Buenos Aires, October 21, 1991
IN VIEW OF File No. 58381/91 of the UNDERSECRETARIAT OF FUELS, and WHEREAS:
- The hydrocarbon policy implemented by the National Government promotes through various programs the reactivation of production by privatizing and deregulating the industry;
- It is necessary to increase the levels of hydrocarbon reserves, which have decreased to levels that could ~eopardize a rational hydrocarbon exploitation strategy;
- Such reactivation should be supported by a hydrocarbon exploration program that encompasses the whole of the national territory, including the continental shelf;
- Within a policy of industry deregulation, it is necessary to discontinue previous schemes under which exploratory activities necessarily had to be performed under contracts with the state oil company;
- Law 17319 provides a suitable legal framework for industry deregulation, based on the premise that the risk capitals undertake the tasks related to hydrocarbon exploration and subsequent exploitation, and provide the technology, equipment, machinery and other investments necessary for the work in each area awarded;
- A system must be established to provide for the periodic opening of tenders for Exploration Permits and requests for Surface Surveys, so as to allow a flexible and economical bidding process as well as obtain the greatest possible response;
- Permit holders and concessionaries are free to dispose of the hydrocarbons produced in the areas, in order to strengthen the oil industry deregulation and competition process;
- The National Executive may order the exclusion of all privileges and/or monopolistic clauses and/or discriminatory prohibitions, even when derived from legal regulations, if their application hinders the privatization process or if they prevent demonopolization or deregulation (article 10 of Law 23696);
- It is necessary to establish the general outline of the Bidding Conditions for the calls for tenders;
- In accordance with the provisions of articles 9, 46 and 98, subsections a), b), c) and e) of Law 17319, it is the responsibility of the National Executive to issue the present decree;
NOW THEREFORE,
THE PRESIDENT OF THE ARGENTINE NATION DECREES THE FOLLOWINGs
Article 1: The ENFORCEMENT AUTHORITY of Law 17319 is instructed to issue an International Public Call for Bids for the awarding of exploration permits in the areas determined in ANNEX I, "Areas Subject to Exploration Permits', in accordance with Law 17319 and Decrees of the National Executive Power Nos. 1055 (10 Oct. 89), 1212 (8 Nov. 89) and 1589 (27 Dec. 89), and according to the conditions stipulated herein and in the Bidding Conditions attached as Annex II. The areas listed in Annex I must be located by means of the corresponding coordinates before the call for bids.
Surface Surveys may also be requested for the areas sub~ect to Exploration Permits, in accordance with Title II, Section 1, Articles 14 and 15 of Law 17319. Surface Survey permits shall be cancelled if the area in question is awarded under an Exploration permit.
Article 2: Any area abandoned or which reverts to the National State, for which no statement of commerciality has been made, shall automatically be incorporated into ANNEX I, "Areas Subject to Exploration Permits".
Article 3: The provinces may ~uggest the inclusion or incorporation of areas other than those indicated in the exploration map.
Article 4: Any areas tendered for which no bids are made or for which bids are rejected will continue to be subject to tender, and bids for Exploration Permits will be received and opened in accordance with the schedule indicated in the Attached Bidding Conditions (ANNEX II).
Article 5: The areas will be awarded as stipulated in Title II, Section 5 of Law 17319, in accordance with the procedure provided for in the attached Bidding Conditions.
The Enforcement Authority may include in the Bidding Conditions any modifications deemed necessary to obtain the adjustements required to achieve a greater participation of capitals, based on the results of the call for bids.
For the purpose of the awards, the Work Units may be replaced by payments in cash (Exploration Fees) when the Enforcement Authority considers it advisable. Sufficient advance notice of this fact must be given to the purchasers of the Bidding Conditions, observing the times previously stipulated for the opening of the bids.
Article 6: Permit holders and concessionaries will be free to dispose of the hydrocarbons extracted in the area, in accordance with Law 17319 and National Executive Power Decrees No. 1055 (10 Oct. 89), 1212 (8 Nov. 89) and 1589 (27 Dec. 89), whose terms will be incorporated to the title of the permit or the concession, as applicable.
In accordance with National Executive Power Decree No. 1589 (27 Dec. 89), the export and import of hydrocarbons and byproducts will be exempted from any customs duties, charges or withholdings, either present or future.
Permit holders and concessionaries will be free to dispose of SEVENTY PERCENT (70~) of the foreign currency resulting from the sale of the hydrocarbons extracted, under the terms of article 5 of Decree 1589 (27 Dec. 89), unless another regulation should authorize a higher percentage or no obligation should exist to surrender foreign currency.
Article 7: Any restrictions on the free disposal referred to in the preceding article will entitle permit holders and concessionaries to receive, during the period of the restriction, a value not below that specified in article 6 of Decree 1589 (27 Dec. 89) under the terms and conditions therein established.
Article 8s As article 56, sub6ections c) and d) of Law 17319 is not applicable to hydrocarbon exploration permit holders and/or exploitation concessionarie~, they will be sub~ect to the general laws on profit tax and will be exempted from any provisions that tax separately or specifically persons, their legal status or activities, the equity applied to the exploration or concession, or the tasks arising therefrom, including the disposal of the hydrocarbons produced.
