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SECOND AMENDED AND RESTATED 1973 LNG SALES CONTRACT
BETWEEN
PERUSAHAAN PERTAMBANGAN MINYAK DAN
GAS BUMI NEGARA (PERTAMINA),
AS SELLER
AND
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.,
AS BUYERS
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SECOND AMENDED AND RESTATED 1973 LNG SALES CONTRACT
CONTENTS
Page
ARTICLE 1 - DEFINITIONS 2
ARTICLE 2 - SALE AND PURCHASE 10
ARTICLE 3 - SOURCES OF SUPPLY 11
ARTICLE 4 - TRANSPORTATION AND UNLOADING 13
ARTICLE 5 - ONSHORE FACILITIES 23
ARTICLE 6 - DURATION OF CONTRACT 26
ARTICLE 7 - QUANTITIES 27
ARTICLE 8 - CONTRACT SALES PRICE 36
ARTICLE 9 - TRANSFER OF TITLE 50
ARTICLE 10 - INVOICES AND PAYMENT 51
ARTICLE 11 - QUALITY 55
ARTICLE 12 - PROGRAMMING AND SHIPPING MOVEMENTS 56
ARTICLE 13 - MEASUREMENTS AND TESTS 58
ARTICLE 14 - DUTIES, TAXES AND CHARGES 66
ARTICLE 15 - FORCE MAJEURE 67
ARTICLE 16 - ARBITRATION 69
ARTICLE 17 - APPLICABLE LAW 70
ARTICLE 18 - BUYERS' COORDINATOR 71
ARTICLE 19 - CONFIDENTIALITY 72
ARTICLE 20 - NOTICES 73
ARTICLE 21 - ASSIGNMENT 75
ARTICLE 22 - AMENDMENTS 76
ARTICLE 23 - SEVERALTY 77
ARTICLE 24 - DETAILS OF PERFORMANCE 78
ARTICLE 25 - SCOPE 79
ARTICLE 26 - COUNTERPARTS 80
ARTICLE 27 - EFFECTIVE DATE AND APPLICABILITY 81
SCHEDULE A - TESTING AND METHODS
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SECOND AMENDED AND RESTATED 1973 LNG SALES CONTRACT
This LNG Sales Contract ("Contract"), dated as of the 3rd day of December,
1973, amended by Amendment No.1 dated as of the 31st day of August, 1976,
amended and restated as of the 1st day of January, 1990 and further amended as
of the 1st day of June, 1992 ("First A/R"), is hereby further amended and
restated as of the 3rd day of August, 1995 ("Second A/R") by and between
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA ("PERTAMINA"), a state
enterprise of the Republic of Indonesia ("Seller"), on the one hand, and CHUBU
ELECTRIC POWER CO., INC. ("Chubu Electric"), THE KANSAI ELECTRIC POWER CO.,
INC. ("Kansai Electric"), KYUSHU ELECTRIC POWER CO., INC. ("Kyushu Electric"),
NIPPON STEEL CORPORATION ("Nippon Steel"), OSAKA GAS CO., LTD. ("Osaka Gas")
and TOHO GAS CO., LTD. ("Toho Gas"), all corporations organized and existing
under the laws of Japan (referred to individually as "Buyer" and collectively
as "Buyers"), on the other hand.
WITNESSETH:
WHEREAS:
1. Seller and Buyers have, from time to time, amended the Contract to
incorporate new or revised terms relating to the sale and purchase of
LNG;
2. By Memorandum of Agreement Re : 1973 LNG Sales Contract Extension
("1973 Extension MOA") dated as of October 6, 1994, and subsequent
agreements Seller and Buyers agreed to extend the Contract to December
31, 2010 on agreed terms and conditions and to reflect such extension
in this Second A/R after the finalization of transportation
arrangements; and
3. Seller and Buyers have agreed on the appropriate revisions to reflect
the transportation arrangements in accordance with the provisions of
the 1973 Extension MOA, and Seller and Buyers desire to amend and
restate the Contract accordingly.
NOW, THEREFORE, Seller and each Buyer hereby agree to the following terms:
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ARTICLE 1 - 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 Adverse Weather Conditions
As defined in Section 4.4(b)(iii).
1.3 Affiliate
As defined in Article 19.
1.4 Allowance
The quantity of LNG by which a Buyer reduces a Quantity Deficiency in
respect of a given calendar year pursuant to the provisions of Section
7.3(d).
1.5 Allowance Restoration Period
As defined in Section 7.3(d)(iv).
1.6 Annual Program
As defined in Section 12.1(a).
1.7 Badak Facility
The liquefaction plant facilities, including processing, storage,
loading and related facilities and the Natural Gas transmission
pipelines from the field to the liquefaction plant, located in East
Kalimantan, Indonesia.
1.8 Base Rate
The rate of interest announced from time to time by Citibank, N.A.,
New York ("Citibank") as Citibank's base rate. The base rate may not
be the lowest rate charged by Citibank to its borrowers. If there is
any doubt as to the Base Rate for any period, a written confirmation
signed by an officer of Citibank shall conclusively establish the Base
Rate in effect for such period. In the event that Citibank shall for
any reason cease quoting a base rate as described above, then a
comparable rate shall be determined using rates then in effect and
shall be used in place of the said base rate.
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1.9 British Thermal Unit (BTU)
The amount of heat required to raise the temperature of one
avoirdupois pound of pure water from 59.oF to 60.oF at an absolute
pressure of 14.696 pounds per square inch.
1.10 Burmah
Burmah Gas Transport Limited, a Liberian corporation, and its
successors and assigns.
1.11 Burmah Vessels
The following LNG tankers: LNG Capricorn, LNG Gemini, LNG Leo, LNG
Libra, LNG Taurus, and LNG Virgo.
1.12 Business Day in Japan
Every day other than Saturdays, Sundays, National Holidays (including
compensatory days), and January 2 and 3.
1.13 Buyer Force Majeure
As defined in Section 4.6(a).
1.14 Buyers' Coordinator
Japan Indonesia LNG Co., Ltd. or such other entity as may be
designated by Buyers pursuant to Article 18.
1.15 Buyer's Facilities
For the purposes of Section 15.1 E in respect of any Buyer, the
Receiving Facilities of such Buyer and such other facilities directly
related to the use of LNG which, if not operational, would reduce the
amount of LNG which such Buyer is able to receive hereunder.
1.16 Certificate
As defined in Section 3.2(a).
1.17 Contract Sales Price
As defined in Section 8.1.
1.18 Coordinated Maintenance Schedule
As defined in Section 12.3.
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1.19 Cubic Meter
A volume equal to the volume of a cube whose edge is one meter.
1.20 Delivery Point
The point at which the flange coupling of Buyer's unloading line joins
the flange coupling of the LNG discharging manifold on board the LNG
Tanker.
1.21 Demurrage Event
As defined in Section 4.4(a).
1.22 Dwiputra
The LNG tanker Dwiputra.
1.23 Exercising Buyer
As defined in Section 7.3(d)(i).
1.24 Extension Fleet
The Burmah Vessels and the Dwiputra.
1.25 Final Settlement
As defined in Section 8.5(a).
1.26 Fixed Quantity
As defined in Section 7.1.
1.27 Fixed Quantity Period
As defined in Section 7.1.
1.28 Force Majeure Deficiency
As defined in Section 7.6(a).
1.29 G.P.A.
Gas Processors Association.
1.30 Gas Supply Area
The areas in East Kalimantan, Indonesia, covered by production sharing
contracts between Seller and Seller's Suppliers, and such other nearby
contract areas as Seller may designate from time to time.
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1.31 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 60.0oF and at an absolute pressure of 14.696 pounds
per square inch, with the air at the same temperature and pressure as
the gas, after cooling the products of the combustion to the initial
temperature of the gas and air, and after condensation of the water
formed by combustion.
1.32 Inward Steaming Time
As defined in Section 4.4(b).
1.33 Liquefied Natural Gas (LNG)
Natural Gas in a liquid state at or below its boiling point at a
pressure of approximately one atmosphere.
1.34 LNG Element or LE
As defined in Section 8.1.
1.35 LNG Tanker
One of the vessels in the Extension Fleet or a Substitute LNG Tanker.
1.36 Loading Port
The port located at the Badak Facility.
1.37 M.S.A.
The Maritime Safety Agency of Japan.
1.38 Make-Good LNG
As defined in Section 7.3(d)(iv).
1.39 Make-Good Obligation
The obligation of a Buyer as set forth in Section 7.3(d)(iv) to take
and pay for LNG in an amount (measured in BTU's) equal to each
Allowance exercised.
1.40 Make-Up LNG
As defined in Section 7.5.
1.41 Natural Gas
Any hydrocarbon or mixture of hydrocarbons consisting essentially of
methane, other hydrocarbons, and non-combustible gases in a gaseous
state and
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which is extracted from the subsurface of the earth in its natural
state, separately or together with liquid hydrocarbons.
1.42 Net Payments
The amount paid after deducting any amounts pursuant to section 8.3 of
a Charter and any other credits or sums which Seller receives with
respect to the applicable Seller's Transportation Arrangements (but
excluding any credits or sums which Seller receives with respect to
the cargo or with respect to the Omnibus and Waiver Agreements);
provided, however, that any sums received by Seller from Seller's
Transporter in the nature of damages or other compensation for breach
of contract or received by Seller from Guarantors under the Guarantee
shall be net of any attorney's fees, arbitrators' fees and costs, and
any other third party costs and expenses incurred by Seller in
recovering such damages or compensation.
1.43 Ninety-Day Schedule
As defined in Section 12.2.
1.44 Non-Utilization Cost
As defined in Section 4.6(a).
1.45 Notice of Readiness
The notice given at the time prescribed in Section 4.4(b) by the
Master of each LNG Tanker or its agent to Buyer by letter, telegraph,
telex, facsimile, radio or telephone that such LNG Tanker is ready to
discharge LNG.
1.46 Outward Steaming Time
As defined in Section 4.4(b).
1.47 Pacific
Pacific LNG Transport Limited, a Bahamas corporation, and its
successors and assigns.
1.48 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.
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1.49 Quantity Deficiency
As defined in Section 7.3(a).
1.50 Receiving Facilities
The LNG receiving terminal facilities which Buyers have constructed or
will construct at the Unloading Ports including, without limitation,
berthing and unloading facilities, LNG storage tanks, vessel services
facilities and regasification plants.
1.51 Restoration Quantities
As defined in Section 7.6(a).
1.52 Safety Pledge Letter
As defined in Section 4.1(f).
1.53 Seller's Facilities
For the purpose of Section 15.1 D, Natural Gas reservoirs or (whether
heretofore constructed or to be constructed) production facilities in
the field, the facilities for transportation of Natural Gas from the
field, and the Badak Facility.
1.54 Seller Force Majeure
As defined in Section 8.3(a)(ii).
1.55 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.
1.56 Seller's Suppliers
In respect of portions of the LNG to be sold hereunder :
(a) Total Indonesie and Indonesia Petroleum, Ltd.;
(b) Virginia Indonesia Company, Lasmo Sanga Sanga Limited, OPICOIL
Houston, Inc., Union Texas East Kalimantan Limited, Universe
Gas & Oil Company, Inc. and Virginia International Company;
(c) Unocal Indonesia Company;
(d) Indonesia Petroleum, Ltd.; and
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such other entities that may, from time to time, execute a Supply
Agreement with Seller; and any successors and assigns of any of the
aforesaid suppliers who shall have agreed in writing to be bound by
all of the obligations of their respective assignors under the
applicable Supply Agreement with Seller.
1.57 Seller's Transportation Arrangements
The Fleetwide Agreement, Charters, and Paying Agent Agreement, each
dated as of July 25, 1995, between Burmah and Seller, and Deed
of Guarantee and all other agreements and instruments referred to
therein to which Seller is a party; the Time Charter Party dated June
2, 1994 between Pacific and Seller and all other agreements and
instruments referred to therein to which Seller is a party; and all
agreements and instruments to which Seller is a party relating to a
Substitute LNG Tanker; including, in each case, any amendments and
supplements thereto; but, in each case, only to the extent related to
the transportation of LNG hereunder.
1.58 Seller's Transporter
Burmah, Pacific or any entity providing a Substitute LNG Tanker.
1.59 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 60.0oF and at an absolute
pressure of 14.696 pounds per square inch.
1.60 Substitute LNG Tanker
An ocean-going vessel suitable for transporting LNG (other than a
vessel in the Extension Fleet) which Buyers have consented pursuant to
Section 4.1(c) that Seller may use for transportation of LNG
hereunder.
1.61 Supply Agreement
As defined in Section 3.1.
1.62 Take-or-Pay Quantity
As defined in Section 7.5.
1.63 TE Formula
As defined in Section 8.3(a).
1.64 TE Period
As defined in Section 8.3(a).
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1.65 Transportation Element or TE
As defined in Section 8.1.
1.66 Unloading Ports
The ports at locations in or near Nagoya, Osaka, Himeji, Kita-Kyushu
and Oita, and at such other locations in Japan as may be agreed
between Seller and Buyers, where the Receiving Facilities are or will
be constructed.
