Exhibit 10.6


 


This
contract for the supply of Gas is entered into by and between Pluspetrol Perú
Corporation S.A. (“Pluspetrol”), Pluspetrol Camisea S.A. (“Pluspetrol
Camisea”), Hunt Oil Company of Peru L.L.C., Sucursal del Peru (“Hunt”),
SK Energy, Sucursal Peruana (“SK”), Tecpetrol del Perú S.A.C. (“Tecpetrol”),
Sonatrach Perú Corporation
S.A.C. (“Sonatrach”), Repsol Exploración Perú, Sucursal del Perú (“Repsol,” and,
together with Pluspetrol, Pluspetrol Camisea, Hunt, SK, Tecpetrol and
Sonatrach, “Sellers” and each company, individually, as “Seller”)
and CF Industries Perú S.A.C., with RUC No. 20492304604, with domicile at Av.
De La Floresta 497, Piso 5, San Borja, Lima (hereinafter, the “Buyer”), on
the following terms and conditions:


 


RECITALS


 


The
Sellers are the licensees of the license agreement for the exploration and
production of hydrocarbons in the Camisea Reservoir, dated December 9, 2000
(hereinafter, the “License”). The participating interests of the Sellers
in the License (hereinafter, the “Participating Interests”) are as
follows:


 


	
  Pluspetrol

  	
   

  	
  2.2

  	
  %

  
	
  Pluspetrol Camisea

  	
   

  	
  25.0

  	
  %

  
	
  Hunt

  	
   

  	
  25.2

  	
  %

  
	
  SK

  	
   

  	
  17.6

  	
  %

  
	
  Sonatrach

  	
   

  	
  10.0

  	
  %

  
	
  Tecpetrol

  	
   

  	
  10.0

  	
  %

  
	
  Repsol

  	
   

  	
  10.0

  	
  %

  



 


The
Sellers declare that they have rights to volumes of natural gas according to
the License, which are (a) available for the supply and delivery to the Buyer, (b)
in accordance with the quality standards set forth in Annex A and (c) in
sufficient quantities to satisfy the obligations of the Sellers hereunder, in
each case, subject to the terms and conditions described hereinafter.


 


The
Buyer declares its intention to be supplied and receive Gas from the Sellers,
in accordance with the terms and conditions described hereinafter.


 


The
Gas to be supplied by the Sellers to the Buyer will be used by the Buyer in the
Plant to be built by the Buyer.


 


In
consequence of the above, the Parties agree on the following:


 


ARTICLE I


 


DEFINITIONS


 


Capitalized terms used in this Contract (including the preamble and
recitals hereto) shall have the meanings indicated herein below:


 

















 


1.1           Affected Party: has the
meaning set forth in Point 12.6.


 


1.2           Affiliate: any Person which,
directly or indirectly, controls, is controlled by or is under common control
with another Person; and, for the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlled by” or “under
common control with”) means the power to direct or cause the direction of the
management and policies of any Person, whether through the ownership of shares
or other economic interests, the holding of voting rights or contractual rights
or otherwise.


 


1.3           Applicable Cure Payment: (a) $25,000,000
for any Cure Payment made prior to the date that is seventy-two (72) Months
after the Date of Execution and (b) $50,000,000 for any Cure Payment made on or
after the date that is seventy-two (72) Months after the Date of Execution.


 


1.4           Applicable Law: collectively,
all statutes, laws, rules, regulations, ordinances, writs, judgments, decrees,
and injunctions of any Government Authority of the Republic of Perú affecting
the Buyer, the Sellers and/or this Contract and all Government Authorizations
relating thereto. Unless the context clearly requires otherwise, “Applicable
Laws” shall include each of the foregoing (and each provision thereof) as in
effect at the time in question, including any amendments, supplements,
replacements, or other modifications thereto or thereof, and whether or not in
effect as of the date hereof.


 


1.5           Article: each one of the
articles hereof.


 


1.6           Base Conditions: as used in
relation to the Gas, means the temperature of 15°C measured with a mercury
thermometer at a pressure of 1,013 Bar or 760 mm of mercury column, measured
with a Fortin-type barometer and adjusted at 0°C with a normal gravity
acceleration value. All measurements mentioned herein shall be understood as
expressed in “Base Conditions,” unless others are otherwise specifically
indicated.


 


1.7           BTU: the abbreviation for
“British Thermal Unit,” which is the heat unit in the “British Measuring System”
and is equivalent to 0.251996 kcal.


 


1.8           Business Day: any day (except
Saturdays, Sundays and public holidays in the City of Lima, Republic of Perú).


 


1.9           Buyer Milestones: has the
meaning set forth in Point 3.4.


 


1.10         Buyer’s Deferred Quantities: has
the meaning set forth in Point 5.3. 


 


1.11         Buyer’s Excused Quantities: has
the meaning set forth in Point 5.1. 


 


1.12         Camisea Reservoir: the reservoir
located at Block 88.


 


1.13         Commercial Operation Date (COD):
the Day on which commercial operation occurs in accordance with the
requirements of the EPC Contract, as declared by the Buyer to the Sellers and
written notice of which shall be given to the Sellers by the Buyer in
accordance with Point 3.4.


 

















 


1.14         Conditions Precedent: has the
meaning set forth in Point 2.5.


 


1.15         Contract: this contract for the
supply of Gas together with all its Annexes, as may be amended, modified or
supplemented from time to time.


 


1.16         Contractual Month: the period
starting on the first Day of a calendar month and ending on (and including) the
last Day of that calendar month. The first Contractual Month shall begin on the
COD and shall end on (and include) the last Day of that calendar month.


 


1.17         Contractual Year: the period
starting on the first Day of a calendar year and ending on (and including) the
last Day of that calendar year; provided that (a) the first Contractual Year
shall begin on the Commercial Operation Date and shall end on (and include) the
last Day of the calendar year in which Commercial Operation Date occurs and (b)
the last Contractual Year shall begin on the first Day of the calendar year in
which the twentieth (20th) anniversary
of the Commercial Operation Date occurs and shall end on the Termination Date.


 


1.18         Cubic Meter (m3): the quantity
of steam-free Gas which in the Base Conditions occupies a volume of one cubic
meter. One (1) MMcfd means one (1) Million Cubic Feet per Day. One (1) Mcfd
means one (1) Thousand Cubic Feet per Day.


 


1.19         Cure Payment: has the meaning
set forth in Point 13.5(f).


 


1.20         Daily Contractual Quantity (DCQ):
the daily quantity of Gas designated by the Buyer for each Contractual Year.
The initial DCQ shall be designated by the Buyer no later than thirty (30) Days
prior to the COD. This initial DCQ will not be lower than eighty five per cent
(85%) of the MDCQ. No later than thirty (30) Days prior to the first Day of
each Contractual Year thereafter, Buyer shall have the right to vary the DCQ to
be effective for such Contractual Year between ninety per cent (90%) of the
original DCQ and the MDCQ.


 


1.21         Date of Execution: the day on
which the last of the Parties execute this Contract.


 


1.22         Day or Days: unless otherwise
expressly indicated, the period of time of twenty-four (24) consecutive hours
starting at 6 o’clock (6 a.m.) of any given day in the City of Lima, Republic
of Peru, and ending at five fifty nine with fifty nine seconds (5: 59,59 a.m.)
of the following day in the City of Lima, Republic of Peru, or such other
period set forth in the future pursuant to Peruvian regulations in order to
control and meter the natural gas transportation operations.


 


1.23         Default Interest Rate: the
lesser of (i) LIBOR rate + 3.5 % or (ii) the highest rate of interest allowed
under Applicable Law.


 


1.24         Defaulted Amount: has the
meaning set forth in Point 11.4.


 


1.25         Defaulting Period: has the
meaning set forth in Point 11.4.


 


1.26         Deferred Quantities Recovery Period
(DQRP): twelve (12) Contractual Months following the Contractual Month in
which the Buyer pays for the relevant Deferred Quantity, as set forth in Article
Five.


 

















 


1.27         Deferred Quantity: the Gas
volume paid for but not consumed by the Buyer under the terms set forth in
Point 5.3.


 


1.28         Deliver or Pay Quantity (DOPQ):
the minimum quantity of Gas that the Sellers are obligated to make available to
the Buyer as established in Article Six.


 


1.29         Dispute: has the meaning set forth
in Point 14.2.


 


1.30         Distribution Company: the
Company that has been granted the distribution concession from the Department
of Ica, Perú.


 


1.31         Dollar or US$: the legal
currency of the United States of America.


 


1.32         DOP Make Up Gas: has the meaning
set forth in Point 6.5(i).


 


1.33         EPC Contract: the engineering,
procurement and construction contract to be entered into by the Buyer for the
construction of the Plant; provided, that such engineering, procurement and
construction contract may, at the Buyer’s sole discretion, be more than one
contract and all such contracts shall, at the Buyer’s sole discretion, be
deemed to constitute the same EPC Contract.


 


1.34         Financing: has the meaning set
forth in Point 16.2.


 


1.35         Financing Consent: has the
meaning set forth in Point 16.2.


 


1.36         Fixed Date Notice: any notice
delivered by the Parties to the addresses indicated in Article Seventeen and
with the formalities established therein.


 


1.37         Force Majeure: has the meaning
set forth in Article Twelve.


 


1.38         Gas: the natural gas produced
from the Camisea Reservoir and subject matter hereof, which is a mixture of
hydrocarbons in gaseous state essentially comprised by methane in accordance
with the quality standards set forth in Annex A.


 


1.39         Gas Sale Price: the price of the
Gas calculated in accordance with the formula set forth in Annex B and
expressed in US$/MMBTU (Dollars per million BTU).


 


1.40         Government Authority: any
national, state, regional, municipal, local, judicial, legislative, administrative
or other government authority, ministry, department, agency, unit, office or
organization (including Perupetro S.A.), which has jurisdiction over a Party or
over the properties or the assets of that Party.


 


1.41         Government Authorization: any
authorization, consent, approval, license, resolution, permit, easement,
certification, exemption, exception, registration or filing by any Government
Authority.


 


1.42         Higher Calorific Value: The
total amount of heat produced by the combustion, at a constant pressure, of a
mass of dry gas occupying a volume of one Cubic Meter, in humidity saturated
air, at a temperature for both of 15°C and at an absolute pressure of seven
hundred and


 

















 


sixty
millimeters (760 mm) of mercury column adjusted at zero degrees (0° C) with
combustion steam condensation converted to a dry base. Its measurement unit
shall be the Kilocalorie per Cubic Meter (Kcal/m3).


 


1.43         ICC: has the meaning set forth
in Point 14.2


 


1.44         ICC Rules: has the meaning set
forth in Point 14.2.


 


1.45         Independent Engineer: means a
technical consultant to be reasonably acceptable to the Buyer and the Sellers.


 


1.46         Initial Expected COD Period: has
the meaning set forth in Point 3.4.


 


1.47         Kcal: the abbreviation of
Kilocalorie,  which is the
unit of heat equivalent to 3.96832 BTU as defined in the Metric System.


 


1.48         Lenders: has the meaning set
forth in Point 16.2.


 


1.49         LIBOR: means the average of the
rates per annum for deposits in Dollars for a period equal to or nearest the
number of days in a Defaulting Period which appear on the LIBOR 01 page of the
Reuter Monitor Rates Service displaying London Interbank offered rates for US
Dollars of leading banks at approximately 11: 00 a. m. (London time) on the
relevant Rate Fixing Date, provided that if one only or no offered rate appears
on the LIBOR 01 page of the Reuters Monitor Rates Service or if there is no
relevant page on the Reuters Monitor Rates Service, the rate per annum for
deposits in Dollars as of on or about 11 am (London time) on the Rate Fixing
Date for a period equivalent, so far as practicable, to the Defaulting Period
concerned and for an amount, so far as practicable, comparable to the Defaulted
Amount, which appears on the display designated as “Page 3750” on the Telerate
Service (or such other page as may replace Page 3750 on that service for the
purpose of displaying such London Interbank offered rates for deposits in
Dollars) provided that if the Telerate Service is not available or no such rate
is published or available then the average, determined by the Buyer or the
Sellers, whichever is the non-defaulting party, of the rates per annum,
supplied to it at its request, quoted by three leading international banks as the
Buyer may reasonably select from the following: BBVA, HSBC, JP Morgan Chase,
Bank of America, in the London interbank market at or about 11:00 a.m. (London
time) on the relevant Rate Fixing Date for the offering of Dollar deposits in
amounts and for a period comparable, so far as practicable, to the Defaulted
Amount and Defaulting Period. Buyer or the Sellers, whichever is the
non-defaulting party, shall inform the other party of the three leading banks
selected by it as aforesaid and of the average of the said rates.


