Oil Agreement (1979)(Ratification) Act, 1982

ACT Supplement to theSierra Leone Gazette Vol. CXIII, No. dated 18 th February,1982. SioKED this 16th day of February, 1982. SIAKA STEVENS, President, LS No. 2 1982 has.._Sierra Leone The Exploration, Mining and Pröcessing of Mineral Short tite,: Oil Agreement (1979)(Ratification) Act, 1982 Being an Act to ratify and confirm an Agreemnent made for and on behalf ofthe Government of SierraLeone ofthe first part, The Oxoco Inter. ational and Aracca Petroleum Corporation of the second part for theexploration, mining and processing of mineral oil inSierra. Leone; and for matters connected therewith orincidental thereto. [28th May, 1979.]Dateof commencc WHEREAS; en Agreement was made on th .28th day of May,ment. 1979, between the Monourable Françis Stephen Conteh, Esquire, Ministerof Mines, acting for and on behalf of the Government of Sierra Leone of the first part, and Oxoco International and Aracca. Petroleum Corporation of the s cond part, which Agreement is set out in the Schedule to this Act: 4 No. 2 Exploration, Mining and Processing Mineral 1982 Effective Date" means the date on which this Agreement is signed by the parties concerned.

(1)The Government hercby agrees to grant to the Companies upon application Oil Exploration Licence (hereinafter referred to as "the Licence ) covering the areas lying within the territorial waters and continental shelf of Sierra Leone as more fully described in the Schedule attached hereto. (2) The provisions of the Mining (Mineral Oil) Act and Regulations relating to mineral oil exploration and mineral oil Prospecting shall apply to the Licence granted hereunder.

(1) The term of the Licence is for five (5) years from the date of issue. (2) The Licœnce shall confer on the Companies in addition to the rightsgranted by the Mining (Mineral Oil) Act and Regulations the exclusive right to carry out within the area specified in this Agreenent such operations as are provided for in this Agreement. (3) Not later than the end of six months after the coming into force of this Agreement the initial area shall be reduced by at least 30 per cent. Subsequently, not later than the end of 30months after the coming into force of this Agreement, the area shall be reduced again to.the extent necessary to ensure. that not more than 40 per cent of the initial area shall remain at the Companies' disposal. (4) The Companies shall designate the boundaries of the area to be relinquished on each occasion, and shall notify the Government accordingly not less than three months in advance of the due date. Such notice shall be accompanied by a map and a clear descrip tion of the plots to be relinquished the shape of plots of which shall be as determined by the Director of Mines. However, the Companies shall not be required to relinquish any area that is immediately adjacent toa proven area and which is yet untested. (5) The rent payable by the Companies in respect of the Exploration Areas shall be as stated in the Licence. (6) The Companies shall throughout the period of the licence be obliged to spend annually on bona fide exploration the sum specified in this Agreement, The-Companies shall submit to the Director of Mines at the end of each oil exploration year detailed returns of expenditure incurred in respect of th s sub-clause. Na 2 Exploration, Mining atd Processing Mineral 1982 5

Upon written application by the Companies not later than six months prior to the expiration of the licence the Companies shall be entitled to the renewal of the licence for a further period of two years from and after such expiration date upon revised terms and cond tions provided that the Companies are not then in default under any of the terms and conditions of the Licence for this Agreement. But the said renewal for a further two years will only be granted if the Companies have applied foran Oil mining Lease under this Agree ment. Ifatthe end of the exploration period no commercial exploitable field shall have been discovered, this Agreement shall be deemed to have terminated. 5 MINING LEASE (1)The Companies, observing and performing the terms and condi tions herein shall have a right at anytime during the tern of any exploration licence issued pursuant to this Agreement or any renewal thereof upon written request to the grant, of an oil mining lease (hereinafter called the Lease ") covering all or any of the Exploration area as described in the Company's request. The provisions of the Mining (Mineral Oil) Act and Regulations relating to mining leases shall apply to the Lease except to the extent inconsistent with the special provisions incorporated in this Agreement. (2) The term of the Lease shall cover a period of twenty-five years from the date of issue. The Companies may by at least six (6) months previous notice in writing to the Government given prior to the expiration of the period of the Lease, request the Govern ment to grant them a new Lease for a further minimum term of five (5) years on terms and conditions to be agreed upon between iiit the parties. 3)The Government shall during the terms of the Lease indemnify the Companies against all claims by owners or occupiers (includ ing Chiefdom Councillors) in respect of the Mining Areas other than ciaims for compensation payable in accordance with the provisions of the Mining (Mineral Oil) Act and Regulations and terms and conditions pursuant to this Agreement. 4) The Companies may surrender any part or parts, but not all, 00,EZof the Mining Areas at any time during the term of the Lease by notice in writing to the Government to that effect and upon such surrender the lands surrendered shall cease to be comprised în or subject to the provisions of. the Lease. 6 No. 2 Exploration, Mining anl Phocessing Mineral (5) The Companies shall have the right to terminate the Lease at any time giving not less than (6) months notice in writing to the Government to that effect. (6) Upon the surrender or other termination of the Lease or of any other Lease granted hereunder, or of any portion thereof, the Companies shall be granted a period of not less than one (1) year, or such longer period as the Director of Mines may specify, immediately following such expiration or termination in which to remove all or any of their buildings, structures, piant, machinery equipment or effects from areas covered by the Lease or portion of the Lease surrendered or terminated. Any of the Companies' buildings, structures, plant, machinery or effects which are not removed in accordance with the provisions of this sub-clause (6) within the period stated herein, or such longer periods as the Director of Mines may specify, shall at the expiration of such period become the property of the Govern ment. Nothing in this sub-clause (6) contained shall prejudice the right of the Government to take possession of any building. plant machinery or other effects which are the property of the Companies and which on the expiration, surrender or other termination of any lease are left upon the area of such lease if the Companies are knowingly in default in payment due to the Government in respect of such lease.

