AMENDED AND RESTATED BADAK LNG SALES CONTRACT
This Badak LNG Sales Contract (the "Contract") dated as of the
14th day of April 1981, and amended and restated as of the 1st day
of January, 1990, by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN
GAS BUMI NEGARA, 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"), OSAKA GAS CO., LTD. ("Osaka Gas") and TOHO GAS CO.,
LTD. ("Toho Gas"), all corporations organized and existing under
the laws of Japan (hereinafter referred to individually as "Buyer"
and collectively as "Buyers"), on the other hand,
WITNESSETH:
WHEREAS:
1. By that certain Invoice Settlement Agreement for 1981 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; and
2. By Memorandum of Agreement on Revisions to the 1981 Badak LNG
Sales Contract dated as of September 7, 1989, Seller and Buyers
agreed to revise certain provisions of the Contract, to provide for
an adjustment of the Contract Sales Price and the sale and purchase
of additional quantities of LNG, and to amend the Contract to
incorporate these revisions effective as of January 1, 1990; and
3. 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 I - DEFINITIONS
The terms or expressions below will have the following
meanings in this Contract:
1.1 Actual Cubic Foot
A volume equal to the volume of a cube whose edge is
one foot.
1.2 Actual Loading Time
As defined in Section 4.12(b).
1.3 Affiliate
As defined in Article 19.
1.4 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 73(d).
1.5 Allowance Restoration Period.
As defined in Section 7.3(d)(iv).
1.6 Allotted Loading Time
As defined in Section 4.12(a).
1.7 Annual Program
As defined in Section 12.1(a).
1.8 Arrival Temperature Requirement
As defined in Section 4.10.
1.9 Badak Facility
As defined in Section 5.2.
1.10 British Thermal Unit (BTU)
The amount of heat required to raise the temperature
of one avoirdupois pound of pure water from 59.00F to 60.00F 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 Buyer's Facilities
For the purposes of Section 15.1(a)(v) in respect of
any Buyer, the Receiving Facilities of such Buyer and such other
facilities directly related to the use of LNG which, if not
operational, would reduce the amount of LNG which such Buyer is
able to receive hereunder.
1.14 Buyers' Representative
P.T. Jasa Enersi Pratama Nusantara or such other
entity as may be designated by Buyers pursuant to Article 18.
1.15 Buyers' Transportation Agreement
The Transportation Agreement between Buyers and
Buyers' Transporter for transporting LNG delivered under this
Contract.
1.16 Buyers' Transporter
The Transporter designated in Buyers' Transportation
Agreement.
1.17 Certificate
As defined in Section 3.2(a).
1.18 Contract Sales Price
As defined in Section 8.2.
1.19 Cubic Meter (CBM)
A volume equal to the volume of a cube whose edge is
one meter.
1.20 Delivery Point
The point at the Loading Port at which the flange
coupling of Seller's loading line joins the flange coupling of the
LNG loading manifold onboard any LNG Tanker.
1.21 ETA
Estimated time of arrival as defined in Section 4.6
(a).
1.22 Exercising Buyer
As defined in Section 7.3 (d)(i).
1.23 Fixed Quantity
As defined in Section 7.l.
1.24 Fixed Quantity Period
As defined in Section 7.l.
1.25 Floor Price
As defined in Section 8.2.
1.26 Force Majeure Deficiency
As defined in Section 7.6 (a).
1.27 Gas Supply Area
Badak, Nilam and other nearby fields selected by
Seller in East Kalimantan, Indonesia.
1.28 G.P.A.
Gas Processors Association.
1.29 Gross Heating Value
The quantity of heat expressed in British Thermal
Units produced by the complete combustion in air of one cubic foot
of anhydrous gas, at a temperature of 60.00 Fahrenheit and an
absolute pressure of 14.696 pounds per square inch, with the air at
the same temperature and pressure as the gas, after cooling the
products of the combustion to the initial temperature of the gas
and air, and after condensation of the water formed by combustion.
1.30 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.
1.31 Initial Contract Sales Price
As defined in Section 8.l.
1.32 Liquefied Natural Gas (LNG)
Natural Gas in a liquid state at or below its
boiling point and at a pressure of approximately one atmosphere.
1.33 LNG Tanker
An ocean-going vessel, meeting the requirements of
Section 4.2, suitable for transporting LNG, which is used by Buyers
for transportation of LNG under this Contract.
1.34 Loading Port
The port located at the Badak Facility.
1.35 Make-Good LNG
As defined in Section 7.3 (d)(iv).
1.36 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
BTU'S) equal to each Allowance exercised.
1.37 Make-Up LNG
As defined in Section 7.5.
1.38 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.
1.39 1973 LNG Sales Contract
The LNG Sales Contract dated as of December 3, 1973,
amended and restated as of January 1, 1990, between Seller, on the
one hand, and Chubu Electric, Kansai Electric, Kyushu Electric
Power Co., Inc., Nippon Steel Corporation, Osaka Gas and Toho Gas,
on the other hand.
1.40 Ninety-Day Schedule
As defined in Section 12.2.
1.41 Notice of Readiness
As defined in Section 4.9.
1.42 Proved Remaining Recoverable Reserves
Reserves which have been proved to a high degree of
certainty by reason of actual completion, successful testing or in
certain cases by adequate core analyses; and which are defined
areally by reasonable geological interpretation of structure and
known continuity of oil- or gas-saturated material.
1.43 Quantity Deficiency
As defined in Section 7.3(a).
1.44 Receiving Facilities
As defined in Section 5.l.
1.45 Restoration Quantities
As defined in Section 7.6(a).
1.46 Round-Up Request
As defined in Section 7.3 (a)(ii).
1.47 Seller's Facilities
For the purposes of Section 15.1(a)(iv), Natural Gas
reservoirs or production facilities in the field, the facilities
for transportation of Natural Gas from the field, and the Badak
Facility.
1.48 Seller's Gas Supply Obligation
From time to time on any given date the amount of
Natural Gas required to satisfy the remaining obligations of Seller
on such date to supply LNG or Natural Gas from the Gas Supply Area
plus the amount of Natural Gas from the Gas Supply Area required to
supply any additional commitment or commitments which Seller
anticipates making.
1.49 Seller's Suppliers
In respect of portions of the LNG to be sold
hereunder:
(a) Huffco Group;
(b) Total Indonesie and Indonesia Petroleum Ltd.;
and
(c) Unocal Indonesia Ltd. and Indonesia Petroleum
Ltd.;
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.
1.50 Seller's Transportation Agreement
That certain Transportation Agreement made as of
September 23, 1973, as amended, by and between Burmah Gas Transport
Limited and Seller.
1.51 Standard Cubic Foot (scf)
The quantity of Natural Gas, free of water vapor,
occupying a volume of one Actual Cubic Foot at a temperature of
60.00F and at an absolute pressure of 14.696 pounds per square
inch.
1.52 Statement of Cooling Time
As defined in Section 4.10.
1.53 Supply Agreement
As defined in Section 3.1.
1.54 Take-or-Pay Quantity
As defined in Section 7.5.
1.55 Unloading Ports
The ports at locations in or near Nagoya, Osaka,
Himeji, and at such other locations in Japan as may be agreed
between Seller and Buyers, where the Receiving Facilities are or
will be constructed.
ARTICLE 2 - SALE AND PURCHASE
Seller agrees to sell and deliver to the Delivery Point 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
3.1 Sources of Supply
The Natural Gas to be processed into LNG and sold
hereunder is to be produced from the Gas Supply Area. Seller
represents that Seller will maintain throughout the term hereof the
right to sell all quantities of LNG to be sold hereunder. In this
connection, Seller represents that it has executed or will execute
from time to time, as required in order to maintain the right to
sell the quantities of LNG to be sold hereunder, agreements with
production sharing contractors of Seller under which agreements
such production sharing contractors make available for sale
hereunder their respective interests in the quantities of LNG to be
sold hereunder ("Supply Agreement").
3.2 Reserves of Natural Gas
(a) Seller has furnished Buyers with statements, each
entitled "Certificate" and each dated on or prior to November 15,
1979, of DeGolyer and MacNaughton expressing its estimate of Proved
Remaining Recoverable Reserves of Natural Gas in the Gas Supply
Area. Seller represents that such estimated quantity is in excess
of Seller's Gas Supply Obligation as of the date of this Contract.
Hereafter and throughout the term of this Contract, before
committing additional Natural Gas from the Gas Supply Area to sale
or other utilization, Seller shall secure from an independent
petroleum engineering consultant firm of recognized standing in the
petroleum industry, qualified by reputation and experience in
estimating reserves of oil and natural gas in subsurface
reservoirs, the written statement (the "Certificate") of such firm
expressing its estimate of Proved Remaining Recoverable Reserves of
Natural Gas in the Gas Supply Area in an amount at least equal to
Seller's Gas Supply Obligation. Seller shall provide Buyers with
copies of each Certificate of such independent petroleum
engineering consultant firm on which Seller relies in making any
such commitment for supply of Natural Gas from the Gas Supply Area.
Seller shall also furnish all supporting documentation provided by
such independent petroleum engineering consultant firm in
connection with the issuance of such Certificate.
(b) If, during the term of this Contract Seller obtains
information from its activities (including the activities of
Seller's production sharing contractors) in operating fields in the
Gas Supply Area which indicates unforeseen adverse changes in the
Proved Remaining Recoverable Reserves of Natural Gas in the Gas
Supply Area, Seller will promptly inform Buyers of such situation
and will further inform Buyers of any measures which Seller may
elect to take in order to increase the amount of Proved Remaining
Recoverable Reserves of Natural Gas in the Gas Supply Area.
ARTICLE 4 - LOADING AND TRANSPORTATION
4.1 Buyers' Obligation to Provide Transportation
Buyers shall provide, or cause to be provided, the
transportation required to transport all quantities of LNG to be
sold and delivered hereunder from the Loading Port.
4.2 LNG Tankers
Buyers will provide, or cause to be provided, for their
performance under this Contract, LNG Tankers compatible with the
marine facilities of the Badak Facility of up to approximately
two-hundred ninety (290) meters in length, up to approximately
forty-six (46) meters in width, and up to approximately eleven and
one-tenth (11.1) meters draft, which LNG Tankers shall be designed
and at all times equipped and manned so as safely to permit the
loading of a full cargo in approximately twelve (12) hours of
pumping time and to accept cargo at a rate up to approximately
eleven thousand (11,000) CBM per hour being the fun design pumping
rate of Seller's loading pumps (which rate shall be subject to
revision after mutual agreement). The provisions of this Contract
applicable to LNG Tankers shall apply whether any LNG Tanker is
owned and operated by the Buyers or otherwise.
4.3 Loading Port Facilities
(a) Seller will provide a berth, and cause to be
provided port facilities, including a channel and turning basin,
and cause to be designated a holding anchorage, all capable of
receiving an LNG Tanker of the dimensions set forth in Section 4.2,
where such LNG Tanker may safely proceed to, lie at and depart
from, always afloat at all times of the tide. Seller shall not be
obligated to provide facilities for repair of LNG Tankers.
(b) Seller will provide facilities capable of loading
LNG at an approximate rate of ten thousand (10,000) CBM per hour at
a normal operating pressure of about forty-two and one-half pounds
per square inch gauge (42.5 psig) at the Delivery Point. In any
event, pressure at the Delivery Point shall not exceed one hundred
twenty pounds per square inch gauge (120 psig).
(c) Loading Port facilities shag include:
(i) Shore tanks and loading lines for liquid
nitrogen; pipelines and connections for the
supply of fresh water; and
(ii) Appropriate systems necessary for radio and
telex communications with the LNG Tankers.
