LNG SALES CONTRACT
dated as of October 13, 1992
BETWEEN
PERUSAHAAN PERTAMBANGAN MNYAK DAN
GAS BUMI NEGARA (PERTAMINA), as Seller
AND
OSAKA GAS CO., LTD., as Buyer
LNG SALES CONTRACT
CONTENTS
Page
ARTICLE 1 - Definitions 2
ARTICLE 2 - Sale and Purchase 9
ARTICLE 3 - Sources of Supply 10
3.1 Sources of Supply 10
3.2 Reserves of Natural Gas 10
3.3 Changes in Gas Supply Area and Seller's
Suppliers 11
ARTICLE 4 - Transportation and Unloading 12
4.1 Seller's Obligation to Provide
Transportation 12
4.2 LNG Tankers 12
4.3 Unloading Port Facilities 12
4.4 Unloading Port Obligations 13
4.5 Notices of LNG Tanker Movements and
Characteristics of LNG Cargoes 14
4.6 Demurrage at Unloading Ports 15
4.7 Effect of Unloading Port Delays; Excess
Boil-Off 18
4.8 Non-Utilization Cost 18
ARTICLE 5 -Onshore Facilities 21
5.1 Receiving Facilities 21
5.2 Badak Facility 21
ARTICLE 6 -Duration of Contract 22
ARTICLE 7 -Quantities 23
7.1 Fixed Quantities 23
7.2 Permanent Decrease in Fixed Quantities 25
7.3 Annual Adjustment to Fixed Quantities 25
7.4 Adjustment to Fixed Quantities at Time
of Ninety-Day Schedules 26
7.5 Single Port Cargoes; Rate of Deliveries 26
7.6 Quantity Deficiency 27
7.7 Allocation of Deliveries Between Buyer and
Other Purchasers 28
7.8 Make-Up LNG 29
7.9 Force Majeure Deficiency 30
7.10 Allocation of Make-Up LNG and Restoration
Quantities 30
7.11 Additional Quantities 31
ARTICLE 8 - Contract Sales Price 32
8.1 Contract Sales Price 32
8.2 LNG Element 32
8.3 Transportation Element 33
8.4 Annual Reconciliation of Transportation Costs35
8.5 Second LNG Tanker 36
ARTICLE 9 - Transfer of Title 37
ARTICLE 10 - Invoices and Payment 38
10.1 Cargo Invoices and Documents 38
10.2 Other Invoices 38
10.3 Invoice Due Dates 38
10.4 Payment 39
10.5 Seller's Rights Upon Buyer's Failure to Make
Payment 40
10.6 Seller's Rights Upon MCGC's Failure to Make
Payment 40
10.7 Disputed Invoices 41
ARTICLE 11 -Quality 42
11.1 Gross Heating Value 42
11.2 Components 42
ARTICLE 12 - Scheduling 43
12.1 Annual Program 43
12.2 Ninety-Day Schedules 44
12.3 Maintenance and Inspection Coordination 44
12.4 Coordination of Scheduling with the MCGCs 44
ARTICLE 13 - Measurements, Tests and Analysis 45
13.1 Parties to Supply Devices 45
13.2 Selection of Devices 45
13.3 Units of Measurement and Calibration 45
13.4 Tank Gauge Tables of LNG Tankers 46
13.5 Gauging and Measuring LNG Volumes Delivered46
13.6 Samples for Quality Analysis 47
13.7 Quality Analysis 48
13.8 Operating Procedures 49
13.9 BTU Quantities Sold and Delivered 49
13.10 Verification of Accuracy and Correction
for Error 51
13.11 Disputes 52
13.12 Costs and Expenses of Test and
Verification 52
ARTICLE 14 -Duties, Taxes and Charges 53
ARTICLE 15 -Force Majeure 54
15.1 Events of Force Majeure 54
15.2 Notice; Resumption of Normal Performance 55
15.3 Efforts to Mitigate the Effect of
Force Majeure 56
15.4 Settlement of Industrial Disturbances 56
ARTICLE 16 -Arbitration 57
ARTICLE 17 -Applicable Law 58
ARTICLE 18 -Buyer's Representative 59
ARTICLE 19 -Confidentiality 60
ARTICLE 20 -Notices 61
ARTICLE 21 -Assignment 63
ARTICLE 22 -Amendment and Waiver 64
ARTICLE 23 -Details of Performance 65
ARTICLE 24 -Exchange of Information 66
ARTICLE 25 -Termination 67
ARTICLE 26 -Scope 68
ARTICLE 27 -Counterparts 69
SCHEDULE A -Testing and Methods
LNG SALES CONTRACT
This LNG Sales Contract (the "Contract"), dated as of the
13th day of October 1992, 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., a corporation organized and
existing under the laws of Japan ("Buyer"), on the other hand.
WHEREAS:
1. Seller and Buyer are parties to several LNG Sales Contracts,
including the LNG Sales Contract originally dated December
3rd, 1973, amended and restated as of January 1st, 1990 (the
"1973 LNG Sales Contract") and the LNG Sales and Purchase
Contract dated as of March 31st, 1988 (the "1988 LNG Sales
Contract").
2. Of even date herewith, Seller has entered into an LNG Sales
Contract with Hiroshima Gas Co., Ltd. and Nippon Gas Co.,
Ltd. (the "MCGCs") in respect of certain quantities of LNG
(as hereinafter defined). Such LNG Sales Contract is
hereinafter referred to as the "MCGC Contract".
3. Buyer has agreed with Seller to purchase and receive, upon
the terms and conditions contained in this Contract, such
quantities of LNG as are necessary to ensure the full
utilization of the LNG Tankers to be used to transport the
quantities of LNG sold and purchased under the MCGC Contract
and the quantities of LNG sold and purchased under this
Contract.
4. Seller and Buyer intend to agree to the sale and purchase of
certain quantities of LNG to replace Buyer's demand upon the
expiration of the 1988 LNG Sales Contract on December 31,
1993.
NOW, THEREFORE, in consideration of the mutual promises
contained herein, Seller and 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 Amount
As defined in Section 8.4.
1.2 Actual Cubic Foot
A volume equal to the volume of a cube whose edge is
one foot.
1.3 Additional Quantities
As defined in Section 7.11.
1.4 Adverse Weather Conditions
As defined in Section 4.6(b).
1.5 Affiliate
As defined in Article 19.
1.6 Allowed Laytime
As defined in Section 4.6(b).
1.7 Annual Program
As defined in Section 12.1(a).
1.8 Authorizations and Approvals
As defined in Article 25.
1.9 Badak Facility
As defined in Section 5.2.
1.10 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.
1.11 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) BTUs.
1.12 Business Day in Japan
Every day other than Saturdays, Sundays, National
Holidays (including compensatory days), and January 2 and 3.
1.13 Buyer's Facilities
For the purposes of Sections 15.1(E) and 15.3, the
Receiving Facilities and such other facilities directly related
to the use of LNG which, if not operational, would reduce the
amount of LNG which Buyer is able to receive hereunder.
1.14 Buyer's Representative
Such entity from time to time designated by Buyer
pursuant to Article 18.
1.15 Certificate
As defined in Section 3.2(a).
1.16 Coordinated Maintenance Schedule
As defined in Section 12.3.
1.17 Contract Sales Price
As defined in Section 8.1.
1.18 Cubic Meter (CBM)
A volume equal to the volume of a cube whose edge is
one meter.
1.19 DA Period
A Fixed Quantity Period in relation to which a Downward
Adjustment is exercised pursuant to Section 7.1(b).
1.20 Delivery Point
The point at the Unloading Port at which the flange
coupling of Buyer's unloading line joins the flange coupling of
the LNG discharging manifold on board the LNG Tanker.
1.21 Downward Adjustment
As defined in Section 7.1(b).
1.22 Fixed Quantity
As defined in Section 7.1(a).
1.23 Fixed Quantity Period
As defined in Section 7.1(a).
1.24 Force Majeure
As defined in Section 15.1.
1.25 Force Majeure Deficiency
As defined in Section 7.9(a).
1.26 Full Cargo Lot
A quantity of LNG delivered to the Receiving Facilities
from an LNG Tanker loaded to its full capacity.
1.27 Gas Supply Area
The areas in East Kalimantan, Indonesia covered by
production sharing contracts between Seller and Seller's
Suppliers, and such other nearby contract areas as Seller may
designate from time to time.
1.28 G.P.A.
Gas Processors Association.
1.29 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.