(1)The Companies shall : (i) pay a cash bonus of twenty leones (Le20) per retained square mile or part thereof on discovery of oil in commercially exploitable quantities; (ú) pay a cash bonus of five hundred thousand dollars ($500,000) when production shall have reached seventy. five thousand (75,000) barrels per day for thirty (30) consecutive days; (ii)pay a cash bonus of one million dollars (S1,000,000) when production shall have reached one hundred thousand (100,000) barrels per day for thirty (30) consecutive daysi (iv) pay a cash bonus of two million dollars ($2,000,000) when production shall have reached two hundred thousand (200,000) barrels per day for thirty (30) consecutive days; (1) pay a cash bonus of three million d llars (S3,000,000) when production shall have reached three hundred thousand (300,000) barrels per day for thirty (30) secutive days; No. 2 Exploraion,Mining dnd Processing Mineral 1982 (2) i)Rental shall be payable half-yearly in advance on the Explo ration Area held by the Companies at an anual rate of fity cents (Le0.50) per retained square mile or part thereof for the frst five (5)years, thereafter twenty leones (Le20) per retained square mile or part thereof during the exploratory period. (ii) The Companies shall pay to the Government half-yearly in advance a mining lease rent at the rate of nine hundred leones (Le900) per square mile or part thereof per year for the first ten (10) years of the term of the lease. Thereafter the Com panies shall pay to the Government half-yearly in advan a mining leaso rent at the rate of one thousand three hundred and fifty leones (Lel,350) per square mile or part thereof. The first payment shall be made within thirty (30) days of the coming into force of this Agreement and shall be proportionate to the amount of time remaining in the half-year. (111) The Companies shall pay to the Government a surace rent in respect of any enjoyment of any easements, right of way and the like as specified in this Agreement. (3) (i) Expenditure obligation shall ba ten leones (Le10) per square mile or part thereof for the first two (2)years of the explora tion period and fifty leones (Le50) per square mile or part thereof thereafter. (ii) Within six months after the end of the exploration period, the Companies shall in the event no commercial mineral oil deposit has been found, submit a full report to the Govern ment, supported by adequate documents, indicating the total amount spent by it on exploration operations during the said period. Áfter verification of such report, any sum by which the total expenditure may fall short of the total minimum expendi ture obligation herein laid down shall be paid by the Companies to the Government. (i)During the first two (2) years after the commencement of exploration operations, the Companies may not suspend or stop operations for any reason except Force Majeure as prescribed in this Agreement. But at any time after the end of the said two years period, it may relinguish its rights subject to the requirement of notice as laid down in Clause 5 of this Agreement and to having fulfilled all obligations that it may have incurred up to thedate of relinquishment, including in particular the relevant minimum expenditure obligation. In,the event that there remains an unexpended balance, up to fhc date of notification of relinguishment, such balance shall be € paid by theCompanies to the Government. However, should the Companies ccase oxploration at the end of the two years from the obligation to pay such shortfall to the Government provided the Companies have fully carried out their under taking set out in Clause 6 (3) of this Agreement. (4) (a) The Companies shall be subject to the provisions of the Income Tax Act in force applicable to Companies generally. (6) In addition to Sub-clause (4) (a) the Companies shall be liable to Surtax in force in accordance with the Surtax (Temporary Imposition) Act. (c) Notwithstanding Sub-clause (4) (a) and Sub-clause (4) (b) the total tax liability of the Companies to the Government in respect of Income Tax and Surtax for any year of assessment shall be an amount equal to fifty percent (50/%) of its charge able income ascertained in accordance with the provisions of the Income Tax Act in force. (d) In computing the total amount of Income Tax and Surtax tobe paid by the Companies in respect of any year of assess ment there shall be deducted from the amount of tax payable payments made in respect of Royalty as provided for in Sub clause (6)in so far as such payments fall due within the same year of assessment; so that in any year of assessment the tax paid by the Companies under Sub-clause (4) (a) and Sub clause (4) (b) together with the said Royalty shall not exceed 1ffty per centum of the chargeable income of the Companies ascertained in accordance with the provisions of the Income Tax Act in force: Provided that if the said Royalty exceeds fifty per centum iiof the chargeable income of the Companics the Royalty shall tbibe payable in full for that year. (5)(a) In computing the chargeable income of the Companies no deduction shall be allowed for payments made in respect of Royalty as provided for in Sub-clause (6), depletion, amorti 9zation of debts, taxes and other imports paid by the Companies outside Sierra Leone. (6)Capital Allowances shall be granted in accordance with the Third Schedule to the Income Tax Act. Provided that: i: i) all expenditure, including prospecting expenditure, other than on plant, machinery and buildings incurred by the Companies during the exploration No, 2 Exploration, Mining and,Processing Mineral 1982 period, less the Companies net procceds from the sale of materials produced in the conduct of its activities in SierrLeone under and pursuant to this Agreement and sold prior to beginning of pro duction period, and the market value of stocks, unsold petroleum held by the Companies less the anticipated expenses of transporting and selling the same shall be deemed to constitute exploration expenditure and as such shall be subject of capital allowances at the rate of ten per centum per annum. (ii) Cash bonus paid as provided for in Sub-clause 6 (1) shall be subject of capital allowance at the rate of ten per cent per annum. (6) (a) The Companics shall pay to the Government aRoyalty equal to 12 of the value of all crude oil produced and saved in the Authorised Area cach year, excluding Petroleum used by it in its operations. The value of Petroleumn shall be calculated on the basis of posted prices as defined in Clause 14. (6) The Royalty provided for in the preceding Sub-clause (6) (a) shall be paid in whole or in part cither in cash or in kind at the Government's choice. Where the Government elects to receive Royalty in kind, it shall give the Companies notice in writing of the quantities required during a specific year not less than (3)months before the beginning of the ycar. (c) The Royalty payable in respect of Natural Gas sold in or exported from Sierra Leone or used by the Companies to manufacture any substances for sale or export shall be equal to 124% of the proceeds of the sale thereof. (a) Royalties shall be paid quarterly. The amount payable in respect of each quarter of the calendar ycar shall be paid by the Companies not later than thirty (30) days after the end of the quarter. (7) from the Companies in respect of Authorised operations, except Notaxes shall be imposed on, or payments of any nature required for the following: (a) Payments to be made to the Government as laid down in Clause 6 of this Agreement: (b) Income Tax as provided for in Clause 6; (c) Customs duties as laid down in Clause 9; (d) Payments to the Government of taxes required by the Income Tax Law to be withheld from salaries paid to , Employees and payments made to Contractors in Sierra Leone as provided for in Clause 6; 10 Exploralion, Mining and Processin Mineral 1982 Oil Agreement (|979) (Ratification) (e) Reasonable and non-discriminatory charges and fees for services rendered by Government Authorities on request or to the public in general such as tolls, water rates and sanitary charges; ()Non-discriminatory taxes and fees of general application, such as documentary stamp taxes, registry, patent and copyright fees; (g) Payroll taxes in accordance with Payroll Tax Act.

