      shall:





(a)  relate
      to
      the Discovery Area and contain a Reservoir or part thereof and the boundaries
      of
      the proposed Development Area;


(b)  be
      designed to ensure the most efficient, beneficial and timely use of the
      Petroleum resources discovered; and


(c)  be
      prepared **** in
      accordance with sound engineering, economic, safety and environmental principles
      recognised in the generally accepted modern oilfield and petroleum industry
      practices.





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:





(i)
            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;


(ii)
            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;


(iii)
            estimate
                of the rate of production to be established and projection of the
                possible
                sustained rate of production in accordance with modern oilfield and
                petroleum 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;


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


(v)
            Contractor's
                recommendations as to the particular project that it would prefer;


(vi)
            Work
                Programme and Budget for development proposals relating to the proposed
                Development Area;


(vii)
            anticipated
                adverse impact on the environment and measures to be taken for prevention
                or minimisation thereof and for general protection of the environment
                in
                conduct of operations;


(viii)
            measures
                to be taken for the health and safety of persons employed in Petroleum
                Operations;


(ix)
            the
                information required in Article 21.





10.8  A
      proposed development plan submitted by the Contractor pursuant to Article 10.7
      may be approved by the Management Committee within one hundred and ten (110)
      days of submission thereof or eighty (80) days of receipt of any additional
      information requested by the Management Committee. In case the Management
      Committee requires any reasonable additional information, the same shall be
      requested by it within eighty (80) days from the submission of the development
      plan. The Contractor shall provide such additional information within thirty
      (30) days from the request by the Management Committee. If, within a period
      of
      one hundred and ten (110) days after submission of a proposed development plan
      or eighty (80) days from the receipt of any additional information, where asked
      by the Management Committee, the Management Committee fails to convey a decision
      to the Contractor, the Contractor shall have option to submit the proposal
      to
      the Government. Also, where, the Management Committee rejects the development
      plan of the Contractor, the Contractor can submit the
      development





plan
      for
      the approval of the Government. The Government shall respond on the proposed
      development plan submitted by the Contractor within one hundred and ten (110)
      days. In case Government refuses to approve the proposed development plan,
      it
      shall convey the reasons for such refusal and the Contractor shall be given
      opportunity to make appropriate modifications to meet concerns of Government
      and
      the provisions of the foregoing Article and re-submit the plan within ninety
      (90) days from the date of receipt of refusal from the Government.





10.9
            A
                Development Plan approved by the Management Committee or Government,
                as
                may be the case, from time to time shall commit the Contractor to
                the
                obligations stipulated in Articles 10.10 to
                10.12.





10.10
            Work
                Programmes and Budgets for Development and Production Operations
                shall be
                submitted to the Management Committee as soon as possible after the
                approval of a Development Plan under Article 10.8 and thereafter
                not later
                than 31st December each Year in respect of the Year immediately
                following.





10.11
            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 Work 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 yearly estimates
                of
                potential production are required, these shall be based on evidence
                necessitating such changes.





10.12
            Not
                later than the fifteenth (15th)
                of January each Year, in respect of the Year immediately following
                commencement of Commercial Production, 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 modern
                oilfield and petroleum industry practices and minimising 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.





10.13
            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 for
                approval
                to the Management Committee.





10.14
            In
                the event the area encompassing the Commercial Discovery extends
                beyond
                the Development Area designated in the Development Plan, either within
                the
                original Contract Area but subsequently relinquished or, outside
                the
                original Contract Area, the Management Committee may make recommendations
                to the Government





concerning
      enlargement of the Development Area, provided the same was not awarded to any
      other company by the Government or is not held by any other party or not on
      offer by the Government and no application for a License or Lease is pending
      with the Government. However, in case the area is held by any other party or
      on
      offer by the Government or application for License or Lease is pending with
      the
      Government, the Management Committee shall notify the same to the Government
      for
      further action on the matter. Government
      may consider such request for extension at its sole discretion and on terms
      and
      conditions, which it may consider fit.








**ARTICLE
      11**





**PETROLEUM
      EXPLORATION LICENSE AND MINING LEASE**








11.1  The
      Contractor shall submit an application for grant of License in respect of the
      Contract Area, as early as possible, but not later than fifteen (15) Business
      Days from the date of execution of this Contract.





11.2  On
      submission of a development plan of a Commercial Discovery pursuant to Article
      10.7, the Contractor shall submit an application for a Lease in respect of
      the
      proposed Development Area to the relevant State Government(s).





11.3  Where
      a
      part of a Reservoir in respect of which a Commercial Discovery has been declared
      extends beyond the Contract Area, subject to Article 10.14 such area may be
      included in the proposed Development Area, in relation to which application
      for
      a Lease is made, on terms and conditions as decided by the Central Government;
      provided that such area is:





(a)
            not
                subject to a license or lease granted to any other
                person;


(b)
            not
                the subject of negotiations/bidding or contract awarded for a license
                or
                lease; and


(c)
            available
                for licensing (i.e. is not an area over which Petroleum Operations
                are
                excluded).





11.4  Where
      a
      Development Plan has been approved pursuant to Article 10 and the Contractor
      has
      complied with the terms and conditions of the License and this Contract and
      is
      not in breach of any of the terms thereof, or the provisions of any law and
      subject to normal Government clearances/approvals being obtained by the
      Contractor as applicable before grant/issue of the Lease, the Central Government
      will assist the Contractor in obtaining the Lease from the relevant State
      Government(s) over the Development Area as agreed, subject to Article 11.5
      to
      enable the Contractor to carry out Petroleum Operations in the Development
      Area
      in accordance with the Development Plan.





11.5  The
      Lease
      shall be granted for an initial period of twenty (20) years from the date of
      grant thereof subject to:





(a)  cancellation
      in accordance with its terms or for termination of this Contract in accordance
      with its terms;


(b)  extension
      by mutual agreement between the Parties for five (5) years or such period as
      may
      be agreed after taking into account the balance recoverable reserve and balance
      economic life of the Field/Development





Area
      from
      the expiry of the initial period provided that in the event of a Commercial
      production of Non Associated Natural Gas the extension may be for a period
      of
      ten (10) years or such period as may be mutually agreed between the Parties
      after taking into account the balance recoverable reserves and balance economic
      life of the Field/Development Area from the date of expiry of the initial term;
      and


(c)  the
      terms
      of this Contract and other terms and conditions as set forth in such Lease
      be
      consistent with this Contract and the relevant legislation.





**ARTICLE
      12**





**UNIT
      DEVELOPMENT**








12.1  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 and both parts of the Reservoir can be more efficiently
      developed together on a commercial basis, on receiving information in writing
      from any party to these contracts or any information on this from any bonafide
      source, the Government may, for securing the 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
      ;


(b)  submit
      such agreement between the Contractor and such other parties to the Government
      for approval within one hundred and eighty (180) days; 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.





12.2  If
      no
      plan is submitted within the period specified in Article 12.1 (c) or such longer
      period as the Government and the Contractor and the other parties referred
      to in
      Article 12.1 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 such other parties a plan for such joint development consistent
      with generally accepted modern oilfield and petroleum industry practices which
      shall take into consideration any plans and presentations made by the Contractor
      and the aforementioned other parties.





12.3  If
      the
      parties are unable to agree on the proposed plan for joint development, the
      Government may call for a joint development plan from an independent agency,
      which agency, may make such a proposal after taking into account the position
      of
      the parties in this regard. Such a development plan, if approved by Government,
      shall be binding on the parties, notwithstanding their disagreement with the
      plan. However, the Contractor may in case of any disagreement on the issue
      of
      joint development or the proposed joint development plan, prepared in accordance
      with Article 12.2 or within forty five (45) Business Days of the plan approval
      as aforesaid in this Article, notify the Government that it elects to surrender
      its rights in the Reservoir/Discovery in lieu of participation in a joint
      development.








12.4  If
      a
      proposed joint development plan is agreed and adopted by the parties, or adopted
      following determination by the Government, 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.





12.5  The
      provisions of Articles 12.1, 12.2 and Article 12.3 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 the areas subject to contract for petroleum
      operations by other parties.





**ARTICLE
      13**





**MEASUREMENT
      OF PETROLEUM**





13.1
            Petroleum
                used for internal consumption for Petroleum Operations, flared, saved
                and
                sold from the Contract Area shall be measured by methods and appliances
                generally accepted and customarily used in modern oilfield and petroleum
                industry practices and approved by the Management Committee and the
                Government.





13.2  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.





13.3  Before
      commencement of production from the Contract Area, the Parties shall mutually
      agree on:





(a)
            methods
                to be employed for measurement of volumes of Petroleum
                production;


(b)
            the
                point or points 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.





13.4  The
      Contractor shall undertake to measure the volume and quality of the Petroleum
      Produced and Saved from the Contract Area at the agreed measurement point
      consistent with generally accepted modern oilfield and petroleum industry
      practices with the frequency and according to procedures agreed pursuant to
      Article 13.3. 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.





13.5  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 authorised representatives, such operations.





13.6  The
      Contractor shall keep all the records of analysis and measurement of
      hydrocarbons calibrations and proving of measurement system and make available
      to Government or its authorized agency such records on request.





**ARTICLE
      14**





**PROTECTION
      OF THE ENVIRONMENT**











14.1  The
      Government and the Contractor recognise that Petroleum Operations 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 and shall in particular;





(a)  employ
      modern oilfield and petroleum industry practices and standards including
      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
      unavoidable, to minimise 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; and




(c)  comply
      with the requirements of applicable laws and the reasonable requirements of
      the
      Government from time to time.





14.2  If
      the
      Contractor fails to comply with the provisions of paragraph (b)(i) of Article
      14.1 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.





14.3  If
      the
      Government in accordance with the laws has 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 fauna
      or flora 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
      such **** damage.
      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.











14.4  The
      measures and methods to be used by the Contractor for the purpose of complying
      with the terms of paragraph (b)(i) of Article 14.1 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 14.5 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 reviewed from
      time to time in the light of prevailing circumstances.





14.5  The
      Contractor shall cause a person or persons with special knowledge on
      environmental matters, 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 flora and fauna 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 flora and fauna 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 14.4 for minimising
      Environmental Damage and carrying out Site Restoration activities.





14.5.1  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, it being understood that such approval
      shall not be unreasonably withheld.





14.5.2  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, it being understood that such approval
      shall not be unreasonably withheld.





14.5.3  The
      studies mentioned in Article 14.5 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 taking into account the phase of operations to which the study
      relates :





(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;


(l)  blowout
      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;


(r)  debris
      disposal; and


(s)  protection
      of natural drainage and water flow.





14.5.4  Subject
      to the provision of all applicable laws and notifications on protection of
      environment, any new project or expansion or modernization projects for
      petroleum operations for which a proposal is submitted by the Contractor, the
      Government shall compete the assessment of the project within a period of ninety
      (90) days from the receipt of the requisite documents and data from the project
      authorities and completion of public hearing. The decision of the Government
      on
      the proposal of the Contractor for environmental clearance shall be conveyed
      within thirty (30) days thereafter. However, wherever forest land is involved;
      the Contractor / user agency shall have to obtain approval of the Central
      Government through the State Government concerned, under the Forest
      (Conservation) Act, 1980. The decision of the Central Government on such
      proposal of the contractor / user agency shall be taken within sixty (60) days
      from the date of receipt of proposal of the Contractor / user agency from the
      State Government. The State Government is required to convey its recommendations
      on the proposal complete in all respect to the Central Government or otherwise
      within ninety (90) days from the receipt of the same from the
      applicant.





14.6
            The
                Contractor shall ensure that:





(a)  Petroleum
      Operations are conducted in an environmentally acceptable and safe manner
      consistent with modern oilfield and petroleum industry practices 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 for the
      implementation of the Contractor's obligations in relation to the environment
      under this Contract.





14.7  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.





14.7.1  In
      the
      event of an emergency, accident, Oil spill or fire arising from Petroleum
      Operations affecting the environment, the Contractor shall forthwith notify
      the
      Government and shall promptly implement the relevant contingency plan and
      perform such Site Restoration as may be necessary in accordance with modern
      oilfield and petroleum industry practices.





14.7.2  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 modern oilfield and petroleum industry
      practices in such circumstances.





14.8  In
      the
      event that the Contractor fails to comply with any of the terms contained in
      Article 14.7 within a period specified by the Government, 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 of Appendix
      C
      of this Contract.





14.9  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 in accordance with modern oilfield and petroleum
      industry practices and take all other action necessary to prevent hazards to
      human life or to the property of others or the environment.