1.67 U.S.CPI
The United States Consumer Price Index (determined by reference to :
All Urban Consumers (CPI-U); Unadjusted U.S. City Average; All items;
with a base period of 1982-84 = 100) as published by the U.S.
Department of Labor, Bureau of Labor Statistics.
1.68 Capitalized terms defined in Seller's Transportation Arrangements for
the Burmah Vessels and not otherwise defined herein shall have the
same meanings when used in this Contract.
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ARTICLE 2 - SALE AND PURCHASE
Seller agrees to sell and deliver, and each Buyer agrees to purchase, receive
and pay for, or 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.
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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").
Notwithstanding any reference to Seller's Suppliers in this Contract,
Seller is fully responsible for performance of all the obligations of
Seller hereunder.
3.2 Reserves of Natural Gas
(a) Seller has furnished Buyers with statements, each entitled
"Certificate" and each dated on or prior to May 31, 1994, 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
hereof. Hereafter and throughout the term hereof, 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 hereof, Seller obtains information from
its activities (including the activities of Seller's
production sharing contractors) in
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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 be required to
take in order to fulfill its obligations under this Contract.
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ARTICLE 4 - TRANSPORTATION AND UNLOADING
4.1 General
(a) Seller shall be responsible for the continuous transportation
from the Badak Facility to the Receiving Facilities of the LNG
to be sold and delivered under this Contract and shall use LNG
Tankers for transportation of such LNG.
(b) Buyers shall be entitled to participate in transportation as
follows, at all times ensuring that such participation is
performed in an expedient manner:
(i) For the Burmah Vessels and Substitute LNG Tankers:
(A) Buyers shall have the right to participate
(consistent with Seller's Transportation
Arrangements) in all meetings between Seller
and Seller's Transporter related to payments
to be made by Buyers under this Contract, to
attend any arbitration proceeding pursuant to
Seller's Transportation Arrangements, and to
receive copies of reports, including audited
statements, that Seller receives from
Seller's Transporter and any correspondence
relating to amounts to be paid by Buyers
therefor;
(B) Seller shall consult and agree with Buyers
prior to exercising or expressly waiving its
rights (other than rights related to
day-to-day operations) under Seller's
Transportation Arrangements that will
significantly affect amounts payable by
Buyers and shall make reasonable efforts to
implement any reasonable requests of Buyers
in connection therewith;
(C) Seller shall consult and agree with Buyers
prior to amending or terminating in whole or
in part Seller's Transportation Arrangements
or concluding any new Seller's Transportation
Arrangements; and
(D) Seller shall permit Buyers to participate in
negotiations relating to any such amendment
or termination or
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conclusion of such new Seller's
Transportation Arrangements.
(ii) For the Dwiputra, except as provided below, Buyers
shall not be entitled to review or participate in any
audit of costs or to otherwise participate in
Dwiputra-related matters. Buyers shall have the
following rights:
(A) to receive general information regarding the
maintenance and repair of the Dwiputra,
including information regarding proposed
dry-docking plans and time schedules of
significant maintenance and repair and
results thereof, and to receive copies of
shipyard reports which identify any
significant maintenance problems with the
Dwiputra;
(B) to make general observations to Seller
regarding maintenance and repair of the
Dwiputra;
(C) to attend Dwiputra ship/shore meetings to the
extent such meetings relate to the Receiving
Facilities; and
(D) to receive such information in respect of the
Dwiputra as is reasonably necessary to verify
the calculations required in Section 4.6 and
Article 8.
It is acknowledged that, prior to the date hereof, Buyers
together with Seller and Burmah have commissioned and
participated in a technical evaluation of the longevity of the
Burmah Vessels, conducted by Lloyd's Register of Shipping,
which confirmed that the condition, structural integrity,
reliability, and availability of the Burmah Vessels are
satisfactory to provide transportation under this Contract.
(c) If it is necessary to employ a vessel to substitute for a
vessel in the Extension Fleet to deliver the quantities under
this Contract, Seller shall arrange a Substitute LNG Tanker,
utilizing any rights it might have under Seller's
Transportation Arrangements for the Burmah Vessels or
utilizing other vessels that are then available. Buyers shall
have the right to offer a proposed Substitute LNG Tanker to
Seller. Seller shall finalize its arrangements for a
Substitute LNG Tanker only after obtaining Buyers' consent,
such consent not to be unreasonably withheld. If Buyers do
not consent to the arrangements which Seller
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proposes for a Substitute LNG Tanker, then Seller and Buyers
shall discuss the availability of alternatives. If agreement
on an alternative is not reached within a reasonable period of
time, such unavailability of transportation shall be deemed to
constitute an event of force majeure pursuant to Section 15.1
I and the provisions of Article 15 shall apply.
(d) Seller will endeavor as far as reasonably practicable to
coordinate the day-to-day operations of the LNG Tankers and to
coordinate the operations of the LNG Tankers with common
standards, documentation and procedures with respect to:
(i) vessel/terminal interface, including joint ship/shore
meetings;
(ii) vessel compliance with applicable national and
international regulations;
(iii) cargo documentation;
(iv) vessel performance;
(v) cargo transfer procedures; and
(vi) Loading Port Conditions of Use and Omnibus and Waiver
Agreements.
Seller shall coordinate the LNG Tankers regarding
implementation of the Annual Program and Ninety-Day Schedule,
including (i) scheduling of dry-dock and lay-up periods; and
(ii) scheduling of Substitute LNG Tankers.
(e) Before using an LNG Tanker to undertake a voyage to a buyer
other than Buyers during or after the Fixed Quantity Period
2000, Seller shall obtain Buyers' consent, such consent not to
be unreasonably withheld.
(f) Seller shall use its best efforts to cause Seller's
Transporters to take such actions as are reasonably required
by Japanese authorities to evidence responsibility for safe
operation of LNG Tankers in accordance with the letter of the
vessel operator addressed to Japanese port authorities in
connection with permission for LNG Tankers to enter into
Unloading Ports ("Safety Pledge Letter"). Seller shall arrange
or shall cause Seller's Transporters to arrange for such
number and types of fireboats and
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escort vessels as are required by the Japanese authorities to
attend the LNG Tankers so as to permit safe and efficient
movement of the LNG Tanker within the maritime safety areas
located in the approaches to and from the Unloading Ports.
4.2 Notices of LNG Tanker Movements and Characteristics of LNG Cargoes
(a) With respect to each cargo of LNG to be delivered hereunder,
Seller shall give, or cause the Master of the LNG Tanker to
give, to the Buyer at the Receiving Facility at which such
cargo is to be delivered, the following notices:
(i) A first notice, which shall be sent upon the
departure of the LNG Tanker from the Loading Port and
which shall set forth the time and date that loading
was completed, the volume, expressed in Cubic Meters,
of LNG loaded on board the LNG Tanker, and the
estimated time of arrival of the LNG Tanker at
Buyer's Unloading Port;
(ii) A second notice, which shall be sent ninety-six (96)
hours prior to the estimated time of arrival of the
LNG Tanker at the Unloading Port;
(iii) A third notice, which shall be sent forty-eight (48)
hours prior to the estimated time of arrival of the
LNG Tanker at the Unloading Port;
(iv) A fourth notice, which shall be sent twenty-four (24)
hours prior to the estimated time of arrival of the
LNG Tanker at the Unloading Port;
(v) A final notice, which shall be sent five (5) hours
prior to the estimated time of arrival of the LNG
Tanker at the Unloading Port; and
(vi) A Notice of Readiness, which shall be given at the
time prescribed in Section 4.4(b) below.
(b) Within thirty-six (36) hours after departure of each LNG
Tanker from the Loading Port, Seller shall notify Buyer, for
Buyer's information
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only, of the following characteristics of the LNG comprising
its cargo as determined at the time of loading:
(i) the Gross Heating Value per unit, and
(ii) the molecular percentage of hydrocarbon components
and nitrogen.
4.3 Obligations of Buyers at Unloading Ports
Each Buyer shall cooperate with Seller's Transporters or their agents
and the Master of each LNG Tanker directed to an Unloading Port to
ensure the continuous and efficient delivery of LNG hereunder. Each
Buyer shall provide a safe berth for prompt berthing of LNG Tankers at
its Receiving Facility and shall operate the Receiving Facility, or
ensure that it is operated, so as to permit discharge of the cargo of
each LNG Tanker as quickly as possible. During discharge of each cargo
of LNG, Buyer shall return to the LNG Tanker natural gas in such
quantities as are necessary for the safe unloading of the LNG at such
rates, pressures and temperatures as may be required by the LNG Tanker
design.
4.4 Demurrage at Unloading Ports
(a) Subject to paragraph (c) below, in the event used laytime
exceeds allowed laytime in unloading an LNG Tanker, as
provided in paragraph (b) below ("Demurrage Event"), Buyer
shall pay to Seller, or for Seller's account if so directed by
Seller, demurrage at the daily rate in U.S. Dollars (which
shall be prorated for a portion of a day) determined in
accordance with the following formula:
TE (reduced to exclude
436,821,000 voyage costs) in effect
Demurrage rate = 0.14 x MMBTU's x on the day the
Demurrage Event occurs
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(b) Laytime to be allowed at each Unloading Port at which the LNG
Tanker discharges LNG being delivered hereunder shall be
thirty-six (36) consecutive hours extended by any period of
delay which is caused by:
(i) reasons attributable to Seller, the LNG Tanker or its
Master, crew, owner or operator;
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(ii) force majeure as defined in Article 15; provided,
however, that delays resulting from the application
of safety regulations or similar governmental action
shall not be considered as an event of force majeure
for the purposes hereof; or
(iii) "Adverse Weather Conditions", which for purposes
hereof means weather and/or sea conditions actually
experienced at the Unloading Port which are
sufficiently severe either: (A) to prevent all LNG
Tankers from proceeding to berth, discharging or
departing from berth in accordance with the weather
standards prescribed in the M.S.A. standard published
regulations, including the Safety Pledge Letters, or
(B) to cause an actual determination by the Master
that it is unsafe for the LNG Tanker to berth,
discharge or depart from berth. The period of delay
to an LNG Tanker caused by Adverse Weather Conditions
shall not be considered to extend past the time
during which such Adverse Weather Conditions actually
prevailed except where additional delay is caused by
the occupation of the berth by another LNG Tanker.
Upon arrival of each LNG Tanker at the agreed location off
each Unloading Port, and subject to any mutually agreed time
restrictions, the Master of the LNG Tanker or its agent shall
give Notice of Readiness to Buyer or its agent that such LNG
Tanker is ready to discharge LNG, berth or no berth. Laytime
shall commence upon receipt of Notice of Readiness and shall
continue to run until the LNG Tanker clears the Unloading Port
(i.e., when leaving the Unloading Port passes the agreed
position for tendering Notice of Readiness). From used
laytime calculated as above shall be deducted all Inward
Steaming Time and all Outward Steaming Time.
For the purpose of this paragraph (b):
(A) "Inward Steaming Time" shall mean the total time
elapsed between Notice of Readiness and "all fast" in
berth, minus the period of any delay or stoppage that
prevents the forward movement of the LNG Tanker to
the berth if and to the extent the total of all such
delays or stoppages exceeds six (6) hours, and
(B) "Outward Steaming Time" shall mean the total of all
hours between the disconnection of the discharge and
return lines and
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the LNG Tanker clearing the Unloading Port, minus the
period(s) of any delay or stoppage that prevents the
outward movement of the LNG Tanker.
Any delay caused to an LNG Tanker by quarantine at an
Unloading Port (except that related to the presence aboard or
processing of refugees picked up by the LNG Tanker) shall
count as used laytime.
(c) If a Demurrage Event occurs, Seller shall take such actions
which are prudent and reasonable to prevent any modification
of the Ninety-Day Schedule and any other ninety-day schedule
of loadings at the Loading Port, including appropriate
direction of the LNG Tanker. In the event that the Demurrage
Event causes the LNG Tanker involved to be delayed in arriving
at the Loading Port so that it is unable to commence loading
on the scheduled loading date (in effect at the time of the
Demurrage Event) or such delay requires the modification of
the date of commencement of loading of any other LNG vessel,
any Seller's invoice to Buyer in accordance with the
provisions of Section 10.2 with respect to such Demurrage
Event shall remain in effect; otherwise, no payment for the
Demurrage Event shall be due and Seller shall notify Buyer
either that it is not invoicing Buyer or that it is canceling
any invoice already submitted to Buyer.
4.5 Effect of Unloading Port Delays; Excess Boil-Off
(a) Notwithstanding the provisions of Section 11.1, if the Gross
Heating Value of LNG to be delivered hereunder is higher than
the limits set forth in Section 11.1 by reason of boil-off
occurring during a delay in unloading an LNG Tanker of more
than forty-eight (48) hours after Notice of Readiness has been
given, such LNG shall be deemed to have met the quality
specifications of this Contract regarding Gross Heating Value.