 


1.50         License: has the meaning set
forth in the Recitals.


 


1.51         Maximum Daily Contractual Quantity
(MDCQ): shall be ninety-nine (99) MMCFD, which shall be the maximum
quantity of Gas that the Buyer may schedule for delivery by the Sellers per any
Day at the Receiving Point. Unless otherwise agreed by the Parties, the Sellers
shall not be obligated to deliver a quantity of Gas on any Day that is larger
than the MDCQ and the Buyer shall not be authorized to nominate a DCQ for
delivery on any Day that is larger than the MDCQ.


 

















 


1.52         Measuring Equipment: all the
facilities used to quantify and register volumes, pressures, temperatures,
specific gravity, calorific value, and Gas composition.


 


1.53         Nomination: the monthly
communication forwarded by the Buyer to the Sellers, regarding the daily
quantity of Gas to be provided by the Sellers to the Buyer at the Receiving
Point, including any updates given in accordance with Article 7.


 


1.54         Notice of Assignment: has the
meaning set forth in Point 16.5.


 


1.55         Operational Period Effective Date:
the Day when all the Conditions Precedent become satisfied or waived.


 


1.56         OSINERGMIN: the Supervisory
Board for Investment in Energy and Mining, of Perú


 


1.57         Participating Interest: has the meaning
set forth in the Recitals.


 


1.58         Parent Company: means CF
Industries Holdings, Inc., CF Industries, Inc., or any other entity that,
directly or indirectly, owns at least 50.01% of CF Industries Perú S.A.C.


 


1.59         Party: The Sellers or the Buyer.
Parties.: both, the
Sellers and the Buyer. Pluspetrol, Pluspetrol Camisea, Hunt, SK, Sonatrach, Tecpetrol,
Repsol and the Buyer are sometimes referred to collectively as the “Parties” or
individually as a “Party”.


 


1.60         Person: an individual,
partnership, corporation (including a business trust), limited liability
company, joint stock company, trust, unincorporated association, joint venture
or other entity, or a government or any political subdivision or agency
thereof.


 


1.61         Petroleum Engineer: means De
Golyer & McNaughton, Netherland Sewell, Ryder Scott, Gaffney & Cline,
or such other internationally recognized independent petroleum engineering and
consulting firm of recognized standing in the petroleum industry that is
reasonably acceptable to the Buyer and the Sellers.


 


1.62         Petrochemical Plant: (a) the
Plant; (b) any and all pipelines connecting the Plant or other facilities with
the pipelines of the Transporter and the Distribution Company; (c) any related
port facilities that handle or transport a substantial amount of the Plant’s
output; and (d) any land (including real estate rights or rights on the ocean
bed, as the case may be) on which the Plant and/or its port facilities and its
related infrastructure are placed.


 


1.63         Plant: the Buyer’s plant to be
located in Perú, which will serve as the final destination of the Gas for the
production of petrochemicals, as well as its additional facilities, equipment
and infrastructure, including the related facilities, as these may be built or
modified from time to time.


 


1.64           Point: any point of the
Articles hereof.


 


1.65         Rate Fixing Date: has the
meaning set forth in Point 11.4.


 

















 


1.66         Receiving Point: the place
existing at the beginning of the gas transportation system, located in the
liquid separation plant in Malvinas, Perú, owned by the Sellers, MAU Unit 5700,
where Sellers shall put Gas at disposal of the Buyer.


 


1.67         Required Rating: has the meaning
set forth in Point 15.1.


 


1.68         Scheduled Completion Date: the
Day that is forty-eight (48) months after the Date of Execution.


 


1.69         Scheduled Maintenance: the
periods of time in which the production site or facilities of the Sellers or
the Buyer are out of service due to a scheduled maintenance as set forth in
Points 4.3 and 4.4.


 


1.70         Sellers Coordinator: Pluspetrol,
as performing the duties set forth in Point 18.2.


 


1.71         Sellers’ Excused Quantities: has
the meaning set forth in Point 6.2.


 


1.72         Starting Date of Gas Supply: the
first Day following the Commercial Operation Date on which the Buyer makes a
Nomination.


 


1.73         Subsequent Expected COD Period:
has the meaning set forth in Point 3.4.


 


1.74         Take or Pay Percentage (TOPP):
the take or pay percentage designated by the Buyer (within the range of numbers
detailed in Annex B, Point 2.2, first column) no later than 30 Days prior to the
COD to be effective for the term of this Contract.


 


1.75         Take or Pay Quantity (TOPQ): the
minimum quantity of Gas that the Buyer is obligated to take from the Sellers,
or pay for if not taken, as established in Article Five.


 


1.76         Term: has the meaning set forth
in Point 3.1.


 


1.77         Termination Date: the date
determined in accordance with Point 3.1. 


 


1.78         Transporter: Transportadora de
Gas del Perú S.A.


 


1.79         Trigger Date: the date that is
forty-eight (48) months after the Date of Execution and each six (6) months’
anniversary of such date.


 


1.80         Yuhzny Urea Price (YUP): for any
Day, the arithmetical average of the most recent average FOB prices for Yuhzny
Prilled Urea as published by Fertecon and FMB in their weekly publications. If
only one such publication has a price available, that price will form the basis
for the calculation. If both such publications cease publishing a price, the
Parties will work together to develop a mutually acceptable substitute price
reference.


 














 


ARTICLE II


 


PURPOSE


 


2.1                                 The purpose of
this Contract is the supply of Gas (produced from the Camisea Reservoir) by the
Sellers to the Buyer, up to MDCQ, to be used at the Plant to produce
petrochemicals and generate electricity for use within the Plant. The Buyer
shall pay to the Sellers the Gas Sale Price or, in the case of the Gas used for
the generation of electricity within the Plant, such price as will be
determined in accordance with the License (as amended from time to time).


 


2.2                                 Due to the fact
that this Contract is allocated to an activity promoted by Applicable Laws, in
particular, to the supply of natural gas to produce petrochemicals and generate
electricity to be used within the Plant, the Gas to be sold under this Contract
shall not be used for any other purpose unless otherwise expressly provided
under the Applicable Laws, as may be amended, supplemented or modified from
time to time (including, but not limited to, its resale by the Buyer).


 


2.3                                 Subject to
Point 4.2, solely in relation to the supply of Gas up to the MDCQ, this Contract
shall be governed by the exclusivity clause referred to in Article 1616 of the
Peruvian Civil Code. The Buyer may acquire the Gas in excess of the MDCQ from
any supplier.


 


2.4                                 The Sellers
agree to sell and deliver the Gas at the Receiving Point, and the Buyer agrees to
be supplied, receive and pay for it at the price, terms and conditions set
forth herein.


 


2.5                                 Notwithstanding
any provision hereof to the contrary, after the Commercial Operation Date has
occurred, the duties and obligations of the Sellers to deliver Gas in
accordance with this Contract and the obligations of the Buyer to pay for this
Gas in accordance with the terms and provisions set forth in this Contract
become effective upon the satisfaction (or waiver by the Party in whose benefit
they operate) of the following conditions precedent (the “Conditions
Precedent”):


 


2.5.1.                     Existence of the Plant (with
a capacity capable of consuming 99 MMcfd), holding all material Government
Authorizations (including those determined by Supreme Decree Nr. 054-2007-EM)
necessary for its installation and operation.


 


2.5.2.                     Existence of a gas pipeline
linking the Plant to the transportation or distribution system, and other
related facilities (all of which shall be capable of transporting and
distributing Gas to the Plant).


 


2.5.3.                     Effectiveness of a gas
transportation contract between the Transporter and the Buyer.


 


2.5.4.                     If necessary, by virtue of
Buyer’s decision, in its sole discretion, to locate the Plant at a location not
serviced directly by the Transporter’s pipeline facilities, effectiveness of a
gas distribution contract between the Distribution Company and the Buyer.


 

















 


2.5.5.                Existence of a port
facility, together with other related facilities, capable of handling and
transporting the output of the Plant.


 


2.5.6.                The Government
Authorizations related to the application of the Gas Sale Price and other
Government Authorizations and/or third party authorizations, in each case,
which are necessary for the supply of the Gas beginning on the Commercial
Operation Date, shall have been obtained and be in full force and effect.


 


2.5.7.                The issuance of an affidavit
by the Buyer, stating that the Conditions Precedent set forth in Points 2.5.1,
2.5.2, 2.5.3, 2.5.4 and 2.5.5 have been satisfied, and the issuance of an
affidavit by the Sellers, stating that the Conditions Precedent set forth in
Point 2.5.6 have been satisfied.


 


ARTICLE III


 


EFFECTIVENESS AND TERM OF THIS
CONTRACT


 


3.1                                 This Contract
shall become effective as and from the Date of Execution, and shall be in effect
during construction, initial startup and testing of the Plant. Beginning on the
first Day of the first Contractual Year, this Contract shall continue in effect
thereafter for a period of twenty-one (21) Contractual Years (the “Term”)
and, subject to Point 3.2, shall terminate on the 20th (twentieth)
anniversary of the first Commercial Operation Date (“Termination Date”).


 


3.2                                 After the Term
(or any extension thereof in accordance with this Point 3.2) has elapsed, this
Contract may be extended for periods of one (1) year, upon written agreement by
the Parties. For the purposes of any such extension, the Buyer shall notify the
Sellers in writing of its intention to begin negotiations, at least six (6) months
prior to the Termination Date.


 


3.3                                 The Buyer shall
be entitled, upon written notice to the Sellers, to suspend (for technical matters,
or matters related to testing activities) Articles Five and Six for a maximum
period of one hundred and eighty (180) Days, beginning with the Commercial
Operation Date. The Buyer shall promptly notify the Sellers of the termination
of such suspension and Articles Five and Six will become effective upon the
earlier of (i) the receipt of such notification and (ii) the expiry of the 180
Day period.


 


3.4                                 In order to
demonstrate the progress of the construction of the Plant, the Buyer shall perform
a number of milestones set forth in Annex C (the “Buyer Milestones”) and
submit a certificate to the Sellers stating that a certain Buyer Milestones has
been achieved. Failure to achieve Buyer Milestones shall not give rise to a
termination right or other remedies of Sellers except to the extent
specifically set forth in Point 13.5.


 


On or prior to the second (2nd) anniversary of the Date of Execution,
the Buyer shall notify the Sellers in writing of the six (6) month period
during which it reasonably anticipates the Commercial Operation Date to occur;
provided that the failure of the Commercial Operation Date to occur during such
six (6) month period shall not give rise to any right or remedy of the Sellers.


 

















 


Not
later than one (1) year prior to the Scheduled Completion Date, the Buyer shall
notify the Sellers in writing of the 90-Day period during which it reasonably
anticipates the Commercial Operation Date will occur (the “Initial Expected
COD Period”). Not later than thirty (30) Days prior to the commencement of
the Initial Expected COD Period, the Buyer shall notify the Sellers in writing (a)
of the Day during the Initial Expected COD Period on which the Buyer reasonably
anticipates that the Commercial Operation Date will occur or (b) that the
Commercial Operation Date is not expected to occur during the Initial Expected
COD Period, in which event the Buyer shall state the new 90-Day period during
which it reasonably anticipates the Commercial Operation Date will occur (a “Subsequent
Expected COD Period”). Not later than thirty (30) Days prior to the
commencement of a Subsequent Expected COD Period, the Buyer shall notify the Sellers
in writing (i) of the Day during such Subsequent Expected COD Period on which
the Buyer reasonably anticipates that the Commercial Operation Date will occur
or (ii) that it is establishing a new Subsequent Expected COD Period in
accordance with the preceding clause (b), in which case the process
contemplated by this sentence shall be repeated until the Buyer notifies the
Sellers in writing of the Day during the applicable Subsequent Expected COD
Period on which the Buyer reasonably anticipates that the Commercial Operation
Date will occur. Notwithstanding anything to the contrary contained in this
Point 3.4, and except as provided in Point 13.5, the failure of the Commercial
Operation Date to occur during the Initial Expected COD Period, during a Subsequent
Expected COD Period or on the Day established in accordance with clause (a) or (i)
above shall not give rise to any right or remedy of the Sellers.


 


The
Sellers may, at their option (at any time, but not to be exercised more than
three times in any calendar year), request that the Buyer provide them with the
Buyer’s reasonable anticipation as to the six (6) month period during which the
Commercial Operation Date will occur, and the Buyer shall provide same to the
Sellers within thirty (30) Days after such request is made; provided
that the failure of the Commercial Operation Date to occur during such six (6) month
period shall not give rise to any right or remedy of the Sellers except as
provided in Point 13.5. The Sellers will have the option to sell the Gas to
third parties until the Commercial Operation Date occurs, provided that
such sale shall not impede the Sellers’ ability to deliver the Gas to the Buyer
for testing and commissioning activities in accordance with Point 3.5.