14.10  The
      Contractor shall prepare a proposal for the restoration of site including
      abandonment plan and requirement of funds for this and the annual contribution.
      This will be submitted along with the annual Budget for the consideration and
      approval of the Management Committee. The annual contribution shall be deposited
      by the Contractor in the Site Restoration fund which will be established, in
      accordance with the scheme notified by the Government.





14.11   Subject
      to Section 3.2 of Accounting Procedure, any Site Restoration fund scheme
      formulated by Government and subject to provisions of this Contract, any and
      all
      costs incurred by the Contractor pursuant to this Article shall be cost
      recoverable including but not limited to sinking funds established for
      abandonment and restoration of the Contract Area.





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





14.13   Where
      the
      Contract Area is partly located in areas forming part of certain national parks,
      sanctuaries, mangroves, wetlands of national importance, biosphere reserves
      and
      other biologically sensitive areas passage through these 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
      appropriate authorities shall be obtained.





14.14   The
      obligations and liability of the Contractor for the environment hereunder shall
      be limited to damage to the environment which:





(a)  occurs
      after the Effective Date; and


(b)  results
      from an act or omission of the Contractor.





**ARTICLE
      15**





**RECOVERY
      OF COST PETROLEUM**








15.1  The
      Contractor shall be entitled to recover Contract Costs out of a percentage
      of
      the total value of Petroleum Produced and Saved from the Contract Area in the
      Year in accordance with the provisions of this Article.





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





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





15.4  Development
      Costs incurred by the Contractor in the Contract Area upto the date of first
      Commercial Production shall be aggregated, and the Contractor shall be entitled
      to recover out of the Cost Petroleum 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.





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





15.6  The
      Contractor shall be entitled to recover in full during any Year the Production
      Costs incurred in that Year out of the Cost Petroleum.





15.7  The
      Contractor shall be entitled to recover in full during any Year the royalty
      payments to the Government/State Government(s) in that Year out of the Cost
      Petroleum.





15.8  If
      during
      any Year the Cost Petroleum 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 15.1 to 15.7 then, subject to the provisions
      of
      Article 15.12:





(a)
      recovery shall first be made of royalty payments; and


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


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


(d)
      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 Contract Costs in
      such
      Year or the subsequent Years as if such Contract Costs were due for recovery
      in
      that Year, or the succeeding Years, until the unrecovered Contract Costs have
      been fully recovered out of Cost Petroleum from the Contract Area.





15.9  The
      maximum amount of Cost Petroleum to which the Contractor shall be
      entitled, in
      accordance with the provisions of this Article, shall be **fifty
      one** percent **(51%)** of the
      total value of the Petroleum Produced and Saved from the Contract
      Area.





15.10  For
      the
      purposes of this Article, as well as Article 16, costs, receipts and income
      shall be converted into production unit equivalents, and vice versa viz both
      in
      physical and monitory terms, using the relevant prices established pursuant
      to
      Article 19 for Crude Oil and Article 21 for Natural Gas.




15.11  Pending
      completion of the calculations required to establish definitively the
      Contractor's entitlement to Cost Petroleum from the Contract 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 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 ninety (90) **** 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 as reflected in audited accounts under Article 25.4.3, shall be
      undertaken and any necessary adjustments to the Cost Petroleum entitlement
      shall
      be agreed upon between the Government and the Contractor within thirty (30)
      days
      and made within thirty (30) days thereafter.





15.12  Where
      more than one Party constitutes the Contractor, the percentage of the total
      Cost
      Petroleum from the Contract 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 Participating Interest of each such Party.





15.13  The
      Contractor acknowledges that the cost estimates for Minimum Work Programme
      are
      the realistic estimate of expenditure. For the purposes of allowing cost
      recovery under Article 15 herein read with Section 3 of the Accounting
      Procedure, the cost estimates given by the Contractor in the bid documents
      towards the Minimum Work Programme in both the Exploration Phases shall
      be





taken
      as
      Bench Mark. Any material difference over the Bench Mark shall not be allowed
      for
      cost recovery unless the Government on the recommendation of the Management
      Committee agrees that the cost increase is due to change in circumstances after
      the Contract comes into effect. For the above purpose, an itemized break-up
      of
      cost estimates given by the Contractor in the bid documents is placed at
      Appendix-H to this Contract.











**ARTICLE
      16**





**PRODUCTION
      SHARING OF PETROLEUM**











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





16.2.1  When
      the
      Investment Multiple of the Contractor at the end of any Year is less than one
      and one half (1.5), the Government shall be entitled to take and receive **ninety
      one percent (91%)** and
      the
      Contractor shall be entitled to take and receive **nine
      percent (9%)** of the
      total Profit Petroleum from the Contract Area with effect from the start of
      the
      succeeding Year.





16.2.2  When
      the
      Investment Multiple of the Contractor at the end of any Year 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 **sixty
      nine percent (69%)** and the
      Contractor shall be entitled to take and receive **thirty
      one percent (31%)** of the
      total Profit Petroleum from the Contract Area with effect from the start of
      the
      succeeding Year.





16.2.3  When
      the
      Investment Multiple of the Contractor at the end of any Year 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 **five
      percent (5%)** and the
      Contractor shall be entitled to take and receive **ninety
      five percent (95%)** of the
      total Profit Petroleum from the Contract Area with effect from the start of
      the
      succeeding Year.





16.2.4  When
      the
      Investment Multiple of the Contractor at the end of any Year 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 **five
      percent (5%)** and the
      Contractor shall be entitled to take and receive **ninety
      five percent (95%)** of the
      total Profit Petroleum from the Contract Area with effect from the start of
      the
      succeeding Year.





16.2.5  When
      the
      Investment Multiple of the Contractor at the end of any Year 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 **five
      percent (5%)** and the
      Contractor shall be entitled to take and receive **ninety five percent (95%)** of the
      total Profit Petroleum from the Contract Area with effect from the start of
      the
      succeeding Year.








16.2.6  When
      the
      Investment Multiple of the Contractor at the end of any Year is equal to or
      more
      than three and one half (3.5), the Government shall be entitled to take and
      receive **five
      percent (5%)** and the
      Contractor shall be entitled to take and receive **ninety
      five percent (95%)** of the
      total Profit Petroleum from the Contract Area with effect from the start of
      the
      succeeding Year.





16.3  Any
      balance left to the credit of the Parties in any Site Restoration account,
      opened pursuant to the provision of Article 14.10, after Site Restoration has
      been done by the Contractor in accordance with the provisions of this Contract
      and the laws in this regard, shall be shared between the Government and the
      Contractor as per the Investment Multiple reached at the time of ceasing of
      production from the Contract Area.





16.4.1  The
      Government shall have the option to take its entitlement to Profit
      Petroleum **** o ther
      than
      "ANG" or "NANG **"**  either
      in
      cash or in kind in any Year. In case of "ANG" or "NANG", as the case may be,
      the
      Government shall have the option to take its entitlement to Profit Petroleum
      in
      cash or in kind and such option shall be exercised at interval of every five
      (5)
      Years from the commencement of first Commercial Production from the Contract
      Area.





16.4.2  In
      accordance with the Article 16.4.1, The Government shall exercise such option
      by
      giving a written notice to the Contractor not later than thirtieth
      (30 th )
      June in
      the preceding Year in which the entitlement is due. Once the Government has
      exercised its option, the same shall continue unless the Government informs
      the
      Contractor otherwise.





16.4.3  Where
      the
      Government has informed the Contractor of its intention to take its share in
      kind, the Parties shall mutually agree on a procedure for delivery of the
      Government’s share of Profit Petroleum and, where relevant, the composition of
      the Petroleum which is to be delivered.





16.5 The
      value
      of the Contractor’s Investment Multiple at the end of any Year in respect of the
      Contract 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
      amount of Profit Petroleum to be shared between the Government and the
      Contractor shall be determined for each Quarter on an accumulative basis.
      Pending finalisation of accounts, Profit Petroleum shall be shared between
      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 prices determined pursuant to Articles 19 and 21 for Crude Oil,
      Condensate and Natural Gas respectively shall be used. Within ninety
      (90) **** 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 completed and any
      necessary adjustments to the sharing of Petroleum shall be agreed upon between
      the Government and the Contractor within thirty (30) days and made within thirty
      (30) days thereafter.


(Explanation
      : The Profit Petroleum due to the Government shall be deposited with “Pay &
Accounts officer or its successor, Ministry of Petroleum & Natural Gas,
      Government of India, Shastri Bhavan, New Delhi by 10th of the Month following
      each Quarter)





16.6  The
      Profit Petroleum due to the Contractor in any Year from the Contract Area shall
      be divided amongst the Parties constituting the Contractor, in proportion to
      their respective Participating Interest.





**ARTICLE
      17**





**TAXES,
      ROYALTIES, RENTALS, DUTIES ETC.**








17.1  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.





17.2  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. Any other
      allowance, which are not specified herein, shall be treated in accordance with
      the provisions of Income-tax Act, 1961.





17.2.1  Subject
      to the provisions herein below, deductions at the rate of one hundred percent
      (100%) per annum shall be allowed for all expenditures, both capital and revenue
      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:





(a)  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;


(b)  sections
      40A and 44C of the Income-tax Act, 1961, shall apply.





17.2.2  A
      Company
      shall be entitled, for income tax purposes only, to deduct all its unsuccessful
      Exploration Costs in contract areas covered by other contracts from the
      aggregate value of Petroleum allocable to the Company from any Field(s) in
      the
      Contract Area in the manner as follows:





(a)  unsuccessful
      Exploration Costs incurred in contract areas other than the Contract Area where
      a 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;


(b)  unsuccessful
      Exploration Costs incurred in contract areas other than the Contract Area where
      a Commercial Discovery has been made, after the 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.





17.2.3  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.





17.2.4  For
      any
      or all accumulated expenditures incurred in respect of Exploration Operations
      and drilling operations prior to the date of commercial production, Company(ies)
      shall have option to amortize such expenditures over a period of ten (10) years
      from the date of first commercial production.





17.2.5  The
      profits and gains of the business of the Parties comprising the Contractor
      consisting of Petroleum Operations shall, for the purpose of levy of income
      tax
      under the Income-tax Act, 1961, be computed on the basis of the value,
      determined in accordance with Article 19, of its Participating Interest share
      of
      Crude Oil produced and saved and sold, or otherwise disposed of, from the
      Contract Area and from any revenue realised on the sale of Associated or Non
      Associated Natural Gas referred to in Article 21 as well as any other gains
      or
      receipts from Petroleum Operations as reduced by the deductions as specified
      herein, and, except as herein provided, all the provisions of the Income-tax
      Act, 1961, shall apply.





17.2.6  Company(ies)
      shall be eligible for benefits available under section 80 IA of the Income-tax
      Act, 1961 as applicable from time to time.





17.3  For
      the
      purposes of Article 17.2 and section 42 of the Income-tax Act,
      1961:





17.3.1  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:





(a)  "agreement"
      means this Contract as defined in Article 1;


(b)  "commercial
      production" shall have the meaning assigned in Article 1.





17.3.2  The
      terms
      "assessing officer", "assessed loss", and "assessment year" shall have the
      meaning as defined in the Income-tax Act, 1961.





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





17.4  Companies
      (Lessee) shall be required to pay royalty to the Government (Lessor) for
      offshore areas at the rate of ten percent (10%) of the well-head value of Crude
      Oil and Natural Gas. In case of an onshore area, Companies shall be required
      to
      pay to the State Government(s) (Lessor) at the rate of twelve point five zero
      percent (12.5%) of the well-head value of Crude Oil and ten percent (10%) of
      the
      well-head value of Natural Gas. In case of an offshore area falling beyond
      four
      hundred (400) metre isobath, the rate of royalty payable by Companies (Lessee)
      to the Government (Lessor) shall be at the rate of five percent (5%) of the
      well-head value of Crude Oil and Natural Gas for the first seven years from
      the
      date of commencement of Commercial Production in the Field. The valuation of
      Crude Oil and Natural Gas shall be as per the Article 19 and Article 21
      respectively. The royalty amount due to Government/State Government(s) shall
      be
      payable latest by the end of the succeeding Month.





17.5  Machinery,
      plant, equipment, materials and supplies imported by the Contractor and its
      Subcontractors solely and exclusively for use in Petroleum Operations under
      this
      Contract or similar contracts with the Government where customs duty has been
      exempted by the Government shall be exempt from customs duties and export duties
      or other charges on re-exportation of the said items in accordance with
      applicable legislation.





17.6  The
      Government shall have the right to inspect the records and documents of the
      physical item or items for which an exemption has been provided pursuant to
      Article 17.5 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.




17.7  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 including rules, regulations, procedures,
      notifications etc. governing customs duties and sale or disposal of such
      items.





17.8  Any
      sales
      tax or tax of similar nature payable on the sale(s) of Petroleum under this
      Contract shall be borne/reimbursed by the buyer(s).