(b) If an LNG Tanker is delayed in berthing and/or commencement of
unloading for a reason that would not result in an extension
of allowed laytime under Section 4.4(b), and if, as a result
thereof, the commencement of unloading is delayed beyond
thirty (30) hours after Notice of Readiness has been given,
then, for each full hour by which commencement of unloading is
delayed beyond such thirty-hour period, Buyer shall pay Seller
an amount, on account of excess boil-off, equal to the
Contract Sales Price multiplied by the number of MMBTU's per
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hour by which such boil-off reduces the aggregate number of
BTU's of a full cargo at berth. The hourly BTU reduction rate
to be applied for such purpose shall be determined by actual
boil-off experience as determined at appropriate intervals.
4.6 Non-Utilization Cost
(a) If there is an event of force majeure pursuant to Section 15.1
affecting a Buyer ("Buyer Force Majeure") which results in an
LNG Tanker being less than fully utilized under this Contract,
then the Buyer so affected shall pay to Seller, with respect
to such period of Buyer Force Majeure, an amount in U.S.
Dollars calculated in accordance with the following formula
("Non-Utilization Cost"):
NUC = [(TN - VA) x BFM] - BFMS
where:
NUC = The Non-Utilization Cost to be paid
to Seller with respect to quantities
not taken and expected not to be
taken during a Fixed Quantity Period
as a result of a Buyer Force
Majeure;
TN = TE Non-Utilization which is the TE
in U.S.$/MMBTU in effect at the time
BFM is not taken and expected not to
be taken;
VA = Voyage Expenses Amount which is the
component of TN in U.S.$/MMBTU that
is attributable to voyage costs;
BFM = Buyer Force Majeure Quantities which
is the quantities not taken and
expected not to be taken during a
Fixed Quantity Period as a result of
a Buyer Force Majeure, such
quantities to be reduced to the
extent that an LNG Tanker undertakes
voyages to other Buyers or to other
LNG customers in order to deliver
cargoes that would have been
delivered to the affected Buyer but
for the Buyer Force Majeure; and
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BFMS = Buyer Force Majeure Savings which is
the savings in U.S. Dollars, if any,
in transportation costs during the
period of Buyer Force Majeure,
calculated as the sum of:
BS + DS
where:
BS = Burmah Savings which is the
reduction in payments by
Seller resulting from the
lay-up of a Burmah Vessel or
a Substitute LNG Tanker
during the period of Buyer
Force Majeure or pursuant to
any provision of Seller's
Transportation Arrangements
for such vessels applicable
to such period of Buyer Force
Majeure; and
DS = Dwiputra Savings which is,
if the Dwiputra is in lay-up
due to the Buyer Force
Majeure, an amount equal to
the reduction in the Burmah
Vessel daily Hire Rate
applicable if a Burmah Vessel
were laid up for the same
number of days (as
established pursuant to
paragraph 2.5.3(b) of
Schedule III of the
Charters), multiplied by the
number of days the Dwiputra
is in lay-up.
(b) During a period of Buyer Force Majeure, Seller and Buyers will
consult on whether an LNG Tanker should be laid up and/or
placed in non-utilization status, and Seller agrees to give
preference to first removing a Burmah Vessel from providing
transportation under this Contract before removing any other
LNG Tanker.
(c) Seller shall invoice the affected Buyer for amounts due under
this Section 4.6 periodically so as to ensure Seller receives
Non-Utilization Cost payments at generally the same time it
would have received the Transportation Element for quantities
not taken and expected not to be taken as a result of the
Buyer Force Majeure. Buyer shall pay such invoice in
accordance with the terms of Section 10.2. In connection with
the determination of Non-Utilization Cost, Seller shall
furnish to the
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affected Buyer such available estimates, accounting and other
data as may reasonably be required by such Buyer to establish
the basis upon which and the manner in which such
Non-Utilization Cost is calculated. If in fact a BFM cargo is
actually taken by the end of the applicable Fixed Quantity
Period, that part of the invoice for such cargo relating to
the Transportation Element shall be reduced by the amount of
Non-Utilization Cost previously paid with respect thereto.
(d) In the event Seller terminates a Charter for a Burmah Vessel
as a result of a Buyer Force Majeure, Seller shall invoice the
affected Buyer promptly and such Buyer shall pay the amount of
the Required Termination Payment under the Charter (excluding
any amount under item (D) of BE of Section 8.3(a)(i)) to
Seller in lump sum amount in accordance with the terms of
Section 10.2. Upon such termination, the affected Buyer shall
have no further obligation to pay Non-Utilization Cost other
than payments due with respect to periods prior to the
effective date of such termination. If Seller decides for its
own reasons not to terminate the non-utilized LNG Tanker,
Seller and the affected Buyer will determine whether the
affected Buyer has any further obligation to make payments
under this Section 4.6 based on the benefits to be received by
such Buyer if the Charter for the non-utilized LNG Tanker is
continued.
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ARTICLE 5 - ONSHORE FACILITIES
5.1 Receiving Facilities
Each Buyer shall ensure, at no cost to Seller, that its Receiving
Facilities shall be compatible with the general specifications of the
Extension Fleet and shall include the following:
A. Berthing facilities capable of receiving LNG Tankers having an
overall length of up to 950 feet, a beam of up to 150 feet and
a draft of up to 36 feet 6 inches, which the LNG Tankers can
always safely reach, fully laden, and safely depart, and at
which the LNG Tankers can lie safely berthed and discharge
safely afloat at all times;
B. Unloading facilities capable of receiving LNG at a rate which
will permit the discharging of cargo from a fully loaded LNG
Tanker within twelve (12) hours of pumping time at the full
pumping rate specified by the LNG Tanker design;
C. A vapor return line system of sufficient capacity to transfer
to the LNG Tankers quantities of natural gas necessary for the
safe unloading of LNG at such rates, pressures and
temperatures as may be required by the LNG Tanker design;
D. Systems for timely provision of the LNG Tankers with adequate
fresh water and bunker oil, if necessary;
E. Facilities allowing access to the LNG Tankers from onshore
adequate for the handling and delivery of ship's stores,
provisions and spare parts to the LNG Tankers;
F. Shore-based tanks and loading lines for liquid nitrogen
adequate to service the LNG Tankers;
G. LNG storage tanks of adequate capacity to receive and store a
full cargo of LNG upon each scheduled arrival of an LNG
Tanker;
H. Appropriate systems for necessary radio communications with
LNG Tankers; and
I. Regasification plant.
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5.2 Badak Facility
Seller shall ensure, at no cost to Buyers, that the Badak Facility
shall include the following:
A. Natural Gas transmission pipelines for the delivery to the
liquefaction plants of Natural Gas for processing into LNG;
B. LNG processing facilities of sufficient capacity to process
Natural Gas into the LNG to be sold and delivered hereunder;
C. LNG storage tanks of adequate capacity for the storage of
quantities of LNG for subsequent loading on to LNG Tankers;
D. Berthing facilities capable of receiving LNG Tankers having an
overall length of up to 950 feet, a beam of up to 150 feet and
a draft of up to 36 feet 6 inches, which the LNG Tankers can
always safely reach, fully laden, and safely depart, and at
which the LNG Tankers can lie safely berthed and load safely
afloat at all times;
E. Loading facilities capable of loading LNG at a rate which will
permit the full loading of an LNG Tanker within twelve (12)
hours of pumping time;
F. Facilities allowing access to the LNG Tankers from onshore
adequate for the handling and delivery of ship's stores,
provisions, liquid nitrogen and spare parts to the LNG
Tankers; and
G. Appropriate systems for necessary radio communications with
LNG Tankers.
5.3 Compatibility of Receiving Facilities and LNG Tankers
(a) Seller shall ensure, at no cost to Buyers, that the Dwiputra
is compatible with the Receiving Facilities existing as of the
date hereof.
(b) Seller shall ensure that each Substitute LNG Tanker is
compatible with the Receiving Facilities, and any costs
necessary to ensure such compatibility shall be included in S
under Section 8.3(a)(i).
(c) Buyers shall ensure, at no cost to Seller, that the
construction or modification of any Receiving Facility (other
than the Receiving
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Facilities existing as of the date hereof) is compatible with
the Extension Fleet.
(d) With respect to paragraphs (a) through (c) above, Seller and
Buyers shall consult to determine the most effective manner to
achieve the required compatibility.
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ARTICLE 6 - DURATION OF CONTRACT
The terms of this Contract shall continue in effect until the expiration of the
parties' respective obligations hereunder with respect to the sale and purchase
of LNG or the earlier termination of this Contract pursuant to Section 10.5.
If Seller and any Buyer or Buyers so agree at least seven (7) years before the
time this Contract would otherwise expire, the term of this Contract may, as to
such Buyer or Buyers, be extended on such terms and conditions as may be
mutually agreed.
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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
and deliver to each Buyer, and each Buyer shall purchase, receive and
pay for, or pay for if not taken, at the Contract Sales Price, a
quantity of LNG having a heating value as specified for such Buyer for
such Fixed Quantity Period (each such quantity being called a "Fixed
Quantity") as follows:
CALENDAR FIXED QUANTITY FIXED QUANTITIES FOR EACH BUYER
YEAR PERIOD (BILLIONS OF BTU'S)
-------- ------------ -----------------------------------------------------------------
CHUBU KANSAI KYUSHU NIPPON OSAKA TOHO TOTAL
ELECTRIC ELECTRIC ELECTRIC STEEL GAS GAS
-------- -------- -------- ------ ----- ---- --------
1977 OCT 18-DEC 31 6,079.70 1,957.78 1,641.03 1,547.77 7,081.48 - 18,307.76
1978 FULL YEAR 54,792 29,389 37,149 29,387 39,741 - 190,458
1979 FULL YEAR 71,650 67,459 69,063 30,293 45,801 - 284,266
1980 FULL YEAR 87,848 108,520 77,516 31,004 54,260 - 359,148
1981 FULL YEAR 87,850 124,023 77,515 31,006 59,427 - 379,821
1982 FULL YEAR 87,850 124,023 77,515 31,006 67,179 - 387,573
1983 FULL YEAR 117,050 141,543 83,355 31,006 67,179 - 440,133
1984-1986 EACH FULL YEAR 117,050 132,783 86,275 31,006 67,179 - 434,293
1987-1999 EACH FULL YEAR 111,210 132,783 80,435 28,066 67,179 2,940 422,613
2000-2010 EACH FULL YEAR 111,210 132,783 80,435 32,251 67,179 12,963 436,821
The above Fixed Quantities are subject to adjustment as provided in
Section 7.3(a). After giving effect to any such adjustment, the term
"Fixed Quantity" shall mean the applicable Fixed Quantity as so
adjusted, and the respective obligations of Seller to sell and
deliver, and of 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 Single-Port Cargoes; Reallocation of Cargoes; Rate of Deliveries
(a) All deliveries of LNG by Seller and receipt thereof by a Buyer
shall be made in fully loaded LNG Tanker lots and, except as
provided in paragraph (c) below, each LNG Tanker shall be
unloaded at a single Receiving Facility in Japan.
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(b) Each Buyer, upon appropriate notice to Seller, may reallocate
all of an LNG Tanker cargo from one Buyer to another Buyer
and/or from one Receiving Facility to another, and also may
reallocate any part of an LNG Tanker cargo from one Buyer to
another within one Receiving Facility.
In case of such reallocation, the ownership of such cargo or
part thereof shall be transferred directly from Seller to the
new Buyer in place of the original Buyer, but the respective
Fixed Quantities of the Buyers concerned shall not be changed
and the cargo in question shall be deemed to be received by
the original Buyer in connection with its take or pay
obligations under Section 7.3(a).
Each such reallocation shall be documented in a form to be
established by Seller and Buyers, executed by the original
Buyer and the Buyer which will actually receive the cargo,
which document will provide that the receiving Buyer will
assume and be responsible to Seller for performance of the
obligations of the original Buyer in respect of such cargo,
and that such cargo is deemed to be taken by the original
Buyer in connection with its take or pay obligations under
Section 7.3(a).
Buyers will exercise the right to reallocate cargoes in a
manner that will not materially disrupt the shipping
schedules.
(c) In addition to paragraph (b) above, upon reasonable advance
notice to Seller from the Buyer concerned, in case of
emergency, Seller and Buyers may reallocate all or any part of
an LNG Tanker cargo from one Receiving Facility to another, if
such change would not materially disrupt the shipping
schedules.
(d) Within each Fixed Quantity Period, the quantities to be
delivered by Seller and received by each Buyer shall be
delivered at rates and intervals and in quantities which are
reasonably constant over the course of such Fixed Quantity
Period and give effect to the maintenance, downtime and
shipping schedules provided for in Article 12, so as to
assure, as nearly as possible, continuous full utilization of
the LNG Tankers, an even production rate at the Badak
Facility, and even rates of deliveries at each Buyer's
Receiving Facility.