 


3.5                                 No later than
sixty (60) Days before the scheduled testing and commissioning activities  of the Plant
(the “Testing Period”), the Buyer shall submit a notice to the Sellers
that will set forth the starting Day of the Testing Period and the estimated
final Day of the Testing Period. The Sellers shall provide Gas at the Receiving
Point reasonably needed to conduct tests during the Testing Period and to
establish the Commercial Operation Date in such quantities as nominated by the
Buyer. The Parties understand that during the Testing Period the nominations
may vary and the requirements of Articles 5, 6, or 7 shall not apply. The Buyer
shall notify the Sellers of the Buyer’s good faith nomination of the quantity
of Gas required in connection with any such tests no later than two Days before
the Day of delivery. The sale and delivery of any Gas provided under this Point
3.5 shall be subject to the terms and conditions of this Contract (other than
the requirements set forth in Articles 5, 6 and 7) and the Buyer shall pay the
Sellers for Gas provided under this Point 3.5 the Gas Sale Price for the Day of
delivery determined according to the conditions stated in Annex B.


 

















 


ARTICLE IV


 


SUPPLY


 


4.1                                 The Sellers
hereby undertake to make available to the Buyer, at the Receiving Point, the quantity
of Gas nominated for each Day, up to the agreed MDCQ, transfer of ownership and
risk of which shall be governed by Point 8.3.


 


4.2                                 During the
Term, the Buyer undertakes to purchase Gas up to the MDCQ exclusively from the
Sellers, unless the Sellers fail to supply the Gas in the quantities requested
by the Buyer for any reason. For the avoidance of doubt, the Buyer shall be
entitled to purchase the Gas in excess of the MDCQ from a third party at any
time during the term of this Contract.


 


4.3                                 The Sellers may
interrupt their obligations under Article 6 without being obligated to pay to
the Buyer any compensation and/or damages if:


 


(i)                                     they are
required to perform Scheduled Maintenance (including expansion works at their
processing plants in Malvinas and/or Pisco and their various facilities) in
which case the Sellers’ Coordinator shall notify the Buyer at least one hundred
and fifty (150) Days in advance of such Scheduled Maintenance, stating the
first and the last Day of such Scheduled Maintenance; and


 


(ii)                                  the Scheduled
Maintenance does not exceed a period of twenty (20) Days per Contractual Year,
provided that any period of Scheduled Maintenance works of the Buyer shall not
count against such period even if planned outage of the Sellers occurs during
such period of Scheduled Maintenance of the Buyer. If such 20-Day period is
exceeded, the provisions set forth in Article Six shall apply to the Days in
excess of such limits.


 


For
the avoidance of doubt, the terms of Point 4.2 shall not apply during any
Scheduled Maintenance by the Sellers.


 


4.4                                 The Buyer may
interrupt its obligations under Article 5 without being obligated to pay to Sellers
any compensation and /or damages if:


 


(i)                                     it is required
to perform Scheduled Maintenance (including expansion works at the Plant) in
which case the Buyer shall notify the Sellers at least ninety (90) Days in
advance of such Scheduled Maintenance, stating the first and the last Day of
such Scheduled Maintenance; and


 


(ii)                                  the Scheduled
Maintenance works of the Buyer shall not exceed sixty (60) Days per period of
four (4) consecutive Contractual Years, provided that any period of Scheduled
Maintenance works of the Sellers shall not count against such 60-Day limit even
if a planned outage of the Buyer occurs during such period of Scheduled
Maintenance of the Sellers. If such 60-Day limit is exceeded, the provisions
set forth in Article Five shall apply to the Days in excess of such 60-Day
limit.


 

















 


4.5                                 The Parties
understand that a certain period of time per Contractual Year is required for the
Transporter and the Distribution Company, as the case may be, to carry out
maintenance works pursuant to the provisions set forth in the respective BOOT
Concession Contracts for the Pipeline Transportation of Natural Gas from Camisea
to the City Gate, for the Liquid Transportation Pipeline System and for the
Distribution of Natural Gas by Pipeline Network in the Department of Ica,
respectively. The Buyer and the Sellers will each use their best commercial
efforts in order to cause all Scheduled Maintenances to occur concurrently with
each other, and with the Transporter and the Distribution Company. The
provisions of Articles Five and Six shall be suspended during the period the
Transporter’s and the Distribution Company’s scheduled maintenance is being
carried out, in each case, to the extent such scheduled maintenance prevents
Buyer from taking Gas.


 


4.6                                 If the Sellers
should interrupt the supply of Gas (for any period of time) due to maintenance
works other than Scheduled Maintenance and for reasons other than Force Majeure
events, the Sellers shall pay to the Buyer the compensation set forth in Article
Six for any such period. In such case, Article Five and the exclusivity
obligation indicated in Point 4.2 shall not be applicable to the Buyer during
the period of time of the said unscheduled maintenance works.


 


ARTICLE V 


 


TAKE OR PAY


 


The
Take-Or-Pay Quantity is the minimum amount of Gas that the Buyer must either
take, or pay for if not taken, during each Contractual Month.


 


5.1                                 In any
Contractual Month, the Buyer shall be excused from any obligation to take delivery
of a quantity of Gas (“Buyer’s Excused Quantities”) equal to the sum
over all the Days in the Contractual Month of: (i) any quantities of natural
Gas not taken by the Buyer due to Force Majeure affecting the Buyer, including
without limitation any quantities of Gas that cannot be delivered for the
reasons set forth in Point 12.2(d) whether or not Force Majeure was declared by
the Buyer; plus (ii) any quantities of Gas that the Buyer schedules for
delivery and the Sellers fail to deliver for any reason (including for the
reasons of Scheduled Maintenance set forth in Point 4.3); plus (iii) any Gas
properly rejected by the Buyer or the Transporter at the Receiving Point for
not satisfying the quality specifications; plus (iv) any quantities of Gas that
the Buyer does not require due to Scheduled Maintenance in accordance with
Point 4.4.


 


5.2                                 The TOPQ for
any Contractual Month shall equal: (i) the product of (A) the DCQ designated by
the Buyer for the applicable Contractual Year multiplied by (B) the TOPP,
multiplied by (C) the number of Days in such Contractual Month; less (ii) any
quantities of Gas that are Buyer’s Excused Quantities for such Contractual
Month.


 


5.3                                 In any
Contractual Month, if the Buyer takes a total quantity of Gas in such Contractual Month that is
less than the TOPQ for such Contractual Month, then the Buyer must pay to the
Sellers a take-or-pay charge equal to the product of: (i) the Gas Sale Price
multiplied by (ii) a quantity of Gas (“Buyer’s Deferred Quantities”) equal
to (A) the TOPQ for such Contractual Month, less (B) the quantity of Gas
actually taken in such Contractual Month.


 

















 


5.4                                 The Buyer is
entitled to recover, within the DQRP, the Buyer’s Deferred Quantities following
the sequential order in which they occurred. This recovery shall be effected
with the quantities of Gas taken during the DQRP in excess of the TOPQ in
effect during such DQRP, provided that such quantities in excess of the TOPQ
may not exceed the MDCQ without the consent of the Sellers. If on expiry of
this Contract there should remain Buyer’s Deferred Quantities pending recovery,
the Buyer may recover the corresponding quantities after such expiry, within a
maximum period of twelve (12) months, as may be extended by such period of time
(if any) during which the Sellers fail to deliver the Deferred Quantities (as
requested by the Buyer) for reasons other than Force Majeure.


 


5.5                                 At any time
that the most recently determined weekly YUP closes below one hundred and
twenty-five Dollars (US$125) per tonne, the Buyer shall have the right to
suspend the application of a take or pay charge by giving the Sellers not less
than seven (7) Days’ prior written notice (a “Suspended TOPQ”). After
such written notice is given, a Suspended TOPQ shah be in effect on each Day
from the Day set forth in such notice until the earlier of (a) seven (7) Days
after the Day on which the Buyer gives the Sellers written notice that it is
terminating the Suspended TOPQ and (b) seven (7) Days after the most recently
determined YUP closes above one hundred and twenty-five Dollars (US$125) per
tonne. The volume of Gas not taken by the Buyer during a Suspended TOPQ can be
used freely by the Sellers. Notwithstanding anything to the contrary contained
herein, in the event Suspended TOPQs are in effect for more than three hundred
and sixty-five (365) Days, in the aggregate, the Sellers shall have the right
to terminate this Contract by giving the Buyer at least thirty (30) Days’ prior
written notice.


 


For
the purposes of this Point 5.5, the TOPQ for any Contractual Month in which a
Suspended TOPQ is in effect shall equal: (i) the product of (A) the DCQ
designated by the Buyer for the applicable Contractual Year multiplied by (B) the
TOPP designated by the Buyer for the term of this Contract, multiplied by (C) the
number of Days in such Contractual Month other than Days in Which a Suspended
TOPQ was in effect; less (ii) any quantity of Gas that are the Buyer’s Excused
Quantities for such Contractual Month.


 


5.6                                 Subject to
Point 19.6, if the Buyer fails to comply with its obligations to take Gas from the
Sellers in accordance with this Contract and such failure is not otherwise
excused under this Contract, (a) the Sellers’ remedies will be limited solely
to those described in this Article Five and no additional penalties will apply;
(b) the Buyer shall not be responsible for any Consequential Damages (as
defined in Point 19.6); and (c) the Sellers hereby
waive any claim of indemnity that may arise from the Buyer’s failure to take
the TOPQ of the Gas in accordance with this Article 5.


 


ARTICLE VI


 


DELIVER OR PAY


 


6.1                                 The Deliver or
Pay Quantity is the amount of Gas scheduled by the Buyer for delivery in any
Contractual Month that the Sellers must pay for if not delivered during such
Contractual Month.


 

















 


6.2                                 On any Day
during the Term, the Sellers shall be excused from any obligation to deliver a
quantity of Gas (“Sellers’ Excused Quantities”) equal to the sum of: (i)
any quantities of Gas scheduled by the Buyer but not delivered by the Sellers
due to Force Majeure affecting the Sellers, including without limitation any
quantities of Gas that cannot be delivered for the reasons set forth in Point
12.2(d) whether or not Force Majeure was declared by the Sellers; plus (ii) any
quantities of Gas scheduled by the Buyer but which the Buyer fails to take for
any reason, other than quantities of Gas properly rejected by the Buyer or the
Transporter at the Receiving Point for not satisfying the quality
specifications; plus (iii) the amount, if any, by which the DCQ exceeds the
quantity of natural gas scheduled by the Buyer for that Day; plus (iv) any
quantities of Gas that the Sellers are not required to deliver due to Scheduled
Maintenance in accordance with Point 4.3.


 


6.3                                 The DOPQ for
any Contractual Month shall be equal to the sum for all of the Days in such
Contractual Month of: (i) the DCQ; less (ii) the quantity of Gas actually
delivered by the Sellers to the Buyer at the Receiving Point on each Day of
such Contractual Month; less (iii) any quantities of Gas that are the Sellers’
Excused Quantities for each Day of such Contractual Month.


 


6.4                                 On any Day
during the Term, if any Gas is tendered, for delivery at the Receiving Point that
does not meet the Gas quality specifications and the Transporter or the Buyer
rejects such Gas, then any such rejected Gas quantities shall be considered as
quantities of Gas that were not delivered by the Sellers for such Day, and will
not be considered as part of the Sellers’ Excused Quantities for such Day.


 


6.5                                 If in any
Contractual Month the DOPQ for such Contractual Month is a non-zero positive  quantity, then
the Sellers may:


 


(i)                                     provided the
Buyer can make use of the Gas at the Plant, deliver to the Buyer quantities of
Gas up to 100% of the DOPQ (“DOP Make Up Gas”), in which case the Buyer
shall not be obligated to make any payment to the Sellers in respect of such
DOP Make Up Gas. The performance of this option shall not increase the
corresponding TOPQ; or


 


(ii)                                  pay to the
Buyer a Deliver-or-Pay charge equal to the product of: (x) the Gas Sale Price
multiplied by (y) the DOPQ for such Contractual Month. Any such Deliver-or-Pay
charge that is undisputed may be set-off against the invoice corresponding to
the Gas consumption of the following month in which the Sellers incurred a DOP
charge; provided, however, that if (i) the Buyer is not in breach of its
payment obligations hereunder and (ii) there are not enough amounts invoiced by
the Sellers so that such charges cannot be set-off against any such invoices
for a period of ninety (90) days following the last day of the Contractual
Month in which the DOP charge was incurred, then any such undisputed
Deliver-or-Pay charge that remains unpaid after such ninety (90) day period,
shall be paid by the Sellers to the Buyer within ten (10) Business Days as from
the lapse of such 90-day period.