17.9  Subject
      to the provisions herein above provided, the Contractor shall be liable for
      payment of:


(a)  annual
      license charges and rental fees and other charges under the
      Rules;





(b)  charges
      payable by specified industries or in connection with Petroleum Operations
      under
      applicable legislation;


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


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


(e)  customs
      duties, except for those items subject to exemption as provided in Article
      17,
      applicable at the rates specified from time to time; and


(f)  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.





17.10  If
      any
      change in or to any Indian law, rule or regulation dealing with income tax
      or
      other corporate tax, export/import tax, excise, customs duty or any other
      levies, duties or taxes imposed on Petroleum or dependent upon the value of
      Petroleum results in a material change to the expected economic benefits
      accruing to any of the Parties after the date of execution of the Contract,
      the
      Parties shall consult promptly in good faith to make necessary revisions and
      adjustments to the Contract in order to maintain such expected economic benefits
      to each of the Parties, provided, however, that the expected economic benefits
      to the Parties shall not be reduced as a result of the operation of this
      Article.








**ARTICLE_18**





**DOMESTIC
      SUPPLY, SALE, DISPOSAL AND**


**EXPORT
      OF CRUDE OIL AND CONDENSATE**








18.1  Until
      such time as the total availability to the Government of Crude Oil and
      Condensate from all Petroleum production activities in India meets the total
      national demand, each Company comprising the Contractor, shall be required
      to
      sell in the domestic market in India all of the Company's entitlement to Crude
      Oil and Condensate from the Contract Area in order to assist in satisfying
      the
      national demand.





18.2  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 Company(ies) 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, domestic sale obligation shall be suspended
      and the Company 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 position to ask Company(ies)
      under Article 18.1 in respect of the following Year by giving ninety (90) days
      notice thereof to the Company(ies) to sell Crude Oil and Condensate in the
      Indian domestic market.





18.3  Upon
      India achieving Self-sufficiency, the Company(ies) shall be entitled to freely
      lift and export any Crude Oil and Condensate 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.





18.4  No
      later
      than sixty (60) days prior to the commencement of production in a Field, 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 Field during the succeeding Year, based on
      a
      maximum efficient rate of recovery of Crude Oil from that Field in accordance
      with modern oilfield and petroleum industry practices. No later than thirty
      (30)
      days prior to the commencement of each Quarter, the Contractor shall inform
      its
      estimate of production for the succeeding Quarter and shall endeavour to produce
      the forecast quantity for each Quarter.





18.5  Each
      Company 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 Profit Petroleum and shall have the obligation to lift the
      said





Petroleum
      on a current basis and in such quantities so as not to cause a restriction
      of
      production or inconvenience to the other Company(ies).





18.6  The
      Government shall, throughout the term of this Contract, have the right to
      separately take in kind and dispose of its share of Crude Oil and shall have
      the
      obligation to lift the said Oil on a current basis and in such quantities so
      as
      not to cause a restriction of production or inconvenience to the
      Contractor.





18.7  For
      the
      purpose of implementing the provisions of this Article, a Crude lifting
      procedure and Crude sales agreement based on generally acceptable international
      terms shall be agreed upon by the Contractor with buyer(s) no later than six
      (6)
      months or such shorter period as may be mutually agreed between the Contractor
      and buyer(s) with the consent of Government prior to the commencement of
      production in a Field. Such lifting procedure shall be made available to all
      the
      Parties to this Contract.





**ARTICLE
      19**





**VALUATION
      OF PETROLEUM**








19.1  For
      the
      purpose of this Contract, the value of Crude Oil, Condensate and Natural Gas
      (refer Article 21) shall be based on the price determined as provided
      herein.





19.2  A
      price
      for Crude Oil shall be determined for each 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, on import parity basis (with marine freight
      being determined on the basis of nearest port to the Contract Area) for Crude
      Oil produced and sold or otherwise disposed of from Contract Area, for each
      Delivery Period, in accordance with the appropriate basis for that type of
      sale
      or disposal specified below. Subject to the provisions of this Article 19,
      it is
      clearly understood that the actual prices received by the Company(ies) from
      the
      sales will form the basis for the purposes of cost recovery, Profit Petroleum
      sharing and payment of royalty as provided in the Articles 15, 16 and 17
      respectively. The basis of valuation given in this Article for the purpose
      of
      Article 15,16 and 17 shall apply only where Government is of the view that
      sale
      prices realised by the Company(ies) are not consistent with the price realisable
      at Arms Length Sales.





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





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





19.4  For
      the
      purpose of determining price at Arms Length Sales, the price of the Crude Oil
      at
      which sale takes place will generally be based on 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,
      selling price to be ascertained from Platt's Crude Oil Market Wire daily
      publication ("Platt's"), or the spot market for the same crude oils ascertained
      in the same manner, whichever





price
      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 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 and 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. The Contractor shall make available all the
      data
      pertaining to pricing of Crude to enable Government to decide that the proposed
      sale price by the Contractor/each constituents of the Contractor reflects a
      fair
      market price for the Crude.





19.4.1  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.





19.5  The
      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 and shall be subject to agreement by the
      Government.





19.6  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 or arbitrator appointed as provided in Article
      33.





19.6.1  If
      the
      matter is referred to the sole expert, 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.





19.6.2  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.





19.6.3  Any
      price
      or pricing mechanism agreed by the Parties pursuant to the provisions of this
      Article shall not be changed retroactively.





19.7  In
      the
      event that all sales of Crude Oil in a Delivery Period by a Company constituting
      the Contractor are to be made to an Affiliate, the Parties may agree on an
      alternative method of valuing the Crude Oil for the purposes of this Contract,
      provided that such alternative method results in an internationally competitive
      fair market valuation for that Delivery Period. In case of disagreement, the
      decision of the Government on determining a Crude price in case of sales to
      an
      Affiliate shall be final and binding.





19.8  In
      the
      event that in any Delivery Period there is more than one type of sales referred
      to in Articles 19.3 and 19.7, then, for the purpose of calculating Cost
      Petroleum and Profit Petroleum entitlement and royalty payments pursuant to
      Articles 15, 16 and 17 respectively, 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.





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





19.10  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 to compliance with the relevant provisions of
      the
      laws of general application in India governing currency and foreign exchange
      and
      related administrative instructions and procedures issued thereunder 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 freely convertible currency
      acceptable to the Government and the Foreign Company, the net proceeds of sales
      of Petroleum 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


(f)  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.





Provided,
      however, that repatriation pursuant to subparagraphs (a) and (e) and payments
      pursuant to subparagraph (f) shall be subject to the provisions of any treaties
      and bilateral arrangements between the Government and any country with respect
      to payments to or from that country.





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.  A
      Party
      other than a Foreign Company comprising the Contractor shall be governed by
      the
      relevant currency and foreign exchange laws and related administrative
      instructions and procedures issued thereunder.





20.4  Indian
      Companies shall have right to remit their portion of expenditure in foreign
      currency(ies) in accordance with the exchange control provisions.








**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 and produced from the Contract Area.
      Accordingly, any proposal by the Contractor relating to Discovery and production
      of Natural Gas from the Contract Area 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  The
      Contractor shall have the right to use Natural Gas produced from the Contract
      Area for the purpose of Petroleum Operations including reinjection for pressure
      maintenance in Oil Fields, gas lifting and captive power generation required
      for
      Petroleum Operations.





21.3  For
      the
      purpose of sales in the domestic market pursuant to this Article 21, the
      Contractor shall have freedom to market the Gas and sell its
      entitlement.





21.4  Associated
      Natural Gas (ANG)





21.4.1  In
      the
      event that a Discovery of Crude Oil contains ANG, the Contractor shall declare
      in the proposal for the declaration of the said Discovery as a Commercial
      Discovery as specified in Article 10, 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 be commercially exploited in accordance
      with
      the terms of this Contract along with the Commercial Production of the Crude
      Oil
      from the Contract Area, 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 for an Oil Discovery 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
      in accordance with Government's policy, or elsewhere, the proposed plans for
      such exploitation.





21.4.3  If
      the
      Contractor wishes to exploit the Excess ANG, subject to Article 21.1, the
      Contractor shall be free to explore markets for the commercial exploitation
      of
      the said Excess ANG and submit its proposals for such exploitation to the
      Government in accordance with Article 21.4.2.





21.4.4  Where
      the
      Contractor is of the view that the Excess ANG cannot be commercially exploited
      and chooses not to exploit the said Excess ANG, or is unable to find a market
      for the Excess ANG pursuant to Article 21.4.3, the Government shall be entitled
      to take and utilise such Excess ANG free of any cost/charge.





21.4.5  If
      the
      Government elects to take the Excess ANG as provided in Article
      21.4.4:





(a)  the
      Contractor shall deliver such Excess ANG to the Government (or its nominee)
      free
      of any cost/charge, at 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, insofar as practicable, uninterrupted delivery
      of such Excess ANG to the Government or its nominee;


(c)  the
      cost
      of all facilities installed pursuant to paragraph (b) above shall be borne
      by
      the Government (or its nominee);


(d)  the
      Government or its nominee shall bear all costs including gathering, treating,
      processing and transporting costs beyond the downstream flange of the Gas/Oil
      separation facilities; and


(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.
      Parties shall endeavour that such procedures do not restrict Oil production.





21.4.6  The
      Excess ANG which is not commercially exploited by the Contractor, or taken
      by
      the Government or its nominee pursuant to this Article 21, shall be returned
      to
      the subsurface structure or flared or otherwise disposed off as approved by
      the
      Government in the context of the Development Plan, provided that flaring will
      be
      resorted to only for small quantities and as a last resort.





21.4.7  As
      soon
      as practicable after the submission of the proposed development plan, the
      Contractor and the Government or its nominee shall meet to discuss the sale
      and/or disposal of any ANG discovered with a view to giving effect to the
      provisions of this Article 21 in a timely manner.





21.5  Non
      Associated Natural Gas (NANG)





21.5.1  In
      the
      event of a Discovery of NANG in the Contract Area, the Contractor shall promptly
      report such Discovery to the Management Committee and the





Government
      and the provisions of Articles 10.1 and 10.2 shall apply. The remaining
      provisions of Article 10 would apply to the Discovery and development of NANG
      only insofar as they are not inconsistent with the provisions of this Article.
      Notwithstanding the provisions of Article 3, the Contractor shall be entitled
      to
      retain the Discovery Area subject to the provisions of this Article
      21.





21.5.2  If,
      pursuant to Article 10.1, the Contractor gives notification that the Discovery
      is of potential commercial interest, the Contractor shall submit to the
      Management Committee, within one (1) year from the date of notification of
      the
      above said Discovery, the proposed Appraisal Programme, including a Work
      Programme and Budget to carry out an adequate and effective appraisal of such
      Discovery, to determine (i) without delay, whether such Discovery is a
      Commercial Discovery and (ii) with reasonable precision, the boundaries of
      the
      area to be delineated as the Development Area. Such proposed Appraisal Programme
      shall be supported by all relevant data such as Well data, Contractor's best
      estimate of reserve range and production potential, and shall indicate the
      date
      of commencement of the proposed Appraisal Programme.





21.5.3  The
      proposed Appraisal Programme together with the Work Programme and Budget
      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 shall offer its comments within the said period. The said Appraisal
      Programme together with the Work Programme and Budget submitted by the
      Contractor as revised or modified or amended in light of the Management
      Committee review and advice, shall be adopted as the Appraisal Programme and
      the
      Contractor shall promptly proceed with implementation of the said
      Programme.





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, it shall submit
      to the Management Committee as soon as practicable but not later than three
      (3)
      years from the date of notification of the aforementioned Discovery, a proposal
      for the declaration of the Discovery as a Commercial Discovery. Such proposal
      shall take into account the Government’s policies on Gas utilization and propose
      alternative options, if any for use or consumption of the NANG and be
      accompanied by a report on the Discovery 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 proposal is submitted to
      the
      Management Committee by the Contractor within three (3) years from 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.








21.5.5  Where
      the
      Contractor has submitted a proposal for the declaration of a Discovery as a
      Commercial Discovery, the Management Committee shall consider the proposal
      of
      the Contractor with reference to commercial utilization or commercial
      development of the NANG in the domestic market or elsewhere and in the context
      of Government’s policy on Gas utilization and the chain of activities required
      to bring the NANG from the Delivery Point to potential consumers in the domestic
      market or elsewhere. The Management Committee may, within eighty five (85)
      days
      of the submission of the said proposal, request the Contractor to submit any
      additional information on the Discovery, the anticipated markets or any other
      related matter, that may reasonably be required to facilitate a review. The
      Contractor shall submit the required information within thirty (30) days of
      the
      request by the Management Committee. The Management Committee will advise the
      Contractor of its review within one hundred and thirty five (135) days from
      the
      submission of proposal or within fifty five (55) days from the receipt of
      additional information, as the case may be, on the proposal made by the
      Contractor to declare the Discovery as a Commercial Discovery.