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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 (reduced to
exclude that portion of the Transportation Element related to
voyage costs) in effect as of the last day of such Fixed
Quantity Period, for the quantities of LNG required to be
purchased but which were not taken by such Buyer during such
Fixed Quantity Period (any such quantity deficiency being
called a "Quantity Deficiency"), subject, however, to
paragraphs (b), (c) and (d) below and the following:
(i) If, after taking into account all adjustments
provided for in this Section 7.3 including any
Allowance that has been exercised, there remains a
Quantity Deficiency for a Buyer at the end of any
Fixed Quantity Period, such Buyer may carry forward
and add to the Fixed Quantity for the next succeeding
Fixed Quantity Period:
(A) the full amount when such Quantity Deficiency
amounts to less than a full LNG Tanker cargo
lot; or
(B) any fractional portion of a cargo when the
Quantity Deficiency exceeds one full LNG
Tanker cargo lot.
Amounts so carried forward shall not be included in
such Quantity Deficiency.
(ii) If, at the end of any Fixed Quantity Period, a Buyer
has purchased and received quantities of LNG
hereunder in excess of the Fixed Quantity of such
Buyer for such Fixed Quantity Period other than
Make-Up LNG, Make-Good LNG, or Restoration
Quantities, the excess shall be applicable to reduce
the Fixed Quantity of such Buyer for the next
succeeding Fixed Quantity Period.
(b) The obligation (set forth in paragraph (a) above) of each
Buyer with regard to any Fixed Quantity Period to pay for
Fixed Quantities not taken shall be reduced by the quantity of
LNG which such Buyer was unable to purchase because of an
event of force majeure as defined in Article 15 affecting
either Seller or such Buyer or because of Seller's
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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 being in
excess of 21,841 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.
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(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 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 March
31, 2011 ("Allowance Restoration Period"). Any
Make-Good LNG purchased after the expiration of the
last Fixed Quantity Period but prior to March 31,
2011 shall be paid for at the LNG Element in effect
as of the date of delivery plus the actual
transportation costs incurred in delivering the
Make-Good LNG. 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 Make-Good Obligation has not been satisfied
in full, the Exercising Buyer (whether or not a Buyer
other than the Exercising Buyer was named in any
relevant request for Make-Good LNG) shall pay for any
unsatisfied portion of the Make-Good Obligation at
the Contract Sales Price (reduced to exclude that
portion of the Transportation Element related to
voyage costs) in effect as of the last day of such
Allowance Restoration Period. The Buyer shall have
the right to request Make-Up LNG pursuant to Section
7.5 with respect to any such payment.
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(vii) Seller shall not be obligated to reserve any LNG
production or shipping capacity for the purposes of
permitting Buyers to satisfy Make-Good Obligations.
(viii) In the event that Buyers' Coordinator requests
quantities of LNG to satisfy a Make-Good Obligation
on behalf of a Buyer or Buyers which Seller is unable
to make available for any reason, including force
majeure, the following provisions shall apply:
(A) The Exercising Buyer shall be relieved from
the obligation pursuant to subparagraph (vi)
above to pay for such requested quantities as
of the expiration of the Allowance
Restoration Period relating thereto, except
in the case where subparagraph (viii)(C)
below requires such payment;
(B) Such requested quantities shall be deemed not
outstanding for the purposes of subparagraph
(iii) above until Seller shall (whether
during or after the Allowance Restoration
Period) have offered the same to such Buyer
but shall then be outstanding if such Buyer
does not accept such offer; any change in the
quantity outstanding due to a failure to
accept such an offer shall not result in an
acceleration of any then outstanding
Make-Good Obligations; and
(C) Such requested quantities shall be scheduled
for delivery at any time prior to March 31,
2011 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.
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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 Buyers) pro rata in the ratio
of their respective quantities which are eligible for
allocation as provided below. The quantities eligible for such
allocation shall, as to Buyers, be the portion of the Fixed
Quantities to be purchased hereunder during the period of such
force majeure 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 7.3(a) or Section 7.3(d)(vi), a Buyer shall
have paid for any quantity of LNG which was not taken by such Buyer
("Take-or-Pay Quantity"), then, in any subsequent year, the said Buyer
may purchase up to an equal quantity of LNG from Seller as make-up LNG
("Make-Up LNG") (to the extent not previously made up). A Buyer may
request Make-Up LNG by 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 purpose, (ii) Seller has available LNG Tanker capacity which may
be used to transport such Make-Up LNG, and (iii) such Buyer shall have
first taken and paid for its Fixed Quantity for such year, then
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Seller shall sell and deliver to such Buyer the quantity of Make-Up
LNG requested; provided, however, that after the expiration of three
(3) months following the end of the last Fixed Quantity Period such
Make-Up LNG shall only be made available if either Seller has at the
time uncommitted shipping capacity available for the purpose or the
Buyer provides transportation. A Buyer's right to purchase Make-Up LNG
under this Section 7.5 shall expire on December 31, 2011 unless such
Buyer shall have requested Make-Up LNG during the year 2011 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 December 31, 2011. 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; provided, however, that any Make-Up LNG delivered after the end
of the last Fixed Quantity Period shall be paid for at the LNG Element
in effect as of the date of delivery (reduced by the amount previously
paid as the LNG Element on account of all or that part of the
Take-or-Pay Quantity being made up by such sale) plus the actual
transportation costs incurred in delivering the Make-Up LNG.
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. As between a Force Majeure
Deficiency resulting from force majeure affecting Seller and a
Force Majeure Deficiency resulting from force majeure
affecting a Buyer or Buyers, the Restoration Quantities
applicable thereto shall be scheduled in the chronological
order in which the force majeure events arose, but shall be
subordinate to Make-Good LNG requested pursuant to Section
7.3(d) and Make-Up LNG requested
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pursuant to Section 7.5. Each Buyer shall pay for Restoration
Quantities at the Contract Sales Price in effect as of the
date of delivery. In the case of Restoration Quantities
arising from an event of force majeure affecting a Buyer, that
part of the invoice relating to the Transportation Element
will be reduced by the amount of any Non-Utilization Cost
previously paid by such Buyer under Section 4.6 on account of
all or that part of the quantities being restored.
(b) If an event of force majeure prevents 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 for 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 under contracts which provide for sales of LNG over a term of
at least fifteen (15) years, and uncommitted quantities of LNG are not
available from 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.
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ARTICLE 8 - CONTRACT SALES PRICE
8.1 Contract Sales Price
The contract sales price applicable to the quantities of LNG to be
sold and delivered at the Delivery Point and to any quantities of LNG
required to be taken but which are not taken and are required to be
paid for by a Buyer hereunder, expressed in United States Dollars per
million British Thermal Units (U.S.$/MMBTU), ("Contract Sales Price")
shall comprise an LNG element ("LNG Element" or "LE") and a
transportation element ("Transportation Element" or "TE") and shall
be determined in accordance with the following provisions of this
Article 8.
The LNG Element and the Transportation Element are subject to
adjustment from time to time according to the following provisions of
this Article 8 and the sum thereof as adjusted and in effect at any
time shall be the Contract Sales Price. The Contract Sales Price 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 unloading of
such cargo.
8.2 LNG Element
(a) The LNG Element included in the Contract Sales Price, as
adjusted from time to time, shall be calculated according to
the following formula:
9 A 1 U.S.CPIn
LE = ---(Po x ----------)+ ---(Po' x --------) + C
10 U.S.$18.00 10 U.S.CPIo
where:
LE = the LNG Element (expressed in U.S.$/MMBTU);
Po = U.S.$ 3.06/MMBTU;
A = the arithmetic average of the realized export
prices per barrel in U.S. Dollars, f.o.b.
Indonesia, of all field classifications of
Indonesian crude oils then being sold and
exported by PERTAMINA, except premiums and
except such prices for spot sales;
Po' = U.S.$ 3.24/MMBTU;
U.S.CPIn = in respect of the applicable calendar year,
the average of the monthly values of U.S.CPI
for the twelve-month
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period commencing with the month of November,
fourteen (14) months prior to the beginning
of the applicable calendar year, and ending
with the month of October, three (3) months
prior to the commencement of the applicable
calendar year;
U.S.CPIo = 143.8, being the arithmetic average of the
monthly values of U.S.CPI for the twelve-
month period, November 1992 through October
1993; and
C = U.S.$ 0.012/MMBTU.
(b) An adjustment of the LNG Element to reflect any change in
U.S.CPI shall be made on and shall be effective as of January
1 of each calendar year, and further adjustments of the LNG
Element shall be made as of each effective date on which:
(i) the realized export prices of more than one of the
field classifications of Indonesian crude oils sold
by PERTAMINA shall have changed from the respective
prices therefor included in the last preceding
determination of "A" made pursuant to Section 8.2
(a); or
(ii) two or more field classifications of such crude oils
shall have been added to or deleted from the crude
oils being sold by PERTAMINA since the date of the
last preceding determination of "A" made pursuant to
Section 8.2(a).
Procedures for verifying changes in the realized export prices
of all Indonesian crude oils and for determining the effective
date of any adjustment of the LNG Element shall be separately
agreed upon by Seller and Buyers.
(c) Seller and Buyers shall agree separate procedures for handling
corrections, revisions or changes in the calculation of
U.S.CPI. It is agreed that if at any time the U.S. Department
of Labor, Bureau of Labor Statistics discontinues publishing a
report on U.S.CPI values, then Seller and Buyers shall agree
upon an index method that reflects inflation in the United
States of America's consumer prices to replace the
discontinued U.S.CPI report.
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8.3 Transportation Element
(a) Subject to Sections 8.4 and 8.5 below, the Transportation
Element included in the Contract Sales Price shall be
calculated for each twelve (12) month period effective as of
April 1 of each year (each such period being called a "TE
Period") in accordance with the following formula ("TE
Formula"):
TEn = The Transportation Element in U.S.$/MMBTU for the TE
Period n (commencing on April 1 of year n) calculated
as follows:
TC + A + RA
= -----------
AQ
TC (Transportation Costs), A (Adjustments) and AQ (Annual
Quantities) are estimates for the current calendar year based
on information available at the time of the calculation of
TEn; RA (Reconciliation Amount) is based on actual amounts for
the previous calendar year.
where:
(i) Transportation Costs
TC = B + D + V + S
where:
B = BHA - BE + BSA
where:
BHA = Burmah Hire Amount which is
the Net Payments in U.S.
Dollars to be made under
Seller's Transportation
Arrangements for the Burmah
Vessels during year n with
respect to:
(A) the Burmah's Cost
Component;
(B) the Operating Cost
Component (including
any prior year Over/
Under Adjustment
Amounts);
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(C) the Additional Cost
Component;
(D) to the extent not
included in (B) above
any amount paid to
Seller's Transporter
for savings in respect
of change of registry
and recrewing; and
(E) any other amounts to
be paid to Seller's
Transporter under a
Charter for the
transportation of LNG
hereunder;
BE = Burmah Exclusions which is the
amount in U.S. Dollars to be
paid under Seller's
Transportation Arrangements
for the Burmah Vessels during
year n with respect to:
(A) Supplemental Costs
under paragraph 2.4 of
Schedule III of a
Charter;
(B) insurance for the
benefit of Seller
only, including costs
of Seller's entry as
time charterer under
paragraph 2(e) of
Schedule IV of a
Charter;
(C) costs in respect of
Seller's unexcused
failure to satisfy
its obligations under
Seller's Transportation
Arrangements,
including late payment
fees under section
8.7 of a Charter;
(D) amounts payable as
Additional Cost
Component that relate
to changes to the
vessel requested by
Seller for Seller's
sole benefit;
(E) Seller's share of
costs of a change of
registry (excluding
costs of a change of
registry requested by
Buyers) based on the
proportion of benefits
received by Seller; and
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(F) amounts payable for a
Burmah Vessel when
on-hire but
unavailable due to the
gross negligence of
Seller;
(G) requisition
compensation payable
by Charterer under
Article 38 of a
Charter; and
(H) fifty percent (50%) of
costs included in BHA
relating to testing
and calibration of
measuring devices
provided by Seller
under Article 13;
BSA = SA x NBC
where:
SA = Sharing Amount which is
U.S.$315,000; and
NBC = Number of Burmah
Charters which is the number
of Charters for the Burmah
Vessels in effect during year
n (adjusted for a partial
year if a Charter for a
Burmah Vessel is terminated
during year n).
D = DCA + DNVOC - DOH
where:
DCA = Dwiputra Capital Amount
which is U.S.$19,108,000 );
and
BHAM - BE + BR
DNVOC = (--------------) - DLS
NBC
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where:
BHAM = Burmah Hire Amount Modified
which is BHA modified to
exclude all amounts with
respect to the Burmah's Cost
Component (but not any
amounts included in BE);
BR = Burmah Reductions which is
the amount, in U.S. Dollars,
by which BHAM would be
increased if the following
deductions for year n had not
been taken into account:
(A) adjustments for
lay-up;
(B) adjustments for
Off-Hire or other
unavailability;
(C) adjustments due to
a vessel being a
Non-Utilized Vessel
under the Fleetwide
Agreement; and
(D) adjustments for
performance
compensation; and
DLS = Dwiputra Lay-up Savings
which is an amount equal to
the reduction in the Burmah
Vessel daily Hire Rate
applicable if a Burmah Vessel
were laid up for the same
number of days (as
established pursuant to
paragraph 2.5.3(b) of
Schedule III of the
Charters), multiplied by the
number of days the Dwiputra
is laid up.