1.30 Liquefied Natural Gas (LNG)
Natural Gas in a liquid state at or below its boiling
point and at a pressure of approximately one atmosphere.
1.31 LNG Element
As defined in Section 8.2.
1.32 LNG Tanker
The LNG tanker or tankers referred to in Section 4.2 to
be used by Seller for transporting LNG under this Contract.
1.33 Loading Port
The port located at the Badak Facility.
1.34 M.S.A.
The Maritime Safety Agency of Japan.
1.35 Make-Up LNG
As defined in Section 7.8.
1.36 MCGCs
As defined in Recital 2.
1.37 MCGC Contract
As defined in Recital 2.
1.38 MCGC Quantities
The quantities of LNG to be purchased and received
under the MCGC Contract.
1.39 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.
1.40 Night Navigation or Berthing Restrictions
As defined in Section 4.6(b).
1.41 Ninety-Day Schedule
As defined in Section 12.2.
1.42 Non-Utilization Cost
As defined in Section 4.8.
1.43 NOR Position
Tomogashima Pilot Station.
1.44 Notice of Readiness
As defined in Section 4.6(a).
1.45 Operating Cost Component
As defined in Seller's Transportation Arrangements.
1.46 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.
1.47 Quantity Deficiency
As defined in Section 7.6(a).
1.48 Receiving Facilities
As defined in Section 5.1.
1.49 Restoration Quantities
As defined in Section 7.9(a).
1.50 Round-Up Request
As defined in Section 7.6(a)(ii).
1.51 Safety Pledge Letter
As defined in Section 4.4(b).
1.52 Seller's Facilities
For the purposes of Section 15.1(D), Natural Gas
reservoirs or production facilities in the field, the facilities
for transportation of Natural Gas from the field, and the Badak
Facility.
1.53 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.
1.54 Seller's Suppliers
In respect of portions of the LNG to be sold hereunder:
(a) Virginia Indonesia Company, OPICOIL Houston, 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.;
(c) Unocal Indonesia Ltd.;
(d) Indonesia Petroleum Ltd.; and
such other entities that may, from time to time, execute a supply
agreement with Seller; 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.
1.55 Seller's Transportation Arrangements
The agreement(s) between Seller and Seller's
Transporter providing for the transportation of LNG hereunder,
together with any amendment, modification or supplement thereto.
1.56 Seller's Transporter
An entity or entities which contract with Seller to
provide transportation.
1.57 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.
1.58 Take-or-Pay Quantity
As defined in Section 7.8.
1.59 Transportation Element
As defined in Section 8.3.
1.60 Unloading Ports
The ports at locations in or near Osaka and Himeji, and
at such other locations in Japan as may be agreed between Seller
and Buyer, where the Receiving Facilities are located.
1.61 Used Laytime
As defined in Section 4.6(a).
1.62 Year 21 Quantity
As defined in Section 7.1(b)(iv).
ARTICLE 2 - SALE AND PURCHASE
Seller agrees to sell and deliver to Buyer at the Delivery
Point, and 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 Buyer 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 Buyer 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 Buyer of such
situation and shall further inform Buyer of any measures which
Seller may be required to take in fulfillment of its obligations
under this Contract.
3.3 Changes in Gas Supply Area and Seller's Suppliers
If Seller designates additional areas covered by
production sharing contracts as Gas Supply Areas, or if Seller
includes companies other than those listed in Sections 1.54(a),
(b), (c) and (d) as Seller's Suppliers, then Seller shall give
Buyer prior notice thereof.
ARTICLE 4 - TRANSPORTATION AND UNLOADING
4.1. Seller's Obligation to Provide Transportation
(a) Seller shall be responsible for the continuous
transportation of the LNG to be sold and delivered hereunder from
the Badak Facility to the Receiving Facilities, using the LNG
Tankers. Seller, after consultation and agreement with Buyer,
which agreement will not be unreasonably withheld, may, but shall
not be obligated to, use any other vessel for the transportation
of the LNG to be sold and delivered hereunder, provided that any
such vessel is compatible with the Receiving Facilities.
(b) Buyer shall be entitled to participate as an
observer in the negotiations between Seller and Seller's
Transporter and shall be entitled to receive all negotiation
documents relative thereto, including all drafts of Seller's
Transportation Arrangements and a signed copy thereof. Buyer
shall be entitled to participate as an observer in all meetings
between Seller and Seller's Transporter which are related to the
payments to be made by Buyer under Section 8.3 and to receive
copies of reports, including audited statements, that Seller
receives from Seller's Transporter. Seller shall consult with
Buyer prior to concluding or amending Seller's Transportation
Arrangements or exercising any rights it may have thereunder that
will affect amounts payable by Buyer under Section 8.3 and shall
make all reasonable efforts to implement any reasonable requests
of Buyer in connection therewith.
4.2 LNG Tankers
Each LNG Tanker shall have the following general
specifications:
LNG Tanker Capacity (at -163oC, 98.5% full) : about 19,100
Cubic Meters
Total Deadweight on Summer Draft Extreme : about 11,700
metric tons
Length Overall : about 151 meters
Breadth Moulded : about 28 meters
Summer Draft Extreme : about 7.6 meters
4.3 Unloading Port Facilities
Buyer, at no cost to Seller, shall ensure that its
Receiving Facilities shall be compatible with the general
specifications of the LNG Tankers as provided in Section 4.2 and
shall at all times provide, maintain and operate, or cause to be
provided, maintained and operated, facilities at such Unloading
Port, including the following:
(a) Berthing facilities which the LNG Tankers can
always safely reach, fully laden, and safely depart, and at which
the LNG Tankers can lie safely berthed and discharge safely
afloat at all times.
(b) Unloading facilities capable of receiving LNG at a
rate which will permit the discharging of cargo from a fully
loaded LNG Tanker within four and one half (4.5) hours of pumping
time at a pumping rate of 5100 Cubic Meters per hour, such
pumping rate resulting from the back pressure at the Delivery
Point generated by the unloading facilities.
(c) A vapor return line system of sufficient capacity
to transfer to an LNG Tanker quantities of natural gas necessary
for the safe unloading of LNG at such rates, pressures and
temperatures to be mutually agreed between Seller and Buyer.
Failing such agreement, such rates, pressures and temperatures
will be as required by the LNG Tanker design.
(d) Systems for timely provision of an LNG Tanker with
adequate fresh water and bunker oil, if necessary.
(e) Facilities allowing access to an LNG Tanker from
onshore adequate for the handling and delivery of ship's stores,
provisions and spare parts to the LNG Tanker.
(f) Shore-based tanks and loading lines for liquid
nitrogen adequate to service an LNG Tanker.
(g) LNG storage tanks of adequate capacity to receive
and store a full cargo of LNG upon each scheduled arrival of an
LNG Tanker.
(h) Appropriate systems for necessary radio, telex and
facsimile communication with the LNG Tankers.
(i) Regasification plant.
4.4 Unloading Port Obligations
(a) Buyer shall cooperate with Seller and Seller's
Transporter, their agents and the master of each LNG Tanker
directed to an Unloading Port to ensure the continuous and
efficient delivery of LNG hereunder.
Buyer shall provide a safe berth for prompt berthing of
an LNG Tanker at its Receiving Facility and shall operate the
Receiving Facility, or ensure that it is operated, so as to
permit discharge of each cargo of the LNG Tankers as quickly as
possible.
During discharge of each cargo of LNG, Buyer shall
return to the LNG Tanker natural gas in such quantities as are
necessary for the safe unloading of the LNG at such rates,
pressures and temperatures as may be required by the LNG Tanker.
(b) Seller shall use its best efforts to cause
Seller's Transporter to take such actions as are reasonably
required by Japanese authorities to evidence responsibility for
safe operation of the LNG Tankers in accordance with the letter
of the vessel operator addressed to Japanese port authorities in
connection with permission for the LNG Tankers to enter into
Unloading Ports ("Safety Pledge Letter").
Seller shall ensure that Seller's Transporter will
arrange for such number and types of tugs, fireboats and escort
vessels as are required by the Japanese authorities to attend the
LNG Tankers so as to permit safe and efficient movement of the
LNG Tankers within the maritime safety areas located in the
approaches to and from the Unloading Ports.
4.5 Notices of LNG Tanker Movements and Characteristics of
LNG Cargoes.
