AMENDED AND RESTATED 1973 LNG SALES CONTRACT
This LNG Sales Contract ("Contract") dated as of the 3rd
day of December, 1973, amended by Amendment No.1 dated as of the
1st day of August, 1976, and amended and restated as of the 1st day
of January, 1990, 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 CHUBU ELECTRIC POWER
CO., INC. ("Chubu Electric"), THE KANSAI ELECTRIC POWER CO., INC.
("Kansai Electric"), KYUSHU ELECTRIC POWER CO., INC. ("Kyushu
Electric"), NIPPON STEEL CORPORATION ("Nippon Steel"), OSAKA GAS
CO., =. ("Osaka Gas"), and TOHO GAS CO., LTD. ("Toho Gas"), all
corporations organized and existing under the laws of Japan
(referred to individually as "Buyer" and collectively as "Buyers"),
on the other hand.
WITNESSETH:
WHEREAS:
1. By Memorandum of Agreement, dated as of January 1, 1983,
Seller and Buyers other than Toho Gas agreed to amend the Fixed
Quantity provisions of the Contract with respect to calendar years
1983 through 1997 to provide for the sale to and purchase by Buyers
of additional quantities of LNG;
2. By Assignment dated as of January 30, 1987, Nippon Steel
assigned to Toho Gas all of its rights and Toho Gas assumed the
obligations with respect to a portion of the Fixed Quantities that
Nippon Steel had agreed to purchase under the Contract; Seller and
the other Buyers consented to such assignment pursuant to the
Contract and to the inclusion of Toho Gas as a Buyer under the
Contract as of January 1, 1987;
3. By Seller/Buyers Memorandum of Understanding Related to
Amendment No.3 to the Transportation Agreement, dated October 16,
1987, Seller and Buyers agreed on certain matters that relate to
transportation of LNG pursuant to the Contract and Seller and
Buyers have agreed to amend the Contract to incorporate such
agreements;
4. By that certain Invoice Settlement Agreement for 1973 LNG
Sales Contract dated as of March 31, 1987 and amended and restated
as of December 1, 1988, Seller and Buyers agreed to amend the
Contract to delete the currency adjustment provision and all
references thereto as of April 1, 1988;
5. By Memorandum of Agreement on Revisions to the 1973 LNG Sales
Contract dated as of September 7, 1989, Seller and Buyers agreed to
revise certain provisions of the Contract, to provide for the sale
and purchase of additional quantities of LNG during the period
1997; through 1999, and to amend the Contract to incorporate these
revisions effective as of January 1, 1990; and
6. Seller and Buyers have agreed to eliminate those provisions of
the Contract that are no longer operational and to make certain
linguistic and grammatical revisions to improve the clarity of the
Contract.
NOW, THEREFORE, Seller and each Buyer hereby agree to the
following terms:
ARTICLE 1 - DEFINITIONS
The terms or expressions below will have the following
meanings in this Contract:
1.1 Actual Cubic Foot (acf)
A volume equal to the volume of a cube whose edge is one
foot.
1.2 Adverse Weather Conditions
As defined in Section 4.4(b).
1.3 Affiliate
As defined in Article 19.
1.4 Allowance
The quantity of LNG by which a Buyer reduces a Quantity
Deficiency in respect of a given calendar year pursuant to the
provisions of Section 7.3(d).
1.5 Allowance Restoration Period
As defined in Section 7.3(d)(iv).
1.6 Annual Accounting Period
As defined in the Transportation Agreement.
1.7 Annual Program
As defined in Section 12.1(a).
1.8 Arun Facility
The liquefaction plant facilities, including processing,
storage, loading and related facilities and the Natural Gas
transmission pipeline from the field to the liquefaction plant,
located near Lhok Seumawe, Aceh, Indonesia.
1.9 Badak Facility
The liquefaction plant facilities, including processing,
storage,
loading and related facilities and the Natural Gas transmission
pipeline from the
field to the liquefaction plant, located in East Kalimantan,
Indonesia.
1.10 British Thermal Unit (BTU)
The amount of heat required to raise the temperature of
one avoirdupois pound of pure water from 59.OoF to 60.OoF at an
absolute pressure of 14.696 pounds per square inch.
1.11 Business Day in Japan
Every day other than Saturdays, Sundays, National
Holidays (including compensatory days), and January 2 and 3.
1.12 Buyers' Coordinator
Japan Indonesia LNG Co., Ltd. or such other entity as may
be designated by Buyers pursuant to Article 18.
1.13 Buyers' Facilities
For the purposes of Section 15.1 E in respect of any
Buyer, the Receiving Facilities of such Buyer and such other
facilities directly related to the use of LNG which, if not
operational, would reduce the amount of LNG which such Buyer is
able to receive hereunder.
1.14 Contract Sales Price
As defined in Section 8.1.
1.15 Coordinated Maintenance Schedule
As defined in Section 12.3.
1.16 Crew + Stores + Subsistence
The items included in the definition of Operating Costs
in the Transportation Agreement in the following categories: Crew
wages, overtime and fringe benefits, including subsistence and
repatriation expense; Stores and Equipment; and Subsistence.
1.17 Cubic Meter
A volume equal to the volume of a cube whose edge is one
meter.
1.18 Dedicated Vessel
As defined in the Transportation Agreement.
1.19 Delivery Point
The point at which the flange coupling of Buyer's
unloading line joins the flange coupling of the LNG discharging
manifold on board the LNG Tanker.
1.20 Escalating
As defined in the Transportation Agreement.
1.21 Exercising Buyer
As defined in Section 7.3(d)(i).
1.22 Financing Costs
As defined in the Transportation Agreement.
1.23 Fixed Quantity
As defined in Section 7.1(a).
1.24 Fixed Quantity Period
As defined in Section 7.1(a).
1.25 Force Majeure Deficiency
As defined in Section 7.6.
1.26 G.P.A.
Gas Processors Association.
1.27 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 60oF and at 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.
1.28 Huffco Group
Roy M. Huffington, Inc., Huffington Corporation, Virginia
International Company, Virginia Indonesia Company, Ultramar
Indonesia Limited, Union Texas East Kalimantan Limited and Universe
Tankships, Inc.
1.29 Indonesian Facilities
The Arun Facility and the Badak Facility.
1.30 Initial Contract Sales Price
As defined in Section 8.1.
1.31 Insurance
As defined in the definition of Operating Costs in the
Transportation Agreement.
1.32 Inward Steaming Time
As defined in Section 4.4(b).
1.33 Liquefied Natural Gas (LNG)
Natural Gas in a liquid state at or below its boiling
point at a pressure of approximately one atmosphere.
1.34 LNG Element
As defined in Section 8.1.
1.35 LNG Tanker
An ocean-going vessel, suitable for transporting LNG,
which is used by Seller for transportation of LNG under this
Contract to the Unloading Ports.
1.36 Loading Ports
The ports located at the Arun Facility and the Badak
Facility.
1.37 Maintenance and Repairs
As defined in the definition of Operating Costs in the
Transportation Agreement.
1.38 Make-Good LNG
As defined in Section 7.3(d)(iv).
1.39 Make-Good Obligation
The obligation of a Buyer as set forth in Section
7.3(d)(iv) to take and pay for LNG in an amount (measured in BTUs)
equal to each allowance exercised.
1.40 Make-Up LNG
As defined in Section 7.5.
1.41 Market Value LNG Element
As defined in Section 8.2.
1.42 Minimum LNG Element
As defined in Section 8.2.
1.43 Mobil
Mobil Oil Indonesia Inc.
1.44 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.
1.45 Ninety-Day Schedule
As defined in Section 12.2.
1.46 Notice of Readiness
The notice given at the time prescribed in Section 4.4(b)
by the Master of each LNG Tanker or its agent to Buyer by
letter, telegraph, telex, facsimile, radio or telephone
that such LNG Tanker is ready to discharge LNG.
1.47 Operating Costs
As defined in the Transportation Agreement.
1.48 Outward Steaming Time
As defined in Section 4.4(b).
1.49 Quantity Deficiency
As defined in Section 7.3(a).
1.50 Receiving Facilities
The LNG receiving terminal facilities which Buyers have
constructed or will construct at the Unloading Ports including,
without limitation, berthing and unloading facilities, LNG storage
tanks, vessel services facilities and regasification plants.
1.51 Required Minimum Payment
As defined in the Transportation Agreement.
1.52 Restoration Quantities
As defined in Section 7.6.
1.53 Safety Pledge Letter
As defined in Section 4.1(c).
1.54 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
Indonesian Facilities.
1.55 Seller's Suppliers
In respect of a portion of the LNG to be delivered from
the Arun Facility, Mobil; and in respect of a portion of the LNG to
be delivered from the Badak Facility, Huffco Group; and any
successors and assignees 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 supply agreement with
Seller.
1.56 Standard Cubic Foot of Gas (scf)
The quantity of Natural Gas, free of water vapor,
occupying a volume of one Actual Cubic Foot at a temperature of
60oF and at an absolute pressure of 14.696 pounds per square inch.
1.57 Substitute LNG Tanker
An LNG Tanker other than a Dedicated Vessel.
1.58 Take-or-Pay Quantity
As defined in Section 7.5.
1.59 Take-or-Pay Transportation Amount
As defined in Section 7.3(e).
1.60 Transportation Agreement
Transportation Agreement made as of September 23, 1973
between Pertamina and Burmah Gas Transport Limited (as successor to
Burmast East Shipping Corporation), as amended by Amendment No.1
dated as of August 31, 1976, Amendment No.2 dated as of November
28, 1979, and Amendment No.3 dated as of May 27, 1981 (and
including any further amendment that may be agreed pursuant to
Section 4.1(b)), under which Transporter is obligated to furnish
LNG Tankers to transport all LNG to be sold and delivered
hereunder.
1.61 Transportation Element
As defined in Section 8.1.
1.62 Transportation Related Amount
As defined in Section 4.5(c).
1.63 Transporter
Burmah Gas Transport Limited which has contracted with
Seller to provide transportation pursuant to the Transportation
Agreement as required by Section 4.1.
