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EXHIBIT (10)-70-
MEMORANDUM OF AGREEMENT
BETWEEN
PERTAMINA
AND
KOREA GAS CORPORATION
FOR
THE PURCHASE AND SALE OF LNG
DURING 1996 - 1999
MEMORANDUM OF AGREEMENT
FOR
THE PURCHASE AND SALE OF LNG DURING 1996 - 1999
This Memorandum of Agreement ("Agreement") dated July 19, 1996 is made by and
between PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA ("PERTAMINA")
("Seller") and Korea Gas Corporation ("KOGAS") ("Buyer"), for the sale and
purchase of certain quantities of LNG as described below. Seller and Buyer are
collectively referred to herein as the "Parties".
WHEREAS, Seller and Buyer are parties to an Amended and Restated LNG Sales and
Purchase Contract, effective as of January 1, 1991 ("Arun III Contract") which
is in full force and effect and which is unaffected by this Agreement;
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WHEREAS, Seller and Buyer are parties to the LNG Sales and Purchase Contract
effective as of May 7, 1991 ("Korea II Contract") which is in full force and
effect and which is unaffected by this Agreement; and
WHEREAS, Seller desire to sell and Buyer desires to purchase certain quantities
of LNG during the period 1996 to 1999 inclusive.
NOW THEREFORE, in consideration of the mutual promises contained herein, the
Parties agree as follows:
ARTICLE I - TERM
The effectiveness of this Agreement shall be as of the date hereof and the term
of this Agreement shall commence on September 1, 1996 and shall terminate when
the respective rights and obligations of the parties hereunder have been
extinguished.
ARTICLE II - FIXED QUANTITIES
During each calendar year specified below ("Fixed Quantity Period"), Seller
shall sell and deliver to Buyer and Buyer shall purchase, receive and pay for
at the applicable Contract Sales Price, the quantity of LNG specified for such
Fixed Quantity Period (each such quantity being called a "Fixed Quantities") as
follows:
Fixed Quantity Period Fixed Quantities (Number of Cargoes)
- --------------------- ------------------------------------
Ex-ship FOB TOTAL
------- --- -----
1996 - 3 3
1997 2 20 22
1998 2 20 22
1999 3 20 23
One Ex-Ship cargo is equivalent to 2,900 Billion BTUs.
One FOB cargo is equivalent to 2,940 Billion BTUs.
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ARTICLE III - TRANSPORTATION
(a) Seller shall be responsible for providing transportation for the Ex-ship
Fixed Quantities, and Buyer shall be responsible for providing
transportation for the FOB Fixed Quantities, specified in Article II
above.
(b) In providing transportation hereunder, the Parties shall use LNG Tankers
which are compatible with the Loading Port and the Receiving Facility
and which have the required port clearances, authorizations and
approvals. The Parties shall use their respective best efforts to
obtain such clearances, authorizations and approvals.
ARTICLE IV - CONTRACT SALES PRICES
(a) Ex-Ship Fixed Quantities
The Contract Sales Price for the Ex-Ship Fixed Quantities shall be the
sum of an LNG related portion ("LNG Related Portion") and a transport
related portion ("Transport Related Portion").
The LNG Related Portion shall be 0.159 REP, where REP is the arithmetic
average of the realized export prices, in U.S. Dollars per barrel,
F.O.B. Indonesia, of all field classifications of Indonesian crude oils
(including condensate) then being sold and exported, except premiums and
except such prices for spot sales.
The Transport Related Portion shall be U.S.$0.62/MMBTU as at January 1,
1994, escalating 2.5% per annum thereafter.
(b) F.O.B. Fixed Quantities
The Contract Sales Price for the F.O.B. Fixed Quantities shall be equal
to the LNG Related Portion for the Ex-Ship Quantities referred to in (a)
above, multiplied by a boil-off adjustment factor of 0.9870.
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ARTICLE V - SOURCE OF SUPPLY
The Natural Gas to be processed into LNG and sold and delivered hereunder is to
be produced from the areas in East Kalimantan covered by production sharing
contracts between PERTAMINA and its relevant suppliers, and loaded at
PERTAMINA's facility at Bontang, East Kalimantan and Gas Supply Area shall be
construed accordingly.
ARTICLE VI - GENERAL TERMS AND CONDITIONS
(a) Ex-ship Fixed Quantities
All of the terms and conditions of the Arun III Contract shall apply to
the Ex-ship Fixed Quantities and shall be incorporated in this Agreement
(mutatis mutandis) except for terms which are specifically excluded
below, or which conflict with the terms herein. Capitalized terms used
herein in connection with the Ex-ship Fixed Quantities shall have the
same meaning as set forth in the Arun III Contract unless otherwise
specifically defined or construed herein.
The following Articles of the Arun III Contract are hereby expressly
excluded from this Agreement:
7.1 Fixed Quantity (save that each of the calendar years 1996 - 1999
shall be referred to as a "Fixed Quantity Period" and the
quantity of LNG set out for delivery hereunder in each such
calendar year shall be referred to as the "Fixed Quantity" for
such Fixed Quantity Period);
7.3 Buyer's Obligation to Take-or-Pay;
7.4 Allocation of Deliveries of Fixed Quantities Between Buyer and
Other Purchasers;
7.6 Make-Up LNG;
7.7 Allocation for Make-Good LNG, Make-Up LNG and Restoration
Quantities; and
7.8 Priority Order.
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(b) F.O.B. Fixed Quantities
All of the terms and conditions of Korea II Contract shall apply to the
FOB Fixed Quantity and shall be incorporated in this Agreement (mutatis
mutandis) except for terms which are specifically excluded below, or
which conflict with the terms herein. Capitalized terms used herein in
connection with the FOB Fixed Quantity shall have the same meaning as
set forth in Korea II Contract unless otherwise specifically defined or
construed herein.
The following Articles of Korea II Contract are hereby expressly
excluded from this Agreement.
7.1 Fixed Quantity (save that each of the calendar years 1996-1999
shall be referred to as a "Fixed Quantity Period" and the
quantity of LNG set out for delivery hereunder in each such
calendar year shall be referred to as the "Fixed Quantity" for
such Fixed Quantity Period);
7.3 Buyer's Obligation to Take-or-Pay;
7.4 Allocation of Deliveries of Fixed Quantities between Buyer and
Other Purchasers;
7.5 Make-Up LNG;
7.7 Allocation for Make-Up LNG and Restoration Quantities; and 7.8
Priority Order.
ARTICLE VII - DELIVERIES
The Parties refer to their common understanding regarding deliveries of the
Fixed Quantities hereunder as set out in paragraph 1 of the Minutes of Meeting
between them dated 22-23 May, 1996. The Parties shall have their respective
representatives regularly consult to seek to apply this understanding in
practice.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed by its duly authorized officer as of the day and year first above
written.
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BUYER: SELLER :
- ------ --------
KOREA GAS CORPORATION PERUSAHAAN PERTAMBANGAN MINYAK
(KOGAS) DAN GAS BUMI NEGARA (PERTAMINA)
/s/ /s/
- ---------------------------- ------------------------------------
By:Han, Kap-Soo By:F. Abda'oe
Title:President Title:President Director
& C.E.O. & C.E.O.