The Companies shall cause their books to be audited as soon as practicable after each accounting year by such independent firm Chartered Accountants as may be chosen by the Companies and approved by the Government. The Companies Áccounts Book together with the audited report and certificate shall then be forwarded to the Commissioner of Income Tax. The Balance Sheet and Profit and Loss Account shall be drawn up in the English Language.

(i) Subject to the strict observance of the provisions of this Agree ment, the Companies shall have full and effective control of all operations. (i) The Companies have exclusive right to explore, search and drill for and produce petroleum within the Mining Area by any methods that they consider appropriate in compliance with good oil field practice; to convey the petroleum produced to any point as necessary for use, treatment, storage, or export or sales for use or consumption outside of Sierra Leone, to store it wherever needed; and to deliver it to any transportation facilities for export. (ii) In addition to the other rights granted them by this Agreement and the Mining (Mineral Oil) Act and Regulations and other applicable laws of Sierra Leone, the Companies shall have the following rights: (iv) Rights incidental to mining operations as follows (a) To create all facilities for exploring for end producing petroleum; (b) to drill wells, pits, shafts and make vxcavations; (c) to make dams, drains and water-courses; (d) toreclaim land and create islands; (e)toconstruct tanks, reservoirs and other storage facilities; No. 2 Exploration, Mining and Processing of Mineral 1982 11 () to construct gas-oil separators, topping plants, cassing head gasoline plants and sulphur planis; ()to create power-lines and telegraph, telephone, radio a d other communication facilities; (h) to provide pipclines, pumping stations, power hóuses, and power stations; build ofices,factories, warehouses and other buildings: )to create ports, docks, harbours, piers, jetties, dredgings, breakwaters, submarine loading line and terminal faci lities; (k) to makerailways, roads, bridges, ferries, airways, airports and other transport facilities; () to administer and maintain allthe above facilities. The reclaiming of land, the creation of islands and the construction of any railway lines, ports, telephone, telegraph and radio services, power and aviation facilities shall require the prior consent of the Government which shall not be unreasonably withheld or delayed. In cases where the conduct of Authorised Operations necessi tates the use of land belonging to the State, such land shall upon application by the Companies be placed at its disposal in consideration of a surface rent to be fixed by the Government, but not exceeding the surface rent or similar land in the vicinity of the Exploration or Mining Area. Easements, rights of way, the right to construct vads, railways, pipe-lines and the like where the State land is concerned shall be granted to the Companies as necessary, in the same manner. The Government shall have the right to refuse the Companies appli cation for any land which comprises historical or religious sites or which is deemed unsuitable for Petroleum Operations for sa ety and security reasons. Where the conduct of Authorised Operations involves the use of land which is privately owned, or the acquisition of easements, rights of way and the like over privately-owned land, the Companies shall negotiate with the owner for the acquisition of the ttle desired, either by purchase or lease. If the owner refuses to sell or lease the land or to grant the casement, or if he demands unreasonable terms, the Companies may apply to the Government to intervene on its behalf and to ensure that such land is placed at its disposal, or that the casement required is granted on reasonable terms. Any relinquishment of parts of the Authorised Area effected in accordance with the provisions of this Agroement shall not affect the Companies' access rights acquired over land so relinqu shed. 12 No. 2 Exploratio1, Mining and Processing Mineral 1982 The Companies may, for the purpose of conducting Authorised Operations, and subject to any third party rights, use any water found on land which it shall have acquired hereunder or on unutilized State land; it may likewise, subject to third party rights, cut timber and take building materials from such land, and may clear parts from a forest existing thereon. However, when land has been rented from a private owner, the exercise of such rights shall depend on the owner's consent. The Companies shall acquire title to its share of all of the Petro leum which it shall find in accordance with the provisions of this Agreement. The Companies shall have the right to export the Petroleum produced by it without being subject to any export taxes, duties or other charges. It shall be free to decide with whom to contract for the shipment of its cargoes of Petroleum, and also whether and with whom cargoes shall be insured. However, the Companies shall give preferential consideration to the transportation of its cargoes by vessels belonging to Sierra Leone, provided such means of transportation are available on reasonable and competitive conditions.

The Companies shall be entitled to import, free of customs and other duties, all articles which may be needed exclusively for the conduct of Authorised Operations. This exemption shall not apply in respect of any goods which are available in Sierra Leone of suit able and reasonably comparable quality and atno higher price, provided that in comparing prices of goods available in Sierra Leone 3to the price of imported goods there shall be added any customs or export duties paid in the country of origin as well as other expenses incurred up to the time the imported goods are landed in Sierra Leone. Any articles thus imported may be re-exported by the Compa nies without any permits, and free of all duties but subject to notice to the Government, and for the f llowing purpose only: Repairs which cannot be effected in Sierra Leone, exchange against more modern or more efficient equipment, and return to the place of origin of equipment imported for temporary use. Repaired or renewed parts shall be brought to Sierra Leone within a reasonable time. The Companies may, subject to the consent of the Government, sell in Sierra Leone articles imported by it, provided that the buyer shall pay all applicable duties and conform tothe formalities and rules relating to customs clearance. No. 2 Exploration, Mining and Processing of Mineral 1982 13 Articles needed for personal use of Compaies' employees and their dependants may be imported, subject to thepayment of customs and import duties generally applicable at the time of import. This provision, however, shall not apply to goods and articles brought in for personal use at the time of first entry. Employees of the Companies and their dependants shall enjoy freedom of movement throughout Sierra Leone by anyform of trans port, subject to the observance of any rules concerning such transport. Provided that visits to diamond protected arcas shall be in accordance with a valid permit. The Companies shall be free to retain or dispose of its funds or assets outside Sierra Leone including but not limited to proceeds of any export sales. It shall have the right to export any such funds as it shall have imported or derived from its operations in Sierra Leone. The Companics shall have the right to engage foreign personnel for the conduct of Authorised Operations, provided that it shall employ Nationals of Sierra Leone to the fullest extent possible, and also that it shall train Nationals of Sierra Leone both within the industry and by the grant of scholarships in order that they may replace foreign personnel as soon as reasonably practicable. Programmes and plans for such training shall be drawn up and agreed upon annually by the Government and the Companies. The obligations to train the Nationals of Sierra Leone shali begin to be carried out as soon as practicable after completion of the first producing well. The Companies may entrust the execution of any part of Authorised Operations to independent contractors, provided: (a) that a copy of cach signed contract is submitted to the Government as soon as possible; (b) that the Companies shall, as far as possible select cOntrac tors who are Nationals of Sierra Leone, provided such Nationals are capable of performing the work desired satisfactorily and on terms and conditions which compare favourable with those of expatriate contractors; (c) that the Companies shall remain directly responsible to the Government for the proper performance of the work entrusted to contractors.