 

















 


6.6                                 Subject to
Point 19.6, if the Sellers fail to comply with their obligations to deliver Gas
to the Buyer in accordance with this Contract and such failure is not otherwise
excused under this Contract, (a) the Buyer’s remedies will be limited solely to
those described in this Article Six and compensation of the Buyer by the
Sellers for any additional transportation and/or distribution costs (if any)
actually incurred by the Buyer as a result of such failure, and no additional
penalties will apply; (b) the Sellers shall not be responsible for any
Consequential Damages (as defined in Point 19.6); and (c) the Buyer hereby
waives any claim of indemnity that may arise from the Sellers’ failure to
deliver the DOPQ of the Gas in accordance with this Article Six.


 


6.7                                 The Sellers
agree that, provided they are producing gas at the Camisea Reservoir and injecting
it into the Transporter’s pipeline, they will be obligated to sell Gas
hereunder to Buyer up to the MDCQ. In cases where the Sellers cannot make
available to the Buyer, at the Receiving Point, the quantity of Gas nominated
for each Day, up to the agreed MDCQ, due to Force Majeure or Emergency Events
(as defined hereunder), the priority for available supplies of Gas shall be
determined (a) if there is Applicable Law or binding legal direction of any
Government Authority, according to such Applicable Law or such binding legal
direction of the Government Authority; or (b) if there is no Applicable Law or
binding legal direction of any Government Authority, on a pro-rata basis,
considering the Gas quantities properly nominated for the relevant Day by Buyer
pursuant to the Contract and by other buyers under all existing gas supply
contracts from the Camisea Reservoir between Sellers and third parties. For the
avoidance of doubt, nothing in this Section 6.7 shall affect nor increase or
decrease the Sellers’ liabilities under Sections 6.1, 6.2, 6.3, 6.4, 6.5 and
6.6.


 


“Emergency
Event”: means an emergency event, as defined in the Glossary of the
Hydrocarbons Sector (“Glosario, Siglas y Abreviaturas del Subsector
Hidrocarburos”), as approved by Supreme Decree No. 032-2002-EM, as amended by
Supreme Decree No. 048-2009-EM, in each case as effective as of the date of
this Agreement. For the avoidance of doubt, an Emergency Event does not include
shortages of Gas that may arise (i) due to the Sellers’ over commitment to
deliver Gas to other customers in excess of the amount of Gas they are capable
of producing at the Camisea Reservoir and injecting into the Transporter’s
pipeline (whether pursuant to gas supply agreements or otherwise) or (ii) due
to the capacity of the Sellers to sell Gas at a higher or more favorable price
than that established herein.


 


ARTICLE VII


 


NOMINATIONS


 


7.1                                 Subject to
Point 3.5, the Buyer shall nominate the daily quantities of Gas by twelve o’clock
(12 p.m.) on the Business Day immediately preceding the Day on which the Gas
volumes shall be made available to it by the Sellers at the Receiving Point.
The Sellers’ Coordinator shall confirm such quantities before 2 p.m. on the
Business Day the Buyer nominates the daily quantities of Gas. This activity
shall be done each and every Business Day from the Starting Date of Gas Supply.
If the Buyer does not make such Nomination on a certain Business Day, this
shall mean it is nominating the quantity nominated on the preceding Business
Day or the last quantity the Buyer had nominated. If the Sellers’ Coordinator
does not confirm the Nomination by the Buyer, it shall be understood as
confirmed.


 

















 


7.2                                 In those cases where the Sellers agree
with the Transporter on an operational balance, they shall implement an account
to inject Gas into the Transporter’s pipeline from which the Sellers may
perform the delivery of Gas to the Buyer, following authorization of the
Transporter. The Sellers’s Coordinator shall be responsible for securing
authorization from the Transporter and coordinating with it.


 


7.3                                 In none of the Contractual Days shall the
Sellers be obligated to deliver or the Buyer to  take Gas volumes exceeding the MDCQ, unless the
Parties agree otherwise.


 


ARTICLE VIII


 


RECEIVING POINT - TRANSFER
OF OWNERSHIP, MEASUREMENTS.


 


8.1                                 The Gas shall be delivered
by the Sellers to the Buyer at the Receiving Point.


 


8.2                                 The Sellers may modify the Receiving
Point, subject to the consent of the Buyer, not to be unreasonably withheld and
provided such modification shall not affect the supply of Gas to the Plant,
including the quality standards set forth in Annex A and the ability to conduct
accurate measurements in accordance with this Article Eight. Any costs caused
by the change shall be borne by the Sellers and not by the Buyer.


 


8.3                                 Subject to Point 6.5, by 6:00 a.m. on the
Day following the Day when the Nomination is made (or deemed made) by the Buyer
in accordance with Point 7.1 and confirmed (or deemed confirmed) by the Sellers
in accordance with Point 7.1, the Sellers shall make the quantity of Gas set
forth in such Nomination available to the Buyer at the Receiving Point. The
transfer of ownership and risk over the Gas shall pass from the Sellers to the
Buyer once the Gas has been made available to the Buyer at the Receiving Point
in accordance with the preceding sentence. The Buyer shall have exclusive
ownership and control of the Gas once the Gas has been made available to the
Buyer at the Receiving Point. The Buyer will be responsible for the Gas
transportation from the Receiving Point to the Plant.


 


8.4                                 The Sellers shall maintain a register of
the measurements and quantities of Gas delivered by the Sellers to Buyer at the
Receiving Point which register will be used by the Sellers to prepare and issue
the invoices in accordance with Article Eleven. Such measurement system shall
be approved by the Transporter.


 


8.5                                 The quantity and heat contents of the
supplied Gas shall be determined at the Receiving Point by using the Sellers’
Measuring Equipment, which the Sellers shall, or shall cause to, install, operate
and maintain under their responsibility at the Receiving Point, duly equipped
and operated as required by Applicable Law. Each Party has the right to
inspect, verify and participate in the adjustments and audits of the Sellers’
Measuring Equipment, which shall be performed with reasonable frequency, prior
notice and without unnecessarily interrupting or interfering with the Sellers’
activities related to this Contract.


 


8.6                                 The price, the quantities consumed, the
billing and the DCQ, MDCQ, DOPQ and TOPQ shall be adjusted in energy units
(MMBTU). The installed Sellers’ Measuring Equipment shall facilitate such
calculation.


 

















 


8.7                                 The Buyer shall
install, operate and maintain under its responsibility and within the Plant the
Measuring Equipment solely for the purposes of measuring the amount of Gas used
to produce electricity for the Plant for the purposes of Annex B, Point 5. The
Sellers have the right to inspect, verify and participate in the adjustments
and audits of such Measuring Equipment, which shall be performed at reasonable
frequency, with reasonable prior notice and without unnecessarily interrupting
or interfering with the Buyer’s activities at the Plant.


 


ARTICLE IX


 


QUALITY


 


9.1                                 The Sellers
shall deliver the Gas in accordance with the quality standards set forth in Annex
A and shall maintain the quality of gas within the specifications set forth in
Annex A.


 


9.2                                 In the event
that the quality of Gas does not conform to the standards of Annex A, the Sellers’
Coordinator shall notify the Buyer as soon as reasonably possible that the Gas
available for delivery does not meet the quality specifications of Annex A,
providing details on the nature and magnitude of the difference, the reason for
the failure to comply and the probable duration of such situation. Any amount
of Gas that does not meet the specifications and is rejected by the Buyer or
the Transporter in accordance with Point 6.4 shall be considered to have not
been made available by the Sellers for the purposes of Article Six.


 


9.3                                 The Buyer will
be deemed to have rejected the Gas that does not meet the specifications, in
which case the remedies of the Buyer will be determined in accordance with Article
Six and Point 13.2, unless the Buyer at any time notifies the Sellers that the
Buyer accepts the total or partial delivery of such Gas, in which case the
Sellers shall deliver the Gas only after receipt of Buyer’s acceptance. If the
Buyer accepts the Gas that does not meet the specifications, unless such Gas is
rejected by the Transporter in accordance with Point 6.4, the Buyer will not
have right to make any future claim with respect to such Gas and the provisions
of Article Six with respect to non-conforming Gas will not apply. The Buyer’s
partial or total acceptance of non-conforming Gas at any time shall not be
construed to limit its ability to reject any non-conforming Gas that may be
delivered by the Sellers at any future time.


 


ARTICLE X


 


PRICE - TAXES


 


10.1                           The Gas Sale
Price shall be determined according to the conditions stated in Annex B. For
the purposes of Point 5 of Annex B, the YUP will be determined in accordance
with its definition. Neither the Buyer nor the Sellers will undertake any
activities or roles in an effort to lobby the Government Authorities to alter
the Gas Sale Price agreed in this Contract.


 


10.2                           The Gas Sale
Price shall not include any indirect consumption tax that may be applicable to
the transference of Gas and which by Applicable Law must be shifted by the
Sellers to the Buyer, such as Impuesto
General a las Ventas, Impuesto de Promoción Municipal, Impuesto Selectivo al
Consumo, and any other tax of similar nature, which shall be
added to the pertinent invoicing.


 














 


10.3        With respect to taxes, it is
further agreed by the Parties that:


 


(a)                            the Sellers
shall be liable for all taxes, rates, encumbrances, contributions, royalties
and other tax costs, present and future, which shall be applicable to and/or
originated with respect to the Gas prior to the Receiving Point, including all
taxes specific to the activities of producing and/or selling the Gas, except
for any indirect consumption tax that may be applicable to the transference of
Gas and which by Applicable Law must be shifted by the Sellers to the Buyer,
such as Impuesto General a las Ventas,
Impuesto de Promoción
Municipal, Impuesto Selectivo al Consumo, and any other of similar
nature; and


 


(b)                            the Buyer shall
be liable for all taxes, rates, encumbrances, contributions, royalties and
other tax costs, present and future, which shall be applicable and/or
originated with respect to the Gas at and after the Receiving Point, including
all taxes specific to the activities of manufacturing and selling of nitrogen
fertilizers, and/or buying of Gas. For the avoidance of doubt, the Buyer will
not be responsible for the income tax resulting from the Sellers’ sale of Gas
to the Buyer or the royalties on natural gas production.


 


ARTICLE XI


 


INVOICING AND PAYMENT


 


11.1        The quantities of Gas
acquired by the Buyer shall be measured by the heat content (BTU), referring to
the Higher Calorific Value, and then invoiced in Dollars. The invoice shall be
issued on the basis of measurements made at the Receiving Point by the Sellers’
Measuring Equipment, and shall be certified by the Transporter.


 


11.2        The Sellers shall provide
monthly invoices to the Buyer, all amounts in Dollars, due and owing under this
Contract for each Contractual Month. Within ten (10) Days immediately after the
last Day in each Contractual Month, the Sellers shall bill the Buyer for the
quantities of Gas delivered in such month specifying the quantity corresponding
to the TOPQ, if applicable, also taking into account the provisions of Article Five
and Article Six. The Buyer shall pay each such monthly invoice in Dollars on or
before the Day that is ten (10) Days after Buyer’s receipt of each invoice. If
the due date falls on a Saturday, the payment shall be made on the preceding
Business Day. If the due date falls on a Sunday or non-working holiday, the
payment shall be made by the following Business Day.


 


With
respect to any amounts due from the Sellers to the Buyer, the Buyer may invoice
the Sellers in Dollars, monthly, and the Sellers shall pay in Dollars on or
before the last Day of the ten (10) Days after Sellers’ receipt of each invoice
or set off the undisputed amounts due against any amount due from Buyer to
Sellers under this Contract. If the Sellers have to pay any amount to the Buyer,
if the due date falls on a Saturday, the payment shall be made on the preceding
Business Day. If the due date falls on a Sunday or a non-working holiday, the
payment shall be made by the following Business Day.


 

















 


11.3        Invoices issued by the
Sellers shall include the Gas supplies made during the pertinent period,
detailing the volumes of Gas, the heat contents, the unit price, discounts and
the total amount. Should the Buyer require additional information with respect
to the billing and/or measurement, such information shall be provided by the
Sellers within ten (10) Business Days after submission of such request.


 


11.4        All payments or amounts to
be made or discharged hereunder in cash, shall be made in immediately
available, unencumbered and freely transferable US Dollars funds, made not
later than 12:00 pm (noon) City of Lima time on the Day in question to the
nominated account.