4.4 Loading Port Obligations
(a) LNG Tankers shall utilize the Loading Port
facilities subject to observance of all relevant port regulations.
Any tugs, pilots or escort vessels required (or other support
vessels required in connection with the safe berthing of an LNG
Tanker) shall be employed at, the sole risk and expense of the LNG
Tanker. Prior to each loading, Buyers' Transporter shall be
responsible for determining the availability of any nitrogen, fuel,
water and other utilities required by the LNG Tankers at the
Loading Port, which will be provided by Seller on an as available
basis for Buyers' Transporter's account.
(b) Buyers and/or Buyers' Transporter shall be
responsible for payment of amounts due for supplies and services
requested by masters of LNG Tankers and for normal port charges to
the extent such charges are uniformly applied to all LNG vessels
receiving exports of LNG from the Loading Port.
4.5 Cargo Loading
(a) The LNG to be sold and purchased hereunder shall be
pumped into LNG Tankers at the expense of Seller through manifold
strainers of sixty (60) mesh (or such other mesh as shall be agreed
from time to time by the parties) provided by the LNG Tanker and,
absent agreement of the parties or an unavoidable circumstance,
shall be in full cargo lots.
(b) The loading facilities provided by Seller shall
include a boil-off gas return system for receiving boil-off gas
from LNG Tankers. There shall be no charge for any natural gas
boiled-off from the LNG Tankers while berthed at the Loading Port
that is returned to shore. The LNG Tankers shall compress such
boil-off gas to the extent required to maintain the gas pressure in
the LNG Tanker's cargo tanks and the boil-off gas return line
within allowable operating limits during loading, and Seller shall
operate the boil-off gas return system in a manner that will permit
the gas pressure in the LNG Tanker's cargo tanks to be maintained
within the allowable operating limits of such tanks.
4.6 Notifications of Estimated Time of Arrival at Loading
Port and Cooling Requirements
(a) Buyers shall give Seller notice by telex or
facsimile of the date and hour on which each LNG Tanker departs
from an Unloading Port or drydock/repair port and the estimated
time of arrival ("ETA") at the Loading Port. Said notice shall be
submitted immediately after the LNG Tanker's departure from the
Unloading Port or drydock/repair port. Buyers shall include in
such notice to Seller a statement of:
(i) The estimated quantity of LNG that will be
required to cool the tanks to permit
continuous loading of LNG and the estimated
time that will be required for such cooling,
both of which will be based upon the date the
LNG Tanker is expected to commence loading.
(ii) Any operational deficiencies in the LNG Tanker
that may affect its port performance.
(iii) Requirements for nitrogen, fuel, water
and other utilities. Buyers shall
arrange for the LNG Tanker's master to
notify Seller regarding any change in the
ETA of twelve (12) hours or more. If the
LNG Tanker's cargo tanks should require
cooling or if the cooling or utilities
requirements or the condition of the LNG
Tanker should change on account of
circumstances discovered after
transmittal of the notice required by
this Section 4.6(a), the master of the
LNG Tanker shall give prompt notice
thereof to Seller, setting forth the
information required by the second
preceding sentence, or amending any such
information previously given to Seller.
(b) Seventy-two (72) hours prior to the LNG Tanker's
arrival at the Loading Port, the LNG Tanker's master shall give
notice by telex to Seller stating its then ETA. If this ETA should
change by more than six (6) hours, the LNG Tanker's master shall
give notice of the corrected ETA promptly to Seller.
(c) Forty-eight (48) hours prior to the LNG Tanker's
arrival at the Loading Port, the LNG Tanker's master shall give
notice by telex to Seller confirming or amending the last ETA
notice. If this ETA changes by more than six (6) hours, the LNG
Tanker's master shall give notice of the corrected ETA promptly to
Seller.
(d) Twenty-four (24) hours prior to the LNG Tanker's
arrival at the Loading Port, an ETA notice shall be sent by telex
and radio to Seller confirming or amending the last ETA notice. If
this ETA changes by more than two (2) hours, the LNG Tanker's
master shall give notice of the corrected ETA promptly to Seller.
(e) A final ETA notice shall be sent by telex and radio
five (5) hours prior to the LNG Tanker's arrival at the Loading
Port.
4.7 Berthing Assignments
Seller shall determine the berthing sequence of vessels
at the Loading Port in order to best ensure compliance with the
overall loading schedule of the Badak Facility (including the
Annual Program and Ninety-Day Schedules hereunder), and shall
notify the masters of LNG Tankers via the ship's agent of their
berthing priority upon receipt of Notice of Readiness.
4.8 Vessels not Ready for Loading
(a) If an LNG Tanker arrives which is not ready to load
for any reason, Seller may or may not allow it to berth. In the
case of an LNG Tanker only requiring cooldown to be ready to load,
Seller shall not defer berthing by reason thereof if either such
cooldown was provided for in the most recent Ninety-Day Schedule or
the cooldown time is not expected to exceed six (6) hours.
Whenever Buyers notify Seller that an LNG Tanker will require
cooldown, Seller shall make provision therefor in the Ninety-Day
Schedule as soon as Seller can do so without disrupting the overall
loading schedule or operations of the Badak Facility.
(b) If any LNG Tanker previously believed to be ready
for loading or cooling is found to be unready after being berthed,
Seller may direct the master to vacate the berth and proceed to
anchorage, whether or not other vessels are awaiting a berth,
unless it appears reasonably certain that the LNG Tanker at the
berth can be readied within four (4) hours and Seller has not
concluded that such LNG Tanker is unsafe.
(c) When the LNG Tanker at anchorage is ready, the
master will notify Seller. Seller shall assign a berth to any such
LNG Tanker or to any LNG Tanker awaiting cooldown at anchorage as
soon as Seller is able to do so without disrupting Seller's loading
requirements or operations.
4.9 Notice of Readiness
As soon as the LNG Tanker is securely moored at the berth
or securely anchored awaiting a berth, has received all necessary
port clearances and is able to receive LNG for loading or cooling,
the master shall give notice of readiness to Seller ("Notice of
Readiness"); provided, however, that in the event an LNG Tanker
should arrive at the Loading Port prior to the date established in
the Ninety-Day Schedule (and any revisions thereof except those
made after the LNG Tanker has commenced its voyage to the Loading
Port unless made as a result of delays caused by the operations of
the LNG Tankers), Notice of Readiness shall be deemed effective at
the earlier of (i) 0:00 a.m. local time on the scheduled loading
date, or (ii) the time loading commences.
4.10 Tank Temperature for Loading and Statement of Cooling
Time
Buyers shall cause Buyers' Transporter after each
discharge of a cargo at an Unloading Port to retain on board each
LNG Tanker sufficient LNG, based on normal operations of the LNG
Tanker (subject to making adequate provision for any LNG Tanker
mechanical problems of which Buyers' Transporter is aware), to
maintain, for a period of not less than twenty-four (24) hours
after the later of (i) the actual arrival or (ii) the scheduled
arrival date (ignoring any revision to such date made after the LNG
Tanker has commenced its voyage to the Loading Port) of such LNG
Tanker at the Loading Port, a temperature in the cargo tanks to
permit continuous loading of LNG ("Arrival Temperature
Requirement"); provided, however, that the Arrival Temperature
Requirement shall not apply upon entry into service or in cases
where the LNG Tanker proceeds from an Unloading Port to a
drydock/repair port. When an LNG Tanker requires cooling, the
master or Buyers' Representative shall so inform Seller at the time
of the first notice under Section 4.6(a) and, second, at the time
of the Notice of Readiness. After the LNG Tanker has been cooled,
the representatives of both Buyers and Seller shall sign a
statement of cooling time ("Statement of Cooling Time").
4.11 Quantities for Purging and Cooling of Tanks
Quantities of LNG required to purge and cool each LNG
Tanker to the temperature that will permit continuous loading of
LNG shall be delivered by Seller without charge to Buyers upon the
initial entry of such LNG Tanker into service and upon its return
to service after each annual scheduled maintenance period (except
that for a vessel temporarily in service as an LNG Tanker to
receive such quantities of LNG without charge to Buyers, such
vessel must remain in service for a period of not less than four
(4) continuous months). All other LNG required by the LNG Tankers
for purging and cooling shall be sold, delivered and invoiced by
Seller and paid for by the Buyer (or its designee) scheduled to
receive the cargo of LNG next to be loaded at the Contract Sales
Price applicable to such cargo, except that where any LNG Tanker
having met the Arrival Temperature Requirement needs purging or
cooldown due to an event which does not extend Allotted Loading
Time under Section 4.12(c), then the LNG required in connection
therewith shall be provided without charge. Such price shall be
applied to the total liquid quantities delivered for purging and
cooling, measured before evaporation of any part thereof occurs.
The parties will determine by mutual agreement the rates and
pressures for delivery of LNG for purging and cooling and the
method for determining quantities used for such operations.
Quantities of LNG used to bring the LNG Tankers to a temperature
permitting continuous loading of LNG shall not be applied against
the quantities required to be sold by Seller and taken, or paid for
if not taken, by Buyers under other provisions of this Contract.
4.12 Loading Time
(a) The allotted loading time for Seller to load each
LNG Tanker ("Allotted Loading Time") shall be twenty-four (24)
hours, subject to adjustment as provided below.
(b) The actual loading time for each LNG Tanker ("Actual
Loading Time") shall commence (i) six (6) hours after the time when
the Notice of Readiness is received or deemed to be effective, as
defined in Section 4.9, or (ii) when the LNG Tanker is all fast
alongside the berth and ready to receive cooldown LNG or cargo,
whichever first occurs, and shall end when the loading and return
lines of the LNG Tanker are disconnected from the Seller's loading
and return lines and all cargo papers necessary for departure
required to be furnished by Seller are delivered on board in proper
form and the LNG Tanker is permitted to proceed to sea.
(c) Allotted Loading Time shall be extended to include:
(i) The period during which proceeding from the
anchorage, berthing, loading or clearing of
the LNG Tanker to proceed to sea after
completion of loading is delayed, hindered or
suspended by a Buyer, Buyers' Transporter, LNG
Tanker master, port authority or any third
party for reasons of safety, weather or
otherwise and over which Seller has no
control;
(ii) The period of any delays attributable to the
operation of an LNG Tanker, including the
period of time such LNG Tanker: (1) awaits a
berth by reason of the exercise by Seller of
its rights under Section 4.8, or (2) receives
LNG for purging and cooldown (except when: (A)
the LNG Tanker met the Arrival Temperature
Requirement, and (B) the purging and cooldown
is not due to an event which extends Allotted
Loading Time under this Section 4.12(c));
(iii) Any period during which berthing or
loading of an LNG Tanker is delayed,
hindered or suspended by reason of force
majeure pursuant to Article 15 hereof;
and
(iv) Any period of delay caused by occupancy of the
berth:
(A) By a previous LNG Tanker, provided such
occupancy is for reasons attributable to
such LNG Tanker;
(B) By either a previous LNG Tanker or
another vessel on its scheduled loading
date (ignoring any change in the schedule
of the vessel occupying the berth made
after departure of the LNG Tanker from
the Unloading Port); or
(C) By either a previous LNG Tanker or
another vessel that arrived prior to the
LNG Tanker when the LNG Tanker arrived
after its scheduled loading date
(ignoring any change in the LNG Tanker's
scheduled loading date after departure of
the LNG Tanker from the Unloading Port),
except that there shall be no addition to
Allotted Loading Time under this clause
(C) either: (1) for any period in excess
of twenty-four (24) hours, or (2) if the
LNG Tanker arrived more than twenty-four
(24) hours prior to 0:00 a.m. local time
on the scheduled loading date of the
vessel occupying the berth (unless
loading of such vessel was necessary in
order to maintain production of the
liquefaction facilities).