()The Companjes undertake to commence exploration operation not later th n six (6) months after the Effective Date: to pursue these operations to the maximum extent consistent with good petroleum industry practice; and to commenc the drilling of at least one well for Petroleum not later than twenty four (24) months after the Effective Date. Such well will be drilled to a depth sufficient to test the Devonian Strata (estimated at 7,000 feet), to basement, or to the depth at which commer cial production is found, whichever comes first. Nevertheless, if in the opinion of the Companies drilling of such a well is not feasible due to a lack of a drilling prospect, it shall not be necessary to drill such well and the Conpanies may revert the concession to the Government. (ii) Previous notice shall be given to the Government concern ing the commencementof any drillings, with a description of the location of the proposed welI, and work on drilling shall not be started before consulting with the Government. (iü) When a productive field has been discovered, the Con panies shall exert its utmost efforts for developing it to the maximum extent consistent with good potroleum industry practice, and shall conduct production operations as e peditiously as possible. (iv) No well shall be abandoned without first consulting with the Government. All wells so abandoned shallbe plugged only with the consent of the Government and in accordance with specifi cations to be proposed by the Companies and approved by the Government. (v) The Companies undertake to carry ou all Authorised Opera tions with due diligance, eficiency and economy; to observe sound technical and engineering principles, in particular in regard to the conservation of hydrocarbon deposits; and to take atall times every reasonable precaution and adopt all reasonable safety measures to prevent injury to person and property, the occurence of blow-out and fire, the contamination of water through the escape of petroleum or other injurious substances, the pollution of the air by liberation of gas and in general all avoidable waste. (vi) All Petroleum produced shall be measured or weighed by methods used in good oil industry practice. The Companies shall propose the methods to be adopted to the Government for approval. (vii) The Companies shall enable duly nominated representatives of the Government to inspect at all reasonable times the operations conducted under this Agreement, to control and test the methods and apparatus used for measuring or weigh ing Petroleum, and to examine all books and records connected with Companies' operations. No. 2 Exploration, Mining and Processing Mineral 1982 15 (vii) The Companies shall keep in Sierra Leone ooks of accounts and maintain full records of operations in accordance with a system which it shall propose to the Government for its approval. Such system shall conform to generally accepted accounting principles and procedures in international petro leum industry, and the books of accounts and records of operations shall be opened to the Government's inspection at all times, upon reasonable notice. (ix) The Companies shall give the Government notice of the erectionof all fxed installation and shall kecPe of all fixed installation and shall keep the Government informed ony discOvery ofof the progress of operations as well as of any discovery of materials other than Petroleum which may come to light in the course of Authorised Operations. The Companies shall furnish the Government with characteristic samples, duly labelled, of strata as well as of Petroleum or of any other minerals which may be discovered in the course of operation. (x) The Companies shall submit to the Government within thirty (30) days of the end of cach calendar quarter reports contain ing information in respect of operations carried out and within thirty (30) days of the end of cach calendar year a yearly report containing all information required by the Government inres pect of operations carried out by the Companies. These reports shall be accompanied by accurate copies of maps, sections, well logs, and other data relating to topographical, geological, geophysical with its interpretation, drilling, producing and other relevant matters. In addition, monthly progress reports shall be submitted by the Companies concerning allwells being drilled. (xi) Any plans, maps, records and general technical information except statistical information, obtained by the Companies shall be treated as confidential in the sense that neither party shall disclose the same to third parties without the other party's con sent which shall not be unreasonably withheld. However, the duration of such confidentiality shall be limited to three (3) years, except for seismic information which shall only be released with consent of the Companies. (xii) In the event of discovery of a gasficld the reserves of which are not deemed by the Companies to be of sufficient size to warrant its commercial development, then such field will be offered to the Government free of charge and if accepted, the Companies will have no further responsibilitiesfor that gasficld. (xiii) If additional facilities are required for the purpose of enabling the Government to take delivery of Natural Gas under Sub clause 10 (xii) the capital for tbe creation of such facilities shal be providod by the Government. 16 No. 2 Exploration, Mining and Processing Mineral (xiV) The Companics shall supply to the Government or to refiners to be nominated by the Government such quantities of Petro leum, to be determined by the Government from time to time, as may be necessary for internal consumption in Sierra Leone, such consumption to include the bunkering of vesseis and fuel ling of aircrat. Such supplies shall besubject to the following provisions : (a) The Companies shall not be called upon to supply Petroleum the Government tothe extent that such Petroleum is required for the conduct of Authorised Operations. (6) The Companiesshall not be required,in order to meet the require ments provided for in this Clause to produce Petroleunt at a rate higher than the maximum efficient rate of production. (c) The Government shall notify the Companies of its requirements under this Clause in respect of each quarter of the calendar year namely three months ending on Maroh 31st, June 30th, September 30th and December 31st; cach notification to be given not less than two (2) months before the beginning of the quarter during which delivery is to be made. ()Deliveries of Petroluem under this Clause shall be made at the Companies' export terminal. The price to be paid to the Companies for Petroleum supplied under the terms of Clause 14 shall be an amount equivalent to the of the prices ex terminal at which the Companies have sold Petroleum to Nonaffiliates during that quarter. In the event no sales of crude ol were mado during the said quarter to other than Afiliates the price shall be equivalent to the minimum unit price exterminal as obtained by producers of crude oil in West Africa (owned directly or beneficially by persons or entities foreign to Nigeria) (for the pur poses hereof West African producing countries are deemed to b those along the coast of West Africa commencing with Spanish Sahara and extending to Gabon) for the sale of crude oil during the immediately preceding quarter, taking into consideration quantity and quality of the crude oil in question and any other relevant factors.