 


Without
prejudice of the foregoing, and without limiting obligations to discharge and
settle in US Dollars hereunder, the Parties undertake, in the event of any
foreign exchange restriction or prohibition in Peru being in effect which
restricts the ability to perform US Dollar denominated payment obligations,
that the paying Party shall (x) utilize and implement every available lawful
mechanism in Peru (but solely to the extent it is commercially reasonable to do
so) for the acquisition of US Dollars in any local or international exchange
market and (y) if there are no available lawful mechanisms in Peru, or it is
not commercially reasonable to implement them, each Seller hereby agrees that
the Buyer shall be required to make any and all US Dollar denominated payments
hereunder to such Seller at an account or address outside Peru; provided
that, in each case, no default of the provisions of this Agreement shall be
deemed to have occurred due to any delay in payment of the amounts due while
the paying Party is fulfilling, complying or following any of the lawful
mechanisms available in Peru for the acquisition of US Dollars. All costs
including any taxes, relating to any transaction related to this clause shall
be borne by the paying Party.


 


In
case of any failure by a Party to make a timely payment of any amount owed to
the other Party under this Contract (the “Defaulted Amount”), such
amounts shall accrue interest for the period of time (the “Defaulting Period”)
beginning on the Day immediately following the due date (the “Rate Fixing- Date”) under this Contract and
continuing until the date such amounts are paid, without the need of a judicial
or extrajudicial demand. The interest owed on any such amounts shall accrue at
an annual percentage rate equal to Default Interest Rate. In case of failure by
the Buyer to pay the undisputed portion of any three (3) monthly invoices
outstanding at any one time, the Sellers shall be able to interrupt the supply
of Gas upon ten (10) Business Days’ notice until such time as the Buyer has
cured such failure.


 


11.5        In case of any disputes with
respect to any of the invoices submitted in accordance with this Article 11,
the Buyer shall pay the undisputed sum within ten (10) Days of receipt of such
invoice and may file a written claim to the Sellers with respect to the
disputed portion of such invoice.


 


11.6        If, within ten (10) Days
after the due date with respect to any invoice, the Buyer has not filed any
written claim in accordance with Point 11.5, the Buyer shall fully pay the
disputed amount without prejudice to the exercising of its right to file a
claim at a later date.


 

















 


11.7        In the event the Buyer has
filed a written claim with respect to any invoice which has been accepted by
the Sellers in writing, invoicing differences shall be applied to the invoice
of the following Contractual Month.


 


11.8        If, as a result of a written
claim with respect to any invoice, the Parties are not able to reach an
agreement with respect to the disputed amount, they may submit the Dispute to
arbitration as provided for in Article Fourteen.


 


11.9        If the award settling any
Dispute initiated in accordance with Point 11.8 is unfavorable to the Buyer, it
shall pay the amount claimed and unpaid, plus the default interest established
pursuant to Point 11.4, taking into account the application of the Default
Interest Rate as from the due date on which the claimed amount was to be paid.
Otherwise, the Sellers shall reimburse the Buyer for any amount paid which
claim is favorable to the Buyer, adding thereto the Default Interest Rate
calculated as from the date on which the Buyer made such payment in favor of
the Sellers.


 


11.10      An account statement or invoice
may only be questioned within a term of twelve (12) Contractual Months
following their receipt. The Buyer shall notify the Sellers of a mistake made
and request the pertinent correction. If a term of twelve (12) Contractual
Months following the receipt of notice has elapsed, an invoice or account
statement shall be considered correct, final and acceptable for both Parties,
except for the items, as applicable, which have been objected to in accordance
with the foregoing.


 


ARTICLE XII


 


FORCE MAJEURE


 


12.1        None of the Parties shall be
responsible for non-compliance or for partial, late or defective compliance
with an obligation during the time such Party is affected by a Force Majeure
event, provided such Party has provided evidence that such cause impeded its
due compliance.


 


12.2        For the purposes hereof,
Force Majeure shall include events beyond the reasonable control of a Party and
which cannot be avoided by due diligence and reasonable care of such Party,
including (but not limited to), among others:


 


(a)                                 Any act of
external war (whether declared or not), invasion, armed conflict, roadblocks,
embargo, revolution, riots, insurrection, civil commotion or acts of terrorism
or threat thereof, civil disturbance, sanction or any other restriction on the
export of goods.


 


(b)                                 Any workers’
strike (whether declared or not, legal or not) affecting the Parties hereto.


 


(c)                                  Any earthquake,
flood, storm, hurricane, tornado, thunderstorm, fire, explosion,
extreme weather or similar event, provided it directly affects the Sellers’ or
the Buyer’s facilities, in whole or in part.


 

















 


(d)                                 A Force Majeure
event declared by the Transporter or the technical impossibility by the
Transporter to carry the Gas (including any interruption, curtailment or
cessation of transportation, but excluding any maintenance works in respect of
the Transporter in excess of the periods contemplated by Article 4), which may
include the transportation system of Gas or natural gas liquids by pipeline,
and/or the facilities of the Distribution Company by the pipeline network in
the Department of Ica, if applicable, as from the moment it occurs, provided it
prevents the Buyer from receiving the agreed TOPQ
or prevents the Sellers from complying with their commitment to supply
the Gas as per this Contract, as applicable.


 


(e)                                  In the case of
the Sellers, the loss, serious damage or the inoperability of the processing
plants of Las Malvinas and/or Pisco, including the freezing or rupture of the
pipelines and auxiliary facilities related to the transportation of unprocessed
Gas from the Camisea Reservoir to Las Malvinas plant.


 


(f)                                   In the case of
the Sellers, damage or destruction of the Camisea Reservoir (including (i) inexistence,
loss or failure of gas reserves and (ii) depletion or lack of economically
recoverable Gas and natural liquids in the Camisea Reservoir, in each case, as
a consequence of such damage or destruction) due to events beyond the
reasonable control of the Sellers (provided that, it shall not be a Force
Majeure event if it results from the Sellers’ commitments to sell Gas beyond
the gas reserves existing at the time of each sale, as they were described in
the most recent certification of such reserves made by a recognized independent
international petroleum engineering firm in accordance with standard industry
practices at the time of relevant sale).


 


(g)                                    The loss,
serious accidental damage or inoperability of the Plant or inability of any of
its facilities (including port facilities, whether or not owned by the Buyer)
to receive the Gas, store or dispatch the products of the Plant.


 


(h)                                 Failure to
obtain Government Authorizations and/or private authorizations (excluding the
invalidity, refusal or expiration of any approval or permit from any Government
Authority or the impossibility of obtaining them, to the extent the affected
Party may request and obtain, maintain or execute, or was able to reasonably
request, obtain, maintain or execute such approval or permit, or in the event
of failure to act by the affected Party, failure to observe the terms and
conditions of any existing approval or authorization, or any other legal
requirement).


 


(i)                                     The acts or
failures to act of any Government Authority, the effect of which would prevent,
delay or make unlawful or commercially uneconomic Sellers’ or Buyer’s
performance hereunder, or would require


 

















 


the Sellers or the Buyer, in order to comply with said act, to take
measures which are commercially unreasonable in the circumstances.


 


12.3        For the avoidance of doubt,
Force Majeure events shall not include:


 


(a)                                 The breakdown
or failure of equipment caused by normal wear and tear, lack of adequate
maintenance of the equipment or spare parts.


 


(b)                                 The
unavailability or lack of funds.


 


(c)                                  The capacity of
the Sellers to sell Gas at a higher or more favorable price than that
established herein, or the capacity of the Buyer to acquire the Gas at a lesser
or more favorable price than that established herein.


 


12.4        A Force Majeure event shall
not relieve the Parties from the duty of compliance with any of their duties
not partially or totally affected by such events. In such case, the affected
duties shall be suspended for the entire time the Force Majeure event lasts and
the term of this Contract shall be extended, if the Parties so agree and if
possible, for a period equal to the event giving rise to such suspension.


 


12.5        The Party invoking a Force
Majeure event shall inform the other Party regarding the facts constituting
such Force Majeure event within forty-eight (48) hours following its
occurrence, providing details of the event and stating the obligations the
execution of which is or will be impeded, delayed or prevented, and (both in
the original notice and any additional notices) indicating: (i) an estimate in
good faith of the likely duration of the event of Force Majeure and the period
during which its performance may be suspended or diminished, including, to the
extent that it may be communicated or established, the estimated scope of such
diminishment in performance; and (ii) the details of the schedule to be
implemented and any other corrective measure already taken to assure the total
resumption of the normal performance established herein. Delivery of such
notice by the Sellers, through the Sellers’ Coordinator, shall constitute a
declaration by the Sellers that they are entitled and authorized to make such
determination and issue said declaration. In order to resume the normal
performance of this Contract as soon as possible, the affected Party shall
adopt all reasonable commercial measures according to the circumstances and for
the purposes thereof, taking into account the consequences arising from such
event of Force Majeure for the affected Party. Before the resumption of normal
performance, the Parties shall continue complying with their obligations as
established herein to the extent that these are not exempted or prevented by
said event of Force Majeure. The failure by an affected Party to submit a
notice of a Force Majeure event in accordance with this Point 12.5 will not
prevent such Party from claiming the Force Majeure event, unless the other
Party can show that it was materially prejudiced and suffered actual damages as
a result of such failure.


 


12.6        If (i) an event of Force
Majeure prevents a Party declaring a Force Majeure (an “Affected Party”)
from supplying (in the case of the Sellers) or receiving (in the case of the
Buyer) of any amount of Gas provided herein for an uninterrupted period of more
than twelve (12) Contractual Months and (ii) there is no reasonable prospect
that such supply or receipt (as the case may be) be resumed, the unaffected
Party shall be entitled, though not obliged, to terminate this Contract after
ninety (90) Days as from the receipt of such notice at any moment following the
expiration


 

















 


of
such period of twelve (12) Contractual Months. Any valid termination shall not
result in any liability for the unaffected Party. For the avoidance of doubt,
the Affected Party shall not be entitled to terminate this Contract under this
Point 12.6.


 


12.7        In the event that one of the
Parties is not in agreement with the qualification of the event as a Force
Majeure event, such party shall initiate the procedure for settling Disputes in
accordance with Article Fourteen, within fifteen (15) Business Days from the
notice of the event issued by the Party invoking it. Once such period elapses
without any objections having been raised by the Party notified of the event
and provided that Point 12.5 has been complied with, it shall be understood
that such Party has accepted the event as such, unless facts or circumstances
discovered by such Party after said period clearly demonstrate that the event
does not constitute a Force Majeure event.


 


12.8        Once the claimed and
accepted Force Majeure cases are settled, the Parties shall recommence full
compliance with their contractual duties with reasonable promptness, and none
of the Parties shall have the right to request any services or claim
indemnities for the period of inactivity.


 


12.9        No Force Majeure event can
be claimed in order to justify the default on payment of sums of money.


 


ARTICLE XIII


 


TERMINATION OF THIS CONTRACT


 


13.1        The Sellers may terminate
this Contract if the Buyer is in default on the payment of the undisputed
portion of any three (3) monthly invoices concurrently outstanding, which
default is not cured within a period of three (3) months of receipt by the
Buyer of the Fixed Date Notice from the Sellers notifying the Buyer of such
default.


 


13.2        If the Sellers fail to
comply with their obligation to deliver Gas or pay any undisputed portion of
the DOPQ charge due to causes other than a Force Majeure event or Scheduled
Maintenance for ninety (90) (consecutive or non-consecutive) Days within a
period of one (1) year, the Buyer may terminate this Contract following a Fixed
Date Notice to the Sellers and this Contract shall be terminated if the default
is not fully cured by either delivery of the missing quantities of Gas or by
payment of the appropriate undisputed DOPQ charge in accordance with Article 6
within a period of fifteen (15) Days after receipt by the Sellers of such Fixed
Date Notice.


 


13.3        The Sellers or the Buyer may
terminate this Contract, pursuant to article 1430 of the Peruvian Civil Code,
in the event the authorizations for the installation of the Plant granted by
the applicable Government Authority to the Buyer is rendered null and void
through an administrative act of the highest instance. In such case,
termination of this Contract shall not result in a claim by the Buyer or the
Sellers for any indemnity and/or payments agreed on by them.


 


13.4        The Sellers may terminate
this Contract in case the Buyer (i) is dissolved (by a process other than
consolidation or merger); or (ii) has initiated (or other person has initiated
against it) a


 

















 


process
seeking a declaration of insolvency or bankruptcy under the provisions of the
Bankruptcy System Act, Act 27809, as amended, and such proceeding results in a
declaration of insolvency or bankruptcy; or (iii) makes a general assignment,
arrangement or settlement with or for the benefit of its creditors without the
consent of the Sellers; or (iv) pursues or is subject to the appointment of an
administrator, temporary liquidator, custodian, receiver, trustee, depositary
or similar officer for itself or for the entirety of its assets.