4.13 Demurrage
(a) If Actual Loading Time exceeds Allotted Loading Time
(as extended in accordance with Section 4.12) in loading any LNG
Tanker, Seller shall pay to Buyers demurrage at the daily rate
provided in Buyers' Transportation Agreement but not to exceed the
daily demurrage rate payable by Seller under Seller's
Transportation Agreement, for each day or portion thereof.
(b) Buyers shall invoice Seller for amounts due under
this Section 4.13 and Seller shall pay the invoice in accordance
with Article 10.
(c) Under Buyers' Transportation Agreement, demurrage
payments to Buyers' Transporter in any calendar year will be
subject to refund to the extent that the aggregate of demurrage
payments and freight payments received by Buyers' Transporter
exceeds the minimum amount required to be paid under Buyers'
Transportation Agreement for transportation of the Fixed Quantities
in such calendar year. If Buyers receive from Buyers' Transporter
any such refund, Buyers shall promptly pay to Seller a portion
thereof calculated by multiplying the total refund by a fraction,
the numerator of which is the amount paid by Seller in respect of
demurrage hereunder during the year and the denominator of which is
the total amount received by Buyers' Transporter in respect of
demurrage during such year.
4.14 Effect of Loading Port Delays: Transportation Costs
(a) If an LNG Tanker is delayed in berthing and/or
commencement of loading, for a reason which would not result in an
extension of Allotted Loading Time under Section 4.12(c), and if as
a result of such reason the commencement of loading is delayed
beyond thirty (30) hours after Notice of Readiness has been given,
then for each full hour by which commencement of loading is delayed
beyond such thirty-hour period, Seller shall pay Buyer or its
designee for boil-off during such delay at the Contract Sales Price
applicable to the cargo of LNG next to be loaded. The hourly BTU
boil-off rate to be applied for such purpose shall be determined by
actual average boil-off experience of the LNG Tankers as determined
at appropriate intervals, but shall never exceed that quantity of
LNG on board the LNG Tanker at the commencement of the said
thirty-hour period. Buyers shall invoice Seller for amounts due
under this Section 4.14(a) and Seller shall pay the invoice in
accordance with Article 10.
(b) If there should become due from Buyers to Buyers'
Transporter at any time any of the following, namely:
(i) Any payment or payments on account of
non-utilization of an LNG Tanker resulting
from an event or circumstance of force majeure
affecting Seller caused by an LNG vessel other
than an LNG Tanker which payment or payments:
(A) shall not exceed, on a daily basis, the
daily demurrage rate provided in Section 4.13
for the first ninety (90) days, and (B) shall
be payable for any days in excess of one
hundred eighty (180) days of such LNG Tanker
non-utilization caused by such Seller force
majeure at the rate provided in Buyers'
Transportation Agreement, provided that should
Buyers' Transportation Agreement be terminated
with respect to the LNG Tanker by reason of
such event of force majeure, the payment shall
be equal to the termination pay-ment provided
for in Buyers' Transportation Agreement, and
provided further that the basis for
calculating all payments referred to in this
clause (B) is reasonable when compared with
the obligations of Seller under Seller's
Transportation Agreement in the same
circumstances; in any event the amount payable
under this clause (i) shall not exceed the
maximum amount then available by way of P. and
I. cover in respect of the LNG vessel causing
the damage, and if amounts in respect of all
damages resulting from the incident which
would be recoverable by Seller from such P.
and I. cover exceed the maximum amount then
available by way of P. and I. cover, then
there shall be a proportionate reduction in
the amount payable under this clause (i) so
that such reduced amount bears the same
relationship to the maximum amount then
available by way of P. and I. cover as the
amount otherwise payable hereunder would bear
to the total amount of Seller's damages
resulting from the incident which are
recoverable from such P. and I. cover; or
(ii) Any payment or payments on account of Buyers'
failure to provide Buyers' Transporter with
the minimum quantities of LNG required under
Buyers' Transportation Agreement, if the
deficiency is caused by the failure of Seller
to satisfy its obligations under this
Contract;
then, if and to the extent that the amount payable to Buyers'
Transporter has not been paid and is not payable to Buyers under
Section 4.13, such amount shall be paid to Buyers by Seller. This
paragraph (b) shall not require Seller to pay any amount which
becomes payable to Buyers' Transporter as the result of an event or
circumstance of force majeure affecting Buyers, or as the result of
Buyers' breach of their obligations under this Contract. It is
understood that no amount will be payable by Seller under this
paragraph (b) by reason of non-utilization of an LNG Tanker caused
by the fault or negligence of such LNG Tanker or Buyers'
Transporter. Any payments under this Section 4.14(b) shall be in
such amounts as reflect any credits to Buyers for other revenues
earned by the LNG Tanker during the period of force majeure.
Buyer shall invoice Seller for payments under this
paragraph (b) and
Seller shall pay those invoices in accordance with Article 10.
ARTICLE 5 - ONSHORE FACILITIES
5.1 Receiving Facilities
Buyers have heretofore constructed or will construct LNG
receiving terminal facilities at the Unloading Ports including,
without limitation, berthing and unloading facilities, LNG storage
tanks, vessel services facilities and regasification plants (the
"Receiving Facilities").
5.2 Badak Facility
Seller has heretofore constructed or will construct at
Bontang, East Kalimantan, liquefaction plant facilities to be used
by Seller, including, without limitation, gas transmission
pipelines, processing facilities, storage tanks, utilities,
berthing and loading facilities (the "Badak Facility").
ARTICLE 6 - DURATION OF CONTRACT
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
During each calendar year or portion thereof specified
below (each such period being called a "Fixed Quantity Period"),
Seller shall sell 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:
Fixed Fixed Quantities for Each Buyer
Calendar Quantity (billions of BTU's)
Year Period
Chubu Kansai Osaka Toho
Electric Electric Gas Gas Total
1983 Aug. 25-
Dec. 31 14,685 12,301 4,767 6,366 38,119
1984-1989 Each Full Year 80,156 42,750 21,375 26,719 171,000
1990 Full Year 82,884 44,205 22,103 27,628 176,820
1991 Full Year 84,248 44,933 22,466 28,083 179,730
1992 Full Year 85,612 45,660 22,830 28,538 182,640
1993 Full Year 86,976 46,388 23,194 28,992 185,550
1994-2002 Each Full Year 88,340 47,115 23,558 29,447 188,460
2003 Jan.1-Mar.31 19,906 10,601 5,300 6,655 42,462
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 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.
7.2 Reallocation of Cargoes: Rate of Deliveries
(a) Each Buyer, upon appropriate notice to Seller, may
reallocate all or part of an LNG Tanker cargo from one Buyer to
another Buyer.
In case of such reallocation, the ownership of such cargo
or part thereof shall be transferred directly from Seller to the
new Buyer in place of the original Buyer, but the respective Fixed
Quantities of the Buyers concerned shall not be changed and the
cargo in question shall be deemed to be received by the original
Buyer in connection with its take or pay obligations 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 win 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 at
the Badak Facility.
(b) Within each Fixed Quantity Period the quantities to
be delivered by Seller and received by Buyers at the Badak Facility
shall be delivered and received at rates and intervals which are
reasonably constant over the course of such Fixed Quantity Period,
after taking into account all commitments of the Badak Facility and
taking into consideration the downtime, shipping and other matters
referred to in Article 12, so as to assure, as nearly as
practicable, an even production rate at the Badak Facility and an
even rate of deliveries at the Delivery Point.
7.3 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, the Quantity
Deficiency of a Buyer at the end of any Fixed
Quantity Period amounts to less than 2.9 trillion
BTU'S, the amount of such Quantity Deficiency shall
be carried forward and added to the Fixed Quantity
of such Buyer for the next succeeding Fixed Quantity
Period; provided that notwithstanding the foregoing,
if the total Quantity Deficiency of those Buyers
whose Quantity Deficiency is less than 2.9 trillion
BTU's shall exceed 5.8 trillion BTU's, the amount of
carry forward for such Buyers shall be determined as
follows:
(A) Any Buyer who has a Round-Up Request denied
shall carry forward its Quantity Deficiency;
(B) Any Buyer, other than a Buyer to whom (A) next above
applies, shall carry forward the amount of such
Quantity Deficiency up to 1.45 trillion BTU'S; and
(C) Any Buyer whose Quantity Deficiency has not been
fully carried forward under (A) or (B) next above
shall in addition carry forward its share of the
amount equal to 5.8 trillion BTU's minus the total
carry forward amount allowed under (B) above,
allocated among all such Buyers in proportion to the
amount by which each of their respective Quantity
Deficiencies exceeds 1.45 trillion BTU's (calculated
to the nearest million BTU's).
The amount carried forward pursuant to this clause (i)
shall be deducted from the Quantity Deficiency of such
Buyer and each Buyer to whom this clause (i) applies
shall be subject to take or pay pursuant to this Section
7.3 only if and to the extent any Quantity Deficiency
remains after such deduction.
(ii) If, at the time each Annual Program is
developed, the Quantity Deficiency of a Buyer
for the applicable year is estimated to amount
to less than a full cargo, such Buyer shall
have the right to request an increase in the
quantities which such Buyer wishes to take in
such year in an amount sufficient to fill out
such cargo (such right being herein referred
to as a "Round-Up Request"). Any such
Round-Up Request shall not, however, increase
the Fixed Quantity of such Buyer. If Buyer
does not make a Round-Up Request, or if Seller
elects not to honor such Round-Up Request, the
non-delivery of the partial cargo of Fixed
Quantity shall not constitute a failure of
Seller to make LNG available for sale for the
purpose of paragraph (b) below.
(iii) At the time the Annual Program is being
prepared for 1994 or any subsequent year, the
Fixed Quantities shall be adjusted at the
request of Buyers to effect the acceleration
by one year of up to 2,910 billion BTU's if
necessary to ensure that, taking into account
scheduled drydockings, Buyers have adequate
shipping capacity to transport the Fixed
Quantities during the year following that for
which the Annual Program is being prepared.
Such acceleration shall be effected by an
appropriate increase to the Fixed Quantity of
a single Buyer or appropriate increases to the
Fixed Quantities of all or a number of Buyers,
as specified in such Buyers' request.
Corresponding decreases shall be made to the
Fixed Quantity or Fixed Quantities of the same
Buyer(s) for the Fixed Quantity Period
following the Fixed Quantity Period during
which such acceleration occurs.
(iv) 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 obligations (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 Exercising Buyer 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 during any Fixed
Quantity Period prior to 1994 being in excess
of five percent (5%) of the total Fixed
Quantities for all Buyers for such Fixed
Quantity Period, or thereafter being in excess
of 9,423 billion BTU'S. 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 in 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 June 30, 2003. 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 Exercising
Buyer, of the Exercising Buyer.
(vi) If, at the expiration of the Allowance
Restoration Period, a MakeGood 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; provided, however, that
for the purposes of determining such Contract
Sales Price, "R" under Section 8.2 shall be
the value shown for the year in which such
Allowance was exercised. 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 Obligation; and
(C) Such requested quantities shall be scheduled
for delivery at any time prior to June 30,
2003 as mutually agreed by Seller and the
Buyer having the Make-Good Obligation. 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) A reduction shall be made to any Quantity Deficiency
equal to the amount by which such Quantity Deficiency resulted from
a partial loading of an LNG Tanker during the relevant Fixed
Quantity Period due to reasons attributable to Seller.