(a) With respect to each cargo of LNG to be delivered
hereunder, Seller shall give, or cause the master of the LNG
Tanker to give, to Buyer at the Receiving Facility at which such
cargo is to be delivered, the following notices :
(i) A first notice which shall be sent upon the
departure of the LNG Tanker from the Loading
Port and which shall set forth the time and
date that loading was completed, the volume,
expressed in Cubic Meters, of LNG loaded on
board the LNG Tanker, and the estimated time
of arrival of the LNG Tanker at Buyer's
Unloading Port (the "ETA");
(ii) A second notice which shall be sent ninety-
six (96) hours prior to the ETA;
(iii) A third notice which shall be sent
forty-eight (48) hours prior to the ETA;
(iv) A fourth notice which shall be sent twenty-
four (24) hours prior to the ETA;
(v) A final notice which shall be sent five (5)
hours prior to the ETA; and
(vi) A Notice of Readiness as provided in Section
4.6(a).
(b) Within thirty-six (36) hours after departure of
the LNG Tanker from the Loading Port, Seller shall notify Buyer,
for Buyer's information only, of the following characteristics of
the LNG comprising its cargo as determined at the time of loading
:
(i) the Gross Heating Value per unit, and
(ii) the molecular percentage of hydrocarbon
components and nitrogen.
4.6 Demurrage at Unloading Ports
(a) Upon arrival of the LNG Tanker at the NOR Position
off each Unloading Port, and subject to any mutually agreed time
restrictions, the master of the LNG Tanker or its agent shall
give notice to Buyer or its agent that such LNG Tanker is ready
to discharge LNG, berth or no berth ("Notice of Readiness"). A
Notice of Readiness may be tendered on any day of the week or any
hour of the day. Laytime used in unloading the LNG Tanker ("Used
Laytime") shall begin to count upon the earlier of :
(i) six (6) hours from Notice of Readiness; or
(ii) the LNG Tanker being "all fast" in berth.
Used Laytime shall continue to run until discharge and
return lines have been disconnected and the LNG Tanker is cleared
for departure.
(b) Laytime to be allowed at each Unloading Port at
which the LNG Tanker discharges LNG being delivered hereunder
("Allowed Laytime") shall be twenty-eight (28) consecutive hours
extended by any period of delay which is caused by :
(i) reasons attributable to Seller, the LNG
Tanker or its master, crew, owner or
operator;
(ii) Force Majeure; provided, however, that delays
resulting from the application of safety
regulations or similar governmental action
shall not be considered as an event of Force
Majeure for the purposes hereof;
(iii) "Adverse Weather Conditions", which for
purposes hereof means weather and/or sea
conditions actually experienced at the
Unloading Port which are sufficiently
severe either: (A) to prevent the LNG
Tanker from proceeding to berth,
discharging or departing from berth in
accordance with the weather standards
prescribed in the M.S.A. standard
published regulations, including the
Safety Pledge Letters, or (B) to cause
an actual determination by the master
that it is unsafe for the LNG Tanker to
berth, discharge or depart from berth.
The period of delay to the LNG Tanker
caused by Adverse Weather Conditions
shall not be considered to extend past
the time during which such Adverse
Weather Conditions actually prevailed,
except where additional delay is caused
by the occupation of the berth by
another LNG Tanker;
(iv) "Night Navigation or Berthing Restrictions",
which for purposes hereof means governmental
restrictions which prevent the LNG Tanker (A)
having arrived at the NOR Position or within
the vicinity of the Unloading Port, from
proceeding to berth; or (B) from departing
from the berth; or
(v) Any period of delay caused by occupancy of
the berth:
(A) By a previous LNG Tanker or an LNG
tanker utilized by Seller under the 1973
LNG Sales Contract, provided such
occupancy is for reasons attributable to
such vessel;
(B) By either a previous LNG Tanker or
another vessel on its scheduled
unloading date (ignoring any change in
the schedule of the departure of the LNG
Tanker from the Loading 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 unloading date
(ignoring any change in the LNG Tanker's
scheduled unloading date after departure
of the LNG Tanker from the Loading
Port), except that there shall be no
addition to Allowed Laytime 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
unloading date of the vessel occupying
the berth (unless unloading of such
vessel was necessary in order to
maintain operations of the Receiving
Facilities).
(c) In the event Used Laytime exceeds Allowed Laytime
in unloading an LNG Tanker, Buyer shall pay to Seller, or for
Seller's account if so directed by Seller, demurrage at the daily
rate (which shall be prorated for a portion of a day) determined
in accordance with the following:
Demurrage rate = Tcy
N
Where: Tcy = the total amount estimated to be payable
to Seller's Transporter in relation to
the LNG Tanker for the Fixed Quantity
Period in which the demurrage occurs, as
determined under Section 8.3 ; and
N = the number of days in the Fixed Quantity
Period during which the LNG Tanker is in
service.
(d) Seller shall invoice Buyer for amounts due under
this Section 4.6 and Buyer shall pay such invoice in accordance
with the terms of Section 10.3.
4.7. Effect of Unloading Port Delays; Excess Boil-Off
(a) Notwithstanding the provisions of Section 11.1, if
the Gross Heating Value of LNG to be delivered hereunder is
higher than the limits set forth in Section 11.1 by reason of
boil-off occurring during a delay in unloading an LNG Tanker of
more than forty-eight (48) hours after Notice of Readiness has
been given, such LNG shall be deemed to have met the quality
specifications of this Contract regarding Gross Heating Value.
(b) If an LNG Tanker is delayed in berthing and/or
commencement of unloading, for reasons that would not result in
an extension of Allowed Laytime under Section 4.6(b), and if, as
a result thereof, the commencement of unloading is delayed beyond
thirty (30) hours after Notice of Readiness has been given, then
for each full hour by which commencement of unloading is delayed
beyond such thirty-hour period, Buyer shall pay Seller an amount,
on account of excess boil-off, equal to the Contract Sales Price
multiplied by the number of MMBTUs per hour by which such boil-
off reduces the aggregate number of BTUs of a full cargo at
berth. The hourly BTU reduction rate to be applied for such
purpose shall be determined by actual boil-off experience as
determined at appropriate intervals.
4.8. Non-Utilization Cost
(a) If there is an event of Force Majeure affecting
Buyer which results in any LNG Tanker being less than fully
utilized, then Buyer shall pay to Seller, or for Seller's account
if so directed by Seller, on account of such non-utilization an
amount at the daily rate determined in accordance with the
following:
Non-Utilization rate = Tcy - VCy
N
Where : Tcy = the total amount estimated to be
payable to Seller's Transporter in
relation to the LNG Tanker for the
Fixed Quantity Period in which the
non-utilization occurs, as
determined under Section 8.3;
Vcy = the total amount estimated to be payable
to Seller's Transporter for fuel costs
and port charges in relation to the LNG
Tanker for the Fixed Quantity Period in
which the non-utilization occurs; and
N = the number of days in the Fixed Quantity
Period during which the LNG Tanker is in
service.
Such amount is hereinafter called the "Non-Utilization
Cost".
(b) Notwithstanding the above, the Non-Utilization
Cost payable by Buyer in the event of laying up of an LNG Tanker
as a result of an event of Force Majeure affecting Buyer shall be
an amount equal to the amount payable by Seller to Seller's
Transporter with respect to such lay up period.
(c) If there is an event or events of Force Majeure
which simultaneously affect Buyer and one or both MCGCs, the
total of the payments due under Sections 4.8(a) or (b) and the
comparable sections of the MCGC Contract shall not exceed the
amount due hereunder, and such total shall be allocated among
Buyer and those MCGCs experiencing the event of Force Majeure in
accordance to the proportion the Fixed Quantities of Buyer and
each of such MCGCs bears to the aggregate of the Fixed Quantities
of Buyer and such MCGCs for the applicable Fixed Quantity Period
in which the non-utilization occurs.
(d) Any Non-Utilization Cost payable hereunder shall
be reduced to the extent that the LNG Tanker is utilized to
deliver LNG which would otherwise have been purchased and
received by Buyer to the MCGCs, or to a third party.
(e) Any Non-Utilization Cost shall not include any
amount which becomes payable:
(i) as the result of an event or circumstance of
Force Majeure affecting Seller;
(ii) as the result of Seller's breach of its
obligations under this Contract; or
(iii) by reason of non-utilization of the LNG
Tanker caused by the fault or negligence
of such LNG Tanker or Seller's
Transporter, including, but not limited
to, the failure of Seller's Transporter
to satisfy Japanese authorities in
connection with permission for the LNG
Tanker to enter into Unloading Ports as
required pursuant to Section 4.4(b).
