BADAK IV LNG SALES CONTRACT
This Badak IV LNG Sales Contract (the "Contract"), dated as of
the ____ day of ____________, 1990, is made by and between
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
(PERTAMINA), a
state enterprise of the Republic of Indonesia ("Seller"), on the
one hand,
and
OSAKA GAS CO., LTD. ("Osaka Gas"), TOKYO GAS CO., LTD. ("Tokyo
Gas") and TOHO GAS CO., LTD. ("Toho Gas"), all corporations
organized and existing under the laws of Japan (hereinafter
referred to individually as "Buyer" and collectively as "Buyers"),
on the other hand.
In consideration of the mutual agreements contained herein,
Seller and each Buyer hereby agree as follows:
ARTICLE 1 - DEFINITIONS
The terms or expressions set forth below will have the
following meanings when used in this Contract and where the context
permits the singular shall include the plural and vice versa:
1.1 Actual Cubic Foot
A volume equal to the volume of a cube whose edge is one foot.
1.2 Actual Loading Time
As defined in Section 4.12(b).
1.3 Affiliate
As defined in Article 19.
1.4 Allotted Loading Time
As defined in Section 4.12(a).
1.5 Annual Program
As defined in Section 12.1(a).
1.6 Arrival Temperature Requirement
As defined in Section 4.10.
1.7 Authorizations and Approvals
As defined in Article 26.
1.8 Badak Facility
As defined in Section 5.2.
1.9 Base Rate
The rate of interest announced from time to time to the press
by Citibank, N.A., New York ("Citibank") as Citibank's base
rate. The base rate may not be the lowest rate charged by
Citibank to its borrowers. If there is any doubt as to the
Base Rate for any period, a written confirmation signed by an
officer of Citibank shall conclusively establish the Base Rate
in effect for such period. In the event that Citibank shall
for any reason cease quoting a base rate as described above,
then a comparable rate shall be determined using rates then in
effect and shall be used in place of the said base rate.
1.10 British Thermal Unit (BTU)
The amount of heat required to raise the temperature of one
avoirdupois pound of pure water from 59.0 degrees Fahrenheit
to 60.0 degrees Fahrenheit at an absolute pressure of 14.696
pounds per square inch. MMBTU means one million (1,000,000)
BTU's.
1.11 Business Day in Japan
Every day other than Saturdays, Sundays, National Holidays
(including compensatory days), and January 2 and 3.
1.12 Buyer's Facilities
For the purposes of Section 15.1(a)(v) in respect of any
Buyer, the Receiving Facilities of such Buyer and such other
facilities directly related to the use of LNG which, if not
operational, would reduce the amount of LNG which such Buyer
is able to receive hereunder.
1.13 Buyers' Representative
Such entity or entities from time to time designated by Buyers
pursuant to Article 18.
1.14 Buyers' Transportation Agreement
The Transportation Agreement between Buyers and Buyers'
Transporter for transporting LNG delivered under this
Contract.
1.15 Buyers' Transporter
The Transporter designated in Buyers' Transportation
Agreement.
1.16 Certificate
As defined in Section 3.2(a).
1.17 Conditions of Use
As defined in Section 4.4(c).
1.18 Contract Sales Price
As defined in Section 8.1.
1.19 Cubic Meter (CBM)
A volume equal to the volume of a cube whose edge is one
meter.
1.20 DA Period
A Fixed Quantity Period in relation to which a Downward
Adjustment is exercised pursuant to Section 7.1(d).
1.21 Delivery Point
The point at the Loading Port at which the flange coupling of
Seller's loading line joins the flange coupling of the LNG
loading manifold on board any LNG Tanker.
1.22 Downward Adjustment
As defined in Section 7.1(d).
1.23 ETA
Estimated time of arrival as defined in Section 4.6(a).
1.24 Financing
As defined in Article 26.
1.25 Fixed Quantity
As defined in Section 7.1(a).
1.26 Fixed Quantity Notice
As defined in Section 7.1(c).
1.27 Fixed Quantity Period
As defined in Section 7.1(a).
1.28 Force Majeure
As defined in Section 15.1.
1.29 Force Majeure Deficiency
As defined in Section 7.6(a).
1.30 Gas Supply Area
The areas in East Kalimantan, Indonesia covered by production
sharing contracts between Seller and Seller's Suppliers.
1.31 G.P.A.
Gas Processors Association.
1.32 Gross Heating Value
The quantity of heat, expressed in British Thermal Units,
produced by the complete combustion in air of one cubic foot
of anhydrous gas, at a temperature of 60.0 degrees Fahrenheit
and an absolute pressure of 14.696 pounds per square inch,
with the air at the same temperature and pressure as the gas,
after cooling the products of the combustion to the initial
temperature of the gas and air, and after condensation of the
water formed by combustion.
1.33 Liquefied Natural Gas (LNG)
Natural Gas in a liquid state at or below its boiling point
and at a pressure of approximately one atmosphere.
1.34 LNG Tanker
An ocean-going vessel, meeting the requirements of Section
4.2, suitable for transporting LNG, which is used by Buyers
for transportation of LNG delivered under this Contract.
1.35 Loading Port
The port located at the Badak Facility.
1.36 Make-Up LNG
As defined in Section 7.5.
1.37 Natural Gas
Any hydrocarbon or mixture of hydrocarbons consisting
essentially of methane, other hydrocarbons, and non-
combustible gases in a gaseous state and which is extracted
from the subsurface of the earth in its natural state,
separately or together with liquid hydrocarbons.
1.38 Ninety-Day Schedule
As defined in Section 12.2.
1.39 Notice of Readiness
As defined in Section 4.9.
1.40 Omnibus Agreement
As defined in Section 4.4(c).
1.41 Proved Remaining Recoverable Reserves
Reserves which have been proved to a high degree of certainty
by reason of actual completion, successful testing or in
certain cases by adequate core analyses, and which are defined
areally by reasonable geological interpretation of structure
and known continuity of oil- or gas-saturated material.
1.42 Quantity Deficiency
As defined in Section 7.3(a).
1.43 Receiving Facilities
As defined in Section 5.1.
1.44 Restoration Quantities
As defined in Section 7.6(a).
1.45 Round-Up Request
As defined in Section 7.3(a)(ii).
1.46 Seller's Facilities
For the purposes of Section 15.1(a)(iv), Natural Gas
reservoirs or production facilities in the field, the
facilities for transportation of Natural Gas from the field,
and the Badak Facility.
1.47 Seller's Gas Supply Obligation
From time to time on any given date the amount of Natural Gas
required to satisfy the remaining obligations of Seller on
such date to supply LNG or Natural Gas from the Gas Supply
Area plus the amount of Natural Gas from the Gas Supply Area
required to supply any additional commitment or commitments
which Seller anticipates making.
1.48 Seller's Suppliers
In respect of portions of the LNG to be sold hereunder:
(a) Virginia Indonesia Company, OPICOIL Houston, Inc.,
OPICOIL IJV, Inc., Ultramar Indonesia Limited, Union
Texas East Kalimantan Limited, Universe Gas & Oil
Company, Inc. and Virginia International Company;
(b) Total Indonesie and Indonesia Petroleum Ltd.; and
(c) Unocal Indonesia Ltd. and Indonesia Petroleum Ltd.;
and any successors and assigns of any of the aforesaid
suppliers who shall have agreed in writing to be bound by all
of the obligations of their respective assignors under the
applicable agreement with Seller under which such suppliers
make available for sale hereunder their respective interests
in the quantities of LNG to be sold hereunder.
1.49 Seller's Transportation Agreement
That certain Transportation Agreement made as of September 23,
1973, as amended, by and between Burmah Gas Transport Limited
and Seller.
1.50 Seller's Transporter
Burmah Gas Transport Limited or its successors or assigns
under Seller's Transportation Agreement.
1.51 Standard Cubic Foot (scf)
The quantity of Natural Gas, free of water vapor, occupying a
volume of one Actual Cubic Foot at a temperature of 60.0
degrees Fahrenheit and at an absolute pressure of 14.696
pounds per square inch.
1.52 Statement of Cooling Time
As defined in Section 4.10.
1.53 Take-or-Pay Quantity
As defined in Section 7.5.
1.54 Unloading Ports
The ports at locations in or near Tokyo, Nagoya, Osaka and
Himeji, and at such other locations in Japan as may be agreed
between Seller and Buyers, where the Receiving Facilities are
or will be constructed.
1.55 Waiver Agreement
As defined in Section 4.4(c).
1.56 Year 21 Quantity
As defined in Section 7.1(d)(iv).
ARTICLE 2 - SALE AND PURCHASE
Seller agrees to sell and deliver to each Buyer at the
Delivery Point, and each Buyer agrees to purchase, receive and pay
for, and to pay for if not taken, LNG, in the quantities, at the
price and in accordance with the other terms and conditions set
forth in this Contract.
ARTICLE 3 - SOURCES OF SUPPLY
3.1 Sources of Supply
The Natural Gas to be processed into LNG and sold and
delivered hereunder is to be produced from the Gas Supply
Area. Seller has and will maintain throughout the term of this
Contract the right and ability to perform its obligations
under this Contract to sell and deliver all quantities of LNG
to be sold and delivered hereunder. Notwithstanding any
reference to Seller's Suppliers in this Contract, Seller is
fully responsible for performance of all the obligations of
Seller hereunder and no contractual default of any of Seller's
Suppliers shall excuse Seller from its full responsibility
hereunder.
3.2 Reserves of Natural Gas
(a) Seller has furnished Buyers with statements, each
entitled "Certificate" and each dated January 31, 1986 or
May 1, 1989, of DeGolyer and MacNaughton expressing its
estimate of Proved Remaining Recoverable Reserves of
Natural Gas in the Gas Supply Area. Seller represents
that such estimated quantity is in excess of Seller's Gas
Supply Obligation as of the date of this Contract.
Hereafter and throughout the term of this Contract,
before committing additional Natural Gas from the Gas
Supply Area to sale or other utilization, Seller shall
secure from an independent petroleum engineering
consultant firm of recognized standing in the petroleum
industry, qualified by reputation and experience in
estimating reserves of oil and natural gas in subsurface
reservoirs, the written statements (the "Certificate") of
such firm expressing its estimate of Proved Remaining
Recoverable Reserves of Natural Gas in the Gas Supply
Area in an amount at least equal to Seller's Gas Supply
Obligation. Seller shall provide Buyers with copies of
each Certificate of such independent petroleum
engineering consultant firm on which Seller relies in
making any such commitment for supply of Natural Gas from
the Gas Supply Area. Seller shall also furnish all
supporting documentation provided by such independent
petroleum engineering consultant firm in connection with
the issuance of such Certificate.
(b) If, during the term of this Contract, Seller obtains
information which indicates unforeseen adverse changes in
the Proved Remaining Recoverable Reserves of Natural Gas
in the Gas Supply Area, Seller shall promptly inform
Buyers of such situation and shall further inform Buyers
of any measures which Seller may be required to take in
fulfilment of its obligations under this Contract.
ARTICLE 4 - LOADING AND TRANSPORTATION
4.1 Buyers' Obligation to Provide Transportation
Buyers shall provide, or cause to be provided, the
transportation required to transport all quantities of LNG to
be sold and delivered hereunder from the Loading Port.