7.4 Allocation of Deliveries between Buyers and Other
Purchasers
(a) Whenever deliveries of LNG by Seller under this
Contract must be reduced by reason of an event or circumstance of
force majeure as defined in Article 15 affecting Seller's ability
to produce or load LNG from the Badak Facility, an allocation of
quantities then available for sale at the Badak Facility will be
made between Buyers and other purchasers of LNG from the Badak
Facility. At such times the total quantities available for sale
from the Badak Facility shall be allocated among the purchasers
therefrom (including the Buyers) pro rata in the ratio of their
respective quantities which are eligible for allocation as -
provided below. The quantities eligible for such allocation shall,
as to Buyers, be the Fixed Quantities to be purchased hereunder
during the period of such force majeure and, as to other
purchasers, be those fixed or contract quantities of LNG which are
committed for sale from the Badak Facility during the period of
such force majeure in satisfaction of Seller's contracts with other
purchasers which provide for sales of LNG over a term of at least
fifteen (15) years.
(b) If such 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 Badak Facility to Buyers and equivalent
quantities scheduled for- delivery from the Badak 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 73 (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 giving written notice
to Seller as provided in Section 12.1. If, during any year for
which Make-Up LNG has been requested , (i) Seller has uncommitted
quantities of LNG available for such purposes and (ii) such Buyer
shall have first taken and paid for its Fixed Quantity for such
year, then Seller shall sell to such Buyer the quantity of Make-Up
LNG requested. A Buyer's right to purchase Make-Up LNG under this
Section 7.5 shall expire on March 31, 2004 unless such Buyer shall
have requested Make-Up LNG during the preceding twelve (12) months
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 Take-or-Pay Quantity not made up by March
31, 2004. 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
(a) If during any Fixed Quantity Period or Fixed
Quantity Periods all or any portion of the Fixed Quantity of LNG
required to be taken by any Buyer therein is not delivered by
Seller or taken by such Buyer by reason of force majeure 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. 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.
(b) If an event of force majeure relieves or delays the
performance by any Buyer of its obligations under this Contract and
causes a reduction in deliveries of LNG, and Seller sells to third
parties quantities of LNG which Buyers are unable to purchase, then
the Force Majeure Deficiency shall be reduced by the amount, if
any, that the Seller's Gas Supply Obligation (including amounts so
sold to third parties) exceeds the estimate of Proved Remaining
Recoverable Reserves stated in the most recent Certificate as a
result of such sales.
7.7 Allocation of Make-Good LNG, Make-Up LNG and Restoration
Quantities
Whenever Make-Good LNG is requested under Section 7.3(d),
Make-Up LNG is requested under Section 7.5 and/or Restoration
Quantities are requested under Section 7.6(a) by a Buyer or Buyers,
and quantities are requested for similar purposes by other
purchasers from the Badak Facility, and uncommitted quantities of
LNG are not available from the Badak Facility to meet all such
requests, then the quantities of LNG which are available from the
Badak Facility for such purposes shall be allocated, as between
such Buyer or Buyers on the one hand and such other purchasers on
the other hand, based on the proportion of the contract quantities
of each requesting purchaser 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 Initial Contract Sales Price
The Initial Contract Sales Price applicable, as of
January 1, 1981, to the quantities of LNG to be sold 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.$/MMBTU), shall be U.S. $5.87 (the
"Initial Contract Sales Price").
8.2 Contract Sales Price and Adjustments Thereto
The Initial Contract Sales Price is subject to adjustment
from time to time according to the following provisions of this
Article 8, and such price as adjusted and in effect at any time
shall be the contract sales price (the "Contract Sales Price")
which is in effect hereunder at such time. The Contract Sales
Price to be applied to the BTU's comprising each cargo shall be
that Contract Sales Price in effect as of the date of completion of
loading of such cargo.
A Contract Sales Price adjustment shall be made as of
each effective date on which either: (i) the realized export prices
(except premiums and except prices for spot sales) of more than one
of the field classifications of Indonesian crude oils then being
sold and exported shall have changed from the respective prices
therefor included in the last preceding Contract Sales Price
adjustment made pursuant to this Section 8.2, (ii) two or more
field classifications of such crude oils shall have been added to
or deleted from the field classifications of crude oils being
exported from Indonesia, since the date of the last preceding
Contract Sales Price adjustment made pursuant to this Section 8.2
or (iii) January 1 of each year in which the value of "R" changes.
The export price and classification data required to make the above
determination shall be verified by the Ministry of Mines and Energy
of the Republic of Indonesia. In every case such adjustment is to
be made in accordance with the following formula:
PA = Po Ax R
Ay
in which PA = the Contract Sales Price as such term is used
herein (as
expressed in U.S.$/MMBTU).
PO = the Initial Contract Sales Price.
Ax = the arithmetic average of the realized export
prices in U.S.
Dollars per barrel, f.o.b. Indonesia, of all
field classifications of Indonesian crude oils
then being sold and exported, except premiums
and except such prices for spot sales.
Ay = U.S.$35.69, being the arithmetic average on
January 1, 1981 of the realized export prices
in U. S. Dollarsper barrel,f.o.b. Indonesia,
of all field classificationsof Indonesiancrude
oils then being sold and exported, except
premiums and except such prices for spot
sales.
R = U.S.$O.04/MMBTU during the calendar year 1990
U.S.$O.06/MMBTU during the calendar year 1991
U.S.$O.08/MMBTU during the calendar year 1992
U.S.$O.10/MMBTU during the calendar year 1993
U.S.$O.12/MMBTU from and after January 1, 1994
provided, however, that during such period or periods as the
Contract Sales Price shall be less than 98.2 percent of the LNG
Element of the contract sales price calculated pursuant to the
formula set forth in the 1973 LNG Sales Contract (the "Floor
Price") then such Floor Price shall be substituted for the product
of the above formula and shall become the Contract Sales Price
hereunder.
ARTICLE 9 - TRANSFER OF TITLE
Delivery shall be deemed completed and title and risk of
loss shall pass from Seller to the purchasing Buyer as the LNG
reaches the Delivery Point.
ARTICLE 10 - INVOICES AND PAYMENT
10.1 Cargo Invoices and Documents
Promptly after completion of loading of each LNG Tanker,
Seller, or its representative, shall furnish to the receiving
Buyer, or Buyers' Representative, a certificate of quantity loaded
together with such other documents concerning the cargo as may be
reasonably requested by Buyers for the purpose of Japanese customs
clearance. Seller shall further, within forty-eight (48) hours of
completing, the loading, cause a laboratory analysis to be
completed to determine the quality of the LNG and shall promptly
furnish Buyer, or Buyers' Representative, a certificate with
respect thereto together with details of the calculation of the
number of BTU's sold. Promptly upon completion of such analysis
and calculation, Seller, or its representative, shall furnish by
telex or telegram to the receiving Buyer an invoice, stated in U.S.
Dollars in the amount of the Contract Sales Price for the number of
BTU's sold together with component MOL fractions, temperature,
pressure and volume delivered. At the same time, Seller shall send
Buyer a signed copy of the invoice and relevant documents showing
the basis for the calculation thereof.
10.2 Other Invoices
In the event that any monies are due from one party to
the other
hereunder, including, without limitation, amounts payable pursuant
to Section 73 on account of Fixed Quantities of LNG required to be
purchased but which were not taken by such Buyer, then the party to
whom such monies are due shall furnish or cause to be furnished 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
Each invoice to a Buyer referred to in Section 10.1 above
shall become due and payable by such Buyer on the eighth (8th)
Business Day in Japan after the date on which the invoice (which
may be in telex or telegraphic form) has been received by Buyer in
Japan.
Each other invoice to a Buyer hereunder shall become due
and payable by such Buyer within twenty (20) calendar days after
the date of Buyer's receipt of such invoice in Japan.
Each invoice delivered to Seller shall become due and
payable on the fourteenth (14th) calendar day after Seller's
receipt thereof.
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 th
!-,Period of delinquency by Citibank, N.A-, New York, New York, to
its prime commercial customers for ninety-day loans. Such interest
rate 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., Seller
shall pay, or cause to be paid, in U.S. Dollars all amounts which
become due and payable by Seller pursuant to any invoices issued
hereunder to a bank account in Japan designated by Buyers. - The
paying party shall not be responsible for a designated bank's
disbursement of amounts remitted to such bank, and a deposit in
immediately available funds of the full amount of each invoice with
such bank shall constitute full discharge and satisfaction of the
obligations under this Contract for which such amounts were
remitted. Each payment of any amount owing hereunder shall be in
the full amount due without reduction or offset for any reason,
including, without limitation, taxes, exchange charges or bank
transfer charges.
Transfer of funds to the bank in the United States,
effected from Japan before the close of business in Japan o n or
before the due date of any invoice shall be deemed timely payment
notwithstanding that such U.S. bank cannot credit such transfer as
immediately available funds for a period of up to fourteen (14)
hours by reason of the time difference between Japan and the United
States, or for one or more days which are not banking days in the
United States.
10.5 Seller's Rights Upon Buyer's Failure to Make Payment
If payment of any invoice for quantities of LNG sold
hereunder or for Fixed Quantities of LNG not taken and for which a
Buyer is obligated to pay pursuant to this Contract is not made
within sixty (60) days after the due date thereof, Seller shall be
entitled, upon giving thirty (30) days' written notice to such
Buyer, to suspend subsequent sales to such Buyer until the amount
of such invoice and interest thereon has been paid, and such Buyer
shall not be entitled to any make-up rights in respect of such
suspended sales. If any such invoice is not paid within one
hundred twenty (120) days after the due date thereof, then, subject
to the further provisions of this Section 10.5, Seller shall have
the right at Seller's election, upon not less than eighty (80)
days' notice to Buyer or Buyers, as the case may be, to exercise
either of the following options:
(i) Seller may terminate this Contract in respect of
the defaulting Buyer only, in which event this
Contract shall continue in effect between Seller
and the other Buyers just as though the defaulting
Buyer had never been a party and the quantities of
LNG thereafter to be purchased and received by such
defaulting Buyer had never been included in this
Contract; or
(ii) Seller may terminate this Contract in its entirety
as to Buyers unless prior to such termination
arrangements shall have been made which are
satisfactory to Saner for the payment of all
amounts owed Seller by the defaulting Buyer and for
the assumption of the LNG quantity and other
obligations of the defaulting Buyer under this
Contract by one or more Buyer(s) not defaulting.
Termination by Seller under clause (i) or (ii) above shall become
effective upon the date specified in such notice from Seller. Any
such termination shall be without prejudice to any other rights and
remedies of Seller arising hereunder or by law or otherwise,
including the right of Seller to receive payment of all obligations
and claims which arose or accrued prior to such termination or by
reason of such default by a Buyer or Buyers.
10.6 Disputed Invoices
In the event of disagreement concerning any invoice,
the invoiced party shall make provisional payment of the total
amount thereof and shall immediately notify the other party of the
reasons for such disagreement except that in the case of obvious
error in computation the correct amount shall be paid disregarding
such error. Invoices may be contested or modified only if, within
a period of ninety (90) days after receipt thereof, Buyer or Seller
serves notice on the other, questioning their correctness. If no
such notice is served, invoices shall be deemed correct and
accepted by both parties. Promptly after resolution of any dispute
as to an invoice, the amount of any overpayment or underpayment
shall be paid by Seller or Buyer to the other, as the case may be,
plus interest at the rate provided in Section 10.3 from the date
payment was due to the date of payment.
ARTICLE 11 - QUALITY
11.1 Gross Heating Value
The LNG when delivered by Seller to Buyers shall
have,in a gaseous state, a Gross Heating Value of not less than
1065 BTU per Standard Cubic Foot and not more than 1165 BTU per
Standard Cubic Foot. The expected range will be between 1105 and
1160 BTU per Standard Cubic Foot.
11.2 Components
The LNG delivered by Seller to. Buyers shall, in a
gaseous state, contain not less than eighty-five molecular
percentage (85 MOL%) of methane (CH4) and, for the components and
substances listed below, such LNG shall not contain more than the
following:
A. Nitrogen (N2), 1.0 MOL%.
B. Butanes (C4) and heavier, 2.00 MOL%.
C. Pentanes (C5) and heavier, 0.10 MOL%.
D. Hydrogen sulfide (H2S), 0.25 grains per 100
Standard Cubic Feet
(0.25 grains/100 scf).