1.64 Unloading Ports
The ports at locations in or near Nagoya, Osaka, Himeji
and Kita-Kyushu, and at such other locations in Japan as may be
agreed between Seller and Buyers, where the Receiving Facilities
are or will be constructed.
ARTICLE 2 - SALES AND PURCHASE
Seller agrees to sell and deliver, and each Buyer agrees to
purchase, receive and pay for, and to pay for if not taken, LNG, in
the quantities and at the price and in accordance with the other
terms and conditions set forth in this Contract.
ARTICLE 3 - SOURCES OF SUPPLY
The Natural Gas to be processed into LNG and sold and
delivered hereunder is to be produced from Contract Area "B" in
Sumatra, Indonesia, which is covered by the Mobil production
sharing contract referred to below, and from the Badak field
located in that area of East Kalimantan, Indonesia, covered by
the Huffco Group production sharing contract referred to below.
Seller represents that the production of Natural Gas from
said Contract Area "B' is governed by a production sharing
contract between Seller and Mobil, as contractor, and that the
production of Natural Gas from the said area of East Kalimantan
is governed by a production sharing contract between Seller and
the Huffco Group, as contractor. Under each of such production
sharing contracts, the contractor is entitled to a share of
production, subject to adjustment to give effect to the
contractor cost-recovery provisions thereof, and Seller is
entitled to the balance of such production.
Seller further represents that Seller has the right to sell
all of the quantities of LNG to be sold and delivered hereunder.
In this connection, Seller represents that it has executed supply
agreements with Mobil and the Huffco Group under which Mobil and
the Huffco Group have each made available, for sale and delivery
hereunder, their respective interests in the quantities of the
LNG covered by this Contract to be delivered from the Arun
Facility and the Badak Facility.
ARTICLE 4 - TRANSPORTATION AND UNLOADING
4.1 Transportation Agreement
(a) Seller shall be responsible for the continuous
transportation from the Indonesian Facilities to the Receiving
Facilities of the LNG to be sold and delivered hereunder, and for
this purpose Seller shall take all appropriate steps to secure
full and complete performance by Transporter of its obligations
under the Transportation Agreement. In order to fulfill its
responsibilities for transportation of LNG under this Contract,
Seller has arranged with Transporter in the Transportation
Agreement for Transporter to make time charter or other
arrangements for Substitute LNG Tankers. Seller, after
consultation with Buyers, may employ other LNG Tankers meeting
the requirements of this Contract. However, in the event
additional or replacement LNG Tankers are needed for purposes of
this Contract because of unavailability of LNG Tankers from
Transporter or loss of an LNG Tanker already in service, then
Buyers may offer to Seller other available LNG Tankers.
Each LNG Tanker shall have the following general
specifications:
LNG Tanker Capacity : about 125,000
cubic meters
Total Deadweight : about 64,000 long
tons
Length Overall : about 936 feet
Beam Extreme : about 144 feet
Design Draft fully laden in salt water : about 36 feet - 1
inch
All Substitute LNG Tankers shall be compatible with the
Receiving Facilities, unless such limitation is mutually waived
by Seller and Buyers.
(b) If the Transportation Agreement is amended or
terminated in whole or in part, or if for any other reason new
and/or additional transportation arrangements are required to
fulfill Seller's responsibility for transportation of LNG
hereunder, such amended, new and/or additional transportation
arrangements shall be concluded with the agreement of Seller and
Buyers. Seller shall permit Buyers to participate in
negotiations related thereto. Any decisions by Seller relating
to the use of Substitute LNG Tankers contemplated by the
Transportation Agreement shall be made with the agreement of
Seller and Buyers, which agreement will not be unreasonably
withheld by either Seller or Buyers.
(c) Seller shall use its best efforts to cause Transporter
to take such actions as are reasonably required by Japanese
authorities to evidence responsibility for safe operation of LNG
Tankers in accordance with the letter of the vessel operator
addressed to Japanese port authorities in connection with
permission for LNG Tankers to enter into Unloading Ports ("Safety
Pledge Letter"). Seller shall ensure that Transporter will
arrange for such number and types of 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
Tanker within the maritime safe areas located in the approaches
to and from the Unloading Ports. The cost of such fireboats and
escort vessels shall be included in the Operating Costs of the
Dedicated Vessels and for other LNG Tankers shall be reimbursed
as part of the Transportation Element.
4.2 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 the 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 a 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;
(ii) A second notice which shall be sent
ninety-six (96) hours prior to the estimated
time of arrival of the LNG Tanker at the
Unloading Port;
(iii) A third notice which shall be sent
forty-eight (48) hours prior to the
estimated time of arrival of the LNG
Tanker at the Unloading Port;
(iv) A fourth notice which shall be sent
twenty-four (24) hours prior to the estimated
time of arrival of the LNG Tanker at the
Unloading Port;
(v) A final notice which shall be sent five (5)
hours prior to the estimated time of arrival
of the LNG Tanker at the Unloading Port; and
(vi) A Notice of Readiness which shall be given at
the time prescribed in Section 4.4 (b) below.
(b) Within thirty-six (36) hours after departure of
each LNG Tanker from a 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.
4.3 Obligations of Buyers at Unloading Ports
Each Buyer shall cooperate with Transporter or its
agent and the
Master of each LNG Tanker directed to an Unloading Port to insure
the continuous and efficient delivery of LNG hereunder. Each
Buyer shall provide a safe berth for prompt berthing of LNG
Tankers at its Receiving Facility and shall operate the Receiving
Facility, or ensure that it is operated, so as to permit
discharge of the cargo of each LNG Tanker 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 design.
4.4 Demurrage at Unloading Ports
(a) In the event used laytime exceeds allowed laytime
in unloading an LNG Tanker, as provided in paragraph (b) below,
Buyer shall pay to Seller, or for Seller's account if so directed
by Seller, demurrage calculated at an initial daily rate of
U.S.$58,007 or prorated for a portion of a day, subject to
adjustment as provided below, except that the demurrage rate for
Substitute LNG Tankers shall be calculated to reflect the actual
demurrage costs of such Substitute LNG Tankers as agreed by
Seller and Buyers. The amount to be paid for demurrage shall be
adjusted at the time the Transportation Element is adjusted to
reflect changes in Operating Costs in accordance with the
following formula:
U.S.$ 58,007 (Escalating) = U.S.$ 48,154.20
+ U.S.$ 3,764.71 x (Crew + Stores + Subsistence)*
1,280,000 U.S.S/Yr.
+ U.S.$ 4,323.53 x Insurance*
1,470,000 U.S.$/Yr.
+ U.S.$ 1,764.71 x Maintenance and Repairs*
600,000 U.S.$/Yr.
Whenever Seller receives notice from Transporter that the
demurrage rate has been adjusted as contemplated above, Seller
shall promptly send a copy of such notice to each Buyer together
with a statement certified by a firm of certified public
accountants or other appropriate documentation of the calculation
of such adjustment. The adjusted demurrage rate shall become
effective on the date the corresponding Transportation Element
adjustment becomes effective and shall not apply to any demurrage
incurred prior to the date of effectiveness of such adjustment.
(b) Laytime to be allowed at each Unloading Port at which
the LNG Tanker discharges LNG being delivered hereunder shall be
thirty-six (36) 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 as defined in Article 15; 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; or
(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 all LNG Tankers 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 an
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.
Upon arrival of each LNG Tanker at the agreed location off
each Unloading Port, and subject to any mutually agreed time
restrictions, the Master of the LNG Tanker or its agent
shall give Notice of Readiness to Buyer or its agent that
such LNG Tanker is ready to discharge LNG, berth or no
berth. Laytime shall commence upon receipt of Notice of
Readiness and shall continue to run until the LNG Tanker
clears the Unloading Port (i.e., when leaving the Unloading
Port passes the agreed position for tendering Notice of
Readiness). From used laytime calculated as above shall be
deducted all Inward Steaming Time and all Outward Steaming
Time.
For the purposes of this paragraph (b):
(A) "Inward Steaming Time" shall mean the total time
elapsed between Notice of Readiness and "all fast" in berth,
minus the period of any delay or stoppage that prevents the
forward movement of the LNG Tanker to the berth if and to
the extent the total of all such delays or stoppages exceeds
six (6) hours, and
(B) "Outward Steaming Time" shall mean the total of
all hours between the disconnection of the discharge and
return lines and the LNG Tanker clearing the Unloading Port,
minus the period(s) of any delay or stoppage that prevents
the outward movement of the LNG Tanker.
Any delay caused to an LNG Tanker by quarantine at an
Unloading Port (except that related to the presence aboard or
processing of refugees picked up by the LNG Tanker) shall count
as used laytime.
4.5 Effect of Unloading Port Delays: Transportation Costs
(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 other than force majeure
affecting Buyer's Receiving Facility or such LNG Tanker and other
than the fault of the LNG Tanker, its Master, crew, owner or
operator, 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.
(c) For purposes of this paragraph (c), the following
amounts shall each be called a "Transportation Related Amount":
(i) Any amount due from Seller to Transporter
pursuant to Section 5.2.(b)(xii) of the
Transportation Agreement relating to the last
Annual Accounting Period under the
Transportation Agreement;
(ii) Any amount due from Seller to Transporter on
account of non-utilization of an LNG Tanker
caused by an event or circumstance of force
majeure affecting a Buyer during the first
ninety (90) days from the commencement
thereof. Such amounts shall not exceed, on a
daily basis, the daily demurrage rate set
forth in Section 4.4(a) (as escalated and in
effect during the period of LNG Tanker non-
utilization); and
(iii) Any amount due from Seller to
Transporter on account of
non-utilization of an LNG Tanker caused
by an event or circumstance of force
majeure affecting a Buyer during any
portion in excess of one hundred and
eighty (180) days. However, such
amounts shall: (A) not exceed, on a
daily basis, the Transporter's
unamortized Financing Costs (prorated on
a daily basis) falling due from time to
time after such 180th day of
non-utilization, and (B) include only
amounts payable for each day of
non-utilization of the LNG Tanker which
precedes the day the circumstance of
Buyer force majeure has ended, or the
day Transporter's unamortized Financing
Costs have been fully paid, whichever is
earlier.