4.2 LNG Tankers
Buyers shall at all times provide, maintain and operate, or
cause to be provided, maintained and operated, for their
performance under this Contract, LNG Tankers compatible with
the marine facilities of the Badak Facility of the following
dimensions:
length up to approximately two hundred ninety (290) meters
width up to approximately forty-eight (48) meters draft up to
approximately eleven and one-tenth (11.1) meters, which LNG
Tankers shall be designed and at all times equipped and manned
so as safely to permit the loading of a full cargo in
approximately twelve (12) hours of pumping time and to accept
cargo at a rate up to approximately eleven thousand (11,000)
CBM per hour being the full design pumping rate of Seller's
loading pumps (which rate shall be subject to revision after
mutual agreement). The provisions of this Contract applicable
to LNG Tankers shall apply whether any LNG Tanker is owned and
operated by the Buyers or otherwise.
4.3 Loading Port Facilities
Seller shall at all times provide, maintain and operate, or
cause to be provided, maintained and operated, for its
performance under this Contract, facilities at the Loading
Port, including the following:
(A) a berth and port facilities, including a channel and
turning basin, all (together with a holding anchorage
which Seller shall cause to be designated) capable of
receiving an LNG Tanker of the dimensions set forth in
Section 4.2, where such LNG Tanker may safely proceed to,
lie at and depart from, always afloat at all times of the
tide;
(B) loading facilities capable of loading LNG at an
approximate rate of ten thousand (10,000) CBM per hour at
a normal operating pressure of about forty-two and one-
half pounds per square inch gauge (42.5 psig) at the
Delivery Point. In any event, pressure at the Delivery
Point shall not exceed one hundred twenty pounds per
square inch gauge (120 psig);
(C) a boil-off gas return system capable of receiving boil-
off gas from an LNG Tanker at the rate required for the
loading of LNG at the rate specified in Section 4.3(B);
(D) shore tanks and loading lines for liquid nitrogen;
pipelines and connections for the supply of fresh water;
and
(E) appropriate systems necessary for radio and telex
communications with the LNG Tankers.
Seller shall not be obligated to provide facilities for repair
of LNG Tankers.
4.4 Loading Port Obligations
(a) LNG Tankers shall utilize the Loading Port facilities
subject to observance of all relevant port regulations.
Any tugs, pilots or escort vessels required (or other
support vessels required in connection with the safe
berthing of an LNG Tanker) shall be employed at the sole
risk and expense of the LNG Tanker. Prior to each
loading, Buyers' Transporter shall be responsible for
determining the availability of any nitrogen, fuel, water
and other utilities required by the LNG Tankers at the
Loading Port, which will be provided by Seller on an as
available basis for Buyers' Transporter's account.
(b) Buyers and/or Buyers' Transporter shall be responsible
for payment of amounts due for supplies and services
requested by masters of LNG Tankers and for normal port
charges to the extent such charges are uniformly applied
to all LNG vessels receiving exports of LNG from the
Loading Port.
(c) Conditions of Use for Bontang, Selatan LNG Marine
Terminal ("Conditions of Use") will be signed by the
Master of each LNG Tanker before using the Loading Port
facilities. The Conditions of Use shall be modified by an
Omnibus Agreement between Seller, Seller's Suppliers and
Buyers' Transporter (the "Omnibus Agreement") and a
Waiver Agreement between Seller, Seller's Suppliers,
Buyers' Transporter and Buyers (the "Waiver Agreement"),
in the same form and substance as hitherto executed in
connection with the use of the Loading Port by other LNG
vessels. Prior to the first sale and delivery of LNG
under this Contract, Seller shall sign and cause Seller's
Suppliers to sign the Omnibus Agreement and Waiver
Agreement, Buyers shall sign and cause Buyers'
Transporter to sign the Waiver Agreement, and Buyers
shall cause Buyers' Transporter to sign the Omnibus
Agreement.
(d) In the interests of the smooth and timely performance of
Buyers' obligation to provide transportation of LNG sold
and purchased under this Contract, Seller shall provide
assistance to Buyers, Buyers' Transporter and Buyers'
Representative in obtaining equipment, supplies, services
and assistance, similar to and upon the same terms as the
assistance provided by Seller to the other LNG vessels
using the Loading Port.
4.5 Cargo Loading
(a) The LNG to be sold and purchased hereunder shall be
pumped into an LNG Tanker at the expense of Seller
through manifold strainers of sixty (60) mesh (or such
other mesh as shall be agreed from time to time by the
parties) provided by the LNG Tanker and, absent agreement
of the parties or an unavoidable circumstance or
circumstances, shall be in full cargo lots.
(b) There shall be no charge for any natural gas boiled-off
from the LNG Tankers while berthed at the Loading Port
that is returned to shore. The LNG Tankers shall compress
such boil-off gas to the extent required to maintain the
gas pressure in the LNG Tanker's cargo tanks and the
boil-off gas return line within allowable operating
limits during loading, and Seller shall operate the boil-
off gas return system in a manner that will permit the
gas pressure in the LNG Tanker's cargo tanks to be
maintained within the allowable operating limits of such
tanks.
4.6 Notifications of Estimated Time of Arrival at Loading Port and
Cooling Requirements
(a) Buyers shall give Seller notice by telex or facsimile of
the date and hour on which each LNG Tanker departs from
an Unloading Port or drydock/repair port and the
estimated time of arrival ("ETA") at the Loading Port.
Said notice shall be submitted immediately after the LNG
Tanker's departure from the Unloading Port or
drydock/repair port. Buyers shall include in such notice
to Seller a statement of:
(i) The estimated quantity of LNG that will be required
to cool the tanks to permit continuous loading of
LNG and the estimated time that will be required
for such cooling, both of which will be based upon
the date the LNG Tanker is expected to commence
loading.
(ii) Any operational deficiencies in the LNG Tanker that
may affect its port performance.
(iii) Requirements for nitrogen, fuel, water and
other utilities.
Buyers shall arrange for the LNG Tanker's master to
notify Seller regarding any change in the ETA of
twelve (12) hours or more. If the LNG Tanker's
cargo tanks should require cooling or if the
cooling or utilities requirements or the condition
of the LNG Tanker should change on account of
circumstances discovered after transmittal of the
notice required by this Section 4.6(a), the master
of the LNG Tanker shall give prompt notice thereof
to Seller, setting forth the information required
by the second preceding sentence, or amending any
such information previously given to Seller.
(b) Seventy-two (72) hours prior to the LNG Tanker's arrival
at the Loading Port, the LNG Tanker's master shall give
notice by telex to Seller stating its then ETA. If this
ETA changes by more than six (6) hours, the LNG Tanker's
master shall give notice of the corrected ETA promptly to
Seller.
(c) Forty-eight (48) hours prior to the LNG Tanker's arrival
at the Loading Port, the LNG Tanker's master shall give
notice by telex to Seller confirming or amending the last
ETA notice. If this ETA changes by more than six (6)
hours, the LNG Tanker's master shall give notice of the
corrected ETA promptly to Seller.
(d) Twenty-four (24) hours prior to the LNG Tanker's arrival
at the Loading Port, an ETA notice shall be sent by telex
and radio to Seller confirming or amending the last ETA
notice. If this ETA changes by more than two (2) hours,
the LNG Tanker's master shall give notice of the
corrected ETA promptly to Seller.
(e) A final ETA notice shall be sent by telex and radio five
(5) hours prior to the LNG Tanker's arrival at the
Loading Port.
4.7 Berthing Assignments
Seller shall determine the berthing sequence of vessels at the
Loading Port in order to best ensure compliance with the
overall loading schedule of the Badak Facility (including the
Annual Program and Ninety-Day Schedules hereunder), and shall
notify the masters of LNG Tankers via the ship's agent of
their berthing priority upon receipt of Notice of Readiness.
4.8 Vessels Not Ready for Loading
(a) If an LNG Tanker arrives which is not ready to load for
any reason, Seller may or may not allow it to berth. In
the case of an LNG Tanker only requiring cooldown to be
ready to load, Seller shall not defer berthing by reason
thereof if either such cooldown was provided for in the
most recent Ninety-Day Schedule or the cooldown time is
not expected to exceed six (6) hours. Whenever Buyers
notify Seller that an LNG Tanker will require cooldown,
Seller shall make provision therefor in the Ninety-Day
Schedule as soon as Seller can do so without disrupting
the overall loading schedule or operations of the Badak
Facility.
(b) If any LNG Tanker previously believed to be ready for
loading or cooling is found to be unready after being
berthed, Seller may direct the master to vacate the berth
and proceed to anchorage, whether or not other vessels
are awaiting a berth, unless it appears reasonably
certain that the LNG Tanker at the berth can be readied
within four (4) hours and Seller has not concluded that
such LNG Tanker is unsafe.
(c) When the LNG Tanker at anchorage is ready, the master
will notify Seller. Seller shall assign a berth to any
such LNG Tanker or to any LNG Tanker awaiting cooldown at
anchorage as soon as Seller is able to do so without
disrupting Seller's loading requirements or operations.
4.9 Notice of Readiness
As soon as the LNG Tanker is securely moored at the berth or
securely anchored awaiting a berth, has received all necessary
port clearances and is able to receive LNG for loading or
cooling, the master shall give notice of readiness to Seller
("Notice of Readiness"); provided, however, that in the event
an LNG Tanker should arrive at the Loading Port prior to the
date established in the Ninety-Day Schedule (and any revisions
thereof except those made after the LNG Tanker has commenced
its voyage to the Loading Port unless made as a result of
delays caused by the operations of the LNG Tankers), Notice of
Readiness shall be deemed effective at the earlier of:
(i) 0:00 a.m. local time on the scheduled loading date,
or
(ii) the time loading commences.
4.10 Tank Temperature for Loading and Statement of Cooling Time
Buyers shall cause Buyers' Transporter after each discharge of
a cargo at an Unloading Port to retain on board each LNG
Tanker sufficient LNG, based on normal operations of the LNG
Tanker (subject to making adequate provision for any LNG
Tanker mechanical problems of which Buyers' Transporter is
aware), to maintain, for a period of not less than twenty-four
(24) hours after the later of:
(i) the actual arrival, or
(ii) 0:00 a.m. local time on the scheduled loading date
(ignoring any revision to such date made after the LNG
Tanker has commenced its voyage to the Loading Port) of
such LNG Tanker at the Loading Port, a temperature in the
cargo tanks to permit continuous loading of LNG ("Arrival
Temperature Requirement"); provided, however, that the
Arrival Temperature Requirement shall not apply upon
entry into service or in cases where the LNG Tanker
proceeds from a drydock/repair port to the Loading Port.
When an LNG Tanker requires cooling, the master or
Buyers' Representative shall so inform Seller first at
the time of the first notice under Section 4.6(a) and
second at the time of the Notice of Readiness. After the
LNG Tanker has been cooled, the representatives of both
Buyers and Seller shall sign a statement of cooling time
("Statement of Cooling Time").
4.11 Quantities for Purging and Cooling of Tanks
Quantities of LNG required to purge and cool each LNG Tanker
to the temperature that will permit continuous loading of LNG
shall be delivered by Seller without charge to Buyers upon the
initial entry of such LNG Tanker into service and upon its
return to service after each annual scheduled maintenance
period (except that for a vessel temporarily in service as an
LNG Tanker to receive such quantities of LNG without charge to
Buyers, such vessel must remain in service for a period of not
less than four (4) continuous months). All other LNG required
by the LNG Tankers for purging and cooling shall be sold,
delivered and invoiced by Seller and paid for by the Buyer (or
its designee) scheduled to receive the cargo of LNG next to be
loaded at the Contract Sales Price applicable to such cargo,
except that where any LNG Tanker having met the Arrival
Temperature Requirement needs purging or cooldown due to an
event which does not extend Allotted Loading Time under
Section 4.12(c), then the LNG required in connection therewith
shall be provided without charge. Such price shall be applied
to the total liquid quantities delivered for purging and
cooling, measured before evaporation of any part thereof
occurs. The parties will determine by mutual agreement the
rates and pressures for delivery of LNG for purging and
cooling and the method for determining quantities used for
such operations. Quantities of LNG used to bring the LNG
Tankers to a temperature permitting continuous loading of LNG
shall not be applied against the quantities required to be
sold by Seller and taken, or paid for if not taken, by Buyers
under other provisions of this Contract.