21.5.6  If
      the
      Contractor declares the Discovery a Commercial Discovery after taking into
      account the advice of the Management Committee as referred to in the Article
      21.5.5, the Contractor shall, within one (1) year of the declaration of the
      Discovery as a Commercial Discovery, submit a development plan for the
      development of the Discovery to the Management Committee for approval. Such
      plan
      shall be supported by all relevant information including, inter alia, the
      information required in Article 10.7.





21.5.7  Unless
      otherwise agreed by the Management Committee, it shall consider the proposed
      development plan and give their approval within one hundred and sixty five
      (165)
      days of submission thereof or eighty five (85) days from the receipt of the
      clarifications/additional information from the Contractor. Any
      clarification/additional information required by the Management Committee shall
      be asked for within eighty five (85) days of receipt of the proposal from the
      Contractor. The Contractor shall provide such additional information within
      thirty (30) days from the receipt of request by the Management Committee. If
      the
      Management Committee fails to convey its decision within one hundred and sixty
      five (165) days from the submission of the development plan or eighty five
      (85)
      days from the receipt of the clarifications/additional information, whichever
      is
      later, the Contractor may submit the development plan for the approval of the
      Government. Also, where, the Management Committee rejects the development plan
      of the Contractor, the Contractor can submit the development plan for the
      approval of the Government.





21.5.8  Where
      the
      development plan is submitted to the Government for approval pursuant to Article
      21.5.7, the Government shall convey its decision within one hundred and fifteen
      (115) days from the date of receipt of the proposal from the Contractor.
      Government, where it considers necessary, may ask





clarifications/additional
      information from the Contractor within eighty five (85) days and shall convey
      its decision within fifty five (55) days from the date of receipt of such
      clarifications/additional information.





21.5.9  If
      the
      Government has failed to approve or disapproves the Contractor’s proposed
      development plan, within one hundred and fifteen (115) days from receipt or
      within fifty five (55) days from the receipt of clarifications/ information
      from
      the Contractor as mentioned in the Article 21.5.8, the Government shall advise
      the Contractor, in writing, of the reasons for such failure or disapproval
      and
      the Government and the Contractor shall meet to discuss the said development
      plan and the reasons for the said failure to approve or disapproval, and use
      their best efforts to agree on appropriate modifications thereto to meet the
      Government’s concerns or objections. Thereafter, the Contractor shall have the
      right to resubmit, within eighty five (85) days of communication from the
      Government, the proposed development plan duly amended to meet the Government’s
      concerns. Such right of resubmission of the proposed development plan shall
      be
      exercisable by the Contractor only once. The Government will respond to the
      re-submitted plan within one hundred and fifteen (115) days. **** If
      no
      such plan is submitted to the Government within the above specified period,
      the
      Contractor shall relinquish its right to develop such Gas Discovery and such
      Discovery shall be excluded from the Contract Area.





21.5.10  In
      the
      event that the Management Committee or Government, as may be the case, approves
      the Contractor’s development plan for the development of such Commercial
      Discovery, with such modifications and amendments as the Management Committee
      or
      Government, as may be the case, may approve, the said Gas Discovery shall be
      promptly developed by the Contractor in accordance with the approved plan which
      shall be the Development Plan.





21.5.11  The
      Contractor will have a two (2) years period, from the date of approval of the
      Development Plan by the Management Committee or Government, to tie-up the
      market(s) for sale of Non-associated Natural Gas.





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





21.6  Valuation
      of Natural Gas





21.6.1  The
      Contractor shall endeavour to sell all Natural Gas produced and saved from
      the
      Contract Area at arms-length prices to the benefits of Parties to the
      Contract.





21.6.2  Notwithstanding
      the provision of Article 21.6.1, Natural Gas produced from the Contract Area
      shall be valued for the purposes of this Contract as follows :





(a)  Gas
      which
      is used as per Article 21.2 or flared with the approval of the Government or
      re-injected or sold to the Government pursuant to Article 21.4.5 shall be
      ascribed a zero value;


(b)  Gas
      which
      is sold to the Government or any other Government nominee shall be valued on
      the
      terms and conditions actually obtained including pricing formula and delivery;
      and


(Explanation
      : However, it is clarified that this provision would apply only when the sale
      is
      made to the Government or Government nominee under the provisions of the
      Contract)


(c)  Gas
      which
      is sold or disposed of otherwise than in accordance with paragraph (a) or (b)
      shall be valued on the basis of competitive arms length sales in the region
      for
      similar sales under similar conditions.





21.7  The
      formula or basis on which the prices shall be determined pursuant to Article
      21.6 **** shall
      be
      approved by the Government prior to the sale of Natural Gas to the
      consumers/buyers, **** within
      sixty (60) Business Days from the receipt of proposal or from the date of
      receipt of clarification/additional information, where asked for by the
      Government. For granting this approval, Government shall take into account
      the
      prevailing policy, if any, on pricing of Natural Gas including any linkages
      with
      traded liquid fuels, and it may delegate or assign this function to a regulatory
      authority as and when such an authority is in existence and in place.





**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 Subcontractors 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  The
      Operator 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 Operator shall, in consultation with
      the
      Government, 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  At
      the
      request of the Government, the Foreign Companies shall separately endeavour
      to
      negotiate, in good faith, technical assistance agreements with the Government
      or
      a company nominated by Government for this purpose 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 the company nominated
      by Government. 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, t o 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; and


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





23.2  Subject
      to Article 8.3(f), 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
      sixty (60) days after the end of each Year, the Contractor shall provide the
      Government with a report outlining its achievements in utilising Indian
      resources during that Year in accordance with Section 10 of Appendix C to this
      Contract.





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, maintain and obtain
      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 modern oilfield and
      petroleum industry practices, and shall furnish to the Government, certificates
      evidencing that such coverage is in effect. Such insurance policies shall
      include the Government as additional insured and shall waive subrogation against
      the Government. 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 Operations; 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;


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


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


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


(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
      such
      Subcontractors.





24.2  Indemnity





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





**ARTICLE
      25**





**RECORDS,
      REPORTS, ACCOUNTS AND AUDIT**








25.1  The
      Contractor shall prepare and maintain in original 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.





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
      the
      Operator, at its business office in India, in accordance with the Accounting
      Procedure to this Contract.





25.3  The
      Contractor shall submit to the Government regular Statements and reports
      relating to Petroleum Operations as provided in Appendix-C.





25.4.1  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.





25.4.2  The
      appointment of auditor and the scope of audit should have prior approval of
      the
      Management Committee.





25.4.3  The
      Contractor shall submit the audited accounts to the Management Committee for
      approval within sixty (60) days from the end of the Year. The Management
      Committee shall consider and approve the auditor's report within thirty (30)
      days after the submission of such report.





25.4.4  Copy
      of
      the auditors report shall be submitted to the Government within thirty (30)
      days
      after the approval of the Management Committee.




25.5  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.





25.6  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 requirements of the statutes
      relating to taxation of Companies.





25.7  For
      the
      purpose of any audit referred to in Articles 25.5, the Contractor shall make
      available in original to the auditor all such books, records, accounts and
      other
      documents and information as may be reasonably required by the auditor during
      normal business hours.





**ARTICLE
      26**





**INFORMATION,
      DATA, CONFIDENTIALITY,**


**INSPECTION
      AND SECURITY**








26.1  The
      Contractor shall, promptly after they become available in India, provide the
      Government, free of cost, with 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, magnetic
      tapes, cores, cuttings and production data as well as all interpretative and
      derivative data, including reports, analyses, interpretations and evaluation
      prepared in respect of Petroleum Operations (hereinafter referred to as "Data").
      Data shall be the property of the Government, provided, however, that the
      Contractor 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  The
      Contractor may, for use in Petroleum Operations, retain copies or samples of
      material or information constituting the Data and, with the approval of the
      Government, original material, except that where such material is capable of
      reproduction and copies have been supplied to the Government, the Contractor
      may, subject to the right of inspection by the Government, export, subject
      to
      any applicable regulations, 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
      Government.





26.3  The
      Contractor shall keep the Government currently advised of all developments
      taking place during the course of Petroleum Operations and shall furnish the
      Government with full and accurate information and progress reports relating
      to
      Petroleum Operations (on a daily, Monthly, Yearly or other periodic basis)
      as
      Government may reasonably require, provided that this obligation shall not
      extend to proprietary technology. The Contractor shall meet with the Government
      at a mutually convenient location in India to present the results of all
      geological and geophysical work carried out 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, advisers, data processing centres and
      laboratories, where required, for the 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 a Participating Interest of
      a
      Party comprising the Contractor or in connection with a sale of the stock or
      shares 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 the 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;
      and


(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 as confidential by
      the
      recipient. Prompt notice of disclosures made by Companies pursuant to Article
      26.5 shall be given to the Government.





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 acreages, may be disclosed by the Government for such purpose.
      Government may also disclose such Data or information for any exploration
      programme to be conducted by a third party in adjoining areas with the consent
      of the Contractor, for better understanding of regional geological set-up and
      such consent by the Contractor shall not be unreasonably withheld.




26.8  Where
      an
      area ceases to be part of the Contract Area, the Contractor shall hand over
      all
      the originals and copies of the Data and information with respect to that part
      to the Government within a period of one (1) year from the date of
      relinquishment or surrender. The Contractor shall, however, be allowed to retain
      one copy of the Data in its possession for its own use, where required, and
      shall not use the Data for sale or any other purposes. Subject to the provisions
      of this Article, the Contractor shall keep all Data/information
      confidential.










**Explanatory
      Note:** Pursuant
      to this Article 26, and not withstanding any provisions in the contract to
      the
      contrary, the Government shall have the right to disclose and freely use all
      data and information at it's sole discretion except for data of proprietary
      nature such as interpretation report to any party on or after three (3) Years
      from acquisition of such data in order to promote exploration and production
      activities in the country. For any relinquished areas, the government shall
      have
      the right to disclose and freely use all the data immediately after such
      relinquishment.





26.9  The
      Government shall, at all 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 in the
      Contract Area, 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 reasonable use of all facilities
      and privileges afforded to its own personnel in the field including the use
      of
      office space and housing for a period not exceeding 30 mandays in a Year and
      thereafter at the cost of Government. The said representatives shall be entitled
      to make a reasonable number of surveys, measurements, drawings, tests and copies
      of documents, take samples, and make reasonable use of the equipment and
      instruments of the Contractor provided that such functions shall not unduly
      interfere with the Contractor's Petroleum Operations.





26.10  The
      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 a
      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, Condensate 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
      Petroleum to which the Contractor is entitled under this Contract, and title
      to
      Petroleum sold by the Companies shall pass to the relevant buyer party at the
      Delivery Point. The Contractor shall be responsible for all costs and risks
      prior to and including at the Delivery Point and each buyer party shall be
      responsible for all costs and risks associated with such buyer party's share
      after the Delivery Point.





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





27.4  Assets
      purchased by the Contractor for use in Petroleum Operations shall be owned
      by
      the Parties comprising the Contractor in proportion to their Participating
      Interest provided that the Government 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 the Government’s option upon expiry or earlier termination of the
      Contract.





27.5  The
      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, subject to Article 27.5, 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
      Government.





27.7  Equipment
      and assets no longer required for Petroleum Operations during the term of the
      Contract shall be sold, exchanged or otherwise disposed of by the Contractor,
      provided however that the proceeds of sale shall be credited to Petroleum
      Operations as provided in Appendix C, provided that prior written consent of
      the
      Management Committee shall be obtained for each transaction in excess of US$
      50,000 (Fifty thousand United States Dollars) or such other value as may be
      agreed from time to time by the Management Committee. The consent of the
      Management Committee shall not be unreasonably withheld.





**ARTICLE
      28**





**ASSIGNMENT
      OF PARTICIPATING INTEREST**








28.1  Subject
      to the terms of this Article and other terms of this Contract, any Party
      comprising the Contractor 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 of good standing, has the capacity and
      ability to meet its obligations hereunder, and is willing to provide an
      unconditional undertaking to the Government 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.





