Document:

Exhibit 10.5

 

Confidential
Treatment Requested by Indonesia Energy Corporation Limited.

Confidential
treatment requested with respect to certain portions of the Exhibit hereof denoted with

“***”
that are (i) not material and (ii) would likely cause competitive harm to 

Indonesia Energy
Corporation Limited if publicly disclosed.

 

	 	 

 

PRODUCTION SHARING

CONTRACT

 

BETWEEN

 

SATUAN KERJA KHUSUS

PELAKSANA

KEGIATAN USAHA HULU

MINYAK DAN GAS BUMI

(SKK MIGAS)

 

AND

 

PT COGEN NUSANTARA

ENERGI

 

AND

 

PT HUTAMA WIRANUSA

ENERGI

 

CONTRACT AREA:

CITARUM

 

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INDEX

 

	SECTION	 	TITLE	 	PAGE
	 	 	 	 	 
	I	 	SCOPE AND DEFINITIONS	 	6
	 	 	 	 	 
	II	 	TERM AND COMMERCIALITY OF CONTRACT AREA	 	18
	 	 	 	 	 
	III	 	RELINQUISHMENT OF CONTRACT AREA	 	27
	 	 	 	 	 
	IV	 	WORK PROGRAM AND BUDGET	 	30
	 	 	 	 	 
	V	 	RIGHTS AND OBLIGATIONS OF THE PARTIES	 	35
	 	 	 	 	 
	VI	 	HANDLING OF OPERATING COSTS AND PRODUCTION	 	56
	 	 	 	 	 
	VII	 	VALUATION OF CRUDE OIL AND NATURAL GAS	 	64
	 	 	 	 	 
	VIII	 	BONUS AND ASSISTANCE	 	70
	 	 	 	 	 
	IX	 	PAYMENTS	 	71
	 	 	 	 	 
	X	 	TITLE TO GOODS, EQUIPMENT, LAND, AND INTELLECTUAL PROPERTY RIGHTS	 	72
	 	 	 	 	 
	XI	 	CONSULTATION AND ARBITRATION	 	73
	 	 	 	 	 
	XII	 	EMPLOYMENT AND TRAINING OF INDONESIAN PERSONNEL	 	75
	 	 	 	 	 
	XIII	 	CONTRACT TERMINATION	 	
    76
	 	 	 	 	 
	XIV	 	BOOKS AND ACCOUNTS	 	78
	 	 	 	 	 
	XV	 	OTHER PROVISIONS	 	79
	 	 	 	 	 
	XVI	 	PARTICIPATION	 	83
	 	 	 	 	 
	XVII	 	EFFECTIVENESS	 	85

 

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EXHIBITS

 

	“A”	DESCRIPTION OF CONTRACT AREA
	 	 
	“B”	MAP OF CONTRACT AREA
	 	 
	“C”	ACCOUNTING PROCEDURE
	 	 
	“D”	MEMORANDUM OF PARTICIPATION
	 	 
	“E”	PARTICIPATING INTEREST HOLDER AND OPERATOR
	 	 
	“F”	VARIABLE COMPONENT
	 	 
	“G”	PROGRESSIVE COMPONENT

 

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This Production Sharing Contract (“CONTRACT”),
is made and entered into on this 7th day of June 2018 by and between SATUAN KERJA KHUSUS PELAKSANA KEGIATAN USAHA
HULU MINYAK DAN GAS BUMI (hereinafter called “SKK MIGAS”), a task force given the task by the Government of
the Republic of Indonesia c.q. the Minister of Energy and Mineral Resources (“MEMR”) to conduct the management of the
upstream oil and gas business activities pursuant to the Presidential Regulation No. 95/2012 in conjunction with the Presidential
Regulation No. 9/2013 as amended by Presidential Regulation No. 36/2018 in conjunction with the MEMR Regulation No. 9/2013 as amended
by MEMR Regulation No. 17/2017 in conjuction with MEMR Regulation No. 53/2017, party of the first part, and PT COGEN NUSANTARA
ENERGI and PT HUTAMA WIRANUSA ENERGI, a corporation organized and existing under the laws of Indonesia, (hereinafter
called “CONTRACTOR”) party of the second part.

 

SKK
MIGAS and CONTRACTOR hereinafter sometimes referred to either individually as the “Party”
or collectively as the “Parties”.

 

WITNESSETH

 

WHEREAS, all the existing Petroleum
within the statutory mining territory of Indonesia is national wealth controlled by the State; and

 

WHEREAS, in accordance with Law
No. 22/2001 and Government Regulation No. 35/2004 as amended several times, recently by Government Regulation No. 55/2009, the
Government of the Republic of Indonesia who hold “Authority to Mine” wishes to promote the development of the Contract
Area and appoint a CONTRACTOR in accelerating the exploration, and development of the resources within the Contract Area;
and

 

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WHEREAS, on November 13th
2012, the Constitutional Court of the Republic of Indonesia through Verdict No. 36/PUU-X/2012 (“MK Verdict No. 36/PUU-X/2012”)
has partially approved the petitions of the Judicial Review on Law No.22/2001, in which the verdict has shifted the functions and
duties of Badan Pelaksana Kegiatan Usaha Hulu Minyak Dan Gas Bumi (“BPMIGAS”) as the supervisor of the implementation
of Cooperation Contracts and the upstream oil and gas business activities to the Government of the Republic of Indonesia c.q. the
related Ministry, until the issuance of a new Law that governs such matter; and

 

WHEREAS, as the follow-up to
the MK Verdict No. 36/PUU-X/2012, the Government of the Republic of Indonesia through the Presidential Regulation No. 95/2012 in
conjunction with the Presidential Regulation No. 9/2013 as amended by Presidential Regulation No. 36/2018 in conjunction with the
MEMR Regulation No. 9/2013 as amended by MEMR Regulation No. 17/2017 in conjuction with MEMR Regulation No. 53/2017, has decided
that the duties to implement the management of the upstream oil and gas business activities, until the issuance of the new Law
on the oil and gas sector, shall be conducted by SKK MIGAS, which one of SKK MIGAS functions is execute the Cooperation
Contract; and

 

WHEREAS, CONTRACTOR declares
its financial ability, technical competence, and professional skills necessary to carry out the Petroleum Operations hereinafter
described, and is willing to enter into this CONTRACT with SKK MIGAS under the terms and conditions described herein;
and

 

NOW THEREFORE, in consideration
of the mutual covenants herein contained, it is hereby agreed as follows:

 

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SECTION
I

SCOPE
AND DEFINITIONS

 

		1.1	SCOPE

 

		1.1.1	This CONTRACT is a cooperation contract in
the form of a Production Sharing Contract. In accordance with the provisions herein contained, SKK
MIGAS shall have and be responsible for the management of the Petroleum Operations contemplated hereunder.

 

		1.1.2	CONTRACTOR shall be responsible to SKK
MIGAS for the execution of such Petroleum Operations in accordance with the provisions of this CONTRACT,
and is hereby appointed and constituted as the company exclusively conducting Petroleum Operations hereunder as of the
Effective Date.

 

		1.1.3	CONTRACTOR shall provide all the financial
and technical assistance, including skills required for the execution of Petroleum Operations.

 

		1.1.4	CONTRACTOR shall carry the risk in conducting
Petroleum Operations and shall therefore have an economic interest in the development of the Petroleum deposits in the Contract
Area.

 

		1.1.5	During the term of this CONTRACT, the total
production of Petroleum achieved in the conduct of such Petroleum Operations shall be shared in accordance with the provisions
of Section VI hereof.

 

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		1.1.6	In the case that CONTRACTOR comprises of more
than one Participating Interest Holder, then the following provisions shall apply:

 

		(a)	CONTRACTOR shall appoint one of the Participating
Interest Holders as an Operator which is authorized to execute Petroleum Operations hereunder and represent them in communicating
and liaising with SKK MIGAS, GOI and any other parties in relation to this
CONTRACT and the performance thereof;

 

		(b)	As a general rule, the Operator to be proposed to SKK
MIGAS shall have the necessary skills, experience, financial capability and qualified personnel to conduct Petroleum
Operations hereunder;

 

		(c)	The appointed Operator in the Contract Area at the signing of this CONTRACT
is as described in Exhibit “E”;

 

		(d)	The change of Operator shall be subject to the prior written approval of SKK
MIGAS and SKK MIGAS shall notify GOI
of such change. Approval of such request shall not be unreasonably withheld, provided that the requirements in Sub-section
1.1.6.(b) are satisfied;

 

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		(e)	In addition to the responsibilities
                                         and functions of Operator referred to in paragraph (a) of this Sub-section 1.1.6, SKK
                                         MIGAS shall solely look to Operator for the performance of CONTRACTOR
                                         under this CONTRACT;

 

		(f)	Notwithstanding the provisions in paragraph (e) of this Sub-section 1.1.6, the appointment of
                                                                 Operator shall not in any way limit, restrict or discharge each of the other Participating Interest Holder(s) from their
                                                                 obligations, responsibilities and liabilities as Participating Interest Holder(s) under this CONTRACT, and
                                                                 such appointment shall not prevent SKK MIGAS from directly
                                                                 communicating, liaising with and/or enforcing such obligations, responsibilities and liabilities to any of them on a joint
                                                                 and several liability basis.

 

		1.2	DEFINITIONS

 

For
the purposes of this CONTRACT, except as expressly stated otherwise herein,
the words and terms defined in Article 1 of Law No. 22/2001, when used herein, shall have the meaning in accordance with such
definitions. In addition, the following definitions shall apply.

 

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		1.2.1	Abandonment and Restoration Funds
                                                                  or AARF means the accumulation of funds deposited in an escrow
                                                                  account jointly controlled by SKK MIGAS and CONTRACTOR reserved for the conduct of abandonment and site
                                                                  restoration in the manner and pursuant to the procedures described in Sub-section 5.2.6.

 

	 	1.2.2	Affiliated Company or Affiliate means (i) a company or other entity that Controls or is Controlled by a Party to this CONTRACT, or (ii) a company which is Controlled by a company or other entity which Controls, a Party to this CONTRACT.

 

		1.2.3	Barrel means a quantity or unit of oil,
forty-two (42) United States gallons at the temperature of sixty (60) degrees Fahrenheit.

 

		1.2.4	Barrel of Oil Equivalent or BOE
means six thousand (6,000) standard cubic feet of Natural Gas based on the gas having a calorific value of one thousand (1,000)
British Thermal Unit per cubic foot (BTU/ft3).

 

		1.2.5	Gross Split Production Sharing means production
sharing principle without Operating Cost recovery.

 

		1.2.6	Crude
                                         Oil Base Split means SKK MIGAS’ share of Crude Oil is 57% (fifty
                                         seven percent) and CONTRACTOR’s share of Crude Oil is 43% (forty three percent).

 

		1.2.7	Natural
                                         Gas Base Split means SKK MIGAS’ share of Natural Gas is 52% (fifty
                                         two percent) and CONTRACTOR’s share of Natural Gas is 48% (forty eight percent).

 

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		1.2.8	Variable Component means components that
are used as bases in production sharing calculation adjustment as described in Exhibit “F”.

 

		1.2.9	Progressive Component means components
that are used as bases in progressive production sharing calculation adjustment as described in Exhibit “G”.

 

		1.2.10	Actual Condition means condition of Variable
and/or Progressive Components’ parameters on the date when production sharing adjustment is conducted.

 

		1.2.11	Budget of Operating Costs means cost estimates
of all items included in the Work Program.

 

		1.2.12	Calendar Year or Year
means a period of twelve (12) months, commencing on January 1st and ending on December 31st, according to
the Gregorian Calendar.

 

		1.2.13	Calendar month or Month means a period
of calendar days in 1 (one) month in Calendar Year.

 

		1.2.14	Change of Control means any direct or indirect
change of Control of a Participating Interest Holder (whether through merger, sale of shares or other equity interests, or others)
through a single transaction or series of related transactions.

 

		1.2.15	Contract Year means a period of twelve
(12) consecutive months according to the Gregorian Calendar counted from the Effective Date of this CONTRACT or from the
anniversary of such Effective Date.

 

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		1.2.16	Contract Area means the area where CONTRACTOR
is appointed to carry out Petroleum Operations, as described and outlined in Exhibits “A” and “B” attached
hereto and made part hereof, less all areas relinquished pursuant to this CONTRACT.

 

		1.2.17	Control means direct ownership (by holding
company with one level above) or indirect ownership through (a) a majority ownership of the voting stock, if the company is a corporation
issuing stock, or (b) a majority ownership of the controlling rights or interests, if the other entity is not a corporation issuing
stock, or (c) an agreement designated by the shareholders of stock/interest to vote for a Controller. The terms Controls and Controlled
by shall be construed accordingly.

 

		1.2.18	Crude Oil means crude mineral oil, asphalt,
ozokerite and all kinds of hydrocarbons and bitumens, both in solid and in liquid form, in their natural state or obtained from
Natural Gas by condensation or extraction.

 

		1.2.19	Exploration Period means the exploration
terms of six (6) Contract Years, commencing on the Effective Date. Such a term may be extended once for a maximum period of four
(4) Contract Years.

 

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		1.2.20	Exploitation
                                         Period means the part of this CONTRACT term where exploitation
                                         activities are allowed to take place, which commences since the first POD proposals submitted
                                         by CONTRACTOR is approved by Minister.

 

	 	1.2.21	Effective Date means the date of the approval of this CONTRACT by GOI.

 

		1.2.22	Field means a certain part of
                                                                   Contract Area which produces Petroleum commercially.

 

	 	1.2.23	Firm Commitment means the Work Programs during the first *** Contract Years, as set forth in Sub-section 4.2 of this CONTRACT, for which CONTRACTOR is committed and obligated to complete.

 

	 	1.2.24	Work Commitment means the Work Programs during the second *** Contract Years, as set forth in Sub-section 4.2 of this CONTRACT.

 

		1.2.25	Force
                                         Majeure means delays or failure in performance under this CONTRACT
                                         caused by circumstances beyond the control and without the fault or negligence
                                         of the Party affected by an event of Force Majeure that may affect economically or otherwise
                                         the continuation of Petroleum Operations under this CONTRACT.
                                         It is understood that an event of Force Majeure shall include but not be restricted
                                         to acts of God or the public enemy, perils of navigation, fire, hostilities, war (declared
                                         or undeclared), blockade, labor disturbances, strikes, riots, insurrections, civil commotion,
                                         quarantine, restrictions, epidemics, storm, tsunami, earthquakes, or accidents.

 

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		1.2.26	Foreign
                                         Exchange means currency other than that of the Republic of Indonesia but
                                         acceptable to GOI, SKK MIGAS and
                                         CONTRACTOR.

 

		1.2.27	GOI means the Central Government
                                                                   of the Republic of Indonesia represented by the ministry which has the authority in the oil and gas sector.

 

		1.2.28	Grids means graticular sections
                                                                   defined by meridians of longitude (reference the meridian of Greenwich) and by parallels of latitude (reference the
                                                                   Equator).

 

		1.2.29	Gross Negligence or Willful
                                                                   Misconduct means act or omission by CONTRACTOR’s senior
                                                                   management or senior supervisory personnel which (i) was intended to cause or which was in reckless disregard of, or wanton
                                                                   in indifference to, the harmful consequences such person, knew or should have known, such act or omission would have on the
                                                                   safety or property of another person or entity or (ii) seriously deviates from a diligent course of action and which is in
                                                                   reckless disregard of or indifference to harmful consequences.

 

		1.2.30	Indonesia Income Tax Law means the applicable
Indonesian Income Tax Law including all of its implementing regulations as of the Effective Date.

 

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		1.2.31	The
                                         ten percent (10%) Participating Interest means a maximum of ten percent
                                         (10%) Participating Interest in this CONTRACT, which is offered by CONTRACTOR
                                         to a Local Government Owned Company designated by the Local Government, as referred
                                         to in Section 16.1 of this CONTRACT.

 

		1.2.32	Local Government Owned Company or LGOC
means a company established in accordance with Indonesian laws and regulations, which domiciles and operates in Indonesia in the
form of: (a) a local government owned company in which of the share is entirely owned by the local government; or (b) a limited
liability company in which at least ninety nine percent (99%) of the share is owned by local government and the remaining share
is affiliated entirely with the local government.

 

LGOC shall meet the following
criteria: a) its status is authorized by a local government regulation; b) not conducting business activity other than managing
Participating Interest.

 

	 	1.2.33	LGOC Subsidiary means business entity in the form of limited liability enterprise established by LGOC in which its capital is divided into shares directly or indirectly owned entirely by the local government.

 

		1.2.34	State Owned Company or SOC
means an entity of which the shares is entirely owned by the state through direct participation that
is derived from the state’s separated assets and which operates in oil and gas business.

 

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		1.2.35	Minister means the minister with
                                                                   the authority in the oil and gas sector.

 

		1.2.36	Natural
                                         Gas means all associated and/or non-associated gaseous hydrocarbons produced
                                         from a well, including wet mineral gas, dry mineral gas, casing head gas and residue
                                         gas remaining after the extraction of liquid hydrocarbons from wet gas.

 

		1.2.37	Net
                                         Realized Price FOB means the realized price of Crude Oil, the ICP (Indonesian
                                         Crude Price) as determined by GOI.

 

		1.2.38	Operating
                                         Costs means expenditures made and obligations incurred in carrying out
                                         Petroleum Operations, which consist of Exploration costs, Exploitation costs and other
                                         costs hereunder, determined in accordance with the Accounting Procedure attached hereto
                                         and deemed as an integral part hereof as Exhibit “C”.

 

		1.2.39	Operator means the CONTRACTOR or,
                                                                   in the case CONTRACTOR comprises of more than one Participating Interest
                                                                   Holder, one of the Participating Interest Holders appointed by the other Participating Interest Holder(s) to represent them
                                                                   under this CONTRACT.

 

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		1.2.40	Participating
                                         Interest means the undivided rights, interests and obligations of CONTRACTOR
                                         in and under this CONTRACT. For
                                         avoidance of doubt, if CONTRACTOR comprises
                                         more than one Participating Interest Holder, each of such Participating Interest Holders
                                         constitute CONTRACTOR shall have the rights and interests hereunder in the same percentage
                                         share of the Participating Interest it holds under this CONTRACT.

 

		1.2.41	Participating Interest Holder means
CONTRACTOR, or in the case that CONTRACTOR comprises
more than one Business Entity(ies) and or Permanent Establishment(s), those Business Entity(ies) and/or Permanent Establishment(s)
which holds certain percentage of Participating Interest, as approved by GOI.

 

		1.2.42	Petroleum means both or either
                                                                   Crude Oil and Natural Gas.

 

		1.2.43	Petroleum Operations means
all exploration, development, extraction, production, transportation, marketing, abandonment and site restoration
operations authorized or contemplated under this CONTRACT.

 

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		1.2.44	Plan of Development or POD
means a plan proposed by CONTRACTOR for the development of a field in which
Petroleum is discovered in a quantity and quality that may be produced commercially, the plan of which describes in reasonable
detail all information required by SKK MIGAS, including, inter alia, the estimated
quantities of reserves and production of Petroleum, expenditures required to develop the field in question and production costs
of Crude Oil and/or Natural Gas, costs for abandonment and restoration required for post Petroleum Operations including its funding
program, plan of utilization of the Crude Oil and/or Natural Gas to be produced, method and process of the exploitation of the
Crude Oil and/or Natural Gas, the estimated amount of GOI’s revenues
resulting from such development and the plan in utilizing Indonesian national manpower and domestic goods and services. The POD
for the development of Crude Oil and/or Natural Gas discovery in the subsequent field(s) shall be submitted to SKK
MIGAS for SKK MIGAS approval, based on consideration of all pertinent
operating and financial data made available by CONTRACTOR.

 

		1.2.45	Point of Delivery means the point of
delivery contemplated by Law No. 22/2001, which is the outlet flange of the loading arm after final sales meter at the delivery
terminal, or, some other point(s) mutually agreed by the Parties.

 

		1.2.46	Work Program means a statement itemizing
the Petroleum Operations to be carried out in the Contract Area.

 

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SECTION
II

TERM
AND COMMERCIALLY OF

CONTRACT
AREA

 

		2.1	TERM OF CONTRACT

 

		2.1.1	Subject to the following provisions
of this CONTRACT, the term of this CONTRACT
shall be thirty (30) Contract Years as from the Effective Date. The term of this CONTRACT
consists of Exploration Period and Exploitation Period.

 

		2.1.2	(a)	The initial term of Exploration Period shall be six (6) Contract Years as from the Effective
Date. At the end of the initial term of Exploration Period, CONTRACTOR shall
have the option to request a one time extension to SKK MIGAS for a maximum
period of four (4) Contract Years, and the approval of such request shall not be unreasonably withheld, provided that CONTRACTOR
shall have fully complied with the requirements of relinquishment of Contract Area referred to Section III, and fully
performed its Firm Commitment referred to Sub-section 4.2 of Section IV and fulfil all financial obligations hereof.

 

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	 	(b)	Notwithstanding the provisions in paragraph (a) of this Sub-section 2.1.2, in the event that CONTRACTOR fails to fulfil the requirements specified in Sub-section 2.1.2(a), SKK MIGAS may take into consideration the performance of CONTRACTOR in conducting exploration operations during six (6) Contract Year, fulfilment of financial obligations and CONTRACTOR’s effort to discover the hydrocarbon, in evaluating and determining if CONTRACTOR may obtain the approval of such extension.

 

	 	2.1.3	If at the end of the initial six (6) Contract Years of the Exploration Period or, as the case may be, the approved Contract Years extension thereto, no Petroleum in commercial quantities is discovered in the Contract Area, then without prejudice to Section XIII, Sub-section 13.6 hereof, this CONTRACT shall automatically terminate forthwith in its entirety, and CONTRACTOR shall relinquish all remaining Contract Area to GOI through SKK MIGAS immediately after the receipt of SKK MIGAS notification.

 

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		2.2	COMMERCIALITY
OF CONTRACT AREA

 

	 	2.2.1	If within the Exploration Period, Petroleum is discovered in the Contract Area in a quantity and quality, which CONTRACTOR has reasonably determined can be produced commercially, CONTRACTOR shall immediately report such discovery to SKK MIGAS and GOI, for SKK MIGAS evaluation and written acknowledgement. Such report shall specify in reasonable detail the estimated amount of the reserves and quality of the Petroleum, supported with the relevant data, such as certificate regarding the quantity and quality of Petroleum reserves discovered by CONTRACTOR.

SKK MIGAS will not unreasonably withhold the delivery of its acknowledgement letter to CONTRACTOR.

 

		2.2.2	Upon receipt of SKK
MIGAS acknowledgement letter of such report of discovery, CONTRACTOR
shall, as soon as practicable, but in no case shall exceed three (3) Years thereafter, submit a proposed POD for the
field in which Petroleum is discovered for the first time, to SKK
MIGAS for evaluation. SKK MIGAS
will invite CONTRACTOR and
confer in good faith for clarification of any information and data included in the POD. SKK
MIGAS shall convey the result of its evaluation and its recommendation in respect of the POD to the Minister for approval.

 

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If
during such three (3) Years time limit, CONTRACTOR
does not submit a proposed POD and the Exploration Period has expired, then this CONTRACT
shall automatically terminate.

 

Notwithstanding to the paragraph
above, CONTRACTOR may request to SKK
MIGAS a maximum two (2) Years extension to the foregoing three (3) Years time limit, in relation to:

 

	 	(i)	the discovery of hydrocarbon in frontier or deep-water areas, or other certain areas the development of which, in SKK MIGAS’ judgment, is technically difficult; and/or

 

	 	(ii)	the discovery of Natural Gas field (except field containing associated Natural Gas), the sales and purchase commitment for which cannot be agreed by CONTRACTOR and buyer(s) within such three (3) Years time limit, having negotiated in good faith.

 

	 	2.2.3	If the Minister approves CONTRACTOR’s proposed POD for the first field in the Contract Area, such POD approval shall constitute the declaration of commerciality of the entire Contract Area and CONTRACTOR shall commence to develop the field and or fields in which the Petroleum is discovered.

 

If prior to the expiration of
the Exploration Period, CONTRACTOR has submitted to SKK
MIGAS a notification as provided for in Sub-section 2.2.1 of this CONTRACT,
notwithstanding Sub-section 2.1.3 and Sub-section 2.2.2, this CONTRACT shall
not terminate on the expiration of the Exploration Period or its extension, until and unless CONTRACTOR
receives a letter from SKK MIGAS notifying that either: (i) SKK
MIGAS does not agree to issue the acknowledgment of discovery reported by CONTRACTOR
for such first field in question, or (ii) Minister does not approve CONTRACTOR’s
proposed POD for the first field in the Contract Area.

 

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In
the case that CONTRACTOR receives
such SKK MIGAS notification letter,
this CONTRACT shall automatically
terminate on the date of receipt of such SKK
MIGAS notification letter, and CONTRACTOR
shall immediately relinquish all remaining Contract Area to GOI
through SKK MIGAS.

 

		2.2.4	In the event that CONTRACTOR
which has received a POD approval to develop its first Field in the Contract Area fails to conduct Petroleum Operations
for the development of such first Field within a maximum period of five (5) consecutive
Years (meaning sixty (60) months) after the end of the Exploration Period, in accordance with the schedules proposed in the approved
POD, then unless the Parties otherwise agree this CONTRACT
shall automatically terminate on the expiration date of such five (5) Years time limit.

 

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SKK MIGAS shall notify
CONTRACTOR of the expiration of such five (5) Years time limit and the expiration of this CONTRACT
Upon receipt of such notification letter, CONTRACTOR shall be obliged to relinquish
all remaining Contract Area to GOI through SKK
MIGAS.

 

	 	2.2.5	An exception to the foregoing five (5) Years time limit may be made in the event of development of Natural Gas field. If it is anticipated that during such five (5) Years time limit CONTRACTOR shall have not successfully entered into any commercial gas sales agreement, at the request of CONTRACTOR, SKK MIGAS may extend such five (5) Years time limit to a reasonable period(s) of time to be determined by SKK MIGAS. If at the end of such time limit extension, CONTRACTOR remains unable to enter into a commercial gas sales agreement, the Parties shall confer in good faith to determine all reasonable steps, including the possibility of not granting CONTRACTOR with additional extension. If eventually SKK MIGAS determines not to grant any additional extension to CONTRACTOR, SKK MIGAS shall advise CONTRACTOR of its decision and the expiration of the term of this CONTRACT, and CONTRACTOR shall, without prejudice to CONTRACTOR’s obligations to fulfil any of its outstanding obligations under this CONTRACT, be obliged to relinquish remaining Contract Area to GOI through SKK MIGAS.