4.12 Loading Time
(a) The allotted loading time for Seller to load each LNG
Tanker ("Allotted Loading Time") shall be twenty-four
(24) hours, subject to adjustment as provided below.
(b) The actual loading time for each LNG Tanker ("Actual
Loading Time") shall commence (i) six (6) hours after the
time when the Notice of Readiness is received or deemed
to be effective, as defined in Section 4.9, or (ii) when
the LNG Tanker is "all fast alongside" the berth and
ready to receive cooldown LNG or cargo, whichever first
occurs, and shall end when the loading and return lines
of the LNG Tanker are disconnected from the Seller's
loading and return lines and all cargo papers necessary
for departure required to be furnished by Seller are
delivered on board in proper form and the LNG Tanker is
permitted to proceed to sea.
(c) Allotted Loading Time shall be extended to include:
(i) The period during which proceeding from the
anchorage, berthing, loading or clearing of the LNG
Tanker to proceed to sea after completion of
loading is delayed, hindered or suspended by a
Buyer, Buyers' Transporter, LNG Tanker's master,
port authority or any third party for reasons of
safety, weather or otherwise and over which Seller
has no control;
(ii) The period of any delays attributable to the
operation of an LNG Tanker, including the period of
time such LNG Tanker:
(1) awaits a berth by reason of the exercise by
Seller of its rights under Section 4.8, or
(2) receives LNG for purging and cooldown, except
when:
(A) the LNG Tanker met the Arrival
Temperature Requirement, and
(B) the purging and cooldown is not due to an
event which extends Allotted Loading Time
under this Section 4.12(c);
(iii) Any period during which berthing or loading of
an LNG Tanker is delayed, hindered or
suspended by reason of Force Majeure pursuant
to Article 15; and
(iv) Any period of delay caused by occupancy of the
berth:
(A) By a previous LNG Tanker, provided such
occupancy is for reasons attributable to such
LNG Tanker;
(B) By either a previous LNG Tanker or another
vessel on its scheduled loading date (ignoring
any change in the schedule of the vessel
occupying the berth made after departure of
the LNG Tanker from the Unloading Port); or
(C) By either a previous LNG Tanker or another
vessel that arrived prior to the LNG Tanker
when the LNG Tanker arrived after its
scheduled loading date (ignoring any change in
the LNG Tanker's scheduled loading date after
departure of the LNG Tanker from the Unloading
Port), except that there shall be no addition
to Allotted Loading Time under this clause (C)
either:
(1) for any period in excess of twenty-four
(24) hours, or
(2) if the LNG Tanker arrived more than
twenty-four (24) hours prior to 0:00 a.m.
local time on the scheduled loading date
of the vessel occupying the berth (unless
loading of such vessel was necessary in
order to maintain production of the
liquefaction facilities).
4.13 Demurrage
(a) If Actual Loading Time exceeds Allotted Loading Time (as
extended in accordance with Section 4.12) in loading any
LNG Tanker, Seller shall pay to Buyers demurrage at the
daily rate provided in Buyers' Transportation Agreement,
but not to exceed the daily demurrage rate payable by
Seller under Seller's Transportation Agreement, for each
day or portion thereof.
(b) Buyers shall invoice Seller for amounts due under this
Section 4.13 and Seller shall pay the invoice in
accordance with Article 10.
(c) Under Buyers' Transportation Agreement, demurrage
payments to Buyers' Transporter in any calendar year will
be subject to refund to the extent that the aggregate of
demurrage payments and freight payments received by
Buyers' Transporter exceeds the minimum amount required
to be paid under Buyers' Transportation Agreement for
transportation of the Fixed Quantities in such calendar
year. If Buyers receive from Buyers' Transporter any such
refund, Buyers shall promptly pay to Seller a portion
thereof calculated by multiplying the total refund by a
fraction, the numerator of which is the amount paid by
Seller in respect of demurrage hereunder during the year
and the denominator of which is the total amount received
by Buyers' Transporter in respect of demurrage during
such year.
4.14 Effect of Loading Port Delays; Transportation Costs
(a) If an LNG Tanker is delayed in berthing and/or
commencement of loading, for a reason which would not
result in an extension of Allotted Loading Time under
Section 4.12(c), and if as a result of such reason the
commencement of loading is delayed beyond thirty (30)
hours after Notice of Readiness has been given, then for
each full hour by which commencement of loading is
delayed beyond such thirty-hour period, Seller shall pay
Buyer or its designee for boil-off during such delay at
the Contract Sales Price applicable to the cargo of LNG
next to be loaded. The hourly BTU boil-off rate to be
applied for such purpose shall be determined by actual
average boil-off experience of the LNG Tankers as
determined at appropriate intervals, but the total boil-
off during such delay shall never exceed the quantity of
LNG on board the LNG Tanker at the commencement of the
said thirty-hour period. Buyers shall invoice Seller for
amounts due under this Section 4.14(a) and Seller shall
pay the invoice in accordance with Article 10.
(b) If there should become due from Buyers to Buyers'
Transporter at any time any of the following, namely:
(i) Any payment or payments on account of non-
utilization of an LNG Tanker resulting from an
event or circumstance of Force Majeure affecting
Seller caused by an LNG vessel other than an LNG
Tanker which payment or payments:
(A) shall not exceed, on a daily basis, the daily
demurrage rate provided in Section 4.13 for
the first ninety (90) days, and
(B) shall be payable for any days in excess of one
hundred eighty (180) days of such LNG Tanker
non-utilization caused by such Force Majeure
affecting Seller at the rate provided in
Buyers' Transportation Agreement, provided
that should Buyers' Transportation Agreement
be terminated with respect to the LNG Tanker
by reason of such event of Force Majeure, the
payment shall be equal to the termination
payment provided for in Buyers' Transportation
Agreement, and provided further that the basis
for calculating all payments referred to in
this clause (B) is reasonable when compared
with the obligations of Seller under Seller's
Transportation Agreement in the same
circumstances; in any event the amount payable
under this clause (i) shall not exceed the
maximum amount then available by way of P. and
I. cover in respect of the LNG vessel causing
the damage, and if amounts in respect of all
damages resulting from the incident which
would be recoverable by Seller from such P.
and I. cover exceed the maximum amount then
available by way of P. and I. cover, then
there shall be a proportionate reduction in
the amount payable under this clause (i) so
that such reduced amount bears the same
relationship to the maximum amount then
available by way of P. and I. cover as the
amount otherwise payable hereunder would bear
to the total amount of Seller's damages
resulting from the incident which are
recoverable from such P. and I. cover,
provided that Seller agrees not to include in
claims of Seller for damage caused to the
Badak Facility by an LNG vessel other than an
LNG Tanker any amounts paid or payable by
Seller to Seller's Transporter on account of
non-utilization of such LNG vessel or other
LNG vessels of Seller's Transporter; or
(ii) Any payment or payments on account of Buyers'
failure to provide Buyers' Transporter with the
minimum quantities of LNG required under Buyers'
Transportation Agreement, if the deficiency is
caused by the failure of Seller to satisfy its
obligations under this Contract, excluding,
however, any payment or payments as a result of
delay in the commencement of deliveries of LNG as
contemplated by Section 7.1(b); then, if and to the
extent that the amount payable to Buyers'
Transporter has not been paid and is not payable to
Buyers under Section 4.13, such amount shall be
paid to Buyers by Seller. This paragraph (b) shall
not require Seller to pay any amount which becomes
payable to Buyers' Transporter as the result of an
event or circumstance of Force Majeure affecting
Buyers, or as the result of Buyers' breach of their
obligations under this Contract. It is understood
that no amount will be payable by Seller under this
paragraph (b) by reason of non-utilization of an
LNG Tanker caused by the fault or negligence of
such LNG Tanker or Buyers' Transporter. Any
payments under this Section 4.14(b) shall be in
such amounts as reflect any credits to Buyers for
other revenues earned by the LNG Tanker during the
period of Force Majeure.
Buyer shall invoice Seller for payments under this
paragraph (b) and Seller shall pay those invoices in
accordance with Article 10.
ARTICLE 5 - ONSHORE FACILITIES
5.1 Receiving Facilities
Buyers have heretofore constructed or will construct LNG
receiving terminal facilities at the Unloading Ports
including, without limitation, berthing and unloading
facilities, LNG storage tanks, vessel services facilities and
regasification plants (the "Receiving Facilities").
5.2 Badak Facility
Seller has heretofore constructed or will construct at
Bontang, East Kalimantan, liquefaction plant facilities to be
used by Seller, including, without limitation, gas
transmission pipelines, processing facilities, storage tanks,
utilities, berthing and loading facilities (the "Badak
Facility").
ARTICLE 6 - DURATION OF CONTRACT
This Contract shall come into force and effect as of and from
the date hereof and shall continue in effect until the expiration
of the parties' respective obligations to sell and purchase LNG as
provided in Article 7 or the earlier termination of this Contract
pursuant to Section 10.5 or Article 26. If Seller and any Buyer or
Buyers so agree at least five (5) years before the time this
Contract would otherwise expire, the term of this Contract as to
such Buyer or Buyers may be extended on such terms and conditions
as may be mutually agreed.
ARTICLE 7 - QUANTITIES
7.1 Fixed Quantities
(a) During each calendar year specified below (each such
period being called a "Fixed Quantity Period"), Seller
shall sell and deliver to each Buyer, and each Buyer
shall purchase, receive and pay for, or pay for if not
taken, at the Contract Sales Price, a quantity of LNG
having a heating value as specified for such Buyer for
such Fixed Quantity Period (each such quantity being
called a "Fixed Quantity") as follows:
Calendar Fixed Quantities for Each Buyer
Year (billions of BTU's)
Osaka Tokyo Toho Total
Gas Gas Gas
1994 41,496 31,122 5,187 77,805
1995 46,683 33,715.5 5,187 85,585.5
1996 51,870 36,309 5,187 93,366
1997-2013 57,057 41,496 5,187 103,740
The above Fixed Quantities are subject to adjustment as
provided in Sections 7.1(b), 7.1(c), 7.1(d), 7.1(e),
7.3(a)(i) and 7.3(a)(iii). After giving effect to any
such adjustment, the term "Fixed Quantity" shall mean the
applicable Fixed Quantity as so adjusted, and the
respective obligations of Seller to sell and deliver, and
each Buyer to purchase, receive and pay for, or pay for
if not taken, Fixed Quantities of LNG in any Fixed
Quantity Period, shall apply to the applicable Fixed
Quantities as so adjusted.
(b) If Seller anticipates any difficulty in supplying any
part of the Fixed Quantities for 1994 by reason of any
new stage of the Badak Facility not being completed in
time, then:
(i) to the extent LNG is then available to Seller from
its existing facilities, Seller shall supply such
LNG (as Fixed Quantities hereunder) during the
period prior to such completion, and
(ii) if no or insufficient LNG can be made available,
then the parties shall consult and agree upon
reductions in Fixed Quantities for the 1994 Fixed
Quantity Period.