 


13.4.1      The Buyer may
terminate this Contract, pursuant to what is established in article 1430 of the
Peruvian Civil Code, in case the License is terminated.


 


13.5        The Sellers shall have the
following termination rights in respect of the Buyer’s failure to achieve
certain Buyer Milestones:


 


(a)                                      The Sellers
shall be entitled to terminate this Contract upon thirty (30) days’ notice to
the Buyer unless the Buyer shall have cured such failure within such thirty
(30) day period, in the event that (i) the Buyer has not obtained requisite
internal approval to commence a FEED study in respect of the Plant on or before
March 1, 2009 (as certified in writing by the Buyer to the Sellers) and (ii) Buyer
has not provided a workaround plan that maintains the proposed schedule for
completion of the Plant (such workaround plan to be certified as reasonable by
an independent Engineer); provided, however, that if a
workaround plan is provided as set forth in item (ii), the action referred to
in item (i) shall be postponed for the period of time set forth in such
workaround plan, which shall not exceed one hundred and eighty (180) days as
from the date set forth in item (i);


 


(b)                                      The Sellers
shall be entitled to terminate this Contract upon thirty (30) days’ notice to
the Buyer unless the Buyer shall have cured such failure within such thirty
(30) day period, in the event that (i) the Buyer has not engaged a third party
contractor to prepare a FEED Study in respect of the Plant on or before April 1,
2009 (as certified in writing by the Buyer to the Sellers) and (ii) the Buyer
has not provided a workaround plan that maintains the proposed schedule for
completion of the Plant (such workaround plan to be certified as reasonable by
an Independent Engineer); provided, however, that if a
workaround plan is provided as set forth in item (ii), the action referred to
in item (i) shall be postponed for the period of time set forth in such
workaround plan, which shall not exceed one hundred and eighty (180) days as
from the date set forth in item (i);


 


(c)                                       The Sellers
shall be entitled to terminate this Contract upon thirty (30) days’ notice to
the Buyer unless the Buyer shall have cured such failure within such thirty
(30) day period, in the event that (i) on or before March 16, 2010 the Buyer
has not submitted an environmental assessment and detailed environmental work
to the Governmental Authorities in respect of the Plant (as certified in
writing by the Buyer to the Sellers) and (ii) the


 

















 


Buyer
has not provided a workaround plan that maintains the proposed schedule for
completion of the Plant (such workaround plan to be certified as reasonable by
an independent Engineer); provided,
however, that if a workaround plan is provided as set forth in item
(ii), the action referred to in item (i) shall be postponed for the period of
time set forth in such workaround plan, which shall not exceed one hundred and
eighty (180) days as from the date set forth in item (i);


 


(d)                                      The Sellers
shall be entitled to terminate this Contract upon thirty (30) days’ notice to
the Buyer unless the Buyer shall have cured such failure within such thirty
(30) day period, in the event that (i) the FEED Study contemplated by clause (b)
above has not been completed on or before May 1, 2010 (as certified in writing
by the Buyer to the Sellers) and (ii) the Buyer has not provided a workaround
plan that maintains the proposed schedule for completion of the Plant (such
workaround plan to be certified as reasonable by an Independent Engineer); provided, however, that
if a workaround plan is provided as set forth in item (ii), the action referred
to in item (i) shall be postponed for the period of time set forth in such
workaround plan, which shall not exceed one hundred and eighty (180) days as
from the date set forth in item (i);


 


(e)                                       The Sellers
shall be entitled to terminate this Contract upon thirty (30) days’ notice to
the Buyer unless the Buyer shall have cured such failure within such thirty
(30) day period, in the event that (i) the Buyer has not entered into the EPC
Contract and commenced detailed engineering work on or before July 1, 2010 (as
certified in writing by the Buyer to the Sellers) and (ii) the Buyer has not
provided a workaround plan that maintains the proposed schedule for completion
of the Plant (such workaround plan to be certified as reasonable by an
Independent Engineer); provided,
however, that if a workaround plan is provided as set forth in item
(ii), the action referred to in item (i) shall be postponed for the period of
time set forth in such workaround plan, which shall not exceed one hundred and
eighty (180) days as from the date set forth in item (i); and


 


(f)                                        In the event
that, on any Trigger Date, the Operational Period Effective Date has not
occurred and the Commercial Operation Date has not occurred, the Sellers shall
be entitled to terminate this Contract upon thirty (30) Days’ notice to the
Buyer, provided, however, that for a Trigger Date that occurs not later than
ninety-six (96) months after the Date of Execution, the Buyer shall be entitled
to avoid termination in that case if, during such thirty (30) day period, the
Buyer makes a payment (any such payment, a “Cure Payment”) in an amount
equal to the Applicable Cure Payment (such Cure Payment to be applied as a
prepayment of the Buyer’s obligations under this Contract following the
Operational Period Effective Date or as a non-refundable security deposit in
the event the Operational Period Effective Date never occurs). For the
avoidance of doubt, in the


 

















 


event
Buyer has previously made a Cure Payment, this clause (e) shall not be
applicable (and Sellers shall not be entitled to attempt to terminate this
Contract in accordance with this clause (f)) until the next Trigger Date to
occur after such Cure Payment is made.


 


ARTICLE XIV


 


GOVERNING LAW - SETTLEMENT OF DISPUTES


 


14.1        This Contract shall be
governed by and construed in accordance with the laws of the Republic of Peru.


 


14.2        Any dispute, controversy or
claim arising out of, relating to or in connection with this Contract (“Dispute”),
including any question regarding its existence, validity or termination, or
regarding a material breach thereof which cannot be resolved by good faith
discussions between the Parties within 60 (sixty) days (or such longer period
as may be agreed by the claimant Party) shall be referred to, and shall be
finally settled by the Court of Arbitration of the International Chamber of
Commerce (the “ICC”) in accordance with the Rules of Arbitration of the
International Chamber of Commerce then in effect (“ICC Rules”).


 


The
place of arbitration shall be New York City, New York, U.S.A., the arbitration
language shall be the English language, and any arbitral award shall be deemed
to have been made in New York City, New York, U.S.A. The arbitration tribunal
shall consist of three (3) independent arbitrators, with one arbitrator to be
appointed by the Sellers, another arbitrator to be appointed by the Buyer, and
a third arbitrator, to be appointed by the two appointed arbitrators, who shall
head the arbitration panel. Except as otherwise provided herein, the
appointment of arbitrators shall be performed in accordance with the ICC Rules.
The decision of the arbitration panel shall include a statement of reasons for
such decision, and the award shall be final and binding on the Parties.


 


14.3        Each of the Parties hereby
irrevocably and unconditionally waives any right to immunity regarding itself
and its property and agrees not to claim or have any immunity with respect to
the issues provided herein, or in any arbitration, trial or action hereunder,
whether initiated as provided for by law or in any other manner, which it may
have or may acquire in the future, including the rights provided for in the
doctrine of the sovereign immunity of the state, immunity before legal
proceedings (including notices of procedural acts or judicial notices,
pre-judgment attachment before the award, or attachment supporting the
execution), immunity from jurisdiction or decision issued by any arbitration
court (including any questioning or complaint of forum non conveniens), and the
immunity against the demand or execution of any award, judgment or any other
remedy.


 


14.4        The Parties have undertaken
to resolve all Disputes promptly and efficiently. Consequently, if two (2) or
more Disputes arise between the same Parties, any of such Disputes may be
submitted to a single arbitration proceeding or be contained in a single
arbitration proceeding. If one (1) or more arbitration proceedings is already
pending between the same Parties with respect to a Dispute, then any of the
Parties may request that a new Dispute be consolidated into any prior
arbitration. If more than one (1) arbitration is pending between the


 

















 


same
Parties, then the Parties to the Dispute shall designate, within twenty (20)
days following the request to consolidate a new Dispute, one (1) of the pending
arbitrations into which the new Dispute shall be consolidated. If the
arbitration Parties are not able to choose the arbitration within a term of
twenty (20) days, the ICC shall designate the proper arbitration within twenty
(20) days from the written request by any of the Parties. The new Dispute will
be consolidated, provided the arbitration court in charge of the selected
arbitration finds that: (i) the new Dispute has findings of fact or conclusions
of law common to the pending arbitration; (ii) none of the Parties shall be
wrongfully harmed; and (iii) the consolidation under these circumstances shall
not unreasonably delay the pending arbitration. Any order for consolidation
issued by the arbitration court shall be final and conclusive for the Parties.
The Parties hereby waive their right to receive counsel for appeal or seek the
interpretation, review or annulment of such order for accumulation in
accordance with ICC Rules or before any other court. The arbitration court in
charge of the arbitration into which the new Dispute is consolidated shall
serve as the arbitration court for the consolidated arbitration. The Parties
agree that if an order for consolidation is issued, they shall immediately
dismiss any arbitration started as provided for herein which purpose has been
consolidated into other arbitration proceeding.


 


ARTICLE XV


 


GUARANTEE


 


15.1        At all times after the
Starting Date of Gas Supply, the Buyer shall be required to comply with any one
of the following conditions, in the Buyer’s sole discretion:


 


(a)                                      Risk Rating: Maintenance of a credit
rating (the “Required
Rating”) as follows: (i) for its unsecured long-term senior
debt obligations, not lower than “BB” or its equivalent (international rating
scale) granted by Standard & Poor’s, Moody’s Investors Service, Inc., Fitch
Ratings or any other recognized international rating agency or (ii) for common
shares, not lower than “Ba-2” or its equivalent (international rating scale),
granted by an international rating agency; or (iii) for long-term unsecured
senior debt obligations, not lower than “AA-” (local scale), granted by Apoyo y
Asociados Internacionales S.A.C., Pacific Credit Rating, Equilibrium or any
other recognized local rating agency; or (iv) for common shares, not lower than
“A-1” (local scale), granted by a local rating agency; or, if the Buyer does
not have the Required Rating or fails to maintain the Required Rating, but the
Parent Company of Buyer does have the Required Rating, the Parent Company of
Buyer may provide to the Sellers a guarantee of the Buyer’s obligations under
this Contract in form and substance satisfactory to the Sellers, as informed by
Sellers’ Coordinator.


 


(b)                                      Letter of Credit: The Buyer shall give to the
Sellers a bank letter of credit (LC) (satisfactory to the Sellers’) to
guarantee the Buyer’s obligations hereunder, or any liability related to the
payment of invoices for the supply of Gas issued according to this Contract,
including interest, issued by JPMorgan Chase Bank, or any other institution
satisfactory to the Sellers that maintains the credit rating set forth in the
last sentence of this


 














 


clause
(b); provided that, the Buyer shall, if it selects this option initially,
deliver such LC to the Sellers not later than thirty (30) Days prior to the
Starting Date of Gas Supply. This letter of credit can be either a standby LC
or a documentary LC, and will be irrevocable and unconditional without
requirement of demand (sin beneficio de excusión) and with
automatic extension, for an amount that corresponds to twenty-five per cent
(25%) of the MDCQ applied for a period of twelve (12) months. The LC shall be
in force for a period of not less than one hundred eighty (180) Days as of the
moment of delivery to the Sellers, and shall be automatically renewed thirty
(30) Days prior to its termination. The issuer bank shall maintain a credit
rating not lower than “A-” (international scale), granted by an international
credit risk agency (Standard & Poor’s, Moody’s or Fitch Rating), or a
credit rating not lower than “A” (local scale), granted by a Peruvian risk
rating agency (Apoyo y Asociados Internacionales S.A.C., Pacific Credit rating
or Equilibrium), provided that the Buyer shall have the right to replace the LC
in accordance with clause (d) below if the issuing bank fails to maintain such
rating.


 


(c)                                  Pre-Payment: The Buyer shall
make an advance payment for an amount corresponding to the MDCQ applied to
sixty (60) Days, such payment to be deposited in an interest bearing escrow
account that can be drawn on by the Sellers in the event of non-payment by the
Buyer hereunder; provided that, the Buyer shall, if it selects this option
initially, make such prepayment not later than fifteen (15) Days prior to the
Starting Date of Gas Supply.


 


(d)                                 Buyer’s
Discretion: The Buyer is entitled to choose any option
outlined in Point (a), (b) or (c) above in its sole discretion at any time. The
Buyer is entitled to replace an option adopted pursuant to the foregoing with
any other option referred to in this Article at any time. If the first option
was adopted and at any time the Required Rating is lost, Buyer must adopt another
option within fifteen (15) Days.