A Transportation Related Amount under either clause (ii) or
(iii) above shall be adjusted downward to reflect any credits to
Seller for other revenues earned by the LNG Tanker during the
period of force majeure.
A Transportation Related Amount shall not include any
amount which becomes payable to Transporter:
(A) as the result of an event or circumstance of force
majeure affecting Seller;
(B) as the result of Seller's breach of its obligations
under this Contract; or
(C) by reason of non-utilization of an LNG Tanker caused by
the fault or negligence of such LNG Tanker or the
Transporter, including, but not limited to, the failure
of Transporter to satisfy Japanese authorities in
connection with permission for LNG Tankers to enter
into Unloading Ports as required pursuant to Section
4.1(c).
If and to the extent that a Transportation Related Amount
has not been paid and is not payable to Seller as part of the
Transportation Element or under any provisions of this Contract,
the Buyer(s) responsible therefor shall pay such Transportation
Related Amount to Seller.
Unless otherwise instructed in writing by Buyers, the total
of any lump sum payments due under Section 5.2.(b) (xii) of the
Transportation Agreement shall be apportioned among and paid by
each of the Buyers concerned in the respective proportions that
each Buyer's Fixed Quantities bear to the aggregate Fixed
Quantities of all concerned Buyers during the last Annual
Accounting Period.
In connection with each payment due under this paragraph
(c), 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 payments under clauses (ii)
and (iii) above every seven (7) days and such invoice shall be
due and payable in accordance with Section 10.3).
Seller shall pay to the Buyers any amounts paid to Seller by
Transporter pursuant to Section 5.2.(b) (xii) of the
Transportation Agreement relating to the last Annual Accounting
Period thereunder. Unless otherwise instructed in writing by
Buyers, such payment shall be apportioned among and paid to each
of the Buyers concerned in the respective proportions that each
Buyer's Fixed Quantities bear to the aggregate Fixed Quantities
of all concerned Buyers during the last Annual Accounting Period.
ARTICLE 5 - ON-SHORE FACILITIES
5.1 Receiving Facilities
Each Buyer shall ensure, at no cost to Seller, that its Receiving
Facilities shall be compatible with the general specifications of
the LNG Tankers as provided for in Section 4.1(a) and shall include
the following:
A. Berthing facilities capable of receiving LNG Tankers
having an overall length of up to 950 feet, a beam of up to
150 feet and a draft of up to 36 feet 6 inches, 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 twelve (12) hours of pumping time at
the full pumping rate specified by the LNG Tanker design.
C. A vapor return line system of sufficient capacity to
transfer to the LING Tankers quantities of natural gas
necessary for the safe unloading of LNG at such rates,
pressures and temperatures as may be required by the LNG
Tanker design.
D. Systems for timely provision of the LNG Tankers with
adequate fresh water and bunker oil, if necessary.
E. Facilities allowing access to the LNG Tankers from
onshore adequate for the handling and delivery of ship's
stores, provisions and spare parts to the LNG Tankers.
F. Shore-based tanks and loading lines for liquid
nitrogen adequate to service the LNG Tankers.
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
communications with LNG Tankers.
I. Regasification plant.
5.2 Indonesian Facilities
Seller shall ensure, at no cost to Buyers, that the
Indonesian Facilities shall include the following:
A. Natural Gas transmission pipelines for the delivery
to the liquefaction plants of Natural Gas for processing into
LNG.
B. LNG processing facilities of sufficient capacity to
process Natural Gas into the LNG to be sold and delivered
hereunder.
C. LNG storage tanks of adequate capacity for the
storage of quantities of LNG for subsequent loading on to LNG
Tankers.
D. Berthing facilities capable of receiving LNG Tankers
having an overall length of up to 950 feet, a beam of up to
150 feet and a draft of up to 36 feet 6 inches, which the LNG
Tankers can always safely reach, fully laden, and safely
depart, and at which the LNG Tankers can lie safely berthed
and load safely afloat at all times.
E. Loading facilities capable of loading LNG at a rate
which will permit the full loading of an LNG Tanker within
twelve (12) hours of pumping time.
F. Facilities allowing access to the LNG Tankers from
onshore adequate for the handling and delivery of ship's
stores, provisions, liquid nitrogen and spare parts to the LNG
Tankers.
G. Appropriate systems for necessary radio
communications with LNG Tankers.
ARTICLE 6 - DURATION OF CONTRACT
The terms of this Contract 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. If Seller and any Buyer or
Buyers so agree at least five (5) years before the time this
Contract would otherwise expire, the term of this Contract as to
such Buyer or Buyers may be extended on such terms and conditions
as may be mutually agreed.
ARTICLE 7 - QUANTITIES
7.1 Required Deliveries
(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 each
Buyer, and each Buyer shall purchase, receive and pay for, or
pay for if not taken, at the Contract Sales Price, a quantity
of LNG having a heating value as specified for such Buyer for
such Fixed Quantity Period (each such quantity being called a
"Fixed Quantity") as follows:
CALENDAR FIXED QUANTITY FIXED QUANTITIES FOR
EACH BUYER
YEAR PERIOD (Billions of BTUs)
CHUBU KANSAI KYUSHU NIPPON OSAKA TOHO
TOTAL
ELECTRIC ELECTRIC ELECTRIC STEEL GAS GAS
1977 Oct. 18-Dec. 31 6,079.70 1,957.78 1,641.03 1,547.77 7,081.48 -
18,307.76
1978 Full Year 54,792 29,389 37,149 29,387 39,741 -
190,458
1979 Full Year 71,650 67,459 69,063 30,293 45,801 -
284,266
1980 Full Year 87,848 108,520 77,516 31,004 54,260 -
359,148
1981 Full Year 87,850 124,023 77,515 31,006 59,427 -
379,821
1982 Full Year 87,850 124,023 77,515 31,006 67,179 -
387,573
1983 Full Year 117,050 141,543 83,355 31,006 67,179 -
440,133
1984-1986 Each Full Year 117,050 132,783 86,275 31,006 67,179 -
434,293
1987-1997 Each Full Year 111,210 132,783 80,435 28,066 67,179 2,940
422,613
1998 Full Year 111,210 132,783 80,435 - 67,179 2,940
394,547
1999 Full Year 111,210 132,783 - - 67,179 - 311,172
/TABLE
The above Fixed Quantities are subject to adjustment as
provided in Section 7.3 (a). After giving effect to any such
adjustment the term "Fixed Quantity" shall mean the applicable
Fixed Quantity as so adjusted, and the respective obligations of
Seller to sell and deliver, and each Buyer to purchase, receive
and pay for, or pay for if not taken, Fixed Quantities of LNG in
any Fixed Quantity Period, shall apply to the applicable Fixed
Quantities as so adjusted.
(b) In the event Seller is able to obtain an extension of
Dedicated Vessel availability, Seller shall so advise each Buyer
and, if Seller and Buyer mutually agree in writing, additional
Fixed Quantity Periods for such Buyer may be designated to
continue during such extended Dedicated Vessel availability.
During such additional Fixed Quantity Periods, Seller shall sell
and deliver and such Buyer shall purchase, receive and pay for,
or pay for if not taken, at the Contract Sales Price, such
quantities of LNG as shall have been designated as Fixed
Quantities for such Fixed Quantity Periods by mutual agreement of
Seller and Buyer.
7.2 Single-Port Cargoes: Reallocation of Cargoes: Rate of
Deliveries
(a) All deliveries of LNG by Seller and receipt thereof by
a Buyer shall be made in fully loaded LNG Tanker lots comprised
solely of LNG from the Arun Facility or the Badak Facility and,
except as provided in paragraph (c) below, each LNG Tanker shall
be unloaded at a single Receiving Facility in Japan.
(b) Each Buyer, upon appropriate notice to Seller,
may reallocate all of an LNG Tanker cargo from one Buyer to
another Buyer and/or from one Receiving Facility to another, and
also may reallocate any part of an LNG Tanker cargo from one
Buyer to another within one Receiving Facility.
In case of such reallocation, the ownership of such cargo
or part thereof shall be transferred directly from Seller to the
new Buyer in place of the original Buyer, but the respective
Fixed Quantities of the Buyers concerned shall not be changed and
the cargo in question shall be deemed to be received by the
original Buyer in connection with its take or pay obligations
under Section 7.3(a).
Each such reallocation shall be documented in a form to be
established by Seller and Buyers, executed by the original Buyer
and the Buyer which will actually receive the cargo, which
document will provide that the receiving Buyer will assume and be
responsible to Seller for performance of the obligations of the
original Buyer in respect of such cargo, and that such cargo is
deemed to be taken by the original Buyer in connection with its
take or pay obligations under Section 7.3(a).
Buyers will exercise the right to reallocate cargoes in a
manner that will not materially disrupt the shipping schedules.
(c) In addition to paragraph (b) above, upon reasonable
advance notice to Seller from the Buyer concerned, in case of
emergency, Seller and Buyers may reallocate all or any part of an
LNG Tanker cargo from one Receiving Facility to another, if such
change would not materially disrupt the shipping schedules.
(d) Within each Fixed Quantity Period the quantities to be
delivered by Seller and received by each Buyer from the
Indonesian Facilities shall be delivered at rates and intervals
and in quantities which are reasonably constant over the course
of such Fixed Quantity Period and give effect to the maintenance,
downtime and shipping schedules provided for in Article 12, so as
to assure, as nearly as possible, continuous full utilization of
the LNG Tankers, even production rates of each of the Indonesian
Facilities, and even rates of deliveries at each Buyer's
Receiving Facility.