(c) Buyers shall be entitled to increase the Fixed Quantity
listed in Section 7.1(a) for each Buyer for each Fixed
Quantity Period by delivery to Seller of a notice (a
"Fixed Quantity Notice") as follows:
(i) The Fixed Quantity Notice for such increase, if
any, for the Fixed Quantity Period in each of 1994,
1995 and 1996 shall be given to Seller on or before
September 1, 1993, specifying for each Buyer the
Fixed Quantity for each such Fixed Quantity Period.
The Fixed Quantity of a Buyer for any such Fixed
Quantity Period shall not be less than the Fixed
Quantity for the last preceding period.
(ii) The Fixed Quantity Notice for such increase, if
any, for the Fixed Quantity Period in each of the
years from 1997 through 2013 shall be given to
Seller on or before September 1, 1996, specifying
for each Buyer the Fixed Quantity for each such
Fixed Quantity Period. The Fixed Quantity for a
Buyer for the Fixed Quantity Period in each of the
years 1998 to 2013 shall be equal to the Fixed
Quantity for such Buyer for the Fixed Quantity
Period in 1997. If Buyers deliver a Fixed Quantity
Notice pursuant to subparagraph (i) above in which
a Buyer's Fixed Quantity for 1996 is greater than
the amount of its Fixed Quantity for 1997 listed in
Section 7.1(a), then Buyers shall deliver a Fixed
Quantity Notice which provides for a Fixed Quantity
for such Buyer for the Fixed Quantity Periods for
the years 1997 through 2013 which is not less than
its Fixed Quantity for the Fixed Quantity Period in
1996.
(iii) Each Fixed Quantity Notice shall be given
jointly and signed by all Buyers and shall
specify for each Buyer the amount of the Fixed
Quantity for each Fixed Quantity Period. Any
such notice shall be effective and irrevocable
upon Seller's receipt thereof, and the Fixed
Quantity of each Buyer thereafter shall be the
Fixed Quantity set forth in the Fixed Quantity
Notice.
(iv) The aggregate for all Buyers of the Fixed
Quantities for any Fixed Quantity Period shall not
exceed 119,301 billion BTU's.
(d) The Fixed Quantity of a Buyer for any Fixed Quantity
Period may be reduced by the exercise of an adjustment
("Downward Adjustment") as follows:
(i) Each Buyer shall have the right to exercise a
Downward Adjustment only by giving notice that is
received by Seller not later than October 15 of the
year preceding the DA Period, and/or not later than
October 31 of the DA Period, subject to the limits
in subparagraph (ii) below. Each such notice shall
state that it constitutes an exercise of a Downward
Adjustment. Notice of exercise of a Downward
Adjustment shall be effective and irrevocable upon
Seller's receipt thereof.
(ii) The total amount by which the Fixed Quantity of a
Buyer may be reduced shall not exceed ten percent
(10%) of such Buyer's Fixed Quantity under Section
7.1(a) (as increased pursuant to any exercise of
Buyers' entitlement under Section 7.1(c) but
without any adjustment pursuant to Sections 7.1(b),
7.1(d)(i), 7.3(a)(i) or 7.3(a)(iii)) for the DA
Period.
(iii) The cumulative aggregate amounts by which a
Buyer reduces its Fixed Quantities for all
Fixed Quantity Periods shall not exceed, for
each Buyer, fifty percent (50%) of such
Buyer's Fixed Quantity under Section 7.1(a)
(as increased pursuant to any exercise of
Buyers' entitlement under Section 7.1(c) but
without any adjustment pursuant to Sections
7.1(d)(i), 7.1(e), 7.3(a)(i) or 7.3(a)(iii))
for the Fixed Quantity Period in 1997.
(iv) If by notice to Buyers not later than December 31,
2010 Seller shall so require, each Buyer shall in
the period prescribed in paragraph (A) below,
commencing on January 1, 2014, take and pay for a
quantity of LNG ("Year 21 Quantity") equal to the
aggregate amount by which such Buyer (by the
exercise of Downward Adjustments) reduces its Fixed
Quantities during all Fixed Quantity Periods
(including the years 2011, 2012 and 2013). For this
purpose:
(A) The period within which such Buyer shall take
and pay for the Year 21 Quantity shall be a
fraction of a year, such fraction calculated
as the total Year 21 Quantities (in billions
of BTU's) for all Buyers divided by ninety
percent (90%) of the total Fixed Quantities
under Section 7.1(a) (as increased pursuant to
any exercise of Buyers' entitlement under
Section 7.1(c) but without any adjustment
pursuant to Sections 7.1(d)(i), 7.1(e),
7.3(a)(i) or 7.3(a)(iii)) for all Buyers for
the Fixed Quantity Period in 1997;
(B) Such period shall be a Fixed Quantity Period
only for the Year 21 Quantity, and the Year 21
Quantity of each Buyer shall be a Fixed
Quantity for such Buyer for such period; and
(C) The Year 21 Quantity shall be sold and
delivered, and purchased and received, under
and upon the terms of this Contract, except
that Buyers may not exercise a Downward
Adjustment in respect thereof.
(e) If an event of Force Majeure as to LNG Tankers under
Section 15.1(b) occurs and, notwithstanding all measures
taken by Buyers pursuant to Section 15.2(b), Buyers are
unable either:
(i) to resume normal performance within a reasonable
period of time, or
(ii) to adopt a plan which, taking into account the then
existing circumstances, will provide reasonable
assurance to Seller that normal performance will be
resumed within a period that will hold the
resulting Force Majeure Deficiency to a level which
can be restored within a reasonable period of time
(thereby minimizing Seller's financial loss and
relieving the pressure on Buyers to increase the
quantities to be taken during later Fixed Quantity
Periods), then Seller and Buyers will consult
together and in good faith try to reach agreement
as to what to do.
If, within a period of nine (9) months from the date on
which such event of Force Majeure occurred (or, if
longer, the period ending with the end of the Fixed
Quantity Period during which such event of Force Majeure
occurred), Buyers are unable to adopt a plan that meets
the standards in subparagraph (ii) above and gives
reasonable assurance to Seller that performance will be
resumed within the shortest practical time, then:
(A) any plan to resume normal performance thereafter
adopted by Buyers shall be with Seller's consent,
which shall not unreasonably be withheld, and
(B) then, or at any later time before such a plan has
been adopted, Buyers, at the request of Seller in
connection with the commitment by Seller to sell to
third parties all or a portion of the quantities
for which transportation has not been made
available, shall agree to the reduction of the
Fixed Quantities to the extent and for the term of
such commitment which Seller proposes to make;
provided that, if after the expiration of such
period such a plan to resume normal performance is
adopted by Buyers, Buyers shall no longer be
obligated to agree to a reduction in Fixed
Quantities.
7.2 Reallocation of Cargoes; Rate of Deliveries
(a) Each Buyer, upon appropriate notice to Seller, may
reallocate all or part of an LNG Tanker cargo from one
Buyer to another Buyer.
In case of such reallocation, the ownership of such cargo
or part thereof shall be transferred directly from Seller
to the new Buyer in place of the original Buyer, but the
respective Fixed Quantities of the Buyers concerned shall
not be changed and the cargo in question shall be deemed
to be received by the original Buyer in connection with
its take or pay obligations provided for in Section 7.3.
Each such reallocation shall be documented in a form to
be established by Seller and Buyers, executed by the
original Buyer and the Buyer which will actually receive
the cargo, which document will provide that the receiving
Buyer will assume and be responsible to Seller for
performance of the obligations of the original Buyer in
respect of such cargo, and that such cargo is deemed to
be taken by the original Buyer in connection with its
take or pay obligations provided for in Section 7.3.
Buyers will exercise the right to reallocate cargoes in
a manner that will not materially disrupt the shipping
schedules at the Badak Facility.
(b) Within each Fixed Quantity Period the quantities to
be delivered by Seller and received by Buyers at
the Badak Facility shall be delivered and received
at rates and intervals which are reasonably
constant over the course of such Fixed Quantity
Period, after taking into account all commitments
of the Badak Facility and taking into consideration
the downtime, shipping and other matters referred
to in Article 12, so as to assure, as nearly as
practicable, an even production rate at the Badak
Facility and an even rate of deliveries at the
Delivery Point.
7.3 Quantity Deficiency
(a) If, during any Fixed Quantity Period, a Buyer should fail
to take the full Fixed Quantity applicable thereto, such
Buyer shall pay Seller, at the Contract Sales Price in
effect as of the last day of such Fixed Quantity Period,
for the quantities of LNG required to be purchased but
which were not taken by such Buyer during such Fixed
Quantity Period (any such quantities being called a
"Quantity Deficiency"), subject, however, to paragraphs
(b), (c) and (d) below and the following:
(i) If, after taking into account all adjustments
provided for in Sections 7.3(b), (c) and (d), the
Quantity Deficiency of a Buyer at the end of any
Fixed Quantity Period amounts to less than 2.9
trillion BTU's, the amount of such Quantity
Deficiency shall be carried forward and added to
the Fixed Quantity of such Buyer for the next
succeeding Fixed Quantity Period.
(ii) If, at the time each Annual Program is developed,
the Quantity Deficiency of a Buyer for the
applicable year is estimated to amount to less than
a full cargo, such Buyer shall have the right to
request an increase in the quantities which such
Buyer wishes to take in such year in an amount
sufficient to fill out such cargo (such right being
herein referred to as a "Round-Up Request"). Any
such Round-Up Request shall not, however, increase
the Fixed Quantity of such Buyer. If Buyer does not
make a Round-Up Request, or if Seller does not
accept such Round-Up Request, the non-delivery of
the partial cargo of Fixed Quantity shall not
constitute a failure of Seller to make LNG
available for sale for the purpose of paragraph (b)
below.
(iii) If, at the end of any Fixed Quantity Period, a
Buyer has purchased and received quantities of
LNG hereunder in excess of the Fixed Quantity
of such Buyer for such Fixed Quantity Period
other than Make-Up LNG or Restoration
Quantities, the excess shall be applicable to
reduce the Fixed Quantity of such Buyer for
the next succeeding Fixed Quantity Period.
(b) The obligation (set forth in paragraph (a) above) of each
Buyer with regard to any Fixed Quantity Period to pay for
Fixed Quantities not taken shall be reduced by the
quantity of LNG which such Buyer was unable to purchase
because of an event of Force Majeure affecting either
Seller or such Buyer or because of Seller's failure for
any other reason to make such quantity available for sale
in accordance with this Contract.
(c) In calculating the quantity of LNG delivered by Seller
and purchased by a Buyer for each Fixed Quantity Period,
quantities delivered and purchased within the first seven
(7) days of the next following Fixed Quantity Period
shall be included, provided such quantities were
scheduled in the Annual Program for the Fixed Quantity
Period with respect to which the calculation is being
made.
(d) A reduction shall be made to any Quantity Deficiency
equal to the amount by which such Quantity Deficiency
resulted from a partial loading of an LNG Tanker during
the relevant Fixed Quantity Period due to reasons
attributable to Seller.
