1st Amendment to Low Sulfur Fuel Oil Supply Contract



 HECO Exhibit 10(a) 
  
 FIRST AMENDMENT TO 
 LOW SULFUR FUEL OIL SUPPLY CONTRACT 
 BY AND BETWEEN 
 BHP PETROLEUM AMERICAS REFINING INC. 
 AND 
 HAWAIIAN ELECTRIC COMPANY, INC. 
  
 This First Amendment to Low Sulfur Fuel Oil Supply Contract (“Amendment”), dated March 29, 2004 is entered into between Tesoro Hawaii Corporation fka BHP Petroleum Americas Refining Inc., a Hawaii
corporation (referred to as “Tesoro” or “SELLER”), and Hawaiian Electric Company, Inc., a Hawaii corporation, (referred to as “HECO” or “BUYER”). 
  
 WHEREAS, BHP Petroleum Americas Refining Inc. entered into that certain Low Sulfur Fuel Oil Supply Contract dated November
14, 1997, effective as of January 1, 1998 (the “Contract”); and 
  
 WHEREAS, on or about June 1, 1998, Tesoro Petroleum Corporation purchased all the stock of BHP Petroleum Americas Refining Inc., and thereafter changed the name of BHP Petroleum Americas Refining Inc. to Tesoro Hawaii
Corporation; and 
  
 WHEREAS, the Contract provided for the sale
by SELLER and purchase by HECO of Low Sulfur Fuel Oil (referred to as “LSFO” or “Product”) for the period from January 1, 1998 through December 31, 2004, with provision for additional terms of 12-months each, beginning each
successive January 1, unless BUYER or SELLER gives written notice of termination at least 120 days prior to the expiration of the then current term; and 
  

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 WHEREAS, SELLER and BUYER desire to extend the original term of the Contract for an additional ten-year
period under the existing terms and conditions of the Contract, subject to the amendments noted herein; 
  
 NOW THEREFORE, the parties agree to amend the Contract as follows, effective as of January 1, 2005: 
  
 1. All references to “BHP” or “BHP Petroleum Americas Refining Inc.” in
the title of and throughout the Contract shall be replaced by “Tesoro Hawaii Corporation”. 
  
 2. Article I (“Definitions”) is hereby amended by amending the definition of “Original Term” in its entirety to read as follows: 
  
 “22. “Original Term” means the first term of this Contract, which commenced January 1, 1998 and concludes
December 31, 2014.” 
  
 3. Article III (“Term”) is hereby amended
in its entirety to read as follows: 
  
 “The Original Term of
this Contract shall be from January 1, 1998 through December 31, 2014, and shall continue for Additional Terms, unless BUYER or SELLER gives written notice of termination at least one hundred twenty (120) Days prior to the beginning of an Additional
Term.” 
  

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 4. Article V (“Quantity”), Section 5.1 (“Quantity”) is hereby amended in the first paragraph by
replacing the phrase “2000-2004” in the table with “2000-2014/Additional Term”, by replacing the phrase “Years 2001, 2002 and 2003” with “Years 2001, 2002, 2003, 2005, 2006, 2007, 2009,
2010, 2011, 2013, and 2014”, and by replacing the phrase “Years 2000 and 2004” with “Years 2000, 2004, 2008, and 2012”; in the second paragraph, by replacing the phrase “Year 2004” with “Year 2014”; and
in the fourth paragraph, by replacing the phrase “Years 2000, 2001, 2002, 2003 and 2004” with “Years 2000 through 2014.” 
  
 5. Article VI (“Price”), Section 6.1 (“Determination of Product Price”) is hereby amended by replacing all references to [___] and [___] therein with
[___] and by replacing their respective definitions with the definition of [___] below. 
  
 [___] 
  
 6. Article VI (“Price”), Section 6.1 (“Determination of Product Price”) is hereby further amended by replacing the phrase
“2000-2004” in the table following the definition of price component [___] with “2000-2014/Additional Term”; and by amending the sentence immediately following the definition of price formula component
[___] by replacing the phrase “2004” with “2014”. 
  