E. Total sulfur cont!i!t, 1.3 grains per 100 Standard
Cubic Feet (1.3 grains/100 scf).
Although the LNG which Seller delivers to Buyers is
permitted to contain the sulfur concentrations shown in clauses D
and E above, under normal operating conditions at the Badak
Facility, Seller would expect such concentrations to be materially
less.
Should any question regarding quality of the LNG arise,
Buyers and Seller shall consult and cooperate concerning such
questions.
ARTICLE 12 - SCHEDULING
12.1 Annual Program
(a) Not later than ninety (90) days prior to the
beginning of each calendar year commencing with the year in which
the first Fixed Quantity Period occurs, Seller shall give written
notice to Buyers of the anticipated quantities of LNG to be
available for sale hereunder from the Badak Facility for each
calendar quarter of the next calendar year, specifying any
scheduled downtime of the Badak Facility. On or before October 15
of. each year in which such notice is given, each Buyer shall
advise Seller in writing of. (i) the quantities such Buyer wishes
to take during each calendar quarter of the following year,
specifying the amount of any Make-Up LNG requested pursuant to
Section 7.5 and any Restoration Quantities in excess of Fixed
Quantities requested pursuant to Section 7.6, and (ii) any- planned
downtime for Receiving Facilities, Buyers' shipping capacity and
scheduled drydocking for LNG Tankers. 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 with
a view to reaching agreement by December 1st of the same year and
Seller shall issue a programming schedule, including provisional
loading dates, for quantities sold hereunder to be loaded in full
cargo lots at the Badak Facility during each calendar month during
the following year (the "Annual Program"), and in so doing Seller
and Buyers shall take into consideration the contents of the above
notices. The Annual Program shall take into account Seller's
commitments to other purchasers of LNG from the Badak Facility.
Such Annual Program and the Ninety-Day Schedules referred to below
(and any revisions thereof) are intended to assist the parties in
planning their respective operations during the periods involved.
The content of the Annual Program and Ninety-Day Schedules shall
not reduce the entitlement of any party during any Fixed Quantity
Period to sen and be paid for, or to purchase and receive, as the
case may be, the quantities of LNG required under Article 7 to be
sold and paid for during such Fixed Quantity Period. Seller and
Buyers will each take all appropriate steps to carry out each
Annual Program and Ninety-Day Schedule.
(b) An Annual Program shall be amended to reflect 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 is 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 loadings (the "Ninety-Day
Schedule"), which follows the applicable Annual Program (or most
current draft thereof) as nearly as practicable and sets forth the
projected dates of loadings for each of the next three (3) calendar
months. Each Ninety-Day Schedule shall reflect all adjustments, if
any, necessitated by deviation from prior Ninety-Day Schedules so
as to maintain as far as practicable the loadings forecast in the
Annual Program. Both parties shall cooperate to facilitate smooth
performance of the Ninety-Day Schedule. After consultation with
Buyers, Seller shall revise the Ninety-Day Schedule when
appropriate to meet operational requirements with the overall
objective of fulfilling the Annual Program as far as practicable,
taking into account any requests of Buyers for adjustments.
ARTICLE 13 - MEASUREMENTS AND TESTS
13.1 Parties to Supply Devices
Buyers shall supply, operate and maintain, or cause
to be supplied, operated and maintained, suitable gauging devices
for the LNG tanks of the LNG Tankers, density, pressure and
temperature measuring devices, and any other measurement or testing
devices which are incorporated in the structure of LNG Tankers or
customarily maintained on shipboard.
Seller shall supply, operate and maintain, or caused to
be supplied, operated and maintained, devices required for
collecting samples and for determining quality and composition of
the LNG and any other measurement or testing devices which are
necessary to perform the measurement and testing required hereunder
at the Badak Facility.
13.2 Selection of Devices
All devices provided for in this Article 13 shall
be chosen by mutual agreement of the parties and shall be such
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
Buyers shall provide Seller, or cause Seller to be
provided, with a certified copy of tank gauge tables for each tank
of each LNG Tanker verified by a competent impartial authority or
authorities mutually agreed upon by the parties. Such tables shall
include correction tables for list, trim, tank construction and any
other items requiring such tables for accuracy of gauging. Seller
and Buyers shall each have the right to have representatives
present at the time each LNG tank on each LNG Tanker is
volumetrically calibrated. If the LNG tanks of any LNG Tanker
suffer distortion of such nature as to cause a prudent expert
reasonably to question the validity of the tank gauge tables
described herein (or any subsequent calibration provided for
herein), any Buyer or Seller may require recalibration of such LNG
tanks during any period when the LNG Tanker is out of service for
inspection and/or repairs. Upon recalibration of the LNG tanks of
the LNG Tankers, the same procedures used to provide the original
tank gauge tables will be used to provide revised tank gauge
tables based upon the recalibration data. The calibration of tanks
provided for in this Section 13.4 shall constitute the only
calibration required for purposes of this Contract.
13.5 Gauging and Measuring LNG Volumes Delivered
Volumes of LNG delivered pursuant to this Contract shall
be determined by gauging the LNG in the tanks of the LNG Tankers
before and after loading.
Gauging the liquid in the tanks of the LNG Tankers and
measuring of liquid temperature, vapor temperature, vapor pressure
and liquid density in each LNG tank, trim and list of the LNG
Tankers, and atmospheric pressure shall be performed, or caused to
be performed, by the Buyer purchasing the LNG, before and after
loading.
The first gauging and measurements shall be made
immediately before the commencement of loading. The second gauging
and measurements shall take place immediately after the completion
of loading.
Copies of gauging and measurement records shall be
furnished to Seller.
A. Gauging the Liquid-Level of LNG
The level of the LNG in each LNG tank of the LNG Tanker
shall be gauged by means of the gauging device installed in the LNG
Tanker for that purpose. The level of the LNG in each tank shall
be logged or printed.
B. Determination of Temperature
The temperature of the LNG and of the vapor space in each
cargo tank shall be measured by means of a sufficient number of
properly located temperature measuring devices to permit the
determination of average temperature. Temperatures shall be logged
or printed.
C. Determination of Pressure
The pressure of the vapor in each LNG tank shall be
determined by means of pressure measuring devices installed in each
LNG tank of the LNG Tankers. The atmospheric pressure shall be
determined by readings from the standard barometer installed in the
LNG Tankers.
D. Determination of Density
Density of the LNG shall be computed by Seller or, if
mutually agreed, measured. Initially the density of the LNG will
be computed by the method described in Schedule A attached hereto.
Should any improved data, method of calculation or direct
measurement device become available which is acceptable to both
Buyers and Seller, such improved data, method or device shall then
be used. If density is determined by measurements, the results
shag be logged or printed.
13.6 Samples for Quality Analysis
Representative samples of the LNG delivered shall be
obtained, or be caused to be obtained, in triplicate by Seller
during the time of loading. The three (3) samples shall be taken
from an appropriate point on Seller's loading line as close as
possible to the loading flanges and collected in the gaseous state
using the continuous gasification/collection method agreed by
Buyers and Seller.
In addition periodic samples shall be obtained
during loading. Should Seller determine that it is necessary to
utilize periodic samples, the composition of the LNG delivered to
each LNG Tanker shall be the arithmetic average of the results
obtained by analysis of such samples. The method and devices for
sampling and the quantity of the samples to be withdrawn shall be
determined by agreement between Buyers and Seller to provide for
taking representative and adequate samples of the LNG delivered.
The samples obtained shall be distributed as follows:
First sample - for use of Seller.
Second sample - for use of Buyer receiving the LNG
shipment.
Third sample - for retention by Seller for the
agreed period, not to exceed
twenty-five (25) days, during which
period any dispute as to the
accuracy of any analysis shall be
raised, in which case the sample
shall be further retained until such
Buyer and Seller agree to retain it
no longer.
13.7 Quality Analysis
The samples provided for in Section 13.6 shall be
analyzed, or be caused to be analyzed, by Seller to determine the
molar fraction of the hydrocarbon and other components in the
sample by gas chromatography using a mutually agreed method in
accordance with "G.P.A. Standard 2261, Method of Analysis for
Natural Gas and Similar Gaseous Mixtures by Gas Chromatography",
published by G.P.A., current as of January 1, 1977 or as otherwise
mutually agreed upon. If better standards for analysis are
subsequently adopted by G.P.A. or other recognized competent
impartial authority, upon mutual agreement of Buyers and Seller,
they shall be substituted for the standard then in use, but such
substitution shall not take place retroactively. A calibration of
the chromatograph or other analytical instrument used shall be
performed by Seller immediately prior to the analysis of the sample
of LNG delivered. Seller shall give advance notice to Buyers of
the time Seller intends to conduct a calibration thereof and Buyers
shall have the right to have a representative present at each such
calibration; provided, however, Seller will not be obligated to
defer or reschedule any calibration in order to permit the
representative of Buyers to be present.
The sample shall be analyzed, or be caused to be
analyzed, by Seller to determine the concentrations of Hydrogen
Sulfide (H2S) and total sulfur content referred to in Section 11.2
using the methods described in Schedule A attached hereto.
13.8 Operating Procedures
Prior to conducting operations for measurement,
gauging and analysis provided in Sections 13.5, 13.6 and 13.7, the
party responsible for such operations shall notify the appropriate
representatives of the other party, allowing such representatives
reasonable opportunity to be present for all operations and
computations; however, the absence of the other party's
representative after notification and opportunity to attend shall
not prevent any operations ;and computations from being performed.
At the request of either party any measurement, gauging and
analysis provided for in Sections 13.5, 13.6 and 13.7 shall be
witnessed and verified by an independent surveyor mutually agreed
upon by the Buyer and Seller. The results of such surveyor's
verifications shall be made available promptly to each party. All
records of measurement and the computation results shag be reserved
and available to both parties for a period of not less than three
(3) years after such measurement and computation.
13.9 BTU Quantities Sold
The quantity of BTU's sold shall be calculated by Seller
following the procedures described in this Section 13.9, and shall
be verified by an independent surveyor mutually agreed upon by
Seller and Buyers.
A. Determination of Gross Heating Value
The Gross Heating Value of the samples of the LNG
shall be determined by computation, in accordance with the method
described in Schedule A attached hereto, on the basis of the
molecular composition determined pursuant to Section 13.7 and of
the molecular weights and heating values described in G.P.A.
Publication 2145 published by G.P.A., current at the time of
computation.
If better constants or improved methods for
determination of heating value are subsequently adopted by G.P.A.
or other recognized competent impartial authority, they shall, upon
mutual agreement of Seller and Buyers, be substituted. therefor but
not retroactively. The Gross Heating Value of the representative
sample shall be the conclusive Gross Heating Value for the purpose
of determining quantities of BTU's sold.
B. Determination of Volume of LNG Loaded
The LNG volume in the tanks of the LNG Tanker before
- -and after loading shall be determined by gauging as provided in
Section 13.5 on the basis of the tank gauge tables provided for in
Section 13.4. The volume of LNG remaining in the tanks of the LNG
Tanker before loading shall then be subtracted from the volume
after -loading and the resulting volume shall be taken as the
volume of the LNG delivered to the LNG Tanker.