The Government shall have the right to grant to other persons permitsfor the exploitation of substances other than Petroleum within theMining Area. In such case, the Companies shall afford safe passagefor the holder of the permit to the sites which he wishes to inspect orwork on, provided, owever, that any activities under the permits shall not in any way hamper tho Companies' operations.

The Companies shall at all times have full regard, in the conduct ofits operatíons, to the rights and interest of the Government and peopleof Sierra Leone.No. 2 Exploration ,Mining and Processing o Mineral 1982 17

The Companies shall at all times hold the Governnent and its agents loss sufered by third parties as a result of acts or omissions on the part of the Companies relating to its operations.

(0) The Companies hereby undertake that the sale price of the Petroleum which they produce or any products thereof shall be the best prico which the Company can obtain in a free competitive market. (ii) For the purpose of this Agreement posted prices shall mean the FOB prices received by the Companies for each grade, gravity and quantity of Petroleum offered forsale to buyers generally for export at thorelevant points of export in Sierra Leone which price shall be a price received with due regard to any other posted prices for Petro leum of comparable grade, gravity and quality and having regard to geographical location. (üi) The Government and the Companies may at any time agree on prices other than posted prices, to be known as reference prices, to serve as a bassis of computation for any of the cases in which posted prices have to be taken as a basis of computation under the provisions of this Agreement. (iv) If a difference arises between the Government and the Companies concerning the determination of posted prices it shall be determined by arbitration. GENERAL PROVISIONS

In the event of war invo ving Sierra Leone or of national emergency. the President of Sierra Leone may, for the duration of such war or national emergency, if circumstances so require, proceed to take over all the Petroleum and Petroloum products produced by the Companies, and to take control of the whole or part of the Companies installa tions and premises, provided that fair compensation shall be paid to the Companies for any loss or damage incurred by them asa result of actions taken in pursuit of the President's decision.

(i)Wherc the Companies fail or omit to fulfil an obligation or delaythe fulfilment thereof because of Force Majeure, such failure, omission or delay shall not be treated as a failure to comply with the provisions of this Agrecment, provided it is proved to be the necessary consequence of such Force Majeure. (i) Force Majeure means any event beyond the Companies' reasonable contro , such as but not limited to, war, insurrection, civil commo tion, strike, storm, tidal wave, flocod, epidemic, explosion, fire, lightning or earthquake. 18 No. Exploralion, Minling and rocessing Mineral 1982 (i)lf as a result of a Force Majcure the performance of any obliga tion or the exercise of any right of the Companies is delayed, theperiod of such delay shall be added to any rolevant periods 'aid down in this Agreement. (iv) If the Duration of Force Majeure preventing the perfcrmance of an obligation or the exercise of a right is onc ycar or more, this Agreement shall be automatically cxtended for a period cqual to such duration without prejudice to the provisions of this Agree ment concerning further extensions.

)The Companies shall not assign this Agreement or any exploration licence or oil mining lease issued pursuant to this Agreement without the previous consent in writing of the Minis ter of Mines (which consent shal! not be unreasonably withheld), except where the assignment is to another Company which is itself a member of the group or groups of which the Companies or any of the Companies mining them re members : provided that on any such assignmcnt the Minister may require the assignors and for the assignces at their cxpense to exccute a deed of covenant to observe and perform the covenants and conditions on the part of the Companics contained in this Agreement or in eny of the licences or leases granted here under. Subject to such limitation on assignment, the assignment of any oil exploration licence or oil mining lease or part thereof issued pursuant to this Agreement shall carry with it the rights, privileges and benefits set out in this Agreement. (ü) No assignment cf this Agreement shall release the Companics from any of the obligations assumed by it hereunder except where all such obligations have been fulfilled by the assignee. (ii) The Companies shall if it becomes necessary bring in qualified partners in this concession provided however that the prior written consent of the Government shall be obtained. Such consent however shall not be unreasonably withhcld and shal be given within a period of thirty (30) days from the receipt of the request by the Companies.

The Government may revoke this Agrecment if any of the events described hereunder occurs, provided that it shall have given notice of its intention and the reasons therefor to the Companies reasonably in advançe of revocation : No. 2 Explo:at 1, Mining ad Processing Mineral 1982 19 (a) Failure in the part of the Companigs to fulfil the work obligations assumed by it for the commencement of operations and drilling, or to meet expense obligations within two consecutive periods; or to observe other sub stantial provisions of the Agreement; (b) In case the Companies become bankrupt or go into liquidation; (c) If it is proved that the Companies made. a wilful misrepre sentation of any material fact in the process of the steps taken which have ed to the conclusion of this Agreement; (d) If the Companies fail to comply with an award duly given by an Arbitration Board or a Sole Arbitrator as a result of arbitration proceedings as laid down in this Agreement, after the lapse of six (6)months from the dato of commu nication toit of the award.