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DOHD
DOH = (DCA + DNVOC + DLS) x ----
365
where:
DOHD = Dwiputra Off-hire Days which is the
number of days the Dwiputra is
off-hire in year n.
DCA, DNVOC and DOH shall be adjusted for a partial
year if Seller's Transportation Arrangements for the
Dwiputra are terminated during year n.
PAA
V = --- x EV
BV
where:
PAA = Paying Agent Agreement Amount which
is the Net Payments in U.S. Dollars
to be made under the Paying Agent
Agreement during year n as Voyage
Expenses for voyages under this
Contract, taking into account the
prior year Voyage Over/Under Amount
for voyages under this Contract;
BV = Burmah Vessel Voyages which is the
total number of voyages under this
Contract of the Burmah Vessels and
any Alternate Vessels for year n;
and
EV = Extension Fleet Voyages which is the
total number of voyages under this
Contract of the Extension Fleet and
any Alternate Vessels for year n;
S = Substitute Tanker Costs which is any amount
in U.S. Dollars paid by Seller with respect
to use of a Substitute LNG Tanker (taking
into
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account adjustments comparable to those
included in BE, and excluding any amount
already included in PAA); provided, however,
that with respect to a Substitute LNG Tanker
required as a result of a vessel in the
Extension Fleet being unavailable because of
an incident which would not have occurred but
for a voyage to a buyer other than Buyers,
amounts that are (on a daily basis) in excess
of the average Hire Rate of the Burmah
Vessels shall also be excluded.
(ii) Adjustments
A = BP - DP - AV - FM
where:
BP = BLP + BSP + BBP
where:
BLP = Burmah Loading
Performance Compensation
which is any amount in U.S.
Dollars in respect of a
failure in year n to meet the
loading undertaking pursuant
to section 16.4 of a Charter;
BSP = Burmah Speed
Performance Compensation
which is fifty percent (50%)
of any amount in U.S. Dollars
in respect of a failure in
year n to meet the speed
undertaking pursuant to
section 16.2 of a Charter;
and
BBP = Burmah Boil-off
Performance Compensation
which is the LE portion only
in U.S. Dollars of any amount
in respect of a failure in
year
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n to meet the boil-off
undertaking pursuant to
Article 27 of a Charter.
DP = DDP + DSP
where:
DDP = Dwiputra Discharge
Performance Compensation
which is in relation to a
failure in year n to meet the
discharge undertaking
pursuant to Seller's
Transportation Arrangements
for the Dwiputra, an amount
in U.S. Dollars calculated by
taking the excess discharge
time in hours multiplied by
the average Hire Rate for the
Burmah Vessels for year n
divided by twenty-four (24);
and
DSP = Dwiputra Speed
Performance Compensation
which is in relation to a
failure in year n to meet the
speed undertaking pursuant to
Seller's Transportation
Arrangements for the
Dwiputra, fifty percent (50%)
of an amount in U.S. Dollars
calculated by applying
paragraph 4.1 of Schedule II
of a Burmah Vessel Charter to
the speed deficiency for the
applicable Dwiputra voyage.
AVD
AV = (TC-V) x ---
TVD
where:
AVD = Additional Voyage Days which
is the number of days used by
a vessel in the Extension
Fleet to complete a voyage
not pursuant to this
Contract, determined from the
time such vessel departs the
sea buoy at the Loading Port
prior to loading until it
again arrives at such sea
buoy upon completion of such
voyage or arrives at a
dry-dock port or place of
lay-up, minus the
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number of days an LNG Tanker
is unavailable (including,
without limitation, off-hire)
during any such voyage ; and
TVD = Total Voyage Days which is
the total number of voyage
days calculated as the number
of LNG Tankers performing
transportation under this
Contract multiplied by the
number of days in year n,
minus the number of days an
LNG Tanker is in dry-dock or
unavailable (including,
without limitation,
off-hire).
FMQ
FM = (TC +SFMS - V - AV) x ------------- - SFMS
AQ + FMQ + DQ
where:
SFMS = Seller Force Majeure Savings
which is the savings in U.S.
Dollars, if any, in
transportation costs during
the period of an event of
force majeure pursuant to
Section 15.1 hereunder
affecting Seller ("Seller
Force Majeure"), calculated
as the sum of:
SBS + SDS
where:
SBS = Seller Burmah Savings
which is the reduction in
payments by Seller
resulting from the lay-up
of a Burmah Vessel or a
Substitute LNG Tanker
during the period of
Seller Force Majeure or
pursuant to any
provision of Seller's
Transportation
Arrangements for such
vessels applicable to
such period of Seller
Force Majeure; and
SDS = Seller Dwiputra Savings
which is, if the
Dwiputra is in lay-up
due to a Seller Force
Majeure, an amount equal
to the reduction in the
Burmah
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Vessel daily Hire Rate
applicable if a Burmah
Vessel were laid up for
the same number of days
(as established pursuant
to paragraph 2.5.3(b) of
Schedule III of the
Charters), multiplied by
the number of days the
Dwiputra is laid up.
FMQ = Force Majeure Quantities
which is the Fixed Quantities
not delivered during year n
as a result of a Seller Force
Majeure but excluding DQ and
quantities not delivered as a
result of an LNG Tanker being
off-hire;
DQ = Declined Quantities which is
Fixed Quantities not
delivered because Buyers did
not accept a proposed
Substitute LNG Tanker offered
by Seller during a period
subject to Section 15.1 I as
a result of an LNG Tanker
being on-hire and
unavailable; and
AQ = as defined in Section
8.3(a)(iv) below.
(iii) Reconciliation Amount
RA = (RTA - TEP + R) x I
where:
RTA = Recalculated Transportation
Amounts which is the sum in
U.S. Dollars of TC and A for
year n-1, recalculated using
actual amounts under this
Section 8.3, plus RA included
in the calculation for TE for
the year n-1;
TEP = TE Payments which is the sum
in U.S. Dollars of:
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(A) TE payments for
quantities delivered
in respect of year
n-1 Fixed Quantity
Period;
(B) TE payments for
Take-or-Pay Quantities
in respect of year n-1
Fixed Quantities;
(C) TE payments for excess
boil-off made pursuant
to Section 4.5(b) in
respect of year n-1
quantities; and
(D) the amount of
Non-Utilization Cost
under Section 4.6
hereof paid in respect
of year n-1 quantities;
R = Restoration Quantities
Amount which is, if
Restoration Quantities have
been delivered in respect of
year n-1, which restored a
Force Majeure Deficiency
resulting from a Seller's
Force Majeure, amounts in
U.S. Dollars of FM previously
excluded from the TE
calculation with respect to
the Force Majeure Deficiency
that was restored; and
I = Interest which is one
hundred and one percent
(101%) plus the arithmetic
average of LIBOR for year
n-1.
(iv) Annual Quantities
AQ = The sum (expressed in MMBTU) of the
following:
(A) quantities to be delivered in
respect of year n to Buyers
hereunder;
(B) any anticipated Take-or-Pay
Quantities for year n; and
(C) any quantities which would be
delivered hereunder in respect of
year n but for a Buyer Force
Majeure.
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(b) Following the end of the calendar year 2000, and the end of
each Fixed Quantity Period thereafter, the actual
transportation costs for such year shall be determined. In
this regard, Seller and Buyers jointly shall employ
independent auditors to perform the audit pursuant to Seller's
Transportation Arrangements for the Burmah Vessels and
Substitute LNG Tankers and consultants to assist in the review
of costs for such vessels, and the cost of such audit and such
related consultancy fees shall be shared equally by Seller and
Buyers and be paid directly by each party.
(c) In connection with each annual adjustment of the
Transportation Element, Seller shall furnish to Buyers such
available estimates, accounting and other data as may
reasonably be required by Buyers to establish the basis upon
which and the manner in which such adjustment is calculated.
Subject to Section 4.1(b)(ii), Seller shall permit Buyers to
review the reasonableness of the current year estimated
transportation costs and prior year results in conjunction
with Seller's review as provided for in Seller's
Transportation Arrangements.
(d) Seller and Buyers intend that, except as noted in this Article
8 with respect to the Dwiputra and BSA, all costs for
transportation of LNG hereunder shall be passed through to
Buyers. Subject to the provisions of this Article 8, the TE
Formula shall be adjusted to ensure that Seller neither
profits nor loses under Seller's Transportation Arrangements
in providing transportation of LNG hereunder.
8.4 Transportation Element for First Calendar Quarter of 2000
The Transportation Element included in the Contract Sales Price for
the period January 1 to March 31, 2000 shall be calculated in
accordance with Section 8.3, taking into account adjustments to such
calculation as a result of the three (3) month period.
8.5 Final Settlement
(a) Within ninety (90) days after the delivery of the last cargo
of LNG to be sold and purchased hereunder, Seller and Buyers
shall determine the amount of the final reconciliation payment
("Final Settlement"). The Final Settlement shall be
determined utilizing the principles by which RA is calculated
annually pursuant to Section 8.3(a)(iii) (taking into
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consideration Section 8.3(d)) and shall be determined in
respect of the period from January 1, 2010 until delivery of
the last cargo of LNG to be sold and purchased hereunder.
(b) If any Fixed Quantities previously included in FMQ under
Section 8.3(a)(ii) as a result of the unavailability of an LNG
Tanker which remained on-hire while unavailable have not been
restored as Restoration Quantities at the end of the last
Fixed Quantity Period, Buyers shall pay to Seller as part of
the Final Settlement fifty percent (50%) of the amount of FM
determined under Section 8.3(a)(ii) that was previously
excluded from the TE calculation with respect to such
quantities.
(c) The Final Settlement will be payable by or paid to Buyers in
proportion to each Buyer's Fixed Quantities during the Fixed
Quantity Period 2010. After the amount of the Final Settlement
has been determined, Seller shall invoice Buyers, or Buyers
shall invoice Seller, in U.S. Dollars for amounts due under
this Section 8.5, and Buyers or Seller, as the case may be,
shall pay such invoice no later than twenty (20) calendar days
after the date of receipt thereof.
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ARTICLE 9 - TRANSFER OF TITLE
The LNG to be sold by Seller and purchased by each Buyer hereunder shall be
delivered to such Buyer into its Receiving Facility at an Unloading Port.
Delivery shall be deemed completed and title and risk of loss shall pass from
Seller to such Buyer as the LNG reaches the Delivery Point.
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ARTICLE 10 - INVOICES AND PAYMENT
10.1 Invoice and Cargo Documents
Promptly after completion of unloading of an LNG Tanker, Seller, or
its representative, shall furnish to the receiving Buyer, or its
representative, a certificate of volume unloaded together with such
other documents concerning the cargo as may be reasonably requested by
Buyers for the purpose of Japanese customs clearance. The receiving
Buyer shall complete a laboratory analysis to determine quality and
BTU content of the LNG as soon as possible but not later than
forty-eight (48) hours after the completion of unloading.
Promptly upon completion of such analysis, Seller or its
representative shall 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 delivered. At the same
time Seller shall send to the receiving Buyer a signed copy of the
invoice together with relevant documents setting forth the basis for
the calculation thereof.
If the receiving Buyer has not completed the above mentioned quality
and BTU analysis within the forty-eight-hour period mentioned above,
Seller may furnish a provisional commercial invoice based upon the
typical BTU content and typical mole composition analysis of LNG then
being delivered to Buyer, and such provisional invoice shall be
payable on the due date specified in Section 10.3 subject only to any
later adjusting payment which may be called for when the aforesaid
analysis has been completed.
10.2 Other Invoices
In the event any amount is due from any Buyer to Seller, including,
without limitation, amounts payable pursuant to Section 7.3(a) on
account of Fixed Quantities of LNG required to be purchased but which
were not taken by such Buyer, Seller shall furnish or cause to be
furnished to such Buyer an invoice therefor and relevant documents
showing the basis for the calculation thereof. The procedure set
forth in Section 10.1 for sending a copy of such invoice by telex or
telegram may be followed.
10.3 Invoice Due Dates, etc.
Each invoice for LNG delivered to a Buyer referred to in Section 10.1
shall become due and payable by such Buyer on the fifth (5th) Business
Day in Japan after the date on which the telex/telegraphic copy of
such invoice has been received by such Buyer in Japan. For this
purpose a telex/telegraphic copy of an invoice shall be deemed
received by Buyer in Japan on the next
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Business Day in Japan following the day on which it was sent. Each
other invoice to Buyer referred to in Section 10.2 shall become due
and payable by such Buyer within twenty (20) calendar days after the
date of such Buyer's receipt of such invoice in Japan.
If any invoice due date is not a Business Day in Japan, such invoice
shall become due and payable on the next day which is a Business Day
in Japan.
In the event the full amount of any invoice is not paid when due, any
unpaid amount thereof shall bear interest from the due date until
paid, at an interest rate, compounded annually, two percent (2%)
greater than the Base Rate in effect from time to time during the
period of delinquency. Such interest rate shall be adjusted up or
down, as the case may be, to reflect any changes in the Base Rate as
of the dates of such changes in the Base Rate.