7.4 Allocation of Deliveries Between Buyers and Other Purchasers
(a) Whenever deliveries of LNG by Seller under this Contract
must be reduced by reason of Force Majeure affecting
Seller's ability to produce or load LNG from the Badak
Facility, an allocation of quantities then available for
sale at the Badak Facility will be made between Buyers
and other purchasers of LNG from the Badak Facility. At
such times the total quantities available for sale from
the Badak Facility shall be allocated among the
purchasers therefrom (including the Buyers) pro rata in
the ratio of their respective quantities which are
eligible for allocation as provided below. The quantities
eligible for such allocation shall, as to Buyers, be the
Fixed Quantities to be purchased hereunder during the
period of such Force Majeure and, as to other purchasers,
be those fixed or contract quantities of LNG which are
committed for sale from the Badak Facility during the
period of such Force Majeure in satisfaction of Seller's
contracts with other purchasers which provide for sales
of LNG over a term of at least fifteen (15) years.
(b) If such Force Majeure does not preclude full production
and loading of all Fixed Quantities under the allocation
formula described in paragraph (a) above, but is of such
an extent as to prevent Seller from producing and loading
all Make-Up LNG and Restoration Quantities scheduled for
delivery from the Badak Facility to Buyers and equivalent
quantities (including quantities required to make good
any exercise of an allowance) scheduled for delivery from
the Badak Facility to other purchasers under LNG sales
contracts which provide for sales over a term of at least
fifteen (15) years, quantities of such LNG as are
available shall be allocated between Buyers and such
other purchasers in proportion to the respective
quantities so scheduled.
7.5 Make-Up LNG
If pursuant to Section 7.3(a) a Buyer shall have paid for any
quantity of LNG which was not taken by such Buyer ("Take-or-
Pay Quantity"), then in any subsequent year the said Buyer may
purchase up to an equal quantity of LNG from Seller as make-up
LNG ("Make-Up LNG") to the extent not previously made up. A
Buyer may request Make-Up LNG by giving written notice to
Seller as provided in Section 12.1. If, during any year for
which Make-Up LNG has been requested,
(i) Seller has uncommitted quantities of LNG available for
such purposes, and
(ii) such Buyer shall have first taken and paid for its
Fixed Quantity for such year, then Seller shall
sell to such Buyer the quantity of Make-Up LNG
requested.
A Buyer's right to purchase Make-up LNG under this
Section 7.5 shall expire twelve (12) months after:
(A) if Buyer is required to purchase a Year 21
Quantity, the end of the period prescribed in
Section 7.1(d)(iv)(A), or
(B) if Buyer is not required to purchase a Year 21
Quantity or there is no such quantity for such
Buyer, the end of the last Fixed Quantity Period,
unless such Buyer shall have requested Make-Up LNG
during the preceding twelve (12) months and the
Make-Up LNG requested shall not have been delivered
to such Buyer. In such circumstance, the parties
shall consult and agree upon a deferred schedule
for Buyer to take delivery of any outstanding
balance of Take-or-Pay Quantity.
Each Buyer shall pay for Make-Up LNG at the Contract
Sales Price in effect as of the date of delivery, reduced
by the amount previously paid on account of the Take-or-
Pay Quantity, or the part thereof, being made up by such
sale. Take-or-Pay Quantities shall be made up, and prior
payments applicable thereto applied, in the same
chronological order in which such quantities accrued.
7.6 Force Majeure Deficiency
(a) If during any Fixed Quantity Period or Fixed Quantity
Periods all or any portion of the Fixed Quantity of LNG
required to be taken by any Buyer therein is not
delivered by Seller or taken by such Buyer by reason of
Force Majeure (any such quantity not taken for such
reason being called a "Force Majeure Deficiency"), Seller
and the Buyer or Buyers concerned shall each make best
efforts to restore the Force Majeure Deficiency in full
by Seller selling and the Buyer or Buyers purchasing such
quantities of LNG prior to the expiration of the last
Fixed Quantity Period. The restoration quantities so
agreed ("Restoration Quantities") will be scheduled for
delivery pursuant to Article 12 at the mutual convenience
of the parties. Such Restoration Quantities shall be
subordinate to Make-Up LNG requested pursuant to Section
7.5.
(b) If an event of Force Majeure relieves or delays the
performance by any Buyer of its obligations under
this Contract and causes a reduction in deliveries
of LNG, and Seller sells to third parties
quantities of LNG which Buyers are unable to
purchase, then the Force Majeure Deficiency shall
be reduced by the amount, if any, that the Seller's
Gas Supply Obligation (including amounts so sold to
third parties) exceeds the estimate of Proved
Remaining Recoverable Reserves stated in the most
recent Certificate as a result of such sales.
7.7 Allocation of Make-Up LNG and Restoration Quantities
Whenever Make-Up LNG is requested under Section 7.5 and/or
Restoration Quantities are requested under Section 7.6(a) by
a Buyer or Buyers, and quantities are requested for similar
purposes (including quantities required to make good any
exercise of an allowance) by other purchasers from the Badak
Facility, and uncommitted quantities of LNG are not available
from the Badak Facility to meet all such requests, then the
quantities of LNG which are available from the Badak Facility
for such purposes shall be allocated, as between such Buyer or
Buyers on the one hand and such other purchasers on the other
hand, based on the proportion of the contract quantities of
each requesting purchaser (including such Buyer or Buyers) to
the total of the contract quantities of all of the requesting
purchasers.
ARTICLE 8 - CONTRACT SALES PRICE
8.1 Contract Sales Price
The contract sales price ("Contract Sales Price") applicable
to the quantities of LNG to be sold and delivered at the
Delivery Point and to any quantities of LNG required to be
taken but which are not taken and are required to be paid for
by a Buyer under this Contract, expressed in United States
Dollars per million British Thermal Units (US$/MMBTU), shall
be determined according to the following formula:
P = A x I - B
where
P = the Contract Sales Price expressed in US$/MMBTU
A = 0.153 (barrel/MMBTU)
B = 0.08 (US$/MMBTU)
I = the arithmetic average of the realized export
prices in U.S. Dollars per barrel, f.o.b.
Indonesia, of all field classifications of
Indonesian crude oils then being sold and exported,
except premiums and except such prices for spot
sales.
The Contract Sales Price to be applied to the BTU's comprising
each cargo shall be that Contract Sales Price in effect as of
the date of completion of loading of such cargo.
8.2 Determination of "I"
A redetermination of "I" in the formula in Section 8.1 shall
be made as of each effective date on which either:
(i) the realized export prices (except premiums and except
prices for spot sales) of more than one of the field
classifications of Indonesian crude oils then being sold
and exported shall have changed from the respective
prices therefor included in the last preceding
determination of "I" pursuant to this Section 8.2, or
(ii) two or more field classifications of such crude oils
shall have been added to or deleted from the field
classifications of crude oils being exported from
Indonesia since the date of the last preceding
determination of "I" made pursuant to this Section 8.2.
The export price and classification data required to make
the above determination shall be verified by the Ministry
of Mines and Energy of the Republic of Indonesia.
ARTICLE 9 - TRANSFER OF TITLE
Delivery shall be deemed completed and title and risk of loss
shall pass from Seller to the purchasing Buyer as the LNG reaches
the Delivery Point.
ARTICLE 10 - INVOICES AND PAYMENT
10.1 Cargo Invoices and Documents
Promptly after completion of each loading of an LNG Tanker,
Seller, or its representative, shall furnish to the receiving
Buyer, or Buyers' Representative, a certificate of volume
loaded together with such other documents concerning the cargo
as may be reasonably requested by Buyers for the purpose of
Japanese customs clearance.
Seller shall further, within forty-eight (48) hours of
completing the loading, cause a laboratory analysis to be
completed to determine the quality and BTU content of the LNG
and shall promptly furnish Buyer, or Buyers' Representative,
a certificate with respect thereto together with details of
the calculation of the number of BTU's sold.
Promptly upon completion of such analysis and calculation,
Seller, or its representative, shall furnish by telex or
telegram to the receiving Buyer an invoice, stated in U.S.
Dollars, in the amount of the Contract Sales Price for the
number of BTU's sold together with component mol fractions,
temperature, pressure and volume delivered. At the same time,
Seller shall send Buyer a signed copy of the invoice and
relevant documents showing the basis for the calculation
thereof.
10.2 Other Invoices
In the event that any moneys are due from one party to the
other hereunder, including, without limitation, amounts
payable pursuant to Section 7.3 on account of Fixed Quantities
of LNG required to be purchased but which were not taken by a
Buyer, then the party to whom such moneys are due shall
furnish or cause to be furnished an invoice by telex or
telegram therefor and relevant documents showing the basis for
the calculation thereof. The procedure set forth in Section
10.1 for sending a signed copy of such invoice shall be
followed.
10.3 Invoice Due Dates
Each invoice to a Buyer referred to in Section 10.1 above
shall become due and payable by such Buyer on the eighth (8th)
Business Day in Japan after the date on which the invoice
(which may be in telex or telegraphic form) has been received
by such Buyer in Japan.
Each other invoice to a Buyer hereunder shall become due and
payable by such Buyer on the twentieth (20th) calendar day
after the date of such Buyer's receipt of such invoice in
Japan.
Each invoice to Seller shall become due and payable on the
fourteenth (14th) calendar day after Seller's receipt thereof.
If any invoice due date for Buyer is not a Business Day in
Japan, such invoice shall become due and payable on the next
day which is a Business Day in Japan.
In the event the full amount of any invoice is not paid when
due, any unpaid amount thereof shall bear interest, compounded
annually, from and including the day following the due date up
to and including the date when payment is made, at an interest
rate two percent (2%) greater than the Base Rate in effect
from time to time during the period of delinquency. Such
interest rate shall be adjusted up or down, as the case may
be, to reflect any changes in the Base Rate as of the dates of
such changes in the Base Rate.
10.4 Payment
Each Buyer shall pay, or cause to be paid, in U.S. Dollars all
amounts which become due and payable by such Buyer pursuant to
any invoice issued hereunder, to a bank account or accounts in
the United States to be designated by Seller. Seller shall
pay, or cause to be paid, in U.S. Dollars all amounts which
become due and payable by Seller pursuant to any invoice
issued hereunder to a bank account or accounts in Japan
designated by and in accordance with instructions issued by
Buyers. The paying party shall not be responsible for a
designated bank's disbursement of amounts remitted to such
bank, and a deposit in immediately available funds of the full
amount of each invoice with such bank shall constitute full
discharge and satisfaction of the obligations under this
Contract for which such amounts were remitted. Each payment of
any amount owing hereunder shall be in the full amount due
without reduction or offset for any reason, including, without
limitation, taxes, exchange charges or bank transfer charges.
Transfer of funds to the Seller's bank in the United States
effected from Japan before the close of business in Japan on
or before the due date of any invoice shall be deemed timely
payment notwithstanding that such U.S. bank cannot credit such
transfer as immediately available funds for a period of up to
fourteen (14) hours by reason of the time difference between
Japan and the United States, or for one or more days which are
not banking days in the United States.