 

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		2.3	LIMITED COMMERCIAL CONTRACT AREA

 

		2.3.1	Limited
                                         Commercial Contract Area Due to Unitization

 

If
during the Exploration Period, Petroleum is discovered in a field in the Contract Area which straddles in the other contract area
which in the judgment of SKK MIGAS,
such field cannot be produced commercially by the Contract Area on its own, other than through unitization of the field with the
part of such field located substantially in other contract area adjacent to the Contract Area, then if the POD of such field is
approved by the Minister, the part of the field located in the Contract Area will be declared as a Limited Commercial Contract
Area. Upon the commencement of commercial production of Petroleum from such Limited Commercial Contract Area, CONTRACTOR
shall have the right to the Petroleum produced from the Limited Commercial Contract Area only.

 

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		2.3.2	Consequences
                                         of Declaration of Limited Commercial Contract Area

 

Notwithstanding
the other provisions of this CONTRACT
which set out otherwise, to the extent that the circumstances described in Sub-Section 2.3.1 above occurred then if until the
expiration of the Exploration Period or its extension under this CONTRACT
no Petroleum is discovered from other field within the Contract Area (outside the Limited Commercial Contract Area)
in a quantity which may be produced commercially, then the Limited Commercial Contract Area shall be carved out and separated
from the original Contract Area, and shall be treated as producing acreage of the Contract Area, where the terms and conditions
of this CONTRACT shall continue
to apply, whilst the remaining portion of the Contract Area outside the Limited Commercial Contract Area shall be relinquished
to GOI through SKK
MIGAS.

 

		2.4	SUBSEQUENT PETROLEUM DISCOVERY

 

		2.4.1	Any Petroleum subsequently discovered in the Contract Area
shall be immediately reported to SKK MIGAS
and GOI for SKK
MIGAS evaluation.

 

	 	2.4.2	Upon receipt of the foregoing report, if SKK MIGAS considers that such discovery may be produced commercially, SKK MIGAS shall issue an acknowledgement letter of such commercial discovery. Following agreement with CONTRACTOR of such commercial discovery, CONTRACTOR shall, as soon as practicable, but consistent with the deadlines set forth in Sub-section 2.2.2, submit a proposed POD of the field in which the Petroleum is discovered to SKK MIGAS, for approval. In the event CONTRACTOR fails to submit the POD within the prescribed period CONTRACTOR shall be obliged to relinquish a portion of the Contract Area corresponding to the surface area where such field is located to GOI through SKK MIGAS.

 

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    CONTRACT AREA: CITARUM

    

 

		2.5	INVESTMENT IN
                                         THE END OF EXPLOITATION PERIOD

 

	 	2.5.1	At the end of the Exploitation Period, CONTRACTOR shall maintain the Oil and Gas production through investment(s), subject to SKK MIGAS approval.

 

		2.5.2	In the event
                                         of useful life of the assets purchased in the investment(s) referred to Sub-section 2.5.1
                                         exceeds CONTRACT period, the investment(s) as referred in Sub-section 2.5.1 becomes
                                         one of GOI’s considerations on granting the approval of the extension of
                                         the CONTRACT.

 

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    CONTRACT AREA: CITARUM

    

 

SECTION III

RELINQUISHMENT OF CONTRACT AREA

 

 

		3.1	On or before the end of the initial *** Contract Years as from the Effective Date, CONTRACTOR shall relinquish *** percent (***%) of the original total Contract Area.

 

		3.2	If at the end of the *** Contract Year the Firm Commitment has not been completed by CONTRACTOR pursuant to Sub-section 4.2 of Section IV, upon consideration and evaluation of SKK MIGAS, CONTRACTOR shall be obliged to relinquish an additional *** percent (***%) of the original total Contract Area at the end of the *** Contract Year.

 

		3.3	On or before the end of the *** Contract Year, CONTRACTOR shall relinquish additional portion(s) of Contract Area so that the area retained thereafter shall not be in excess of *** percent (***%) of the original total Contract Area.

 

		3.4	Notwithstanding Sub-section 3.3 above, on or before the end of the *** Contract Year, if any part of the Contract Area corresponding to the surface area in which Petroleum has been discovered, is greater than *** percent (***%) of the original Contract Area, then CONTRACTOR shall not be obliged to relinquish such excess to SKK MIGAS for the purpose of the economic development of the Contract Area.

 

 

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    CONTRACT AREA: CITARUM

    

 

 

		3.5	With regard to the portion of the Contract Area remaining after the mandatory relinquishments as set forth in Sub-sections 3.1, 3.2 and 3.3 above, CONTRACTOR shall maintain a reasonable exploration effort. In the event CONTRACTOR does not conduct any exploration program such as surveys and/or drilling(s) in the remaining Contract Area during *** Years after commercial production commences, SKK MIGAS may gives a reminder by written notice to CONTRACTOR, require CONTRACTOR to choose either to: (i)       conduct an exploration program within *** after receipt of such reminder and thereafter immediately submit and obtain a POD approval or (ii) relinquish such part of the Contract Area.

 

In the event that CONTRACTOR
fails to fulfil its obligation provided for in point (i) of this Sub-section 3.5, CONTRACTOR
shall be obliged to relinquish such part of the Contract Area.

 

		3.6	Upon *** written notice to SKK MIGAS, prior to the end of the *** Contract Year and prior to the end of any succeeding Contract Year, CONTRACTOR shall have the right to relinquish any portion of the Contract Area, and such portion shall then be credited to that portion of the Contract Area which CONTRACTOR is next required to relinquish under the provisions of Sub-sections 3.1, 3.2 and 3.3 hereof.

 

		3.7	CONTRACTOR shall advise SKK MIGAS in advance of the date of relinquishment of the portion to be relinquished. For the purpose of such relinquishment, CONTRACTOR and SKK MIGAS shall consult with each other regarding the shape and size of each individual portion of the areas being relinquished, provided, however, that so far as reasonably possible, such portion shall each be of sufficient size and convenient shape to enable Petroleum Operations to be conducted thereon.

 

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    CONTRACT AREA: CITARUM

    

 

		3.8	The portion of the Contract Area to be relinquished shall
be in a number of Grids in accordance with longitude and latitude of spheroids.

 

		3.9	CONTRACTOR’s non-compliance with the relinquishment requirements specified in Sub-sections 3.1, 3.2 (if applicable) and/or 3.3 may be considered as a ground for SKK MIGAS not to approve CONTRACTOR’s request for extending the initial term of the Exploration Period referred to in Sub-section 2.1.2.

 

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    CONTRACT AREA: CITARUM

    

SECTION IV

WORK PROGRAM AND BUDGET

 

 

		4.1	For this CONTRACT, CONTRACTOR shall commence Petroleum Operations in the Contract Area not later than *** since the Effective Date.

 

		4.2	The Work Program to be carried out by CONTRACTOR in conducting exploration operations pursuant to the terms of this CONTRACT during the first *** Contract Years since the Effective Date and in conducting Petroleum Operations pursuant to the terms of this CONTRACT during the next *** Contract Years with the projected estimated Work Program and Budget of Operating Costs in respect of each of such Contract Years is as follows:

 

	TAHUN	DESKRIPSI	AKTIVITAS	ANGGARAN
	KONTRAK	SATUAN	JUMLAH	SATUAN	JUMLAH
	3 Tahun ke-1	G and G Study	Paket	3	US$	***
	 	Seismic 2D Acquisition and Processing *)	Km	300	US$	***
	3 Tahun ke-2	G and G Study	Paket	5	US$	***
	 	Seismic 2D Acquisition and Processing *)	Km	250	US$	***
	 	Seismic 3D Acquisition and Processing *)	Km2	50	US$	***
	 	Exploratory Well	Sumur	3	US$	***

*) Licensing new multi-clients data or acquisition

 

Subject to the provisions of
this CONTRACT, during the first ***Contract Years, CONTRACTOR shall carry out the Work Program as set out above
in respect of each of those Contract Years.

 

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    CONTRACT AREA: CITARUM

    

 

If during the first ***Contract
Years CONTRACTOR failed to complete the Firm Commitment, CONTRACTOR may, with SKK MIGAS’ consent, carry
forward such remaining Firm Commitment to be performed in the following ***Contract Years without prejudice to CONTRACTOR’s
rights and obligations hereunder.

 

If during the first ***Contract
Years CONTRACTOR performs more work than required in the Firm Commitment, then such excess may be credited in the Work Commitment
as long as the said excess have a similar type and nature to the Work Commitment.

 

CONTRACTOR may submit revision of the Firm Commitment
to GOI through SKK MIGAS, and such approval shall be attached to and made an integral part of this CONTRACT.

 

CONTRACTOR may submit revision of the Work Commitment
to SKK MIGAS, and such approval shall be attached to and made an integral part of this CONTRACT.

 

		4.3	CONTRACTOR shall submit a performance bond for the benefit of GOI c/o Director General of Oil and Gas in the amount of ***United States Dollars (US$***) on behalf of Chairman of SKK Migas issued by Bank located in Jakarta, in relation to activities for the first ***Contract Years as set forth in Sub-section 4.2 above. Such submission shall be made no later than the day of the signing of this CONTRACT.

 

Director General of Oil and Gas shall deliver such performance bond
to SKK MIGAS.

 

The value of the
performance bond may be reduced if the value of remaining Firm commitment that has not
been satisfied is less than the value of performance bond.

 

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    CONTRACT AREA: CITARUM

    

 

Thereafter
the remaining value of performance bond shall at least equal to the remaining value of Firm Commitment that has not been satisfied.

 

CONTRACTOR
shall extend the validity period of performance bond up to the completion of Firm Commitment, which shall be proposed
not later than ***prior to the expiration of performance bond and submit to SKK MIGAS
not later than *** since the issuance of performance bond’s extension.

 

		4.4	In the event CONTRACTOR requests for an extension of the Exploration Period after the *** Contract Year as set forth in Sub-section 2.1.2 of Section II:

 

		(a)	such extension
                                         request shall be accompanied by CONTRACTOR’s
                                         proposed annual exploration program up to the end of the proposed extension of
                                         Exploration Period to SKK
                                         MIGAS; and

 

		(b)	the proposed exploration program referred to in paragraph
(a) of this Sub-section 4.4 shall include the Work Program which has not been completed during the preceding Contract Years and
additional exploration work program to be carried out during the extension of the Exploration Period.

 

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    CONTRACT AREA: CITARUM

    

 

 

		4.5	In the event that SKK MIGAS approves CONTRACTOR’s proposed extension of Exploration Period as referred to in Sub-section 4.4 above for a period of more than *** Years, and at the end of the *** Contract Year CONTRACTOR failed to complete the Work Program approved to be carried out in the *** Contract Year which includes Work Programs not completed during the first *** Contract Years, if any, and carried over to be completed until the end of the ***  Contract Year, then such failure may be used by SKK MIGAS as a basis to propose the termination of CONTRACT in its entirety to GOI and request CONTRACTOR to relinquish Contract Area in its entirety.

  

		4.6	At least *** prior to the beginning of each Calendar Year or at such other time as otherwise mutually agreed by the Parties, CONTRACTOR shall prepare and submit to SKK MIGAS a Work Program and Budget of Operating Costs for the Contract Area setting forth the Petroleum Operations which CONTRACTOR proposes to carry out during the ensuing Calendar Year. SKK MIGAS approves or rejects Work Program based on evaluation results, while Budget of Operating Costs is used as supporting data in evaluation of Work Program.

 

		4.7	Should SKK MIGAS wish to propose a revision as to certain specific features of said Work Program, SKK MIGAS shall within *** after receipt thereof notify CONTRACTOR specifying the reasons in reasonable detail. Promptly thereafter, the Parties will meet and endeavor to agree on the revisions proposed by SKK MIGAS. In any event, any portion of the Work Program as to which SKK MIGAS has not proposed a revision shall be carried out as prescribed herein.

 

 

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    CONTRACT AREA: CITARUM

    

 

		4.8	It is recognized by the Parties that the details of a Work
Program may require changes in the light of existing circumstances and nothing herein contained shall limit the right of CONTRACTOR
to make such changes, provided they do not change the general objective of the Work Program.

 

		4.9	It is further recognized that in the event of emergencies
or extraordinary circumstances requiring immediate actions, either Party may take all actions it deems proper or advisable to
protect its interests and those of its respective employees and any costs so incurred shall be included in the Operating Costs.

 

		4.10	SKK MIGAS agrees that the approval of a proposed
Work Program will not be unreasonably withheld.

 

    	 	34	 

    CONTRACT AREA: CITARUM

    

 

SECTION V

RIGHTS AND OBLIGATIONS OF THE PARTIES

 

		5.1	Subject to the provisions of Sub-sections 5.2.7 and 5.2.8
of Sub-section 5.2 herein below:

 

		5.2	CONTRACTOR shall:

 

		5.2.1	advance all necessary funds and purchase or lease all equipment,
supplies and materials required to be purchased or leased with either Rupiah or Foreign Exchange pursuant to the Work Program;

 

		5.2.2	furnish all technical aid, including foreign personnel,
required for the performance of the Work Program, payment whereof requires Foreign Exchange;

 

		5.2.3	furnish such
                                         other funds for the performance of the Work Program that requires payment in Rupiah or
                                         Foreign Exchange, including payment to foreign third parties that perform service as
                                         a contractor to CONTRACTOR;

 

	 	5.2.4	be responsible to prepare and execute the Work Program, with workman like manner and good engineering practices. In addition, CONTRACTOR shall, in conducting Petroleum Operations, implement the occupational health, safety & environmental protection standards applicable in oil and gas industry, take all reasonable and necessary precautions so as to prevent injury to or death of person and damage to environment and property, and comply with all applicable safety and environmental laws and regulations;

 

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    CONTRACT AREA: CITARUM

    

 

	 	5.2.5	submit to SKK MIGAS and maintain regular reports, on the performance of this CONTRACT, including its operational, technical, safety and financial aspects thereof;

 

		5.2.6	(a)	conduct
                                         an environmental baseline assessment at the beginning of CONTRACTOR’s activities,
                                         and thereafter conduct any obligation pursuant to applicable law analysis of environmental
                                         impact (AMDAL);

 

	 	 	(b)	take the necessary precautions for protection of ecological systems, navigation and fishing and shall prevent extensive pollution of the land, sea or rivers and other as the direct result of Petroleum Operations undertaken under the Work Program;

 

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    CONTRACT AREA: CITARUM

    

 

	 	 	(c)	subject to the provisions of paragraphs (e) and (f) of this Sub-section 5.2.6, upon the relinquishment of part of the Contract Area, or field abandonment, be responsible for the removal of all equipment and installations from such part of the Contract Area that is relinquished in a manner acceptable to SKK MIGAS and GOI, and perform all necessary site restoration activities in accordance with the applicable law and regulations to prevent hazards to human life and property of others or environment, provided however, if a third party appointed by GOI takes over any Contract Area or any field prior to such relinquishment or abandonment, CONTRACTOR shall be released from its obligations for the removal of the equipment and installations and performance of the necessary site restoration activities of the field in such Contract Area. In such event the CONTRACTOR’s right of control and utilization of all the accumulated fund reserved for the removal and restoration operations for such Contract Area deposited in the escrow account referred to in paragraph (e) of this Sub-section 5.2.6 shall be transferred to SKK MIGAS. 

Thereafter, SKK MIGAS shall immediately transfer such CONTRACTOR’s right of control and utilization of such accumulated fund to the third party appointed by GOI as AARF for financing the abandonment and site restoration by the third party appointed by GOI to take over the Contract Area or field referred to above;

 

    	 	37	 

    CONTRACT AREA: CITARUM

    

 

	 	 	(d)	include in the proposed annual Budget of Operating Costs, an estimate of the anticipated abandonment and site restoration costs for each exploratory well in the Work Program. All expenditures incurred by CONTRACTOR in the abandonment of all such wells and restoration of their drill sites shall be treated as Operating Costs in accordance with the Accounting Procedure attached hereto as Exhibit “C”;

 

	 	 	(e)	include with requisite POD for each commercial discovery, an abandonment and site restoration program required after relinquishment of any part of Contract Area or abandonment of any Field together with a funding procedure for such program. The amount of money estimated to be required for such abandonment and restoration program will be called “Abandonment and Restoration Funds” or “AARF” and shall be determined each Year in conjunction with the Budget of Operating Costs for the Plan of Development and Work Program and Budget of Operating Costs and be reviewed in the subsequent Years in accordance with Exhibit “C”. All such amount of money which constitutes the AARF shall be deposited in an escrow account controlled by, and in a prime bank operated in Indonesia acceptable to, CONTRACTOR and SKK MIGAS, provided that the implementation of which shall be in accordance with the applicable regulations. Any amount deposited in the escrow account for the AARF shall be treated as Operating Costs in accordance with the Accounting Procedure attached hereto as Exhibit “C”, and any interest earned therefrom shall become part of the AARF;

 

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    CONTRACT AREA: CITARUM

    

 

	 	 	(f)	notwithstanding the foregoing, if for any reason CONTRACTOR (whether existing or its permitted assignees or transferees) is required by law or otherwise to remove the equipment and installations and perform the necessary abandonment and site restoration activities of the field in any part of Contract Area prior to the termination of this CONTRACT, with the approval of GOI through SKK MIGAS, CONTRACTOR may withdraw an amount of AARF required to conduct such abandonment and site restoration activities from the escrow account, which approval shall not be unreasonably withheld;

 

	 	 	(g)	without prejudice to paragraph (c) of Subsection 5.2.6, upon the expiration or termination of this CONTRACT, CONTRACTOR shall be responsible for conducting the abandonment and site restoration of the Contract Area, and for such purposes, CONTRACTOR may, with prior approval of GOI through SKK MIGAS, withdraw an amount of AARF required to conduct such abandonment and site restoration activities from the escrow account, which approval shall not be unreasonably withheld. In the event the remaining amount of AARF exceeds or does not suffice to finance the required abandonment and restoration, then such excess or shortage shall be credited or added to Operating Costs in accordance with the Accounting Procedure attached hereto as Exhibit “C”;

 

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    CONTRACT AREA: CITARUM

    

 

	 	5.2.7	have the right to sell, assign, transfer, convey or otherwise dispose of all or any part of its share of Participating Interest under this CONTRACT to any Affiliated Companies upon the prior written consent of GOI through SKK MIGAS, which consent shall not be unreasonably withheld, provided that any party to whom such Participating Interest is assigned under any provision of this CONTRACT shall not hold any Participating Interest in any other Production Sharing Contract or any other form of Cooperation Contract at any given time;

 

	 	5.2.8	have the right to sell, assign, transfer, convey or otherwise dispose of all or any part of its share of Participating Interest under this CONTRACT to any non-Affiliated Companies upon the prior written consent of GOI through SKK MIGAS, which consent shall not be unreasonably withheld, provided that any Party to whom such Participating Interest is assigned under any provision of this CONTRACT shall not hold Participating Interest in any other Production Sharing Contract or any other form of Cooperation Contract at any given time; and provided further that during the first ***  Contract Years and until the fulfillment of all of the Firm Commitment, CONTRACTOR shall remain a majority holder (greater than 50%) of the Participating Interest and shall hold the operatorship of this CONTRACT;

 

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    CONTRACT AREA: CITARUM

    

 

	 	5.2.9	undertake to obtain the approval of GOI through SKK MIGAS prior to any proposed direct Change of Control, which approval shall not be unreasonably withheld, provided that CONTRACTOR shall continue to meet the qualifications as CONTRACTOR and to be fully liable in executing Petroleum Operations and the approved Work Program and Budget of Operating Costs under this CONTRACT;

 

		5.2.10	undertake to notify GOI
through SKK MIGAS prior
to any proposed indirect Change of Control, provided that CONTRACTOR
shall continue to meet the qualifications as CONTRACTOR
arid to be fully liable in executing Petroleum Operations and the approved Work Program and Budget of Operating Costs
under this CONTRACT;

 

	 	5.2.11	ensure any change of operatorship or Change of Control shall be executed without making any major modification of any existing standard, method, system, technology, unless CONTRACTOR can demonstrate that any change proposed by CONTRACTOR shall improve efficiency and effectiveness, and reduce Operating Costs, and such changes have been approved in writing by SKK MIGAS before the implementation thereof;

 

    	 	41	 

    CONTRACT AREA: CITARUM

    

 

		5.2.12	retain control of all leased property paid for with Rupiah
and/ or Foreign Exchange and brought into Indonesia, and CONTRACTOR
is entitled to freely remove the same from Contract Area;

 

		5.2.13	have the right of ingress to and egress from the Contract
Area and to and from facilities wherever located at all times;

 

	 	5.2.14	have the right to use and have access through SKK MIGAS, and GOI shall furnish all data and information of geological, geophysical, drilling, well, production and other information related to the Contract Area held by GOI. All costs incurred in obtaining such data and information shall be provided by CONTRACTOR, and shall be included in Operating Costs;

 

	 	5.2.15	submit through SKK MIGAS to GOI copies of all such original geological, geophysical, drilling, well, and production data resulting from the Petroleum Operations conducted in the Contract Area and other data and reports as it may compile during the term hereof;

 

		5.2.16	submit the
                                         original data as set forth in Sub-section 5.2.14 to GOI
                                         through SKK
                                         MIGAS at the time when CONTRACTOR
                                         relinquishes all or a part of Contract Area, and CONTRACTOR
                                         may retain copies of the original data subject to approval by GOI;

 

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    CONTRACT AREA: CITARUM

    

 

		5.2.17	prepare and carry out plans and programs for industrial
training and education of indonesians for all job classifications with respect to Petroleum Operations contemplated hereunder;

 

		5.2.18	have the right during the term hereof to freely lift, dispose
of and export its share of Crude Oil, and retain abroad the proceeds obtained therefrom;

notwithstanding the foregoing provision,
CONTRACTOR give preference of
its share of Crude Oil to fulfil domestic demand in accordance with laws and regulations;

 

		5.2.19	appoint an authorized representative (person or branch-office)
with respect to this CONTRACT, who
shall have an office in Jakarta;

 

	 	5.2.20	after commercial production commences, fulfil its obligation towards the supply of the domestic market. CONTRACTOR agrees to sell a portion of the share of Crude Oil to satisfy domestic market demand, and to deliver and sell to domestic gas buyers, a portion of the share of Natural Gas, to which CONTRACTOR is entitled pursuant to Sub-sections 6.2.3 and 6.3.3 of Section VI calculated for each Year as follows:

 

    	 	43	 

    CONTRACT AREA: CITARUM

    

 

		i.	For Crude Oil:

 

	 	(a)	Compute twenty five percent (25%) of CONTRACTOR’s entitlement as provided under Sub-section 6.2.3 of Section VI hereof multiplied by total quantity of Crude Oil produced from the Contract Area;

 

		(b)	The price at which such Crude Oil will be sold under this
Sub-section 5.2.20 shall be Indonesian Crude Price;

 

		ii.	For Natural Gas:

 

For
every new reservoir of Natural Gas discovered in the period following the Effective Date which can be produced commercially, CONTRACTOR
shall fulfil its obligation towards the supply of the domestic market as set out below:

 

	 	(a)	Upon the discovery of a new reservoir of Natural Gas following the Effective Date, CONTRACTOR shall notify GOI regarding such discovery;

 

	 	(b)	Following such notification as stipulated in paragraph (a) above the Parties shall agree on the quantity of proven reserves of Natural Gas of such discovered reserves in the Contract Area;

 

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    CONTRACT AREA: CITARUM

    

 

		(c)	Within the period of one (1) Year following agreement by
the Parties on the quantity of proven reserves as stipulated in paragraph (b) above, GOI shall give the opportunity for
domestic buyer to purchase such Natural Gas as calculated in Sub-section 5.2.20 (ii)(g);

 

	 	(d)	Not later than ***  following the expiration of ***  period stipulated in paragraph (c) above, GOI shall notify CONTRACTOR concerning the condition of domestic market demand;

 

	 	(e)	In case that in the period as stipulated in paragraph (d) above, GOI notifies CONTRACTOR of the existence of potential domestic gas buyer, CONTRACTOR shall enter into negotiations with such potential domestic gas buyer for the sale of gas to satisfy the domestic market obligation stipulated in this Sub-section 5.2.20;

 

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    CONTRACT AREA: CITARUM

    

 

		(f)	In case that
                                         in the period as stipulated in paragraph (d) above GOI does not notify CONTRACTOR
                                         of
                                         the existence of potential domestic gas buyer or the negotiation as stipulated in paragraph
                                         (e) above fail, CONTRACTOR shall
                                         request the approval of GOI to market
                                         and sell the domestic market such quantity of Natural Gas in the international market;

 

	 	(g)	The quantity of Natural Gas which CONTRACTOR shall be obligated to supply for the consumption of domestic market shall be calculated as follows:

 

		(i)	computing twenty five percent (25%) of the quantity of
Natural Gas proven reserves in the newly discovered reservoir in the Contract Area.

 

		(ii)	multiply the amount stipulated in (i) with the percentage of CONTRACTOR’s entitlement
                                                                                   provided under Sub-section 6.3.3 of Section VI hereof.

 

CONTRACTOR shall
not be obligated to transport such Natural Gas beyond the Point of Delivery but upon request of SKK
MIGAS, CONTRACTOR shall assist in arranging transportation and such assistance shall be without costs or
risk to CONTRACTOR, including
incurred tax(es);

 

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    CONTRACT AREA: CITARUM

    

 

	 	5.2.21	notwithstanding the foregoing, CONTRACTOR recognizes GOI policy to at any time satisfy domestic consumption to its maximum. The Parties however agree that such policy shall not be implemented as to prevent or impede CONTRACTOR from fulfilling its obligations pursuant to any existing commitment/agreement to sell Natural Gas to a third party; or to materially erode the agreed economic of the gas project;

 

		5.2.22	give preference to such goods, services, technologies, and engineering and design expertise,
                                                                                     which are produced in Indonesia or rendered by Indonesian nationals, provided such goods, services, technologies, and
                                                                                     engineering and design expertise are offered at equally advantageous conditions with regard to quality, price,
                                                                                     availability of goods, services, technologies, and engineering and design expertise at the time and in the quantities
                                                                                     required;

 

Goods
and technologies may be imported as long as they are not domestically produced in Indonesia or in case of insufficient domestic
production capacities, and as long as the goods and technologies to be imported satisfies national standard evaluation of quality
and price, and provide on time delivery and after sales service guarantee;

 

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    CONTRACT AREA: CITARUM

    

 

Obligation
to prioritize the domestic goods, services, technologies, and engineering and design expertise is conducted by CONTRACTOR
independently by complying all applicable laws and regulations;

 

	 	5.2.23	furnish such other funds and be responsible to conduct community development programs relating to the community surrounding and/or adjacent to the Contract Area during the term of this CONTRACT. Subject to Exhibit “C”, the expenditure required for performing such development programs shall be for the account of CONTRACTOR;

 

		5.2.24	severally
be subject to and pay to the Government of the Republic of Indonesia the income tax in accordance with the Indonesian Income Tax
Law, and if any, the final tax on profits after tax deduction or dividend in the event the contractor is an Indonesian legal entity,
imposed on it pursuant to applicable laws and regulations, and comply with the requirements of the tax law in particular with
respect to filing of returns, assessment of tax, and keeping and showing of books and record;

 

    	 	48	 

    CONTRACT AREA: CITARUM

    

 

In
the event that the Government of the Republic Indonesia requires crude oil and/or natural gas to fulfil domestic demand, payment
of income tax may be made in kind.