28.1.1  Subject
      to Article 28.7, nothing in this Article 28 shall prevent a Party comprising
      the
      Contractor from assigning or transferring a part or all of its Participating
      Interest to an Affiliate, with the approval of the Management Committee,
      provided that;





a)  the
      assignee provides an irrevocable, unconditional bank guarantee from a reputed
      bank of good standing in India, acceptable to the Government, in favour of
      the
      Government, for the amount specified in Article 29.2, in a form provided at
      Appendix-G;


b)  the
      assignee provides a parent financial and performance guarantee issued by the
      guarantor which furnished the guarantee pursuant to Article 29 in respect of
      the
      assignor Party’s obligations under this Contract in favour of the Government, of
      the performance of such Affiliate assignee of its obligations under this
      Contract;


c)  the
      prospective Affiliate is not a company incorporated in a country with which
      the
      Government, for policy reason, has restricted trade or business;
      and


d)  the
      assignment will not adversely affect the performance or obligations under this
      Contract or be contrary to the interest of India.





28.2  In
      case
      of any change in the status of a Company or its shareholding resulting in a
      change in:





a)  the
      control of the Company; or


b)  its
      relationship with the company(ies) providing the guarantee under Article 29.1
      (a) and 29.1 (b);





the
      Company shall seek the consent of the Government for assigning the Participating
      Interest under the changed circumstances and the provisions of this Article
      28
      shall apply, mutatis mutandis, to be obtaining of such consent. For the purpose
      of this Article 28.2, control has the same meaning as in Article 1.3.





28.3   An
      application for consent to assign or transfer shall be accompanied by all
      relevant information concerning the proposed assignment or transfer including
      detailed information on the proposed assignee or transferee and its shareholding
      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 Article.





28.4   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.





28.5   No
      assignment or transfer shall be effective until the approval of the Government
      is received or deemed to have been received. Approval may be given by the
      Government on such terms and conditions as it may deem fit. Provided that such
      terms and conditions may not increase the obligations of the Parties comprising
      the Contractor. Upon assignment or transfer of its 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.





28.6   In
      the
      event that the Government does not give its consent or does not respond to
      a
      request for assignment or transfer by a Party comprising the Contractor within
      one hundred and twenty (120) days of such request and receipt of all information
      referred to in Article 28.3 above, consent shall be deemed to have been given
      by
      the Government.





28.7   An
      assignment or transfer shall not be made where the Participating Interest to
      be
      retained by the proposed assignor or the percentage interest of assignee shall
      be less than ten per cent (10%) of the total Participating Interest of all
      the
      constituents of the Contractor, except where the Government, on the
      recommendations of the Management Committee may, in special circumstances,
      so
      permit.








28.8   Nothing
      contained in this Article 28, shall prevent a Party comprising the Contractor
      from mortgaging, pledging, charging or otherwise encumbering at its own risk
      and
      cost all or part of its Participating Interest for the purposes of security
      relating to finance to the extent required for performing its obligation under
      the Contract, provided that:





i)  such
      Party shall remain solely liable for all its obligations relating to its
      Participating Interest to the exclusion of the other participants
      thereto;


ii)  the
      encumbrance shall be expressly subordinated to the rights of the other Parties
      under this Contract. The obligations occurring from the said encumbrance shall
      be the sole responsibility of the original Party and shall in no manner
      compromise the rights of other Parties to the Contract;


iii)  such
      Party has given reasonable notice of such encumbrance and furnishes to all
      other
      Parties (including, for the avoidance of doubt, the Government) a certified
      copy
      of the executed instrument(s) evidencing the encumbrances;


iv)  keeping
      in view the national interest of India, prior consent of the Government shall
      be
      required (which consent shall not be unreasonably withheld) of the list of
      potential lenders with whom such Party can consider hypothecation;


v)  the
      Party
      creating the charge shall ensure that such charge shall not in any way affect
      the interest of other Parties or result in interference with joint operations.
      In the event of any claims or liabilities imposed on other Parties because
      of
      the creation of such charges, the Party having created charge on its
      Participating Interest shall indemnify the other Parties; and


vi)  in
      case
      of foreclosure or default by a borrowing Party, the mortgagee shall not be
      deemed to have acquired a right to carry on either by itself or through an
      agent, the Petroleum Operation, without the written consent of the Government
      of
      India.





28.8.1  The
      Parties acknowledge that to obtain financing a Party (“Borrower”) will be
      required to secure for a permitted chargee the right to receive a copy of any
      notice served on the Borrower and the Parties agree that they shall serve a
      copy
      of any such notice on any such permitted chargee in accordance with the
      provisions of Article 37 at the same time as such notice is served on the
      Borrower. For the purposes of Article 37 the address for service of notices
      of
      the permitted chargee shall be that specified in the instrument or instruments
      referred to in Article 28.8(iii).





28.8.2  In
      case
      lender elects to participate directly or through a company other than the
      Borrower under the financing arrangement referred to above, the same shall
      be
      subject to the rights of Government as contained in Article 28.1 of Contract
      and
      the pre-emptive rights of the Parties as may be contained in Operating
      Agreement. Any Party which wishes to exercise the said pre-emptive rights will
      explicitly assume the obligation on the same terms and conditions as the
      Borrower.





**ARTICLE
      29**





**GUARANTEES**








29.1  Each
      of
      the Companies constituting the Contractor shall procure and deliver to the
      Government within thirty (30) days from **** the **** Effective
      Date of this Contract:





(a)  an
      irrevocable, unconditional bank guarantee from a reputed bank of good standing
      in India, acceptable to the Government, in favour of the Government, for the
      amount specified in Article 29.2, in a form provided at Appendix-G;





(b)  financial
      and performance guarantee in favour of the Government from a parent company
      acceptable to the Government, in the form and substance set out in Appendix-E1,
      or, where there is no such parent company, the financial and performance
      guarantee from the Company itself in the form and substance setout in
      Appendix-E2;





(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 Minimum Work Programme to be undertaken by the Contractor in
      the
      Contract Area during the relevant Year of a Phase, subject to Article 29.3.
      The
      total estimated expenditure for the relevant Year for the purpose of furnishing
      bank guarantee by the Contractor shall be higher of the cost estimates made
      by
      the Directorate General of Hydrocarbons (DGH) or budget estimates of the
      Contractor as presented by its to the Management Committee.





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 Minimum 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)  after
      the
      completion and due performance of the Minimum Work Programme of a particular
      Exploration Phase, the guarantee will be released in favour of the Company
      on
      presentation to the bank of a certificate from the Government that the
      obligation of the Contractor has been fulfilled and the guarantee may be
      released, subject to Article 29.4. Such certificate shall be provided within
      thirty (30) days from the completion of the Minimum Work Programme and
      fulfillment of obligations under the Contract to the satisfaction of the
      Government.





29.4  If
      the
      Contractor elects to proceed to the second Exploration Phase of the Exploration
      Period, a bank guarantee for the Phase in terms of Articles 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 terminated by the Government upon ninety
      (90) days written notice of its intention to do so.





29.6  Subject
      to Article 29.7, notwithstanding any change in the composition or shareholding
      of the parent company furnishing a performance guarantee as provided herein,
      it
      shall, not under any circumstances, be absolved of its obligations contained
      in
      the guarantees provided pursuant to Article 29.1(b).








29.7  If
      :




(a)
            a
                Party (“Assignor”) assigns all or a part of its Participating Interest to
                a third party (“Assignee”) in accordance with Article 28;





(b)
            the
                Assignee provides an irrevocable, unconditional bank guarantee from
                a
                reputed bank of good standing in India, acceptable to the Government,
                in
                favour of the Government, for an amount equal to the assignee’s
                Participating Interest share of the estimated expenditure of the
                Minimum
                Work Programme of the Exploration Phase current at the Effective
                Date of
                the assignment;





(c)
            the
                Assignee provides performance guarantee and legal opinion in terms
                of this
                Article; and





(d)
            the
                addendum to the Contract giving effect to the assignment of Participating
                Interest is executed by all
                Parties;





then
      the
      Government shall release the guarantee given by the assignor under Article
      29.1
      (a) to the extent of the amount of the guarantee provided by the assignee and
      where relevant the guarantee under Article 29.1 (b).








**ARTICLE
      30**





**TERM
      AND TERMINATION OF THE CONTRACT**








30.1  The
      term
      of this Contract shall be for the period of the License and any Lease granted
      thereunder, unless the Contract is terminated earlier in accordance with its
      terms, and shall be deemed to have been terminated, if for any reason, the
      Contractor ceases to hold such License or Lease.





30.2  Subject
      to the provision of Articles 5, 14 and 30.6 and without prejudice to the
      provisions of Article 30.7 or any other provisions of this Contract, the
      Contractor 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.





30.3  This
      Contract may, subject to the provisions herein below and Article 31, be
      terminated by the Government upon giving ninety (90) days written notice with
      reasons to the other Parties of its intention to do so in the following
      circumstances, namely, that the Contractor or a Party comprising the Contractor
      (“the Defaulting Party”)





(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
      hydrocarbon not authorized 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
      modern oilfield and petroleum industry practices which, when so extracted,
      were
      immediately notified to the Government or


(c)  is
      adjudged bankrupt by a competent court or enters into 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)  has
      failed to make any monetary payment required by law or under this Contract
      by
      the due date or within such further period after the due date as may thereafter
      be specified by the Government; or


(g)  has
      failed to comply with or has contravened the provisions of this Contract in
      a
      material particular; or


(h)  has
      failed to comply with any final determination or award made by a sole expert
      or
      arbitrators subject to Article 33; or


(i)  has
      failed to carry out or observe any of the terms and conditions of the License
      or
      Lease or the provisions of the Acts or Rules in force thereunder, subject
      however, to Article 31.


(j)  on
      notice
      of termination as provided in Article 29.5.








PROVIDED
      THAT





where
      the
      Contractor comprises two or more Parties, the Government shall not exercise
      its
      rights of termination pursuant to Article 30.3, on the occurrence, in relation
      to one or more, but not all, of the Parties comprising the Contractor, of an
      event entitling the Government to terminate the Contract,





(a)  if
      any
      other Party or Parties constituting the Contractor (the non-Defaulting Party
      or
      Parties) satisfies the Government that it, or they, is/are willing and would
      be
      able to carry out the obligations of the Contractor.


(b)  where
      the
      non Defaulting Party or Parties with the consent of the Government has/have
      acquired the Participating Interest of the Defaulting Party pursuant to the
      provisions of the Operating Agreement and has/have procured and delivered to
      the
      Government a guarantee or guarantees as referred to in Article 29.1 in respect
      of the Participating Interest of the Defaulting Party acquired by the non
      Defaulting Party or Parties.





30.4  This
      Contract may also be terminated by the Government on giving the requisite notice
      specified above if the events specified in Article 30.3 (c) and (d) occur with
      respect to a company which has given a performance guarantee pursuant to Article
      29 subject however to Article 30.5.





30.5  If
      the
      circumstance or circumstances that give rise to the right of termination under
      Article 30.3(f) or (g) or (i) or Article 30.4 are remedied (whether by the
      Defaulting Company or by another Party or Parties in its behalf) within the
      ninety (90) day 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.





30.6  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 undertaken
      or
      incurred including obligations under Article 5.6, by the Contractor or any
      Party
      comprising the Contractor and not discharged prior to the date of
      termination.





30.7  In
      the
      event of termination pursuant to Articles 30.2, 30.3 or 30.4:





(a)
            the
                Government may require the Contractor, for a period not exceeding
                one
                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)
            a
                Foreign Company, which is a constituent of the Contractor, shall
                have to
                remove and export all its property subject to Article 27 and the
                provisions hereof 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
      30.2, 30.3, or 30.4, or such longer period as the Government may agree, the
      Contractor shall comply with Article 14.9 and any reasonably necessary action
      as
      directed by the Government to avoid Environmental Damage or hazards to human
      life or to 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
                License or Lease granted to such Party, or in meeting any requirement
                of
                the Act, the Rules or any License or Lease, 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 under this Contract 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.





31.3
            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 Management
                Committee 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. The Party
                affected
                shall promptly notify the Management Committee 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 that the circumstances constitute valid grounds of Force
                Majeure
                under this Article and that such Party has exercised reasonable diligence
                and efforts to remedy the cause of any alleged Force
                Majeure.








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 Exploration Phase of the Exploration Period or this Contract,
                may be
                extended to the extent of Force Majeure period or by such period
                as may be
                agreed by the Management Committee.





31.7
            Notwithstanding
                anything contained herein above, if an event of Force Majeure occurs
                and
                is likely to continue for a period in excess of thirty (30) days,
                the
                Parties shall meet to discuss the consequences of the Force Majeure
                and
                the course of action to be taken to mitigate the effects thereof
                or to be
                adopted in the circumstances.








**ARTICLE
      32**





**APPLICABLE
      LAW AND LANGUAGE OF THE CONTRACT**








32.1
            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.