10.5 Seller's Rights Upon Buyer's Failure to Make Payment
If payment of any invoice for quantities of LNG sold hereunder
or for Fixed Quantities of LNG not taken and for which a Buyer
is obligated to pay pursuant to this Contract is not made in
accordance with this Contract within sixty (60) days after the
due date thereof, Seller shall be entitled, upon giving thirty
(30) days' written notice to such Buyer, to suspend subsequent
sales to such Buyer until the amount of such invoice and
interest thereon has been paid, and such Buyer shall not be
entitled to any make-up rights in respect of such suspended
sales. If any such invoice is not paid within one hundred
twenty (120) days after the due date thereof, then, subject to
the further provisions of this Section 10.5, Seller shall have
the right, at Seller's election, upon not less than eighty
(80) days' notice to Buyer or Buyers, as the case may be, to
exercise either of the following options:
(i) Seller may terminate this Contract in respect of the
defaulting Buyer only, in which event this Contract shall
continue in effect between Seller and the other Buyers
just as though the defaulting Buyer had never been a
party and the quantities of LNG thereafter to be
purchased and received by such defaulting Buyer had never
been included in this Contract; or
(ii) Seller may terminate this Contract in its entirety
as to Buyers unless prior to such termination
arrangements shall have been made which are
satisfactory to Seller for the payment of all
amounts owed Seller by the defaulting Buyer and for
the assumption of the LNG quantity and other
obligations of the defaulting Buyer under this
Contract by one or more Buyer(s) not defaulting.
Termination by Seller under clause (i) or (ii) above
shall become effective upon the date specified in such
notice from Seller. Any such termination shall be without
prejudice to any other rights and remedies of Seller
arising hereunder or by law or otherwise, including the
right of Seller to receive payment of all obligations and
claims which arose or accrued prior to such termination
or by reason of such default by a Buyer or Buyers.
10.6 Disputed Invoices
In the event of disagreement concerning any invoice,
(i) the invoiced party shall make provisional payment of the
amount which is believed to be correct and shall
immediately notify the other of the reasons for such
disagreement, except that in case of obvious error in
computation the correct amount shall be paid disregarding
such error, and
(ii) the invoiced party shall make provisional payment of the
amount in dispute to an interest bearing escrow account
established and controlled jointly by Seller and the
relevant Buyer. The amount in dispute (including account
interest thereon) shall remain in the escrow account
until resolution of the disagreement, after which the
amount shall be paid to the party entitled thereto. If,
in the case of disagreement concerning one or more
Seller's invoices, the amount of payments not in dispute
is insufficient to permit Seller to meet its periodic
obligations to its lenders for debt service in respect of
the Financing, then Seller may pledge its rights in such
escrow account to lenders as security for such Financing.
Invoices may be contested or modified only if, within a
period of ninety (90) days after receipt thereof, Buyer
or Seller serves notice on the other, questioning their
correctness. If no such notice is served, invoices shall
be deemed correct and accepted by both parties. Promptly
after resolution of any dispute as to an invoice, the
amount of any overpayment or underpayment shall be paid
by Seller or Buyer to the other, as the case may be, plus
interest at the rate provided in Section 10.3 from the
date payment was due to the date of payment.
ARTICLE 11 - QUALITY
11.1 Gross Heating Value
The LNG when delivered by Seller to Buyers shall have, in a
gaseous state, a Gross Heating Value of not less than 1065 BTU
per Standard Cubic Foot and not more than 1165 BTU per
Standard Cubic Foot. The expected range will be between 1105
and 1160 BTU per Standard Cubic Foot.
11.2 Components
The LNG when delivered by Seller to Buyers shall, in a gaseous
state, contain not less than eighty-five molecular percentage
(85 mol%) of methane (CH4) and, for the components and
substances listed below, such LNG shall not contain more than
the following:
A. Nitrogen (N2), 1.0 mol%.
B. Butanes (C4) and heavier, 2.00 mol%.
C. Pentanes (C5) and heavier, 0.10 mol%.
D. Hydrogen sulfide (H2S), 0.25 grains per 100 Standard
Cubic Feet (0.25 grains/100 scf).
E. Total sulfur content, 1.3 grains per 100 Standard Cubic
Feet (1.3 grains/100 scf).
Although the LNG which Seller delivers to Buyers is permitted
to contain the sulfur concentrations shown in clauses D and E
above, under normal operating conditions at the Badak
Facility, Seller would expect such concentrations to be
materially less.
Should any question regarding quality of the LNG arise, Buyers
and Seller shall consult and cooperate concerning such
question.
ARTICLE 12 - SCHEDULING
12.1 Annual Program
(a) Not later than ninety (90) days prior to the beginning of
each calendar year commencing with the year in which the
first Fixed Quantity Period occurs, Seller shall give
written notice to Buyers of the anticipated quantities of
LNG to be available for sale hereunder from the Badak
Facility for each calendar quarter of the next calendar
year, specifying any scheduled downtime of the Badak
Facility. On or before October 15 of each year in which
such notice is given, each Buyer shall advise Seller in
writing of:
(i) the quantities such Buyer wishes to take during
each calendar quarter of the following year,
specifying the amount of any Make-Up LNG and any
Restoration Quantities (in addition to Fixed
Quantities) requested pursuant to Article 7, and
(ii) any planned downtime for Receiving Facilities,
Buyers' shipping capacity and scheduled drydocking
for LNG Tankers.
Seller and Buyers shall thereupon consult together with
a view to reaching agreement by December 1st of the same
year and Seller shall issue a programming schedule,
including provisional loading dates, for quantities sold
hereunder to be loaded in full cargo lots at the Badak
Facility during each calendar month during the following
year (the "Annual Program"), and in so doing Seller and
Buyers shall take into consideration the contents of the
above notices. The Annual Program shall take into account
Seller's commitments to other purchasers of LNG from the
Badak Facility. Such Annual Program and the Ninety-Day
Schedules referred to below (and any revisions thereof)
are intended to assist the parties in planning their
respective operations during the periods involved.
The content of the Annual Program and Ninety-Day Schedules
shall not reduce the entitlement of any party during any Fixed
Quantity Period to sell and be paid for, or to purchase and
receive, as the case may be, the quantities of LNG required
under Article 7 to be sold and paid for during such Fixed
Quantity Period. Seller and Buyers will each take all
appropriate steps to carry out each Annual Program and Ninety-
Day Schedule.
(b) An Annual Program shall be amended to reflect requests
for:
(i) Make-Up LNG relating to a Take-or-Pay Quantity paid
for in respect of the immediately preceding year;
and/or
(ii) Restoration Quantities relating to a Force Majeure
Deficiency arising in respect of the immediately
preceding year; provided that the requested LNG is
available and such requests are received by Seller
not later than January 15 of the year to which such
Annual Program relates.
(c) An Annual Program shall be amended to the extent required
by the exercise by any Buyer of a Downward Adjustment.
12.2 Ninety-Day Schedules
Not later than the fifteenth (15th) day of each calendar
month, Seller shall, after discussion with each Buyer, deliver
to each Buyer a three-month forward plan of loadings (the
"Ninety-Day Schedule"), which follows the applicable Annual
Program (or most current draft thereof) as nearly as
practicable and sets forth the projected dates of loadings for
each of the next three (3) calendar months. Each Ninety-Day
Schedule shall reflect all adjustments, if any, necessitated
by deviation from prior Ninety-Day Schedules so as to maintain
as far as practicable the loadings forecast in the Annual
Program. Both parties shall cooperate to facilitate smooth
performance of the Ninety-Day Schedule. After consultation
with Buyers, Seller shall revise the Ninety-Day Schedule when
appropriate to meet operational requirements with the overall
objective of fulfilling the Annual Program as far as
practicable, taking into account any requests of Buyers for
adjustments.
ARTICLE 13 - MEASUREMENTS, TESTS AND ANALYSIS
13.1 Parties to Supply Devices
Buyers shall supply, operate and maintain, or cause to be
supplied, operated and maintained, suitable gauging devices
for the LNG tanks of the LNG Tankers, density, pressure and
temperature measuring devices, and any other measurement or
testing devices which are incorporated in the structure of LNG
Tankers or customarily maintained on shipboard.
Seller shall supply, operate and maintain, or caused to be
supplied, operated and maintained, devices required for
collecting samples and for determining quality and composition
of the LNG and any other measurement or testing devices which
are necessary to perform the measurement and testing required
hereunder at the Badak Facility.
13.2 Selection of Devices
All devices provided for in this Article 13 shall be chosen by
mutual agreement of the parties and shall be such as at the
time of selection are the most accurate and reliable devices
in their practical application. The required degree of
accuracy (which shall in any case be within the permissible
tolerances defined in Schedule A) of such devices selected
shall be mutually agreed upon by Buyers and Seller. In advance
of the use of any device the party providing such device shall
cause tests to be carried out to verify that such device has
the required degree of accuracy. The provisions of Section
13.10(a) shall apply to such tests.
13.3 Units of Measurement and Calibration
The parties will cooperate closely in the design, selection
and acquisition of devices to be used for measurements and
tests under this Article 13 in order that, to the maximum
extent possible, all measurements and tests may be conducted
either in American units of measurement or in metric units of
measurement. In the event that it becomes necessary to make
measurements and tests using a new system of units of
measurement, the parties shall establish mutually agreeable
conversion tables, or, if they are unable to agree, such
tables may be established by the procedures provided for
resolution of disputes on measurement and testing in Section
13.11. Measurement devices shall be calibrated as follows:
Measurement American Units Metric Units
Volume Cubic feet Cubic meters
Temperature Degrees Fahrenheit Degrees Centigrade
Pressure Pounds per square Kilograms per square
inch or inches of centimeter or
mercury millimeters of mercury
Length Feet Meters
Weight Pounds Kilograms
Density Pounds per cubic Kilograms per cubic
foot meter
13.4 Tank Gauge Tables of LNG Tankers
Buyers shall provide Seller, or cause Seller to be provided,
with a certified copy of tank gauge tables for each tank of
each LNG Tanker verified by a competent impartial authority or
authorities mutually agreed upon by the parties. Such tables
shall include correction tables for list, trim, tank
construction and any other items requiring such tables for
accuracy of gauging. Seller and Buyers shall each have the
right to have representatives present at the time each LNG
tank on each LNG Tanker is volumetrically calibrated. If the
LNG tanks of any LNG Tanker suffer distortion of such nature
as to cause a prudent expert reasonably to question the
validity of the tank gauge tables described herein (or any
subsequent calibration provided for herein), any Buyer or
Seller may require recalibration of such LNG tanks during any
period when the LNG Tanker is out of service for inspection
and/or repairs. Upon recalibration of the LNG tanks of the LNG
Tankers, the same procedures used to provide the original tank
gauge tables will be used to provide revised tank gauge tables
based upon the recalibration data. The calibration of tanks
provided for in this Section 13.4 shall constitute the only
calibration required for purposes of this Contract.
13.5 Gauging and Measuring LNG Volumes Delivered
Volumes of LNG delivered pursuant to this Contract shall be
determined by gauging the LNG in the tanks of the LNG Tankers
before and after loading.
Gauging the liquid in the tanks of the LNG Tankers and
measuring of liquid temperature, vapor temperature, vapor
pressure and liquid density in each LNG tank, trim and list of
the LNG Tankers, and atmospheric pressure shall be performed,
or caused to be performed, by the Buyer purchasing the LNG,
before and after loading.
The first gauging and measurements shall be made immediately
before the commencement of loading. The second gauging and
measurements shall take place immediately after the completion
of loading.
Copies of gauging and measurement records shall be furnished
to Seller.
A. Gauging the Liquid Level of LNG
The level of the LNG in each LNG tank of the LNG Tanker
shall be gauged by means of the gauging device installed
in the LNG Tanker for that purpose. The level of the LNG
in each tank shall be logged or printed.
B. Determination of Temperature
The temperature of the LNG and of the vapor space in each
cargo tank shall be measured by means of a sufficient
number of properly located temperature measuring devices
to permit the determination of average temperature.
Temperatures shall be logged or printed.