10.4 Payment
Each Buyer shall pay, or cause to be paid, in U.S. Dollars all amounts
which become due and payable by such Buyer pursuant to any invoice
issued hereunder to a bank account or accounts in the United States to
be designated by Seller. Buyer shall not be responsible for such
bank's disbursement of amounts remitted by Buyer to such bank, and
Buyer's deposit in immediately available funds of the full amount of
each invoice with such bank shall constitute full discharge and
satisfaction of the obligations hereunder for which such amounts were
remitted. Each payment by a Buyer of any amount owing hereunder shall
be in the full amount due without reduction or offset for any reason,
including, without limitation, Japanese taxes, exchange charges or
bank transfer charges.
Transfer of funds to the bank in the United States, effected from
Japan before the close of business in Japan on or before the due date
of any invoice, shall be deemed timely payment notwithstanding that
such U.S. bank cannot credit such transfer as ready funds for a period
of up to fourteen (14) hours by reason of the time difference between
Japan and the United States or for one or more days which are not
banking days in the United States.
10.5 Seller's Rights Upon Buyers' Failure to Make Payment
If payment of any invoice for quantities of LNG delivered hereunder or
for Fixed Quantities of LNG not taken and for which a Buyer is
obligated to pay hereunder 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
deliveries to such Buyer until the amount of such invoice
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and interest thereon has been paid, and such Buyer shall not be
entitled to any make-up rights in respect of such suspended
deliveries. If any such invoice is not paid within one hundred and
twenty (120) days after the due date thereof, then, subject to the
further provisions of this Section 10.5, Seller shall have the right,
at Seller's election, upon not less than eighty (80) days' notice to
Buyer or Buyers, as the case may be, to exercise either of the
following options :
(i) Seller may terminate this Contract in respect of the
defaulting Buyer only, in which event this Contract shall
continue in effect between Seller and the other Buyers just as
though the defaulting Buyer had never been a party and the
quantities of LNG to be purchased and received by such
defaulting Buyer had never been included in this Contract; or
(ii) Seller may terminate this Contract in its entirety as to
Buyers unless, prior to such termination, arrangements shall
have been made which are satisfactory to Seller for the
payment of all amounts owed Seller by the defaulting Buyer and
for the assumption of the LNG quantity and other obligations
of the defaulting Buyer under this Contract by one or more
Buyer(s) not defaulting.
Termination by Seller under clause (i) or (ii) above shall become
effective upon receipt by each Buyer of notice from Seller to such
effect. Any such termination shall be without prejudice to any other
rights and remedies of Seller arising hereunder or by law or
otherwise, including the right of Seller to receive payment of all
obligations and claims which arose or accrued prior to such
termination or by reason of such default by a Buyer or Buyers.
10.6 Disputed Invoices
In the event of disagreement concerning any invoice, the Buyer shall
make provisional payment of the total amount thereof and shall
immediately notify Seller of the reasons for such disagreement, except
that :
(i) in the case of obvious error in computation, Buyer shall pay
the correct amount disregarding such error; and
(ii) in the case of any disputed invoice for demurrage incurred at
an Unloading Port, Buyer's provisional payment shall be ninety
percent (90%) thereof or such greater amount as is not
disputed by Buyer.
Invoices may be contested by Buyer or modified by Seller only if,
within a period of ninety (90) days after Buyer's receipt thereof,
Buyer serves on Seller
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notice questioning their correctness. If no such notice is served,
invoices shall be deemed correct and accepted by both parties.
Promptly after resolution of any dispute as to an invoice, the amount
of any overpayment or underpayment shall be paid by Seller or Buyer
to the other, as the case may be.
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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 1070 BTU per Standard
Cubic Foot and not more than 1170 BTU per Standard Cubic Foot. The
expected range will be between 1110 and 1165 BTU per Standard Cubic
Foot.
11.2 Components
The LNG delivered by Seller to Buyers shall, in a gaseous state,
contain not less than eighty-five molecular percentage (85 MOL%) of
methane (CH4) and, for the components and substances listed below,
such LNG shall not contain more than the following :
A. Nitrogen (N2), 1.0 MOL %.
B. Butanes (C4) and heavier, 2.00 MOL %.
C. Pentanes (C5) and heavier, 0.10 MOL %.
D. Hydrogen sulfide (H2S), 0.25 grains per 100 Standard Cubic
Feet (0.25 grains/100 scf).
E. Total sulfur content, 1.3 grains per 100 Standard Cubic Feet
(1.3 grains/100 scf).
Although the LNG which Seller delivers to Buyers is permitted to
contain the sulfur concentrations shown in clauses D and E above,
under normal operating conditions at the Badak Facility, Seller would
expect such concentrations to be materially less.
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ARTICLE 12 - PROGRAMMING AND SHIPPING MOVEMENTS
12.1 Annual Program
(a) Not later than ninety (90) days prior to the beginning of each
calendar year, Seller shall give written notice to Buyers of
the anticipated quantities of LNG to be available for delivery
hereunder from the Badak Facility in each calendar quarter of
the next calendar year, taking into consideration the
projected capacity 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 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(a). In addition, by October 15 of each year,
Buyers' Coordinator shall request any Make-Good LNG pursuant
to Section 7.3(d).
Seller and Buyers shall thereupon consult together and agree
by December 1 of the same year upon a programming schedule of
quantities to be delivered to each Receiving Facility during
each calendar month during the following year (the "Annual
Program"), which shall take into consideration the anticipated
capacity of the parties' respective facilities, the
Coordinated Maintenance Schedule and the shipping schedules.
Such Annual Program and the Ninety-Day Schedules referred to
below (and any revisions thereof) are intended to assist the
parties in planning their respective operations during the
periods involved. The content of the Annual Program and
Ninety-Day Schedules shall not reduce the entitlement of any
party during any Fixed Quantity Period to sell, deliver and be
paid for, or to purchase and receive, as the case may be, the
quantities of LNG required under Article 7 to be sold,
delivered and paid for during such Fixed Quantity Period.
Seller and Buyers will each take all appropriate steps to
carry out each Annual Program and Ninety-Day Schedule.
(b) An Annual 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;
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(ii) Make-Up LNG relating to a Take-or-Pay Quantity paid
for in respect of the immediately preceding year; or
(iii) Restoration Quantities relating to a Force Majeure
Deficiency arising in respect of the immediately
preceding year;
provided that the requested LNG and the necessary
transportation are available and such request is received by
Seller not later than January 15 of the year to which such
Annual Program relates.
12.2 Ninety-Day Schedules
Not later than the fifteenth (15th) day of each calendar month, Seller
shall, after discussion with each Buyer, deliver to each Buyer a
three-month forward plan of delivery (the "Ninety-Day Schedule"),
which follows the applicable Annual Program as nearly as practicable
and sets forth by voyages and the projected dates thereof the pattern
of shipments forecast for each of the next three (3) calendar months.
Each Ninety-Day Schedule shall reflect all adjustments, if any,
necessitated by deviation from prior Ninety-Day Schedules so as to
maintain as far as practicable the scheduled shipments forecast in the
Annual Program.
12.3 Maintenance and Inspection Coordination
Not later than ninety (90) days prior to the beginning of each
calendar year, Seller and Buyers shall consult and agree on a program
designed to coordinate the anticipated scheduled maintenance and
inspection downtime during that calendar year of the Receiving
Facilities of each Buyer, the anticipated scheduled downtime of the
Badak Facility and the maintenance schedules of the LNG Tankers.
Such program (the "Coordinated Maintenance Schedule") will be devised
so as to minimize the collective impact of such downtime and
maintenance periods on the continuous delivery of LNG hereunder.
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ARTICLE 13 - MEASUREMENTS AND TESTS
13.1 Parties to Supply Devices
Seller shall supply, operate and maintain, or cause to be supplied,
operated and maintained, suitable gauging devices, density, pressure
and temperature measuring devices, and any other measurement or
testing devices for the LNG tanks of the LNG Tankers, which are
incorporated in the structure of LNG Tankers or customarily maintained
on shipboard.
Each Buyer shall supply, operate and maintain, or cause to be
supplied, operated and maintained, devices required for collecting
samples and for determining quality and composition of the LNG and any
other measurement or testing devices which are incorporated in land
structures or customarily maintained at Receiving Facilities.
13.2 Selection of Devices
All devices provided for in this Article 13 shall be compatible with
the specifications of the LNG Tankers. Such devices shall be chosen
by mutual agreement of the parties and shall be such that at the time
of selection are the most accurate and reliable devices in their
practical application. The required degree of accuracy of such
devices selected shall be mutually agreed upon and verified by Buyers
and Seller, in advance of their use, and at the request of either
Buyer or Seller such degree of accuracy shall be verified by an
independent surveyor mutually agreed upon by such Buyer and Seller.
13.3 Units of Measurement and Calibration
The parties will cooperate closely in the design, selection, and
acquisition of devices to be used for measurements and tests under
this Article 13 in order that, to the maximum extent possible, all
measurements and tests may be conducted either in American units of
measurement or in metric units of measurement. In the event that it
becomes necessary to make measurements and tests using a new system of
units of measurement, the parties shall establish mutually agreeable
conversion tables, or, if they are unable to agree, such tables may be
established by the procedures provided for resolution of disputes on
measurement and testing in Section 13.11. Measurement devices shall
be calibrated as follows :
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Measurement American Units Metric Units
----------- -------------- ------------
Volume Cubic feet Cubic Meters
Temperature Degrees Fahrenheit Degrees Centigrade
Pressure Pounds per square Kilograms per square
inch or inches of centimeter or
mercury millimeters of mercury
Length Feet Meters
Weight Pounds Kilograms
Density Pounds per cubic Kilograms per Cubic
foot Meter
13.4 Tank Gauge Tables of LNG Tankers
Seller shall provide each Buyer, or cause each Buyer to be provided,
with a certified copy of tank gauge tables for each tank of each LNG
Tanker verified by the U.S. Bureau of Standards at Washington, D.C.,
the Nippon Kaiji Kentei Kyokai (Japan Marine Surveyors and Sworn
Measurers' Association) or other competent impartial authority
mutually agreed upon by the parties. Such tables shall include
correction tables for list, trim, tank construction and any other
items requiring such tables for accuracy of gauging. Seller and
Buyers shall each have the right to have representatives present at
the time each LNG tank on each LNG Tanker is volumetrically
calibrated. If the LNG tanks of any LNG Tanker suffer distortion of
such nature as to cause a prudent expert reasonably to question the
validity of the tank gauge tables described herein (or any subsequent
calibration provided for herein), any Buyer or Seller may require
recalibration of such LNG tanks during any period when the LNG Tanker
is out of service for scheduled inspection or repairs. Upon
recalibration of the LNG tanks of the LNG Tankers, the same procedures
used to provide the original tank gauge tables will be used to provide
revised tank gauge tables based upon the recalibration data. The
calibration of tanks provided for in this Section 13.4 shall
constitute the only calibration required for purposes of this
Contract.
13.5 Gauging and Measuring LNG Volumes Delivered
Volumes of LNG delivered pursuant to this Contract shall be determined
by gauging the LNG in the tanks of the LNG Tankers before and after
unloading.
Gauging the liquid in the tanks of the LNG Tankers and measuring of
liquid temperature, vapor temperature, vapor pressure and liquid
density in each LNG tank, trim and list of the LNG Tankers, and
atmospheric pressure shall be performed, or be caused to be performed,
by Seller before and after unloading.
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The first gauging and measurements shall be made immediately before
the commencement of unloading. The second gauging and measurements
shall take place immediately after completion of unloading.
Copies of gauging and measurement records shall be furnished to Buyer.
A. Gauging the Liquid Level of LNG
The level of the LNG in each LNG tank of the LNG Tanker shall
be gauged by means of the gauging device installed in the LNG
Tanker for that purpose. The level of the LNG in each tank
shall be logged or printed.
B. Determination of Temperature
The temperature of the LNG and of the vapor space in each
cargo tank shall be measured by Seller by means of a
sufficient number of properly located temperature measuring
devices, to permit the determination of average temperatures.
Temperatures shall be logged or printed.
C. Determination of Pressure
The pressure of the vapor in each LNG tank shall be determined
by means of pressure measuring devices installed in each LNG
tank of the LNG Tankers. The atmospheric pressure shall be
determined by readings from the standard barometer installed
in the LNG Tankers.
D. Determination of Density
Density of the LNG shall be determined by Seller either by
computation or by measurement, as mutually agreed to by the
parties. Initially, the density of the LNG will be computed by
the method described in Schedule A. Should any improved data,
method of calculation or direct measurement device become
available which is acceptable to both Buyers and Seller, such
improved data, method or device shall then be used. If
density is determined by measurements, the results shall be
logged or printed.
13.6 Samples for Quality Analysis
Representative samples of the LNG delivered shall be obtained, or be
caused to be obtained, in triplicate by each Buyer during the time of
unloading and delivery to such Buyer. The three (3) samples shall be
taken from an appropriate point on Buyer's receiving line as close as
possible to the unloading flanges and collected in the gaseous state
using the continuous gasification/collection method agreed by Buyers
and Seller. The method and
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devices for sampling and the quantity of the samples to be withdrawn,
shall be determined by agreement between Buyers and Seller to provide
for taking representative and adequate samples of the LNG delivered.