7.3 Buyer's Obligation to Take or Pay
(a) If, during any Fixed Quantity Period, any Buyer should
fail to take the full Fixed Quantity applicable thereto, such
Buyer shall pay Seller, at the Contract Sales Price in effect as
of the last day of such Fixed Quantity Period, for the quantities
of LNG required to be purchased but which were not taken by such
Buyer during such Fixed Quantity Period (any such quantity
deficiency being called a "Quantity Deficiency"), subject,
however, to paragraphs (b), (c) and (d) below and the following:
(i) If, after taking into account all adjustments provided
for in this Section 7.3 including any Allowance that
has been exercised, there remains a Quantity Deficiency
for a Buyer at the end of any Fixed Quantity Period,
such Buyer may carry forward and add to the Fixed
Quantity for the next succeeding Fixed Quantity Period:
(A) the full amount when such Quantity Deficiency
amounts to less than a full LNG Tanker cargo lot;
or
(B) any fractional portion of a cargo when the
Quantity Deficiency exceeds one fall LNG Tanker
cargo lot.
Amounts so carried forward shall not be included in
such Quantity Deficiency.
(ii) If, at the end of any Fixed Quantity Period, a
Buyer has purchased and received quantities of
LNG hereunder in excess of the Fixed Quantity of
such Buyer for such Fixed Quantity Period other
than Make-Up LNG, Make-Good LNG, or Restoration
Quantities, the excess shall be applicable to
reduce the Fixed Quantity of such Buyer for the
next succeeding Fixed Quantity Period.
(b) The obligation (set forth in paragraph (a) above) of
each Buyer with regard to any Fixed Quantity Period to pay for
Fixed Quantities not taken shall be reduced by the quantity of
LNG which such Buyer was unable to purchase because of an event
of force majeure as defined in Article 15 affecting either Seller
or such Buyer or because of Seller's failure for any other reason
to make such quantity available for sale in accordance with this
Contract.
(c) In calculating the quantity of LNG delivered by Seller
and purchased by a Buyer for each Fixed Quantity Period,
quantities delivered and purchased within the first seven (7)
days of the next following Fixed Quantity Period shall be
included, provided such quantities were scheduled in the Annual
Program for the Fixed Quantity Period with respect to which the
calculation is being made.
(d) The obligation of a Buyer pursuant to paragraph (a)
above to pay for quantities not taken may be reduced by the
exercise of an Allowance as follows:
(i) Each Allowance must be exercised by notice in
writing given to Seller by Buyers' Coordinator,
which will act as agent for Buyers in connection
with the exercise of all Allowances. A notice of
the exercise of an Allowance given by Buyers'
Coordinator shall be deemed to have both the
authority of the Buyer on whose behalf it is
expressed to be given (the "Exercising Buyer")
and the consent of all other Buyers. No
purported direct exercise of an Allowance by a
Buyer shall be valid. A notice of exercise of an
Allowance must be received by Seller on or before
January 12 of the year following the Fixed
Quantity Period in respect of which such
Allowance is exercised.
(ii) Each notice of exercise of an Allowance shall
specify the ExercisingBuyer and the quantity of
LNG by which such Buyer's obligation to take
and/or pay during the relevant Fixed Quantity
Period is to be reduced.
(iii) No Allowance can be exercised which would
result in the aggregate Allowances then
outstanding for all Buyers being in excess of
21,131 billion BTUs; provided, however, that,
without accelerating the Make-Good Obligation
for any Allowance(s) exercised in an earlier
year, the limit on aggregate Allowances
outstanding for all Buyers shall be reduced
during the 1998 and 1999 Fixed Quantity
Periods to five percent (5%) of the total
Fixed Quantities for all Buyers for the
relevant of such Fixed Quantity Periods.
Subject to the provisions of subparagraph
(viii) below, an Allowance (or portion
thereof) is outstanding until either the
Make-Good Obligation pursuant to subparagraph
(iv) below is satisfied, or payment in
respect thereof is made pursuant to
subparagraph (vi) below.
(iv) Each Allowance shall be made good in full (even
if it amounts to a fractional portion of a full
cargo lot) by the purchase of an equal quantity
of LNG excess of Fixed Quantities ("Make-Good
LNG") within a period ("Allowance Restoration
Period") commencing January 1 of the year
following the Fixed Quantity Period in relation
to which such Allowance was exercised and ending
with the earlier of the expiration of five (5)
calendar years or the expiration of three (3)
months following the end of the last Fixed
Quantity Period for the Buyer concerned. No
Buyer may satisfy a Make-Good Obligation or any
part thereof during a Fixed Quantity Period until
it shall first have taken its Fixed Quantity for
such Fixed Quantity Period. If a Buyer has more
than one Allowance outstanding the Make-Good
Obligations in respect thereof shall be satisfied
in the same chronological order in which such
Allowances were exercised. One or more Buyers
may satisfy the Make-Good Obligation with respect
to an Allowance exercised by another Buyer.
(v) Every request for Make-Good LNG shall be made by
Buyers' Coordinator on behalf of a named Buyer in
accordance with Section 12.1 and shall specify
the Allowance to which it relates. Each such
request shall be deemed to have the authority of
the named Buyer and, if the named Buyer is not
the Fxercising Buyer, of the Exercising Buyer.
(vi) If at the expiration of the Allowance Restoration
Period a Make-Good Obligation has not been
satisfied in full, the Exercising Buyer (whether
or not a Buyer other than the Exercising Buyer
was named in any relevant request for Make-Good
LNG) shall pay for any unsatisfied portion of the
Make-Good Obligation at the Contract Sales Price
in effect as of the last day of such Allowance
Restoration Period. The Buyer shall have the
right to request Make-Up LNG pursuant to Section
7.5 with respect to any such payment.
(vii) Seller shall not be obligated to reserve any
LNG production or shipping capacity for the
purposes of permitting Buyers to satisfy
Make-Good Obligations.
(viii) In the event that Buyers' Coordinator
requests quantities of LNG to satisfy a
Make-Good Obligation on behalf of a Buyer or
Buyers which Seller is unable to make
available for any reason, including force
majeure, the following provisions shall
apply:
(A) The Exercising Buyer shall be relieved from
the obligation pursuant to subparagraph (vi)
above to pay for such requested quantities as
of the expiration of the Allowance
Restoration Period relating thereto, except
in the case where subparagraph (viii)(C)
below requires such payment;
(B) Such requested quantities shall be deemed not
outstanding for the purposes of subparagraph
(iii) above until Seller shall (whether
during or after the Allowance Restoration
Period) have offered the same to such Buyer
but shall then be outstanding if such Buyer
does not accept such offer; any change in the
quantity outstanding due to a failure to
accept such an offer shall not result in an
acceleration of any then outstanding
Make-Good Obligations; and
(C) Such requested quantities shall be scheduled
for delivery at any time prior to the
expiration of three (3) months following the
last Fixed Quantity Period for the Buyer
having the Make-Good Obligation as mutually
agreed by Seller and such Buyer. If such
requested quantities have not been scheduled
as of the end of the last Fixed Quantity
Period and should Seller be unable to deliver
such requested quantities during the three
(3) months following the last Fixed Quantity
Period, Buyer shall have no further
obligation in respect thereof. If Seller
gives Buyer reasonable notice that such
requested quantities are available during
such three-month period but Buyer does not
take such quantities, Buyer shall then make
the payment required under subparagraph (vi)
above.
(e) (i) The Transportation Element of the Contract Sales
Price payable for quantities required to be paid
for but not taken pursuant to paragraph (a) above
(the "Take-or-Pay Transportation Amount") shall
be reduced by an amount equal to the demurrage
payments made by such Buyer during such calendar
year under Section 4.4(a) if and to the extent
that corresponding demurrage payments by Seller
under Section 9.1 of the Transportation Agreement
result in a credit against the Required Minimum
Payment by Seller for such calendar year under
Section 4.2.(e) of the Transportation Agreement.
(ii) To the extent the amount of demurrage allowable
to reduce the Take-or-Pay Transportation Amount
for any Buyer under paragraph (i) above exceeds
the Take-or-Pay Transportation Amount of such
Buyer, such excess shall be allocated among those
Buyers that have a Take-or-Pay Transportation
Amount remaining after the application of
paragraph (i) above in proportion to each such
Buyer's share of the total remaining obligation
to pay Take-or-Pay Transportation Amounts and, as
so allocated can be used by such Buyers to
further reduce their respective Take-or-Pay
Transportation Amounts.
7.4 Allocation of Deliveries between Buyers and Other
Purchasers
(a) Whenever deliveries of LNG by Seller under this
Contract must be reduced by reason of an event or
circumstance of force majeure as defined in Article 15
affecting Seller's ability to produce or load LNG from
either the Arun Facility or the Badak Facility, an
allocation of quantities then available for sale from the
Indonesian Facility so affected will be made between Buyers
and other purchasers of LNG from such Indonesian Facility.
At such times the total quantities available for sale from
such Indonesian Facility shall be allocated among the
purchasers therefrom (including the Buyers) pro rata in the
ratio of their respective quantities which are eligible for
allocation as provided below. The quantities eligible for
such allocation shall, as to Buyers, be the portion of the
Fixed Quantities to be purchased hereunder during the
period of such force majeure from such Indonesian Facility
so affected (such portion to be determined by multiplying
the Fixed Quantities for such period by the percentage of
the total quantities scheduled for delivery in the Annual
Program for the Fixed Quantity Period during which the
event or circumstance of force majeure first occurred which
are to be delivered from the Indonesian Facility so
affected) and, as to other purchasers, be those fixed or
contract quantities of LNG which are committed for sale
from such Indonesian Facility so affected during the period
of such force majeure in satisfaction of Seller's contracts
with other purchasers which provide for sales of LNG from
such Indonesian Facility over a term of at least fifteen
(15) years.
(b) If such an event of 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,
Make-Good LNG and Restoration Quantities scheduled for
delivery from the Indonesian Facility so affected to Buyers
and equivalent quantities scheduled for delivery from such
Indonesian Facility to other purchasers under LNG sales
contracts providing for deliveries over a term of at least
fifteen (15) years, quantities of such LNG as are available
shall be allocated between Buyers and such other purchasers
in proportion to the respective quantities so scheduled.