(f) In connection with each payment due under this
Section 4.8, Seller shall furnish to Buyer such available
accounting and other data as may reasonably be required by Buyer
to establish the basis upon which and the manner in which the
amount of such payment is calculated. Seller shall invoice Buyer
for amounts due under this Section 4.8 periodically and Buyer
shall pay such invoice in accordance with the terms of Section
10.3.
ARTICLE 5 - ONSHORE FACILITIES
5.1 Receiving Facilities
Buyer has heretofore constructed or will construct
and/or modify 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
and/or modify 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 25. If
Seller and Buyer so agree at least five (5) years before the time
this Contract would otherwise expire, the term of this Contract
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 or portion thereof
specified below (each such period being called a "Fixed Quantity
Period"), Seller shall sell and deliver to Buyer, and 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 Fixed Quantity Period (each such quantity
being called a "Fixed Quantity") as follows:
Calendar Fixed Quantity Fixed Quantities
Year Period (Billions of BTUs)
1996 Mar - Dec 1996 4,640
1997 Full Year 5,484
1998 " " 5,063
1999 " " 3,375
2000 " " 6,751
2001 " " 10,547
2002 " " 9,281
2003 " " 8,859
2004 " " 8,860
2005 " " 8,016
2006 " " 8,016
2007 " " 8,016
2008 " " 7,172
2009 " " 7,172
2010 " " 6,750
2011 " " 6,750
2012 " " 6,328
2013 " " 5,484
2014 " " 5,906
2015 " " 5,062
The above Fixed Quantities are subject to adjustment as
provided in Sections 7.1(b), 7.2, 7.3, 7.4, 7.6 (a)(i) and 7.6
(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 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) The Fixed Quantity of Buyer for any Fixed Quantity
Period may be reduced by the exercise of an adjustment ("Downward
Adjustment") as follows:
(i) 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 Buyer may be reduced shall not exceed ten
percent (10%) of the sum of Buyer's Fixed
Quantity under Section 7.1(a) (but without
any adjustment pursuant to Sections
7.1(b)(i), 7.6(a)(i) or 7.6(a)(iii)), and the
MCGC Quantities (but without any adjustment
pursuant to Section 7.6(a)(i) or 7.6(a)(iii)
of the MCGC Contract), for the DA Period.
(iii) The cumulative aggregate amounts by
which Buyer reduces its Fixed Quantities
for all Fixed Quantity Periods shall not
exceed fifty percent (50%) of the sum of
Buyer's Fixed Quantity under Section
7.1(a) (but without any adjustment
pursuant to Sections 7.1(b)(i),
7.6(a)(i) or 7.6(a)(iii)), and the MCGC
Quantities (but without any adjustment
pursuant to Section 7.6(a)(i) or
7.6(a)(iii) of the MCGC Contract), for
the DA Period.
(iv) If by notice to Buyer not later than December
31, 2012 Seller shall so require, Buyer shall
in the period prescribed in paragraph (A)
below, commencing on January 1, 2016, take
and pay for, and pay for if not taken, a
quantity of LNG ("Year 21 Quantity") equal to
the aggregate amount by which Buyer (by the
exercise of Downward Adjustments) reduces its
Fixed Quantities during all Fixed Quantity
Periods (including the years 2013, 2014 and
2015). For this purpose:
(A) The period within which Buyer shall take
and pay for the Year 21 Quantity shall
be a fraction of a year, such fraction
calculated as the Year 21 Quantity (in
billions of BTUs) divided by ninety
percent (90%)of the sum of Buyer's Fixed
Quantity under Section 7.1(a) (but
without any adjustment pursuant to
Sections 7.1(b)(i), 7.6(a)(i) or
7.6(a)(iii)), and the MCGC Quantities
(but without any adjustment pursuant to
Section 7.6(a)(i) or 7.6(a)(iii) of the
MCGC Contract), for the Fixed Quantity
Period in 2015;
(B) Such period shall be a Fixed Quantity
Period only for the Year 21 Quantity,
and the Year 21 Quantity shall be a
Fixed Quantity for 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 Buyer may not
exercise a Downward Adjustment in
respect thereof.
7.2. Permanent Decrease in Fixed Quantities
The Fixed Quantities set forth in Section 7.1(a) shall
be decreased for the remainder of the contract term if and to the
extent that the MCGCs increase the MCGC Quantities pursuant to
Section 7.2(a) of the MCGC Contract. If, pursuant to Section
7.2(b) of the MCGC Contract, the date of first delivery is
postponed beyond March 1, 1996 or the date for introduction of
the second LNG Tanker is changed from July 1, 2000, Seller and
Buyer shall agree upon appropriate adjustments to the Fixed
Quantities for each Fixed Quantity Period affected by such
change.
7.3. Annual Adjustment to Fixed Quantities
(a) If, pursuant to Section 7.3 of the MCGC Contract,
an MCGC requests adjustment of its part of the MCGC Quantities,
then upon such request, adjustment shall be made to the Fixed
Quantity pursuant to Sections 7.3(b) and (c) below. The Fixed
Quantity as so adjusted shall become the Fixed Quantity for the
applicable Fixed Quantity Period. If no request for adjustment is
made then the Fixed Quantity shall be that Fixed Quantity
determined pursuant to Sections 7.1 and 7.2.
(b) If, pursuant to Section 7.3(a) of the MCGC
Contract, an MCGC requests upward adjustment of its part of the
MCGC Quantities, Seller shall reduce by a like amount the
quantities of LNG to be sold and delivered by Seller to Buyer
hereunder.
(c) If, pursuant to Section 7.3.(a) of the MCGC
Contract, an MCGC requests downward adjustment of its part of the
MCGC Quantities, Seller shall increase by a like amount the
quantities of LNG to be sold and delivered by Seller to Buyer
hereunder.
7.4 Adjustment to Fixed Quantities at Time of Ninety-Day
Schedules
If, pursuant to Section 7.4 of the MCGC Contract, an
MCGC wishes to increase or reduce its part of the MCGC
Quantities, then, to the extent the MCGCs and Buyer agree, such
increase or decrease shall be made and there shall be a like
decrease or increase in the Fixed Quantity of Buyer hereunder in
respect of the applicable Fixed Quantity Period.
7.5 Single Port Cargoes; Rate of Deliveries
(a) All deliveries of LNG by Seller and receipt
thereof by Buyer shall be made in Full Cargo Lots and each LNG
Tanker cargo shall be unloaded at a single Receiving Facility in
Japan.
(b) Within each Fixed Quantity Period the quantities
to be delivered by Seller and received by Buyer at the Receiving
Facilities, together with the quantities to be delivered by
Seller and received by the MCGCs, 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 drydocking, maintenance, downtime, and other
matters referred to in Article 12, so as to assure, as nearly as
practicable, continuous full utilization of the LNG Tankers and
an even production rate at the Badak Facility.
7.6 Quantity Deficiency
(a) If, during any Fixed Quantity Period, Buyer should
fail to take the full Fixed Quantity applicable thereto, 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 during such
Fixed Quantity Period (any such quantities being called a
"Quantity Deficiency"), subject, however, to paragraphs (b) and
(c) below and the following:
(i) If, after taking into account all adjustments
provided for in Sections 7.6(b) and (c), the
Quantity Deficiency at the end of any Fixed
Quantity Period amounts to less than one Full
Cargo Lot, the amount of such Quantity
Deficiency shall be carried forward and added
to the Fixed Quantity for the next succeeding
Fixed Quantity Period.
(ii) If, at the time each Annual Program is
developed, the Quantity Deficiency for the
applicable year is estimated to amount to
less than a Full Cargo Lot, Buyer shall have
the right to request an increase in the
quantities which 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 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, Buyer has purchased and received
quantities of LNG hereunder in excess of
the Fixed Quantity for such Fixed
Quantity Period other than Make-Up LNG
or Restoration Quantities, the excess
shall be applicable to reduce the Fixed
Quantity for the next succeeding Fixed
Quantity Period.
(b) The obligation (set forth in paragraph (a) above)
with regard to any Fixed Quantity Period to pay for the Fixed
Quantity to the extent not taken shall be reduced by the quantity
of LNG which Buyer was unable to purchase because of an event of
Force Majeure affecting either Seller or 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 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.
7.7 Allocation of Deliveries Between Buyer 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 Buyer 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 Buyer) 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 Buyer, 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 Buyer 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 Buyer and
such other purchasers in proportion to the respective quantities
so scheduled.