 


ARTICLE XVI


 


ASSIGNMENTS


 


16.1         Except as
otherwise provided in this Article 16, neither Party shall assign its rights, obligations
and/or its position with respect to this Contract, in whole or in part, without
the prior written consent of the other Party, unless (i) such assignment is
carried out in favor of an assigning Party’s Affiliate and the
Assigning Party remains liable for all obligations relating to the assigned
interest or, (ii) in the case of the Sellers, in favor of another Seller or of
a company which owns a Participating Interest in the License (each, the “Assignee”):
provided that, after giving effect to such assignment, the Assignee is
capable, in all material respects, of performing its obligations under this
Contract.


 

















 


16.2         The Buyer
contemplates obtaining debt financing (in the form of loans, bonds, notes,
letters of credit or other indebtedness) to be secured by a collateral
assignment of all or a portion of the Plant and its rights under this Contract
(each, a “Financing”).  Any such collateral assignment shall be
permitted hereunder without the consent of any Seller, and in the event the
Buyer applies for or obtains any Financing (or any refinancing thereof), the
Sellers shall, notwithstanding the existence of any claim, dispute or
litigation between the parties hereto, promptly execute (a) a consent and
agreement in substantially the form attached hereto as Annex D (a “Financing
Consent”) with such changes as are reasonably satisfactory to the Sellers
and Buyer and the lenders or other holders of debt under such
Financing (collectively, the “Lenders”), including any additional
reasonable terms or provisions negotiated in good faith among the parties and
the Lenders, (b) one or more opinions of counsel to any Lender regarding the
enforceability of the Sellers’ obligations under this Contract and such other
matters reasonably requested by such Lender negotiated in good faith among the
parties and the Lenders, and (c) any other reasonable document negotiated in
good faith among the parties and the Lenders requested to enable the Buyer to
finance the construction of the Plant (including a consent to a pledge of the
equity interests in the Buyer); provided, however, that (a) with respect to any
confidential information received from the Sellers, such Lenders are subject to
confidentiality obligations consistent with international standards and
practices for lenders in similar transactions, and (b) subject to this Point
16.2, a Party shall not be required to execute and deliver any documents and/or
certificates that would materially alter that Party’s rights and obligations
under this Agreement. The Buyer agrees to pay promptly on demand all reasonable
expenses and taxes incurred by the Sellers in connection with the actions
contemplated in this Point 16.2.


 


16.3         Any Seller may
assign all or any part of its credit rights to amounts of money receivable by
said Seller as a result of the signing, implementation and fulfillment of this
Contract in favor of its lenders. Any such collateral assignment shall be
permitted hereunder without the consent of the Buyer, and in the event such
Seller applies for or obtains any financing (or any refinancing thereof), the
Buyer shall, notwithstanding the existence of any claim, dispute or litigation
between the parties hereto, promptly execute (a) a consent and agreement in
substantially the form of the Financing Consent with such changes as are
reasonably satisfactory to the Sellers and Buyer and the lenders or other
holders of debt under such financing, including any additional reasonable terms
or provisions negotiated in good faith among the parties and the lenders, (b) one
or more opinions of counsel to any lender regarding the enforceability of the
Buyer’s obligations under this Contract and such other matters reasonably
requested by such lender negotiated in good faith among the parties and the
lenders, and (c) any other reasonable document negotiated in good faith among
the parties and the lenders requested to enable the Sellers to assign their
credit rights (including a consent to a pledge of the equity interests in the
Sellers); provided, however, that (a) with respect to any confidential
information received from the Buyer, such lenders are subject to
confidentiality obligations consistent with international standards and
practices for lenders in similar transactions, and (b) subject to this Point
16.3, a Party shall not be required to execute and deliver any documents and/or
certificates that would materially alter that Party’s rights and obligations
under this Agreement. The Sellers agree to pay promptly on demand all
reasonable expenses and taxes incurred by the Buyer in connection with the
actions contemplated in this Point 16.3.


 

















 


16.4         The Buyer’s
parent company may sell, assign or pledge equity interests in the Buyer to
third party investors, including selling part or all of its interests in the
Buyer, together with the Petrochemical Plant, to any third party subject to the
Sellers’ prior written approval, which shall not be unreasonably withheld,
conditioned or delayed. In determining whether or not to provide such approval,
the Sellers shall consider the ability (both financially and operationally) of
the Buyer to perform its obligations under this Contract.


 


16.5         Pursuant to Section
1435, Paragraph 3 of the Civil Code, the assignments expressly approved in
advance in the preceding points shall have full force and effect from the date
on which the assignment contract has been notified through a Fixed Date Notice
forwarded to the Sellers or to the Buyer, as applicable (“Notice of
Assignment”).


 


16.6         The Parties may
hire services from third parties for the administration of the rights and
obligations assumed, being able to assign operating and/or administrative
activities, serving notice of their decision to the other Party. In this case,
the Party hiring such services from third parties shall be responsible for the
actions carried out by such third parties as if they were its own acts.


 


ARTICLE XVII


 


ADDRESS FOR SERVICE OF NOTICES


 


17.1         All notices or
correspondence (including the invoices related to this Contract, which shall  be in Spanish
language as established by the Applicable Law, with duplicates in English) from
one Party to the other shall be carried out in writing and with acknowledgement
of receipt (forwarded personally or by courier) and shall be submitted to the
following addresses or the address that the Party requests through a notice, or
sent by fax or e mail, addressed to the person(s) indicated below or to any
other person(s) that the other Party requests through a notice. Any notice or
communication forwarded by one Party to the other pursuant to the foregoing
shall be considered received by the other Party, if it is forwarded personally
or by means of a courier, on the date on which it is delivered to the address
of such Party, or if sent by fax or e mail, on the Business Day immediately
following the date on which it was sent to the address of that Party, as
follows:


 


 


(a)                                  Sellers’
address:


 


PLUSPETROL


Av.
República de Panamá 3055 


San
Isidro, Lima, Perú


Fax:
511 411 7117


 


Attention:                                         Sergio Eduardo
CAVALLIN


scavallin@pluspetrol.net



Commercial
Manager


 


Cc:
Guillermo Carlos Schinelli 


Buenos
Aires, Argentina


Fax:
5411 4340 2310




















 


HUNT


Av.
V.A. Belaúnde 147, Vía Principal 140 


Torre
Real Seis, Of. 503


San
Isidro- Lima, Perú


 


To
the attention of:


Mr
Carlos del Solar 


cdelsolar@huntoil.com



Fax:
(511) 707-4199


 


SK


Calle
Amador Merino Reyna N° 267, Of 702


Edificio
“Parque Plaza”


San
Isidro, Lima 27 - Perú


 


To
the attention of:


General
Manager 


camisea@skenergy.com


(511)
421 3783


 


SONATRACH


Av.
V.A. Belaunde 147, Vía Principal 110 


Torre
Real Cinco


San
Isidro- Lima, Perú


 


To
the attention of:


Mr
Mahtali Ketfi 


mahtali.ketfi@sonatrach.com.pe



(511)
221 4774


 


TECPETROL


C.M.
Della Parlera 299,Piso 20 C1001ADA 


Buenos
Aires, Argentina


 


To
the attention of:


Mr.
German Crivelli


german.crivelli@tecpetrol.com


(5411)
4018 5812


 


REPSOL


Av.
V.A. Belaunde 147, Vía Principal 140


San
Isidro- Lima, Perú


 


To
the attention of:


Mr.
Evandro Correa 


enacul@repsolypf.com


(5411) 421 7757




















 


(b)                              Buyer’s address:


 


Av. De La Floresta 497,
Piso 5 


San Borja, Lima, Perú


 


To
the attention of:


Mr.
Lynn F. White


lynnwhite@cfindustries.com


(847)
405-2531


cc:
Mr. Douglas C. Barnard


 


17.2         Either Party
may change its address, serving notice of this change to the other as
established in Point 17.1. This new address shall be valid as from the date on
which the change of address is notified.


 


17.3         The
communications forwarded to the Sellers at the address indicated in Point 17.1(a)
shall be considered submitted to each company that is a Seller. Likewise, the
communications forwarded to the Buyer by the Sellers Coordinator shall be
considered as submitted by all the Sellers, unless any of them decides to
individually submit a claim, which shall be considered to be carried out up to
the limits of its Participating Interest.


 


ARTICLE XVIII


 


OBLIGATIONS AND RESPONSIBILITIES OF THE SELLERS. COORDINATION.


 


18.1         All the
liabilities of the Sellers under this Contract, in its various Articles, Points
and  Annexes, shall be several but not joint, up to their respective
Participating Interest in the License (as they are detailed in the Recitals
hereto). Accordingly, the responsibility for damages, losses, claims for
failure to comply with the obligations set forth or any other hereunder shall
be assumed by each of the Sellers according to their Participating Interest. In
the same manner, the Sellers rights set forth in this Contract will be
exercised by each of the Sellers in accordance with their respective
Participating Interests, except otherwise stated herein.


 


18.2         Pluspetrol
shall act as Sellers’ Coordinator in relation to the operational aspects
related to this Contract.


 


ARTICLE XIX


 


MISCELLANEOUS PROVISION


 


19.1         The official
language of this Contract will be Spanish. However, any communication under or
in connection with this Contract shall be in the English language or, if in any
other language, accompanied by a translation into English. In the event of any
conflict between the English text and the text in any other language
corresponding to those communications, the English text shall prevail.


 


19.2         No amendment,
modification or addition to this Contract shall be valid or binding between the
Parties, unless otherwise agreed to in writing by all of the Parties.


 

















 


19.3         Interpretation:


 


(a)                                  References in this Contract
to Articles, Points and Annexes are made to the Articles, Points and Annexes of
this Contract, unless otherwise stated. The headings are only given for
purposes of convenience, and shall not be used for interpretation of this
Contract.


 


(b)                                 The words “includes” or
“including” shall be construed as “includes without limitation” and “including
without limitation” whether or not so stated. Furthermore, the examples given
shall not be construed as limited, expressly or implicitly, to the matters
which they illustrate. Reference to a contract or Contract shall mean the
contract or Contract as it may be amended at any moment, unless otherwise
stated. The measurement units from the International System of Units (and not
as defined hereunder) shall have the meanings set forth in the ISO 1000
standard publications (1992 SI units). The values expressed in any unit shall
be converted into another unit according to the equivalencies set forth in the
ISO 1000 standard publications (1992 SI units).


 


(c)                                  In order to calculate the
terms as from a Day (or a day) or specified Day (or day) up to a Day (or a day)
or specified Day (or day), the word “as from” means “as from but including” and
the words “up to” and “to” mean “up to and including”.


 


(d)                                 Any provision or resolution
that establishes that an action may or shall be adopted within a determined
number of Days shall mean that such action must be adopted within such term, as
from six o’clock (6:00 a.m.) of the Day on which the right or obligation to
adopt such action originated.


 


(e)                                  Any date or terms shall be
established in reference to the Gregorian calendar. References to a certain
hour of the Day or the day shall refer to the hour in Lima, Peru, unless
otherwise stated.


 


(f)                                    If any dispute arises
between the contents of this Contract or the content of its Annexes, the
contents of this Contract shall prevail.


 


(g)                                 The meanings given to terms
or expressions defined in Article 1 or any other part herein shall be, as
allowed by the context, equally applicable in singular or plural.


 


(h)                                 References to a Party, the
Sellers or the Buyer shall include their  successor(s) or authorized
assignee(s).


 


19.4         The Buyer
represents and warrants to the Sellers and each of the Sellers represent to the
Buyer that:


 


(a)          It is fully authorized to act as a
legal entity and enter into this Contract.


 

















 


(b)                                 All the
necessary actions as a legal entity to authorize the execution and delivery of
this Contract and the compliance with its obligations provided hereunder have
been duly adopted;


 


(c)                                  This Contract
has been duly executed and delivered by an authorized officer or other
representative of such Party and constitutes the legal, valid and binding
obligation of such Party, enforceable according to the terms hereunder, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors’ rights generally or by
equitable principles relating to enforceability;


 


(d)                                 The consent or
approval by any other Person in connection with the execution or granting of
this Contract is not required by such Party; and


 


(e)                                  The execution,
granting and performance of this Contract does not violate the articles of
incorporation of such Party or any other material document in which such Party
acted as a signatory or is bound by virtue thereof.