If failure of gauging and measuring devices of an
LNG Tanker should make it impossible to determine the LNG volume,
the volume of LNG delivered shall be determined by- gauging the
liquid level in Seller's onshore LNG storage tanks immediately
before and after loading the LNG Tanker, and such volume shag be
reduced by subtracting an estimated LNG volume, agreed upon by the
parties, for boil-off from such tanks during the loading of such
LNG Tanker. Seller shall provide Buyers, or cause the Buyers to be
provided with, a certified copy of tank gauge tables for each
onshore LNG tank which is to be used for this purpose, such tables
to be verified by a competent impartial authority.
C. Determination of BTU Quantities Sold
The quantities of BTU's sold shall be computed by
Seller by means of the following formula:
Q V x D x P
in which: Q = represents the quantity of the LNG sold in
BTU's.
V = represents the volume of the LNG loaded,
stated in cubic meters, determined as
provided in Section 13.9 B.
D = represents the density of the LNG loaded,
stated in kilograms per cubic meter,
determined as provided in Section 13.5 D.
P = represents the Gross Heating Value of the
LNG loaded, stated in BTU's per
kilograms.
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
hereto, any test shall be witnessed and verified by an independent
surveyor mutually agreed upon by Buyers and Seller. Permissible
tolerances shall be defined in Schedule A 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 that.has become final
pursuant to Section 10.6.
13.11 Disputes
In the event of any dispute concerning the subject
matter of this Article 13, including, but not limited to, disputes
over selection of the type or the accuracy of measuring devices,
their calibration, the result of measurement, sampling, analysis,
computation or method of calculation, such dispute shall be
submitted to a competent impartial authority mutually agreed upon
by the parties or, ff 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. AU 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 Buyers'
measurement devices shall be borne by Buyers. The fees and charges
of independent surveyors for measurements and calculations as
provided for in Sections 13.8 and 13.9 shall be borne equally by
Seller and Buyer. When the services of independent surveyors are
required and selected by mutual agreement pursuant to Section
13.10, then the fees and charges of such surveyors shall be borne
equally by Seller and Buyers.
ARTICLE 14 - DUTIES, TAXES AND CHARGES
Seller shall pay (or reimburse Buyers for any such
payments made by them) all taxes, royalties, duties or other
imposts levied or imposed by the Indonesian Government or any
subdivision thereof, or any other governmental authority in
Indonesia, on the sale or export of LNG.
ARTICLE 15 - FORCE MAJEURE
15.1 Events of Force Majeure
Neither Seller nor any Buyer shall be liable for any
delay or failure in performance hereunder if and to the extent such
delay or failure in performance directly results from any of the
following:
(a) Other than LNG Tankers
(i) Fire, flood, atmospheric disturbance,
lightning, storm, typhoon, tornado,
earthquake, landslide, soil erosion,
subsidence, washout or epidemic;
(ii) War, riot, civil war, blockade,
insurrection, act of public enemies or
civil disturbance;
(iii) Strike, lockout or other industrial
disturbance;
(iv) Serious accidental damage to or serious
failure of Seller's Facilities, unless
such damage or failure is the result of
willful negligence on the part of
Seller's management;
(v) Serious accidental damage to or serious
failure of a Buyer's Facilities, unless
such damage or failure is the result of
willful negligence on the part of such
Buyer's management;
(vi) The Proved Remaining Recoverable Reserves
of Natural Gas in the Gas Supply Area
expressed in the then most recent
Certificate referred to in Section 3.2
which can be economically produced have
been fully depleted; or
(vii) Act of government that directly affects
the lability of a party to perform any
obligation hereunder other than the
obligation to remit payments as provided
in Section 10.4 on account of LNG
delivered and taken or not taken but
required to be paid for under this
Contract.
(b) As to LNG Tankers
(i) The removal of an LNG Tanker from service
due to loss, serious accidental damage or
other serious failure, unless such loss,
damage or failure is the
C>
result of willful negligence on the part
of Buyers;
(ii) Fire, flood, atmospheric disturbance,
lightning, storm, typhoon, tornado or
epidemic;
(iii) War, riot, civil war, blockade,
insurrection, act of public enemies or
civil disturbance;
(iv) Strike, lockout or other industrial
disturbance occurring aboard an LNG
Tanker of at a port or other facility at
which such an LNG Tanker calls; or
(v) Act of government
15.2 Notice: Resumption of Normal Performance
(a) Immediately upon the occurrence of an event of
force majeure that gives a party warning that the event may delay
or prevent the performance by Seller or any Buyer of any of its
obligations hereunder, the party affected shall give notice thereof
to the other parties describing such event and stating the
obligations the performance of which are, or are expected to be,
delayed or prevented, and (either in the original or in
supplemental notices) stating:
(i) The estimated period during which performance
may be suspended or reduced, including, to the
extent known or ascertainable, the estimated
extent of such reduction in performance; and
(ii) The particulars of the program to be
implemented to ensure full resumption of
normal performance hereunder.
(b) In order to ensure resumption of normal performance
of this Contract within the shortest practicable time, the party
affected by an event of force majeure shall take all measures to
this end which are reasonable in the circumstance, taking into
account the consequences resulting from such event of force
majeure. Prior to resumption of normal performance the parties
shall continue to perform their obligations under this Contract to
the extent not prevented by such event.
15.3 Settlement of Industrial Disturbances
Settlement of strikes, lockouts or other industrial
disturbances shall be entirely within the discretion of
the party experiencing such 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 AND REPRESENTATIVE
Buyers will from time to time designate a Buyers'
Coordinator and a Buyers' Representative to act on behalf of each
Buyer in performing the following:
A. Coordination among each of the Buyers, and between
Seller and Buyer or Buyers, and the handling of
communications between Seller and Buyer or Buyers
in connection with performance of this Contract, in
particular the exercise of Allowances pursuant to
Section 73; and
B. Implementation of various operations of each Buyer
or of Buyers which are necessary in connection with
purchasing and receiving of LNG hereunder.
Buyers shall notify Seller the name and address of the
entities to act as Buyers' Coordinator and Buyers' Representative
and shall specify the duties to be performed by each such entity.
Buyers have notified Seller that Japan Indonesia LNG Co., Ltd. is
presently acting as Buyers' Coordinator, and that P.T. Jasa Enersi
Pratama Nusantara is presently acting as Buyers' Representative.
Seller shall be entitled to accept and rely upon any
communication received from Buyers' Coordinator or Buyers'
Representative as if received directly from one or more of the
Buyers, and to give communications to Buyers' Coordinator or
Buyers' Representative with the same effect as if given directly to
a Buyer or Buyers. No act of or authorization to Buyers'
Coordinator or Buyers' Representative shall relieve any Buyer from
performance of any obligation or payment of any liability of such
Buyer hereunder, each Buyer remaining primarily liable therefor at
all times.
ARTICLE 19 - CONFIDENTIALITY
Confidential information or documents in the possession
of the parties relating to the project or the performance of this
Contract may not be used or communicated to third parties 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, except that
such information or documents can be used by or communicated to:
A. Any of Seller's Suppliers or any Affiliate (as
defined below) of
Seller's Suppliers or of a party, with the
obligation of the receiving persons to maintain
confidentiality;
B. Persons participating in the implementation of this
project, such as Buyers' Transporter, Buyers'
Coordinator, Buyers' Representative, legal counsel,
accountants, other professional, business or
technical consultants and advisers, underwriters or
lenders, with the obligation of the receiving
persons to maintain confidentiality; and
C. 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 before, the term "Affiliate" means a company that controls,
is controlled by, or is under common control with, the party or any
of Seller's Suppliers.
ARTICLE 20 - NOTICES
All notices and other communications for purposes of this
Contract shall be in writing, which shall include transmission by
telex, facsimile 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 --
PERUSAHAAN 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-chome, Kita-k-u,
Osaka, 530 Japan
(Telex address) 5248320 KEPCO J
OSAKA GAS CO., LTD.
(Mail address) Attention: Gas Resources Department
4-1-2, Hiranomachi, Chuo-k-u,
Osaka, 541 Japan
(Telex address) 5225275 DAIGAS J
TOHO GAS CO., LTD.
(Mail address) Attention: Raw Materials Department
19-18, Sakurada-cho, Atsuta-k-U,
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
chance any addresses, by notice given thirty (30) days in advance
of such additions or chances. 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 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 Agreement 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 farther effect:
(A) Amended and Restated Invoice Settlement Agreement
for 1981 LNG Sales- Contract dated as of March 31,
1987 and amended and restated as of December 1,
1988 - paragraph 6;
(B) Memorandum of Agreement on Revisions to the 1981
LNG Sales Contract dated as of September 7, 1989.
ARTICLE 26 - COUNTERPARTS
This Contract is executed in five (5) 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 executed 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.
By /s/
WITNESS:
JAPAN INDONESIA LNG CO., LTD. OSAKA GAS CO., LTD.
By /s/ By /s/
NISSHO IWAI CORPORATION TOHO GAS CO., LTD.
By /s/ By /s/
The 1981 LNG Sales Contract
SCHEDULE A
TESTING AND METHODS
PART I BTU QUANTITY DETERMINATION
A. PHYSICAL CONSTANTS
The following table of Physical Constants, developed from
G.P.A. Publication 2145-86, shall be used for all density and
heating value calculations associated with this Contract.
This table of Physical Constants shall be revised to conform
to any subsequent officially published revision of G.P.A.
Publication 2145. The values for the Gross Heating Values in
BTU/KG as shown below have been obtained by multiplying the
G.P.A. 2145--values for BTU/lbm fuel as ideal gas from G.P.A.
2145 by 2.20462.
Gross Heating Gross Heating
Molecular Value at 60oF Value at 60oF
Component Weight BTU/kg BTU/Ft3
Methane 16.043 52671 1010.0
Ethane 30.070 49236 1769.6
Propane 44.097 47737 2516.1
Isobutane 58.123 46809 3251.9
Normal Butane 58.123 46959 3262.3
Isopentane 72.150 46392 4000.9
Normal Pentane 72.150 46485 4008.9
Normal Hexane 86.177 46172 4755.9
Nitrogen 28.0134 0 0
Oxygen 31.9988 0 0
Carbon Dioxide 44.010 0 0
B. LNG DENSITY DETERMINATION
The density of the LNG shall be determined by use of the
following formula:.
D E (Xi x Mi)
(xi x Vi)- (Xm x C)
where:
D is the density to four significant figures of the LNG
loaded in kilograms per cubic meter at temperature TL.
TL is the temperature of the LNG in the tanks of the LNG
Tanker after loading in degrees Centigrade to the nearest
0.1"C. TL shall be determined by taking the arithmetic
average from all the tanks of all the temperatures
obtained from the temperature sensing points located in
the liquid just after completion of the loading
operation.
Xi is the molar fraction to the nearest fourth decimal
place of component (i) from the analysis obtained in
accordance with Section 13.7.
Mi is the molecular weight of component (i) as given in
Part I, Section A of this Schedule A.
Vi is the molar volume to the nearest fifth decimal place
of component (i) in cubic meters per kilogram-mol at
temperature TL and shall be obtained by linear
interpolation of the data in Table II of this Section B.
Xm is the molar fraction to the nearest fourth decimal
place of methane from the analysis obtained in accordance
with Section 13.7.
C is the volume correction to the nearest fifth decimal
place in, cubic meters per kilogram-mol at temperature TL
shall be obtained by linear interpolation of the data in
Table III of this Section B.
An example of LNG density calculation is shown in Table I of
this Section B.