 

Upon
the fulfilment of the obligation to pay the income tax described above, shall be issued a crude oil and natural gas proforma income
tax statement, and a crude oil and natural gas income tax statement which calculation, payment terms and issuance shall be made
in accordance with the prevailing regulations;

 

		5.2.25	fulfill the obligation to pay value added tax (PPN), sales
tax on luxury goods (PPnBM), import duties on goods and import related tax(es) (PDRI) and land and building tax (PBB) in accordance
with the laws and regulations as of the Effective Date, as well as local tax(es) and levies (PDRD) imposed by local government
of the Republic of Indonesia in connection with Contract Area, in accordance with applicable laws and regulations;

 

Such payments shall be treated as Operating Costs in accordance with the
Accounting Procedure attached hereto as Exhibit “C”;

 

		5.2.26	notwithstanding
with Subsection 5.2.25, be relieved from import duties, import related tax(es) (PDRI), value added tax (PPN), and sales tax on
luxury goods (PPnBM) on materials, goods, and equipment imported in connection with Petroleum Operations, and obtain one hundred
percent (100%) deduction on land and building tax (PBB) until commencement of commercial production in accordance with the laws
and regulation as of the Effective Date. However, during the term of this CONTRACT,
shall be subject to any tax(es) and levies (PDRD) imposed by local government of the Republic of Indonesia with respect to the
Petroleum Operation in the Contract Area;

 

    	 	49	 

    CONTRACT AREA: CITARUM

    

 

exempted
from deduction of income tax (PPH) and shall not be imposed of value-added tax (PPN) on cost sharing facility proportionally charged
to all contractors who take a benefit from the sharing utilization of such facilities. Such activities conducted in exploitation
period in which the excess capacity of field processing, transporting, storage and marketing facilities are used by CONTRACTOR
upon approval from SKK MIGAS;

 

exempted
from deduction of income tax (PPH) and shall not be imposed of value added tax (PPN) on allocation of head office’s indirect
cost in accordance with laws and regulations as of the Effective Date;

 

		5.2.27	comply with all applicable laws of the Republic of Indonesia.
It is also understood that the execution of the Work Program shall be exercised so as not to conflict with international laws
ratified by Government of the Republic of Indonesia;

 

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    CONTRACT AREA: CITARUM

    

 

		5.2.28	not disclose any geological, geophysical, petrophysical,
engineering, well and completion logs, status reports and any other data as CONTRACTOR
may compile during the term hereof to third parties without GOI’s
written consent. This Sub-section shall survive the life of this CONTRACT
for the period of time pursuant to the applicable laws and regulations; and

 

	 	5.2.29	secure and maintain sufficient insurance during the term of this CONTRACT, including on all facilities, materials, equipment’s, and Petroleum produced and stored prior to delivery. Without prejudice to the right of the insurance companies to reinsure the risks to reputable international reinsurance companies. All policies for such insurance shall be effected with reputable insurers established and running the business in Indonesia, on the terms and conditions approved by SKK MIGAS, which approval shall not be unreasonably withheld. The policy shall provide that SKK MIGAS is also named as co-insured. CONTRACTOR shall obtain waivers of subrogation in favor of GOI and SKK MIGAS and their respective officers, directors, employees, servants, agents, consultant and appointed representatives.

 

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    CONTRACT AREA: CITARUM

    

 

		5.3	SKK MIGAS shall:

 

		5.3.1	have and be responsible for the management of the operations
contemplated hereunder, as well as assist and provide consultation CONTRACTOR
with a view to the fact that CONTRACTOR
is responsible for the Work Program.

 

In performing its management
function contemplated in this Subsection 5.3.1, SKK MIGAS shall have the right
to review the reasonableness of the work programs, and the appropriateness of any technical, methods, system, standards proposed
by CONTRACTOR in relation to POD and Work Program. Notwithstanding any review
made and approval granted by SKK MIGAS, CONTRACTOR shall remain responsible
for the execution of Petroleum Operations in compliance with the requirements of this CONTRACT
and Indonesian law;

 

	 	5.3.2	not be obliged to pay CONTRACTOR’s income tax including the final tax on profits after tax deduction nor taxes on tobaccos, liquor, income tax of any sub-contractors of the CONTRACTOR’s, income tax of any personnel of CONTRACTOR and its subcontractors, and other taxes not listed above;

 

 

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	 	5.3.3	otherwise assist and expedite CONTRACTOR’s execution of the Work Program by providing facilities, supplies and personnel including, but not limited to, supplying or otherwise making available all necessary transportation, security protection and rights of way and easements as may be requested by CONTRACTOR and made available from the resources supervised by SKK MIGAS. In the event such facilities, supplies or personnel are not available, then SKK MIGAS shall promptly secure the use of such facilities, supplies and personnel from alternative sources. Expenses thus incurred by SKK MIGAS at CONTRACTOR’s request shall be withdrawn from the advance placed by CONTRACTOR to SKK MIGAS. CONTRACTOR shall advance to SKK MIGAS before the beginning of each annual Work Program a minimum amount of *** United States Dollars (US$***), provided that the balance of any unexpended amount shall be returned to CONTRACTOR upon termination of this CONTRACT as stipulated in Section XIII.

 

If
at any time during the annual Work Program period the minimum amount advanced under this Sub-section 5.3.3 has been fully
expended, separately, an additional advance payment as may be necessary to provide the Rupiah expenses to be incurred by SKK
MIGAS during the remaining period of such annual Work Program, will be made. If any amount advanced hereunder is
not expended by SKK MIGAS by
the end of an annual Work Program period, such unexpended amount shall be credited against the minimum amount to be advanced
pursuant to this Subsection 5.3.3 for the succeeding annual Work Program period;

 

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		5.3.4	ensure that at all times during the term hereof sufficient
Rupiah funds shall be available to cover the Rupiah expenditure necessary for the execution of the Work Program;

 

	 	5.3.5	with the approval from and terms determined by CONTRACTOR, approve the utilization of assets by third parties to the extent that it does not interfere with CONTRACTOR’s performance of the Petroleum Operations. Notwithstanding the foregoing, for efficiency and optimum utilization of such asset, SKK MIGAS shall have the right to propose or facilitate the utilization of any assets controlled by CONTRACTOR by another CONTRACTOR of SKK MIGAS who enter into a cooperation contract pursuant to the Law Number 22/2001 provided that such other contractor wishes to utilize such asset is willing to compensate the utilization of such asset an amount proportionally to the cost charged on such asset, pursuant to SKK MIGAS approval and, provided further that the amount received by CONTRACTOR shall be credited to CONTRACTOR’s Operating Costs.

 

Such other contractor shall
defend, indemnify and hold harmless SKK MIGAS, CONTRACTOR, and CONTRACTOR’s Affiliated Company, from
and against any and all losses, claims, costs, liabilities, damages (including any loss of, or damage to, any property of, or injury
to or death of, any person), including any tax(es) incurred by them arising from or in connection with the use of such assets;

 

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	 	5.3.6	not disclose all original data resulting from Petroleum Operations including but not limited to geological, geophysical, petrophysical, engineering, well and completion logs, status reports and any other data as CONTRACTOR may compile during the term hereof to third parties without informing CONTRACTOR and obtaining the consent of GOI for disclosure of such data;

 

		5.4	Government of the Republic of Indonesia will ensure that the terms under which the CONTRACTOR’s obligations under this CONTRACT shall apply are the laws and regulations which are in effect as of the Effective Date, and thereby Government of the Republic of Indonesia will ensure that SKK MIGAS is in position to fully execute the CONTRACT.

  

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SECTION VI

HANDLING OF OPERATING
COSTS AND PRODUCTION

 

		6.1	HANDLING OF OPERATING COSTS

 

Operating
Costs shall be available as a deduction for the purposes of CONTRACTOR’s
tax filing and calculating CONTRACTOR’s
taxable income.

 

CONTRACTOR’s
Operating Costs is defined in Exhibit C.

 

		6.2	CRUDE OIL

 

		6.2.1	CONTRACTOR
is authorized by SKK MIGAS
and obligated to market all Crude Oil produced and saved from the Contract Area subject to the provisions hereinafter set forth
of which the cost shall be borne by CONTRACTOR.

 

		6.2.2	Except as provided in SectionVII Sub-sections 7.1.4 and
7.1.5, CONTRACTOR shall be entitled
to take and receive and freely export such Crude Oil.

 

		6.2.3	Of the Crude Oil, SKK
MIGAS and CONTRACTOR shall
be entitled to take and receive total production share of each Field as follow:

 

For
CONTRACTOR:

 

Base Split + (Variable Component’s correction value
+ Progressive Component’s correction value)

 

The amount resulted from the
formula above shall be adjusted to Actual Condition of Variable Component and Progressive Component of each Field at the time of
commercial production commence and stipulated in Actual Adjustment Official Report signed
by SKK MIGAS and CONTRACTOR and reported to GOI.

 

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The
amount of production share in the Actual Adjustment Official Report shall serve as a base for adjustment resulted from Progressive
Component’s monthly change, stipulated in Progressive Adjustment Official Report signed by SKK MIGAS and CONTRACTOR
and reported to GOI.

 

For
SKK MIGAS:

 

100%
- CONTRACTOR’s total production share.

 

	 	6.2.4	Title to CONTRACTOR’s portion of Crude Oil under Subsection 6.2.3 shall pass to CONTRACTOR at the Point of Delivery, or, in the case of Crude Oil delivered to GOI pursuant to Sub-section 5.2.20 or otherwise, at the Point of Delivery.

 

		6.2.5	CONTRACTOR
will use its best reasonable efforts to market the Crude Oil to the extent markets are available.

 

Notwithstanding
the foregoing, either Party shall be entitled to take and receive their respective portion in kind. If CONTRACTOR is required
to market SKK MIGAS’ portion of Crude Oil, then all proceeds resulting therefrom, after deduction of costs and any
incurred tax(es), shall be deposited to Government of Republic of Indonesia oil and gas account in Indonesia notified by SKK
MIGAS to CONTRACTOR from time to time. CONTRACTOR shall be obliged to ensure the deposit of oil and gas sales
revenue of SKK MIGAS’ portion in a timely and precise amount.

 

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	 	6.2.6	If SKK MIGAS elects to take any of its portion of Crude Oil in kind, it shall advise CONTRACTOR in writing not less than *** prior to the commencement of each semester of each Calendar Year specifying the quantity which it elects to take in kind, such notice to be effective for the ensuing semester of each Calendar Year, provided however, that such election shall not interfere with proper performance of any Crude Oil sales agreement for Petroleum produced within the Contract Area which CONTRACTOR has executed prior to the notice of such election.

 

Failure
to give such notice shall be conclusively deemed to evidence the election not to take in kind. Any sale of SKK MIGAS’
portion of Crude Oil by CONTRACTOR shall not be for a term of more than one Calendar Year without SKK MIGAS’ consent.

 

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		6.3	NATURAL GAS

 

	 	6.3.1	Any Natural Gas produced from the Contract Area to the extent not to be used in Petroleum Operations hereunder, including for effectuating the maximum recovery of Petroleum by secondary recovery, re-pressuring and recycling operations, may be flared if the processing and utilization thereof is not economical.

 

	 	6.3.2	However, should SKK MIGAS and CONTRACTOR consider that the development and/or the processing and utilization of Natural Gas is economical and choose to participate in the development and/or the processing and utilization thereof, in addition to that used in secondary recovery operations, then the construction and installation of facilities for such development and/or processing and utilization shall be carried out pursuant to an approved Work Program.

 

	 	6.3.3	It is hereby agreed that all revenues derived from such development and/ or processing, utilization and sale of Natural Gas, shall be treated on a basis equivalent to that provided for herein concerning Petroleum Operations and disposition of Crude Oil, except that for Natural Gas, or the propane and butane fractions extracted from Natural Gas but not spiked in Crude Oil. SKK MIGAS and CONTRACTOR shall be entitled to take and receive total production share of each fields as follow:

 

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For
CONTRACTOR:

 

Base Split
+ (Variable Component’s correction value + Progressive Component’s correction value)

  

The
amount resulted from the formula above shall be adjusted to Actual Condition of Variable Component and Progressive Component of
each Fields at the time of commercial production commence and stipulated in Official Actual Adjustment Report signed by SKK
MIGAS and CONTRACTOR and reported to GOI.

 

 The amount
of production share in the Official Actual Adjustment Report shall be served as base for adjustment resulted from Progressive
Component’s monthly change, stipulated in Officiai Progressive Adjustment Report signed by SKK MIGAS and CONTRACTOR
and reported to GOI.

 

For
SKK MIGAS:

 

100% - CONTRACTOR’s
total production share.

 

		6.3.4	In
the event, CONTRACTOR considers that the development and/or the processing and utilization of Natural Gas under a certain
field is not economical, then SKK MIGAS may choose to carve out such gas field apart from the Contract Area. In the case
that SKK MIGAS exercises its option mentioned above, CONTRACTOR shall, upon receipt of notification from SKK
MIGAS with respect to its decision to exercise its option, return the same to
GOI through SKK MIGAS. However, the foregoing provisions shall not be applicable to any Field producing Crude Oil
and associated Natural Gas.

 

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		6.3.5	In
                                         any event, title to CONTRACTOR’s portion of Natural Gas pursuant to Subsection
                                         6.3.3 shall pass to CONTRACTOR at the Point of Delivery. SKK MIGAS may
                                         request CONTRACTOR to market Natural Gas produced and stored from the Contract
                                         Area subject to the provisions in the CONTRACT of which the cost shall be borne
                                         by SKK MIGAS and CONTRACTOR. Marketing cost component determination shall be agreed
                                         by SKK MIGAS and CONTRACTOR in a separate agreement.

 

		6.3.6	If
the Parties agree to conduct further treatment and processing activities for Natural Gas in the form of liquified natural gas
(LNG), then it shall be stipulated in a separate agreeement which will become an integral part of this CONTRACT.

 

		6.4	PRODUCTION SHARE ADJUSTMENT

 

		6.4.1	In
the case of commercialization calculation of a fieid(s) does not reach a certain economic level, Minister can stipulate additional
production sharing percentage to CONTRACTOR.

 

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Such
commercialization calculation of a field(s) including CONTRACTOR’s obligation to pay value added tax (PPN), sales
tax on luxury goods (PPnBM), import duties on goods and tax related import (PDRI), land and building tax (PBB) as well as any tax(es)
and levies (PDRD) imposed by local government of the Republic of Indonesia as referred in Subsection 5.2.25.

 

		6.4.2	In
the case of commercialization calculation of a field(s) exceeds a certain economic level, Minister can stipulate additional production
sharing percentage to SKK MIGAS.

 

However,
it is clearly understood by the Parties that the intent of the Minister’s policy is not to reduce CONTRACTOR’S share
within a project that has a reasonable rate of economic return, as applicable in the development of similar Field(s) in the practice
generally accepted in the international up-stream oil and gas business, and shall be conducted in good faith.

 

		6.4.3	Stipulation
of the additional percentage of production sharing as referred in Subsections 6.4.1 and 6.4.2 only be given once for each PODs.

 

		6.4.4	On
the POD approval of the first field, the stipulation of the additional percentage of production sharing as referred in Sub-sections
6.4.1 and 6.4.2 shall be granted in the POD approval of first field considering SKK MIGAS evaluation.

 

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		6.4.5	On
the POD approval in the subsequent field(s), the stipulation of additional percentage of production sharing as referred in Subsections
6.4.1 and 6.4.2 shall be given prior to the approval of POD in the subsequent field(s).

 

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SECTION VII

VALUATION OF CRUDE OIL AND NATURAL GAS

 

		7.1	Crude
Oil sold to third parties shall be valued as follows:

 

		7.1.1	All
of CONTRACTOR’S Crude Oil share shall be valued at the Net Realized Price FOB Indonesia received by CONTRACTOR
for such Crude Oil;

 

		7.1.2	All
SKK MIGAS’ Crude Oil taken by CONTRACTOR and sold to third parties
shall be valued at the Net Realized Price FOB Indonesia received by CONTRACTOR for such Crude Oil;

 

		7.1.3	SKK
MIGAS shall be duly advised prior to the sales referred to in Sub-sections 7.1.1 and 7.1.2 are made;

 

	 	7.1.4	Subject to any existing Crude Oil sales agreement, if a more favorable net realized price is available to SKK MIGAS for the Crude Oil as referred to in Subsection 7.1.2, then SKK MIGAS shall advise CONTRACTOR in writing not less than *** prior to the commencement of the deliveries unde SKK MIGAS’ proposed sales contract. *** prior to the commencement of such deliveries, CONTRACTOR may notify SKK MIGAS regarding CONTRACTOR’s intention to meet the more favorable net realized price in relation to the quantity and period of delivery concerned in said proposed sales contract. In the absence of such notice SKK MIGAS shall market said Crude Oil through other party appointed by SKK MIGAS; and CONTRACTOR shall deliver such SKK MIGAS portion of Crude Oil to the Point of Delivery;

 

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	 	7.1.5	SKK MIGAS’ marketing of such Crude Oil as referred to in Subsection 7.1.4 shall continue until *** after SKK MIGAS’ net realized price on said Crude Oil becomes less favourable. CONTRACTOR’s obligation to market said Crude Oil shall not apply until after SKK MIGAS has given CONTRACTOR at least ***  advance notice of its desire to discontinue such sales. As long as SKK MIGAS is marketing the Crude Oil referred to above, it shall account to CONTRACTOR, on the basis of the more favourable net realized price;

 

		7.1.6	Without
                                         prejudice to any of the provisions of Section VI and Section VII, CONTRACTOR may
                                         at its option transfer to SKK MIGAS during any Calendar Year the right to market
                                         any Crude Oil which is in excess of CONTRACTOR’s normal and contractual
                                         requirement provided that the price is not less than the net realized price from the
                                         Contract Area;

 

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SKK
MIGAS’ request stating the quantity and expected loading date must be submitted in writing at least *** prior
to lifting said Crude Oil. Such lifting must not interfere with CONTRACTOR’s scheduled tanker movements. SKK MIGAS
shall account to CONTRACTOR in respect of any sale made by it hereunder;

 

	 	7.1.7	To meet domestic refinery demand, SKK MIGAS shall have the option, in any Year in which the quantity of Crude Oil to which SKK MIGAS is entitled pursuant to Sub-sections 6.2.3 and 6.3.3 hereof is insufficient, therefore by ***  written notice in advance of that Year, to appoint seller whom will market for the account of CONTRACTOR, at the price provided for in Section VII hereof, a quantity of Crude Oil which needed to fulfil domestic refinery demand.

 

		7.2	Crude
Oil sold to other than third parties shall be valued as follows:

 

	 	7.2.1	by using the minimum ICP price received by CONTRACTOR and SKK MIGAS from sales to third parties (excluding, commissions and brokerages paid in relation to such third party sales) during the *** preceding such sale adjusted as necessary for quality, grade and gravity; or

 

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	 	7.2.2	if no such third party sales have been made during such period of time, then on the basis used to value Indonesian Crude Oil of similar quality, grade and gravity and taking into consideration any special circumstances with respect to sales of such Indonesian Crude Oil.

 

		7.3	Third party sales referred to in this Section VII shall mean sales by CONTRACTOR to purchasers independent of CONTRACTOR.

 

		7.4	Marketing fees of Oil and/or Natural Gas in connection with marketing activities shall be treated as Operating Costs.

 

		7.5	During any given Calendar Year, the handling of production (i.e. the implementation of the provisions of Section VI hereof) and the proceeds thereof shall be provisionally dealt with on the basis of the relevant Work Program and Budget, of Operating Costs based upon estimates of quantities of Petroleum to be produced, of internal consumption in Indonesia, of marketing possibilities, of prices and other sale conditions as well as of any other relevant factors.

 

Within
*** after the end of said given Year adjustment and cash settlements between the Parties
shall be made on the basis of the actual quantities, amounts and prices involved, in order to comply with the provisions of this
CONTRACT.

  

		7.6	In
the event the Petroleum Operations involve the segregation of Crude Oil of different
quality and/or grade and if the Parties do not otherwise mutually agree:

 

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	 	7.6.1	any and all provisions of this CONTRACT concerning evaluation of Crude Oil shail separately apply to each segregated Crude Oil;

 

		7.6.2	each
Crude Oil produced and segregated in a given Year shall contribute to:

 

		(a)	the
“required quantity” of Crude Oil to which a party’s entitled in such Year pursuant to Sub-section 6.2.3;

 

		(b)	the
                                         “required quantity” of Crude Oil approved by CONTRACTOR to be sold and
                                         delivered in such Year for domestic consumption pursuant to Sub-sections 5.2.20 Section
                                         V, from CONTRACTOR’s Crude Oil share to which it is entitled pursuant to
                                         Sub-section 6.2.3;

 

with
quantities, each of which shall bear to the respective “required quantity” referred to in letters (a) or (b) above, the
same proportion as the quantity of such Crude Oil produced and segregated in such given Year bears to the total quantity of Crude
Oil produced in such Year from the Contract Area.

 

		7.7	All
Natural Gas sold to third parties shall be valued at contract sales price.

 

		7.8	Natural
Gas sold to other than third parties shall be valued as follows:

 

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	 	7.8.1	by using the weighted average per unit price received by CONTRACTOR and SKK MIGAS from sales to third parties (excluding, commissions and brokerages paid in relation to such third party sales) during the *** preceding such sale adjusted as necessary for quality and specification; or

 

		7.8.2	if
no such third party sales have been made during such period of time, then on the basis used to value Indonesian Natural Gas of
similar quality and specification and taking into consideration any special circumstances with respect to sales of such Indonesian
Natural Gas.

 

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SECTION VIII

BONUS
AND ASSISTANCE

 

		8.1	CONTRACTOR shall within *** after GOI’s request in writing provide GOI with equipment and/or services in an amount not exceeding the sum of *** United States Dollars (US$***), for special purposes.

 

		8.2	With the determination of cumulative Petroleum production as the component in determining the amount of CONTRACTOR’s production sharing, the production bonus shall be zero (0).

 

 

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SECTION IX

PAYMENTS

 

		9.1	Unless
                                         as specifically stated under the CONTRACT, all payments which this CONTRACT
                                         obligates CONTRACTOR to make to SKK
                                         MIGAS or GOI shall be made in United States Dollars at a bank operating in
                                         Indonesia to be designated by SKK MIGAS or GOI and agreed upon by Bank
                                         Indonesia, or at CONTRACTOR’s election, other currency acceptable to them,
                                         except that CONTRACTOR may make such payments in Indonesian Rupiahs to the extent
                                         that such currencies are realized as a result of the domestic sale of Crude Oil or Natural
                                         Gas or Petroleum products, if any.

  

		9.2	All payments due to CONTRACTOR shall be made in United States Dollars or, at SKK MIGAS’ election, other currencies acceptable to CONTRACTOR at a bank to be designated by CONTRACTOR.

 

		9.3	Any payments required to be made pursuant to this CONTRACT, unless specifically stated otherwise hereunder, shall be made not later than *** after the occurrence of the payment obligation.

 

 

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SECTION
X

TITLE TO GOODS, EQUIPMENT, LAND

AND INTELLECTUAL PROPERTY

RIGHTS

 

		10.1	All
goods and equipments purchased by CONTRACTOR pursuant to the Work Program and used directly in Petroleum Operations becomes
the property of the Republic of Indonesia (in case of import, when landed at the Indonesian ports of import for goods and equipment
which obtained facility as referred to in Sub-section 5.2.26 of Section V) supervised by GOI and managed by SKK MIGAS.

 

		10.2	The
                                         provisions of Sub-section 10.1 of this Section X shall not apply to leased equipment
                                         belonging to third parties who perform service as a contractor to the CONTRACTOR,
                                         which equipment may be freely removed from the work location within the Contract Area
                                         or reexported from Indonesia.

 

		10.3	The
excess supplies of goods and equipments may be transferred to other contractor in accordance with applicable laws and regulations.

 

		10.4	Land
that its acquisition process has been completed by CONTRACTOR shall become the property of Republic of Indonesia and such
land is managed by SKK MIGAS, except that of leased land.

 

Land that its acquisition
process has been completed shall be submitted for land certificate in accordance with all applicable laws and regulations.

 

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SECTION
XI

CONSULTATION and arbitration

 

		11.1	Periodically,
SKK MIGAS and CONTRACTOR shall meet to discuss the conduct of the Petroleum Operations envisaged under this CONTRACT
and will make every effort to settle amicably any problem arising therefrom.

 

		11.2	In the case of any disputes arising between SKK MIGAS and CONTRACTOR relating to this CONTRACT or the interpretation and performance of any of the provisions contained in this CONTRACT shall be settled amicably and persuasively within *** after the receipt by one Party of a notice from the other Party of the existence of the dispute.

 

		11.3	Dispute pursuant to Sub-section 11.2 which cannot be settled amicably, shall be submitted to the decision of arbitration by a three (3) arbitrator panel conducted in accordance with the UNCITRAL arbitration rules contained in resolution 31/98 adopted by the United Nations General Assembly on December 15, 1976 and called “Arbitration Rules of the United Nations Commission on International Trade Law” as in force at the time such arbitration is commenced. SKK MIGAS on the one hand and CONTRACTOR on the other hand shall each appoint one arbitrator and notify the other Party and these two arbitrators will appoint a third. If either Party fails to appoint an arbitrator within *** after receipt of a written request to do so, at the request of the other Party, except the Parties agree otherwise, such arbitrator shall be appointed by the Secretary General of the International Centre for Settlement of Investment Disputes (ICSID).

 

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If
the first two arbitrators appointed as aforesaid fail to agree on the third arbitrator within *** following
the appointment of the second arbitrator, the third arbitrator shall be appointed, at the request of either Party, by the Secretary
General of ICSID. The third arbitrator appointed hereunder shall act as the chairman of the arbitral panel. If an arbitrator fails
or is unable to perform the obligation, the successor will be appointed in the same manner with the appointment of the arbitrator
whom he succeeds. The Parties shall perform this CONTRACT until the arbitration panel issued its decision.

 

		11.4	The
award rendered in such arbitration shall be final and binding upon the Parties, and judgement thereon may be entered In any court
having jurisdiction for its enforcement. The Parties hereby waive their right to appeal any decision of the arbitral panel and
agree that neither Party shall appeal the decision of the arbitral panel in any court and accordingly the Parties hereby waive
the applicability of any provision of laws and regulations or any competent authority that would otherwise give the right to appeal
the decisions of the arbitral panel. In addition, the Parties agree that neither Party shall have any right to commence nor maintain
any suit nor legal proceeding concerning the dispute hereunder, except the legal proceeding required for the enforcement of the
execution of the award rendered by the arbitral panel.