 


19.5.        The Sellers
hereby represent and warrant to the Buyer that, on the Date of Execution, the
License is in full force and effect, the Sellers have title to the Gas under
the License and the Applicable Laws, and the Sellers have not committed any
breach, violation or infringement under the terms of the License. At any time
after the Date of Execution, at the Buyer’s request (but not more frequently
than once per calendar year), the Sellers shall provide to the Buyer at the
Sellers’ expense, a copy of the most recent reserve certificate (prepared by
the Petroleum Engineer) issued during the previous calendar year, as it may be
reasonably necessary to facilitate the financing, project development and
marketing efforts of the Buyer in respect of the Plant. The existing most
recent reserve certificate is attached as Annex E hereto. Subject to the
Buyer’s confidentiality obligations to the Sellers in respect of this Contract,
the Sellers shall make their best reasonable efforts to provide complementary
information regarding reserves, as long as this information (i) is requested by
the Buyer’s lenders that intend to provide financing of the Plant; or (ii) is
determined by the Buyer’s Board of Directors as reasonably necessary to be
obtained prior to the entry into the engineering, procurement and construction
contract for the Plant.


 


l9.6          Except in case
of gross negligence and willful misconduct, none of  the Parties shall be liable
to any other Party for any indirect, special or punitive damage or loss, loss
of profit or interruption of activities (the “Consequential Damages”),
suffered or incurred by such other Party arising from this Contract, in
connection to it or resulting therefrom, whether or not any claim for such
damage or loss is based on tort (including negligence but not gross
negligence), objective responsibility, contractual responsibility (including
the violation or infringement of this Contract or failure to comply with any
statement or guarantee, whether express or implicit, contained herein) or
otherwise. This limitation shall not apply to or limit, in any manner
whatsoever, the responsibility of any of the Parties regarding an indemnity for
determined damages pursuant to this Contract. For the avoidance of doubt, this
Point 19.6 shall not limit the


 

















 


Consequential
Damages that may be recoverable by a Party in case of gross negligence or
willful misconduct of the other Party, and shall be construed so as to be in
compliance with Articles 1328 of the Civil Code and Article 1986 of the Civil
Code.


 


19.7         Any delay by
the Parties in exercising or enforcing their rights or actions established
herein shall not be interpreted, under any circumstance, as waiving them or
releasing the other Party from the violations occurred without affecting the
right of the Parties to enforce such provisions as provided for hereunder,
unless otherwise expressly stated.


 


19.8         If any
provision established herein is declared unenforceable, null or contrary to
law, this shall not render any other provision of this Contract unenforceable,
null or contrary to law, and this Contract shall continue in full force and
effect pursuant to the remaining provisions, unless such provision renders void
the purpose or intention of this Contract.


 


ARTICLE XX


 


ADDITIONAL ARTICLE


 


(i)           It is hereby
certified that on January 18, 2006, the Trust Administration Contract was entered
into by and between Pluspetrol Camisea, as Trustor; Banco de Crédito del Perú,
as Trust Beneficiary; and La Fiduciaria S.A., as Trustee.
By virtue thereof, Pluspetrol Camisea transferred to the Trust Assets
administered by La Fiduciaria S.A., among others, the collection rights corresponding
to the amounts to be received by Pluspetrol Camisea by virtue of this Contract
for the Exclusive Supply entered into with the Buyer.


 


(ii)          For the
purposes thereof, the Parties to this Contract and the Additional Article do
hereby certify that the payments in favor of Pluspetrol Camisea by virtue of
this Contract for the Exclusive Supply shall be made to Account Number No. 000-000-739-382233
opened by La Fiduciaria at JP Morgan Chase & Company.


 


(iii)         The Parties
also hereby state that as long as written instructions to the contrary are not
received from La Fiduciaria S.A., the entirety of the amounts of money to be
paid by the Buyer by virtue hereof as provided by Item (i) shall be made as
provided for in this Additional Article.


 


(iv)                         Any amendment
or suspension of the form in which payments shall be made shall be requested by
La Fiduciaria S.A. in order to be effective. Pluspetrol Camisea does hereby
irrevocably state that in the event it sends instructions to the contrary, this
instruction shall continue in full force and effect. Therefore, the Buyer shall
continue to make the payments to La Fiduciaria S.A. with no responsibility at
all for the Buyer, considering these payments as correctly made (in all cases).


 


IN
WITNESS WHEREOF, this Contract is executed in eight (8) counterparts
under the same terms and conditions, in the city of Lima, this 7th of October of 2009.


 

















 


	
   

  	
  PLUSPETROL
  PERU CORPORATION S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Claudio de Diego

  
	
   

  	
   

  	
  Name:  Claudio de Diego

  
	
   

  	
   

  	
  Position:
  General Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PLUSPETROL
  CAMISEA S.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Claudio de Diego

  
	
   

  	
   

  	
  Name:  Claudio de Diego

  
	
   

  	
   

  	
  Position:
  General Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HUNT OIL COMPANY OF PERU
  L.L.C.,

  
	
   

  	
  Sucursal
  del Perú

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jerome Bell

  
	
   

  	
   

  	
  Name:  Jerome Bell

  
	
   

  	
   

  	
  Position:  Apoderado

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SK
  CORPORATION, Sucursal Peruana

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Han Yin Joo

  
	
   

  	
   

  	
  Name:  Han Yin Joo

  
	
   

  	
   

  	
  Position:  General Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SONATRACH
  PERU CORPORATION S.A.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mahtali Ketfi

  
	
   

  	
   

  	
  Name:  Mahtali Ketfi

  
	
   

  	
   

  	
  Position:  General Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TECPETROL
  DE PERU S.A.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rosa Maria del Carmen Ludowieg

  
	
   

  	
   

  	
  Name:
  Rosa Maria del Carmen Ludowieg

  
	
   

  	
   

  	
  Alvarez
  Calderon

  
	
   

  	
   

  	
  Position:  Representante

  



 

















 


	
   

  	
  TECPETROL
  DE PERU S.A.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Fabio Alberto Gaudelli

  
	
   

  	
   

  	
  Name:  Fabio Alberto Gaudelli

  
	
   

  	
   

  	
  Position:  Representante

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  REPSOL
  EXPLORACIÓN PERU, Sucursal del Perú

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Evandro Correa Nacul

  
	
   

  	
   

  	
  Name:  Evandro Correa Nacul

  
	
   

  	
   

  	
  Position:  Representante

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BUYER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Eduardo Guevara

  
	
   

  	
   

  	
  Name:  Eduardo Guevara

  
	
   

  	
   

  	
  Position:  Representante

  



 


CERTIFICO:  Que la firma que
antecede corresponde a Don (a): Eduardo Alfredo Guevara Dodds con DNI 07871820
firma que legalizo, sin responsabilidad sobre el contenido del documento.


 


	
   

  	
  Lima,
  13 OCT. 2009

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ David Sanchez-Manrique Tavella

  
	
   

  	
  DAVID SANCHEZ-MANRIQUE TAVELLA

  
	
   

  	
  NOTARIO DE LIMA

  



 


 





 














 


ANNEX A


 


GAS QUALITY


 


The
technical characteristics of the Gas to be delivered are detailed hereinbelow,
in a description that is merely a reference, because such characteristics may
change with the development and evolution of the reservoir:


 


The
qualitative specifications of the Gas subject matter of this process shall be
those established in the Seventh Complementary Resolution of the Rules for
the Service of Transport of Natural Gas by Pipelines, approved by Supreme
Decree No. 018-2004-EM including any further modification derived from the
installation of a ethane extraction project, and they are the following
(without prejudice to the compliance, as the case may be, with the other
characteristics set forth in article 44 of the Regulations of the Natural Gas
Distribution by means of Net of Pipelines, approved by Supreme Decree N°
042-99-EM):


 


1.             Pollutants
in Gas


 


The
Gas provided shall not exceed the following pollutant limits:


 


	
  Total sulphur

  	
  :

  	
  15
  mg/m3

  
	
  H2S

  	
  :

  	
  3
  mg/m3

  
	
  CO2

  	
  :

  	
  2
  % in volume

  
	
  Total
  inert content

  	
  :

  	
  4
  % in volume

  
	
  Free
  water

  	
  :

  	
  0

  
	
  Water
  vapor

  	
  :

  	
  65
  mg/m3

  
	
  Hydrocarbons
  dew point

  	
  :

  	
  -4°C
  to 5500 kPa

  



 


Gas
must be free of sand, dust, rubber, oils, glycols and other kind of
impurities.


 


The
Gas maximum temperature shall be of 50°C.


 


2.             Gas
Calorific Power


 


The
gross calorific power of the Gas provided shall be between 8,800 and 10,300
kcal/m3 (36.84 and 43.12  MJ/m3).


 

















 


ANNEX B


 


GAS PRICE


 


1.             BASE
FLOOR PRICE


 


1.00
One U.S. Dollar per million of BTU (US$/MMBTU)


 


2.             FACTORS
TO DETERMINE THE PRICE


 


They
shall be defined according to the Daily Contractual Quantity - DCQ and the percentage
“take or pay” specified for each year.


 


2.1          FACTOR “A” ACCORDING TO THE DCQ 


 


	
  DCQ – Mcmd

  	
   

  	
  FACTOR “A”

  
	
  30.0

  	
   

  	
  1.000

  
	
  55.0

  	
   

  	
  0.995

  
	
  85.0

  	
   

  	
  0.990

  
	
  115.0

  	
   

  	
  0.985

  
	
  140.0

  	
   

  	
  0.980

  
	
  285.0

  	
   

  	
  0.970

  
	
  550.0

  	
   

  	
  0.960

  



 


For
intermediate DCQ values up to 550.0 Mcmd (thousands m3 per Day), factor “A” is
obtained by linear interpolation between close values.


 


2.2          FACTOR “B” ACCORDING TO
PERCENTAGE TAKE OR PAY


 


	
  PERCENTAGE TAKE OR

  PAY

  	
   

  	
  FACTOR “B”

  
	
  100

  	
   

  	
  0.95

  
	
  90

  	
   

  	
  0.97

  
	
  80

  	
   

  	
  0.98

  
	
  70

  	
   

  	
  0.99

  
	
  60

  	
   

  	
  1.00

  



 


For
intermediate values of percentage “take or pay” factor “B” is obtained by
linear interpolation between close values.


 

















 


3.             FORMULA
FOR THE ADJUSTMENT OF THE BASE FLOOR PRICE


 


The
Base Floor Price shall be annually adjusted the first Business Day of each
calendar year according to the application of the following formula (resulting
from the present text of the License Contract for the exploitation of
hydrocarbons in the Camisea Reservoir):


 


PPBt = PPB * FA


 


Where:


 


PPBt
= Base Floor Price at the Fiscalization Point, applicable to the new period.
PPB = Base Floor Price defined in numeral 1 of the present Annex (1.00 US$/MMBTU)


 


FA
= Adjustment Factor determined as a result of:


 


FA = (0.60 * Ind1j /Ind 10+
0.40 * Ind2j/Ind2o)


 


Ind
l= Arithmetic Average of the Oil Field and Gas Field Machinery Index,
(WPS1191), published by the Department of Labor - USA, corresponding to the
period (j) or (0).


 


Ind2=
Arithmetic Average of the Fuels and related products and power Index, (WPU05)
published by the Department of Labor - USA, corresponding to the period (j) or
(0).


 


(j) =
Period of 12 months published before the adjustment period. 


(o) =
Period between December 1999 and November 2000.


 


Period of determination of Adjustment Factor (FA):


 


The
Adjustment Factor (FA) shall be determined for each calendar year on the first
Business Day of each calendar year with the last 12 published indexes, which
for the purpose of these calculation shall be considered final.


 


If
the Adjustment Factor for any year results in FA < 1, then it shall be
considered that FA = 1.


 


4.             FLOOR
PRICE


 


Floor Price = PPBt x Factor “A” x Factor “B”


 


5.             WELLHEAD
FINAL PRICE


 


Wellhead
Final Price (US$/MMBTU) = Wellhead Base Price * Factor “A” * Factor “B”


 


Where:


 

















 


Wellhead
Base Price in US$/MMBTU for Gas used as a feedstock for the Petrochemical Plant
or for other uses within the Petrochemical Plant, other than Gas used for the
generation of electricity that will be used exclusively within the plant, shall
be the greatest of a), b) or c):


 


a)
3,09


 


b)
3,09 + [(YUP — 350) * 0,01619]


 


c)
Floor Price (1)


 


Factor
A and Factor B: Discount factors calculated according to the established in
Points 2.1 and 2.2 of Annex B will be applied to prices a) and b) .


 






(1) In
case c) Floor Price it has been calculated according to Section 4)
applying Factor A and Factor B.


 


The
Wellhead Base Price for Gas used for the generation of electricity that will be
used exclusively within the Petrochemical Plant shall be determined in
accordance with the price set forth in the License (as amended from time to
time).


 


6.             PRICE
APPROVAL


 


The
effective application of the price referred above, freely agreed by the
Parties, shall be subject to the Government Authorizations which may be
necessary.


 














 


ANNEX C


BUYER MILESTONES