TABLE I
Example of LNG Density Calculation
Molar Volume
Mole Molecular Vi X 103
Fraction Weight (m3/kg-mole)
Xi Mi Xi x Mi (at-159.9"C) (XixVi)x103
N2 0.0002 28.0134 0.006 46.89 0.009
CH4 0.8644 16.043 13.868 38.22 33.037
C2H6 0.0851 30.070 2.559 48.01 4.086
C3H8 0.0389 44.097 1.715 62.53 2.432
i-C4HIO 0.0061 58.12 0.355 77.12 0.470
n-C4HlO 0.0052 58.123 0.302 76.83 0.400
i-C5Hl2 0.0001 72.150 0.007 91.14 0.009
1.0000 18.812 40.443
Average Molecular Weight = 18.812
C = 0.67 x 10-3
D = 18.812 18.812.
40.443xlO-3-0.8644xO 67xlO- .40.443xlo-3-0.579xlO-3
0.471904 x 103 471.9 kg/m3
/TABLE
TABLE II
MOLAR VOLUMES OF INDIVIDUAL COMPONENTS
MOLAR VOLUMES (in m3/kg-mol at VARIOUS TEMPERATURES) x 103
-166oC -164oC -162oC -160oC -158oC -156oC
Methane 37,44 37.69 37.95 38.21 38.48 38.76
Ethane 47.52 47.68 47.84 48.00 48.16 48.33
Propane 61.99 62.16 62.34 62.52 62.70 62.89
n-Butane 76.26 76.44 76.63 76.82 77.01 77.20
isoButane 76.49 76.69 76.90 77.11 77.33 77.54
n-Pentane 89.85 90.06 90.26 90.47 90.67 90.88
isoPentane 90.49 90.70 90.92 91.13 91.35 91.56
n-Hexane 104.23 104.45 104.67 104.89 105.11 105.34
Nitrogen 43.58 44.55 45.64 46.83 48.11 49.47
Oxygen 30.44 30.78 31.14 31.51 31.90 32.3O
Carbon Dioxide 29.54 29.64 29.73 29.83 29.93 30.03
/TABLE
TABLE III
CORRECTION C for VOLUME REDUCTION of MIXTURE
Molecular Weight
of Mixture C x 103 at Various Temperatures (C in M3/kg-mol)
E(Xi x Mi) -166*C -164*C -162"C -160"C -15@"C -156,C
17.00 0.22 0.23 0.24 0.24 0.25 0.26
17.50 0.33 0.35 0.36 0.37 0.38 0.39
18.00 0.44 0.46 0.47 0.49 0.50 0.52
18.50 0.55 0.56 0.58 0.60 0.62 0.64
19.00 0.65 0.67 0.69 0.71 0.73 0.75
19.50 0.75 0.77 0.79 0.81 0.84 0.86
20.00 0.84 0.86 0.89 0.91 0.94 0.97
Reference: Density calculations and method from Proceedings of
the First International Conference on LNG, April 1968, Paper
No. 22, Densities of Liquefied Natural Gas and of Low
Molecular Weight Hydrocarbons, J. Klosek and C. McKinley.
C. GROSS HEATING VALUE
Gross Heating Value (mass basis) of the LNG shall be
calculated by the following equation:
P = E (Hi x Xi x Mi)
E(Xi x Mi)
where:
P is the Gross Heating Value of the LNG loaded, stated in
British Thermal Units per kilogram (any fractional number
shall be rounded to the nearest BTU).
Hi is the Gross Heating Value of component (i) expressed as
BTU per kilogram as given in Part I, Section A of this
Schedule A.
Xi is the molar fraction to the nearest fourth decimal place
of component (i) from the analysis obtained in accordance with
Section 13.7.
Mi is the molecular weight of component (i) as given in Part
I, Section A of this Schedule A.
An example of Gross Heating Value Calculation is shown in Table IV
of this Section C.
TABLE IV
Example of Gross Heating Value Calculation
Mole Heating Molecular Hi x Xi X Mi
Fraction Value Weight E(Xi x Mi)
Xi Hi (Btu/kg) Mi Xi x Mi in BTU/Kg
N2 0.0002 - 28.0134 0.006 -
C1 0.8644 52671 16.043 13.868 38828
C2 0.0851 49236 30.070 2.559 6698
C3 0.0389 47737 44.097 1.715 4352
i-C4 0.0061 46809 58.123 0.355 883
n-C4 0.0052 46959 58.123 0.302 754
i-C5 0.0001 46392 72.150 0.007 17
______ ______ _____
1.0000 18.812 51532
D. DETERMINATION OF TOTAL BTU DELIVERED
The total number of British Thermal Units delivered shall be
calculated by the use of the following formula:
Q = V x D x P
where:
Q is the quantity of the LNG delivered in British Thermal
Units (any number shall be rounded to the nearest 10
million).
V is the volume of the LNG loaded, stated in cubic
meters, determined as provided in Section 13.9 B (any
number shall be rounded to the nearest cubic meter).
D is the density of the LNG loaded, stated in kilograms
per cubic meter as determined in Section B, Part I of
this Schedule A.
P is the Gross Heating Value of the LNG loaded, stated in
British Thermal Units per kilogram as determined in
Section C, Part I of this Schedule A.
Example calculation of Total BTU delivered:
For purposes of the example calculation assume
V = 120,281 cubic meters of LNG
From Section B, Part I
D = 471.9 Kg/m3
From Section C, Part I
P = 51532 BTU/Kg
And Total BTU delivered:
Q = V X D X P
Q = 120,281 X 471.9 X 51532
= 2,924,990 X 10 6 BTU
PART II - QUALITY DETERMINATIONS
A. For quality determination of Gross Heating Value as pro-
vided for in Article 11, the following calculation method
shall be used (Part I, Section A of this Schedule A shall
be used as the data source).
Gross Heating
Mole Fraction Value
Component Xi vi (BTU/Ft3) Xi x Hvi
N2 0.0002 0.0 0.0
C1 0.8644 1010.0 873.0
C2 0.0851 1769.6 150.6
C3 0.0389 2516. 197.9
i-C4 0.0061 3251.9 19.8
n-C4 0.0052 3262.3 17.0
i-C5 0.0001 4000.9 0.4
______ ______
1.0000 1158.7
B. For quality determination of molecular percentages of
pentanes and heavier, butanes and heavier, methane, and
nitrogen the chromatograph analysis provided for in
Section 13.7 shall be used.
C. Hydrogen Sulfide Test Method - The ASTM D 2725-70,
Standard Method of Test for Hydrogen Sulfide in Natural
Gas (Methylene Blue Method), shall be used to determine
the hydrogen sulfide content of the LNG for purposes of
this Contract, unless Seller and Buyers mutually agree
that some other method should be used.
D. Total Sulfur Test Method - The ASTM D 2784-70, Standard
Method of Test for Sulfur in Liquefied Petroleum Gases
(Oxy-hydrogen Burner or Lamp) shall be used to determine
the total sulfur content of the LNG for purposes of this
Contract, unless Seller and Buyers mutually agree that
some other method should be used.
PART III - MAXIMUM PERMISSIBLE TOLERANCES
Temperature + 0.2oC at - 160oC
Pressure + 1% of Span
Level + 10 mm at upper and lower 5 meters of the
tanks in the LNG Tanker.
Composition As provided in G.P.A. Standard 2261,
Method of Analysis for Natural Gas and
Similar Gaseous Mixtures by Gas
Chromatography.
EXHIBIT A
Principles for determining liability of the parties under COU
with regard to LNG tankers at Bontang
1. "Company" shall be defined to include the Terminal
Operator, Pertamina, the production-sharing contractors,
independent contractors on the land site and any other
person or company associated in the production, storage
and loading of LNG on the Company's behalf, including
their respective agents, affiliates and subsidiaries.
"Owner" shall be defined to include each person or
company participating in the ownership and/or operation
of the ship, but excluding those persons or companies
included within the definition of "Company".
2. The Company and the Owner each accepts full
responsibility for and indemnifies the other against
personal injury and death claims of its own employees and
their families, and such claims are excluded from the
COU.
3. In the event that damage (including the costs of cleaning
up oil spilt from the ship) is caused to the property of
the Company by the Owner's ship, the liability of the
Company and the Owner shall be in proportion to the
degree of their respective fault; provided that if,
having regard to the circumstances, it is not possible to
establish the degree of respective faults or if neither
party appears to be at fault, the liability shall be
apportioned equally.
4. There shall be no liability of the Owner (except as
provided in Pars. 2 and 6) in the event that the
incident:
1. resulted from an act of war, hostilities, civil war
or insurrection or Act of God including, but not
limited to, earthquake, volcanic eruption, tidal
wave, lightning, or typhoon, provided the Owner
acted reasonably in the circumstances to protect
the property of the Owner and the Company from loss
or damage.
2. was wholly caused by an act or omission with intent
to cause loss or damage by a third party. It is
agreed that a member of the crew of the Owner's
ship is not a third party.
3. was wholly caused by the negligence or wrongful act
of the government or other authority responsible
therefor to maintain lights or other navigational
aids.
5. The Owner accepts responsibility for the acts of tugs and
pilots and if separate towage or pilotage contracts are
used in the port, then as to any inconsistency between
those contracts and the terms of this document, this
document shall be controlling.
6. If the ship sinks, grounds or otherwise becomes an
obstruction or danger in the opinion of the Company, the
Owner shall be responsible at its sole expense to take
reasonable steps to remove such obstruction or danger,
and the Company shall make best endeavors to assist the
Owner to fulfill this responsibility.
If the Owner fails to effect such removal within a reasonable
time, then the Company may effect such removal at Owner's
expense. The actual cost of such removal (and damage to
property of the Company in the course of removal by the Owner)
shall be excluded from the liability limit. Consequential
damages for failure of the Owner to take reasonable steps to
effect such removal within a reasonable time shall be
recoverable in accordance with applicable legal principles and
shall be included within the liability limit set forth in Par.
9.
In the event that the casualty giving rise to the obstruction
or danger was caused in whole or in part by the fault of the
Owner, then consequential damages shall be recoverable in
accordance with applicable tort principles of English law
subject to the thirty (30) days franchise of Par. 8 and shall
be included within the liability limit set forth in Par. 9.
The foregoing shall not apply in the case where the
obstruction or danger (a) resulted from an act of war,
hostilities, civil war or insurrection or (b) was wholly
caused by an act or omission done with intent to cause damage
by a third party. It is agreed that a member of the crew of
the Owner's ship is not a third party. However, in the case
of (b), above, the Owner shall b.e responsible at its sole
expense for taking reasonable steps to remove the obstruction
or danger.
7. All claims of third parties against the Company and/or
the Owner are excluded from the COU.
8. Subject to Par. 6, to the extent that consequential
damages of the Company are recoverable under this
document they shall be determined in accordance with
applicable legal principles, provided that no
consequential damages shall be recoverable by the Company
under the COU in respect of any incident unless the
operations of the Company shall have been materially
disrupted for a period in excess of thirty (30) days.
9. As to matters contained in this document the rights and
obligations of the parties shall be determined in
accordance with these principles and, as to such matters,
(a) The Company waives its rights against the Owner
under general law other than those contemplated
herein, and
(b) The Owner waives its rights to limit its
liabilities under general law, statute or
international convention.
Except as otherwise provided in Pars. 2 and 6, the total.
aggregate liability of the Owner to the Company in
respect of any one incident shall not exceed
U.S.$150,000,000.
10. The liability and the limit set forth above shall
continue in effect for as long as the Owner can obtain
customary P and I Club cover for the risk.
11. The COU shall be governed by English law and subject to
enforcement in the High Court of Justice in London.
12. Except as provided in Par. 2, the Owner waives all claims
against -the Company arising from damage to the ship or
its cargo in connection with the use of loading port
facilities.
13. The Company win not be responsible for loss, damage or
delay arising from labor disputes.