7.8 Make-Up LNG
If pursuant to Section 7.6(a) Buyer shall have paid for
any quantity of LNG which was not taken by Buyer ("Take-or-Pay
Quantity"), then in any subsequent year 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. 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,
(ii) Seller has available LNG Tanker capacity
which may be used to transport such Make-Up
LNG, and
(iii) Buyer shall have first taken and paid
for its Fixed Quantity for such year,
then Seller shall sell to Buyer the quantity of Make-Up LNG
requested.
Buyer's right to purchase Make-Up LNG under this
Section 7.8 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(b)(iv)(A), or
(B) if Buyer is not required to purchase a Year
21 Quantity or there is no such quantity for
Buyer, the end of the last Fixed Quantity
Period,
unless 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 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.
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.
7.9 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 Buyer therein is not delivered by Seller
or taken by Buyer by reason of Force Majeure (any such quantity
not taken for such reason being called a "Force Majeure
Deficiency"), Seller and Buyer shall each make best efforts to
restore the Force Majeure Deficiency in full by Seller selling
and Buyer 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 7.8.
(b) If an event of Force Majeure prevents or delays
the performance by 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 Buyer is 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.
(c) Buyer's obligation to restore a Force Majeure
Deficiency shall be reduced to the extent that the Fixed Quantity
is taken and paid for by the MCGCs.
7.10 Allocation of Make-Up LNG and Restoration Quantities
Whenever Make-Up LNG is requested under Section 7.8
and/or Restoration Quantities are requested under Section 7.9(a)
by Buyer, 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 Buyer on the one hand and such
other purchasers on the other hand, based on the proportion of
the fixed or contract quantities of each requesting purchaser
(including Buyer) to the total of the fixed or contract
quantities of all of the requesting purchasers.
7.11 Additional Quantities
If at the time of making the Annual Program for the
next Fixed Quantity Period Seller anticipates, on a reasonable
basis, that the actual capacity of the LNG Tankers will exceed
the sum of Fixed Quantities, Make-Up LNG, Restoration Quantities,
and quantities for which a Round-Up Request has been accepted, of
Buyer and the MCGCs in the next Fixed Quantity Period, then
(provided Seller has uncommitted production capacity available)
Seller shall offer to Buyer additional quantities of LNG
("Additional Quantities") to the extent of such excess capacity
anticipated at the time of making the Annual Program for such
Fixed Quantity Period. To the extent that Seller's offer is
accepted by Buyer at the time of making such Annual Program,
Seller shall sell and deliver, and Buyer shall purchase and
receive, as Fixed Quantities hereunder, such Additional
Quantities during the Fixed Quantity Period to which such Annual
Program relates upon the terms and conditions herein contained.
Buyer and the MCGCs shall coordinate their requests for
Additional Quantities under this Contract and for quantities
under Section 7.11 of the MCGC Contract so that the sum of such
requests for such quantities shall not exceed the Additional
Quantities available for delivery. Additional Quantities shall be
subject to adjustment in accordance with Sections 7.3(c) and 7.4.
Notwithstanding the above, Seller shall not be
responsible for any loss or damage whatsoever incurred to or by
Buyer as a result of Seller's inability to transport the
Additional Quantities to Buyer.
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
Buyer under this Contract, expressed in United States Dollars per
million British Thermal Units (U.S.$/MMBTU), shall comprise a
transportation element (the "Transportation Element") and an LNG
element (the "LNG Element") and shall be determined in accordance
with the following provisions of this Article 8.
The Transportation Element and the LNG Element are
subject to adjustment from time to time according to the
following provisions of this Article 8, and the sum thereof as
adjusted and in effect at any time shall be the Contract Sales
Price which is in effect hereunder at such time. The Contract
Sales Price to be applied to the BTUs comprising each cargo shall
be that Contract Sales Price in effect as of the date of
completion of unloading of such cargo.
8.2 LNG Element
(a) The LNG Element included in the Contract Sales
Price, as adjusted from time to time, shall be determined
according to the following formula :
LEx = A x I
where :
LEx = the adjusted LNG element, expressed in
U.S.$/MMBTU;
A = 0.156 ;
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.
(b) A redetermination of "I" in the formula in Section
8.2(a) 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(b), 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(b).
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.
8.3 Transportation Element
The Transportation Element included in the Contract
Sales Price as adjusted from time to time shall be calculated
initially, and adjusted from time to time, in accordance with the
formula set forth below.
Annually, effective as of January 1 of each year during
the term of this Contract, the Transportation Element shall be
calculated in accordance with the following formula :
TEx = TC - D
FQ
where:
TEx = the adjusted Transportation Element,
expressed in U.S.$/MMBTU;
TC = TC1 + TC2 ;
where:
TC1 = in respect of the first LNG Tanker, the
estimate of the total transportation
costs payable to Seller's Transporter
under Seller's Transportation
Arrangements for the applicable Fixed
Quantity Period, expressed in U.S.
Dollars;
TC2 = in respect of the second LNG Tanker, the
estimate of the total transportation
costs payable to Seller's Transporter
under Seller's Transportation
Arrangements for the applicable Fixed
Quantity Period, expressed in U.S.
Dollars;
FQ = the aggregate of the Fixed Quantities of
Buyer and the MCGCs (and any quantities
purchased pursuant to a Round-Up Request
by Buyer and/or the MCGCs accepted by
Seller) as reflected in the Annual
Program for the applicable Fixed
Quantity Period, expressed in MMBTUs;
D = U.S.$ 0.15 /MMBTU.
In connection with each annual adjustment of the
Transportation Element, Seller shall furnish to Buyer such
available estimates, accounting and other data as may reasonably
be required by Buyer to establish the basis upon which and the
manner in which such adjustment is calculated. Seller shall
permit Buyer to review the reasonableness of the current year
estimated Operating Cost Component and prior year results in
conjunction with Seller's review as provided for in Seller's
Transportation Arrangements, shall use its best efforts to
provide Buyer full access to periodic review procedures of
Seller's Transporter's operation established thereunder, and, in
consultation and agreement with Buyer, shall appoint independent
auditors to audit the Operating Cost Component pursuant thereto
for the immediately preceding Fixed Quantity Period. Seller,
independently, or at Buyer's request, shall challenge the
inclusion of any unreasonable or unjustified item or amount that
affects the hire rate under Seller's Transportation Arrangements.
8.4 Annual Reconciliation of Transportation Costs
After receipt of the report of the independent auditors
referred to in Section 8.3 and discussions between Seller, Buyer
and the MCGCs (provided that no party shall unreasonably
challenge the conclusions of such independent audit), Buyer and
the MCGCs will pay to Seller (or Seller will pay to Buyer and the
MCGCs as the case may be) the difference between:
(i) the total transportation costs paid by Seller
to Seller's Transporter in respect of the
immediately preceding Fixed Quantity Period,
and
(ii) the sum of all transportation - related costs
paid by Buyer and the MCGCs to Seller in
respect of the immediately preceding Fixed
Quantity Period, and the amount attributable
to D for such Fixed Quantity Period. This
amount is herein referred to as the "Actual
Amount", and will be calculated in accordance
with the following formula:
Actual Amount = (TEx x FQx) + (D x FQx) + NC +
0.35(DEM)
where:
FQx = in respect of Buyer and the MCGCs, the
quantities delivered during the
applicable Fixed Quantity Period
together with any Quantity Deficiency
for such period;
NC = the total amount, in U.S. Dollars, of
Non-Utilization Costs, if any, paid by
Buyer or the MCGCs during the applicable
Fixed Quantity Period;
DEM = the total amount, in U.S. Dollars, of
demurrage payments, if any, paid by
Buyer or the MCGCs during the Fixed
Quantity Period.
Such payment will be payable by or paid to Buyer and the MCGCs in
proportion to Buyer's and the MCGCs' Fixed Quantities (and any
quantities purchased pursuant to a Round-Up Request by such Buyer
and/or the MCGCs accepted by Seller) during the immediately
preceding Fixed Quantity Period.
Seller shall invoice Buyer, or Buyer shall invoice
Seller, for amounts due under this Section 8.4, and Buyer or
Seller (as the case may be) shall pay such invoice no later than
twenty (20) calendar days after the date of receipt thereof.