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

			
	“SELLER:	  	 TESORO HAWAII CORPORATION
 P.O. Box
3379
 Honolulu, Hawaii 96842
 Attn: Manager Utility
Fuel Sales
 Facsimile: (808) 547-3336”


  
 8. Article VIII (“Payment”),
Section 8.2 (“Method of Payment”) is hereby updated by amending the SELLER’s wire transfer information as follows: 
  
 “Bank One, Chicago, Illinois 
 ABA#
071000013 
 Tesoro Hawaii Corporation 
 Account # 5563631” 
  
 9. Article IX (“Notices”) is hereby
clarified and updated by replacing it in its entirety with the following: 
  
 “Except as otherwise expressly provided herein, all notices shall be given in writing, by letter, electronic mail or facsimile to the following addresses, or such other address as the parties may designate by
notice, and shall be deemed to have been duly given upon receipt, provided that notice sent by mail shall be deemed to have been given on the date of actual delivery or at the expiration of the fifth day after the date of mailing, whichever is
earlier. 
  

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	BUYER:	  	 Hawaiian Electric Company, Inc.
 P. O. Box
2750
 Honolulu, Hawaii 96840
 Attn: Director Fuels
Resources, Power Supply Process Area, Mail
 Stop WP-2/IF
 Facsimile: (808) 543-4207

		
	SELLER:	  	 Tesoro Hawaii Corporation
 P.O. Box
3379
 Honolulu, Hawaii 96842
 Attn: Manager Utility
Fuel Sales
 Facsimile: (808) 547-3336”


  
 10. Exhibit A (“Product
Specifications”) is hereby replaced by the Exhibit A attached hereto and incorporated herein by reference. 
  
 11. Exhibit B (“Illustrative Schedule Of Prices”) is hereby clarified and updated by replacing it with the Exhibit B attached hereto and incorporated herein by
reference. 
  
 12. Exhibit C (“Illustrative Computation of Price Formula
Component”) is hereby clarified and updated by replacing it with the Exhibit C attached hereto and incorporated herein by reference. 
  
 13. Except as expressly amended in this First Amendment, the provisions of the Contract shall remain in full force and effect, and exactly as written. 
  

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

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

	 	 	Thomas C. Simmons
	 	 	(Printed or Typed Name)
		
	 Its
	 	Vice President, Power Supply
		
	By	 	/s/    RICHARD A. VON GNECHTEN        
	 	 	

	 	 	Richard A. von Gnechten
	 	 	(Printed or Typed Name)
		
	 Its
	 	Financial Vice President
	 	 	BUYER

  

			
	TESORO HAWAII CORPORATION
		
	By	 	/s/    STEVE L. WORMINGTON        
	 	 	

	 	 	Steve L. Wormington
	 	 	(Printed or Typed Name)
		
	 Its
	 	EVP Marketing
	 	 	SELLER

  

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 EXHIBIT A 
  

PRODUCT SPECIFICATIONS 
  

							
	 LSFO Specification – Test Item

	  	Measurement Unit

	  	Limits

	  	ASTM Method


	 GRAVITY @ 60 DEGREES F.
	  	Degrees API	  	12 Min.
24 Max.	  	D-4052

  
 [_____________________________________________________________________________________________________ 
 __________________________________________________________________________________________________________ 
 __________________________________________________________________________________________________________ 
 __________________________________________________________________________________________________________] 
  

							
				
	 HEAT VALUE, GROSS
	  	MM BTU/BBL	  	6.0 million
Min.	 	D-240,
D-4868
				
	 FLASH POINT
	  	Degrees F.	  	150 Min.	 	D-93,
D-6450
				
	 POUR POINT
	  	Degrees F.	  	125 Max.	 	D-97,
D-5949
				
	 ASH
	  	Percent, Weight	  	0.05 Max.	 	D-482
				
	 SEDIMENT & WATER
	  	Percent, Weight	  	0.50 Max.	 	D-1796

  
 [____________________________________________________________________________________________] 
  
 [_____________________________________________________________________________________________________
_________________________________________________________________________________________________] 
  
  

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 EXHIBIT B 
  
 ILLUSTRATIVE SCHEDULE OF PRICES 
  
 Illustrative Price Calculation for Product Delivered to Meet the Nominated Commitment of 
 October 2003 
  
 Determination of Product Price Under Article VI. The Product Price in U.S. Dollars (USD) per barrel shall be determined according to the following price formula: 
  
 [_________________________________________________________________]

  
 Where: 
  