C. Determination of Pressure
The pressure of the vapor in each LNG tank shall be
determined by means of pressure measuring devices
installed in each LNG tank of the LNG Tankers. The
atmospheric pressure shall be determined by readings from
the standard barometer installed in the LNG Tankers.
D. Determination of Density
Density of the LNG shall be computed by Seller or, if
mutually agreed, measured. Initially the density of the
LNG will be computed by the method described in Schedule
A attached hereto. Should any improved data, method of
calculation or direct measurement device become available
which is acceptable to both Buyers and Seller, such
improved data, method or device shall then be used. If
density is determined by measurements, the results shall
be logged or printed.
13.6 Samples for Quality Analysis
Representative samples of the LNG delivered shall be obtained,
or be caused to be obtained, in triplicate by Seller during
the time of loading. The three (3) samples shall be taken from
an appropriate point on Seller's loading line as close as
possible to the loading flanges and collected in the gaseous
state using the continuous gasification/collection method
agreed by Buyers and Seller.
In addition periodic samples shall be obtained during loading.
Should Seller determine that it is necessary to utilize
periodic samples, the composition of the LNG delivered to each
LNG Tanker shall be the arithmetic average of the results
obtained by analysis of such samples. The method and devices
for sampling and the quantity of the samples to be withdrawn
shall be determined by agreement between Buyers and Seller to
provide for taking representative and adequate samples of the
LNG delivered.
The samples obtained shall be distributed as follows:
First sample - for use of Seller.
Second sample - for use of Buyer receiving the LNG
shipment.
Third sample - for retention by Seller for the agreed
period, not to exceed twenty-five (25)
days, during which period any dispute as
to the accuracy of any analysis shall be
raised, in which case the sample shall be
further retained until such Buyer and
Seller agree to retain it no longer.
13.7 Quality Analysis
The samples provided for in Section 13.6 shall be analyzed, or
be caused to be analyzed, by Seller to determine the molar
fraction of the hydrocarbon and other components in the sample
by gas chromatography using a mutually agreed method in
accordance with "G.P.A. Standard 2261, Method of Analysis for
Natural Gas and Similar Gaseous Mixtures by Gas
Chromatography", published by G.P.A., current as of January 1,
1977 or as otherwise mutually agreed upon. If better standards
for analysis are subsequently adopted by G.P.A. or other
recognized competent impartial authority, upon mutual
agreement of Buyers and Seller, they shall be substituted for
the standard then in use, but such substitution shall not take
place retroactively. A calibration of the chromatograph or
other analytical instrument used shall be performed by Seller
immediately prior to the analysis of the sample of LNG
delivered. Seller shall give advance notice to Buyers of the
time Seller intends to conduct a calibration thereof, and
Buyers shall have the right to have a representative present
at each such calibration; provided, however, Seller will not
be obligated to defer or reschedule any calibration in order
to permit the representative of Buyers to be present.
The sample shall be analyzed, or be caused to be analyzed, by
Seller to determine the concentrations of hydrogen sulfide
(H2S) and total sulfur content referred to in Section 11.2
using the methods described in Schedule A attached hereto.
13.8 Operating Procedures
Prior to conducting operations for measurement, gauging,
sampling and analysis provided in Sections 13.5, 13.6 and
13.7, the party responsible for such operations shall notify
the appropriate representatives of the other party, allowing
such representatives reasonable opportunity to be present for
all operations and computations; however, the absence of the
other party's representative after notification and
opportunity to attend shall not prevent any operations and
computations from being performed. At the request of either
party any measurement, gauging, sampling and analysis provided
for in Sections 13.5, 13.6 and 13.7 shall be witnessed and
verified by an independent surveyor mutually agreed upon by
the Buyer and Seller. The results of such surveyor's
verifications shall be made available promptly to each party.
All records of measurement and the computation results shall
be preserved and available to both parties for a period of not
less than three (3) years after such measurement and
computation.
13.9 BTU Quantities Sold and Delivered
The quantity of BTU's sold and delivered shall be calculated
by Seller following the procedures described in this Section
13.9, and shall be verified by an independent surveyor
mutually agreed upon by Seller and Buyers.
A. Determination of Gross Heating Value
The Gross Heating Value of the samples of the LNG shall
be determined by computation, in accordance with the
method described in Schedule A attached hereto, on the
basis of the molecular composition determined pursuant to
Section 13.7 and of the molecular weights and heating
values described in "G.P.A. Publication 2145" published
by G.P.A., current at the time of computation.
If better constants or improved methods for determination
of heating value are subsequently adopted by G.P.A. or
other recognized competent impartial authority, they
shall, upon mutual agreement of Seller and Buyers, be
substituted therefor but not retroactively. The Gross
Heating Value of the representative sample shall be the
conclusive Gross Heating Value for the purpose of
determining quantities of BTU's sold and delivered.
B. Determination of Volume of LNG Loaded
The LNG volume in the tanks of the LNG Tanker before and
after loading shall be determined by gauging as provided
in Section 13.5 on the basis of the tank gauge tables
provided for in Section 13.4. The volume of LNG remaining
in the tanks of the LNG Tanker before loading shall then
be subtracted from the volume after loading and the
resulting volume shall be taken as the volume of the LNG
delivered to the LNG Tanker.
If failure of gauging and measuring devices of an LNG
Tanker should make it impossible to determine the LNG
volume, the volume of LNG delivered shall be determined
by gauging the liquid level in Seller's onshore LNG
storage tanks immediately before and after loading the
LNG Tanker, and such volume shall be reduced by
subtracting an estimated LNG volume, agreed upon by the
parties, for boil-off from such tanks during the loading
of such LNG Tanker. Seller shall provide Buyers, or cause
the Buyers to be provided with, a certified copy of tank
gauge tables for each onshore LNG tank which is to be
used for this purpose, such tables to be verified by a
competent impartial authority.
C. Determination of BTU Quantities Sold and Delivered
The quantities of BTU's sold and delivered shall be
computed by Seller by means of the following formula:
Q = V x D x P
in which: Q = represents the quantity of the LNG sold
and delivered in BTU's.
V = represents the volume of the LNG loaded,
stated in Cubic Meters, determined as
provided in Section 13.9B.
D = represents the density of the LNG loaded,
stated in kilograms per Cubic Meter,
determined as provided in Section 13.5D.
P = represents the Gross Heating Value of the
LNG loaded, stated in BTU's per kilogram.
Physical constants, calculation procedures and examples of BTU
determination are provided in Schedule A.
13.10 Verification of Accuracy and Correction for Error
(a) Accuracy of devices used shall be tested and
verified at the request of either party, including
the request by a party to verify accuracy of its
own devices. Each party shall have the right to
inspect at any time the measurement devices
installed by the other party, provided that the
other party be notified in advance. Testing shall
be performed only when both parties are
represented, or have received adequate advance
notice thereof, using methods recommended by the
manufacturer or any other method agreed to by
Seller and Buyers. At the request of any party
hereto, any test shall be witnessed and verified by
an independent surveyor mutually agreed upon by
Buyers and Seller. Permissible tolerances shall be
defined in Schedule A.
(b) Inaccuracy of a device exceeding the permissible
tolerances shall require correction of previous
recordings, and computations made on the basis of
those recordings, to zero error with respect to any
period which is definitely known or agreed upon by
the parties, as well as adjustment of the device.
All the invoices issued during such period shall be
amended accordingly to reflect such correction and
an adjustment in payment shall be made between the
affected Buyer or Buyers and Seller. If the period
of error is neither known nor agreed upon, and
there is no evidence as to such period of error,
corrections shall be made and invoices amended for
each delivery made during the last half of the
period since the date of the most recent
calibration of the inaccurate device. However, the
provisions of this Section 13.10(b) shall not be
applied to require the modification of any invoice
that has become final pursuant to Section 10.6.
13.11 Disputes
In the event of any dispute concerning the subject matter
of this Article 13, including, but not limited to,
disputes over selection of the type or the accuracy of
measuring devices, their calibration, the result of
measurement, period of error of a device, sampling,
analysis, computation or method of calculation, such
dispute shall be submitted to a competent impartial
authority mutually agreed upon by the parties to the
dispute or, if such authority cannot be agreed upon
within thirty (30) days of request by any such party,
such dispute shall be decided by arbitration pursuant to
Article 16. All decisions of an authority acting under
this Section 13.11 shall be binding on such parties.
Expenses incurred in connection with the services of such
authority shall be shared equally by the Seller on the
one hand and the Buyer or Buyers who are parties to the
dispute on the other hand.
13.12 Costs and Expenses of Test and Verification
All costs and expenses for testing and verifying Seller's
measurement devices as provided for in this Article 13
shall be borne by Seller and all costs and expenses for
testing and verifying Buyers' measurement devices as
provided for in this Article 13 shall be borne by Buyers.
The fees and charges of independent surveyors for
measurements and calculations as provided for in Sections
13.8 and 13.9 shall be borne equally by Seller and Buyer.
When the services of independent surveyors are required
and selected by mutual agreement pursuant to Section
13.10, then the fees and charges of such surveyors shall
be borne equally by Seller and Buyers.
ARTICLE 14 - DUTIES, TAXES AND CHARGES
Seller shall pay (or reimburse Buyers for any such payments
made by them) all taxes, royalties, duties or other imposts levied
or imposed by the Indonesian Government or any subdivision thereof,
or any other governmental authority in Indonesia, on the sale or
export of LNG under this Contract.
ARTICLE 15 - FORCE MAJEURE
15.1 Events of Force Majeure
Neither Seller nor any Buyer shall be liable for any delay or
failure in performance hereunder if and to the extent such
delay or failure in performance directly results from any of
the following ("Force Majeure"):
(a) Other than LNG Tankers
(i) Fire, flood, atmospheric disturbance, lightning,
storm, typhoon, tornado, earthquake, landslide,
soil erosion, subsidence, washout or epidemic;
(ii) War, riot, civil war, blockade, insurrection, act
of public enemies or civil disturbance;
(iii) Strike, lockout or other industrial disturbance;
(iv) Serious accidental damage to or serious failure of
Seller's Facilities, unless such damage or failure
is the result of willful negligence on the part of
Seller's management;
(v) Serious accidental damage to or serious failure of
a Buyer's Facilities, unless such damage or failure
is the result of willful negligence on the part of
such Buyer's management;
(vi) The Proved Remaining Recoverable Reserves of
Natural Gas in the Gas Supply Area expressed in the
then most recent Certificate referred to in Section
3.2(a) which can be economically produced have been
fully depleted;
(vii) Delay in completion and testing of any stage
of the Badak Facility so as to prevent the
same from becoming operational on a continuing
basis, which delay is caused by delay in
receiving major items of equipment or
materials from the manufacturer or vendor
thereof, provided that Seller shall have taken
all steps reasonably available to obtain
timely delivery of such items including the
placing of purchase orders within such time as
was prudent under then existing circumstances;
or
(viii) Act of government that directly affects the
ability of a party to perform any obligation
hereunder other than the obligation to remit
payments as provided in Section 10.4 on
account of LNG delivered and taken or not
taken but required to be paid for under this
Contract.
(b) As to LNG Tankers
(i) The removal of an LNG Tanker from service due
to loss, serious accidental damage or other
serious failure, unless such loss, damage or
failure is the result of willful negligence on
the part of Buyers;
(ii) Fire, flood, atmospheric disturbance,
lightning, storm, typhoon, tornado or
epidemic;
(iii) War, riot, civil war, blockade,
insurrection, act of public enemies or
civil disturbance;
(iv) Strike, lockout or other industrial
disturbance occurring aboard an LNG Tanker or
at a port or other facility at which an LNG
Tanker calls; or
(v) Act of government.