8.5 Second LNG Tanker
(a) At any time prior to July 1, 1996, Buyer and the
MCGCs may bring to the attention of Seller the availability of an
LNG tanker, and Seller shall give consideration to same. Buyer
and the MCGCs, after having participated as observers in the
negotiations between Seller and Seller's Transporter in relation
to the second LNG Tanker, shall jointly accept in writing the
cost of transportation relating to the second LNG Tanker, as
shown in the agreement which Seller proposes as Seller's
Transportation Arrangements. Such acceptance in writing from
Buyer and the MCGCs shall be given within twenty-one (21) days
after Buyer and the MCGCs have received a copy of the agreement
which Seller proposes as Seller's Transportation Arrangements.
Upon receipt by Seller of such written acceptance, the adjusted
Transportation Element applicable to the quantities of LNG to be
delivered on the LNG Tankers for the applicable Fixed Quantity
Period shall be calculated by including the costs payable to
Seller's Transporter for the second LNG Tanker in the calculation
of TC under Section 8.3, commencing with the Fixed Quantity
Period the second LNG Tanker delivers its first cargo hereunder.
(b) If Buyer and the MCGCs do not jointly accept the
cost of transportation relative to such second LNG Tanker, then
Seller, Buyer, and the MCGCs shall meet to discuss the
availability of alternative methods of transporting the
quantities of LNG which would have been carried by the second LNG
Tanker. If agreement on an alternative is not reached within six
(6) months of Seller's presentation of its proposed Seller's
Transportation Arrangements, this Contract shall ipso facto be
deemed amended to reflect the non-introduction of the second LNG
Tanker and the reduction in the Fixed Quantities of Buyer and the
MCGCs resulting therefrom, such that the aggregate of the Fixed
Quantities of Buyer and the MCGCs do not exceed a maximum of
10,125 Billion BTUs for all subsequent Fixed Quantity Periods.
ARTICLE 9 - TRANSFER OF TITLE
The LNG to be sold by Seller and purchased by Buyer
hereunder shall be delivered to Buyer into its Receiving Facility
at an Unloading Port. Delivery shall be deemed completed and
title and risk of loss shall pass from Seller to Buyer as the LNG
passes the Delivery Point.
ARTICLE 10 - INVOICES AND PAYMENT
10.1 Cargo Invoices and Documents
Promptly after completion of each unloading of an LNG
Tanker, Seller, or its representative, shall furnish to Buyer, or
Buyer's Representative, a certificate of volume unloaded together
with such other documents concerning the cargo as may be
reasonably requested by Buyer for the purpose of Japanese customs
clearance.
As soon as possible but not later than forty-eight (48)
hours after completion of unloading, Buyer shall complete a
laboratory analysis to determine the quality and BTU content of
the LNG and furnish to Seller, or to its representative, a
certificate with respect thereto.
Promptly upon completion of such analysis, Seller, or
its representative, shall furnish by telex or telegram to Buyer
an invoice, stated in U.S. Dollars, in the amount of the Contract
Sales Price for the number of BTUs sold and 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.
If Buyer has not completed the above mentioned quality
and BTU analysis within the forty-eight-hour period mentioned
above, Seller may furnish a provisional commercial invoice based
upon the typical BTU content and typical mole composition
analysis of LNG then being delivered to Buyer, and such
provisional invoice shall be payable on the due date specified in
Section 10.3 subject only to any later adjusting payment which
may be called for when the aforesaid analysis has been completed.
10.2 Other Invoices
In the event that any moneys are due from Buyer to
Seller, including, without limitation, amounts payable pursuant
to Sections 4.6, 4.7(b), 4.8, and 7.6 and Article 14, then Seller
shall furnish or cause to be furnished to Buyer 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 Buyer referred to in Section 10.1 above
shall become due and payable by Buyer on the fifth (5th) Business
Day in Japan after the date on which the invoice (which may be in
telex or telegraphic form) has been received by Buyer in Japan.
For this purpose a telex/telegraphic copy of an invoice shall be
deemed received by Buyer in Japan on the next Business Day in
Japan following the day on which it was sent.
Each other invoice to Buyer hereunder shall become due
and payable by Buyer on the twentieth (20th) calendar day after
the date of Buyer's receipt of such invoice in Japan.
If any invoice due date 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
Buyer shall pay, or cause to be paid, in U.S. Dollars
all amounts which become due and payable by Buyer pursuant to any
invoice issued hereunder, to a bank account or accounts in the
United States to be designated by Seller. Buyer shall not be
responsible for such bank's disbursement of amounts remitted by
Buyer to such bank, and Buyer's 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 by Buyer 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
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 Buyer and the MCGCs, to suspend
subsequent deliveries to Buyer under this Contract until the
amount of such invoice and interest thereon has been paid, and
Buyer shall not be entitled to any make-up rights in respect of
such suspended deliveries. 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,
upon not less then eighty (80) days' notice to Buyer and the
MCGCs, Seller may terminate this Contract.
Termination by Seller under this Section 10.5 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 Buyer.
10.6 Seller's Rights Upon MCGCs' Failure to Make Payment
(a) If payment of any invoice for quantities of LNG
sold to an MCGC under the MCGC Contract or for fixed quantities
of LNG not taken and for which such MCGC is obligated to pay
pursuant to the MCGC Contract is not made in accordance with the
MCGC Contract within sixty (60) days after the due date thereof,
Seller shall be entitled, upon giving thirty (30) days' written
notice to Buyer and such MCGC, to suspend subsequent deliveries
to such MCGC and, for the duration of such suspension, to sell
and deliver to Buyer the quantities of LNG which would otherwise
have been purchased and received by such MCGC and Buyer's Fixed
Quantities shall be increased correspondingly.
(b) If any such invoice is not paid within one hundred
and twenty (120) days after the due date thereof, Seller shall be
entitled, upon not less than eighty (80) days' notice to Buyer
and the MCGCs, to terminate the MCGC Contract in respect of the
defaulting MCGC in which event the quantities of LNG which would
otherwise have been purchased and received by such defaulting
MCGC shall be sold and delivered to Buyer hereunder and Buyer's
Fixed Quantities shall be increased correspondingly.
10.7 Disputed Invoices
(a) Subject to Section 10.7(b) below, in the event of
disagreement concerning any invoice, Buyer shall make provisional
payment of the total amount thereof and shall immediately notify
Seller of the reasons for such disagreement, except that in the
case of obvious error in computation the correct amount shall be
paid disregarding such error.
(b) In the event of disagreement arising under Article
13 which results in a dispute concerning the amount of any
invoice issued to Buyer :
(i) Buyer shall make provisional payment of the
amount which is believed to be correct and
shall immediately notify Seller 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) Buyer shall make provisional payment of the
amount in dispute to an interest bearing
escrow account established and controlled
jointly by Seller and 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.
(c) 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 Buyer shall have,
in a gaseous state, a Gross Heating Value of not less than 1070
BTU per Standard Cubic Foot and not more than 1170 BTU per
Standard Cubic Foot. The expected range will be between 1110 and
1165 BTU per Standard Cubic Foot.
11.2 Components
The LNG when delivered by Seller to Buyer 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 Buyer 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,
Buyer 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 Buyer 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. On or before October
15 of each year in which such notice is given, Buyer shall
advise Seller in writing of the quantities Buyer wishes to take
during each calendar quarter of the following year, specifying
the amount of any Make-Up LNG, any Restoration Quantities (in
addition to Fixed Quantities), and any Additional Quantities
requested pursuant to Article 7.
Seller and Buyer 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 to be delivered to each Receiving
Facility and to the receiving facilities of the MCGCs during each
calendar month during the following year (the "Annual Program"),
taking into consideration the contents of the above notices and
the Coordinated Maintenance Schedule. 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 Buyer 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
(ii) Restoration Quantities relating to a Force
Majeure Deficiency arising in respect of the
immediately preceding year;
provided that the requested LNG and the necessary transportation
is available and such requests are received by Seller not later
than January 15 of the year to which such Annual Program relates.
12.2 Ninety-Day Schedules
Not later than the fifteenth (15th) day of each
calendar month, Seller shall, after discussion with Buyer,
deliver to Buyer a three-month forward plan of delivery (the
"Ninety-Day Schedule"), which follows the applicable Annual
Program (or most current draft thereof) as nearly as practicable
and sets forth by voyages and the projected dates thereof the
pattern of shipments forecast 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
scheduled shipments forecast in the Annual Program. Both parties
shall cooperate to facilitate smooth performance of the Ninety-
Day Schedule. After consultation with Buyer, 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 Buyer for adjustments.