 [_____________________________________________________________________________________________________ 
 __________________________________________________________________________________________________
__________________________________________________________________________________________________ __________________________________________________________________________________________________ 
 __________________________________________________________________________________________________
__________________________________________________________________________________________________ 
 __________________________________________________________________________________________________ __________________________________________________________________________________________________ 
 __________________________________________________________________________________________________
__________________________________________________________________________________________________ 
 __________________________________________________________________________________________________ __________________________________________________________________________________________________ 
 __________________________________________________________________________________________________
__________________________________________________________________________________________________ 
 __________________________________________________________________________________________________ __________________________________________________________________________________________________ 
 __________________________________________________________________________________________________
__________________________________________________________________________________________________ 
 __________________________________________________________________________________________________ __________________________________________________________________________________________________ 
 __________________________________________________________________________________________________
__________________________________________________________________________________________________ 
 __________________________________________________________________________________________________ _______________________] 
  

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

  

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

  

							
	 Date of Price

	 	 Price in USD per Barrel


	 Date

	 	 Low

	 	 High

	 	 Average


	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

				
	[________]	 	 	 	 	 	[________]

  

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

  

 2 









							
	 Date of Price

	 	 Price in USD per Barrel


	 Date

	 	 Low

	 	 High

	 	 Average


	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 	 	 
	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

				
	[________]	 	 	 	 	 	[________]

  

	iii.	Compute the [___________________________________________________________________________________________
______________________________________________________________________________________________________ _______________________________________________________________________________________________________
_________________________________________________] 

  
 [___________________________________________________________________________] 
  

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

  
 Determination of [____________________________________________________________________________________________
_________________________________________________________________________________________] 
  

 3 









							
	 Date of Price

	 	 Price in USD per Barrel


	 Date

	 	 Low

	 	 High

	 	 Average


	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 	 	 
	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

			
	[________]	 	 	 	[________]

  
 [_______________________________]

  

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

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

	    	[___________________________________________________________________________________________________ 


	 	    	________________________________________________________________________________________________ 


	 	    	________________________________________________________________________________________________ 


	 	    	________________________________________________________________________________________________ 


	 	    	________________________________________________________________________________________________ 


	 	    	________________________________________________________________________________________________ 


	 	    	______________________________] 

  

 4 









	    	[___________________________________________________________________________________________________ 


	 	    	________________________________________________________________________________________________ 


	 	    	________________________________________________________________________________________________ 


	 	    	________________________________________________________________________________________________ 


	 	    	________________________________________________________________________________________________ 


	 	    	________________________________________________________________________________________________ 


	 	    	________________________________________________________________________________________________ 


	 	    	________________________________________________________________________________________________ 


	 	    	___________________________________________________________________] 

  

	i.	Determination of the [___________________________________________________________________________________ _______________________________________________] 


 

							
	 Date of Price

	 	 Price in USD per Metric Ton


	 Date

	 	 Low

	 	 High

	 	 Average


	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]


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

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

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

 5 









	iii.	Computation using price formula 

  
 [_____________________________________] 
  
 [____________________________________________________] 
  
 [______________________________________________] 
  
 [__________________________________________] 
  

	[________________________________________________________________________________________________________	


	    	____________________________________________________________________________________________________ 


	    	__________________________________________________________________________________], expressed in USD per barrel. 

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

  
 [_______________] 
  
 Where: 
  

	 	[__]	[_____________] derived by multiplying [_______________________________________________________________ 


	 	    	__________________________________________________________________________________________________ 


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


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

  

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

  
 [_________________________________________________________________________________________________________ 
 ______________________________________________________________________________________________________ 
 ______________________________________________________________________________________________________ 
 __] for the
three Months in the calendar quarter immediately preceding the calendar quarter of the Nominated Month of Delivery, by [________________________________________________________________________________________ 
 ____________________________________________________________________________________________________] applicable to the Year of the quarter of the
referenced [___] data, expressed in USD per barrel. 
  