 

		11.5	Arbitration shall
be conducted in the English language and shall be placed in Indonesia.

 

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SECTION XII

EMPLOYMENT AND TRAINING OF

INDONESIAN PERSONNEL

 

		12.1	CONTRACTOR
agrees to employ qualified Indonesian personnel and will undertake the schooling and training of Indonesian personnel for
labour and staff positions including administrative and executive management positions. CONTRACTOR shall also consider
with SKK MIGAS a program of assistance for training of GOI’s and SKK MIGAS’ personnel.

 

		12.2	Costs
                                         and expenses of training Indonesian personnel for its own employment shall be borne by
                                         CONTRACTOR and included in Operating Costs. Costs and expenses for a program of
                                         training for GOI’s and SKK MIGAS’ personnel shall be
                                         borne by GO! or SKK MIGAS.

 

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SECTION XIII

CONTRACT TERMINATION

 

		13.1	This
CONTRACT cannot be terminated by CONTRACTOR during the first three (3) Contract Years as from the Effective Date.

 

		13.2	At
any time following the end of the third (3rd) Contract Year as from the Effective Date, if in the opinion of CONTRACTOR
circumstances do not warrant continuation of the Petroleum Operations, CONTRACTOR may, by giving written notice to
that effect to SKK MIGAS and after consultation with SKK MIGAS, relinquish its rights and be relieved of its obligations
pursuant to this CONTRACT, except such rights and obligations related to the period prior to such relinquishment.

 

		13.3	If at the end of the third (3rd) Contract Year, CONTRACTOR has not completed its Firm Commitment pursuant to Sub-section 4.2, CONTRACTOR may, after consuitation with SKK MIGAS, terminate this CONTRACT and relinquish its rights hereunder by rendering a *** prior written notice to SKK MIGAS. CONTRACTOR shall not be relieved of its obligations under this CONTRACT unless and until CONTRACTOR transfers the remaining amount of the estimated expenditure for the remaining unperformed Work Program for the *** Contract Years Firm Commitment to GOI. However, in the event all programs during the first three (3) Contract Years have been completed by CONTRACTOR and CONTRACTOR spent less than the estimated amount budgeted for the Firm Commitment Work Program pursuant to Sub-section 4.2, CONTRACTOR shall not be obliged to transfer the remaining amount of the initial *** Contract Years estimated expenditures to GOI.

 

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		13.4	Notwithstanding
anything to the contrary herein, this CONTRACT shall be automatically terminated in its entirety on the expiration date
specified in and in accordance with the provisions of Sub-sections 2.1.3, 2.2.4, 2.2.5 or Sub-Section 4.5, as applicable.

 

		13.5	If
at any time during the term of this CONTRACT, CONTRACTOR has failed to perform this CONTRACT in a good and prudent
manner and has failed to fulfil any of its obligations under this CONTRACT, particularly those specified in Sections III
and/or IV and/or V and/or VIII hereof, SKK MIGAS shall have the right to issue to CONTRACTOR a “Performance
Deficiency Notice”. Such Notice shall detail the specific performance deficiencies of CONTRACTOR under this CONTRACT.

 

Upon
receipt of the Performance Deficiency Notice from SKK MIGAS, CONTRACTOR shall remedy the deficiencies detailed in such Performance
Deficiency Notice within *** after the receipt thereof. Should CONTRACTOR fail
to remedy the deficiencies within the specified *** or the Parties fail to agree on
an extension period in which CONTRACTOR able to remedy the deficiencies, notwithstanding the requirement under Sub-section
13.6, such deficiencies shall become a conclusive evidence of CONTRACTOR’s breach that can be used by SKK MIGAS
as the basis to terminate this CONTRACT in its entirety and thereupon CONTRACTOR shall immediately relinquish the
entire Contract Area to GOI through SKK MIGAS.

 

		13.6	Without
                                                                               prejudice to the provisions stipulated in Sub-section 13.1 termination of this CONTRACT, for any reason, shall not
                                                                               release CONTRACTOR from its outstanding obligations, including the obligation to perform any necessary abandonment of
                                                                               any fields, removal of any equipment and installations and site restoration pursuant to Sub-section 5.2.6.

 

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SECTION XIV

BOOKS AND ACCOUNTS AND AUDITS

		14.1	BOOKS AND ACCOUNTS

 

Subject
to the requirements of Sub-section 5.2.24 of Section V, SKK MIGAS with the assistance of CONTRACTOR shall perform
record reflecting Petroleum production as well as monies received from the sale of Petroleum and financial report, consistent with
Petroleum industry practices.

 

		14.2	AUDITS

 

	 	14.2.1	Authorized Central Government Institution shall have the right to inspect and audit CONTRACTOR’s report referred to in Sub-section 14.1 related to this CONTRACT for each Calendar Year.

 

		14.2.2	SKK
                                                                                     MIGAS shall have the right to inspect and audit CONTRACTOR’s operation activities based on the approved Work
                                                                                     Program under this CONTRACT.

 

	 	14.2.3	CONTRACTOR shall have the right to inspect and audit SKK MIGAS’ books and accounts but only with respect to the use of advance payment referred to in Sub-section 5.3.3 of this CONTRACT. Any such audit will be satisfied within *** after its commencement. Any exception must be made in writing within *** following the end of such audit and failure to give such written exception within such time shall establish the correctness of SKK MIGAS books and accounts.

 

 

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SECTION XV

OTHER PROVISIONS

 

		15.1	LANGUAGE

 

This
CONTRACT has been executed in both Indonesian and English ianguages and both texts are valid and have the same legal force.
In the case of any difference in the interpretation of the two texts, the Indonesia text shall prevail and shall be considered
the official text.

 

		15.2	NOTICE

 

Any
notices required or given by either Party to the other shall be deemed to have been delivered when properly acknowledged for receipt
by the receiving Party.

 

All
notices to SKK MIGAS shall be addressed to:

 

SATUAN
KERJA KHUSUS

PELAKSANA KEGIATAN USAHA

HULU MINYAK DAN GAS BUMI

(SKK MIGAS)

 

Wisma
Mulia Building 35th Floor,

Jl.
Jend Gatot Subroto No.42’

Jakarta
12710 

Attn : Chairman

 

and

 

all
notices to CONTRACTOR shall be addressed to:

 

PT
COGEN NUSANTARA ENERGI,

 

Ruko
Cempaka Putih Permai,

Jl.
Cempaka Putih Permai C-9, RT.012

/ RW.005, Kel. Cempaka Putih Timur,

Kec.
Cempaka Putih,

Jakarta
Pusat 10510,

Attn
: Director

 

and

 

    	 	79	 

    CONTRACT AREA: CITARUM

    

 

PT HUTAMA WIRANUSA ENERGI,

 

Dea
Tower I, Lantai 11 Suite 1103,

Jl.
Mega Kuningan Barat Kav.E4.3

No.1-2, Kel. Kuningan Timur, Kec.

Setiabudi,

Jakarta
Selatan 12950

Attn : Director

 

Either
Party may substitute or change such address upon rendering a prior written notice thereof to the other.

 

		15.3	LAWS
                                         AND REGULATIONS

 

		15.3.1	The
laws of the Republic of Indonesia and its amendment shall apply to this CONTRACT unless otherwise regulated in this CONTRACT.

 

		15.3.2	No
terms or provisions of this CONTRACT, including the agreement of the Parties to submit to arbitration hereunder, shall
prevent or limit the Government of the Republic of Indonesia from exercising its inalienable rights.

 

		15.4	FORCE
                                         MAJEURE

 

		15.4.1	Except
for the failure or inability of a Party to make its payment obligation when due hereunder, any failure or delay on the part of
either Party in the performance of their obligations or duties hereunder shall be excused to the extent attributable to Force
Majeure.

 

		15.4.2	If
the Petroleum Operations are delayed, curtailed or prevented by such causes, then the time for carrying out the obligations thereby
affected, the term of this CONTRACT and all rights and obligations hereunder shall be extended for a period equal to the
period thus involved.

 

    	 	80	 

    CONTRACT AREA: CITARUM

    

 

		15.4.3	The
Party whose ability to perform its obligations affected by event of Force Majeure and intends to seek relief under Sub-section
15.4.1 and/or extension of the term of CONTRACT referred to in Sub-section 15.4.2 shall notify the other Party thereof
in writing as soon as practicable but in no case shall be later than forty eight (48) hours after the occurrence of Force Majeure
or after such Force Majeure is known by the Party so affected, specifying the cause, nature extent of the circumstances giving
rise to Force Majeure, and both Parties shall do all reasonably possible within their power to remove such cause or to find a
solution by which this CONTRACT may be performed despite the continuance of the Force Majeure.

 

		15.4.4	Force
Majeure as stipulated in Sub-Section 15.4 shall be agreed upon by the Parties and subsequently notified to GOI.

 

		15.4.5	In
case of dispute with respect to the existence of Force Majeure claimed by a Party, such dispute shall be settled pursuant to Section
XI.

 

    	 	81	 

    CONTRACT AREA: CITARUM

    

 

		15.5	PROCESS ASSOCIATED PRODUCTS

 

Unless
the associated product requires a special and different treatment, or falls under other than crude oil and gas upstream regulatory
regime, in principle of the production, processing and marketing of such associated product referred shall be treated as production,
processing and marketing of hydrocarbon product under this CONTRACT and the revenues received by CONTRACTOR shall
be CONTRACTOR’s taxable income calculated in accordance with prevailing regulations.

 

    	 	82	 

    CONTRACT AREA: CITARUM

    

 

SECTION
XVI

PARTICIPATION

  

		16.1	Subject to the applicable laws and regulations, at the time the first Plan of Development is approved by GOI, CONTRACTOR shall have obligation to offer a ten percent (10%) Participating Interest under this CONTRACT (hereinafter called “10% Participating Interests”) by registered letter to LGOC to be informed by SKK MIGAS, in the period on *** after receipt of the registered letter from SKK MIGAS regarding the LGOC appointment.

 

		16.2	LGOC shall advise its interest and competency by registered letter to CONTRACTOR within 60 (sixty) days after receipt of offer letter from CONTRACTOR. If LGOC is not interested in such offer or no notification specifying its interest in such offer is given within *** after the date of the offer, the 10% Participating Interest offer from CONTRACTOR to LGOC shall be deemed terminated.

 

		16.3	Within *** after receipt of LGOC interest on the offer of 10% Participating Interest, LGOC may conduct due diligence and access the data related to the Contract Area and this CONTRACT.

 

		16.4	No later than the latest day of the *** of due diligence, LGOC shall advise CONTRACTOR of its decision whether it is interested or not interested in the 10% Participating Interests offer.

 

 

    	 	83	 

    CONTRACT AREA: CITARUM

    

 

If LGOC does not give
its interest and competency of the offer as notified by registered letter to CONTRACTOR
or no notification specifying its interest and competency in such offer is given within the period of such *** 10%
Participating Interest offer from CONTRACTOR to LGOC shall be deemed terminated.

 

		16.5	In
the event of acceptance by LGOC of CONTRACTOR’s  offer, the LGOC, shall be deemed to have acquired
the 10% Participating Interest after Minister approval through SKK MIGAS and shall come into effect on the date of such
approval.

 

		16.6	In
the case of 10% Participating Interest as specified in this Section XVI is not held by LGOC, the LGOC may appoint
the LGOC Subsidiary provided that the appointment of which shall comply to the applicable laws and regulations.

 

		16.7	In
                                         relation to the offer to SOC shall comply to the applicable laws and regulations.

 

		16.8	During
the CONTRACT period, SOC, LGOC or LGOC Subsidiary shall not sell, assign, transfer, convey or otherwise
dispose of all or any part of the 10% Participating Interests and/or the LGOC’s or LGOC Subsidiary’s
shareholders are restricted to transfer the shares to other party.

 

		16.9	SKK MIGAS
shall be notified in writing by CONTRACTOR with regard to all process of the 10% Participating Interests offer referred
to in this Section XVI.

 

		l6.10	Cooperation
                                         scheme between CONTRACTOR and SOC, LGOC, or LGOC Subsidiary
                                         shall refers to applicable laws and regulations. The amount of rights and obligations
                                         of SOC, LGOC, or LGOC Subsidiary is calculated proportionally.

 

    	 	84	 

    CONTRACT AREA: CITARUM

    

 

SECTION XVII

EFFECTIVENESS

 

		17.1	This
                                         CONTRACT shall come into effect on the Effective Date.

 

		17.2	This
                                         CONTRACT shall not be annulled, amended or modified in any respect, except by
                                         the mutual consent in writing of the Parties hereto and approved by the Minister.

 

IN
WITNESS WHEREOF, the Parties hereto have executed this CONTRACT, in triplicate, in Jakarta and in the Indonesian and
English language, as of the day and year first above written, each of the executed copies shall be deemed as the original copy
which has the same legal force and effect.

 

SATUAN
KERJA KHUSUS

PELAKSANA
KEGIATAN USAHA HULU

MINYAK
DAN GAS BUMI (SKK MIGAS) 

 

/s/
AMIEN SUNARYADI

 

AMIEN
SUNARYADI

Chairman/Kepala

 

APPROVED
BY THE MINISTER OF ENERGY AND MINERAL RESOURCES

 

This 6th day of July 2018

 

on
behalf of the

GOVERNMENT
OF THE REPUBLIC OF INDONESIA

 

/s/
IGNASIUS JONAN

 

IGNASIUS
JONAN

Minister
of Energy and Mineral Resources

 

    	 	85	 

    CONTRACT AREA: CITARUM

    

  

EXHIBIT
“A”

 

This
Exhibit “A” is attached to and made an integral part of the CONTRACT between SATUAN KERJA KHUSUS PELAKSANA
KEGIATAN USAHA HULU MINYAK & GAS BUMI (SKK MIGAS) and PT COGEN NUSANTARA ENERGI and PT HUTAMA WIRANUSA ENERGI, Dated the day 7th of June 2018 in the Contract Area of Citarum, onshore Jawa Barat.

 

The
Contract Area herein described is shown on Exhibit “B” of the CONTRACT.

 

DESCRIPTION OF CONTRACT
AREA

 

 

***

 

    	 		A - 1

    CONTRACT AREA: CITARUM

    

 

***

 

    	 		A - 2

    CONTRACT AREA: CITARUM

    

 

*** 

 

    	 		A - 3

    CONTRACT AREA: CITARUM

    

 

*** 

 

    	 		A - 4

    CONTRACT AREA: CITARUM

    

 

*** 

 

    	 		A - 5

    CONTRACT AREA: CITARUM

    

 

*** 

 

    	 		A - 6

    CONTRACT AREA: CITARUM

    

 

***  

 

The
Contract Area of Citarum, onshore Jawa Barat described above consists of approximately 3,924.67 square kilometers.

 

—o0o—

 

    	 		A - 7

    CONTRACT AREA: CITARUM

    

 

EXHIBIT “B”

 

This
Exhibit “B” is attached to and made an integral part of the CONTRACT between SATUAN KERJA KHUSUS PELAKSANA
KEGIATAN USAHA HULU MINYAK & GAS BUMI (SKK MIGAS) and PT COGEN NUSANTARA ENERGI and PT HUTAMA WIRANUSA ENERGI, Dated the day 7th of June 2018 in the Contract Area Citarum, onshore Jawa Barat.

 

 

    	 		B - 1

    CONTRACT AREA: CITARUM

    

 

GEOGRAPHIC
COORDINATES OF

CITARUM BLOCK

 

	POINT	LATITUDE	LONGITUDE
	A	*** 	*** 
	B	*** 	*** 
	C	*** 	*** 
	D	*** 	*** 
	E	*** 	*** 
	F	*** 	*** 
	G	*** 	*** 
	H	*** 	*** 
	I	*** 	*** 
	J	*** 	*** 
	K	*** 	*** 
	L	*** 	*** 
	M	*** 	*** 
	N	*** 	*** 
	O	*** 	*** 
	P	*** 	*** 
	Q	*** 	*** 
	R	*** 	*** 
	S	*** 	*** 
	T	*** 	*** 
	U	*** 	*** 
	V	*** 	*** 
	W	*** 	*** 
	X	*** 	*** 
	Y	*** 	*** 
	Z	*** 	*** 
	A1	*** 	*** 
	B1	*** 	*** 
	C1	*** 	*** 
	D1	*** 	*** 
	E1	*** 	*** 
	F1	*** 	*** 
	G1	*** 	*** 
	H1	*** 	*** 
	I1	*** 	*** 
	J1	*** 	*** 
	K1	*** 	*** 
	LI	*** 	*** 
	M1	*** 	*** 
	M	*** 	*** 
	O1	*** 	*** 
	P1	*** 	*** 
	Q1	*** 	*** 
	R1	*** 	*** 
	S1	*** 	*** 
	T1	*** 	*** 
	U1	*** 	*** 
	V1	*** 	*** 
	W1	*** 	*** 
	X1	*** 	*** 
	Y1	*** 	*** 
	Z1	*** 	*** 

 

	POINT	LATITUDE	LONGITUDE 
	A2	*** 	*** 
	B2	*** 	*** 
	C2	*** 	*** 
	D2	*** 	*** 
	E2	*** 	*** 
	F2	*** 	*** 

  

	INNER BOUNDARY -1	 
	POINT	LATITUDE	LONGITUDE 
	A	*** 	*** 
	B	*** 	*** 
	C	*** 	*** 
	D	*** 	*** 

 

	INNER BOUNDARY-2	 
	POINT	LATITUDE	LONGITUDE
	A	*** 	*** 
	B	*** 	*** 
	C	*** 	*** 
	D	*** 	*** 

 

—o0o—

 

    	 		B - 2

    CONTRACT AREA: CITARUM

    

  

EXHIBIT
“C”

 

THIS
EXHIBIT “C”, THE ACCOUNTING PROCEDURE IS ATTACHED TO AND MADE AS AN INTEGRAL PART OF THE CONTRACT

 

BETWEEN

 

SATUAN
KERJA KHUSUS PELAKSANA KEGIATAN USAHA HULU MINYAK DAN GAS BUMI (SKK MIGAS)

 

AND

 

PT COGEN
NUSANTARA ENERGI

 

AND

 

PT HUTAMA
WIRANUSA ENERGI

 

Dated
the 7th day of June 2018

 

accounting
procedure

 

Article
I

General Provisions

 

		1.1	Definitions

 

The
accounting procedure herein provided for is to be followed and considered as a basis in the performance of either Party’s obligations
under the CONTRACT to which this Exhibit is attached.

 

The
definition and terms appearing in this Exhibit “C” shall have the same meaning as those defined in said CONTRACT.

 

		1.2	Accounts
                                         and Statements

 

CONTRACTOR’s,
as the case may be, accounting records and books will be kept in accordance with generally accepted and recognized accounting
systems, consistent with modern petroleum industry practices and procedures.

 

    	 		C - 1

    CONTRACT AREA: CITARUM

    

 

Article
II

Expenditures
for Petroleum Operation

 

		2.1	Definition

 

	 	2.1.1	Petroleum operation expenditures shall be capital expenditures and non-capital expenditures, in the form of tangible and intangible assets which support Exploration and Exploitation activities, transportation to the point of delivery, plug and abandonment and site restoration Crude Oil and Natural Gas.

 

	 	2.1.2	Operating Costs are expenditures incurred and liabilities arising in carrying out Petroleum Operations which consist of Exploration costs, Exploitation costs and other costs.

 

		2.1.3	For
                                         any Year in which Commercial Production occurs from Working Area, CONTRACTOR shall
                                         be entitled to take into account Operating Costs as a deduction of income in calculating
                                         the CONTRACTOR’s taxable income, which includes:

 

		(a)	current
Year Non Capital Costs;

  

	 	(b)	Amortization of expenditures prior to the initial of Commercial Production;

 

	 	(c)	Amortization of expenditures exclude capitalized tangible asset subsequent to Commercial Production;

  

		(d)	Current
year depreciation of expenditures of capitalized tangible asset subsequent to Commercial
Production.

 

    	 		C - 2

    CONTRACT AREA: CITARUM

    

 

		2.2	Non
Capital Costs

 

Non
Capital Costs means those Operating any Costs incurred that relate to current Year’s operations. In addition to costs relating
only to current year’s operations, as described in Subsections 2.2.3 and 2.2.4 below, will be classified as Non Capital Costs.

 

Non
Capital Costs include, among other things:

 

		2.2.1	Exploration
                                         Expenditures

 

Exploration
and expenditure consist of:

 

		a.	Data Acquisition

 

Labor,
materials and services used in offshore, aerial and land survey, geological, topographical, geophysical, geotechnical and information
technology.

 

		b.	Exploratory
                                         drilling

 

Labor,
materials and services used in drilling of exploratory wells with the objective of finding reserves of oil and/or gas, including
well pads, the access roads, bridges and jetty leading directly to the drilled wells.

 

		2.2.2	Development
                                         drilling

 

Labor,
goods/ materials and services used for drilling and equipping development wells, development-type stratigraphic test wells and
service wells, whether the welllheads directly or indirectly towards production including well pads, access roads, bridges and
jetty to drilled-wells from related fields. Only intangible costs are included herein.

 

    	 		C - 3

    CONTRACT AREA: CITARUM

    

 

		2.2.3	Production
                                         services

 

 Labor,
materials and services used in drilling wells with the objective of penetrating a proven reservoir, including the drilling of
delineation wells as well as redrilling, deepening or recompleting wells, and access roads leading directly to welfrom relevant
Field.

 

		2.2.4	Operations

 

Labor,
materials and services used in day to day oil well operations, oil field production facilities operations, secondary recovery operations,
storage handling transportation and delivery operations, gas well operations, gas field production facilities operations,gas transportation
and delivery operations, gas processing auxiliaries and utilities, and other operating activities, including repairs and maintenance
and marketing incurred in relevant Field.

 

		2.2.5	Office,
services and general administration

 

General
services including technical and related services.material services, transportation, rental of specialized and heavyengineering
equipment, siterentals and other rentals of services and property, personnel expenses, public relations expenses, expenses of community
development programs relating to the community surrounding and/or adjacent to the Contract Area as set out in Sub section 5.2.23
of this CONTRACT and other expenses related to relevant Field.

 

    	 		C - 4

    CONTRACT AREA: CITARUM

    

 

		2.2.6	Training

 

Training
of Indonesian personnel as set forth in Section XII of the CONTRACT.

 

		2.3	Capital
                                         Costs

 

Capital
Costs mean expenditures made for items which normally have a useful life beyond the year incurred. A reasonable annual allowance
for amortization or depreciation of Capital Costs, computed as described in Article III, Sub-sections
3.1 and 3.2 of Exhibit C of this CONTRACT, will be allowed as an Operating Costs for the current Year.

 

Capital
Costs include, among other things:

 

		2.3.1	Development
Wells

  

Tangible
costs used for drilling and equipping development wells, development-type stratigraphic test wells and service wells, whether the
welileads directly or indirectly towards production.

 

		2.3.2	Production
Facilities

 

Offshore
platform (including the costs of labor, fuel, hauling and supplies for both the offsite fabrication and onsite installation of
platforms, and other construction costs in erecting platforms and installing submarine pipelines), wellhead equipment, subsurface
lifting equipment, production tubing, sucker rods, surface pumps, flow lines, gathering equipment, delivery lines and storage
facilities. Costs of oil jetties and anchorages, treating plants and equipment, secondary and tertiary recovery systems, gas plants
and steam systems incurred in relevant Field including certification of offshore and land facilities.

 

    	 		C - 5

    CONTRACT AREA: CITARUM

    

 

		2.3.3	Construction utilities and auxiliaries

 

Work
shops, power and water facilities, warehouses, cargo jetties, and field roads in relevant Field except the access roads mentioned
in Sub sections 2.2.1, 2.2.2 and 2.2.3 above.

 

		2.3.4	Construction housing and welfare

 

Housing,
recreational facilities and other tangible property incidental to construction, related to relevant Field.

 

		2.3.5	Movables

 

		a.	Surface
and subsurface drilling and production equipments,

		b.	Surface
and subsurface drilling and production tools,

		c.	Surface
and subsurface drilling and production instruments,

		d.	Transportation
(including barges, floating crafts, automotive equipments, trains, aircraft),

	 	e.	Construction equipments, furniture and office equipment and miscellaneous equipments.

 

    	 		C - 6

    CONTRACT AREA: CITARUM

    

  

Article
III

Accounting
Methods To Be Used To

Calculate Operating Costs

 

		3.1	Amortization

 

	 	3.1.1	Any capital and non-capital expenditures prior to the initial of Commercial Production, including tangible and intangible assets, should be capitalized and amortized with acceleration by using Unit of Production Method in the beginning of the month of Commercial Production. Accelerated amortization will be conducted using twice of the normal tariff (percentage) of unit of production.

 

		3.1.2	Any
expenditures, exclude tangible assets, having more than 1 (one) year of useful life, subsequent to Commercial Production should
be capitalized and amortized by using Unit of Production Method in the beginning of the month of Commercial Production. In any
circumstances, where the actual accumulative production is less than the expected reserves, the remaining expenditures may be
charges on the last current fiscal year.

 

		3.1.3	Unit
of Production tariff (percentage) is determined by dividing actual yearly production over total expected reserves based on the
approval of First Plan of Development. The expected reserves may be adjusted based on the Plan of Development’s monitoring.

 

In
the event of realization of total production is less than expected which leads to the remaining expenditures to acquire any rights
or expenditures, such remaining expenditures may be charged at once in the current fiscal year.

 

    	 		C - 7

    CONTRACT AREA: CITARUM

    

 

		3.2	Depreciation

 

Capital
Cost occurred in Commercial Production will be depreciated by using declining balance method until individual asset’s useful life
ends.

 

Depreciation
will be calculated in the beginning of the month in which the asset is placed into service with a monthly depreciation according
to the asset’s useful life.