7.5 Take-or-Pay Make-Up
If pursuant to Section 7.3(a) or Section 7.3(d)(vi) a Buyer
shall have paid for any quantity of LNG which was not taken by
such Buyer ("Take-or-Pay Quantity"), then in any subsequent year
the said Buyer may purchase up to an equal quantity of LNG from
Seller as make-up LNG ("Make-Up LNG") (to the extent not
previously made up). A Buyer may request Make-Up LNG by lgiving
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 purpose, (ii)
Seller has available LNG Tanker capacity which may be used to
transport such Make-Up LNG, and (iii) such Buyer shall have first
taken and paid for its Fixed Quantity for such year, then Seller
shall sell and deliver to such Buyer the quantity of Make-Up LNG
requested; provided, however, that after the expiration of three
(3) months following the end of the last Fixed Quantity Period
for the Buyer concerned such Make-Up LNG shall only be made
available if either: Seller has at the time uncommitted shipping
capacity available for the purpose, or the Buyer provides
transportation. A Buyer's right to purchase Make-Up LNG under
this Section 7.5 shall expire on December 31, 2000 unless such
Buyer shall have requested Make-Up LNG during the year 2000 and
Seller shall have had insufficient uncommitted LNG to meet such
request. In such circumstances, the parties shall consult to
agree upon a deferred schedule for Buyer to take delivery of any
outstanding balance of Takeor-Pay Quantity not made up by
December 31, 2000. Each Buyer shall pay for Make-Up LNG at the
Contract Sales Price in effect as of the date of delivery,
reduced by the amount previously paid on account of all or that
part of the Take-or-Pay Quantity being made up by such sale.
Take-or-Pay Quantities shall be made up, and prior payments
applicable thereto applied, in the same chronological order in
which such quantities accrued.
7.6 Force Majeure Deficiency
If during any Fixed Quantity Period or Fixed Quantity
Periods all or any portion of the Fixed Quantity of LNG required
to be taken by any Buyer therein is not delivered by Seller or
taken by such Buyer by reason of force majeure as defined in
Article 15 (any such quantity not taken for such reason being
called a "Force Majeure Deficiency"), Seller and the Buyer or
Buyers concerned shall each make best efforts to restore the
Force Majeure Deficiency in full by Seller selling and the Buyer
or Buyers purchasing such quantities of LNG prior to the
expiration of the last Fixed Quantity Period for such Buyer(s)
concerned. 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-Good LNG requested
pursuant to Section 7.3(d) and Make-Up LNG requested pursuant to
Section 7.5.
7.7 Allocation for Make-Good LNG, Make-Up LNG and
Restoration Quantities
Whenever Make-Good LNG is requested under Section 7.3(d),
MakeUp LNG is requested under Section 7.5 and/or Restoration
Quantities are requested under Section 7.6 by a Buyer or Buyers,
and quantities are requested for similar purposes by other
purchasers from one or both of the Indonesian Facilities under
contracts which provide for sales of LNG over a term of at least
fifteen (15) years, and uncommitted quantities of LNG are not
available from such Indonesian Facilities to meet all such
requests, then the quantities of LNG which are available from
such Indonesian Facilities for such purposes shall be allocated,
as between such Buyer or Buyers on the one hand and such other
purchasers on the other hand, based on the proportion of the
contract quantities of each requesting purchaser to the total of
the contract quantities of all of the requesting purchasers.
7.8 Order of Priority of Make-Good LNG and Make-Up LNG
Make-Good LNG requested under Section 7.3(d) and Make-Up
LNG requested under Section 7.5 shall be delivered in the
priority specified by Buyers' Coordinator.
ARTICLE 8 - CONTRACT SALES PRICE
8.1 Formula Calculation of Price
The initial contract sales price applicable, as of December
3, 1973, to
the quantities of LNG to be sold and delivered at the Delivery
Point, and to any quantities of LNG required to be taken but
which are not taken and are required to be paid for by a Buyer
under this Contract, expressed in United States Dollars per
million British Thermal Units (U.S.S/MMBTU), shall be U.S.$1.29
(the "Initial Contract Sales Price"), of which U.S.$O.30 is the
deemed cost of transportation (the "Transportation Element") and
the balance of U.S.$O.99 is the LNG element (the "LNG Element").
The Transportation Element and the LNG Element are subject
to adjustment from time to time according to the following
provisions of this Article 8, and the sum thereof as adjusted and
in effect at any time shall be the contract sales price (the
"Contract Sales Price") which is in effect hereunder at such
time.
8.2 LNG Element
The LNG Element included in the Contract Sales Price as
adjusted from time to time shall always be the higher of the two
values calculated under paragraph (a) (the "Minimum LNG Element")
and paragraph (b) (the "Market Value LNG Element") below. Such
adjustments of the Contract Sales Price by reason of a chance in
the LNG Element shall be calculated and made at the times and in
the manner hereinafter specified:
(a) A Minimum LNG Element calculation shall be made
annually, as of the first day of January of each year commencing
with January 1, 1975, in accordance with the following formula:
Pn = Po ( 1 + 0.03 )n
in which
Pn = the Minimum LNG Element (as expressed in U.S.$/MMBTU).
Po = the LNG Element (U.S.$O.99) included in the Initial
Contract Sales Price.
n = 1 on January 1, 1975 and one higher whole number on
each subsequent January 1.
If the Minimum LNG Element calculated as of any January 1 is
higher than the Market Value LNG Element (as last calculated
pursuant to paragraph (b) below, including calculation as of such
January 1), then the Contract Sales Price shall be LNG Element
therein adjusted as of such January 1 by including such Minimum
LNG Element therein as the LNG Element.
(b) A Market Value LNG Element calculation shall be made as of
the first day of January of each year commencing with January 1,
1975, and thereafter as of each effective date on which either:
(i) the realized export prices of more than one of the field
classifications of Indonesian crude oils sold by Pertamina shall
have changed from the respective prices therefor included in the
last preceding calculation made pursuant to this paragraph (b);
or (ii) two or more field classifications of such crude oils
shall have been added to or deleted from the crude oils being
sold by Pertamina, since the date of the last preceding
calculation made pursuant to this paragraph (b); in each case
such calculation to be made in accordance with the following
formula:
PA = 9 Po - A + 1 Pn
10 U.S.$6.00 10
in which
PA = the Market Value LNG Element (as expressed in
U.S.$/MMBTU).
Po = the LNG Element (US $O.99) included in the
Initial Contract Sales Price.
A = the arithmetic average of the realized export
prices in U.S. Dollars per barrel, f.o.b.
Indonesia, of all Indonesian crude oils then
being sold by Pertamina, except such prices for
spot sales.
Pn = Pn as then in effect under paragraph (a) above.
Satisfactory procedures for verifying changes in the
realized export prices of all Indonesian crude oils shall be
agreed upon by Buyers and Seller in a separate memorandum.
If the Contract Sales Price in effect immediately prior to
the date of such calculation of the Market Value LNG Element
would change by including such recalculated Market Value LNG
Element as the LNG Element therein, then the Contract Sales Price
shall be adjusted as of and from such date by so including such
Market Value LNG Element, provided that no such adjustment shall
use an LNG Element which is less than the Minimum LNG Element
calculated as of the January 1 which coincides with or last
precedes the date of such adjustment.
8.3 Transportation Element.
The Transportation Element included in the Contract Sales
Price as adjusted from time to time shall initially be the
Transportation Element included in the Initial Contract Sales
Price, as specified in Section 8.1, and shall later be as
adjusted from time to time pursuant to this Section 8.3, provided
that during any period that Substitute LNG Tankers are employed
by Transporter, the Transportation Element shall be calculated as
provided in Section 8.4. The Transportation Element will be
adjusted according to the formula set forth below, and as
adjusted will be effective as of the following dates:
(i) annually as of each April 1, on account of adjustment
of Operating Costs, which adjustment is to be made
based on a written statement of the estimated average
per vessel Operating Costs of Dedicated Vessels; and
(ii) as of each other date on which a Substitute LNG
Tanker enters or leaves service if the freight
rate payable for such Substitute LNG Tanker is
higher or lower than the freight rate applicable
to a Dedicated Vessel, or on which a Dedicated
Vessel enters or leaves service if immediately
preceding such event any such Substitute LNG
Tanker was in service.
Each adjustment of the Transportation Element shall be
calculated according to the following formulas:
TEx = Tx-Y
Tx = T(x-l) . CFx
CF(x- 1)
in which:
TEx = the adjusted Transportation Element (as expressed
in U.S.$/MMBTU).
TX = the adjusted transportation factor (as expressed
in U.S.$/MMBTU).
Y = U.S.$O.0212/MMBTU, the amount of sharing by
Seller.
T(x-l) = the initial transportation factor
(U.S.$O.3624 in the case of the first
adjustment) or Tx as last determined to be
the adjusted transportation factor under this
Section 8.3 (in the case of each subsequent
adjustment).
CFx = the total amount in U.S. Dollars which Seller is
required to pay Transporter for transportation of
the total quantities of LNG which, Seller and
Transporter have agreed in Exhibit A to the
Transportation Agreement (without prejudice to
the right of Seller in its discretion to vary the
proportion of the quantities of LNG to be
delivered from the Arun Facility or the Badak
Facility), will be shipped during the period of
twelve (12) full calendar months which commences
as of the date of the adjustment being calculated
(or as of the first day of the next month, if the
adjustment date is not the first day of the
month), giving effect to the increased or
decreased transportation costs per vessel which
become effective as of the Transportation Element
adjustment date.
CF(x-1) = the total amount in U.S. Dollars which Seller
would have been required to pay Transporter
for transportation of the same total
quantities of LNG during the same twelve
month period used in CFx, if no change in
transportation costs per vessel had occurred
from the level reflected in the last
Transportation Element adjustment.
As of the date of each adjustment of the Transportation
Element, the Contract Sales Price shall be adjusted by including
therein the adjusted Transportation Element. In connection with
each adjustment of the Transportation Element, Seller shall
furnish to Buyers such available accounting and other data as may
reasonably be required by Buyers to establish the basis upon
which and the manner in which such adjustment is calculated.
Seller shall permit Buyers to review the reasonableness of the
current year estimated Operating Costs and prior year results in
conjunction with Seller's review as provided for in the
Transportation Agreement shall use its best efforts to provide
Buyers full access to periodic review procedures of Transporter's
operation established thereunder, and, in consultation and
agreement with Buyers, shall appoint independent auditors to
audit Transporter's Operating Costs pursuant thereto. Seller,
independently, or at Buyers' request, shall challenge the
inclusion of any unreasonable or unjustified item or amount that
affects the freight rate under the Transportation Agreement.