32.4
            The
                laws will also include amendments, revisions, modifications
                etc.








**ARTICLE
      33**





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





33.3
            Subject
                to the provisions of this Contract, the Parties hereby agree that
                any
                controversy, difference, disagreement or claim for damages, compensation
                or otherwise (hereinafter in this Clause referred to as a “dispute”)
                arising between the Parties, which cannot be settled amicably within
                ninety (90) days after the dispute arises, may (except for those
                referred
                to in Article 33.2, which may be referred to a sole expert) be submitted
                to conciliation or an arbitral tribunal for final decision as hereinafter
                provided.





33.4
            The
                arbitral tribunal shall consist of three arbitrators. Each Party
                to the
                dispute shall appoint one arbitrator and the Party or Parties shall
                so
                advise the other Parties. The two arbitrators appointed by the Parties
                shall appoint the third arbitrator.





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 in accordance with Arbitration and Conciliation Act,
                1996.****





33.6
            If
                the two arbitrators appointed by or on behalf of the Parties fail
                to agree
                on the appointment of the third arbitrator within thirty (30) days
                of the
                appointment of the second arbitrator and if the Parties do not otherwise
                agree, at the request of either Party, the third arbitrator shall
                be
                appointed in accordance with Arbitration and Conciliation Act,
                1996.





33.7
            If
                any of the arbitrators fails or is unable to act, his successor shall
                be
                appointed by the Party or person who originally appointed such in
                the
                manner set out in this Article as if he was the first
                appointment.





33.8
            The
                decision of the arbitral tribunal shall be pronounced within four
                (4)
                months unless otherwise extended by the Parties, and, in case of
                difference among the arbitrators the decision of the majority shall
                be
                final and binding on the Parties.





33.9
            The
                arbitration agreement contained in this Article 33 shall be governed
                by
                the Arbitration and Conciliation Act, 1996 (Arbitration Act). Arbitration
                proceedings shall be conducted in accordance with the rules for
                arbitration provided in Arbitration
                Act.





33.10
            The
                right to arbitrate disputes under this Contract shall survive expiry
                or
                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 and Conciliation Act, 1996. No arbitration proceedings
                shall be instituted while conciliation proceedings are pending provided
                that a Party may initiate arbitration proceedings in the event that
                dispute has not been resolved by conciliation within sixty (60) days
                of
                the date of agreement by the Parties to submit such dispute to
                conciliation.





33.12
            The
                venue of the sole expert, conciliation or arbitration proceedings
                pursuant
                to this Article, unless the Parties agree otherwise, shall be New
                Delhi,
                India and shall be conducted in the English language. Insofar as
                practicable, the Parties shall continue to implement the terms of
                this
                Contract notwithstanding the initiation of proceedings before a sole
                expert, conciliator or arbitral tribunal 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. The cost and expenses of arbitrator
                appointed by a Party in accordance with the provision of this Article
                shall be borne by the respective Party and the cost and expenses
                of third
                arbitrator and other incidental expenditure in relation to arbitration
                and
                liability thereof shall be at the discretion of the
                arbitrators.





33.14
            Notwithstanding
                anything contrary contained herein above, in the event of dispute
                among
                Government Company(ies) and with the Government, such disputes shall
                be
                settled in accordance with guidelines issued on the subject by Government
                from time to time.





**ARTICLE
      34**





**CHANGE
      OF STATUS OF COMPANIES**











34.1
            The
                Parties comprising the Contractor shall notify the Government of
                any
                change in the management or control of a Company(ies) or the relationship
                with any guarantor of the
                Company(ies).








**ARTICLE
      35**





**ENTIRE
      AGREEMENT, AMENDMENTS, WAIVER AND MISCELLANEOUS**








35.1
            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 execution date of this
                Contract.





35.2
            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.





35.3
            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.





35.4
            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.





35.5
            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.





35.6
            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.





35.7
            Reference
                to any law or regulation having the force of law includes a reference
                to
                that law or regulation as from time to time may be amended, extended
                or
                re-enacted.





35.8
            A
                reference in this Contract to the word “including” shall also mean
                “including but not limited to”.





**ARTICLE
      36**





**CERTIFICATES**








36.1
            A
                Company shall furnish, prior to execution of this Contract, a duly
                authorised copy of a resolution properly and legally passed by the
                Board
                of Directors of the Company authorising its President or any
                Vice-President or any other representative 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
                authorise the execution, delivery and performance of the
                Contract.











**ARTICLE
      37**





**NOTICES**





37.1
            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 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)  If
      to the
      Government:


Secretary
      to the Government of India


Ministry
      of Petroleum and Natural Gas


Shastri
      Bhavan


Dr.
      Rajendra Prasad Marg,


New
      Delhi- 110001, INDIA


Facsimile
      No.: 91 11 23383585




(b)  Mr.
      M.R.
      Pasrija


Chairman
      and Managing Director


Oil
      India
      Ltd.


5,
      Sikandra Road


New
      Delhi
      - 110001


Facsimile
      No.:  011-23074252


Telephone
      No.:  011-23074250
      / 23074251








(c)  Mr.
      Jean
      Paul Roy


GeoGlobal
      Resources (Barbados) Inc.


C/o
      -
      310, 605 - 1 st Street
      SW,


Calgary,
      Alberta,


Canada
      T2P 0J9


Facsimile
      No.:  +1
      403
      777-9199


Telephone
      No.:  +1
      403
      777-9250





37.2  Notices
      when given in terms of Article 37.1 shall be effective when delivered if offered
      at the address of the other Parties as under Article 37.1 during business hours
      on working days and, if received outside business hours, on the next following
      working day.





37.3  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
      2 nd day of
      March, 2007.








Signed
                for and on


behalf
                of the


President
      of India


By
      :    /s/______________


In
      presence of:   /s/








Signed
      for and on behalf


of
      OIL                 By
      :   /s/   ____






In
      presence of:   /s/











Signed
      for and on behalf


of
      GGRB                By
      :   /s/   ____






In
      presence of:   /s/












**APPENDIX
      A**





**DESCRIPTION
      OF THE CONTRACT AREA**







The
      area
      comprising approximately 2196 Sq. Km., Onshore India identified as **Block
      RJ-ONN-2004/2** described herein and shown on the map attached as Appendix B.





Longitude
      and Latitude measurements commencing at points A to J to A are given below
      :





**Coordinates****Longitude**
            **Latitude****Pt.**
            **Deg.**
            **Min.**
            **Sec.**
            **Deg.**
            **Min.**
            **Sec.**A
            71
            58
            24.00
            27
            52
            8.00B
            71
            57
            9.00
            27
            56
            12.00C
            72
            0
            9.00
            28
            2
            57.00D
            72
            14
            35.00
            28
            16
            50.00E
            72
            22
            40.00
            28
            08
            10.00F
            72
            31
            30.00
            28
            15
            0.00G
            72
            40
            30.00
            28
            5
            0.00H
            72
            10
            0.00
            27
            43
            45.00I
            72
            5
            0.00
            27
            48
            30.00J
            72
            9
            48.00
            27
            52
            28.00A
            71
            58
            24.00
            27
            52
            8.00








Appendix B


Map of Contract Area














**APPENDIX
      C**








**ACCOUNTING
      PROCEDURE TO**








**THE
      CONTRACT**








**BETWEEN**








**THE
      GOVERNMENT OF INDIA**








**AND**








**OIL
      INDIA LTD.**




**AND**





**GEOGLOBAL
      RESOURCES (BARBADOS) INC.**











**WITH
      RESPECT TO CONTRACT AREA**











**IDENTIFIED
      AS**





**BLOCK
      : RJ-ONN-2004/2**











**TABLE
      OF CONTENTS**





**Sections**  **Content**      ****  ****





**Section
      1:**  **General
      Provisions**





1.1
                Purpose


1.2
                Definitions


1.3
                Inconsistency


1.4
                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 transactions


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 the Government:





3.1.1  Surface
      Rights


3.1.2  Labour
      and Associated Labour Costs


3.1.3  Transportation
      Costs


3.1.4  Charges
      for Services -


(i)
      Third
      Parties


(ii)
      Affiliates of Contractor


3.1.5  Communications


3.1.6  Office,
      Shore Bases and


Miscellaneous
      facilities


3.1.7  Environmental
      Studies and Protection





3.1.8  Materials
      and Equipments


(i)  General


(ii)  Warranty


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




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


3.1.14  Royalty,
      License fee, surface rentals etc.


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 and credits


3.5  Non-duplication
      of charges 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:**  **Profit
      Sharing Statement**





**Section
      10:**  **Local
      Procurement Statement**





**Section
      11:**  **End
      of Year Statement**





**Section
      12:**  **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 recovery and profit sharing and participation
      purposes;


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


-  address
      numerous other accounting related matters.





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





1.2   Definitions





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





1.3   Inconsistency





In
      the
      event of any inconsistency or conflict between the provisions of this Accounting
      Procedure and the other 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
      ninety (90) 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 sub-categories 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 and 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)  Profit
      Sharing Statement (see Section 9 of this Accounting Procedure)


(vi)  Local
      Procurement Statement (see Section 10 of this Accounting Procedure)


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


(viii)  Budget
      Statement (see Section 12 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, the Party constituting the
      Contractor who is the 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 using mercantile basis of accounting. The
      accounts shall be maintained in United States Dollars, which shall be the
      controlling currency of account for cost recovery, and profit sharing purposes.
      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
      conversion purposes 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 on the basis of the average of the applicable exchange rates for
      the
      day on which the transaction occurred.





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 converting 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 Article 20.3 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 forty
      five (45) days from the date on which the obligation to pay was
      incurred.





1.7.3  All
      sums
      due by one Party to the other under the Contract during any Month shall, for
      each day such sums are overdue during such Month, bear interest compounded
      daily
      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 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, costs or
      expenditures will not be lower or higher, as the case may be, 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 twenty (20)
      Business 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 the
      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 Year, within two (2) years (or such longer period
      as
      may be required in exceptional circumstances) from the end of such
      Year.





1.9.2  The
      Government may undertake the conduct of the audit either through its own
      representatives or through a qualified firm of recognised chartered accountants,
      registered in India or a reputed consulting firm, appointed for the purpose
      by
      the Government and the costs of audit in case of Government auditor(s) shall
      be
      borne by the Government, where as for outside auditor(s), this shall be borne
      by
      the Contractor as a General and Administrative Cost.





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
      the
      Contractor's activities under the Contract and all books of account, accounting
      entries, material records and inventories, vouchers, payrolls, invoices and
      any
      other documents, correspondence 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 verification 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. Submission of the audit certificate, shall in no way relieve or
      diminish the





responsibility
      of the Contractor for the compliance with the obligations under the Contract.





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 (120) 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 and deemed to have
      been agreed to by the Contractor.





1.9.6   All
      agreed adjustments resulting from an audit and all adjustments required by
      prevailing exceptions under Section 1.9.5 shall be promptly made in the
      Contractor's accounts and any consequential adjustments to the Government's
      entitlement to Petroleum shall be made within thirty (30) days therefrom.





1.9.7   Notwithstanding
      any reference to a Sole Expert or Arbitration in accordance with the provisions
      of the Contract, in case any amount is claimed as due to the Government
      resulting from the audit exception but not accepted or settled by the
      Contractor, then the Contractor shall deposit such claimed amount in a escrow
      account to be opened with a financial institution, failing mutually agreed
      agreement with State Bank of India within thirty (30) days from the date when
      the amount is disputed by the Contractor. The amount in escrow account along
      with any interest accumulated thereon shall be appropriated or adjusted in
      accordance with the decision or award of the Sole Expert or Arbitral Tribunal
      as
      may be or otherwise as mutually agreed to between the Parties.





1.9.8   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 the Contract. 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





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.








**SECTION
      2**





**CLASSIFICATION,
      DEFINITION AND ALLOCATION OF COSTS**


**AND
      EXPENDITURES**











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, analysis 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 Wells with the object of
      finding Petroleum or in drilling Appraisal Wells provided that if such Wells
      are
      completed as producing Wells or injection Well for enhancing Oil recovery,
      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 discoveries within the Contract Area including
      expenditures incurred on account of:





2.3.1   Geological
      and Geophysical information acquired in connection with Development
      Operations.





2.3.2   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.





2.3.3   Completing
      of Exploration 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 to enhance recovery of Petroleum.





2.3.4   Purchase,
      installation or construction of production, transport and storage facilities
      for
      production of Petroleum, such as pipelines, flow lines, production and treatment
      units, wellhead equipment, subsurface equipment, enhanced recovery systems,
      offshore and onshore platforms, export terminals and piers, harbours and related
      facilities and access roads for production activities.