 

Depreciation
calculation of each such Year’s should be based on the individual asset’s capital cost at the beginning of such Year multiplied
by the depreciation factor as follows, for:

 

a.       GROUP
1 = 50%

b.       GROUP
2 = 25%

c.       GROUP
3 = 12.5%

 

For
the Groups of capital assets for any Crude Oil projects and/or Natural Gas projects apply useful lives as follows :

 

GROUP
1 include among other things:

		-	Automobile
                                         applies a useful life of 1.5 years

		-	Trucks-light
                                         (13,000 pounds or less) and tractor units applies a useful life of 2 years

		-	Trucks-heavy
                                         (more than 13,000 pounds) applies a useful life of 3 years

		-	Aircraft applies
                                         a useful life of 3 years

		-	Construction
                                         equipment applies a useful life of 3 years

 

GROUP
2 include among other things:

		-	Buses apply a
                                         useful life of 4.5 Years

		-	Office
                                         and household equipments apply a useful life of 5 Years

		-	Construction
                                         utilities and auxiliaries apply a useful life of 5 Years

 

    	 		C - 8

    CONTRACT AREA: CITARUM

    

 

		-	Production facilities
(including Development Well) apply a useful life of 5 Years

		-	Railroad cars and
locomotives apply a useful life of 7.5 Years

		-	Drilling and production
tools, equipment and instruments apply a useful life of 5 Years

 

GROUP
3 include among other things:

		-	Vessels,
barges, tugs and similar water transportation equipment apply a useful life of 9 Years

		-	Office
buildings, housing and welfare apply a useful life of 10 Years

 

Balance
of remaining Capital Costs is eligible for full depreciation at the end of the individual asset’s useful life.

 

Balance
of remaining Capital Costs at the end of CONTRACT is eligible for full depreciation at the Year of the CONTRACT’s
termination.

 

The
undepreciated balance of assets taken out of service caused by FORCE MAJEURE may be charged directly to Operating Costs.

 

		3.3	Overhead
Allocation

 

General
and administrative costs, other than direct charges, allocable to this operation should be determined by a method of common accounting
procedures that applied each Year consistently.

 

		3.4	Inventory
Accounting

 

The
costs of inventory may be charges as Operating Costs or part of Capital Costs when used.

 

Unused
inventory items may be charges as Operating Costs in the time of abolishment or at the end of CONTRACT.

 

    	 		C - 9

    CONTRACT AREA: CITARUM

    

  

		3.5	Insurance

 

Operating
Costs shall include premiums paid for insurance normally required to be carried for the Petroleum Operations relating to CONTRACTOR’s
 obligations conducted under the CONTRACT.

 

		3.6	Claims

 

Operating
Costs shall also include all expenditures incurred and paid in settlement of any and all losses, claims, damages, judgments, and
other expenses, including fees relating to CONTRACTOR’s obligation under the CONTRACT.

 

		3.7	Abandonment
and Site Restoration

 

Operating
Costs shall include all expenditures incurred in the abandonment of all exploratory wells and the restoration of their drill sites,
together with all estimates of monies required for the funding of any abandonment and site restoration program established in conjunction
with an approved plan of development for a commercial discovery.

 

Expenditures
incurred in the abandonment of exploratory wells and the restoration of their drill sites shall be charged as Operating Costs
in accordance with Article II of this Exhibit “C”

 

The
deposit of the estimates of monies required for the funding of any abandonment and site restoration program established pursuant
to paragraph (e) of Sub-section 5.2.6 of the CONTRACT into an escrow account which constitutes the Abandonment and Restoration
Funds (AARF), shall begin at the Year of first commercial production, and such deposited amount may be charge as Operating Cost
Annually.

 

    	 		C - 10

    CONTRACT AREA: CITARUM

    

 

Such
estimated amount of monies to be deposited into such an escrow account between SKK MIGAS and CONTRACTOR at Indonesian bank in Indonesia
, will be calculated each Year by dividing the total estimated costs of abandonment and site restoration for each discovery less
the estimated salvage value of abandoned facilities by the total estimated number of Years in the economic life of each discovery
and shall be reviewed on an annual basis and such estimates shall be adjusted each Year as required.

 

If,
for any reason, CONTRACTOR is required to abandon any field and restore the related site prior to the expiration or termination
of this CONTRACT, CONTRACTOR may, for the purpose of conducting such abandonment and site restoration, use the funds established
as AARF pursuant to the provisions of Sub-section 5.2.6 (e) hereof.

 

Article
IV

Implementation of Accounting

Procedures

  

The
implementation of Accounting Procedures set forth under this Exhibit “C” shall be stipulated in SKK MIGAS operating
procedures which become an integral part hereof.

 

Article
V

Others

 

In
the case of CONTRACTOR’s income earned from Petroleum Operation, provided in this CONTRACT, after deduction
of Operating Costs, and there still remains losses, the losses shall be compensated by income starting the next consecutive taxable
year up to 10 (ten) years.

  

—o0o—

 

    	 		C - 11

    CONTRACT AREA: CITARUM

    

 

EXHIBIT “D”

 

THIS EXHIBIT “D”,
THE MEMORANDUM OF PARTICIPATION IS ATTACHED TO AND MADE AN INTEGRAL PART OF THE CONTRACT

 

BETWEEN

 

SATUAN KERJA KHUSUS PELAKSANA
KEGIATAN USAHA HULU MINYAK DAN GAS BUMI (SKK MIGAS)

 

AND

 

PT COGEN NUSANTARA ENERGI

 

AND

 

PT
HUTAMA WIRANUSA ENERGI

 

Dated the 7th day of June 2018

 

MEMORANDUM
OF PARTICIPATION

 

The operating agreement between CONTRACTOR and the Indonesian Participant, inter alia, the following
main principles:

 

		1.	CONTRACTOR shall be the sole Operator of the venture under rights and obligations stipulated in CONTRACT.

 

		2.	Authorized
representatives of both parties shall meet periodically for the purpose of conducting the venture’s operations.

 

		3.	Cooperation scheme between CONTRACTOR and LGOC or LGOC Subsidiary shall comply to the applicable laws and regulations.

 

		4.	Commencing
                                         on the transfer of Participating Interest approved, during the term of this CONTRACT,
                                         LGOC, LGOC Subsidiary or SOC is restricted to transfer its shares
                                         and participating interest.

 

		5.	The
                                         Operator shall prepare the annual Work Program and estimated Budgets of Operating Costs
                                         which shall be submitted to the authorized representative of LGOC or LGOC Subsidiary
                                         in accordance with the provisions of the CONTRACT.

 

    	 		D - 1

    CONTRACT AREA: CITARUM

    

 

		6.	If
Natural Gas is encountered in commercial quantities, special provisions shall be drawn up having due regard the condition related
to such Natural Gas, inter alia, to the long term character of Natural Gas supply contracts.

 

—o0o—

 

    	 		D - 2

    CONTRACT AREA: CITARUM

    

 

EXHIBIT
“E”

 

THIS
EXHIBIT “E”, THE PARTICIPATING INTEREST HOLDER AND OPERATOR IS ATTACHED TO AND MADE AN INTEGRAL PART OF THE CONTRACT

 

BETWEEN

 

SATUAN
KERJA KHUSUS PELAKSANA KEGIATAN USAHA HULU MINYAK DAN GAS BUMI (SKK MIGAS)

 

AND

 

PT
COGEN NUSANTARA ENERGI

 

AND

 

PT
HUTAMA WIRANUSA ENERGI

 

Dated
the 7th day of June 2018

 

PARTICIPATING
INTEREST HOLDER AND OPERATOR

 

		1.	Participating
Interest Holder in the Contract Area on the effective date of this CONTRACT are as follows:

 

PT
COGEN NUSANTARA ENERGI: 85%

 

PT
HUTAMA WIRANUSA ENERGI: 15%

 

Operator
shall be PT Cogen Nusantara Energi.

 

		2.	In
                                         the event of transfer of Participating Interest Holder, the letter of approval on the
                                         transfer of Participating Interest as referred to in Sub-section 5.2.7 and 5.2.8 shall
                                         be attached to and made an integral part of this CONTRACT.

 

		3.	In
                                         the event of change of Operator, the letter of approval on the change of Operator as
                                         referred to in Sub-section 1.1.6 shall
                                         be attached to and made an integral part of this CONTRACT.

 

—o0o— 

 

    	 		E - 1

    CONTRACT AREA: CITARUM

    

 
 EXHIBIT
“F”

 

THIS
EXHIBIT “F”, THE VARIABLE COMPONENT IS ATTACHED TO AND MADE AN

INTEGRAL PART OF THE CONTRACT

 

BETWEEN

 

SATUAN
KERJA KHUSUS

PELAKSANA KEGIATAN USAHA HULU MINYAK DAN GAS BUMI

 

(SKK
MIGAS)

 

AND

 

PT
COGEN NUSANTARA ENERGI

 

AND

 

PT
HUTAMA WIRANUSA ENERGI

 

Dated
the 7th day of June 2018

 

VARIABLE COMPONENT

	No	Characteristic	Parameter	
        Contractor’s

        share adjustment

        (%)
	Information
	1.	*** 	*** 	*** 	*** 
	*** 	*** 	*** 
	*** 	*** 	*** 
	2.	*** 	*** 	*** 	*** 
	*** 	*** 	*** 
	*** 	*** 
	*** 	*** 
	*** 	*** 
	*** 	*** 

 

    	 		F - 1

    CONTRACT
                                                                                 AREA: ANDAMAN I

    

 

	3.	*** 	*** 	*** 	*** 
	*** 	*** 
	4.	*** 	*** 	*** 	*** 
	*** 	*** 	*** 
	*** 	*** 	*** 
	5.	*** 	*** 	*** 	*** 
	*** 	*** 	*** 
	6.	*** 	*** 	*** 	*** 
	*** 	*** 
	*** 	*** 
	*** 	*** 
	*** 	*** 
	*** 	*** 
	7.	*** 	*** 	*** 	*** 
	*** 	*** 
	*** 	*** 
	*** 	*** 
	*** 	*** 
	*** 	*** 
	8.	*** 	*** 	*** 	*** 
	*** 	*** 

 

    	 		F - 2

    CONTRACT AREA: ANDAMAN I

    

 

	9.	*** 	*** 	*** 	*** 
	*** 
	*** 	*** 	*** 
	*** 
	*** 	*** 	*** 
	  10.  	*** 	*** 	*** 	*** 
	*** 	*** 	*** 
	*** 	*** 	*** 

 

—o0o—

 

    	 		F - 3

    CONTRACT AREA: CITARUM

    

 

EXHIBIT
“G”

 

THIS
EXHIBIT “G”, THE PROGRESSIVE COMPONENT IS ATTACHED TO AND MADE AN INTEGRAL PART OF THE CONTRACT

 

BETWEEN

 

SATUAN
KERJA KHUSUS PELAKSANA KEGIATAN USAHA HULU MINYAK DAN GAS BUMI (SKK MIGAS)

 

AND

 

PT
COGEN NUSANTARA ENERGI

 

AND

 

PT
HUTAMA WIRANUSA ENERGI

 

Dated
the 7th day of June 2018

 

PROGRESSIVE
COMPONENT

	No.	Characteristic	Parameter	Contractor’s share

adjustment

(%)	Information
	1.	*** 	*** 	*** 
	2. 	*** 	*** 	*** 	*** 
	*** 	*** 
	*** 	*** 
	3.	*** 	*** 	*** 	*** 
	*** 	*** 	*** 
	*** 	*** 	*** 
	*** 	*** 	*** 
	*** 	*** 	*** 
	*** 	*** 	*** 

 

—o0o—

 

    	 		G - 1Exhibit 10.7

 

Confidential
Treatment Requested by Indonesia Energy Corporation Limited.

Confidential
treatment requested with respect to certain portions of the Exhibit hereof denoted with

“***”
that are (i) not material and (ii) would likely cause competitive harm to 

Indonesia Energy Corporation Limited if publicly disclosed.

 

OPERATIONS COOPERATION AGREEMENT

 

BETWEEN

 

PT PERTAMINA EP

 

AND

 

PT GREEN WORLD NUSANTARA

 

FOR PRODUCTION

 

ON

 

KRUH

OPERATING AREA

 

     

     

    

 

Table of Contents

 

	SECTION	Headings	Page

No.
	 	 	 
	I.	Definitions and Interpretations	5
	 	 	 
	II.	Scopes and Durations of Agreement	11
	 	 	 
	III.	Work Program and Budget	14
	 	 	 
	IV.	Rights and Obligations	20
	 	 	 
	V.	Recovery of Operating Costs and Handling of Production	32
	 	 	 
	VI.	Transfer of Rights and Obligations and Change of Control	36
	 	 	 
	VII.	Bank Guarantee and Cash in Advance	38
	 	 	 
	VIII.	Payments	44
	 	 	 
	IX.	Assets	46
	 	 	 
	X.	Governing Law and Settlement of Disputes	47
	 	 	 
	XI.	Confidentiality	48
	 	 	 
	XII.	Force Majeure	49
	 	 	 
	XIII.	Indemnification	51
	 	 	 
	XIV.	Employment and Training of Indonesian Personnel	53
	 	 	 
	XV.	Termination of The Agreement	54
	 	 	 
	XVI.	Books and Accounts and Audits	60
	 	 	 
	XVII.	Notices and Correspondences	62
	 	 	 
	XVIII.	Other Provisions	63

 

    	 	1	 

     

    

 

	SECTION	Headings	Page

No.
	 	 	 
	Exhibit – I	Operating Area Map	68
	 	 	 
	Exhibit – II	Description of Operating Area	69
	 	 	 
	Exhibit – III	Accounting Procedure	71
	 	 	 
	• Article – I                General Provisions	71
	 	 	 
	• Article – II              Operating Costs	72
	 	 	 
	• Article – III             Accounting Methods To Calculate Recovery of Operating Costs	76
	 	 	 
	Exhibit – IV	Baseline Production	81
	 	 	 
	Exhibit – V	Organization Structure	83
	 	 	 
	Exhibit – VI	Petroleum Revenue Flow Distribution	84
	 	 	 
	Exhibit – VII	Berita Acara Serah Terima Area Operasi	85
	 	 	 
	Exhibit – VIII	Bank Guarantee Form	86

 

    	 	2	 

     

    

 

OPERATIONS COOPERATION

AGREEMENT

BETWEEN

PT PERTAMINA EP

AND

PT GREEN WORLD NUSANTARA

 

This Agreement (hereinafter referred to
as “Agreement”) is made and entered into on July 26, 2019 (“Signing Date”), by and between
PT PERTAMINA EP, a company organized and existing under the laws of Republic of Indonesia hereinafter in this Agreement
called “PERTAMINA EP” and “NUSANTARA” company organized and existing under the laws of Republic
of Indonesia hereinafter in this Agreement called “PARTNER”, both PERTAMINA EP and PARTNER hereinafter
sometimes referred to either individually as the “Party” or collectively as the “Parties”.

 

WITNESSETH

 

	A.	WHEREAS, PERTAMINA EP signed a Kontrak Minyak dan Gas Bumi PERTAMINA (hereinafter called “PERTAMINA EP KKS”) with Badan Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi (BPMIGAS, the role and function of BPMIGAS has recently been substituted by SKK Migas based on Peratur-an Presiden No. 9 Year 2013) on September 17, 2005, and therefore PERTAMINA EP is the company with exclusive rights to conduct petroleum operations, among others, in the Operating Area as outlined in the map of Operating Area in Exhibit - I and coordinates of Operating Area as described in Exhibit - II, both attached hereto and made as an integral part hereof; and

 

	B.	WHEREAS, with reference to clause 4.2 of SECTION IV of PERTAMINA EP KKS, in conducting Operations thereof PERTAMINA EP may establish a cooperation agreement with another party in which PARTNER has no participating interest in PERTAMINA EP KKS and has no direct relationship with SKK Migas and/or the Government of the Republic of Indonesia represented by the ministry which has the authority in the oil and gas sector; and

 

    	 	3	 

     

    

 

	C.	WHEREAS, PERTAMINA EP based on SECTION IV PERTAMINA EP KKS, has conducted a tender process to select a PARTNER to perform exploration, development and production in the Operating Area and PARTNER which is willing and committed to carry out exploration, and or accelerating development and production of the Petroleum resources in the Operating Area by conducting the Operations as defined below; and

 

	D.	WHEREAS, PERTAMINA EP and PARTNER are bound to Technical Assistance Contract between Perusahaan Pertambangan Minyak dan Gas Bumi Negara (Pertamina) and PT Binatek Reka Kruh (now PT Green World Nusantara) for contract area Kruh, dated May 22th 2000 and Novation Agreement on dated May 26th 2011, that will ended on May 21st, 2020 at 24.00 WIB; and

 

	E.	WHEREAS, based on PARTNER’s Letter on Permohonan Kontrak Baru Pengelolaan Wilayah Kerja Perminyakan Kruh No. 006/GWN-DIR/X/2017 on dated October 31th, 2017, PARTNER proposed to continue the Operations in the Operating Area; and

 

	F.	WHEREAS, PERTAMINA EP and PARTNER have been discussed the continuation of the Operations on September 4th, 2018, through Operations Cooperation scheme; and

 

    	 	4	 

     

    

 

	G.	WHEREAS, based on PERTAMINA EP’s Letter No. 715/EP0000/2019-S0 tanggal 11 Juli 2019 on Rencana KSO Produksi Area Operasi Kruh pada Wilayah Kerja PT Pertamina EP, PERTAMINA EP has agreed that PARTNER shall continue the Operations in the Operating Area; and

 

	H.	WHEREAS, PARTNER, which has the financial ability, technical competence, organizations and professional skills necessary to carry out the Operations as well as its other obligations pursuant to this Agreement;

 

NOW, THEREFORE, in considerations
of the premises herein contained, it is hereby agreed as follows:

 

SECTION I 

DEFINITION AND INTERPRETATION

 

The following terms unless otherwise
specified herein shall have the meanings assigned to them under the following provisions:

 

	1.1	DEFINTIONS

 

	1.1.1	Budget means Budget of Operating Cost and Investment Budget

 

	1.1.2	Budget of Operating Costs means estimated costs of all items related to Operation activities and included in the Work Program and Budget.

 

	1.1.3	Investment Budget means estimated capital costs included in the Work Program and Budget.

 

	1.1.4	Operating Area means the area where PARTNER conducts Operations which in the area as outlined and described in Exhibit – I and Exhibit – II attached hereto and made part hereof.

 

    	 	5	 

     

    

 

	1.1.5	Asset means movable and non-movable asset including but not limited to: tools, machinery, materials, inventory goods, houses/buildings, vehicles, land and other production facilities which are legally possessed, either through ownership or based on other rights, by PERTAMINA EP or PARTNER for Operations purpose based on the Agreement.

 

	1.1.6	Barrel means a quantity or unit of oil, in the amount of forty-two (42) United States gallons standard at the temperature of sixty (60) degrees Fahrenheit.

 

	1.1.7	Operating Costs means expenditures made and obligations incurred in carrying out the Operations hereunder determined in accordance with the Accounting Procedure attached hereto and made a part hereof as Exhibit-Ill.

 

	1.1.8	Cash in Advance means an amount of cash provided by PARTNER to fund the execution of Firm Commitment in the separate account of PARTNER’s as stipulated in SECTION VII of the Agreement.

 

	1.1.9	Barrel of Oil Equivalent (BOE) means six thousand (6,000) standard cubic feet of Natural Gas based on the assumption that such gas has a calorific value of one thousand (1,000) British Thermal Unit per cubic foot (BTU/ft3).

 

	1.1.10	Natural Gas means all gaseous hydrocarbons produced from wells, including wet mineral gas, dry mineral gas, casing head gas and residue gas remaining after the extraction of liquid hydrocarbons from wet gas.

 

    	 	6	 

     

    

 

	1.1.11	Working Days means Monday through Friday, except national holidays as determined by GOI.

 

	1.1.12	Firm Commitment, means the Work Program during the first three Firm Commitment Years and its extension, if any, that shall be conducted by PARTNER as described in Article 3.3 of the Agreement.

 

	1.1.13	Petroleum means mineral oil and gas, hereinafter called Crude Oil and Natural Gas as defined in Law No. 22/2001 concerning Oil and Natural Gas.

 

	1.1.14	Incremental Oil (Shareable Oil) means the amount of Crude Oil lifted from the Operating Area which is in excess of the Baseline Production (Non-Shareable Oil.

 

	1.1.15	Crude Oil means crude mineral oil, asphalt, ozokerite and all kinds of hydrocarbons and bitumens, both in solid and liquid form, in their natural state or obtained from Natural Gas by condensation or extraction.

 

	1.1.16	Operations means all activities conducted in the Operating Area in accordance with Work Program and Budget including but not limited to the preparation of Work Program and Budget Preparation, geological geophysical and reservoir studies; geological and geophysical surveys; drilling; production testing; production facilities; transportation; work over; operation and maintenance of injection and production wells and water supply wells; if any; construction; operation and maintenance of water gathering lines; water treating plant; water storage facilities; injection facilities and injection lines; day to day injection operations; operations of the Enhanced Oil Recovery Production wells and other facilities up to the inlet flange of PERTAMINA EP’s common pipeline facilities servicing the Operating Area, if any. Such inlet flange will be determined by PERTAMINA EP when plan of production is proposed for approval.

 

    	 	7	 

     

    

 

	1.1.17	Control means ownership directly or indirectly of (i) the voting right, in the event the company is a corporation issuing a stock; or (ii) the controlling of rights or interests, in the event the other company or entity is not a corporation.

 

	1.1.18	Change of Control means any direct or indirect change of Control of PARTNER (whether through merger, sale of share or other equity interests, or otherwise) through a single transaction or series of related transactions.

 

	1.1.19	Government of Indonesia (“GOI”) means any government authorities or agencies of Republic of Indonesia.

 

	1.1.20	Affiliate means a company or other entity that controls, or is controlled by a company or other entity which Control a Party in this Agreement.

 

	1.1.21	Third Party means any party other than The Parties. For avoidance of doubt, specifically for SECTION VI Third Party means any party other than The Parties and its Affiliate.

 

	1.1.22	Baseline Production means the average production of Petroleum in the Operation Area which has resulted in the decline of production curve so agreed by the Parties as stipulated in Exhibit - IV, which constitutes the minimum production to be produced from the Operation Area.

 

    	 	8	 

     

    

 

	1.1.23	Gross Production means the total amount of Crude Oil and/or Natural Gas produced from the Operating Area.

 

	1.1.24	Work Program means detail of the Operations to be carried out in the Operating Area as set forth in SECTION III of the Agreement which has been approved by PERTAMINA EP.

 

	1.1.25	Substitution Program means a replacement program of Firm Commitment as described in clause 3.7 of this Agreement.

 

	1.1.26	SKK Migas means Satuan Kerja Khusus Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi, being the special working unit that, as at the date of this Agreement, has been assigned by GOI to implement the controlling function in oil and gas upstream activity, and shall also mean any entity, unit, agency or other authority that is assigned to be the successor to such special working unit.

 

	1.1.27	Year(s) means a period of twelve (12) consecutive months commencing from January 1 and ending on the following December 31, according to the Gregorian calendar.

 

	1.1.28	Firm Commitment Year(s), means a period of twelve (12) consecutive months counted from Commencement of Firm Commitment Date pursuant to clause 1.32 hereunder.

 

	1.1.29	Agreement Year means a period of twelve (12) consecutive months according to the Gregorian calendar counted from the Effective Date.

 

	1.1.30	Effective Date is on May 22th, 2020 after the fulfillment of the Conditions Precedent as provided under clause 2.3 hereunder.

 

    	 	9	 

     

    

 

	1.1.31	Commencement of Firm Commitment Date means the date when PARTNER shall commence Firm Commitment starting from the commencement of Work Program that is the date stipulated in PERTAMINA EP written approval of the PARTNER’s first Work Program and Budget.

 

	1.1.32	Signing Date means the signing date of the Agreement which stipulated first above.

 

	1.1.33	Point of Export/Sale/Lifting means the outlet flange of the closest loading arm after final sales meter at the delivery terminal or some other point decided by PERTAMINA EP. Point of export/sales/ lifting will be defined specifically under separate procedures.

 

	1.2	INTERPRETATION

 

	1.2.1	References to SECTION, clauses and Exhibits refer to the SECTION and Exhibits of this Agreement, including any changes, renewals and additions thereto.

 

	1.2.2	Approval as stipulated in this Agreement shall always be interpreted as a written approval.

 

	1.2.3	The provisions of the law shall refer to any applicable law in the Republic of Indonesia including any amendments or additions thereto issued from time to time.

 

------End of SECTION I------

 

    	 	10	 

     

    

 

SECTION II

SCOPE AND DURATION OF AGREEMENT

 

	 	2.1	SCOPE OF AGREEMENT

 

	 	2.1.1	This Agreement is an agreement to carry out Operations in accordance with the provisions herein contained;

 

	 	2.1.2	PARTNER shall be responsible to PERTAMINA EP for the execution of such Operations in accordance with the provisions of the Agreement and is hereby appointed as a company to conduct the Operations;

 

	2.1.3	PARTNER shall provide all the financial, technical, organization and skills for such Operations;

 

	2.1.4	PARTNER shall carry all the risk of the Operating Costs required in carrying out the Operations. Such costs shall be included in the Operating Costs and treated as provided in SECTION V hereof and therefore PARTNER shall have the economic rights in accordance with SECTION V hereof;

 

	2.1.5	During the term of the Agreement and subject to the terms and conditions of this Agreement, for the production of Petroleum derived from the Operations, PARTNER will be entitled to the portion in accordance with the provisions of SECTION V hereof.

 

	2.2	DURATION OF AGREEMENT

 

	2.2.1	Unless terminated earlier in accordance with the provisions of this Agreement, the duration of this Agreement shall be 10 (ten) Years as of the Effective Date with such term may be extended once for a maximum until the expiration of PERTAMINA EP KKS.

 

    	 	11	 

     

    

 

	2.2.2	PARTNER may, the earliest ten (10) Years and the latest two (2) Years before the Agreement expires, submit a written request for extension of the Agreement with techno-economy, operational, and commercial justification to PERTAMINA EP. Such extension of the duration of the Agreement shall be conducted in accordance with the prevailing regulations in PERTAMINA EP.

 

	2.3	CONDITIONS PRECEDENT

 

	2.3.1	PARTNER shall submit an irrevocable and unconditional Bank Guarantee to PERTAMINA EP as stipulated in SECTION VII hereof (“Conditions Precedent”).

 

	2.3.2	Handing over of Operating Area, Asset and data from PERTAMINA EP to PARTNER shall be conducted on the Effective Date or at the latest on the first date of the subsequent month after the fulfillment of the Conditions Precedent set out in clause 2.3.1 or on other date as determined by PERTAMINA EP with written prior notice to PARTNER (“Effective Date”).

 

	2.3.3	If the Conditions Precedent are not satisfied within sixty (60) calendar days after the Signing Date or any other time determined in written by PERTAMINA EP, then PERTAMINA EP has the right to terminate the Agreement in which case PERTAMINA EP shall incur no liabilities toward PARTNER.

 

    	 	12	 

     

    

 

	2.3.4	For the avoidance of doubt the handing over of Operating Area, Asset, and data from PERTAMINA EP to PARTNER shall not be interpreted by the Parties, in anyway and in any situation, as PERTAMINA EP’s “inbreng” or capital or equity or contribution into the Agreement.