Should the Transporter persist in including the challenged
amount, Seller and Buyers shall consult on the course of action
to be followed.
8.4 Substitute LNG Tanker Adjustment
Whenever a Substitute LNG Tanker is in service at a cost to
Seller different from the cost of a Dedicated Vessel, the
Transportation Element shall be calculated as follows:
(A) determine a transportation factor for each such
Substitute LNG Tanker using following formula:
TF = Tx . SFx
CFx
where:
TF = transportation factor.
Tx = the current value of Tx as calculated under
Section 8.3.
CFx = the current value of CFx as calculated under
Section 8.3.
SFx = the total amount in U.S. Dollars that would be
paid if the same quantities used to calculate CFx
were transported at the unit cost at the
Substitute LNG Tanker, but the cost of the
Substitute LNG Tanker shall be adjusted to
exclude any payments by Seller related to
non-utilization (unless caused by one or more
Buyers) and to credit any other amounts received
by Seller in connection with the unavailability
of a Dedicated Vessel.
(B) The Transportation Element shall be determined by using
an adjusted Tx, calculated as the average of Tx determined for
Dedicated Vessels under Section 8.3 (weighted by the number of
Dedicated Vessels in service) and the transportation factor of
each Substitute LNG Tanker in service.
ARTICLE 9 - TRANSFER OF TITLE
The LNG to be sold by Seller and purchased by each Buyer
hereunder shall be delivered to such 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
such Buyer as the LNG reaches the Delivery Point.
ARTTCLE 10 - INVOICES AND PAYMENTS
10.1 Invoice and Cargo Documents
Promptly after completion of unloading of a LNG Tanker,
Seller, or its representative, shall furnish to the receiving
Buyer, or its representative, a certificate of volume unloaded
together with such other documents concerning the cargo as may be
reasonably requested by Buyers for the purpose of Japanese
customs clearance. The receiving Buyer shall complete laboratory
analysis to determine quality and BTU content of the LNG as soon
as possible but not later than forty-eight (48) hours after the
completion of unloading.
Promptly upon completion of such analysis, Seller or its
representative shall by telex or telegram to the receiving Buyer
an invoice, stated in U.S. Dollars, in the amount of the Contract
Sales Price for the number of BTUs delivered. At the same time
Seller shall send to the receiving Buyer a signed copy of the
invoice together with relevant documents setting forth the basis
for the calculation thereof.
If the receiving 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 any amount is due from any Buyer to Seller,
including, without limitation, amounts payable pursuant to
Section 7.3(a) on account of Fixed Quantities of LNG required to
be purchased but which were not taken by such Buyer, Seller shall
furnish or cause to be furnished to such Buyer an invoice
therefor and relevant documents showing the basis for the
calculation thereof. The procedure set forth in Section 10.1 for
sending a copy of such invoice by telex or telegram may be
followed.
10.3 Invoice Due Dates, etc.
Each invoice for LNG delivered to a Buyer referred to in
Section 10.1 shall become due and payable by such Buyer on the
fifth (5th) Business Day in Japan after the date on which the
telex/telegraphic copy of such invoice has been received by such
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 a Buyer referred to in Section 10.2
shall become due and payable by such Buyer within twenty (20)
calendar days after the date of such 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 from the
due date until paid, at an interest rate, compounded annually,
two percent (2%) greater than the rate or rates being charged
during the period of delinquency by Citibank, N.A., New York, New
York, to its prime commercial customers for 90-day loans, except
that any portion of the invoice representing payment due
Transporter under the Transportation Agreement shall bear
interest at a rate one percent (1%) greater than such prime
commercial rate. Such interest rates shall be adjusted up or
down as the case may be, to reflect any changes in the aforesaid
prime rate as of the dates of such changes in the prime rate. In
the event that Citibank, N.A shall for any reason cease quoting a
prime 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 prime rate.
10.4 Payment
Each Buyer shall pay, or cause to be paid, in U.S. Dollars
all amounts which become due and payable by such Buyer pursuant
to any invoice issued hereunder to a bank account or accounts in
the United States to be designated by Seller. 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
remittance from a Buyer to such bank which represents amounts
payable for LNG delivered from the Arun Facility or for LNG
required to be purchased but not taken from the Arun Facility
shall be so designated by such Buyer based on Seller's invoice at
the time of such remittance. Each remittance from a Buyer to
such bank which represents amounts payable for LNG delivered from
the Badak Facility or for LNG required to be purchased but not
taken from the Badak Facility shall be so desipated by such Buyer
based on Seller's invoice at the time of such remittance. Each
payment by a Buyer of any amount owing hereunder shall be in the
full amount due without reduction or offset for any reason
including without limitation Japanese taxes, exchange charges or
bank transfer charges.
Transfer of funds to the 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 ready 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 Buyers' Failure to Make
Payment
If payment of any invoice for quantities of LNG delivered
hereunder or for Fixed Quantities of LNG not taken and for which
a Buyer is obligated to pay pursuant to this Contract is not made
within sixty (60) days after the due date thereof, Seller shall
be entitled, upon living thirty (30) days written notice to such
Buyer, to suspend subsequent deliveries to such Buyer until the
amount of such invoice and interest thereon has been paid, and
such Buyer shall not be entitled to any make-up rights in respect
of such suspended deliveries. If any such invoice is not paid
within one hundred and twenty (120) days after the due date
thereof, then, subject to the further provisions of this Section
10.5, Seller shall have the right, at Seller's election, upon not
less than eighty (80) days notice to Buyer or Buyers, as the case
may be, to exercise either of the following options:
(i) Seller may terminate this Contract in respect of the
defaulting Buyer only, in which event this Contract
shall continue in effect between Seller and the other
Buyers just as though the defaulting Buyer had never
been a party and the quantities of LNG to be purchased
and received by such defaulting Buyer had never been
included in this Contract; or
(ii) Seller may terminate this Contract in its
entirety as to Buyers, unless prior to such
termination, arrangements shall have been made
which are satisfactory to Seller, for the payment
of all amounts owed Seller by the defaulting
Buyer, and for the assumption of the LNG quantity
and other obligations of the defaulting Buyer
under this Contract by one or more Buyer(s) not
defaulting.
Termination by Seller under clause (i) or (ii) above shall become
effective upon receipt by each Buyer of notice from Seller to
such effect. Any such termination shall be without prejudice to
any other rights and remedies of Seller arising hereunder or by
law or otherwise including the right of Seller to receive payment
of all obligations and claims which arose or accrued prior to
such termination or by reason of such default by a Buyer or
Buyers.
10.6 Disputed Invoices
In the event of disagreement concerning any invoice,
the Buyer shall
make provisional payment of the total amount thereof and shall
immediately notify Seller of the reasons for such disagreement,
except that:
(i) in the case of obvious error in computation Buyer shall
pay the correct amount disregarding such error; and
(ii) in the case of any disputed invoice for demurrage
incurred at an Unloading Port, Buyer's
provisional payment shall be ninety percent (90%)
thereof or such greater amount as is not disputed
by Buyer.
Invoices may be contested by Buyer or modified by Seller, only
if, within a period of ninety (90) days after Buyer's receipt
thereof, Buyer serves on Seller notice 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.
ARTICLE ll - QUALITY
11.1 Gross Heating Value
The LNG when delivered by Seller to Buyers shall have,
in 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 delivered by Seller to Buyers shall, in a
gaseous state, contain not less than eighty-five molecular
percentage (85 MOL%) of methane (CH4) and, for the components and
substances listed below, such LNG shall not contain more than the
following:
A. Nitrogen (N2), 1.0 MOL%.
B. Butanes (C4) and heavier, 2.00 MOL%.
C. Pentanes (C5) and heavier, 0.10 MOL%.
D. Hydrogen sulfide (H2S), 0.25 grains per 100 Standard
Cubic Feet
(0.25 grains/100scf).
E. Total sulfur content, 1.3 grains per 100 Standard Cubic
Feet (1.3 grains/100scf).
Although the LNG which Seller delivers to Buyers is
permitted to contain the sulfur concentrations shown in clauses D
and E above, under normal operating conditions at the Indonesian
Facilities, Seller would expect such concentrations to be
materially less.
ARTICLE 12 - PROGRAMMING AND SHIPPING MOVEMENTS
12.1 Annual Programs
(a) Not later than ninety (90) days prior to the
beginning of each calendar year, Seller shall give written notice
to Buyers of the anticipated quantities of LNG to be available
for delivery hereunder from the Arun Facility and the Badak
Facility, respectively, in each calendar quarter of the next
calendar year, taking into consideration the projected capacity
of each of such Indonesian Facilities. On or before October 15
of each year in which such notice is given, each Buyer shall
advise Seller in writing of the quantities such Buyer wishes to
take during each calendar quarter of the following year,
specifying the amount of any Make-Up LNG requested pursuant to
Section 7.5 and any Restoration Quantities in excess of Fixed
Quantities requested pursuant to Section 7.6. In addition, by
October 15 of each year Buyers' Coordinator shall request any
Make-Good LNG pursuant to Section 7.3 (d).
Seller and Buyers shall thereupon consult together and
agree by December 1st of the same year upon a programming
schedule of quantities to be delivered from each of such
Facilities to each Receiving Facility during each calendar month
during the following year (the "Annual Program"), which shall
take into consideration the anticipated capacity of the parties'
respective facilities, the Coordinated Maintenance Schedule and
the shipping schedules. 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, deliver 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, delivered and paid for during such Fixed Quantity Period.
Seller and Buyers will each take all appropriate steps to carry
out each Annual Program and Ninety-Day Schedule.
(b) An Annual Progam shall be amended to reflect a request
for:
(i) Make-Good LNG relating to an Allowance exercised
in respect of the immediately preceding year;
(ii) Make-Up LNG relating to a Take-or-Pay Quantity
paid for in respect of the immediately preceding
year; or
(iii) 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
are available and such request is 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 each Buyer,
deliver to each Buyer a three-month forward plan of delivery (the
"Ninety-Day Schedule"), which follows the applicable Annual
Progam 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.