12.3 Maintenance and Inspection Coordination
Not later than ninety (90) days prior to the beginning
of each Fixed Quantity Period, Seller and Buyer shall consult and
agree on a program (the "Coordinated Maintenance Schedule")
designed to coordinate the scheduled drydocking and maintenance
of the LNG Tankers and the anticipated maintenance/inspection
downtime of the Badak Facility and the Receiving Facilities of
Buyer during that Fixed Quantity Period, and to minimize the
collective impact thereof on continuous delivery of LNG
hereunder, if and to the extent such drydocking, maintenance and
downtime is expected to affect deliveries of LNG hereunder.
12.4 Coordination of Scheduling with the MCGCs
In exercising its rights and in performing its
obligations under this Article 12, Buyer shall consult and
coordinate with the MCGCs as to the matters dealt with herein
prior to any discussions regarding the same with Seller.
ARTICLE 13 - MEASUREMENTS, TESTS AND ANALYSIS
13.1 Parties to Supply Devices
Seller 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.
Buyer shall supply, operate and maintain, or cause 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 Receiving Facilities.
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 Buyer 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
Seller shall provide Buyer, or cause Buyer to be
provided, with a certified copy of tank gauge tables for each
tank of the 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 Buyer shall each have the right
to have representatives present at the time each LNG tank on the
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), 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 Tanker, 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 unloading.
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 Seller before and after unloading.
The first gauging and measurements shall be made
immediately before the commencement of unloading. The second
gauging and measurements shall take place immediately after the
completion of unloading.
Copies of gauging and measurement records shall be
furnished to Buyer.
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 Tanker. The atmospheric pressure shall
be determined by readings from the standard barometer installed
in the LNG Tanker.
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
Buyer 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 Buyer
during the time of unloading and delivery to Buyer. The three (3)
samples shall be taken from an appropriate point on Buyer's
receiving line as close as possible to the unloading flanges and
collected in the gaseous state using the continuous
gasification/collection method agreed by Buyer and Seller.
In addition, periodic samples shall be obtained during
unloading. Should it be necessary to utilize periodic samples,
the composition of the LNG unloaded 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 Buyer and Seller to provide for taking representative and
adequate samples of the LNG delivered.
If representative samples cannot be obtained by Buyer,
the data to be determined by sample analysis in Section 13.7
shall be based upon the analysis of the LNG loaded at the Loading
Port and shall, after the boil-off adjustment provided for below,
be substituted for use in determining composition of the cargo
delivered. Such data obtained at the Loading Port shall be
adjusted for boil-off on the basis of the arithmetic average of
the boil-off experience during the one-way voyage with regard to
the last cargoes carried by the same LNG Tanker, up to a maximum
of five (5), from the Loading Port to the same Receiving
Facility. For this purpose Seller shall utilize devices
comparable to those utilized at the Receiving Facility and shall
employ methods of taking and analyzing the samples at the Loading
Port comparable in accuracy to those employed at the Receiving
Facility.
The samples obtained shall be distributed as follows:
First sample - for use of Buyer.
Second sample - for retention by Buyer for an agreed
period, not to exceed twenty (20) 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 Buyer and
Seller agree to retain it no longer.
Third sample - for use of Seller, if Seller so
requests.
13.7 Quality Analysis
The samples provided for in Section 13.6 shall be
analyzed, or be caused to be analyzed, by Buyer 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 Buyer 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 Buyer immediately prior to the analysis of the
sample of LNG delivered. Buyer shall give advance notice to
Seller of the time Buyer intends to conduct a calibration
thereof, and Seller shall have the right to have a representative
present at each such calibration; provided, however, Buyer will
not be obligated to defer or reschedule any calibration in order
to permit the representative of Seller to be present.
The sample shall be analyzed, or be caused to be
analyzed, by Buyer 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 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 BTUs 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 Buyer.
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 Buyer, 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 BTUs sold and
delivered.
B. Determination of Volume of LNG Unloaded
The LNG volume in the tanks of the LNG Tanker before
and after unloading 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 after unloading shall then be subtracted from the
volume before unloading and the resulting volume shall be taken
as the volume of the LNG delivered from the LNG Tanker.
If failure of gauging and measuring devices of the 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 Buyer's onshore LNG storage tanks immediately before and
after unloading the LNG Tanker, and such volume shall be
increased by adding an estimated LNG volume, agreed upon by the
parties, for boil-off from such onshore LNG storage tanks and
related pipelines during the unloading of the LNG Tanker. Buyer
shall provide Seller, or cause Seller 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 BTUs sold and delivered shall be
computed by Seller by means of the following formula:
Q = V x D x P - Qr
where :
Q : represents the quantity of the LNG sold and
delivered in BTUs.
V : represents the volume of the LNG unloaded,
stated in Cubic Meters, determined as
provided in Section 13.9B.
D : represents the density of the LNG unloaded,
stated in kilograms per Cubic Meter,
determined as provided in Section 13.5D.
P : represents the Gross Heating Value of the LNG
unloaded, stated in BTUs per kilogram.
Qr : represents the quantity in BTUs of the vapor
which displaced the volume of LNG unloaded
from the LNG tanks in the LNG Tanker.
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 Buyer. At the request of any
party hereto, any test shall be witnessed and verified by an
independent surveyor mutually agreed upon by Buyer 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 Buyer 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 10.7(c).
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 either 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
the parties. Expenses incurred in connection with the services of
such authority shall be shared equally by Seller and Buyer.
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 Buyer's measurement devices as provided for in this
Article 13 shall be borne by Buyer. 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 Buyer.
ARTICLE 14 - DUTIES, TAXES AND CHARGES
Buyer shall pay (or reimburse Seller for payments made
by it) and shall indemnify and hold Seller harmless from, all
taxes, royalties, duties, or other imposts levied or imposed by
the Japanese Government or any subdivision thereof, or any other
governmental authority in Japan, on the transportation, sale and
import of LNG, or on any income resulting therefrom, including
income resulting from payments made under this Article 14, and
taxes and duties levied or imposed on the LNG Tankers in Japan.
The parties understand and confirm that Buyer shall not be
required to pay under this Article 14 for any port charges, taxes
or duties on the LNG Tankers to the extent the same are included
in any other amounts payable by Buyer under this Contract. All
payments or reimbursements required under this Article 14 shall
be invoiced by Seller and paid by Buyer in accordance with
Article 10.
ARTICLE 15 - FORCE MAJEURE
15.1 Events of Force Majeure
Neither Seller nor 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) Fire, flood, atmospheric disturbance,
lightning, storm, typhoon, tornado,
earthquake, landslide, soil erosion,
subsidence, washout or epidemic;
(B) War, riot, civil war, blockade, insurrection,
act of public enemies or civil disturbance;
(C) Strike, lockout or other industrial
disturbance;
(D) Serious accidental damage to or serious
failure of Seller's Facilities, unless such
damage or failure is the result of gross
negligence on the part of Seller's
management;
(E) Serious accidental damage to or serious
failure of Buyer's Facilities, unless such
damage or failure is the result of gross
negligence on the part of Buyer's management;
(F) 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;
(G) Delay in completion and testing of a vessel
intended to be used as an LNG Tanker so as to
prevent the same from becoming operational on
a continuing basis, provided that Seller
shall have taken all steps which could
reasonably have been expected and which are
necessary to fulfill its responsibility to
provide transportation under this Contract;
(H) 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; or
(I) Unavailability of an LNG Tanker caused by an
event or circumstance which is beyond the
reasonable control of Seller despite Seller's
best efforts to assure the availability of
such LNG Tanker.
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 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 Efforts to Mitigate the Effect of Force Majeure
If there is an event of force majeure (as such term is
defined under the MCGC Contract) which affects one or both of the
MCGCs' receiving facilities, Buyer agrees to use its best efforts
to take (and, if so taken, to pay for) during the period until
resumption of normal performance, all or such part of the MCGC
Quantities as is necessary to ensure the full utilization of the
LNG Tankers.
For the purposes of this Section 15.3, the obligation
of Buyer to use its best efforts shall not require Buyer to
modify Buyer's Facilities at a cost which would make the purchase
of such MCGC Quantities uneconomic, nor shall it require Buyer to
engage in efforts to increase the demand of its customers for gas
beyond the efforts which are in the best interests of its overall
business. Buyer's rights under this Contract to purchase Fixed
Quantities, or under other LNG purchase contracts to purchase the
equivalent thereof, and to increase or decrease such quantities
in accordance with such contracts, are recognized, it being
understood by the parties that the exercise of such rights to
increase or decrease quantities, if any, or the short-term
purchase of LNG by Buyer, are subject to due regard for Buyer's
obligation to use its best efforts to take all or such part of
the MCGC Quantities as is necessary to ensure the full
utilization of the LNG Tankers.