 

------End of Section II------

 

    	 	13	 

     

    

 

SECTION III

WORK PROGRAM AND BUDGET

 

	3.1	PARTNER shall submit to PERTAMINA EP Work Program and Budget for the first Year and Manpower Planning no later than *** as of the Effective Date to obtain PERTAMINA EP’s written approval as the basis for the cost recovery calculation. If PARTNER fails to submit the first Year Work Program and Budget including Manpower Planning within *** since the Effective Date, then PERTAMINA EP shall have the right to terminate the Agreement in which case PERTAMINA EP shall incur no liabilities toward PARTNER.

 

	3.2	Notwithstanding clause 3.1 above, PARTNER shall, no later than *** prior to the beginning of each Year, prepare and submit the Work Program and Budget of Operating Cost for the Operating Area setting forth the Operations which PARTNER proposes to PERTAMINA EP for the approval to carry out during the ensuing Year.

 

	3.3	The Work Program shall be carried out by PARTNER in conducting Operations during the *** Firm Commitment years and budget in respect of each of such Firm Commitment years is as follows:

 

    	 	14	 

     

    

 

Firm Commitment

 

*** 

 

	3.4	PARTNER shall carry out the program pursuant to clause 3.3 above, since the Effective Date with the details of Firm Commitment as follows:

 

	 	a.	If during the *** Firm Commitment Year, PARTNER has not performed the required Work Program in such Firm Commitment year, PARTNER may propose a written request to PERTAMINA EP no later than *** before the end of such Firm Commitment year to carry forward the Work Program which are not performed to the next Firm Commitment year. If such request is approved by PERTAMINA EP, PARTNER shall complete such Work Program no later than the end of the subsequent Firm Commitment year;

 

    	 	15	 

     

    

 

	 	b.	If during the *** Firm Commitment Year, PARTNER performs less Work Program than required in such Firm Commitment Year, with prior written approval by PERTAMINA EP, PARTNER may propose to carry forward the Work Program which are not performed at the latest *** before the end of the of second Firm Commitment Year and shall complete such Work Program no later than the end of the third Firm Commitment Year;

 

	 	c.	If during the *** of Firm Commitment and/or the *** of Firm Commitment, PARTNER performs more work than required in such Firm Commitment year, PARTNER, may subtract such excess work from the work to be performed by PARTNER in the subsequent Firm Commitment years;

 

	 	d.	If there are activities at the *** of Firm Commitment which are not performed at the end of such year, PARTNER, no later than *** before the end of third Firm Commitment Year, may propose a written request to PERTAMINA EP to extend the period of the Firm Commitment. PERTAMINA EP shall have full discretion to approve or deny such request for extension.

 

	 	e.	in the event the PARTNER requests for an extension of the Firm Commitment period, PARTNER shall accompany such requests with:

 

    	 	16	 

     

    

 

	 	(i)	detailed explanation and sufficient evidences of the cause of such requests;

 

	 	(ii)	plan of additional activity that shall be performed up to the end of the proposed extension Firm Commitment period, if any;

 

	 	(iii)	detailed of the uncompleted Firm Commitment activities; and

 

	 	(iv)	An irrevocable and unconditional Bank Guarantee in the amount equal to *** Firm Commitment activities, with a period covering the whole proposed extension Firm Commitment period plus additional *** after the expiration of the proposed extension Firm Commitment period for claim and disbursement period of such Bank Guarantee.

 

	 	f.	Such approval or denial for the extension of Firm Commitment period proposal from PARTNER shall not be unreasonably withheld.

 

	 	g.	If PERTAMINA EP denied the PARTNER’s proposal, PERTAMINA EP shall have the right to terminate the Agreement and forfeit Bank Guarantee.

 

	 	h.	For each one year of extension of the Firm Commitment period which is approved by PERTAMINA EP, except if such extension is caused by the PARTNER’s Non Default, PARTNER shall pay to PERTAMINA EP a compensation for such extension in the amount of *** percent (***%) of the remaining value of Firm Commitment and shall extend the term of the Bank Guarantee as described in clause 7.3 of this Agreement. The payment mechanism of such compensation shall be determine in the approval letter for the Firm Commitment extension from PERTAMINA EP.

 

    	 	17	 

     

    

 

	3.5	In the event of any part or all of Firm Commitment of each Firm Commitment year, cannot be performed, then PARTNER may submit a replacement program of such Firm Commitment (“Substitution Program”) to PERTAMINA EP not later than *** before the end of each such Firm Commitment Year with a value is no less than the value of Firm Commitment be replaced. Such Substitution Program shall be performed by PARTNER after obtaining the prior written approval of PERTAMINA EP.

 

	3.6	In the event PARTNER is proposing Substitution Program in the third Firm Commitment Period or Extension of Firm Commitment period, then PARTNER shall propose Substitution Program simultaneously with the Extension of Firm Commitment period proposal which is at the latest *** prior to the expiration of third Firm Commitment and/or its extension thereof as set forth in clause 3.4.

 

	3.7	If the Substitution Program as stipulated in clause 3.7 of this Agreement cannot be carried out regardless the cause other than Force Majeure then the value of the Firm Commitment that cannot be carried out shall become the right of PERTAMINA EP as a compensation from PARTNER. In the event that PERTAMINA EP has been compensated, then PARTNER has been released from its Substitution Program obligation which compensation shall not be subject to cost recovery.

 

    	 	18	 

     

    

 

	3.8	It is recognized that in the event of emergencies or extraordinary circumstances which are not included as Force Majeure as specified in clause 12.1 of the Agreement, which interfering the Operation and requiring immediate actions including but not limited to blow out, work accident and environmental disturbance, either Party may take all actions it deems proper or advisable to protect its interests and those of its respective employees and any reasonable costs incurred shall be included in the Operating Costs to the extent such costs can be recovered by PERTAMINA EP under PERTAMINA EP KKS and applicable regulations governing cost recovery in Indonesia.

 

Appraisal of such reasonable
costs can be determined by independent appraisal (if necessary) taking into account causes of such emergencies or extraordinary
circumstances.

 

	3.9	Any failures in completing all of Firm Commitment including its Substitution Program (if any) may cause the termination of the Agreement and forfeiture of Bank Guarantee in accordance to Section XV hereof by PERTAMINA EP.

 

------End of SECTION III------

 

    	 	19	 

     

    

 

SECTION IV

RIGHTS AND OBLIGATIONS

 

	4.1	PARTNER shall:

 

	4.1.1	be solely and fully responsible for conducting Operations in accordance with terms and condition hereof, applicable prevailing laws and related regulations, including SKK MIGAS requirements and regulations;

 

	4.1.2	be responsible to obtaining any documents, permit or certificates from GOI, and bear all incurred cost which shall be treated as Operating Costs;

 

	4.1.3	subject to SECTION III herein above:

 

	 	a.	provide all necessary funds, purchase and/or lease all Asset required to carrying out the Work Program pursuant to the Budget;

 

	 	b.	provide such other funds for the performance of the Work Program including payment to Third Parties who perform service(s) as contractors or consultants. The selection or appointment of the contractors or consultants shall comply with the prevailing law and regulations, including but not limited to procurement regulations and policies issued by SKK Migas and/or PERTAMINA EP;

 

	 	c.	accept Operating Area, Asset and data in ‘as is’ and ‘where is’ condition and maintain the Operating Area including all Asset and data in Operating Area until termination of this Agreement.

 

    	 	20	 

     

    

 

	4.1.4	furnish all technical aid required for the performance of the Work Program pursuant to Budget;

 

	4.1.5	be responsible to prepare and to implement the Work Program, in a workmanlike manner in accordance with the appropriate scientific methods and the good engineering practices;

 

	4.1.6	obtain written approval from PERTAMINA EP in the event of: (i) any changes of Organization Structure as attached in Exhibit-IV; or (ii) formation of new Organization Structure to conduct Operations in the Operating Area pursuant to the provisions herein contained;

 

	4.1.7	implement PERTAMINA EP’s standard of Health, Safety and Environment (HSE) and corporate social responsibility in Operating Area, including but not limited to take the necessary precautions for protection of ecological systems, navigation and fishing and shall prevent pollution of the area, and the sea or rivers and the area surrounding the Operating Area as the direct result of Operations;

 

	4.1.8	unless determined otherwise by PERTAMINA EP, after expiration or termination of the Agreement, or surrender part of or the whole of the Operating Area, or abandon of any field, PARTNER shall remove all equipment and installations from the Operating Area in a manner as determined by PERTAMINA EP, and perform all necessary site restoration activities in accordance with the applicable GOI’s regulations to prevent hazards to human life and property of others or environment;

 

    	 	21	 

     

    

 

	4.1.9	include in the annual Budget of Operating Costs, an estimate of the anticipated abandonment and site restoration costs and its funding for all existing wells contributed to the production and all of new wells in the Work Program and Budget. All expenditures incurred by PARTNER in the abandonment and site restoration of all such wells shall be treated as Operating Costs in accordance with the Accounting Procedure attached hereto as Exhibit – III of the Agreement. Management of fund for site restoration as mentioned above is stipulated by PERTAMINA EP;

 

	4.1.10	include in requisite plan of development for each commercial discovery, the program and funding procedure for abandonment and site restoration activities. The amount of costs estimated and its funding to be required for this program shall be determined each Year in conjunction with the Budget of Operating Costs for the field development plan. All expenditures incurred by PARTNER shall be treated as Operating Costs in accordance with the Accounting Procedure attached hereto as Exhibit-Ill. Management of fund for site restoration as mentioned above shall be decided by PERTAMINA EP. For the avoidance of doubt, if the Agreement is ended by whatsoever reasons, PARTNER waives all of its rights to the abandonment and site restoration fund;

 

	4.1.11	submit to PERTAMINA EP all such original geological, geophysical, drilling, well, production and other data and final reports as it may compile from each activity conducted pursuant to the Work Program at the earliest time and the maximum *** following such data obtaining, processing and interpretation;

 

    	 	22	 

     

    

 

	4.1.12	give preference to goods and services which are produced in Indonesia or rendered by Indonesian nationals, provided such goods and services are offered at equally advantageous conditions with regard to quality, price and availability at the time and in the quantities required;

 

	4.1.13	comply with all applicable laws and regulations of Indonesia particularly which are applicable in PERTAMINA EP among others the Procurement regulations, gas sales regulations, employment regulations, and any other regulations related to PARTNER’s Operations hereunder and the policy of GOI or PERTAMINA EP’s shareholders on the security of domestic supply of Crude Oil and Natural Gas;

 

	4.1.14	in case Natural Gas is discovered in sufficient quantity to be developed in the judgment of PERTAMINA EP, PARTNER seek market opportunity for Natural Gas on behalf of PERTAMINA EP in order to firm up a commercial gas market;

 

	4.1.15	maintain regular reporting on the implementation of the Agreement and submit to PERTAMINA EP, including the operational, technical and financial phases, to account for the progress thereof;

 

	4.1.16	with its best effort maintain and furnish to PERTAMINA EP, data, records accounts and statements on such forms approved by PERTAMINA EP for the purpose of its own internal requirements;

 

    	 	23	 

     

    

 

	4.1.17	at all time maintain insurance on well control, properties (including but not limited to surface facilities), and third party liabilities through PERTAMINA EP pursuant to PERTAMINA EP’s policy. The costs of such insurance shall be included in Operating Costs.

 

The above mentioned insurance
shall be reported by PARTNER by submitting a copy of the insurance policy to PERTAMINA EP at the latest *** since
the Signing Date;

 

	4.1.18	in the event PARTNER is a Permanent Establishment (foreign established company), establish an authorized representative office in Jakarta, Indonesia, which fully authorizes to execute this Agreement;

 

	4.1.19	deliver Baseline Production as stipulated in Exhibit - IV of this Agreement. If within a certain period, the production of Crude Oil is lesser than the Baseline Production, PARTNER has to meet and to deliver such shortfall to PERTAMINA EP as a first priority from Incremental Oil. If incremental production is never achieved which results in termination of the Agreement, then the obligation shall be considered fulfilled;

 

    	 	24	 

     

    

 

	4.1.20	fulfill its obligation towards the supply of the domestic market in Indonesia (Domestic Market Obligation “DMO”), PARTNER agrees to sell and deliver to PERTAMINA EP a portion of the share of the Petroleum to which PARTNER is entitled pursuant to clause 5.1.4 and 5.2.3 of this Agreement of calculated for each Year as follows:

 

	 	i.	For Crude Oil:

 

	 	(a)	multiply the total quantity of Crude Oil produced from Operating Area by a fraction the numerator of which is the total quantity of domestic Crude Oil to be supplied and the denominator is the entire Indonesian production of Crude Oil of all petroleum companies;

 

	 	(b)	compute *** percent (***%) of total quantity of Crude Oil produced from the Operating Area;

 

	 	(c)	multiply the lower quantity computed, either under point (a) or point (b) by the resultant percentage of PARTNER’s share as provided under clause 5.1.3 of SECTION V hereof;

 

The quantity of Crude Oil calculated
under point (c) shall be the quantity to be supplied by PARTNER in any Year pursuant to this clause, and deficiencies, if
any, shall not be carried forward to any subsequent Year; provided that if for any Year the recover-able Operating Costs exceed
the difference of total sales proceeds of Crude Oil produced and sold hereunder as provided under SECTION V hereof, PARTNER
shall be relieved from this supply obligation for such Year;

 

    	 	25	 

     

    

 

The price at which such Crude
Oil be delivered and sold under this clause shall be *** percent (***%) of the price as determined under clause 5.1.2 hereof;

 

PARTNER shall not be obligated
to transport such Crude Oil beyond the Point of Export/Sale/Lifting but upon request of PERTAMINA EP, PARTNER shall assist
in arranging transportation and such assistance shall be without costs or risk to PARTNER;

 

Notwithstanding the foregoing,
for the period of *** starting the month of the first delivery of Crude Oil produced and sold from Operating Area, the price per
Barrel for the quantity of Crude Oil supplied to the domestic market from the Operating Area shall be equal to the price determined
in accordance with clause 5.1.2 of hereof for Crude Oil taken for the recovery of Operating Costs.

 

	ii.	For Natural Gas:

For every new reservoir of Natural
Gas discovered in the period following the Effective Date which can be produced commercially, fulfill its obligation towards the
supply of the domestic market (DMO) as set out below:

 

	 	(a)	Upon the discovery of a new reservoir of Natural Gas following the Effective Date, PARTNER shall notify PERTAMINA EP regarding such discovery;

 

	 	(b)	Following such notification as stipulated in point (a) above the Parties shall agree on the quantity of proven reserves of Natural Gas in the discovered reserves;

 

    	 	26	 

     

    

 

	 	(c)	Within the period of *** following agreement by the Parties on the quantity of proven reserves as stipulated in point (b) above, PERTAMINA EP shall first give the opportunity for domestic buyer to purchase such Natural Gas;

 

	 	(d)	No later than *** following the expiration of *** stipulated in point (c) above, PERTAMINA EP shall notify PARTNER concerning the condition of domestic market demand;

 

	 	(e)	In case that in the period as stipulated in point (d) above, PERTAMINA EP notifies PARTNER of the existence of domestic buyer, PERTAMINA EP and PARTNER shall enter into negotiations with such domestic buyer for the sale of the DMO quantity as stipulated in this clause. In case that within *** after PERTAMINA EP’s notice, such negotiations did not reach any result in a binding sale and purchase agreement, then PARTNER shall be obliged to report to PERTAMINA EP.

 

	 	(f)	In case that in the period as stipulated in point (d) above PERTAMINA EP does not notify PARTNER of the existence of domestic buyer or negotiation as stipulated in point (e) above did not reach any result in a binding sale and purchase agreement, PARTNER shall request the prior written approval of PERTAMINA EP to market the DMO quantity in the international market;

 

    	 	27	 

     

    

 

	 	(g)	The quantity of Natural Gas which PARTNER shall be obligated to supply for the consumption of domestic market (DMO) shall be calculated as follows:

 

	 	(i)	compute ***percent (***%) of the quantity of Natural Gas produced and sold from the Operating Area;

 

	 	(ii)	multiply the amount stipulated in point (g).l. with the percentage of PARTNER’s share provided under clause 5.2.3 hereof;

 

	 	(iii)	total amount of Natural Gas calculated pursuant to point (g).2. is the amount that shall be fulfilled by PARTNER in every Year during the terms of the Agreement;

 

The price at which such Natural
Gas be delivered and sold under this clause 4.1.21.ii.(g) shall be based on negotiation between PERTAMINA EP, PARTNER and
buyer which has been approved by GOI;

 

PARTNER shall not be obligated
to transport such Natural Gas beyond the Point of Export/Sale/Lifting but upon request of PERTAMINA EP, PARTNER shall assist
in arranging transportation and such assistance shall be without costs or risk of PARTNER;

 

Notwithstanding the clauses above,
PARTNER shall comply with GOI’s policy to fulfill at any time domestic demand;

 

    	 	28	 

     

    

 

		4.1.21	shall be obliged to periodically
carry out metering of Crude Oil production in the Operating Area and PERTAMINA EP has the right at all times, to request
PARTNER to execute such metering of Crude Oil production in the Operating Area;

 

		4.1.22	conduct community development
for the community surrounding the Operating Area;

 

		4.1.23	not to create, incur to allow
any lien or encumbrance on GOI’s and/or PERTAMINA EP’s Crude Oil and/or Natural Gas as stipulated hereunder
for any indebtedness, obligations or liabilities in whatsoever way, except only PARTNER’s net share after pass through
Point of Export/Sale/ Lifting as provided under SECTION V;

 

		4.1.24	severally be subject to and
pay the GOI all taxes pursuant to the Indonesian Tax Law and its implementing regulations;

 

		4.1.25	deposit cash amount in PERTAMINA
EP before the commencing of the First Annual Work Program in the minimum amount of *** United States Dollars (USD***) for
the requirements of PERTAMINA EP to meet any expenditure incurred to accelerate PARTNER work implementation in normal
conditions, with additional obligation to deposit cash amount upon cost required under clause 4.1.1. The amount of cash needed
for the purpose of obtaining such licenses will be determined by PERTAMINA EP and shall be paid by PARTNER. The
cash deposit which is not used will be returned to PARTNER after the termination of the Agreement. If there is any partial
or entire expenditures from the cash deposit during the Annual Work Program, then PARTNER shall refill cash amount, which
has been used up to the minimum amount of *** United States Dollars (USD***);

 

    	 	29	 

     

    

 

	4.1.26	conduct all activities related to management of production water to achieve zero discharge program pursuant to the prevailing laws and regulations;

 

	4.1.27	ensures and warrants the continuity of consortium agreement or joint venture agreement during Firm Commitment period, if during the submission of proposal for cooperation PARTNER is a consortium or a joint venture. In case of termination of the consortium agreement or the joint venture agreement during the Firm Commitment period, PERTAMINA EP has the right to terminate this Agreement and forfeit the Bank Guarantee; and

 

	4.1.28	accept the assignment and continue all agreements of goods/services that are already executed in the Operating Area from PERTAMINA EP.

 

	4.2	PERTAMINA EP shall:

 

	4.2.1	have the authority to market and sell all Crude Oil and Natural Gas produced and sold from the Operating Area, except for PARTNER’s entitlement of Crude Oil received by PARTNER after Point of Export/Sale/ Lifting for recovery of Operating Cost and PARTNER’s share as stipulated in of SECTION V of the Agreement;

 

	4.2.2	have the right to approve the Organizational Structure and the Manpower Planning;

 

	4.2.3	have title to all original data resulting from the Operations including but not limited to geological, geophysical, petrophysical, engineering, well logs and completion, status reports and any other data collected by PARTNER during the term of the Agreement;

 

    	 	30	 

     

    

 

	4.2.4	have the rights to assign all agreements of goods/services that have been already executed in the Operating Area to PARTNER;

 

	4.2.5	If PARTNER fail to fulfill its obligation as described in clauses 4.1.2, then PERTAMINA EP has the rights to use the deposited cash as stipulated in clause 4.1.26 to settle PARTNER’s obligation. For the avoidance of doubts, the action taken by PERTAMINA EP as stipulated in this clause, cannot be interpreted in any forms a transfer of liabilities of PARTNER.

 

	4.2.6	shall have the right to deduct any indebtness or other liabilities of PARTNER to PERTAMINA EP or damages that PERTAMINA EP has incurred due to PARTNER unsatisfactory performance of the Operations against amounts owed to PARTNER hereunder.

 

	4.2.7	In the event the Agreement is terminated, there are still PARTNER’s invoices remaining which may be paid by PERTAMINA EP under this Agreement and PARTNER has not settle its obligation to pay its workers, then PARTNER hereby grant power of attorney to PERTAMINA EP to settle PARTNER’s obligation to pay PARTNER’s workers’ salaries up to the amount of the remaining of such PARTNER’s invoices. For the avoidance of doubts, the action taken by PERTAMINA EP as stipulated in this clause, cannot be interpreted in any way as to create a partnership or other joint venture or association or a trust. The Agreement shall not be deemed or construed to authorize any Party to act as an agent, representative, or employee for any other Party for any purpose whatsoever except as explicitly set forth in the Agreement.

 

------End of SECTION IV------

 

    	 	31	 

     

    

 

SECTION V

RECOVERY OF OPERATING COSTS AND HANDLING
OF PRODUCTION

 

	5.1	CRUDE OIL

 

	5.1.1	PERTAMINA EP shall have the right to sell all of the Crude Oil produced and sold from the Operating Area, except for the Crude Oil of PARTNER’s entitlement stipulated hereunder;

 

	5.1.2	PARTNER will receive cost recovery of Operating Costs out of Crude Oil equal in value to such Operating Costs, which is produced and sold from the Operating Area and not used in the Operations subject to the terms and conditions stipulated in this Agreement. The right of PARTNER to recover Operating Costs referred to above shall be subject to the following:

 

	 	(i)	PARTNER may recover its Operating Cost up to a maximum amount of *** percent (***%) from Gross Production produced and sold and not used for Operations in each Year, and will be set out in the cost recovery of Operating Costs Procedure which is inseparable part hereof;

 

	 	(iii)	PARTNER shall only be entitled to recover Operating Costs to the extent such costs has been approved by PERTAMINA EP under the PERTAMINA EP KKS and prevailing regulations governing cost recovery for production sharing contractors in Indonesia;

 

    	 	32	 

     

    

 

	 	(iv)	PERTAMINA EP shall have the right to reconcile the actual Crude Oil production against the target production in each current Year. If it is proven based on the reconciliation result that the actual production target is below the target production in the respective current Year, PARTNER is not entitled to cost recovery.

 

	 	(v)	For the purposes of determining the quantity of Crude Oil delivered to PARTNER required to recover the Operating Costs, the weighted average price of all Crude Oil produced and sold from the Operating Area during the Year will be used.

 

	 	(vi)	PARTNER shall have no right over any portion of the Crude Oil produced if it is the same as or below the Baseline Production and sold from the Operating Area.

 

	5.1.3	For the Crude Oil produced from the Operating Area remaining after deducting the Operating Costs in accordance with clause 5.1.2 above and deducting *** percent (***%) of SKK Migas’s share under the PERTAMINA EP KKS, PARTNER shall be entitled to receive each Year, *** percent (***%) share which is taken from *** percent (***%) share of PERTAMINA EP under PERTAMINA EP KKS before corporate and dividend taxes of PERTAMINA EP’s share. The details of calculation of Cost Recovery allocation will be set out in the Oil Lifting Accounting Procedure which is inseparable part hereof; and

 

    	 	33	 

     

    

 

	5.1.4	Title to PARTNER’s entitlement of Crude Oil to recover the Operating Costs under clause 5.1.2 and PARTNER’s share un-der clause 5.1.4 shall pass to PARTNER after the Point of Export/Sale/Lifting. PARTNER shall be entitled to take and receive and freely export their Crude Oil.

 

	5.2	NATURAL GAS

 

	5.2.1	Any Natural Gas produced from the Operating Area to the extent not used in the Operations hereunder may be flared if the processing and utilization thereof is not economical. Such flaring shall be conducted in reference to the prevailing laws and regulations and to the extent that the Natural Gas is not required to effectuate the maximum economic recovery of the Petroleum by secondary recovery Operations, including repressuring and recycling;

 

	5.2.2	Should PERTAMINA EP and PARTNER consider that the processing and utilization of Natural Gas is commercial, in addition to that used in secondary recovery Operations, then the construction and installation of facilities for such processing and utilization shall be carried out pursuant to an approved Work Program and Budget. It is hereby agreed that all costs and revenues derived from such processing, utilization and sale of Natural Gas, shall be treated on a basis equivalent to that pro-vided for herein concerning Operations and disposition of Crude Oil, maximum *** percent (***%) shall be allocated for Operating Costs associated with the Natural Gas Operations of such Natural Gas in such Year. If, in any Year, the Operating Costs exceed the value of such Natural Gas allocated for the Operating Costs in such Year, then the unrecovered excess shall be recovered in succeeding Years;

 

    	 	34	 

     

    

 

	5.2.3	Of the sales proceeds of Natural Gas produced and sold from the Operating Area remaining after deducting Operating Costs in accordance with clause 5.2.2 above and deducting *** percent (***%) of SKK Migas’s share under PERTAMINA EP KKS, PARTNER shall be entitled to receive its share each Year, ** *percent (***%) which is taken from *** percent (***%) share of PERTAMINA EP under PERTAMINA EP KKS before corporate and dividend taxes of PERTAMINA EP’s share, after the Point of Export/Sale/Lifting;

 

	5.2.4	In the event, however, PARTNER considers that the processing and utilization of Natural Gas is not economical, then PERTAMINA EP may choose to take and utilize such Natural Gas that would otherwise be flared in accordance with clause 5.2.1, all costs of taking and handling to be for the sole account and risks of PERTAMINA EP.

 

------End of Section V------

 

    	 	35	 

     

    

 

SECTION VI 

TRANSFER OF RIGHTS AND OBLIGATIONS
AND CHANGE OF CONTROL

 

	6.1	PARTNER may only transfer its rights and obligations of this Agreement to a Third Party (“Assignment”) or make Change of Control, by first fulfilling requirements set as follows:

 

	 	a.	PARTNER shall have completed all Firm Commitments as stipulated in clause 3.3 of hereof; and

 

	 	b.	PARTNER submits a prior written proposal to PERTAMINA EP of such Assignment or Change of Control to obtain PERTAMINA EP’s written approval; and

 

	 	c.	PERTAMINA EP has given its approval for PARTNER’s proposal as stipulated in clause 6.1 point b above. If within *** after receiving PARTNER’s proposal as stipulated in clause 6.1 point b, PERTAMINA EP has not responded to PARTNER’s proposal, then PERTAMINA EP shall be deemed to have denied;

 

	6.2	In the event such Assignment or Change of Control is given to its Affiliate and/or PARTNER’s existing shareholder(s), then PARTNER shall give a prior written notice at the latest *** to PERTAMINA EP before such Assignment and/or Change of Control is effective.