12.3 Maintenance and Inspection Coordination
Not later than ninety (90) days prior to the beginning
of each calendar
year, Seller and Buyers shall consult and agree on a program
designed to coordinate the anticipated scheduled maintenance and
inspection downtime during that calendar year of the Receiving
Facilities of each Buyer, the anticipated scheduled downtime of
each of the Indonesian Facilities and the maintenance schedules
of the LNG Tankers. Such program (the "Coordinated Maintenance
Schedule") will be devised so as to minimize the collective
impact of such downtime and maintenance periods on the continuous
delivery of LNG hereunder.
ARTICLE 13 - MEASUREMENTS AND TESTS
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.
Each 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
incorporated in land structures or customarily maintained at
Receiving Facilities.
13.2 Selection of Devices
All devices provided for in this Article 13 shall be
compatible with the
specifications of the LNG Tankers. Such devices shall be chosen
by mutual agreement of the parties and shall be such that at the
time of selection are the most accurate and reliable devices in
their practical application. The required degree of accuracy of
such devices selected shall be mutually agreed upon and verified
by Buyers and Seller, in advance of their use, and at the request
of either Buyer or Seller such degree of accuracy shall be
verified by an independent surveyor mutually agreed upon by such
Buyer and Seller.
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 each Buyer, or cause each Buyer to
be provided,
with a certified copy of tank gauge tables for each tank of each
LNG Tanker verified by the U.S. Bureau of Standards at Washington,
D.C., the Nippon Kaiji Kentei Kyokai (Japan Marine Surveyors and
Sworn Measurers' Association), or other competent impartial
authority mutually agreed upon by the parties. Such tables shall
include correction tables for list, trim, tank construction, and
any other items requiring such tables for accuracy of gauging.
Seller and Buyers shall each have the right to have
representatives present at the time each LNG tank on each LNG
Tanker is volumetrically calibrated. If the LNG tanks of any LNG
Tanker suffer distortion of such nature as to cause a prudent
expert reasonably to question the validity of the tank gauge
tables described herein (or any subsequent calibration provided
for herein), any Buyer or Seller may require recalibration of such
LNG tanks during any period when the LNG Tanker is out of service
for scheduled inspection or repairs. Upon recalibration of the
LNG tanks of the LNG Tankers, the same procedures used to provide
the original tank gauge tables will be used to provide revised
tank gauge tables based upon the recalibration data. The
calibration of tanks provided for in this Section 13.4 shall
constitute the only calibration required for purposes of this
Contract.
13.5 Gauging and Measuring LNG Volumes Delivered
Volumes of LNG delivered pursuant to this Contract shall
be determined by gauging the LNG in the tanks of the LNG Tankers
before and after 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 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 Seller by means of a sufficient number
of properly located temperature measuring devices, to permit the
determination of average temperatures. Temperatures shall be
logged or printed.
C. Determination of Pressure
The pressure of the vapor in each LNG tank shall be
determined by
means of pressure measuring devices installed in each LNG tank of
the LNG Tankers. The atmospheric pressure shall be determined by
readings from the standard barometer installed in the LNG Tankers.
D. Determination of Density
Density of the LNG shall be determined by Seller either
by computation or by measurement, as mutually agreed to by the
parties. Initially the density of the LNG will be computed by the
method described in Schedule A attached hereto. Should any
improved data, method of calculation or direct measurement device
become available which is acceptable to both Buyers and Seller,
such improved data, method or device shall then be used. If
density is determined by measurements, the results shall be logged
or printed.
13.6 Samples for Quality Analysis
Representative samples of the LNG delivered shall be
obtained, or be caused to be obtained, in triplicate by each Buyer
during the time of unloading and delivery to such 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 Buyers and Seller. The
method and devices for sampling and the quantity of the samples to
be withdrawn, shall be
determined by agreement between Buyers and Seller to provide for
taking representative and adequate samples of the LNG delivered.
The samples obtained shall be distributed as follows:
First sample -for use of Buyer receiving the LNG shipment.
Second sample - for retention by such Buyer for an agreed
period, not to exceed twenty (20) days
during which any dispute as to the
accuracy of any analysis shall be raised,
in which case the sample shall be further
retained until such Buyer and Seller agree
to retain it no longer.
Third sample - for use of Seller, if Seller so requests.
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 five (5) cargoes from the same 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.
13.7 Quality Analysis
The samples provided for in Section 13.6 shall be
analyzed, or be caused to be analyzed, by the Buyer receiving the
LNG shipment to determine the molar fraction of the hydrocarbon
and other components in the sample by gas chromatography 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. If better
standards for analysis are subsequently adopted by G.P.A. or other
recognized competent impartial authority, upon mutual agreement of
Buyers and Seller, they shall be substituted for the standards
then in use, but such substitution shall not take place
retroactively.
Should it be necessary to obtain periodic samples, the
composition of the LNG unloaded from each LNG Tanker shall be the
arithmetic average of the results obtained by analysis of the
samples obtained under Section 13.6. A calibration of the
chromatograph or other analytical instrument used shall be
performed by each Buyer immediately prior to the analysis of the
sample of LNG delivered. The Buyer intending to conduct a
calibration shall give advance notice thereof to Seller, and
Seller shall have the right to have a representative present at
each such calibration; provided, however, that the party
performing the calibration will not be obligated to defer or
reschedule any calibration in order to permit the representative
of the other party to be present.
The sample shall be analyzed, or be caused to be analyzed, by
the Buyer to determine the concentrations of Hydrogen sulfide
(H2S) and total sulfur 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
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 representative 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 and analysis provided for
in Sections 13.5, 13.6 and 13.7 shall be witnessed and verified by
an independent surveyor mutually agreed upon by the Buyer and
Seller. The results of such surveyor's verifications shall be
made available promptly to each party. All records of
measurements and the computation results shall be preserved and
available to both parties for a period of not less than three (3)
years after such measurements and computation.
13.9 BTU Quantities Delivered
The quantity of British Thermal Units (BTU) of LNG
delivered from LNG Tankers 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 the
molecular weights and heating values described in "G.P.A.
Publication 2145" published by G.P.A. current at the time of
computation.
If better constants or improved methods for determination of
heating value are subsequently adopted by G.P.A. or other
recognized competent impartial authority, they shall, upon mutual
agreement of Seller and Buyers, be substituted therefor but not
retroactively. The Gross Heating Value of the representative
sample shall be the conclusive Gross Heating Value for the purpose
of determining quantities of British Thermal Units (BTU) 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 an LNG Tanker
should cause impossibility of determining 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 LNG. Each 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 verified by a competent impartial authority.
C. Determination of BTU Quantities Delivered
The quantities of British Thermal Units (BTU) delivered
from LNG Tankers shall be computed by Seller by means of the
following formula:
Q = V x D x P - Qr
in which: Q represents the quantity of the LNG delivered
in British Thermal Units (BTU).
V represents the volume of the LNG unloaded, stated
in cubic meters, determined as provided in Section
13.9 B.
D represents the density of the LNG unloaded, stated
in kilograms per cubic meter, determined as
provided in Section 13.5 D.
P represents the Gross Heating Value of the LNG
unloaded, stated in British Thermal Units (BTU) per
kilogram.
Qr represents the quantity in British Thermal Units
(BTU) of the vapor which displaced the volume of
LNG unloaded from the LNG tanks in the LNG Tankers.
Physical constants, calculation procedures and examples of BTU
determination are provided in Schedule A.
13.10 Verification of Accuracy and Correction for Error
Accuracy of devices used shall be tested and verified at
the request of either party, including the request by a party to
verify accuracy of its own devices. Each party shall have the
right to inspect at any time the measurement devices installed by
the other party, provided that the other party be notified in
advance. Testing shall be performed only when both parties are
represented, or have received adequate advance notice thereof,
using methods recommended by the manufacturer or any other method
agreed to by Seller and Buyers. At the request of any party any
test shall be witnessed and verified by an independent surveyor
mutually agreed upon by Buyers and Seller. Permissible tolerances
shall be as defined in Schedule A. 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. In the event that the period of error
is neither known nor agreed upon, corrections shall be made 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 shall not be applied
to require the modification of any invoice which has become final
pursuant to Section 10.6.
13.11 Disputes
In the event of any dispute concerning the subject
matter of this Article 13, including but not limited to disputes
over selection of the type or the accuracy of measuring devices,
their calibration, the result of a measurement, sampling,
analysis, computation, or method of calculation, such dispute
shall be submitted to a competent impartial authority mutually
agreed upon by the parties 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 the
parties.
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 a Buyer's measurement devices shall be borne by such
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
Buyers.
ARTICLE 14 - DUTIES, TAXES AND CHARGES
Each 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 transportatior, sale and
import of LNG, or on any income resulting therefrom, including
income resulting from payments made under this Article 14, and all
port charges, 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 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 made by Buyer within twenty (20) calendar days
after the date of Buyer's receipt of such invoice in Japan.
ARTICLE 15 - FORCE MAJEURE
15.1 Events of Force Majeure
Neither Seller nor any Buyer shall be liable for any
delay or failure in performance hereunder if and to the extent
such delay or failure in performance results from any of the
following:
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 other serious failure of
Seller's Facilities, unless such damage or failure is
the result of willful negligence on the part of Seller's
management;
E. Serious accidental damage to or other failure of a
Buyer's Facilities, unless such damage or failure is the
result of willful negligence on the part of such Buyer's
management;
F. The reserves of Natural Gas in the Arun field or the
Badak field which can economically be produced for
purposes of this Contract have been fully depleted;
G. Act of government which 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
H. 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.
Nothing herein shall relieve Buyers of their obligation to pay for
LNG delivered
or to make any other payment which has become due and payable
under this Contract prior to the occurrence of any of the events
described above.