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 after the start of
      production from the Field (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. Service Costs in any Year shall include the costs
      incurred in such 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 including
      supervisory, accounting and employee relations services;





2.6.2   An
      annual
      overhead charge for services rendered by the parent company or an Affiliate
      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, provided that:-




(i)  for
      the
      period from the Effective Date until the date on which the first Development
      Plan under the Contract is approved by the Government, this annual charge shall
      be the Contractor's verifiable expenditure but shall in no event be greater
      than
      the following percentages of the total Contract Costs incurred during the
      Contract Year in or in connection with the Contract Area and qualifying for
      recovery pursuant to Section 3:




**Contract
      costs in any**  **Annual
      overhead charge**


**Contract
      year (in million US$)**





0-2 3%


Over
      2-5 US
      $
      60,000 + 2% of Contract Costs


in
      excess
      of US $ 2 million.


Over
      5 US
      $
      120,000 + 1% of Contract


Costs
      in
      excess of US $ 5 million




(ii)  from
      the
      date on which the first Development Plan is approved, the charge shall be at
      an
      amount or rate to be agreed on between the Parties and stated in the Development
      Plan.





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 on Petroleum Operations as per reviewed or approved
      Work Programme and Budget by the Management Committee as the case may be,
      pursuant to the Contract as classified under the headings referred to in Section
      2 shall be allowable for 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 referred to in Articles 25.4.1 to 25.4.4 and Article
      25.5, **** as
      provided for herein. Further in case of variation in costs over the
      reviewed/approved Work Programme and Budget, as the case may be, or
      re-appropriation of costs, shall be submitted to the Management Committee for
      review/approval, as the case may be, within thirty (30) days from end of the
      relevant Financial Year and subject to the audit and other provisions of the
      Contract, such costs shall be allowable for the purposes of the
      Contract.





3.1.1   Surface
      Rights





All
      direct costs necessary for the acquisition, renewal or relinquishment of surface
      rights acquired and maintained in force for 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
      all the 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
      as
      per the personnel policy of the employer 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 and 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 the Contractor's standard personnel policies. The
      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 the Contractor may use in lieu of having its own employees.
      Charges shall be equal to the 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 modern oilfield and petroleum industry
      practices.





(b)  Scientific
      or Technical Personnel




Cost
      of
      scientific or technical personnel services provided by any Affiliate of the
      Contractor for the direct benefit of Petroleum Operations, which cost shall
      be
      charged on a cost of service basis. Charges therefor 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 Programme, the Contractor
      shall not authorize 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 treating facilities, oil and gas
      loading and transportation 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, satellite link and microwave facilities
      between the Contract Area and the Contractor's nearest base
      facility.





3.1.6   Office,
      Shore Bases and Miscellaneous Facilities




Net
      cost
      to the 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 assessment studies for the
      Contract Area, and in taking environmental protection measures including
      abandonment cost or contribution to abandonment funds as may be created for
      abandonment and Site Restoration pursuant to the terms of the
      Contract.





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
      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 on 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 on the open market;





(bb)  used
      material which is in sound and serviceable condition and is suitable for reuse
      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 corporate income
      tax payable by the constituents of the Contractor.





3.1.10   Insurance
      and Losses





Insurance
      premia and costs 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 in the Contract
      Area
      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.





3.1.14   Royalty,
      License fee, surface rentals etc.





Royalty,
      License fee, surface rentals, dead rents and other levies and taxes paid to
      the
      Government of India or State Government or local Government bodies or authority
      or agency except income tax paid to the Government.





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 profit 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;





**Explanatory
      Note:** It is
      clarified that costs and expenditures, incurred prior to the Effective Date
      but
      after the execution of the Contract, for making statutory payments in connection
      with the Petroleum Operations such as Petroleum Exploration License (PEL) fee
      and application fee shall be allowed as Contract Cost and shall be cost
      recoverable.





(ii)  expenditures
      in respect of any financial transaction 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
      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 of failure to follow procedures laid down
      by





an
      insurance policy or where the 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;
      and


(xii)  expenses
      of the members of the Management Committee as per Article 6.12.





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 for 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 into account for cost
      recovery, and Profit Petroleum sharing purposes in the manner described in
      Articles 15 and 16 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
      premia 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.





4.2   Inventories





4.2.1   The
      Contractor shall:





(a)  not
      less
      than once every twelve (12) Months with respect to movable assets;
      and


(b)  not
      less
      than once every three (3) 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.





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**











5.1   From
      the
      date of first production of Petroleum from the Contract Area the Contractor
      shall submit a monthly Production Statement to Government showing the following
      information separately of each producing Field 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
      separately.





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 re-injected.





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





5.1.9   The
      size
      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
      Field.





5.1.12   The
      Gas-Oil ratio for each Reservoir and Field for the relevant Month.





5.1.13   Water
      production, water injection and Reservoir pressure data for each Reservoir
      and
      Field.








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 the case of Oil in weight
      (metric tonnes).





5.3   For
      the
      purpose of reporting Field production quantities pursuant to this Section,
      the
      Contractor shall agree with the Management Committee on the exact area to be
      designated as Development Area.





5.4   The
      Government may direct in writing that the Contractor include other reasonable
      particulars relating to the production of Petroleum in its monthly Production
      Statement, and the Contractor shall comply with such direction.





5.5   The
      Production Statement for each Month shall be submitted to Government no later
      than fifteen (15) 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 realised therefor by the Contractor as a result
      of sales of Crude Oil and Condensate to third parties made during the Month
      in
      question.





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





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 premia, 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, flared internally used, saved 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 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 pursuant to the provisions of
      Articles 19 and 21.





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 using mercantile basis of
      accounting. The Statement shall distinguish between Exploration Costs,
      Development Costs and Production Costs and shall separately identify all
      significant items of costs and expenditure as itemised 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 itemised in Section 3.4 of this Accounting Procedure. If the Government
      is not satisfied with the degree of disaggregation 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 Year in question.





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





7.1.4   Variations
      between budget forecast and latest forecast and explanations
      thereof.





7.2   The
      Statement of Costs, Expenditures and Receipts of each Quarter shall be submitted
      to Government not later than thirty (30) 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 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 of by the Contractor for the
      Quarter in question.





8.1.5   Contract
      Costs recovered during the Quarter in question as per Article 15.





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





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





8.2   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**





**PROFIT
      SHARING STATEMENT**











9.1   The
      Contractor shall prepare with respect to each Quarter a Profit Sharing Statement
      containing the following information:





9.1.1   The
      calculation of the applicable net cash flows as defined in Appendix D 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 16, the appropriate percentages of Profit Petroleum
      for the Government and the Contractor in the Quarter in question.





9.1.4   The
      total
      amount of Profit Petroleum to be shared between the Government and the
      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 the Contractor as well as to each constituent of the Contractor in the
      Quarter in question.





9.1.6   The
      actual amounts of Petroleum taken or payment received by Government and the
      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 the 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   The
      Profit Sharing Statement shall be submitted to Government not later than thirty
      (30) days after the end of such Quarter. Any amount due or adjustment required
      in profit sharing among the Parties shall be made within thirty (30) days from
      the submission of the Statement to the Government.











**SECTION
      10**





**LOCAL
      PROCUREMENT STATEMENT**











10.1   In
      furtherance of the obligation in Article 23 of the Contract for the Contractor
      to give preference to the procurement of Indian goods and services, the
      Contractor shall prepare in respect of each Year a local procurement statement,
      containing the following information:





(a)  The
      amount of expenditure incurred by the Contractor directly, or indirectly through
      its Subcontractors, on goods supplied, produced or manufactured in
      India;


(b)  the
      amount of expenditure incurred by the Contractor directly, or indirectly through
      its Subcontractors, on services provided by Indian entities;


(c)  the
      respective percentages that the expenditures recorded under items (a) and (b)
      above represent of the Contractor’s total expenditures;


(d)  a
      detailed description of the procedures adopted during the Year to identify
      and
      purchase goods and services from Indian suppliers; and


(e)  a
      detailed exposition of how the local purchases for the Year as recorded under
      items (a) and (b) above compared with the projected purchases included in the
      budget statement for that Year (pursuant to Section 12.1.3), with explanations
      for any significant variations;





10.2   The
      local
      procurement statement shall be submitted to the Government within sixty (60)
      days after the end of each Year.














**SECTION
      11**





**END
      OF YEAR STATEMENT**











11.1   The
      Contractor shall prepare a definitive End of Year Statement. 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 Profit Sharing Statement,
      but shall be based on actual quantities of Petroleum produced, 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.





[Explanation
      : End of year Statement shall further contain the item wise justification for
      the variation between the actual costs and expenditure incurred and included
      in
      the statement of costs, expenditure and receipts vis-à-vis the Budgets for
      corresponding line items.]





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











**SECTION
      12**





**BUDGET
      STATEMENT**











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





12.1.1   Forecast
      costs, expenditures and receipts for the Year in question.





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





12.1.3   Estimated
      amounts to be spent in the Year on procuring goods and services in
      India.





12.2   The
      Budget Statement shall be submitted to Government with respect to each Year
      not
      less than ninety (90) days before the start of the said Year provided that
      in
      the case of the 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 16, the share of the Government and
      the Contractor respectively of Profit Petroleum from the Contract Area in any
      Year shall be determined by the Investment Multiple earned by the Contractor
      from the then Petroleum Operations at 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.





2.   The
      "Net
      Cash Income" of the Contractor from their Petroleum Operations in any particular
      Year is the aggregate value for the Year of the following:





(i)  Cost
      Petroleum entitlement of the Contractor as provided in Article 15;





**plus**





(ii)  Profit
      Petroleum entitlement of the Contractor as provided in Article 16;





**plus**





(iii)  the
      Contractor’s all incidental income (of the type specified in section 3.4 of the
      Accounting Procedure) arising from Petroleum Operations;





**less**





(iv)  the
      Contractor’s Production Costs and royalty payments (Article 17) incurred on or
      in the Contract Area;





3.    The
      "Investment" made by the Contractor in the Contract Area in any particular
      Year
      is the aggregate value for the Year of:





(i)  the
      Contractor’s Exploration Costs incurred on or in the Contract Area pursuant to
      Article 15




**plus**




(ii)  the
      Contractor’s Development Costs incurred on or in the Contract 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 Contractor as at the end of any Year
      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) 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 Contract 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 Contractor as at the end of the previous Year pursuant
      to
      Articles 16.2 to 16.5.








**APPENDIX-E1**





**FORM
      OF PARENT COMPANY FINANCIAL AND PERFORMANCE GUARANTEE**


(to
      be
      furnished pursuant to Article 29.1 (b) 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 one hundred percent (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 in respect of an
      (offshore) (onshore) area identified as Block
      ___________________________________ (hereinafter referred to as 'the Contract')
      made between the Government of India (hereinafter referred to as 'the
      Government'), 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
      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
      subsequently 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
      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 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
      fulfil or cause to be fulfilled the said obligations in place of XYZ Company
      or
      any Affiliate Assignee, and will indemnify the Government 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 be affected by any change in the articles of association
      and
      bye-laws 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 reorganisation 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 _________________ 200_.








**APPENDIX-E2**





**FORM
      OF COMPANY FINANCIAL AND PERFORMANCE GUARANTEE**


(to
      be
      furnished pursuant to Article 29.1 (b) of the Contract)











WHEREAS____XYZ
      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 signatory to a
      Production Sharing Contract in respect of an (offshore) (onshore) area
      identified as Block ___________________________________ (hereinafter referred
      to
      as 'the Contract') made between the Government of India (hereinafter referred
      to
      as 'the Government'), and XYZ Company (hereinafter referred to as XYZ which
      expression shall include its successors and permitted assigns); and








WHEREAS
      the Guarantor wishes to guarantee its performance 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
      that it will make available, or cause to be made available, financial, technical
      and other resources required to ensure that XYZ Company can carry out its
      obligations as set forth in the Contract.





2.   The
      Guarantor further unconditionally and irrevocably guarantees to the Government
      the due and punctual compliance by it of any obligations under the
      Contract.





3.   The
      Guarantor hereby undertakes to the Government that it shall fulfill or cause
      to
      be fulfilled all its obligations under the Contract, and if it fails to perform
      its obligations under the Contract or commits any breach of such obligations,
      then it shall indemnify the Government against all losses, damages, costs,
      expenses or otherwise which may result directly from such failure to perform
      or
      breach on its part.





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, 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 be affected by any change in the articles of association
      and
      bye-laws of XYZ Company or in any instrument establishing the Company.





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.





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 _________________ 200__.








**APPENDIX-F**





**PROCEDURE
      FOR ACQUISITION OF GOODS AND SERVICES**








**I**  **OBJECTIVES**





The
      objectives of these procedures are to:





(a)
            ensure
                that the goods and services acquired by the Operator for carrying
                out the
                Petroleum Operations are acquired at the optimum cost taking into
                consideration all relevant factors including price, quality, delivery
                time
                and the reliability of potential
                suppliers.