15.4 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 Buyer and Seller 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 - BUYER'S REPRESENTATIVE
Buyer will from time to time designate a Buyer's
Representative to act on behalf of Buyer in performing the
following:
A. Coordination among Buyer and the MCGCs, and
between Seller and Buyer, and the handling of
communications between Seller and Buyer in
connection with performance of this Contract; and
B. Implementation of various operations of Buyer
which are necessary in connection with purchasing
and receiving of LNG hereunder.
Buyer shall notify Seller of the name and address of the
entity to act as Buyer's Representative.
Seller shall be entitled to accept and rely upon any
communication received from Buyer's Representative as if received
directly from Buyer, and to give communications to Buyer's
Representative with the same effect as if given directly to
Buyer. No act of or authorization to Buyer's Representative shall
relieve Buyer from performance of any obligation or payment of
any liability of Buyer hereunder, 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
the MCGCs, Seller's Transporter, Buyer's
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 or Seller's
Transporter, 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 Buyer, except
that notices given from an LNG Tanker 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 44
302 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 Buyer at the following mail, telex, facsimile
and cable addresses -
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.
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 Buyer without the prior written
consent of Seller, or by Seller without the prior written consent
of Buyer. Any request by Buyer for Seller's consent to an
assignment shall be accompanied by the written consent of the
MCGCs 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 Buyer.
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 - DETAILS OF PERFORMANCE
Details necessary for performance of this Contract shall be
mutually agreed upon by Seller and Buyer separately or, when
necessary and desirable, by Seller, Buyer and the MCGCs on a
coordinated and mutually agreeable basis.
ARTICLE 24 - EXCHANGE OF INFORMATION
Seller and Buyer will maintain close communication with each
other, and with the MCGCs, and will mutually provide and exchange
available information directly relevant to the fulfillment of
this Contract.
The parties will consult together to coordinate plans
relating to the modification of the Receiving Facilities, the
modification of the Badak Facility and the construction of the
vessels intended to be used as the LNG Tankers, so as to assure
that such facilities and such vessel are compatible for all
purposes and that progress is being made in accordance with the
project timetable agreed to between the parties. Upon the request
of Seller, or if Buyer so desires, Buyer will participate in
meetings of the joint coordinating committee established under
Article 25 of the MCGC Contract.
ARTICLE 25 - TERMINATION
Seller and Buyer shall use best efforts 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 twelve (12) months after the execution of this
Contract, Seller or Buyer should fail to obtain the
Authorizations and Approvals, then such party shall so notify the
other party promptly after such expiration, and Seller and Buyer
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 then
either Seller or Buyer may terminate this Contract by written
notice given at any time prior to the date upon which the
Authorizations and Approvals are obtained. 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.
If, after using their best efforts, either Seller or the
MCGCs should fail to obtain all authorizations, approvals and
permissions of national and local governments or other competent
authorities or bodies which are required for performance of the
MCGC Contract then, in the event that either Seller or the MCGCs
(being entitled to do so pursuant to the provisions of the MCGC
Contract) terminate the MCGC Contract, Seller shall so notify
Buyer in writing, and this Contract shall terminate on the same
date as the MCGC Contract is terminated.
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 26 - 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 27 - COUNTERPARTS
This Contract is executed in two (2) 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: BUYER:
PERUSAHAAN PERTAMBANGAN OSAKA GAS CO., LTD.
MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
By________/s/_____________ By________/s/_____________
WITNESS:
NISSHO IWAI CORPORATION
By________/s/______________
SIDE LETTER TO
LNG SALES CONTRACT
October 13, 1992
OSAKA GAS CO., LTD.
Gentlemen,
With reference to the LNG Sales Contract entered into today
between Pertamina and Osaka Gas Co., Ltd., (the "Contract"), the
parties have agreed the following matters supplemental to the
Contract. In this letter terms defined in the Contract shall have
the meanings therein ascribed to them.
In respect of the Contract:
1.Force Majeure at Seller's Facilities
If there is an event of Force Majeure at Seller's Facilities
which reduces the quantity of LNG available to Buyer from the
Badak Facility, then Seller and Buyer will consult regarding the
possibility of making the LNG Tankers available to Buyer. In the
event that Seller decides to make the LNG Tankers available to
Buyer, Seller shall be entitled, upon reasonable notice to Buyer,
to have the LNG Tankers returned to Seller whenever Seller is
able to resume delivery of LNG to Buyer.
2.Buyer's Obligation to Restore Force Majeure Deficiency
Referring to Section 7.9 (a) of the Contract, the parties have
agreed the following with regard to Buyer's obligation to restore
a Force Majeure Deficiency under the Contract:
(i)Section 7.9 (a) does not impose on Buyer any obligation as to
resumption of normal performance in the event of Force Majeure
affecting Buyer under Section 15.1 which is greater than Buyer's
obligation under Sections 15.2 and 15.3, and after resumption of
normal performance Buyer will not be required to modify Buyer's
Facilities, in order to restore a Force Majeure Deficiency, at a
cost which would make the purchase of such Restoration Quantities
uneconomic.
(ii)Buyer will not be required to engage in efforts to increase
the demand of its customers for gas beyond the efforts which are
in the best interests of its overall business.
(iii)Buyer's rights under this Contract to purchase Fixed
Quantities, or under other LNG purchase contracts of Buyer to
purchase the equivalent thereof, and to increase or decrease such
quantities in accordance with such contracts, are recognized, it
being understood by the parties that the exercise of quantity
options, if any, under other LNG purchase contracts of Buyer or
the short-term purchase of LNG by Buyer are subject to due regard
for Buyer's obligation to restore a Force Majeure Deficiency.
3. Sale of Additional Cargoes on a Spot Basis
Seller and Buyer agree that at any time during any Fixed
Quantity Period Buyer shall be entitled to request the purchase
of additional cargoes, on a spot basis, using the LNG Tankers.
Seller may accept or reject such request in its sole
discretion. In the event that Seller accepts any such request,
the sale and purchase of the quantities involved shall be made on
the terms and conditions contained in this Contract.
4. Seller's Transportation Arrangements
At the time Sections 8.3 and 8.4 were prepared, Seller's
Transportation Arrangements had not yet been finalized. Seller
and Buyer will prepare, if necessary, more detailed guidelines
pursuant to Article 24 to take into account the effect of the
Seller's Transportation Arrangements, as finalized, on the
transportation related matters provided for under Sections 8.3
and 8.4.
5. Transportation of Make-Up LNG
Seller and Buyer intend that the LNG Tankers be fully utilized
throughout the term of the Contract. If pursuant to Section 7.8
Buyer has requested Make-Up LNG but Seller does not expect to
have available LNG Tanker capacity during the remainder of the
term of the Contract which may be used to transport such Make-Up
LNG, then notwithstanding the provisions of Section 7.8, Seller
shall sell such Make-Up LNG to Buyer if:
(i) Seller has uncommitted quantities of LNG available for
such purposes,
(ii) Seller has determined that it has other transportation
capacity which is available for the purpose of transporting such
Make-Up LNG, and
(iii) Buyer shall have first taken and paid for its Fixed
Quantity for such year.
In such event, the credit given to Buyer under Section 7.8
relating to the amount previously paid on account of such Take-
or-Pay Quantity shall be reduced by the amount of transportation
costs incurred by Seller in delivering such Make-Up LNG.
6. Structure of Contract
At the time the Contract was executed, the parties had not yet
completed their negotiations relating to the sale and purchase of
certain quantities of LNG to replace Buyer's demand upon the
expiration of the 1988 LNG Sales Contract on December 31, 1993
("Other Quantities"). Should the parties conclude a separate
agreement regarding such Other Quantities, the Contract shall be
amended to include such quantities. In such an event the amended
Contract shall be structured in two parts in recognition of the
fact that such Contract would be dealing with two different sets
of circumstances (e.g. different volumes, transportation, price):
the first part would contain the provisions relating to the
quantities carried on the LNG Tankers; the second part would
contain detailed provisions relating to the Other Quantities to
be carried on standard size LNG tankers. In the context of their
negotiations on the Other Quantities, the parties agree to
further discuss the issue of downward adjustment.
Very truly yours,
PERUSAHAAN PERTAMBANGAN
MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
By ______/s/___________
Agreed and Accepted this 13th day
of October, 1992:
OSAKA GAS CO., LTD.
By _____/s/__________