MEMORANDUM OF AGREEMENT
BETWEEN
PERTAMINA AND KOREA GAS CORPORATION
FOR
PURCHASE AND SALE OF LNG
DURING 1995 - 1999
MEMORANDUM OF AGREEMENT
FOR
PURCHASE AND SALE OF LNG DURING 1995-1999
This Memorandum of Agreement ("Agreement") dated September 30,
1994 is made by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN
GAS BUMI NEGARA ("PERTAMINA") ("Seller") and Korea Gas
Corporation ("KGC") ("Buyer"), for the sale and purchase of
certain quantities of LNG as described below. Seller and Buyer
are collectively referred to herein as the "Parties".
WHEREAS, Seller and Buyer are parties to an Amended and Restated
LNG Sales and Purchase Contract, effective as of January 1, 1991
("Arun III Contract") which is in full force and effect and which
is unaffected by this Agreement; and
WHEREAS, Seller and Buyer are parties to the LNG Sales and
Purchase Contract (Korea II), effective as of May 7, 1991 ("Korea
II Contract") which is in full force and effect and which is
unaffected by this Agreement ; and
WHEREAS, Seller desires to sell and Buyer desires to purchase
certain quantities of LNG during the period 1995 to 1999.
NOW THEREFORE, in consideration of the mutual promises contained
herein, the Parties agree as follows :
ARTICLE I - TERM
The term of this Agreement shall commence on January 1, 1995 and
shall terminate on December 31, 1999.
ARTICLE II - FIXED QUANTITIES
During each calendar year specified below ("Fixed Quantity
Period"), Seller shall sell and deliver to Buyer and Buyer shall
purchase, receive and pay for, at the applicable Contract Sales
Price, the quantity of LNG specified for such Fixed Quantity
Period (each such quantity being called a "Fixed Quantity") as
follows :
Fixed Quantity
Fixed Quantities (Number of Cargoes)
Period Ex-Ship F.O.B. Total
1997 7 6 13
1996 23 3 26
1997 20 3 23
1998 15 4 19
1999 - 27 27
One Ex-Ship cargo is equivalent to 2,900 Billion BTU's.
One F.O.B. cargo is equivalent to 2,940 Billion BTU's.
ARTICLE III - TRANSPORTATION
(a) Seller shall be responsible for providing transportation for
the Ex-Ship Fixed Quantities specified in Article II above,
on an Ex-Ship basis.
(b) Buyer shall be responsible for providing transportation for
the F.O.B. Fixed Quantities specified in Article II above,
on an F.O.B. basis.
(c) In providing transportation hereunder, the Parties shall use
LNG Tankers which are compatible with the Loading Port and
the Receiving Facility and which have the required port
clearances, authorizations and approvals. The Parties shall
use their respective best efforts to obtain such clearances,
authorizations and approvals.
ARTICLE IV - CONTRACT SALES PRICE
(a) Ex-Ship Fixed Quantities
The Contract Sales Price for the Ex-Ship Fixed Quantities
shall be the sum of an LNG related portion ("LNG Related
Portion") and a transport related portion ("Transport
Related Portion").
The LNG Related Portion shall be 0.159 REP, where REP is 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 (including
condensate) then being sold and exported, except premiums
and except such prices for spot sales.
The Transport Related Portion shall be U.S.$0.62/MMBTU as at
January 1, 1994, escalating 2.5% per annum thereafter.
(b) F.O.B. Fixed Quantities
The Contract Sales Price for the F.O.B. Fixed Quantities
shall be equal to the LNG Related Portion for the Ex-Ship
Quantities referred to in (a) above, multiplied by a boil-
off adjustment factor of 0.9865.
ARTICLE V - SOURCES OF SUPPLY
The Natural Gas to be processed into LNG and sold and delivered
hereunder is to be produced from the areas in East Kalimantan
covered by production sharing contracts between PERTAMINA and its
relevant suppliers, and loaded at PERTAMINA's facility at
Bontang, East Kalimantan.
ARTICLE VI - GENERAL TERMS AND CONDITIONS
(a) Ex-Ship Fixed Quantities
All of the terms and conditions of the Arun III Contract
shall apply to the Ex-Ship Fixed Quantities and shall be
incorporated in this Agreement (mutatis mutandis) except for
terms which are specifically excluded below, or which
conflict with the terms herein. Capitalized terms used
herein in connection with the Ex-Ship Fixed Quantities shall
have the same meaning as set forth in the Arun III Contract
unless otherwise specifically defined herein.
The following Articles of the Arun III Contract are hereby
expressly excluded from this Agreement :
7.1 Fixed Quantity (save that each of the calendar years
1995-1999 shall be referred to as a "Fixed Quantity
Period" and the quantity of LNG set out for delivery
hereunder in each such calendar year shall be referred
to as the "Fixed Quantity" for such Fixed Quantity
Period);
7.3 Buyer's Obligation to Take-or-Pay;
7.4 Allocation of Deliveries of Fixed Quantities Between
Buyer and Other Purchasers;
7.6 Make-Up LNG;
7.7 Allocation for Make-Good LNG, Make-Up LNG and
Restoration Quantities; and
7.8 Priority Order.
(b) F.O.B. Fixed Quantities
All of the terms and conditions of the Korea II Contract
shall apply to the F.O.B. Fixed Quantities and shall be
incorporated in this Agreement (mutatis mutandis) except for
terms which are specifically excluded below, or which
conflict with the terms herein. Capitalized terms used
herein in connection with the F.O.B. Fixed Quantities shall
have the same meaning as set forth in the Korea II Contract
unless otherwise specifically defined herein.
The following Articles of the Korea II Contract are hereby
expressly excluded from this Agreement :
7.1 Fixed Quantity (save that each of the calendar years
1995-1999 shall be referred to as a "Fixed Quantity
Period" and the quantity of LNG set out for delivery
hereunder in each such calendar year shall be referred
to as the "Fixed Quantity" for such Fixed Quantity
Period);
7.3 Buyer's Obligation to Take-or-Pay;
7.4 Allocation of Deliveries of Fixed Quantities Between
Buyer and Other Purchasers;
7.5 Make-Up LNG;
7.7 Allocation for Make-Up LNG and Restoration Quantities;
and
7.8 Priority Order.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed and signed by its duly authorized officer as of
this __________ day of ____________, 1994.
SELLER : BUYERS :
PERUSAHAAN PERTAMBANGAN MINYAK KOREA GAS CORPORATION
DAN GAS BUMI NEGARA (PERTAMINA)
_________/s/________________ ____________/s/______________
By : F. Abda'oe By : Park, Chung-Boo
Title : President Director Title : President
& C.E.O. & C.E.O.