 6 









	i.	the [________________________________________________________________________________________________ 


	    	___________________________________________________________________________________________________ 


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

  
 Date of Publication:
[_____________________________________________________________________________________ 
 ______________________________________________________________________________________________________ 
 __________________________________________________________________________] 
  

			
	 July 2003
	  	[____]
	 August 2003
	  	[____]
	 September 2003
	  	[____]
		
	 [_________]
	  	[______]

  

	ii.	the [__________________________________________________________________________________________________ 


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


	    	_________________________________________________________________________] 

  
 [_________________________________________________________________________________________] effective January 1, 2003: 
 [______________________________________________________________________________________________________ 
 _______________________________________________________________________________________________________ 
 _______________________________________________________________________________________________________ 
 _________________] 
  
 * prorated due [__________________________________________________________________________________________ 
 _________________________________________________________________________________________________] 
  

	iii.	Computation using price formula 

  
 [________________________] 
  
 [____________________] 
  

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

  
 [______________________] 
  
 [________________] 
  
 [_______________________________________________________________________________________________] as defined 

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

  

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

	[_]	= a per barrel [__________________________________________________________________________________________ 


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


  
 [_______________] 
  
 T = Taxes applicable to sale of Product 
  

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

  

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

  

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

  
 [_______________________________] 
  
 [__________________________________________________] 
  
 [__________________________________] 
  
 [_______________________] 
  
 [________________] 
  

 8 









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

  
 [___________________________] 
  
 Assume [__] gross heat content [_________________] Product Delivered against the October 2003
Nomination, [________________ 
 ___________________________________________________________________________________________] 
  
 [________________________________________] 
  
 [________________________________________] 
  
 [_____________________] 
  
 [____________] 
  
 EXPLANATION OF TAXES: 
  
 Taxes in the LSFO price currently in effect include the Hawaii Environmental Response Tax of $0.050 per barrel. Also, Hawaii State General
Excise Tax of 4.166% will be paid on all components of the Product Price, except at the execution of this Contract, the Hawaii Environmental Response Tax. 
  

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 EXHIBIT C 
  
 ILLUSTRATIVE COMPUTATION OF PRICE FORMULA COMPONENT 
  
 Article VI of this Contract provides for the determination of the price per
physical barrel of LSFO, which price determination [________________________________________________________________________________________________________ 
 _________________________________________________________________________________________________________ 
 _________________________________________________________________________________________________________ 
 _______________________________________________________________________________________________]. The current edition of [___________________________________________________________________] to reflect the cost of additional insurance
premium for oil pollution liability insurance on vessels carrying “Persistent Oils” (a cargo category which would include any grade of fuel oil, most fuel oil blending components as well as most types of crude oil) applicable to voyages
having a destination in the U.S.A. SELLER acknowledges that any vessel used to transport LSFO that is sold and purchased under this Contract, including its components and the crude oil from which the LSFO is derived, shall be required to possess oil
spill liability insurance coverage in the maximum amount commercially available, $1 billion as of January 1, 2004. 
  
 The price formula component [____] refers to [________________________________________________________________ 
 ___________________________________________________________________________________________________________ 
 ___________________________________________________________________________________________________________ 
 ___________________________________________________________________________________________________________ 
 __________________________________________] In order to derive an approximation of the relationship between Deadweight and Gross Registered Tons, the design characteristic of tankers against which marine insurance, including oil pollution
liability insurance, is levied, for a nominal vessel consistent with [_______________________], the average size characteristics of two vessels that have transported LSFO or crude oil to Barbers Point, Hawaii are used as reference data. These
vessels are described as follows: 
  

					
	 Name

	  	 Deadweight Tons

	  	 Gross Registered Tons(GT)



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

[___________________________________________]is consistent with the computation of [__] and is to be derived in the same manner as the following illustrative example
calculations: 
  
 1. [__________________] rate in effect from February 20, 2003
(see note #1 at end) onwards shall include a [______________] computed as follows: 
  

 1 








 [_____________________________________] with respect to the additional insurance premium for oil spill
liability insurance coverage in the maximum amount commercially available, $ 1 billion as of January 1, 2004, on vessels carrying Persistent Oils to and from the U.S.A., [____] is derived: 
  
 [_________________________________________________________________________________________________ 
 ___________________________________________________________________________________] 
  
 [_____________________]                                   
          
  
 For
illustrative purposes, this rate may be expressed in USD per barrel as follows: 
  
 [__________________________________________ 
 ________________________________________________________________________________________________] 
  
 [_________________________________________] 
  
 2. The [________________________] and their related [______________________] applicable for each calendar quarter are based upon an average of [___________________________________] in the calendar quarter immediately
preceding the calendar quarter of the Nominated Month of delivery. Therefore the [________________________] computed above may properly be prorated for certain quarterly periods. Such proration may be computed as follows: 
  

	 	A.	With respect to volumes of LSFO [______________________________________________________________________ 

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

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

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

  

 2 










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

  

 3