(b)
            ensure
                that goods and services are delivered in a timely manner taking into
                consideration the consequences of delays in the acquisition of these
                goods
                and services on the project as a
                whole.


(c)
            ensure
                that the provisions of Article 23 of the Contract are
                implemented.





**II**  **PRINCIPLES**





The
      principles upon which these procedures are based are:





(a)
            The
                Parties must be satisfied that the Operator is working to an agreed
                procedure for acquiring goods and services which is auditable and
                in
                accordance with the provisions of the
                Contract.


(b)
            The
                Operator must have the ability to acquire goods and services expeditiously
                so that the project schedules in respect of Approved Work Programmes
                are
                maintained.





**III**  **PROCEDURES**





The
      procedures to be adopted by the Operator for the acquisition of goods and
      services shall be as follows:





**Procedure
                A**
            **Procedure
                B**
            **Procedure
                C**Applicable
                to Exploration, Appraisal, Development and Production
                operations
            $
                50,000 to less than $ 200,000
            $
                200,000 to less than $ 500,000
            Equal
                to or more than $ 500,000











**For
      contracts valued at less than US$ 5000**





The
      Operator will be at liberty to determine the procurement procedures and methods
      to procure goods and services valued at less than US Dollars five thousand
      (US$5000).





**For
      Contracts valued at US$ 5000 and above but less than US$
      50,000**





The
      Operator will be at liberty to determine the preferred method of acquiring
      goods
      and services valued at US Dollars five thousand (US$ 5000) and above but less
      than US Dollars fifty thousand (US$ 50,000) provided that at least three (3)
      quotations from selected suppliers (including at least one (1) Indian supplier)
      will be obtained. For items valued at greater than US Dollars twenty thousand
      (US$ 20,000), Operator is required to report to the Operating Committee if
      the
      quote accepted exceed the lowest quote by more than twenty (20) percent.
      Operator will promptly report to the Operating Committee the Operator’s reasons
      for not selecting the lowest quote.





**Procedure
      A:**





Operator
      shall:





(1)
            provide
                the constituents of the Contractor with a list of all the entities
                approved by the Operating Committee as per Appendix-F (V) for the
                applicable category of the contract along with other entities, if
                any,
                from whom the Operator proposes to invite
                tender;


(2)
            add
                to such list the entities whom other Party requests for adding within
                five
                (5) Business Days on receipt of such
                lists;


(3)
            if
                and when any Party so requests, Operator shall evaluate any entity
                listed
                in (1) and (2) above to assure that entity is qualified as based
                on the
                qualification criteria agreed in accordance with Appendix-F(IV) to
                perform
                under the contract;


(4)
            complete
                the tendering process within a reasonable period of
                time;


(5)
            circulate
                to all constituents of the Contractor a comparative bid analysis
                stating
                Operator’s choice of the entity for award of contract. Provide also
                reasons for such choice in case entity chosen is not the lowest
                bidder;


(6)
            inform
                all the constituents of the Contractor of the entities to whom the
                contract has been awarded; and


(7)
            upon
                the request of a Party, provide such Party with a copy of the final
                version of the contract awarded.





**Procedure
      B:**





Operator
      shall:





(1)
            provide
                the Parties with a list of all the entities approved by the Operating
                Committee as per Appendix-F (V) for the applicable category of the
                contract,





along
      with other entities, if any, from whom the Operator proposes to invite
      tender;


(2)
            add
                to such list the entities whom a Party requests for adding within
                five (5)
                Business Days on receipt of such
                list;


(3)
            if
                and when any Party so requests, Operator shall evaluate any entity
                listed
                in (1) and (2) above to assure that entity is qualified as based
                on the
                qualification criteria agreed in accordance with Appendix-F (IV),
                to
                perform under the contract;


(4)
            complete
                the tendering procedure within a reasonable period of
                time;


(5)
            circulate
                to all constituents of the Contractor a comparative bid analysis
                stating
                Operator’s choice of the entity for award of contract. Provide also
                reasons for such choice in case the entity chosen is not the lowest
                bidder. If the bid selected is not the lowest bid, obtain prior approval
                of the Operating Committee for award of
                contract;


(6)
            award
                the contract accordingly and inform all the members of the Management
                Committee of the entities to whom the contract has been awarded;
                and


(7)
            upon
                the request of a Party, provide such Party with a copy of the final
                version of the contract awarded.





**Procedure
      C:**





Operator
      shall:





(1)
            publish
                invitations for parties to pre-qualify for the proposed contract
                in at
                least three (3) daily national Indian newspaper. Provide to Non-Operating
                Companies, a list of responding parties and an analysis of their
                qualifications for the contract being contemplated to be awarded.
                Include
                those who qualify, as per the prequalification criteria approved
                as per
                Appendix-F (IV) in the list of entities from whom Operator proposes
                to
                invite tender for the said
                contract;


(2)
            provide
                the members of the Management Committee with a total list of all
                the
                entities selected as (1) above and all the entities approved by the
                Operating Committee as per Appendix-F (V) for the applicable category
                of
                the contract, along with other entities, if any, from whom the Operator
                proposes to invite tender;


(3)
            add
                to such entities whom a Party requests for adding within five (5)
                Business
                Days on receipt of such list;


(4)
            if
                and when any Party so requests, Operator shall evaluate any entity
                listed
                in (2) and (3) above to assure that entity is qualified as based
                on the
                qualification criteria agreed in accordance with Appendix-F(IV),
                to
                perform under the contract;


(5)
            prepare
                and dispatch the tender documents to the entities as finally listed
                and to
                Parties;


(6)
            after
                the expiration of the period allowed for tendering, consider and
                analyse
                the details of all bids received;


(7)
            prepare
                and circulate to the constituents of the Contractor a comparative
                bid
                analysis stating Operator’s recommendation as to the entity to whom the
                contract





should
      be
      awarded, the reasons therefor, and the technical, commercial and contractual
      terms to be agreed upon;


(8)
            obtain
                the approval of the Operating Committee to the recommended bid. However,
                failing Operating Committee approval any Company may refer the issue
                to
                the Management Committee for decision;
                and


(9)
            award
                the contract accordingly and upon the request of a Party, provide
                such
                Party with a copy of the final version of the
                contract;





IV.
            A
                set of vendor qualifications criteria for each major category
                contract/supply shall be proposed by the Operator and approved by
                the
                Operating Committee within thirty (30) days of its submission. In
                the
                event the Operating Committee fails to approve vendor qualification
                criteria within thirty (30) days of the date the same is first submitted
                by the Operator, the matter shall be referred to the Management Committee
                for decision. The Operating Committee may revise the qualification
                criteria.





V.
            It
                is anticipated that, in order to expedite joint operations, contracts
                will
                be awarded to qualified vendors/contractors who are identified as
                approved
                vendors for the specified activities. A list of such approved vendors
                shall first be established as
                follows:





Operator
      shall:





(1)
            provide
                the constituents of the Contractor with a list of the entities from
                whom
                Operator proposes to invite tender for contracts;
                and


(2)
            add
                to such list entities whom a Company requests for adding within fourteen
                (14) days on receipt of such list; and


(3)
            obtain
                approval of the Operating Committee. Such list shall thereafter be
                maintained by the Operator. The Operating Committee may add to or
                delete
                vendors from such list.

















**APPENDIX-G**





**PERFORMA
      OF BANK GUARANTEE TO BE PROVIDED**


**PURSUANT
      TO ARTICLE 29**











1.  In
      consideration of Government of India (hereinafter referred to as “Government”)
      having entered into a Production Sharing Contract for the block ________dated
      ________ (hereinafter referred to as “Contract”, which expression shall include
      all the amendments agreed to between the Government and the Contractor,
      thereto), with M/s __________________ having its registered office at
      _____________ (hereinafter referred to as ___________, which expression unless
      repugnant to the context or meaning thereof include all its successors,
      administrators, executors and assigns), which is a constituent of the
      Contractor, and the Government have agreed that the ____________ Company shall
      furnish to Government a bank guarantee (hereinafter referred to as “Guarantee”)
      towards its obligations as provided in the Contract for US$(for Foreign
      Companies)/US$ equivalent in Indian Rupees (for Indian Companies) for the
      performance of its obligations under the Contract.





2.
            We
                __________(name of the Bank) registered under the Law of __________
                and
                having its registered office at _____________ (hereinafter referred
                to as
                “the Bank”, which expression shall unless repugnant to the context or
                meaning thereof includes all its successors, administrators, executors
                and
                assigns) do hereby guarantee and undertake to pay immediately on
                the fist
                demand in writing and any/all money(s) to the extent of Indian Rupees/US$
                _______(in figures) and (Indian Rupees/US$ ______ in words) without
                any
                demur, reservation, contest or protest and/or without any reference
                to the
                Company. Any such demand made by Government on the Bank by serving
                a
                written notice shall be conclusive and binding, without any proof,
                on the
                Bank as regards the amount due and payable, notwithstanding any dispute(s)
                pending before any court, tribunal, arbitrator, sole expert, conciliator
                or any other authority and/or any other matter or thing whatsoever,
                as
                liability under these presents being absolute and unequivocal. We
                agree
                that the Guarantee herein contained shall be irrevocable and shall
                continue to be enforceable until it is discharged by Government in
                writing. This Guarantee shall not be determined, discharged or affected
                by
                the liquidation, winding up, dissolution or insolvency of the Contractor
                and shall remain valid, binding and operative against the
                Bank.





3.  The
      Bank
      also agree that Government at its option shall be entitled to enforce this
      Guarantee against the Bank as a principal debtor, in the first instance, without
      proceeding against the __________ Company and notwithstanding any security
      or
      other guarantee that Government may have in relation to the ____________
      Company’s liabilities.








4.  The
      Bank
      further agree that Government shall have fullest liberty without our consent
      and
      without affecting in any manner our obligations hereunder to vary any
      of  the  terms  and  conditions  of  the  said  Contract  or  to  extend  time  of  performance  by  the  said
      __________ Company from time to time or to postpone for any time or from time
      to
      time exercise of any of the powers vested in Government against the said
      ___________ Company and to forebear or enforce any of the terms and conditions relating
      to the said Contract and we shall not be relieved from our liability
      by reason
      of any such variation, or extension being granted to the said __________ Company or
      for
      any forbearance, act or omission on the part of Government or any
      indulgence by
      Government to the said ___________ Company or any such matter or thing
      whatsoever which under the law relating to sureties would, but for this
      provision, have effect of so relieving us.





5.  The
      Bank
      further agree that the Guarantee herein contained shall remain in full
      force during
      the period that is taken for the performance of the Contract and all dues of
      Government under or by virtue of this Contract have been fully paid and its
      claim satisfied or discharged or till Government discharges this Guarantee
      in
      writing, whichever is earlier.





6.  This
      Guarantee shall not be discharged by any change in our constitution, in the
      constitution of _________ Company or that of the Contractor.





7.  The
      Bank
      confirm that this Guarantee has been issued with observance of appropriate
      laws
      of the country of issue.





8.  The
      Bank
      also agree that this Guarantee shall be governed and construed in accordance
      with Indian Laws and subject to the exclusive jurisdiction of Indian courts
      at
      _________, India.





9.  Notwithstanding
      any thing contained herein above, our liabilities under this Guarantee is
      limited to Indian Rupees/US$ ____________(in figures) Indian Rupees/US$
      _______________ (in words) and our Guarantee shall remain in force upto and
      including sixty (60) days after the expiry date/extended date. Any claim under
      this Guarantee must be received before the expiry of sixty (60) days or
      before  the
      expiry of sixty (60) days from the extended date if any. If no such claim has
      been received
      by us within sixty (60) days after the said date/extended date the Government’s
      right under this will cease. However, if such a claim has been received by
      us
      within and upto sixty (60) days after the said date/extended date, all the
      Government’s rights under this Guarantee shall be valid and shall not cease
      until we have
      satisfied that claim.










In
      witness whereof, the Bank through its authorised officers has set its hand
      and
      stamp on this _______ day of __________ 200_ at ______________.











The
      seal
      of___________________ was hereto duly affixed by______________ this__________
      day of ___________200_ in accordance with its bye-laws and this Guarantee was
      duly signed by_________________ and ________________ as required by the said
      bye-laws.














________________________
      ________________________


Secretary     President & Director











Witness:










Appendix H


Cost Estimates


Page 1











Appendix H


Cost Estimates


Page 2














Appendix H


Cost Estimates


Page 3











Appendix
      H


Cost
      Estimates


Page
      4








Appendix H


Cost Estimates


Page 5