14. The master will have the sole responsibility on behalf of
the Owner for the safety and proper navigation of the
ship and shall place, transport and remove the ship at or
from the berth as reasonably directed by the Company.
15. Subject to Par. 10, the Owner will keep the ship fully
entered in a P and I Club and will produce annually to
the Company a copy of the certificate of entry endorsed
to the effect that the P and I Club has agreed to cover
P and I risks under this document in accordance with its
rules and will give the Company prior notice of
cancellation of such cover at the same time and in the
same manner as customarily provided to mortgagees of
entered ships.
16. As to any inconsistency between the COU form in use in
the port and this document, this document shall be
controlling.
SIDE LETTER TO 1973 LNG SALES CONTRACT
AND BADAK LNG SALES CONTRACT
January 1, 1990
CHUBU ELECTRIC POWER CO., INC.
THE KANSAI ELECTRIC POWER CO., INC.
KYUSHU ELECTRIC POWER CO., INC.
NIPPON STEEL CORPORATION
OSAKA GAS CO., LTD.
TOHO GAS CO., LTD.
Gentlemen:
Reference is made to our discussions on the amendment and
restatement of the 1973 LNG Sales Contract and the Badak LNG Sales
Contract as of even date herewith, under which certain Fixed
Quantities of LNG are sold.
Pertamina confirms that it places great importance on the mutual
trust and cooperation that exists with Buyers, and that no changes
effected by the said amendment and restatement are intended to
adversely effect the relationship between the parties. Pertamina
also fully appreciates the marketing opportunities for the excess
capacity of its LNG facilities provided by Buyers and will continue
to pursue such opportunities in the future.
It is Pertamina's policy to retain the right to dispose of the
excess capacity of its LNG facilities to such purchasers and upon
such terms as it may elect. Pertamina is therefore unable to grant
any general reservations of its excess capacity.
However, in view of the long term business relationship between
Pertamina and Buyers, Pertamina agrees that once a Buyer offers in
writing to purchase a specified quantity of LNG on terms to be
agreed, then and to the extent Pertamina determines that it has
excess LNG production capacity and (if applicable) shipping
capacity available, then Pertamina will give preferential
consideration to such offer over future offers from other potential
purchasers for a reasonable period while good faith negotiations
are being conducted with such Buyer.
Very truly yours,
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
By /s/
ACKNOWLEDGED AND ACCEPTED
this 1st day of January, 1990
CHUBU ELECTRIC POWER OSAKA GAS CO., LTD.
CO., INC.
By /s/ By /s/
THE KANSAI ELECTRIC POWER TOHO GAS CO.,
CO., INC.
By /s/ By
/s/
KYUSHU ELECTRIC POWER CO., INC.
By /s/
NIPPON STEEL CORPORATION
By /s/
AMENDED AND RESTATED SIDE LETTER TO
BADAK LNG SALES CONTRACT
January 1, 1990
CHUBU ELECTRIC POWER CO., INC.
THE KANSAI ELECTRIC POWER CO., INC.
OSAKA GAS CO., LTD.
TOHO GAS CO., LTD.
Gentlemen:
This letter relates to the amended and restated Badak LNG
Sales Contract (the "Contract") dated today between each of you as
Buyers and Pertamina as Seller (terms defined in the Contract shall
have the same meaning when used herein). With respect to the
Contract, Seller and Buyers agree that the following shall apply:
I. Assistance to Buyers
We have agreed that Seller and Buyers will work
together and cooperate to establish mechanisms and procedures which
permit and contribute to the smooth performance by Buyers of
Buyers' obligation to provide transportation for LNG to be sold and
purchased under the Contract. To this end Seller will use its best
efforts to assist Buyers, Buyers' Transporter, or Buyers'
Representative in respect of Buyers' accomplishment of the
following:
A. Obtaining Indonesian Government permits, licenses
and clearances.
B. Identifying Indonesian taxes payable by Buyers or
Buyers' Transporter.
C. Obtaining supply of necessary utilities and
services to LNG Tankers at the Loading Port
including access to an LNG Tanker from onshore and
establishing arrangements for emergency assistance
to LNG Tankers by the Loading Port operator.
D. Consultation as to operating procedures designed to
expedite the turnaround of LNG Tankers at the
Loading Port, including the facilitation of the
timely performance of the duties of Ship's Agent.
E. Formalities necessary to import ship stores and
spare parts and to permit the entry into and
departure from Indonesia of the LNG Tanker crew and
operating personnel on a basis similar to Seller's
providing such assistance to Seller's Transporter
under its arrangements for transportation of LNG
sold and purchased under the 1973 LNG Sales
Contract.
F. Obtaining pilots and tug boats and any other
necessary attending vessels, equipment and services
for the LNG Tankers in the Loading Port.
Should Buyers inform Seller that in their view the level
of port charges imposes an unreasonable commercial burden, Seller
will cooperate with Buyers in examining the problem and in
presenting the problem to the appropriate port authorities.
Seller will continue its efforts to maintain the approval
of marine authorities in Indonesia to 24-hour operation of the
Loading Port.
Further, Seller and Buyers (and Buyers' Transporter) will
work together and exchange relevant data and information relating
to the respective insurance programs of each to cover ship/shore
risks with the objective of coordinating their respective insurance
programs covering shipside and shoreside risks.
In addition to those matters specifically noted herein
Seller contemplates providing shoreside assistance to Buyers'
Transporter similar and to substantially the same extent that
Seller provides such assistance to Seller's Transporter under its
arrangements for transportation of LNG sold and purchased under the
1973 LNG Sales Contract.
II. Conditions of Use
Conditions of Use ("COU") will be signed by the
Master of each LNG Tanker before using the Loading Port facilities.
However, in view of the general COU terms, it is necessary to agree
to the principles for determining liability under COU with regard
to LNG Tankers at Bontang for which adequate insurance is available
to protect the interests of all parties, taking into account
current availability of P. and I. cover. A copy of these
principles is attached hereto as Exhibit A. Such principals formed
the basis for certain Omnibus and Waiver Agreements covering the
three LNG Tankers of Buyers' Transporter.
In the future the COU may be amended from time to
time by Seller, but Seller shall give Buyers prior notice of each
revision in order to enable Buyers and Buyers' Transporter to
detemiine promptly whether such revision will be covered by the
Buyers' Transporter's insurers. As to revisions that do not
increase Buyers' Transporter's liabilities under the principles,
such revisions shall become applicable to Buyers' Transporter upon
the advice of Buyers' Transporter's insurers that the revisions are
approved by insurers or that such approval is not required in order
to maintain Buyers' Transporter's insurance. As to revisions that
increase Buyers' Transporter's liabilities under the principles,
such revisions shall become applicable to Buyers' Transporter when
Buyers' Transporter consents thereto.
If Buyers utilize LNG Tankers other than the three
LNG Tankers of Buyers' Transporter then Seller and Buyers shall
cooperate to make the foregoing COU liability system applicable to
such other LNG Tankers.
In addition to the foregoing, in the event that
during the term of the Contract changed circumstances of a
substantial nature make it appropriate to reconsider the scope of
the liabilities and adequacy of insurance cover as set forth in the
attached principles, then Seller and Buyers shall engage in a
process of mutual review and consultation in order to determine how
to cope with the changed circumstances.
III. Transportation Force Majeure
The Contract provides that certain events of force
majeure affecting LNG Tankers can excuse Buyers from performance of
their obligations under the Contract, including their obligations
to pay for Fixed Quantities of LNG available but not taken.
In the case of a transportation force majeure which
affects only a small portion of the Fixed Quantities or which
reduces or limits Buyers' ability to perform their obligations
under the Contract for only a short period of time the reduction or
loss of revenues to Seller may be manageable, since during periods
of force majeure Seller can sell the quantities of LNG which Buyers
are unable to purchase to third parties.
However, an extended period of transportation force
majeure which prevents Buyers from performance of their obligations
would present very serious problems to both Seller and Buyers.
The Contract provides that in the case of a force
majeure, Buyers shall take all reasonable measures to resume normal
performance within the shortest practicable time. But if in spite
of all that Buyers can do, Buyers are unable either to resume
normal performance within a reasonable period of time or adopt a
plan which, taking into account the then existing circumstances,
will provide reasonable assurance to Seller that normal performance
will be resumed within a period that will hold the Force Majeure
Deficiency caused by the transportation force majeure to a level
which can be restored within a reasonable period of time and
thereby minimize Seller's financial loss and relieve the pressure
on Buyers to increase the quantities to be taken during later Fixed
Quantity Period, then Seller and Buyers will consult together and
in good faith try to reach agreement as to what to do.
Among the circumstances to be considered by the
parties are the point in time during the term of the Contract at
which the force majeure occurs, the amount of the Force Majeure
Deficiency caused thereby, the ability of the Buyers to accept the
Restoration Quantities and of Seller to provide such Restoration
Quantities and the length of the period of time before restoration
can be accomplished, the financial consequences to Seller and
Buyers, and alternatives available to Seller to sell to third
parties the LNG for which transportation is not available.
We are of the opinion that a period of nine months
from the date on which the relevant event of force majeure
occurred, or, if loner, the period ending with the end of the Fixed
Quantity Period during which the event of force majeure occurred
provides a reasonable time for Buyers either to resume normal
performance or adopt a plan which meets the above standards and
provides reasonable assurance to Seller that performance will be
resumed within the shortest practicable time.
If Buyers are unable to adopt such a plan to resume
normal performance within such period, then (i) any plan thereafter
adopted by Buyers shall be with Seller's consent, which consent
shall not unreasonably be withheld, and (ii) then, or at any later
time before such a plan has been adopted, Buyers, at the request of
Seller in connection with the commitment by Seller to sell to third
parties all or a portion of the quantities for which transportation
has not been made available, shall agree to the reduction of the
Fixed Quantities to the extent and for the term of such commitment
which Seller proposes to make, provided that, if after expiration
of the aforesaid period, such a plan to resume normal performance
is adopted by Buyers, Buyers shall no longer be obligated to agree
to a reduction in Fixed Quantities.
IV. Transportation Coordination
In connection with the Contract, Seller and Buyers
hereby confirm that they share the view that it is beneficial to:
1. Coordinate among Seller, Buyers and Buyers'
Transporter for the smooth, efficient and safe operations of the
Badak LNG trade; and
2. Coordinate efficient utilization of both fleets
in a manner that utilizes the spare capacity of the vessels as
back-up for both the 1973 LNG Sales Contract and the Contract so
that if Seller requires transportation additional to that available
to Seller from Seller's Transporter in order to transport cargoes
sold under the 1973 LNG Sales Contract or if Buyers require
transportation additional to that available to Buyers from Buyers'
Transporter in order to transport cargoes sold pursuant to the
Contract and, if the other party has transportation available for
such purpose at the time and for the period needed, such other
party shall do so upon mutually agreeable terms and conditions.
V. Section 4.14(b)(i)
Notwithstanding the provisions of Section 4.14(b)(i)
of the
Contract, Seller agrees not to include in claims of Seller for
damage caused to the Badak Facility by an LNG vessel other than an
LNG Tanker any amounts paid or payable by Seller to Seller's
Transporter on account of non-utilization of such LNG vessel or
other LNG vessels of Seller's Transporter.
This amended and restated Side Letter is intended to
replace in its entirety the original side letter to the Badak LNG
Sales Contract dated as of April 14, 1981.
Very truly yours,
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS
BUMI NEGARA (PERTAMINA)
By /s/
AGREED AND CONSENTED TO
This 1st day of January, 1990
CHUBU ELECTRIC POWER CO., INC.
By /s/
THE KANSAI ELECTRIC POWER CO., INC.
By /s/
OSAKA GAS CO., LTD.
By /s/
TOHO GAS CO., LTD.
By /s/