The Government shall, in the case of Clause 18--(a) and (d) andwhere it considers it appropriate, call upon the Companies while giving it notice of the intention of revoking this Agreement, to remedy the breach which has motivated the revocation, within a specified time limit. 20.. TERMINATION )This Agreement shall terminate automatically if upon the expiry of the expioration period as laid down in Clause 3 (a) no com mercially exploration field has been found. (ii) During the exploration and until commercial produetion is found, the Companies shall be at liberty to terminate this AgreemGnt on giving the Government not less than six (6) months notice in writing, provided it fulfils all its obligations up to the date of such termination. (ii) In case of serious and reported violations assumed hereunder, the Government may order the operations to be temporarily discontinued, pending decision concerning the action to be taken. (iv) Upon the expiry of the terms of this Agreement or of its termi nation in any other manner, all the installationsand immovable properties of tho Companies appropriated to the conduct of Authorised Operations shall be handed over gratuitously and in reasonably good condition to the Government. The government may, if it so desires, purchase all or any. of the Conpanies' movable properties at the acquisition price less depreciation. 20 No. 2 Exploraliorl, Mining and Processing Minerl 1982 Oil Agreement (1979) (Ratificalion) SETTLEMENT OF DISPUTES

)If a difference or dispute arises with regard to the interpretation application or execution of the provisions of this Agreement or the rights and obligations of the parties, and if the pa ties fail to settle the same by mutual agreement, the difference ordis pute shall be submitted to arbitration. Arbitration proceedings shall be instituted by a notice in writing given by the com plainant to the respondent. Each Party shall appoint an arbi trator and the two arbitrators before proceeding to arbitration shall appoint a third arbitrator who shall be Chairman of the Arbitration Board. (ii) If one Party fails toappoint its arbitrator within one month of the commencement ofarbitration proceedings, or if the two arbitrators fail to agree on the appointment of the third arbitra tor within two months of the commencement of proceedings, then there shall be designated a Sole Arbitrator in the first case and a third arbitrator in the second case by the President of the International Chamber of Commorce, from among a number of. candidates who will be agreed upon by the Parties. Such candidates shall be independent persons, not nationals of either Sierra Leone or the United States of America and notnot closely connected with the intorests of the said two countries. A list of such candidates shall be drawn up and agreed upon between the Parties within two months afterthe Efective Date. The list shall thereafter be reviewed and modified as recessary at the beginning of each calendar year. (iüi) In the event of death, disability, or resignation of any arbitrator or his failure to enter upon or to continue his function as arbitrator, notice in writing of such occurrence shall be given by the more diligent party to the other, and a successor shall be appointed in the same manner as in respect of the arbitrator whom he is to replace. (iv) The place of arbitration shall be in Sierra Leone, or in such other country as shall be agroed by the arbitrators, and the procedure of arbitration shall be determined bythe Parties, or failing agreement of the Parties, by the Arbitration Board or Sole Arbitrator. In arriving at the award, arbitrators shall have regard in the first place to the laws of Sierra Leone but they shall not be precluded from relying on principles of law gene rally recognised as well as on consideration of equity. (v) Where the arbitration is referred to a Board, the award may be given by a majority. The award of an Arbitration Board or a No. 2 trplorao ,Mining dnd Processing f Minerul 1982 21 Sole Arbitrator shall be final and binding, and the Parties shall comply with it in good faith. (vi) Pending the issue of an award, the operations which have given rise to arbitration need not be discontinued. In case the award recognises that the complainant was justified, provision be made as necessary in favour of the complainant. (vii) The costs of arbitration proceeds shall be awarded at the sole discretion of the Arbitration Board or Sole Arbitrator. (vii)The provisions of this Agreement relating to arbitration shall continue in force notwithstanding the termination of the Agreement. INTERPRETATION The Agreement and any oil Exploration licence or mining lease issued hereunder shall be governed by and construed in accordance with the laws of Sierra Leone. This Agreement and the performance of the obligations here under are subject toexisting and future laws and regulations of Sierra Leone. PERIODIC REVIEW Four years after the commencement of commercial production and periodically thereafter, the Parties to the present Agreement will jointly review the Agreement's terms and compare them with arrange ments in effect in other producing areas in West Africa. In the event that the sum of fiscal and other arrangements contained in the present Agreement are found to be less favourable to theGovernment than the sum of those provided for in such other oil producing areas, the Government and the Companies shall further consult with a view to determining what adjustments in the terms of the present agreement may be appropriate in order to establish an approximate parity of conditions with arrangements in the aforesaid other producing arcas. Any amendment, modification or alteration of this Agreement shall be in writing executed by the Government and the Companies.