15.2 Notice, Resumption of Normal Performance, etc.
Immediately upon the occurrence of an event of force
majeure, the
party affected shall give notice thereof to the other party
describing such event and the estimated period during which
operations will be suspended or reduced. The parties shall
exercise reasonable diligence to ensure resumption of normal
performance under this Contract after the occurrence of any event
of force majeure, and prior to resumption of normal performance,
the parties shall continue to perform their obligations under this
Contract to the extent not affected by such event of force
majeure.
15.3 Settlement of Industrial Disturbances
Settlement of strikes, lockouts or other industrial
disturbances shall be
entirely within the discretion of the party experiencing such
situations and nothing herein shall require such party to settle
industrial disputes by yielding to demands made on it when it
considers such action inadvisable.
ARTICLE 16 - ARBITRATION
All disputes arising between any Buyer or Buyers, on the one
hand, and Seller, on the other hand, relating to this Contract or
the interpretation or performance hereof, shall be finally settled
by arbitration conducted in accordance with the Rules of
Arbitration of the International Chamber of Commerce, effective at
the time, by three (3) arbitrators appointed in accordance with
such Rules. Arbitration shall be conducted in the English
language and shall be held at Paris, France, unless another
location is selected by mutual agreement of the parties concerned.
The award rendered by the arbitrators shall be final and binding
upon the parties concerned.
ARTICLE 17 - APPLICABLE LAW
This Contract shall be governed by and interpreted in
accordance with the laws of the State of New York, United States
of America.
ARTICLE 18 - BUYERS' COORDINATOR
Buyers will from time to time designate a Buyers' Coordinator
to act on behalf of each Buyer in performing the following:
A. Coordinating among each of Buyers, and between Seller
and Buyer or Buyers, and the handling of communications
between Seller and Buyer or Buyers in connection with
performance of this Contract, in particular the exercise
of Allowances pursuant to Section 7.3(d).
B. Implementation of various operations of each Buyer or of
Buyers which are necessary in connection with the
purchasing of LNG hereunder.
Buyers shall notify Seller the name and address of the entity to
act as Buyers' Coordinator. Buyers have notified Seller that
Japan Indonesia LNG Co., Ltd. is presently acting as Buyers'
Coordinator.
Seller shall be entitled to accept and rely upon any communication
received from Buyers' Coordinator as if received directly from one
or more of Buyers, and to give any communication to Buyers'
Coordinator with the same effect as if given directly to a Buyer
or Buyers, if such notice or communication relates to matters as
to which Buyers' Coordinator is acting as described above pursuant
to this Article 18. No act of or authorization to Buyers'
Coordinator shall relieve any Buyer from performance of any
obligation or payment of any liability of such Buyer hereunder,
each Buyer remaining primarily liable therefor at all times.
ARTICLE 19 - CONFIDENTIALITY
Confidential information or documents which will come to the
attention of the parties in connection with the performance of
this Contract may not be used or communicated to third parties,
other than Mobil or any member of the Huffco Group or any
Affiliate (as defined below) of a party or of a Seller's Supplier,
without the agreement of Seller, in the case of information and
documents furnished to Buyers, and of the Buyer or Buyers
concerned, in the case of information and documents furnished to
Seller. This restriction shall not apply to information or
documents which:
A. Have fallen into the public domain otherwise than
through the act or failure to act of the party that has
obtained them;
B. Are communicated to legal counsel, accountants, other
professional consultants, underwriters, or lenders of
one of the parties, with the obligation of the persons
receiving them to maintain confidentiality; or
C. Are communicated to government or governmental
authorities of the Republic of Indonesia, Japan or the
United States of America having authority to require
such disclosure, in accordance with that authority.
As used above, the term Affiliate means a company controlled by,
under the control of, or under common control with, the party, or
Mobil, or a member of the Huffco Group. Each Affiliate shall have
the same obligation as the parties have to maintain
confidentiality.
ARTICLE 20 - NOTICES
All notices and other communications for purposes of this
Contract shall be in writing, which shall include transmission by
telex, facsimile or cable, except that notices given from LNG
Tankers at sea may be by radio. Notices and communications shall
be directed as follows:
A. To Seller at the following mail address-
PERUSAIIAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
Attention: Head of Gas Marketing Bureau
P.O. Box 12/JKT
Jalan Merdeka Timur No. 1A
Jakarta Pusat, Indonesia
And at the following cable and telex addresses -
Cable: Telex:
PERTAMINA PERTAMINA
JAKARTA, INDONESIA VIA RCA 44302 or 44152
Attention: Head of Gas Marketing JAKARTA,
Bureau INDONESIA
Facsimile: 355271
B. To Buyers at the following mail and telex addresses-
CHUBU ELECTRIC POWER CO., INC.
(Mail Address)
Attention: Fuel Department
1, Toshin-cho, Higashi-ku,
Nagoya, 461 Japan
(Telex Address) 4444405 CHUDEN J
THE KANSAI ELECTRIC POWER CO., INC.
(Mail Address)
Attention: Fuel Department
3-22, Nakanoshima 3-chonie, Kita-ku,
Osaka, 530 Japan
(Telex Address)
5248320 KEPCO J
KYUSHU ELECTRIC POWER CO., INC.
(Mail Address)
Attention: Fuel Department
1-82, Watanabe-dori 2-chome, Chuo-ku,
Fukuoka, 810 Japan
(Telex Address)
725497 KYUDEN J
NIPPON STEEL CORPORATION
(Mail Address)
Attention: Coal & Fuel Division
6-3, Otemachi 2-chome,
Chiyoda-ku, Tokyo, 100 Japan
(Telex Address)
NSC J22291
OSAKA GAS CO., LTD.
(Mail Address)
Attention: Gas Resources Department
4-1-2, Hiranomachi, Chuo-ku,
Osaka, 541 Japan
(Telex Address)
5225275 DAJGAS J
TOHO GAS CO., LTD.
(Mail Address)
Attention: Raw Materials Department
19-18, Sakurada-cho, Atsuta-ku,
Nagoya, 456 Japan
(Telex Address)
4477651 TOHOGS J
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 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.
ARTICLE 21 - ASSIGNMENT
Neither this Contract nor any rights or obligations hereunder
may be assigned by any Buyer without the prior written consent of
Seller, or by Seller without the prior written consent of each
Buyer. Any request by a Buyer for Seller's consent to an
assignment shall be accompanied by the written consent of each
other Buyer to the proposed assignment.
ARTICLE 22 - AMENDMENTS
This Contract may not be amended, modified, varied or
supplemented except by an instrument in writing, signed by Seller
and Buyers.
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 - SEPARABILITY
This Contract shall be binding upon each Buyer in accordance
with its terms. The liabilities of Buyers under this Contract are
several and not joint and each Buyer shall be liable only for
performance of the obligations of such Buyer as provided in this
Contract.
ARTICLE 24 - DETAILS OF PERFORMANCE
Details necessary for performance of this Contract shall be
mutually agreed upon by Seller and each Buyer separately or, when
necessary and desirable, by Seller and Buyers on a coordinated and
mutually agreeable basis.
ARTICLE 25 - 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 other
agreement between the parties, whether written or oral, prior to
the date of the original execution hereof.
Subsequent to the date of original execution of this
Contract, various agreements, manuals, procedures and details of
performance relating to the interpretation or implementation of
the Contract or covering matters related thereto, have been agreed
between Seller and Buyers ("Ancillary Agreements"). It is agreed
that no Ancillary Ageement or portion thereof, to the extent it is
in effect and capable of performance, shall be annulled,
terminated or revoked by reason of the execution of this amended
and restated Contract, except that:
(i) to the extent that there is any conflict between such
Ancillary Agreements and any specific amendment to the
Contract incorporated in this amended and restated
Contract, such specific amendment shall prevail; and
(ii) the following Ancillary Agreements (or identified
portions thereof) are superseded by this amended and
restated Contract and shall have no further effect:
(A) Memorandum of Agreement (15-year amendment) dated
as of January 1, 1983;
(B) Memorandum of Understanding Related to Amendement
No. 3 to the Transportation Agreement dated October
16, 1987 - Section H, paragraphs 7, 9 and 10;
(C) Amended and Restated Invoice Settlement Agreement
for 1973 LNG Sales Contract dated as of March 31,
1987 and amended and restated as of December 1,
1988 - paragraph 6;
(D) Assignment dated as of January 30, 1987 from Nippon
Steel to Toho Gas; and
(E) Memorandum of Agreement on Revisions to the 1973
LNG Sales Contract dated as of September 7, 1989.
ARTICLE 26 - COUNTERPARTS
This Contract is executed in seven (7) 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
amended and restated Contract to be duly executed and signed by
its duly authorized officer as of January 1, 1990.
SELLER: BUYERS:
PERUSAHAAN PERTAMBANGAN CHUBU ELECTRIC POWER CO., INC.
MINYAK DAN GAS BUMI
NEGARA (PERTAMINA)
By /s/
BY: /s/ THE KANSAI ELECTRIC POWER CO.,INC.
WITNESS: BY /s/
JAPAN INDONESIA LNG CO. LTD. KYUSHU ELECTRIC POWER CO, INC.
BY /S/ BY /S/
NISSHO IWAI CORPORATION NIPPON STEEL CORPORATION
BY /S/ BY /S/
OSAKA GAS CO, LTD.
BY /S/
TOHO GAS CO., LTD.
BY /S/
ARTICLE 26 - COUNTERPARTS
This Contract is executed in seven (7) 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
amended and restated Contract to be duly executed and signed by
its duly authorized officer as of January 1, 1990.
SELLER: BUYERS:
PERUSAHAAN PERTAMBANGAN CHUBU ELECTRIC POWER CO., INC.
MINYAK DAN GAS BUMI
NEGARA (PERTAMINA)
BY /s/
THE KANSAI ELECTRIC POWER CO., INC.
BY
WITNESS: BY /s/
JAPAN INDONESIA LNG CO., LTD. KYUSHU ELECTRIC POWER CO., INC.
BY BY /s/
NISSHO IWAI CORPORATION NIPPON STEEL CORPORATION
BY /s/ BY /s/
OSAKA GAS CO., LTD.
BY /s/
TOHO GAS CO., LTD.
BY /s/