The samples obtained shall be distributed as follows :
First sample - for use of Buyer receiving the LNG shipment.
Second sample - for retention by such Buyer for an agreed
period, not to exceed twenty (20) days,
during which any dispute as to the accuracy
of any analysis shall be raised, in which
case the sample shall be further retained
until such Buyer and Seller agree to retain
it no longer.
Third sample - for use of Seller, if Seller so requests.
If representative samples cannot be obtained by Buyer, the data to be
determined by sample analysis in Section 13.7 shall be based upon the
analysis of the LNG loaded at the Loading Port and shall, after the
boil-off adjustment provided for below, be substituted for use in
determining composition of the cargo delivered. Such data obtained at
the Loading Port shall be adjusted for boil-off on the basis of the
arithmetic average of the boil-off experience during the one-way
voyage with regard to the last five (5) cargoes from the Loading Port
to the same Receiving Facility. For this purpose Seller shall utilize
devices comparable to those utilized at the Receiving Facility and
shall employ methods of taking and analyzing the samples at the
Loading Port comparable in accuracy to those employed at the Receiving
Facility.
13.7 Quality Analysis
The samples provided for in Section 13.6 shall be analyzed, or be
caused to be analyzed, by the Buyer receiving the LNG shipment to
determine the molar fraction of the hydrocarbon and other components
in the sample by gas chromatography in accordance with "G.P.A.
Standard 2261, Analysis for Natural Gas and Similar Gaseous Mixtures
by Gas Chromatography", published by G.P.A., current as of 1990. 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
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substituted for the standards then in use, but such substitution shall
not take place retroactively.
Should it be necessary to obtain periodic samples, the composition of
the LNG unloaded from each LNG Tanker shall be the arithmetic average
of the results obtained by analysis of the samples obtained under
Section 13.6. A calibration of the chromatograph or other analytical
instrument used shall be performed by each Buyer immediately prior to
the analysis of the sample of LNG delivered. The Buyer intending to
conduct a calibration shall give advance notice thereof to Seller, and
Seller shall have the right to have a representative present at each
such calibration; provided, however, that the party performing the
calibration will not be obligated to defer or reschedule any
calibration in order to permit the representative of the other party
to be present.
The sample shall be analyzed, or be caused to be analyzed, by the
Buyer to determine the concentrations of hydrogen sulfide (2S) and
total sulfur referred to in Section 11.2 using the methods described
in Schedule A.
13.8 Operating Procedures
Prior to conducting operations for measurement, gauging and analysis
provided in Sections 13.5, 13.6 and 13.7 the party responsible for
such operations shall notify the appropriate representatives of the
other party, allowing such representative reasonable opportunity to be
present for all operations and computations; however, the absence of
the other party's representative after notification and opportunity to
attend shall not prevent any operations and computations from being
performed. At the request of either party, any measurement, gauging
and analysis provided for in Sections 13.5, 13.6 and 13.7 shall be
witnessed and verified by an independent surveyor mutually agreed upon
by the Buyer and Seller. The results of such surveyor's verifications
shall be made available promptly to each party. All records of
measurements and the computation results shall be preserved and
available to both parties for a period of not less than three (3)
years after such measurements and computation.
13.9 BTU Quantities Delivered
The quantity of BTU's of LNG delivered from LNG Tankers shall be
calculated by Seller following the procedures described in this
Section 13.9 and shall be verified by an independent surveyor mutually
agreed upon by Seller and Buyer.
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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, 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 delivered.
B. Determination of Volume of LNG Unloaded
The LNG volume in the tanks of the LNG Tanker before and after
unloading shall be determined by gauging as provided in
Section 13.5 on the basis of the tank gauge tables provided
for in Section 13.4. The volume of LNG remaining in the tanks
of the LNG Tanker after unloading shall then be subtracted
from the volume before unloading and the resulting volume
shall be taken as the volume of the LNG delivered from the LNG
Tanker.
If failure of gauging and measuring devices of an LNG Tanker
should cause impossibility of determining the LNG volume, the
volume of LNG delivered shall be determined by gauging the
liquid level in Buyer's onshore LNG storage tanks immediately
before and after unloading the LNG Tanker and such volume
shall be increased by adding an estimated LNG volume, agreed
upon by the parties, for boil-off from such onshore LNG
storage tanks and related pipelines during the unloading of
LNG. Each Buyer shall provide Seller, or cause Seller to be
provided with, a certified copy of tank gauge tables for each
onshore LNG tank which is to be used for this purpose verified
by a competent impartial authority.
C. Determination of BTU Quantities Delivered
The quantities of BTU's delivered from LNG Tankers shall be
computed by Seller by means of the following formula :
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Q = V x D x P - Qr
where:
Q represents the quantity of the LNG delivered
in BTU's.
V represents the volume of the LNG unloaded,
stated in Cubic Meters, determined as
provided in Section 13.9 B.
D represents the density of the LNG unloaded,
stated in kilograms per Cubic Meter,
determined as provided in Section 13.5 D.
P represents the Gross Heating Value of the
LNG unloaded, stated in BTU's per kilogram.
Qr represents the quantity in BTU's of the vapor
which displaced the volume of LNG unloaded
from the LNG tanks of the LNG Tanker.
Physical constants, calculation procedures and examples of BTU
determination are provided in Schedule A.
13.10 Verification of Accuracy and Correction for Error
Accuracy of devices used shall be tested and verified at the request
of either party, including the request by a party to verify accuracy
of its own devices. Each party shall have the right to inspect at any
time the measurement devices installed by the other party, provided
that the other party be notified in advance. Testing shall be
performed only when both parties are represented, or have received
adequate advance notice thereof, using methods recommended by the
manufacturer or any other method agreed to by Seller and Buyers. At
the request of any party, any test shall be witnessed and verified by
an independent surveyor mutually agreed upon by Buyers and Seller.
Permissible tolerances shall be as defined in Schedule A. Inaccuracy
of a device exceeding the permissible tolerances shall require
correction of previous recordings, and computations made on the basis
of those recordings, to zero error with respect to any period which is
definitely known or agreed upon by the parties, as well as adjustment
of the device. In the event that the period of error is neither known
nor agreed upon, corrections shall be made for each delivery made
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during the last half of the period since the date of the most recent
calibration of the inaccurate device. However, the provisions of this
Section 13.10 shall not be applied to require the modification of any
invoice which has become final pursuant to Section 10.6.
13.11 Disputes
In the event of any dispute concerning the subject matter of this
Article 13, including, but not limited to, disputes over selection of
the type or the accuracy of measuring devices, their calibration, the
result of a measurement, sampling, analysis, computation or method of
calculation, such dispute shall be submitted to a competent impartial
authority mutually agreed upon by the parties or, if such authority
cannot be agreed upon within thirty (30) days of request by either
party, such dispute shall be decided by arbitration pursuant to
Article 16. All decisions of an authority acting under this Section
13.11 shall be binding on the parties. Expenses incurred in
connection with the services of such authority shall be shared equally
by the parties.
13.12 Costs and Expenses of Test and Verification
All costs and expenses for testing and verifying Seller's measurement
devices as provided for in this Article 13 shall be borne by Seller,
and all costs and expenses for testing and verifying a Buyer's
measurement devices shall be borne by such Buyer. The fees and
charges of independent surveyors for measurements and calculations as
provided for in Section 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.
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ARTICLE 14 - DUTIES, TAXES AND CHARGES
Each Buyer shall pay (or reimburse Seller for payments made by it), and shall
indemnify and hold Seller harmless from, all taxes, royalties, duties or other
imposts levied or imposed by the Japanese Government, any subdivision thereof
or any other governmental authority in Japan on the transportation, sale and
import of LNG hereunder or on any income resulting therefrom, including income
resulting from payments made under this Article 14, and all port charges, taxes
and duties levied or imposed on the LNG Tankers in Japan with respect to the
transportation of LNG hereunder. To the extent that the foregoing taxes,
royalties, duties, other imposts or port charges are included in the
calculation of the Transportation Element paid or payable by Buyer, the parties
understand and confirm that Buyer shall not be required to also pay such
amounts under this Article 14. All payments or reimbursements required under
this Article 14 shall be made by Buyer within twenty (20) calendar days after
the date of Buyer's receipt of such invoice in Japan.
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ARTICLE 15 - FORCE MAJEURE
15.1 Events of Force Majeure
Neither Seller nor any Buyer shall be liable for any delay or failure
in performance hereunder if and to the extent such delay or failure in
performance results from any of the following :
A. Fire, flood, atmospheric disturbance, lightning, storm,
typhoon, tornado, earthquake, landslide, soil erosion,
subsidence, washout or epidemic;
B. War, riot, civil war, blockade, insurrection, act of public
enemies or civil disturbance;
C. Strike, lockout or other industrial disturbance;
D. Serious accidental damage to or other serious failure of
Seller's Facilities, unless such damage or failure is the
result of gross negligence on the part of Seller's management;
E. Serious accidental damage to or other failure of a Buyer's
Facilities, unless such damage or failure is the result of
gross negligence on the part of such Buyer's management;
F. The Proved Remaining Recoverable Reserves of Natural Gas in
the Gas Supply Area expressed in the then most recent
Certificate referred to in Section 3.2(a) which can be
economically produced have been fully depleted;
G. Act of government which directly affects the ability of a
party to perform any obligation hereunder other than the
obligation to remit payments as provided in Section 10.4 on
account of LNG delivered and taken or not taken but required
to be paid for under this Contract;
H. Delay in completion and testing of any stage of the expansion
of the Badak Facility contemplated by Seller in connection
with the performance of this Contract so as to prevent the
same from becoming operational on a continuing basis, which
delay is caused by delay in receiving major items of equipment
or materials from the manufacturer or vendor thereof, provided
that Seller shall have taken all steps reasonably available to
obtain timely delivery of such items including
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the placing of purchase orders within such time as was prudent
under then existing circumstances; or
I. The removal of an LNG Tanker from service due to loss, serious
accidental damage or other serious failure, or other
unavailability of an LNG Tanker, unless such loss, damage,
failure or unavailability is the result of gross negligence on
the part of Seller.
Nothing herein shall relieve Buyers of their obligation to pay for LNG
delivered or to make any other payment which has become due and
payable under this Contract prior to the occurrence of any of the
events described above.
15.2 Notice, Resumption of Normal Performance, etc.
Immediately upon the occurrence of an event of force majeure, the
party affected shall give notice thereof to the other party describing
such event and the estimated period during which operations will be
suspended or reduced. The parties shall exercise reasonable diligence
to ensure resumption of normal performance under this Contract after
the occurrence of any event of force majeure, and, prior to resumption
of normal performance, the parties shall continue to perform their
obligations under this Contract to the extent not affected by such
event of force majeure.
15.3 Settlement of Industrial Disturbances
Settlement of strikes, lockouts or other industrial disturbances shall
be entirely within the discretion of the party experiencing such
situations and nothing herein shall require such party to settle
industrial disputes by yielding to demands made on it when it
considers such action inadvisable.
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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.
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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. The parties agree that the
United Nations Convention on Contracts for the International Sale of Goods and
the Convention on the Limitation Period in the International Sale of Goods
shall not apply to this Contract and the respective rights and obligations of
the parties hereunder.
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ARTICLE 18 - BUYERS' COORDINATOR
Buyers will from time to time designate a Buyers' Coordinator to act on behalf
of each Buyer in performing the following:
A. Coordinating among each of Buyers, and between Seller and
Buyer or Buyers, and the handling of communications between
Seller and Buyer or Buyers in connection with performance of
this Contract, in particular the exercise of Allowances
pursuant to Section 7.3(d); and
B. Implementation of various operations of each Buyer or of
Buyers which are necessary in connection with the purchasing
of LNG hereunder.
Buyers shall notify Seller the name and address of the entity to act as Buyers'
Coordinator. Buyers have notified Seller that Japan Indonesia LNG Co., Ltd. is
presently acting as Buyers' Coordinator.
Seller shall be entitled to accept and rely upon any communication received
from Buyers' Coordinator as if received directly from one or more of Buyers,
and to give any communication to Buyers' Coordinator with the same effect as if
given directly to a Buyer or Buyers, if such notice or communication relates to
matters as to which Buyers' Coordinator is acting as described above pursuant
to this Article 18. No act of, or authorization to, Buyers' Coordinator shall
relieve any Buyer from performance of any obligation or payment of any
liability of such Buyer hereunder, each Buyer remaining primarily liable
therefor at all times.