It is understood that the Companies are corporations formed under the laws of the States of New York and Pennsylvania, United States of America, and the Companies agree to file the necessary documents to be registered under the Sierra Leone Companies Act, asCompanies incorporated outside Sierra Leone carrying on business within Sierra Leono. The Government agrees that this Agreement may be made with, and oil exploration licenses and oil mining leases be gKnted to, such Companies so incorporated end registered. 22 No. 2 tylnl.cwl, lfiin (nd Processing Mineral 1982 Oil Agreenent (1979) (Ratification)

All notices, conscnts, or other comunication given pursuant to this Agreement shall be in writing, and the contracting partics shall not under any circumstances be pernitted to allege or rely upon any oral order, approval, declaration, notice or communication. All orders, approvals, declarations, notices or communicatíons from the Govcrnment to the Compaines shall be de livered to the representative of the Companies in Frect All declarations, notices and communications from the Com panies to the Government shall, unless otherwise required by law or by the terms of this Agrcement or unless the Government shall other wise direct by written notice to the Companics, be mailed or deiivere d to the Director of Mines at his office in Freetown. Following the execution of this Agrecment the Government will introduce and use its best endeavours to cause to be pursued legisla tion for the purpose of ratifying and confirming this Agreement and impiementing the terms thereof. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written. Signed, Sealed and Delivered by the (Sgd.) F. S. CortehHonourable Francis Stephen Conteh, and on behalf of the Government of Sierr? Leone in the presence of (Sgd.) S. M. Jonjo Signed, Sealed and Delivered. by.the (Sgd.)Robert Haftlegally authorised representatives of Aracca Petroleum Corporation in.the presence of (Sgd.) Arthur Lake Signed, Sealed and Delivered by the (Sgd.) Robert Haft legally authorised representatives f Oxoco International in the presence of (Sgd.) Arthur Lake

TERRITORIAL WATERS AND CONTINENTAL SHELF All that Arca lying west of Sierra Leone in the ATLANTIC 0CEAN known as Terrítoríal Water and Continental Shelf Commencing at a point X on the mouth of the MANO RIVER along the MEDIAN LINE s ERRA LEONE LIBERIA BOUNDARY for a distance of 47 miles to a point A on the Terrítorial Waters of Sierra Lcone whose Geographical Co-ordinates are N-6° 26 00 W-12°00 0 THENCE On a TRUE BEARING of 190°00 for a distance of 7miles to a point B on the Territorial Water of Sierra Leone whose Geographical Co-ordinates are N-6° 20' 00* W-12° 00'00" pIOTaiOl, V18 a TOcCSDlg O Mmerdl 1964 23 THENCE on a TRUE BEARING of 270° 00 for a distance of 144 miles to a point C on the Territorial Waters of Sierra Leone whose Geographical Co-ordinates are N-6° 20' 00" W-14° 20'00" W-14° 00 08THENCEon a TRUE BEARING of 369° 00' for a distance of 48 miles to a point D on the Territorial Waters of Sierra Leone whose Geographical Co-ordinates are N-7° 00 00" W-1s° 00 00" THENCE ona TR E BEARINGof 360° 00' for a distance of 84 miles to a point F on the Territorial Waters of Sierta Leone whose Geographical Co-ordinates are N-8° 10' 00" W-15° G0 00 THENCE along the MEDIAN LINE SIERRA LEONE-GUINEA BOUNDARY for a distance of 129 miles to a point SALLATOUK THENCE along the HIGH WATER MARK on the Coast of Sierra Leone on the South Eastern direction for a distance of 3 miles`to a point G whuse Geo graphical Co-ordinates are N-90° 00' 00" W-13° 17" 00" THENCE on a TRUE BEARING of 270° 00 for a distance of 3 miles to a point H on the Territorial Waters of Sierra Leone whose Geographical Co-ordinates are N-9° 00' 00" W-13° 20 00 THENCE on a TRUE BEARING of 180° 00' for a distance of 120 miles to a point J on the Territorial Waters of Sierra Leone whose Geographical Co-ordinates are N-7° 20' 00" W-130 00 THENCE on a TRUE BEARING of 180° 00 for a distance of 24 miles to a point L on tho Territorial Waters of Sierra Leone whose Geographical Co-ordinates 2re N-7° 00 00" W-13° 00 00 THENCE on a TRUE BEARING of 90° 00 for a distance of 99 railes to a point M on the Coast of Sierra Leone whose Geographical Co-ordinates are N-7° 00 00 W-1° 37 00" THENCE along the HIGH WATER MARK on the Coast of Sierra Leone for a distance of 14 miles to a point X on the mouth of the MANO RIVER along the MEDIAN LINE SIERRA LEONE-LIBERIA BOUNDARY which is the point of commencement thus enclosing an area of 22,470 square miles approximately be the same several dimensions little more or less as the same is more or howsoever otherwise the same may be bounded known described or EDGED RED on the attached map. Passed in Parliament this 27th day of January, in the year of or ord one thousand nine hundred and eighty-two. J. W. E. DAVIES, Clerk of Parliament. THIS PRINTED IMPRESSION has been carefully compared by me with the Bill which has passed Parliament and found by me to be a true and correctly printed copy of thc said Bill. J. W. E. DAVIES, Clerk of Parliament. PRINTED BY THE (GoVERNMENT PRINTING DEPARTMENT, SIERRA LEONE GAZETTE No. 1lOF 18TH FEBRUARY, 1982.