15.2 Notice; Resumption of Normal Performance
(a) Immediately upon the occurrence of an event of Force
Majeure that gives a party warning that the event may
delay or prevent the performance by Seller or any Buyer
of any of its obligations hereunder, the party affected
shall give notice thereof to the other parties describing
such event and stating the obligations the performance of
which are, or are expected to be, delayed or prevented,
and (either in the original or in supplemental notices)
stating:
(i) The estimated period during which performance may
be suspended or reduced, including, to the extent
known or ascertainable, the estimated extent of
such reduction in performance; and
(ii) The particulars of the program to be implemented to
ensure full resumption of normal performance
hereunder.
(b) In order to ensure resumption of normal performance of
this Contract within the shortest practicable time, the
party affected by an event of Force Majeure shall take
all measures to this end which are reasonable in the
circumstances, taking into account the consequences
resulting from such event of Force Majeure. Prior to
resumption of normal performance the parties shall
continue to perform their obligations under this Contract
to the extent not prevented by such event.
15.3 Settlement of Industrial Disturbances
Settlement of strikes, lockouts or other industrial
disturbances shall be entirely within the discretion of the
party experiencing such situation and nothing herein shall
require such party to settle industrial disputes by yielding
to demands made on it when it considers such action
inadvisable.
ARTICLE 16 - ARBITRATION
All disputes arising between any Buyer or Buyers, on the one
hand, and Seller, on the other hand, relating to this Contract or
the interpretation or performance hereof, shall be finally settled
by arbitration conducted in accordance with the Rules of
Arbitration of the International Chamber of Commerce, effective at
the time, by three (3) arbitrators appointed in accordance with
such Rules. Arbitration shall be conducted in the English language
and shall be held at Paris, France, unless another location is
selected by mutual agreement of the parties concerned. The award
rendered by the arbitrators shall be final and binding upon the
parties concerned.
ARTICLE 17 - APPLICABLE LAW
This Contract shall be governed by and interpreted in
accordance with the laws of the State of New York, United States of
America.
ARTICLE 18 - BUYERS' REPRESENTATIVE
Buyers will from time to time jointly designate a Buyers'
Representative or Buyers' Representatives to act on behalf of the
Buyers in performing the following:
A. Coordination among each of the Buyers, and between Seller
and Buyer or Buyers, and the handling of communications
between Seller and Buyer or Buyers in connection with
performance of this Contract; and
B. Implementation of various operations of each Buyer or of
Buyers which are necessary in connection with purchasing
and receiving of LNG hereunder.
Buyers shall notify Seller the name and address of the entity
or each entity to act as Buyers' Representative and shall specify
the duties to be performed by each such entity.
Seller shall be entitled to accept and rely upon any
communication received from any Buyers' Representative as if
received directly from one or more of the Buyers, and to give
communications to any Buyers' Representative with the same effect
as if given directly to a Buyer or Buyers. No act of or
authorization to a Buyers' Representative shall relieve any Buyer
from performance of any obligation or payment of any liability of
such Buyer hereunder, each Buyer remaining primarily liable
therefor at all times.
ARTICLE 19 - CONFIDENTIALITY
No party to this Contract shall use or communicate to third
parties the contents of this Contract or other confidential
information or documents which may come into the possession of such
party in connection with the performance of this Contract without
the prior agreement of the party or parties to which such
information or documents are confidential. This restriction shall
not apply to the contents of this Contract, or information or
documents, which:
(i) have fallen into the public domain otherwise than through
the act or failure to act of the party that has obtained
them; or
(ii) are communicated to:
(A) any of Seller's Suppliers, or any Affiliate (as
defined below), with the obligation of the
receiving person to maintain confidentiality;
(B) persons participating in the implementation of this
project, such as Buyers' Transporter, Buyers'
Representative, legal counsel, accountants, other
professional, business or technical consultants and
advisers, underwriters or lenders, with the
obligation of the receiving persons to maintain
confidentiality; or
(C) any governmental agency of the Republic of
Indonesia or Japan, or having jurisdiction over any
of Seller's Suppliers or any Affiliate, provided
that such agency has authority to require such
disclosure, and that such disclosure is made in
accordance with that authority.
As used before, the term "Affiliate" means a company that
controls, is controlled by, or is under common control with,
a party to this Contract or any of Seller's Suppliers.
ARTICLE 20 - NOTICES
All notices and other communications for purposes of this
Contract shall be in writing, which shall include transmission by
telex, facsimile, cable, or other similar electronic method of
written transmission mutually agreed by Seller and Buyers, except
that notices given from LNG Tankers at sea may be by radio. Notices
and communications shall be directed as follows:
A. To Seller at the following mail, telex, facsimile and cable
addresses -
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS
BUMI NEGARA (PERTAMINA)
(Mail address)
P.O. Box 12/JKT
Jalan Merdeka Timur 1A,
Jakarta Pusat, Indonesia
(Telex address)
PERTAMINA 44302 or 44152
JAKARTA, INDONESIA
(Facsimile address)
62-21-355271
(Cable address)
PERTAMINA
JAKARTA, INDONESIA VIA RCA
In each case marked for the attention of:
Head of Gas Marketing Bureau
B. To Buyers at the following mail, telex, facsimile and cable
addresses -
(i) OSAKA GAS CO., LTD.
(Mail address)
4-1-2, Hiranomachi,
Chuo-ku,
Osaka, 541 Japan
(Telex address)
5225275 DAIGAS J
(Facsimile address)
81-6-222-2044
(Cable address)
GASTANK OSAKA
In each case marked for the attention of:
Gas Resources Dept.
(ii) TOKYO GAS CO., LTD
(Mail address)
1-5-20, Kaigan,
Minato-ku,
Tokyo, 105 Japan
(Telex address)
2422272 TGGEN J
(Facsimile address)
81-3-432-5834
(Cable address)
TGCC TBA
In each case marked for the attention of:
Raw Materials Dept.
(iii) TOHO GAS CO., LTD
(Mail address)
19-18, Sakurada-cho,
Atsuta-ku,
Nagoya, 456 Japan
(Telex address)
4477651 TOHOGS J
(Facsimile address)
81-52-871-6967
In each case marked for the attention of:
Raw Materials Dept.
The parties may designate additional addresses for particular
communications as required from time to time, and may change any
addresses, by notice given thirty (30) days in advance of such
additions or changes.
Immediately upon receiving communications by telex, facsimile,
cable or other similar electronic method of written transmission,
or radio, a party shall acknowledge receipt by the same means, and
may request a repeat transmittal of the entire communication or
confirmation of particular matters. If the sender receives no
acknowledgement of receipt within twenty-four (24) hours, or
receives a request for repeat transmittal or confirmation, said
party shall repeat the transmittal or answer the particular
request.
Without prejudice to the validity of the original notice, the
receiving party of any notice given by telex, facsimile, cable or
other similar electronic method of written transmission may request
the confirmation of the notice by letter and the sending party
shall make such confirmation by letter upon the request.
ARTICLE 21 - ASSIGNMENT
Neither this Contract nor any rights or obligations hereunder
may be assigned by any Buyer without the prior written consent of
Seller, or by Seller without the prior written consent of each
Buyer. Any request by a Buyer for Seller's consent to an assignment
shall be accompanied by the written consent of each other Buyer to
the proposed assignment.
ARTICLE 22 - AMENDMENT AND WAIVER
This Contract cannot be amended, modified, varied or
supplemented except by an instrument in writing signed by Seller
and Buyers.
The failure of any party at any time to require performance of
any provision of this Contract shall not affect its right to
require subsequent performance of such provision. Waiver by any
party of any breach of any provision hereof shall not constitute
the waiver of any subsequent breach of such provision. Performance
of any condition or obligation to be performed hereunder shall not
be deemed to have been waived or postponed except by an instrument
in writing signed by the party who is claimed to have granted such
waiver or postponement.
ARTICLE 23 - SEVERALTY
This Contract shall be binding upon each Buyer in accordance
with its terms. The liabilities of Buyers under this Contract are
several and not joint or joint and several, and each Buyer shall be
liable only for performance of the obligations of such Buyer as
provided in this Contract.
ARTICLE 24 - DETAILS OF PERFORMANCE
Details necessary for performance of this Contract shall be
mutually agreed upon by Seller and each Buyer separately or, when
necessary and desirable, by Seller and Buyers on a coordinated and
mutually agreeable basis.
ARTICLE 25 - EXCHANGE OF INFORMATION
Seller and Buyers will maintain close communication and
mutually provide and exchange available information directly
relevant to the fulfillment of this Contract.
The parties will consult together, by having meetings if
necessary, to coordinate plans relating to the construction or
modification of any stage of the Badak Facility and the
construction of the LNG Tankers, so as to assure that the Badak
Facility and the LNG Tankers are compatible for all purposes and
that progress is being made in accordance with the project
timetable agreed to between the parties.
ARTICLE 26 - TERMINATION
Seller and each Buyer shall use best endeavors to obtain all
authorizations, approvals and permissions of national and local
governments or other competent authorities or bodies which are
required for performance of this Contract (the "Authorizations and
Approvals"), and will cooperate fully with each other wherever
necessary for this purpose. If, at the time of expiration of six
(6) months after the execution of this Contract, Seller or any
Buyer should fail to obtain the Authorizations and Approvals, or
Seller should fail to arrange the financing of the expansion of the
Badak Facility contemplated by Seller in connection with this
Contract (the "Financing"), then such party shall so notify the
other parties promptly after such expiration, and Seller and Buyers
shall consult as to the circumstances pertaining thereto. If,
within thirty (30) days after the date of the aforesaid notice, the
parties have not agreed on a postponement of the time within which
the Authorizations and Approvals shall be obtained or Financing
arranged, then either Seller or Buyers may terminate this Contract
by written notice given at any time prior to the date upon which
the Authorizations and Approvals are obtained or Financing
arranged. The same right of termination and procedures relating
thereto shall apply upon the expiration of any postponement period
or periods agreed to by the parties. For the purposes hereof
Financing shall be deemed to have been arranged only when the
agreements and other documents required therefor shall have been
entered into by all parties thereto, shall have received all
governmental authorizations and approvals required for the
performance thereof and shall have become effective and
unconditional.
This Contract is also subject to termination under certain
other circumstances as provided in Section 10.5.
Termination of this Contract shall be without prejudice to any
accrued rights of the parties arising under this Contract prior to
termination.
ARTICLE 27 - SCOPE
This Contract constitutes the entire agreement between the
parties relating to the subject matter hereof and supersedes and
replaces any provisions on the same subject contained in any
agreement between the parties, whether written or oral, prior to
the date of the execution hereof.
ARTICLE 28 - COUNTERPARTS
This Contract is executed in four (4) identical counterparts
each of which shall have the force and dignity of an original, and
all of which shall constitute but one and the same Contract.
IN WITNESS WHEREOF, each of the parties has caused this
Contract to be executed by its duly authorized officer as of the
date first written above.
SELLER: BUYERS:
PERUSAHAAN PERTAMBANGAN OSAKA GAS CO., LTD.
MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
By __________/s/_____________ By_________/s/________
TOKYO GAS CO., LTD.
By_________/s/________
WITNESS:
NISSHO IWAI CORPORATION TOHO GAS CO., LTD.
By _________/s/_________ By ________/s/________