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ARTICLE 19 - CONFIDENTIALITY
No party to this Contract shall use or communicate to third parties the
contents of this Contract or other confidential information or documents which
may come into the possession of such party in connection with the performance
of this Contract without the prior agreement of the party or parties to which
such information or documents are confidential. This restriction shall not
apply to the contents of this Contract, or information or documents, which:
(i) have fallen into the public domain otherwise than through the act or
failure to act of the party that has obtained them; or
(ii) are communicated to:
(A) any of Seller's Suppliers, or any Affiliate (as defined
below), with the obligation of the receiving person to
maintain confidentiality;
(B) persons participating in the implementation of this project,
such as Seller's Transporters, Buyers' Coordinator, legal
counsel, accountants, other professional, business or
technical consultants and advisers, underwriters or lenders,
with the obligation of the receiving persons to maintain
confidentiality; or
(C) any governmental agency of the Republic of Indonesia or Japan,
or having jurisdiction over any of Seller's Suppliers or any
Affiliate or Seller's Transporters, provided that such agency
has authority to require such disclosure, and that such
disclosure is made in accordance with that authority.
As used before, the term "Affiliate" means a company that controls, is
controlled by, or is under common control with, a party to this Contract or any
of Seller's Suppliers.
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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 telegraph,
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 : General Manager, Gas Marketing Department
P.O. Box 12 / JKT
Jalan Merdeka Timur No. 1A
Jakarta Pusat, Indonesia
And at the following telegraph, telex and facsimile addresses :
Telegraph : Telex :
PERTAMINA PERTAMINA
JAKARTA, INDONESIA 44302 or 44152
Attention : General Manager, Gas Marketing JAKARTA,
Department INDONESIA
Facsimile: 62-21-345-8312
B. To Buyers at the following mail, telegraph, telex and facsimile
addresses :
CHUBU ELECTRIC POWER CO., INC.
(Mail and telegraph address ) Attention : Fuels Department
1, Toshin-cho, Higashi-ku,
Nagoya, 461-91 Japan
(Telex address) 4444405 CHUDEN J
(Facsimile address) 81-52-951-6025
THE KANSAI ELECTRIC POWER CO., INC.
(Mail and telegraph address) Attention : LNG Group
Office of Purchasing
3-22, Nakanoshima 3-chome, Kita-ku,
Osaka, 530-70 Japan
(Telex address) 5248320 KEPCO J
(Facsimile address) 81-6-441-0283
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KYUSHU ELECTRIC POWER CO., INC.
(Mail and telegraph address) Attention : Fuels Department
1-82,Watanabe-dori 2-chome,
Chuo-ku,
Fukuoka, 810 Japan
(Telex address) 725497KYUDEN J
(Facsimile address) 81-92-731-8719
NIPPON STEEL CORPORATION
(Mail and telegraph address) Attention : Coal & Fuel Dept.-1
Raw Materials Div.-1
6-3, Otemachi 2-chome,
Chiyoda-ku,
Tokyo, 100-71 Japan
(Telex address) 22291 NSC J
(Facsimile address) 81-3-3275-5990
OSAKA GAS CO., LTD.
(Mail and telegraph address) Attention : Gas Resources Department
1-2, Hiranomachi 4-chome,
Chuo-ku,
Osaka, 541 Japan
(Telex address) 5225275DAIGAS J
(Facsimile address) 81-6-222-2044
TOHO GAS CO., LTD.
(Mail and telegraph address) Attention : Raw Materials Department
19-18, Sakurada-cho,
Atsuta-ku,
Nagoya, 456 Japan
(Telex address) 4477651 TOHOGS J
(Facsimile address) 81-52-871-6967
The parties may designate additional addresses for particular communications as
required from time to time, and may change any addresses, by notice given
thirty (30) days in advance of such additions or changes. Immediately upon
receiving communications by telex, facsimile, telegraph or radio, a party shall
acknowledge receipt by the same means, and may request a repeat transmittal of
the entire communication or confirmation of particular matters. If the sender
receives no acknowledgment 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.
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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. Any purported assignment without the
aforesaid consent or consents in each case shall be null and void.
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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.
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ARTICLE 23 - SEVERALTY
This Contract shall be binding upon each Buyer in accordance with its terms.
The liabilities of Buyers under this Contract are several and not joint, and
each Buyer shall be liable only for performance of the obligations of such
Buyer as provided in this Contract.
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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.
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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 First A/R, 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 Second A/R, 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 Second A/R, such specific amendment shall prevail;
(ii) the Ancillary Agreements (or identified portions thereof) that were
superseded by the First A/R (Section 25 (ii)) shall continue to be
without effect; and
(iii) the 1973 Extension MOA shall be terminated.
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ARTICLE 26 - COUNTERPARTS
This Second A/R is executed in seven (7) identical counterparts, each of which
shall have the force and dignity of an original, and all of which shall
constitute but one and the same Second A/R.
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ARTICLE 27 - EFFECTIVE DATE AND APPLICABILITY
This Second A/R shall be effective as of the date of execution stated below.
Notwithstanding the foregoing sentence, the provisions of the First A/R shall
continue to apply and shall take precedence over this Second A/R until January
1, 2000.
IN WITNESS WHEREOF, each of the parties has caused this Second A/R to be duly
executed and signed by its duly authorized officer as of August 3, 1995.
SELLER: BUYERS:
- ------ -----
PERUSAHAAN PERTAMBANGAN CHUBU ELECTRIC POWER CO., INC.
MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
By: /s/ HIROJI OTA
--------------------------------------------------
By: /s/ F. ABDA'OE Name: Hiroji Ota
--------------------------------------------- -------------------------------------------
Name: F. Abda'oe Title: President and C.E.O.
-------------------------------------- -------------------------------------------
Title: President Director
--------------------------------------
THE KANSAI ELECTRIC POWER CO., INC.
By: /s/ YOSHIHISA AKIYAMA
--------------------------------------------------
Name: Yoshihisa Akiyama
-------------------------------------------
Title: President and Director
-------------------------------------------
WITNESSES:
- ----------
JAPAN INDONESIA LNG CO., LTD. KYUSHU ELECTRIC POWER CO., INC.
By: /s/ MASUO SHIBATA By: /s/ SHIGERU OHNO
--------------------------------------------- --------------------------------------------------
Name: Masuo Shibata Name: Shigeru Ohno
-------------------------------------- -------------------------------------------
Title: President and Director Title: President
-------------------------------------- -------------------------------------------
NISSHO IWAI CORPORATION NIPPON STEEL CORPORATION
By: /s/ AKIRA NISHIO By: /s/ ROKURO SUEHIRO
--------------------------------------------- --------------------------------------------------
Name: Akira Nishio Name: Rokuro Suehiro
-------------------------------------- -------------------------------------------
Title: President Title: Executive Vice President
-------------------------------------- -------------------------------------------
OSAKA GAS CO., LTD.
By: /s/ SHIN-ICHIRO RYOKI
--------------------------------------------------
Name: Shin-ichiro Ryoki
-------------------------------------------
Title: President
-------------------------------------------
TOHO GAS CO., LTD.
By: /s/ SADAHIKO SHIMIZU
--------------------------------------------------
Name: Sadahiko Shimizu
-------------------------------------------
Title: President
-------------------------------------------
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SECOND AMENDED AND RESTATED 1973 LNG SALES CONTRACT
The following describes Schedule A to the Second Amended and Restated 1973 LNG
Sales Contract, which is omitted herein, but will be furnished upon request:
Schedule A - Testing and Methods
Part I - BTU Quantity Determination (setting forth a table of physical
constants and the formulae for LNG density determination, gross heating
value calculation and total BTUs delivered calculation)
Table I - Example of LNG Density Calculation
Table II - Molar Volumes of Individual Components
Table III - Correction C for Volume Reduction of Mixture
Table IV - Example of Gross Heating Value Calculation
Part II - Quality Determinations
Part III - Maximum Permissible Tolerances
85
SIDE LETTER TO SECOND AMENDED AND RESTATED 1973 LNG SALES CONTRACT
August 3, 1995
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,
This letter relates to the Second Amended and Restated 1973 LNG Sales Contract
entered into of even date herewith ("Second A/R") (terms defined therein having
the same meanings when used herein).
A. HNS CONVENTION
The International Maritime Organization is developing an International
Convention on Liability and Compensation for Damage in Connection with the
Carriage of Hazardous and Noxious Substances by Sea ("HNS Convention"). If it
becomes likely that the HNS Convention will apply to shipments of LNG under the
Second A/R, then Seller and Buyers shall engage in a process of mutual review
and consultation in order to determine how to allocate any payments Seller is
required to make under the HNS Convention relating to the Fixed Quantities.
B. OMNIBUS AGREEMENT
Seller believes that changing circumstances and increasing values at
the Badak Facility necessitate making changes to the Omnibus Agreement
regarding the required protection and indemnity insurance coverage in respect
of the LNG Tankers ("P&I Cover"). Seller and Buyers shall therefore engage
as soon as possible in a process of mutual review and consultation in order to
determine whether the P&I Cover should be increased to U.S.$300,000,000, as
proposed by Seller.
C. SOCIAL RESPONSIBILITY INSURANCE
Buyers and Seller shall meet during 1999 to determine whether Seller
should obtain Japanese Social Responsibility Insurance ("SRI") for the
Dwiputra. However, if the meetings on the HNS Convention contemplated under A
above occur prior to 1999, then SRI discussions shall be included within such
HNS Convention discussions. Any discussions on how to deal with the HNS
Convention shall also consider whether SRI should be continued for the Burmah
Vessels (and for the Dwiputra, if SRI has been obtained already for such
vessel).
D. DEFINITION OF BUSINESS DAY IN JAPAN
Seller and Buyers have not reached a conclusion regarding whether
December 31 should be considered a Business Day in Japan. Buyers are not able
to make payment to Seller on December 31 through a bank in Japan since December
31 is, by Japanese Government order, a non-banking day in Japan. However,
Seller believes the treatment of December 31 as a non-business day would cause
Seller to incur substantial financial losses and is not justified by the
difficulties faced by Buyers.
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Seller and Buyers are willing to engage in a process of mutual review
and consultation on the exclusion of December 31 as a Business Day in Japan in
the context of considering such a change for all of Seller's sales contracts
with Japanese buyers.
E. PRICING
Article 8 of the Second A/R refers to realized export prices (except
premiums and except prices for spot sales) of field classifications of
Indonesian crude oils being sold and exported. The parties acknowledge that as
of the effective date of the Second A/R, the Indonesian Crude Price (ICP)
system establishes such realized export prices.
If at any time in the opinion of Seller or Buyers, based on their
independent studies, the prices of the field classifications used by Seller to
determine "A" in the formula in Section 8.2(a) are materially different from
the realized export prices, such party shall so notify the other stating the
basis for such opinion, and the parties shall consult promptly and jointly
review the matter with a view to determining whether such difference exists
and, if so, to establishing an alternative basis, to be adopted by Seller, for
determining (for the purposes of the Second A/R) such realized export prices
(except premiums and except prices for spot sales).
In such event the parties shall continue to administer and perform the
provisions of the Second A/R, and to determine the Contract Sales Price and
submit and pay invoices, on the basis provided for in the Second A/R, until the
parties shall have completed such joint review.
If, upon completion of such joint review, it is determined that such
difference exists, then Seller shall promptly take all measures to ensure
proper administration of the Second A/R at all times, including any necessary
recalculation of the Contract Sales Price.
F. EXCESS CAPACITY
Seller confirms that it places great importance on the mutual trust
and cooperation that exists with Buyers, and that no changes effected by the
Second A/R are intended to adversely effect the relationship between the
parties. Seller 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 Seller'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. Seller is therefore unable to grant any general reservations of its
excess capacity.
However, in view of the long term business relationship between Seller
and Buyers, Seller 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 Seller
determines that it has excess LNG production capacity and (if applicable)
shipping capacity available, then Seller 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.
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This Side Letter shall be effective as of the date of execution,
except the provisions of paragraph E and F above shall be effective as
of and from January 1, 2000. This Side Letter supersedes as of January
1, 2000 any prior written instrument between the parties with respect
to the subjects herein mentioned.
Very truly yours,
PERUSAHAAN PERTAMBANGAN
MINYAK DAN GAS BUMI
NEGARA (PERTAMINA)
By: /s/ F. ABDA'OE
-----------------------------
Name: F. Abda'oe
Title: President Director
AGREED AND ACCEPTED
CHUBU ELECTRIC POWER CO., INC. THE KANSAI ELECTRIC POWER CO., INC.
By: /s/ HIROJI OTA By: /s/ YOSHIHISA AKIYAMA
---------------------------------- ---------------------------------
Name: Hiroji Ota Name: Yoshihisa Akiyama
--------------------------- --------------------------
Title: President and C.E.O. Title: President and Director
--------------------------- --------------------------
KYUSHU ELECTRIC POWER CO., INC. NIPPON STEEL CORPORATION
By: /s/ SHIGERU OHNO By: /s/ ROKURO SUEHIRO
---------------------------------- ---------------------------------
Name: Shigeru Ohno Name: Rokuro Suehiro
--------------------------- --------------------------
Title: President Title: Executive Vice President
--------------------------- --------------------------
OSAKA GAS CO., LTD. TOHO GAS CO., LTD.
By: /s/ SHIN-ICHIRO RYOKI By: /s/ SADAHIKO SHIMIZU
---------------------------------- ---------------------------------
Name: Shin-ichiro Ryoki Name: Sadahiko Shimizu
--------------------------- --------------------------
Title: President Title: President
--------------------------- --------------------------
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