 

	6.3	PARTNER has furnished a written guarantee ensuring that the transferee shall abide upon all terms, conditions and all obligations which has been vested and which will arise in the future in accordance with the Agreement.

 

    	 	36	 

     

    

 

	6.4	In the event that after the Assignment in accordance with clause 6.1, there is more than one party holding the rights and obligations as PARTNER hereunder, then, for the conduct of the Operations, one of the party shall be appointed as operator. The appointment of such operator shall obtain PERTAMINA EP’s prior written approval.

 

------End of SECTION VI------

 

    	 	37	 

     

    

 

SECTION VII 

BANK GUARANTEE AND CASH IN ADVANCE

 

BANK GUARANTEE:

 

	7.1	PARTNER shall deliver to PERTAMINA EP an irrevocable and unconditional Bank Guarantee, in the format as per Exhibit - VI, to guarantee the execution of Firm Commitment, in the amount of ***% (***percent) from the total value of Firm Commitment or USD ***  (*** United States Dollar), whichever amount is higher.

 

Any cost incurred as a result
of the issuance of the Bank Guarantee and any of its extensions, if any, shall be borne solely by PARTNER and shall not
be treated as recoverable cost.

 

	7.2	Bank Guarantee submitted by PARTNER to PERTAMINA EP shall be valid, registered in and administered by Bank or issued by Lembaga Pembiayaan Ekspor Indonesia (LPEI)/Indonesia Eximbank.

 

In the event of such Bank Guarantee
issued by a bank, the issuing bank of such Bank Guarantee shall be an Indonesian state owned bank, or private bank domiciled or
licensed in Indonesia, and have Capital Adequacy Ratio (CAR) above average pursuant to the regulation of Central Bank of Indonesia.

 

	7.3	Such Bank Guarantee shall be effective for ***Agreement Years plus additional *** for claim and disbursement period of such Bank Guarantee.

 

    	 	38	 

     

    

 

	7.4	Notwithstanding clause 3.4 point e (iv), such Bank Guarantee as stipulated in clause 2.3.1 hereunder shall be delivered to PERTAMINA EP no later than *** as of the Signing Date. If PARTNER does not deliver any of the Bank Guarantee nor its extension within the determined period, then PERTAMINA EP shall have the right to terminate the Agreement as stipulated in SECTION XV hereof.

 

	7.5	In case that such Bank Guarantee is not valid pursuant to Indonesian banking regulations, PARTNER shall deposit a substitution cash, in the same amount with the Bank Guarantee that should have been delivered, to PERTAMINA EP’s account no later than *** since such Bank Guarantee is declared not valid by the issuing bank. If PARTNER fails to deposit a substitution cash no later than *** since such Bank Guarantee is declared not valid by the issuing bank, PERTAMINA EP shall have the right to terminate the Agreement and the right to claim damages from PARTNER pursuant to this Agreement and to the prevailing laws and regulations. PARTNER shall have no right to claim any reimbursement for any expenses incurred or to claim any damages caused by the termination of this Agreement.

 

	7.6	Bank Guarantee or substitution cash (with no interest incurred) shall be returned once PARTNER has completed the entire Firm Commitment.

 

	7.7	PERTAMINA EP shall have the right to forfeit such Bank Guarantee or a substitution cash for the interest of PERTAMINA EP in case: (i) PARTNER does not fulfill its obligation in connection with the Firm Commitment regardless PERTAMINA EP exercises its right to terminate this Agreement or not pursuant to clause 3.4 or clause 3.11 of the Agreement; or (ii) when PARTNER elects to surrender its rights and be relieved of its further obligations stipulated in the Agreement under clause 15.3 of this Agreement; or (iii) in case of any termination of this Agreement under clause 15.6, clause 15.7 of this Agreement.

 

    	 	39	 

     

    

 

	7.8	In the event PERTAMINA EP decides to forfeit the Bank Guarantee without terminate the Agreement as stipulated in clause 7.7 point (i), then PARTNER, no later than *** since the forfeiture of the Bank Guarantee by PERTAMINA EP, shall submit a Bank Guarantee replacement to PERTAMINA EP in the amount of ***% from the remaining value of uncompleted Firm Commitment, with a period covering the whole proposed extension Firm Commitment period plus additional *** after the expiration of the proposed extension Firm Commitment period for claim and disbursement period of such Bank Guarantee. PERTAMINA EP have the rights to terminate the Agreement if PARTNER fail to submit the Bank Guarantee replacement as stipulated in this clause.

 

	7.9	CASH IN ADVANCE:

To ensure the financial continuity
of the implementation of Firm Commitment as stipulated in clause 3.3 of the Agreement, PARTNER shall provide the funds as
Cash in Advance which is deposited in stage into the separate account on behalf of PARTNER in bank which shall be domiciled
in Indonesia, preferably an Indonesian State owned Bank.

 

Copies of bank statement shall
be submitted to PERTAMINA EP no later than the 10th of each month every month from the Bank where the account
of Cash in Advanced is opened

 

	7.10	Deposit of Cash in Advance as stipulated in clause 7.8 above for the first year Firm Commitment shall be made in the same amount in *** stages with each stage of *** percent (***%) of the value of first year Firm Commitment as follows:

 

    	 	40	 

     

    

 

	 	a.	the first deposit is not later than *** after the Effective Date;

 

	 	b.	the second deposit is not later than *** after the Effective Date;

 

	 	c.	the third deposit is not later than *** after the Effective Date;

 

	 	d.	the fourth deposit is not later than *** after the Effective Date.

 

The amount of Cash in Advance
shall be calculated based on the value of Firm Commitment. However, if the Work Program & Budget and AFE have been already
approved therefore the amount of Cash in Advance shall be calculated from the Work Program & Budget and AFE.

 

	7.11	Deposit of Cash in Advance as stipulated in clause 7.8 above for the second and third years of Firm Commitment shall be made in the same amount in *** stages with each stage of ***  (***%) of the value of second or third year Firm Commitment as follows:

 

	 	a.	the first deposit is no later than the commencement of *** Firm Commitment Year;

 

	 	b.	the second deposit is no later than *** after the commencement of *** Firm Commitment Year;

 

	 	c.	the third deposit is no later than *** after the commencement of *** Firm Commitment Year;

 

	 	d.	the fourth deposit is no later than *** after the commencement of *** Firm Commitment Year.

 

    	 	41	 

     

    

 

	7.12	PERTAMINA EP and PARTNER each shall be obliged to appoint three (3) persons as the representative signatory of checks/giro for withdrawal Cash in Advance. In addition, check/giro for withdrawal Cash in Advance shall be signed jointly by one (1) person appointed by PERTAMINA EP and one (1) person appointed by PARTNER.

 

	7.13	No earlier than ***after the submission of the Cash In Advance, PARTNER may demand for withdrawal of Cash In Advance through the written request to PERTAMINA EP which shall be completed with attachment of the program to utilize such fund in relation to the implementation of the Firm Commitment and evidences which shall be consist of AFE approval (if required) and any evidence of implementation of the work including but not limited to contract and/or work order/purchase order. PERTAMINA EP no later than *** shall give the approval to such submission of Cash In Advance after PARTNER has submitted all the requirements as stated herein. In the event that PERTAMINA EP grants such approval more than *** and PARTNER has paid to the Third Party with regard to the work as included in Firm Commitment as evidenced by providing copy of payment confirmation, thus the subsequent PARTNER’s obligation in relation to the submission of Cash In Advance shall be calculated to such Third Party settlement.

 

PARTNER shall maintain
minimum balance remaining in the Cash in Advance account amounted to *** United States Dollars (USD***) until PARTNER completed
all Firm Commitment.

 

    	 	42	 

     

    

 

	7.14	PERTAMINA EP agrees to give consent upon the withdrawal of remaining amount of Cash in Advance and closing such account by PARTNER after all of the Firm Commitment has been completed by PARTNER or in the event PARTNER elects to surrender its rights and be relieved of its further obligations in accordance to clause 15.3 of SECTION XV of the Agreement.

 

	7.15	If at each time specified above, PARTNER does not fulfill its obligations pursuant to clause 7.9 and clause 7.10 above, then PERTAMINA EP shall have the right to terminate the Agreement and without relieving PERTAMINA EP’s other rights pursuant to the Agreement hereto and by law, except in terms of the total deposit of Cash In Advance has complied with the obligation in relation with Firm Commitment after taking into account with the PARTNER’s payment to the Third Party pursuant to clause 7.13 above

 

------End of SECTION VII------

 

    	 	43	 

     

    

 

SECTION VIII

PAYMENTS

 

	8.1	All Payments to be made pursuant to the Agreement shall be made in United States Dollar currency at a bank to be designated by the Party receiving such payment, unless otherwise agreed by the Parties or stipulated by rules and regulation to make such payments in other currencies.

 

	8.2	Any payments made pursuant to the Agreement, unless specified otherwise, shall be made within *** after PERTAMINA EP received the invoice with all the required supporting documents.

 

	8.3	Related to the PARTNER’s obligation to deliver Baseline Production (NSO) pursuant to clause 4.1.19, for the payment of Baseline Production (NSO) shortfall the following provisions shall apply:

 

	 	a.	In the event the Incremental Oil production is larger than Baseline Production, then PARTNER shall pay to PERTAMINA EP the entire Baseline Production shortfall;

 

	 	b.	In the event the Incremental Oil production is less than Baseline Production, then PARTNER shall settle Baseline Production shortfall to PERTAMINA EP minimum of *** percent (***%) of Incremental Oil production. Such settlement of Baseline Production shortfall shall be fully settled within *** period as of the first Incremental Oil production occurred;

 

    	 	44	 

     

    

 

	 	c.	In the event that period as describe in point-b is continuing nevertheless PARTNER’s Baseline Production shortfall in point-b has not been fully settled, then PARTNER shall pay Baseline Production shortfall to PERTAMINA EP minimum of *** percent (***%) of Incremental Oil production. The settlement of Baseline Production shortfall shall be applicable for the subsequent *** after the period as described in point-b occurred;

 

	 	d.	In the event the Baseline Production shortfall in point-c above has not been fully settled, thus PARTNER has the right to terminate this Agreement pursuant to clause 15.16 of the Article XV of this Agreement and PARTNER shall be released from the obligation of Baseline Production shortfall.

 

------End of SECTION VIII------

 

    	 	45	 

     

    

 

SECTION IX 

ASSETS

 

	9.1	Asset which right to manage is transferred from PERTAMINA EP to PARTNER and/or the Asset purchased by PARTNER pursuant to the Work Program and Budget and has landed in Indonesia customs territory, is the property of PERTAMINA EP qq. GOI.

 

	9.2	PERTAMINA EP may extend, but no obligation, its import facilities to PARTNER if PARTNER purchases or leases Third Parties Asset from outside Indonesian customs territory for the purpose of Operation.

 

	9.3	PARTNER shall maintain such Asset in good conditions during the term of the Agreement, properly recording such Asset and periodically reporting the Asset status to PERTAMINA EP.

 

	9.4	In the event of bankruptcy and/or termination of the Agreement regardless of any cause, PERTAMINA EP is not obliged for the whereabouts and/or the conditions of Asset which are not listed as the property of GOI and/or PERTAMINA EP. The whereabouts and/or the conditions of Asset of PARTNER whether loaned or rented from Third Party, shall be solely borne by PARTNER.

 

------End of SECTION IX------

 

    	 	46	 

     

    

 

SECTION X 

GOVERNING LAW AND SETTLEMENT
OF DISPUTES

 

	10.1	This Agreement is governed and subject to the laws and regulations of the Republic of Indonesia.

 

	10.2	Disputes, if any, arising between PERTAMINA EP and PARTNER relating to the implementation of the Agreement and/or interpretation of any clauses of the Agreement, PERTAMINA EP and PARTNER will make every effort to settle amicably any dispute arising therefrom.

 

	10.3	Any disputes between PERTAMINA EP and PARTNER which cannot be settled amicably within ninety (90) Working Days as of the date of a written request to hold deliberation for amicable settlement, shall be submitted to the District Court pursuant to domicile of Head Office of PERTAMINA EP.

 

------End of SECTION X------

 

    	 	47	 

     

    

 

SECTION XI 

CONFIDENTIALITY

 

	11.1	PARTNER shall obtain written permit of GOI through PERTAMINA EP pursuant to prevailing laws and regulations to utilize any data relating to Crude Oil and Natural Gas other than data from the Operations Area to utilize including but not limited to geological, geophysical, petrophysical, engineering, well logs and completion, status reports and any other technical data including interpretations prepared and gathered in connection with, utilized in, and/or obtained pursuant to the Agreement (hereinafter referred to as “Confidential Information”).

 

	11.2	PARTNER and all of its officers, directors, employees, Affiliates, advisors, agents, PARTNERs, legal counsel and representatives shall keep in strict confidence all of the Confidential Information and any information related to the Agreement and shall not disclose or permit to be disclosed any Confidential Information to any other person, firm, company or body, without obtaining the prior written consent from PERTAMINA EP.

 

	11.3	Without the prior written consent of PERTAMINA EP, PARTNER shall not use any Confidential Information and any information related to the Agreement for any purpose other than as provided in the Agreement, unless required to be disclosed by applicable law or court order.

 

	11.4	Confidential Information shall not include data or information which has becomes part of the public domain.

 

	11.5	This provisions of this SECTION XI shall bind the Parties as of the Signing Date and shall remain in force after the termination of the Agreement.

 

------End of Section XI------

 

    	 	48	 

     

    

 

SECTION XII 

FORCE MAJEURE

 

	12.1	Force Majeure means any events beyond the control of the Parties and not caused by negligence or omission of the affected Party and was not reasonably foreseeable and beyond the control of the parties to resolve which resulted from whatsoever cause which shall include but not limited to: fire, earthquake, hurricane, heavy rains, flood and other acts of God, insurrection, explosion, riots, war, blockade, labor conflict, mass strike, epidemics, acts of GOI or changes in law or regulation, that affect directly to the implementation of the Agreement including termination of the PERTAMINA EP’s KKS by GOI. Lack of access to fund or lack of fund is not regarded as a Force Majeure.

 

	12.2	If any Party is unable to perform or fulfill its obligations hereunder, wholly or in part, by reason of Force Majeure, then the affected Party must take all necessary actions to minimize any losses that might incur during the event of Force Majeure.

 

	12.3	As soon as practicable but in no case shall be no later than *** from the time should have been known or from the time of the Force Majeure occurs, the affected Party shall serve a notice in writing to the non-affected Party describing such Force Majeure which provides a good faith estimate of duration of the Force Majeure and to the time that performance is expected to be resumed. Within *** after receiving of such notice, the non-affected Party shall respond in writing. In the absence of such response within the ***, the non-affected Party is deemed accepting such Force Majeure. Disputes, if any, arising between the Parties relating to the such Force Majeure event, then such dispute shall be resolved pursuant to SECTION X hereunder.

 

    	 	49	 

     

    

 

	12.4	If for temporary period the Operations are delayed, curtailed or prevented by such causes, then the term of this Agreement can be extended for a period equal to the period thus involved.

 

	12.5	If a Force Majeure event take place or predicted to take place more than ***, then The Parties may declare such Force Majeure as permanent and The Parties may terminate the Agreement. All rights and obligations incurred prior to Force Majeure happened must be fulfilled.

 

	12.6	If a condition or event occurs other than Force Majeure during the Firm Commitment Year(s) which:

 

	 	a.	is beyond the reasonable control of PARTNER; and

 

	 	b.	adversely affects the performance by PARTNER of its obligations and commitments under clause 3.2 of this Agreement,

 

then PARTNER may propose,
and PERTAMINA EP may approve, having considered all relevant factors such as permitting issues, that the relevant condition/event
constitute a PARTNER non-default. Any event which is approved by PERTAMINA EP as a PARTNER non-default will
constitute a “Operation Obstacle”.

 

------End of SECTION XII------

 

    	 	50	 

     

    

 

SECTION XIII 

INDEMNIFICATION

 

	13.1	PARTNER shall, at all times defends, save and hold harmless and indemnify PERTAMINA EP from any actions, claims, proceedings, costs, charges, expenses (including but not limited to reasonable attorney’s fees, court costs and expenses incurred in defense of PERTAMINA EP and its Affiliates); arising out of or in connection with the performance of this Agreement or non-performance by PARTNER of its commitments and obligations hereunder, including problems or disputes arising between PARTNER and Third Party including its covertures, shareholder, affiliates, Partners, employee including with GOI institution or arising between share holder and PARTNER’s company organization which in the settlement process: (i) involving PERTAMINA EP including its employee in any capacity in such dispute; (ii) may be indicated to create any material or immaterial damage to PERTAMINA EP as evidenced by any summons from the authorized GOI institution; (iii) occurs claims and demands whatsoever which may be made or brought against PERTAMINA EP or its Affiliates by any Third Party including PARTNER’s shareholder, covertures, employees regarding with the performance of the Agreement.

 

    	 	51	 

     

    

 

	13.2	PARTNER at any time shall indemnify PERTMINA EP of any responsibilities whatsoever that may arise from the performance of Operations, for the avoidance of doubts, PARTNER declare that any approval from PERTAMINA EP shall not be deemed as act of takeover or involvement by PERTAMINA EP in the performance of Operations by PARTNER.

 

	13.3	Putting aside the clause 15.4 of this Agreement, in the event that PARTNER violates the clause 13.1 and 13.2 hereunder, PERTAMINA EP shall have the right to terminate the Agreement at once.

 

------End of SECTION XIII------

 

    	 	52	 

     

    

 

SECTION XIV 

EMPLOYMENT AND TRAINING OF INDONESIAN
PERSONNEL

 

	14.1	PARTNER shall employ Indonesian personnel and undertake the schooling and training of Indonesian personnel for labor and staff positions including administrative and executive management positions with the Indonesian personnel shall be arrange for agreed number by the Parties and PARTNER shall report to PERTAMINA EP at least once in a year.

 

	14.2	Costs and expenses of schooling and training Indonesian personnel shall be included in Operating Costs.

 

------End of SECTION XIV------

  

    	 	53	 

     

    

 

SECTION XV

TERMINATION OF THE AGREEMENT

 

	15.1	The Parties hereby waive the provisions of Articles 1266 paragraph 2, 3, and 4 of the Indonesian Civil Code to the extent it requires a court decision for the termination of this Agreement.

 

	15.2	PARTNER shall have no right to terminate the Agreement until the PARTNER has satisfactorily completed its Firm Commitment, except by provisions as stipulated in clause 15.3 hereunder.

 

	15.3	If in the *** Firm Commitment Year period, PARTNER has not completed all of its Firm Commitment pursuant to SECTION III and after consultation with PERTAMINA EP, PARTNER selects to surrender its rights and be relieved of its further obligations hereunder (not including PARTNER’s liability towards any Third Party) may deliver a *** prior written notice, then PERTAMINA EP shall have the right to forfeit the Bank Guarantee pursuant to SECTION VII, for the interest of PERTAMINA EP and to terminate the Agreement without any obligations toward PARTNER.

 

	15.4	If at any time during the term of this Agreement, PARTNER has failed to perform as a reasonable and prudent PARTNER or has failed to fulfill any of its obligations hereunder, PERTAMINA EP shall have the right to issue to PARTNER “Performance Deficiency Notice”. Said notice shall describe the performance deficiencies of PARTNER hereunder and the period given by PERTAMINA EP to PARTNER to remedy the deficiencies.

 

    	 	54	 

     

    

 

Upon receipt of the Performance
Deficiency Notice, PARTNER shall immediately remedy the deficiencies describe in said Performance Deficiency Notice within
the period as stated in said notice. Should the PARTNER fail to remedy the deficiencies within the specified period as stated
in the notice or the Parties fail to agree on an extension of the period of time in which PARTNER can remedy the deficiencies,
the elapse of such time shall become a conclusive evidence of PARTNER’s breach. PERTAMINA EP, with prior written
notice to PARTNER, shall have the right to terminate this Agreement effectively as of the date of such notice. Therefore
PARTNER shall immediately relinquish the Operation Area to PERTAMINA EP.

 

	15.5	PERTAMINA EP may terminate the Agreement if:

 

	 	a.	PARTNER fails to deliver Bank Guarantee in accordance with clause 2.3.1, clause 7.1 and clause 7.4 of the Agreement; or

 

	 	b.	PARTNER submits an invalid Bank Guarantee as stated in clause 7.5 of the Agreement; or

 

	 	c.	PARTNER made Assignment any rights and obligations hereunder and/or made Change of Control not in accordance the conditions set forth in clause 6.1 of the Agreement. If such assignment and Change of Control occurred during Firm Commitment period, PERTAMINA EP shall have the right to forfeit the Bank Guarantee.

 

	15.6	In the event PARTNER files or is filed for bankruptcy and/or suspension of payment, PERTAMINA EP shall have the right to terminate the Agreement with immediate effect by serving a written notice of termination to PARTNER and PERTAMINA EP is entitled to forfeit Bank Guarantee, if any.

 

    	 	55	 

     

    

 

	15.7	In the event PERTAMINA EP denied PARTNER’s request to carry forward the Firm Commitment as per clause 3.4 point a or denied the request for an extension of the Firm Commitment period as per clause 3.4 point d, PERTAMINA EP shall have the right to terminate the Agreement and to forfeit the Bank Guarantee

 

	15.8	In the event the PARTNER fails to perform all of its Firm Commitment including the Substitution Program (if any), therefore PERTAMINA EP shall have the right to terminate this Agreement and forfeit the Bank Guarantee.

 

	15.9	if in the second Firm Commitment Year PARTNER only completed the carried forward first Firm Commitment Year Firm Commitment and fails to perform the second Firm Commitment Year Firm Commitments, PERTAMINA EP shall have the right to terminate the Agreement and to forfeit the Bank Guarantee:

 

	15.10	If PARTNER fails to deposit Cash in Advance as stipulated in clause 7.10 and 7.11 hereunder, then PERTAMINA EP shall have the right to terminate the Agreement and to forfeit the Bank Guarantee.

 

	15.11	With regard to the discovery of Natural Gas within three (3) Firm Commitment Years, or the extension thereto, which is considered economical for processing and utilization, PERTAMINA EP may give the maximum of twenty two (2) Year as of the approval of PERTAMINA EP to be developed. The of two (2) Year period is approved in order to obtain potential gas buyer(s) and to make POD. In the event that after f the two (2) Year expired there is no available potential gas buyer, and no economical Crude Oil production, then PERTAMINA EP shall have the right to terminate the Agreement.

 

    	 	56	 

     

    

 

	15.12	If PARTNER has completed the Firm Commitment, and PERTAMINA EP considered that there is no commercial discovery, PERTAMINA EP shall have the right to terminate the Agreement.

 

	15.13	If there is any issues between PARTNER and Third Party including its co-ventures, shareholders, Affiliates, PARTNERs, employees, including GOI institution or arising between shareholders and PARTNER’s company organization that cause PERTAMINA EP including its shareholders, directors or its personnel being involved in such issues, PERTAMINA EP shall have the right to terminate this Agreement.

 

	15.14	PERTAMINA EP shall have the right to terminate the Agreement and to forfeit the Bank Guarantee if during the Firm Commitment period PARTNER fails to fulfill its obligations hereunder.

 

	15.15	At any time following the end of Firm Commitment period, if in the opinion of PARTNER circumstances do not warrant continuation of Operations, PARTNER may, by giving a written notice to that effect to PERTAMINA EP, and after consultation with PERTAMINA EP, relinquish its right and be relieved of its obligation pursuant to this Agreement, except such rights and obligations related to the period prior to such relinquishment.

 

	15.16	In the event the Baseline Production shortfall of PARTNER pursuant to clause 8.3 point-d Section VIII of the Agreement has not been fully settled, then PERTAMINA EP shall have the right to terminate this Agreement without approval from or interference by the court and without prejudice to PERTAMINA EP’s other right including the right to obtain compensation from and other remedies against PARTNER as provided in the Agreement and/or by laws, and PARTNER shall be released from the obligation of Baseline Production shortfall.

 

    	 	57	 

     

    

 

	15.17	In case of any termination of the Agreement pursuant to SECTION XV of this Agreement, PARTNER shall have no right to claim for damages and/or compensation in whatsoever form toward PERTAMINA EP and PERTAMINA EP shall only be obliged to satisfy PARTNER’s right arisen, which has been approved by PERTAMINA EP, prior to such termination.

 

	15.18	Subject to clause 9.1 of this Agreement, in the event of termination of the Agreement, all assets including but not limited to the implementation of Firm Commitment, whether the cost has or has not been recovered, remains owned by PERTAMINA EP and PARTNER can not demand any losses and/or compensation to PERTAMINA EP.

 

	15.19	Subject to clause 18.6 of this Agreement, in the event of expiration of the Agreement as specified under clause 2.2 of this Agreement, settlement for the rights and obligations herein, if any, shall be completed in good faith by the Parties no later than *** after the termination date of the Agreement.

 

	15.20	In the event of any audit finding by a GOI institution regarding the rights and obligations of Parties after *** of the termination of this Agreement, then the Party which suffer loss may seek settlement as provided in SECTION X of the Agreement.

 

    	 	58	 

     

    

 

	15.21	The termination of the Agreement based on SECTION XV does not waive a Party right to claim damages and take any other available legal actions against the other Party pursuant to this Agreement and/or prevailing laws and regulations.

 

------End of SECTION XV------

 

    	 	59	 

     

    

 

SECTION XVI

BOOKS AND ACCOUNTS AND AUDITS

 

	16.1	BOOKS AND ACCOUNTS

 

PARTNER shall be responsible
for keeping proper and complete books and accounts reflecting all Operating Costs consistent with customary petroleum industry
practices and procedures as described in Exhibit-Ill attached hereto. Should there be any inconsistency between the provisions
of SECTION V of the Agreement and the provisions of Exhibit-Ill, then the provisions of SECTION V of the Agreement shall prevail.

 

	16.2	AUDITS

 

	 	16.2.1 	PERTAMINA EP shall have the right to inspect and audit PARTNER’S books and accounts relating to the Agreement for any Year, or at any time, if necessary. Any exception must be made in writing within *** following the completion of such audit. PERTAMINA EP may require PARTNER to engage a reputable independent public accountant to audit, in accordance with generally accepted auditing standards, the PARTNER’s books and accounts relating to the Agreement for any Year or perform such auditing procedures as deemed appropriate by PERTAMINA EP. A copy of the independent public accountant’s report or any exceptions shall be forwarded to PERTAMINA EP within *** following the completion of such audit. The costs related to the engagement of such independent accountants shall be included in Operating Costs.

 

    	 	60	 

     

    

 

	 	16.2.2 	The audit result as stipulated in clause 16.2.1 above is final after it has been agreed by the Parties’ representative in audit close out meeting. PARTNER shall settle all findings in such final audit despite the Agreement has ended for whatsoever reason.

 

------End of SECTION XVI------

 

    	 	61	 

     

    

 

SECTION XVII

NOTICES AND CORRESPONDENCES

 

Any notices required or given by
either Party to the other shall be deemed to have been delivered when properly acknowledged for receipt by the receiving Party.

 

All such notices shall be addressed
to:

 

PT PERTAMINA EP

Menara Standard Chartered 12th Floor

Jalan Prof. Dr. Satrio No. 164

Jakarta 12950, Indonesia

	Telephone	: 62-21- 57893001 
	Fax 	: 62-21- 57946333
	Attn.	: President Director

 

PT GREEN WORLD NUSANTARA

Dea Tower 1, 11th
Floor, Suite 1103

Kawasan Mega Kuningan

Jl. Mega Kuningan Barat

Kav. E 4.3 No. 1-2

Jakarta, Indonesia

	Telephone	: +62 21 576 8888
	Fax	: +62 21 576 1009
	Attn. 	: Direktur Utama

 

Either Party may: (i) delegate
to its sub-ordinate for any correspondences, (ii) substitute or (iii) change such address on written notice thereof to the other.

 

------End of Section XVII------

 

    	 	62	 

     

    

 

SECTION XVIII

OTHER PROVISIONS

 

	18.1	PERTAMINA EP’s approval and stipulation in accordance with its authorities in this Agreement shall not be interpreted as any waiver or derogation of PARTNER’s responsibility or taking over by or involvement of PERTAMINA EP in the PARTNER’s responsibilities in conducting the Operations. For the avoidance of doubts, notwithstanding any provisions set forth otherwise in this Agreement, PARTNER shall remain to be fully liable for the performance of Operations in the Operating Area.

 

	18.2	Handing over of Operation Area to and from PARTNER shall be conducted with berita acara serah terima as stipulated in Exhibit - VII hereunder.

 

	18.3	The Agreement constitutes the entire agreement between PERTAMINA EP and PARTNER concerning the subject matter hereof. All previous documents, undertakings and agreements, whether verbal, written or otherwise, between the Parties prior to this Agreement, except all of administrative documents of PARTNER as required when PARTNER submitted a cooperation proposal for the purpose of this Agreement, hereby declared void and shall not affect or modify any of the terms or obligations set forth in the Agreement, including the terms of any of the Exhibits of the Agreement.

 

	18.4	In the event that there is a straddling of structure in the Operating Area which exceeds the borders of the Operating Area, then:

 

	 	a.	If the borders of such straddling are in the contract area of another Cooperation Contract, then PERTAMINA EP shall have the right to negotiate with the relevant contractor for the possibility of unitization;

 

    	 	63	 

     

    

 

	 	b.	If the borders of straddling are in an open area, then PERTAMINA EP shall consult with SKK Migas in relation to the solution of such matter.

 

	 	c.	If the borders of straddling are in an Operating Area of PARTNER and the other business partner’s (KSO/Technical Assistance Contract) of PERTAMINA EP, then PERTAMINA EP shall determine the entitlement or portion for each of those partners in term of unitization within the operating area.

 

	18.5	PERTAMINA EP and PARTNER agree that all of the percentages as stipulated in SECTION V of the Agreement have been determined on the assumption that PARTNER is subject to corporate and dividends taxes on profits after tax under Indonesian Income Tax Law and is not sheltered by any tax treaty to which the GOI has become a party.

 

	18.6	In the event that, any PARTNER’s portion in the Agreement becomes subject to a tax treaty or new Indonesian Income Tax Law, then all of the percentages appearing in SECTION V as applicable only to the portion of PARTNER in the Agreement so affected by a tax treaty and/or the new Indonesian Income Tax Law shall be revised in order to maintain the same net split for PARTNER in the Agreement, due to basically PARTNER’s net split hereunder shall be *** percent (***%) net split after corporate and dividend taxes for Crude Oil before DMO pursuant to SECTION IV of the Agreement and *** percent (***%) net after corporate and dividend taxes for Natural Gas before DMO pursuant to SECTION IV of the Agreement.

 

    	 	64	 

     

    

 

	18.7	Value Added Tax, Import Duties, Personal Income Tax for PARTNER shall have equal treatment to PERTAMINA EP as provided under KKS between PERTAMINA EP and SKK Migas, and/or other related regulations, and the implementation.

 

	18.8	In the event that the Agreement terminates because whatsoever cause including the expiration of the Agreement, PARTNER shall have no right to the unrecovered amount of Operating Costs except for the cost recovery of the Operating Cost which PARTNER has already entitled before the termination of the Agreement and has fulfilled the requirements set out in SECTION V and Exhibit III of this Agreement and has been approved by PERTAMINA EP.

 

	18.9	The rights, obligations and liabilities of The Parties hereunder shall be individual, not jointly or collectively. The Parties do not intent to create or to construe a partnership or other joint venture or association or a trust. The Agreement shall not be deemed or construed to authorize any Party to act as an agent, representative, or employee for any other Party for any purpose whatsoever except as explicitly set forth in the Agreement.

 

	18.10	For the avoidance of doubt this Agreement shall not include the cultivation of the coal bed methane, shale gas and oil well which shall be classified as old well as described in the prevailing laws and regulations.

 

In the event there is old well
in the Operation Area as described in the prevailing laws and regulations then the arrangement for such old well shall be further
stipulated by PERTAMINA EP.

 

    	 	65	 

     

    

 

	18.11	Headings in the Agreement shall be intended for convenience purposes only and shall not affect the interpretation of the Agreement and the Exhibits hereto.

 

	18.12	The Agreement shall not be annulled, amended or modified in any respect without any mutual consent in writing of the Parties hereto, except in case any termination of the Agreement as stipulated hereunder.

 

	18.13	In the event of any changes to the terms and conditions of the Agreement, including but not limited to any effect of amendment of the existing regulations, then such changes will be stated in a side letter or through amendment of the Agreement which signed by the respective authorized representatives of the Parties and made as integral part hereof.

 

	18.14	Investment for capital expenses can be exercised by PARTNER no later than *** prior to the expiration of the Agreement pursuant to clause 2.2 of the Agreement. In the event the investment for capital expenses is exercised after such at less than *** prior to the expiration of the Agreement, then the recovery of investment for capital expenses through prevailing depreciation mechanism pursuant to Exhibit III of the Agreement, could not be accelerated (fully depreciated) thus the remaining depreciation amount, if any, shall not be cost recoverable.

 

	18.15	Since the Effective Date of this Agreement shall include the transfer of the management of Operating Area, Asset, and related data from PERTAMINA EP to PARTNER, Furthermore, the Parties shall complete the formalities associated with the transfer of management of Operating Area, assets and related data no later than *** from the Effective Date.

 

    	 	66	 

     

    

 

	18.16	If any provision of the Agreement is determined to be void or unenforceable, this finding shall not render any other provision void or unenforceable. In such event, the Parties shall seek in good faith to agree an alternative, duly enforceable provision that conforms as nearly as possible to the intent of the original provision, failing which the void or unenforceable provision shall simply be deemed deleted from the Agreement.

 

	18.17	This Agreement made in two (2) versions, in Bahasa and English, in the event any different interpretation and/or dispute for the terms and conditions in this Agreement, then the Indonesian version shall prevail.

 

	For and on behalf of 

PT GREEN WORLD NUSANTARA 	 
	 	 
	/s/ MIRZA FERRINTO SAID	 
	MIRZA FERRINTO SAID	 
	(Direktur Utama/Director)	 

 

    	 	67	 

     

    

 

EXHIBIT
– I

 

This
Exhibit-I is attached to and formed an integral part of the Agreement between PT PERTAMINA EP and PT GREEN WORLD NUSANTARA,
dated 26th day of July, 2019

 

PETA
AREA OPERASI 

(OPERATING
AREA MAP)

KRUH

 

 

    	 	68	 

     

    

 

EXHIBIT
- II

 

This
Exhibit-II is attached to and formed an integral part of the Agreement between PT PERTAMINA EP and PT GREEN WORLD NUSANTARA,
dated the 26 day of July, 2019

 

DESKRIPSI
AREA OPERASI 

(DESCRIPTION
OF OPERATING AREA)

KRUH

 

*** 

 

    	 	69	 

     

    

 

***

 

    	 	70	 

     

    

 

EXHIBIT – III

 

This
Exhibit-Ill is attached to and formed an integral part of the Agreement between PT PERTAMINA EP and PT GREEN WORLD NUSANTARA,
dated the 26th day of  July, 2019

 

ACCOUNTING
PROCEDURE

 

Article
I

General
Provisions

 

	1.1	Definitions

 

The
accounting procedure herein provided for is to be followed and observed in the performance of either Party's obligations under
the Agreement to which this Exhibit is attached subject to prevailing laws and regulations.

 

The
definition and terms appearing in this Exhibit-III shall have the same meaning as those defined in said Agreement.

 

	1.2	Accounting and Reporting

 

PERTAMINA EP and PARTNER,
as the case may be, accounting records and books will be kept in accordance with generally accepted and recognized accounting
systems, consistent with modern petroleum industry practices and procedures. Books and reports will be maintained and prepared
in accordance with methods established by PERTAMINA EP. The chart of accounts and related account definitions and other
related matters will be prescribed by PERTAMINA EP. Reports will be organized for the use of PERTAMINA EP in carrying
out its management responsibilities under the Agreement.

 

    	 	71	 

     

    

 

Article
II

Operating
Costs

 

	2.1.	Definition

 

For
any Year in which commercial production occurs, Operating Costs consists of (a) current Year Non-capital Costs, (b) current Year's
depreciation for Capital Costs and (c) current Year's allowed recovery of prior Year's unrecovered Operating Costs.

 

	2.2.	Non-capital Costs

 

Non-capital
Costs means those Operating Costs incurred that relate to current Year's Operations. In addition to costs relating only to current
Operations, the costs of surveys and the intangible costs of drilling exploratory and development wells, as described in paragraphs
2.2.3, 2.2.4 and 2.2.5 below, will be classified as Non-Capital Costs.

 

Non-capital
Costs include, but are not limited to the following:

 

	2.2.1	Operation

 

Labor,
materials and services used in day to day oil well operations, oil field production facilities operations, improved oil recovery
operations, storage handling transportation and delivery operations, gas well operations, gas field production facilities operations,
gas transportation, and delivery operations, gas processing auxiliaries and utilities, well and site restorations and other operating
activities, including repairs and maintenance, community development of the surrounding and gas marketing;

 

	2.2.2	Office, services and general administration

 

General
services including technical and related services, material services, transportation, rental of specialized and heavy engineering
equipment, site rentals and other rentals of services and property, personnel expenses, public relations.

 

    	 	72	 

     

    

 

	2.2.3	Production Drilling

 

Labor,
materials and services used in drilling wells with the object of penetrating a provenreservoir, including the drilling of delineation
wells as well as redrilling, recompleting wells, and access roads leading directly to wells;

 

	2.2.4	Exploratory Drilling

 

Labor,
materials and services used in the drilling of wells with the object of finding unproven reservoirs of oil and gas, and access
roads leading directly to wells;

 

	2.2.5	Surveys

 

Labor,
materials and services used in aerial, geological, topographical, geophysical and seismic surveys, and core hole drilling;

 

	2.2.6	Other Exploration Expenditures

 

Auxiliary
or temporary facilities having lives of one Year or less used in exploration and purchased geological and geophysical information.

 

	2.3.	Capital Costs

 

Capital
Costs mean expenditures made for items which normally have a useful life beyond the Year incurred. A reasonable annual allowance
for depreciation of Capital Costs, computed as described in Article III paragraph 3.1, will be allowed as a recoverable Operating
Costs for the current Year.

 

    	 	73	 

     

    

 

Capital
Costs include classification described herein but are not limited to the following specifications:

 

	2.3.1	Constructions utilities and auxiliaries

 

Workshops,
power and water facilities, warehouses, cargo jetties, and field roads except the access roads mentioned in paragraphs 2.2.3 and
2.2.4 above;

 

	2.3.2	Construction housing and welfare

 

Housing,
recreational facilities and other tangible property incidental to construction;

 

	2.3.3	Production facilities

 

Offshore
platform (including the costs of labor, fuel, hauling and supplies for both the offsite fabrication and onsite installation of
platforms, and other construction costs in erecting platforms and installing submarine pipelines), wellhead equipment, subsurface
lifting equipment, production tubing, sucker rods, surface pumps, flow lines, gathering equipment, delivery lines and storage facilities.
Costs of oil jetties and anchorages, treating plants and equipment, improved oil recovery systems, gas plants and steam systems;

 

	2.3.4	Movables

 

Surface
and subsurface drilling and production tools, equipment and instruments, barges, floating craft, automotive equipment, aircraft,
construction equipment, furniture and office equipment and miscellaneous equipment.

 

    	 	74	 

     

    

 

	2.4	Home Office Overhead of Holding Company

 

Home Office Overhead Cost of
holding company shall not to include as Operating Cost. Then, such cost shall not be cost recovered.

 

    	 	75	 

     

    

 

Article
III

Accounting
Methods To Calculate

Recovery
of Operating Costs

 

	3.1	Depreciation

 

Depreciation
will be calculated beginning the Year in which the asset is placed into service with a full Year's depreciation allowed the initial
Year. The method used to calculate each Year's allowable recovery of Capital Costs is the declining balance depreciation method.
Calculation of each such Year's allowable recovery of capital costs should be based on the individual asset's capital cost at the
beginning of such Year multiplied by the depreciation factor as follows, for:

 

-   Group
1 = 50%

-   Group
2 = 25%

 

For
the Groups of capital assets for any Crude Oil projects and/or Natural Gas projects apply useful lives as follows:

 

GROUP
1 :

 

	Automobile	1.5 Years
	Truck-light (13,000 pounds or less) and tractor units	2 Years
	Trucks-heavy (more than 13,000 pounds)	3 Years
	Buses	4.5 Years
	Aircraft	3 Years
	Construction equipment	3 Years
	Furniture and office	5 Years
	equipment	 
	 	 
	GROUP 2	 
	 	 
	Construction utilities and auxiliaries	5 Years
	Construction housing and welfare	10 Years
	Production facilities	5 Years
	Railroad cars and locomotives 	7.5 Years
	Vessel, barges, tugs and similar water transportation equipment	9 Years
	Drilling and production tools, equipment and Instruments	5 Years

 

    	 	76	 

     

    

 

The
undepreciated balance of assets taken out of service will not be charged to Operating Costs but will continue depreciating based
upon the lives described above, except where such assets have been subjected to unanticipated destruction, for example, by fire
or accident.

 

	3.2	Inventory Accounting

 

The
costs of non-capital items purchased for inventory will be recoverable if such inventory already exists in Indonesia.

 

	3.3	Gas Costs

 

Operating
Costs directly associated with the production of Natural Gas will be directly chargeable against Natural Gas revenues in determining
share under paragraph 5.2.3 of SECTION V of the Agreement. Operating Costs incurred for production of both Natural gas and Crude
Oil will be allocated to Natural Gas and Crude Oil based on the relative value of the products produced for the current Year. Common
support costs will be allocated on an equitable basis agreed.

 

If
after commencement of production the Natural Gas revenues do not permit full recovery of Natural Gas costs, as outlined above,
then the excess costs shall be recovered from Crude Oil revenues.

 

Likewise,
if excess Crude Oil costs (Crude Oil costs less Crude Oil revenues) exists, this excess can be recovered from Natural Gas revenues.

 

    	 	77	 

     

    

 

If
production of either Natural Gas or Crude Oil has commenced while the other has not, the allocable production costs and common
support costs will be allocated in an equitable manner. Propane and butane fractions extracted from Natural Gas but not spiked
in Crude Oil shall be deemed as Natural Gas for the purpose of accounting.

 

	3.4	Insurance and Claims

 

Operating
Costs shall include premiums paid for insurance normally required to be carried for the Operations relating to PARTNER's
obligations conducted under the Agreement, together with all expenditures incurred and paid in settlement of any and all losses,
claims, damages, judgments, and other expenses, including fees relating to PARTNER's obligation under the Agreement.

 

Revenue
from Insurance claim shall reduce cost recovery.

 

	3.5	Abandonment and Site Restoration

 

Operating
Costs shall include all expenditures incurred in the abandonment of all exploratory wells and the restoration of their drillsites,
together with estimates of all of monies and funds required for the funding of any abandonment and site restoration program established
in conjunction with an approved plan of development for a commercial discovery in the judgement of PERTAMINA EP.

 

Expenditures
incurred in the abandonment of exploratory wells and the restoration of their drill sites shall be charged as Operating Costs in
accordance with Article II of this Exhibit-III.

 

    	 	78	 

     

    

 

Estimates
of monies required for the funding of any abandonment and site restoration program established pursuant to clause 4.1.8 of the
Agreement shall be charged as Operating Costs annually on the basis of accounting accruals beginning in the Year of first production.

 

The fund of such abandonment
and site restoration shall be used by PARTNER upon PERTAMINA EP prior written approval.

 

The
amount charged in each Year will be calculated by dividing the total estimated cost of abandonment and site restoration for each
discovery by the total estimated number of Years in the economic life of each discovery. The estimates of monies required for all
abandonment and site restoration activities shall be reviewed on an annual basis and such estimates shall be adjusted each Year
as required.

 

Such
available abandonment and site restoration fund shall be deposited into separate bank account in the name of PERTAMINA EP and
SKK Migas.

 

PARTNER
shall deposit and report to PERTAMINA EP the abandonment and site restoration fund to such account initially after the
first year production and for the subsequent year shall be executed by PARTNER every *** in
any Agreement Year.

 

	3.6	Termination and Benefit Plan

 

Operating
Costs shall include all expenditures incurred in the termination and benefit plan of all employees dedicated for Oil and Natural
Gas Operations in PARTNER shall be charged as an Operating Cost in each year beginning in the Year of first production,
together with estimates of all of monies and funds required for termination and benefit plan program for employees dedicated for
Oil and Gas Operations in MITRA shall be charged as Operating Costs annually on the basis accounting acrual beginning in
the Year of first production, and shall be included in the annual Work Program and Budget.

 

    	 	79	 

     

    

 

Such
expenditures incurred in the termination and benefit plan of all employees fund shall be deposited as big as cost which is already
been burdened by accrual method into separate account and shall be reported to PERTAMINA EP periodically. The fund of such
abandonment and site restoration shall be used by PARTNER upon PERTAMINA EP prior written approval.

 

	3.7	Application of Cost Recovery Regulation bv the GOI

 

PARTNER
agrees to comply with the provisions regarding cost recovery and taxes as provided in Government Regulation No.79 of 2010 on
recoverable operating cost and income tax treatment in oil and gas upstream sector and its replacement and implementation regulations.

 

	3.8	Over/Under Lifting

 

In
the event PARTNER recovers all the Operation Cost as provided under Article V, Clause 5.1 and 5.2 therefore PARTNER shall
prepare the calculation of Over/Under Lifting at the end of each period of the current year and PARTNER shall submit such
calculation to PERTAMINA EP not later than the *** of the subsequent year.

 

------ End of Exhibit – III ------

 

    	 	80	 

     

    

 

EXHIBIT
– IV

 

This Exhibit-IV is attached to and formed
an integral part of the Agreement between PT PERTAMINA EP and PT GREEN WORLD NUSANTARA, dated the 26th
day of July, 2019

 

TABEL
PRODUKSI DASAR / NSO

 

***

 

    	 	81	 

     

    

 

 ***

 

------ End of Exhibit -IV ------

 

    	 	82	 

     

    

 

EXHIBIT
– V

 

This
Exhibit-V is attached to and formed an integral part of the Agreement between PT PERTAMINA EP and PT GREEN WORLD NUSANTARA,
dated the 26th day of July, 2019.

 

STRUKTUR
ORGANISASI

(ORGANIZATION
STRUCTURE)

 

 

During
implementation of the Agreement, PARTNER may, with PERTAMINA EP's prior written consent, change or modify the organization
structure and/or Manager position as required.

 

------End
of Exhibit –V------

 

    	 	83	 

     

    

 

EXHIBIT
– VI

 

This
Exhibit-VI is attached to and formed an integral part of the Agreement between PT PERTAMINA EP and PT GREEN WORLD NUSANTARA,
dated the 26th day of July, 2019

 

SKEMA
PEMBAGIAN HASIL MINYAK DAN GAS BUMI

(PETROLEUM
REVENUE FLOW DISTRIBUTION)

 

 

------End
of Exhibit -VI------

 

    	 	84	 

     

    

 

EXHIBIT
– VII

 

This
Exhibit-VII is attached to and formed an integral part of the Agreement between PT PERTAMINA EP and PT GREEN WORLD NUSANTARA,
dated the 26th day of July, 2019.

 

DRAFT
LAMPIRAN BERITA ACARA SERAH TERIMA

 

 

BERITA
ACARA SERAH TERIIWA ASSET

AREA
OPERASI KRUH

DARI

PT
PERTAMINA EP

KEPADA

PT
GREEN WORLD NUSANTARA 

 

No.           
/EPXXXX/20XX-S0

 

Pada
hari ini _____ Tanggal _____ Bulan XXX Tahun XXX, kami yang bertandatangan di bawah ini:

 

	1	________, XXX PT Pertamina EP, dalam hal ini bertindak untuk dan atas nama PT Pertamina EP selanjutnya disebut “ PT PERTAMINA EP.”

 

	1	________, XXX PT Green World Nusantara, dalam hal ini bertindak untuk dan atas nama PT GREEN WORLD NUSANTARA selanjutnya disebut " MITRA."

 

	2.	Berdasarkan Berita Acara Serah Terima Pengelolaan Area Operasi Kruh dari PERTAMINA EP kepada MITRA tanggal ____ xxx 20xx dengan ini PERTAMINA EP menyerahkan kepada MITRA asset-asset yang terdapat dan terletak di Area Operasi Kruh sebagaimana disebutkan dalam Daftar Aset terlampir, dan merupakan bagian yang tidak terpisahkan dari Berita Acara Serah Terima Pengelolaan Area Operasi Kruh tersebut di atas.

 

Aset-aset
tersebut merupakan aset yang terkait dengan kegiatan Operasi KSO Produksi di Area Operasi Kruh yang telah diinventarisir oleh PT
PERTAMINA EP dengan status terakhir per tanggal _____, xxx 20xx.

 

Jenis,
kondisi dan/atau jumlah Aset yang diserahkan telah dikenal, diketahui serta disetujui oleh kedua belah pihak sebagaimana adanya
("as it is") sehingga penjelasan lebih lanjut tidak diperlukan lagi.

 

Terhitung
mulai tanggal ______, xxx 20xx segala risiko, kewajiban-kewajiban dan/atau biaya-biaya yang timbul terhadap Asset yang diserahkan
sepenuhnya menjadi tanggung jawab MITRA, dan MITRA wajib mengelola asset-asset tersebut sesuai dengan ketentuan dan peraturan yang
berlaku di PT PERTAMINA EP.

 

Hal-hal
yang belum diatur atau belum cukup diatur dalam Berita Acara Serah Terima Asset ini akan diatur kemudian.

 

Demikian
Berita Acara Serah Terima Asset ini dibuat dengan sebenarnya pada hari, tanggal, bulan dan tahun sebagaimana tersebut diatas untuk
dapat dipergunakan sesuai keperluan.

 

	PT GREEN WORLD NUSANTARA	 	PT PERTAMINA EP	 
	 	 	 	 
	 	 	 	 
	XXX	 	XXX	 

 

------End
of Exhibit -VII------

 

    	 	85	 

     

    

 

EXHIBIT
– VIII

 

This
Exhibit-VIII is attached to and formed an integral part of the Agreement between PT PERTAMINA EP and PT GREEN WORLD NUSANTARA,
dated the 26th day of July, 2019.

 

FORMAT
GARANSI BANK

(BANK
GUARANTEE FORM)

 

BANK
GUARANTEE

 

_______________ (hereinafter called the
"BANK"), refers the article 1832 of Indonesian Civil Code releasing our privilege under the law, as referred in
article 1831 of Indonesian Civil Code, hereby guarantee __________ having its office at __________ (hereinafter called "_________")
to PT PERTAMINA EP having its office at Menara Standard Chartered 21-29 floor Jl. Prof. Dr. Satrio No. 164 South Jakarta
12950 (hereinafter called "PERTAMINA EP") to pay the amount of USD __________ (___________ U.S. dollars)
with the terms as follows;

 

	1.	This BANK GUARANTEE is meant to guarantee the accomplishment of firm commitment in accordance with the Operations Cooperation Agreement between ____________ and PERTAMINA EP on the Operating Area of _________ that has been signed on ____________ hereinafter called the "OC Agreement".

 

	2.	The BANK hereby agrees that it shall guarantee unconditionally and irrevocably payment to PERTAMINA EP pursuant to Section __________ of the OC Agreement, Immediately after PERTAMINA EP demands in writing of the BANK, with the following provisions:

 

If
_____________ has failed to fulfill the activities of its firm commitment as prescribed under Section ___________ clause __________
of the OC Agreement; or because of any other cause that proved __________ is fault which result in firm commitment is unperformed
or ___________ has withdrawn from and be relieved of the rights and obligations under the OC Agreement, than upon Bank shall pay
PERTAMINA EP the said amount in accordance with PERTAMINA EP's letter of demand with attachments as follows:

 

	 	(1)	a copy of letter of notification of failure to fulfill the Firm Commitment obligations; or

 

	 	(2)	a copy of letter of termination of the OC Agreement from PERTAMINA EP; or

 

    	 	86	 

     

    

 

	 	(3)	a copy of letter of withdrawn confirmation from _____________.

 

Termination
of OC shall be conducted by waiver of Articles 1266 and 1267 of Indonesian Civil Code, without interference by the court and without
prejudice to PERTAMINA EP’s other rights and remedies against ___________ as provided in the OC Agreement and by laws.

 

	3.	This BANK GUARANTEE shall be effective as of the date of the Bank Guarantee issued until the end of *** Firm Commitment Year plus *** for claim and draw down of BANK GUARANTEE or as soon as ____________________ has been recognized by PERTAMINA EP to have fulfilled all of its firm commitment obligation under the OC Agreement, whichever occurs earlier, except if any extension of the firm commitment, then BANK GUARANTEE shall be extent pursuant to the extension period of such firm commitment

 

	4.	Any claim made under this BANK GUARANTEE shall be made in writing to the BANK not less than *** from the date of the letter of notification of failure to fulfill the Firm Commitment obligations or the termination letter from PERTAMINA EP or letter of withdrawn confirmation from _______, after which the BANK shall be discharged from its liabilities under this BANK GUARANTEE.

 

Executed
in Jakarta on _____, 20__ in the Indonesian and English languages, which the English version is unofficial translation, and in
case of any divergence between them, The Indonesian version shall prevail.

 

------End
of Exhibit –VIII------

 

    	 	87

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