Article 9: The concessionary will be responsible for paying the royalties resulting from the application of articles 59 and 62 of Law 17319 directly to the province, for the account of the National State. To this end, the concessionary will pay up to TWELVE PERCENT (12%) of the production, whose value will be calculated on the basis of the prices actually obtained by the concessionary for the sale of hydrocarbons obtained in the area, with the deductions provided for in articles 61 and 62 of Law 17319.
In the absence of sales, or if the hydrocarbons extracted are intended for subsequent industrialization processes, or if disagreements arise as to the price applied to determine the amount payable, or as to the deductions made to such amount, the permit holder or concessionary may, unless otherwise agreed, make payments in kind.
Notwithstanding the above, the concessionary is authorized to agree mutually acceptable alternative direct payments, in cash or kind, with the provinces where the areas are located. The concessionary may make the agreements conditional upon being subjected only to the general tax laws applicable.
The provisions of the present article will also be applicable to the permit holder as regards the fifteen percent (15%) royalties payable under art~cle 21 of Law 17319.
Article 10: To calculate the limitations indicated in articles 25, second para., and 34, second para., of Law 17319, when the permit holders or concessionaries are single corporations, a UTE (Joint Venture) or some other association, the restriction will be applicable exclusively to such corporation, UTE or association, with an equal makeup of members.
Article 11: The Enforcement Authority of Law 17319 i8 authorized to regroup or modify the areas subject to abandonment or reversion, to approve special clauses of the permits relating to technical questions and, at the request of the awardee, to agree upon the arbitration procedure envisaged in article 86 of Law 17319.
Article 12: The Enforcement Authority of Law 17319 is also authorized to receive requests for exploration permits for areas not originally included in Annex I of this decree,
Areas Subject to Exploration Permits", and to modify or regroup them, when technical reasons make it necessary, based on the requests received and to optimize the participation in the calls for bids. Any areas proposed by interested parties will be included in Annex 1, "Areas Subject to Exploration Permits" and its amendments, and will be tendered as from the first opening of bids taking place after the publication periods applicable.
The above will not apply to any areas that overlap with areas reserved for YPF S.A., or to areas covered by an Exploration Permit or a Concession, awarded in a previous call for bids, in the process of being awarded, or corresponding to similar requests submitted previously.
Article 13: The authority to approve the contracts envisaged in article 73 of Law 17319, which satisfactorily guarantee the fulfillment of the conditions required by article 72 of such Law, is delegated to the MINISTER OF ECONOMY AND PUBLIC WORKS AND SERVICES or his delegate.
Article 14: If as a consequence of facts or acts caused by public agencies the parties to the Permits or Concessions are singly or collectivelly unable to exercise, or are seriously hindered in the exercise of, the rights established by the Permit or Concession, despite their wish so to do, the indemnities and compensations stipulated in article 519 of the Civil Code shall be to the account of the Executive Power.
Article 15: For the purposes hereof, the Undersecretariat of Fuels may contract with third parties the provision of tg support services, specialized advisory assistance and publicity of the exploration plans within the country and abroad.
Article 16: Communicate, publish, submit to the National Registry and file.
DECREE No. 2178
MENEM, Di Tella. MINISTRY OF ECONOMY AND PUBLIC WORKS AND SERVICES UNDERSECRETARIAT OF FUELS
INTERNATIONAL CALL FOR BIDS No. E-01/92
Bidding Conditions to select the companies that will be responsible for the exploration and possible exploitation and development of hydrocarbons in certain areas of the Argentine Republic (Law 17319, article 16 and associated articles, Decrees No. 1055 of 10 Oct. 89, No. 1212 of 8 Nov. 89, and No. 1589 of 27 Dec. 89, and the Decree approving the present Bidding Conditions).
Article l: Object
1.1 An International Public Call for Bids is issued in order to select the companies that may be awarded exclusive rights for the exploration and possible exploitation and development of hydrocarbons within the perimeter of each area, in accordance with Law 17319, National Executive Power Decrees No. 1055/89, 1212/89 and 1589/89, the conditions stipulated in these Bidding Conditions and the decree approving the same.
1.2 The parties interested in participating in the International Public Call for Bids may purchase the Bidding Conditions at Av. Julio A. Roca 651, 8th floor, Sector 9, Buenos Aires, Argentine Republic (C.P. 1322).
Interested parties may purchase the technical documentation on the AREAS in which they are interested at Av.Julio A. Roca 651, 8th floor, Sector 32, Buenos Aires, Argentine Republic, upon presentation of the receipt for the purchase of the Bidding Conditions.
Article 2: Definitions
2.1 AREA or AREAS: The area(s) the acreage and location of which are determined according to ANNEX 1 of the decree approving the present Bidding Conditions.
2.2 ENFORCEMENT AUTHORITY: The Undersecretariat of Fuels, which will exercise the powers conferred upon the ENFORCEMENT AUT~ORITY in Title IX of Law 17319.
2.3 ACT OF GOD or FORCE MAJEURE: Its definition, scope and effects will be as set out in articles 513, 514 and associated articles of the Argentine Civil Code, as regards
matters not specifically regulated in these Bidding Conditions.
2.4 CONCESSIONARY: The Permit Holder which i~ granted an EXPLOITATION CONCESSION.
2.5 EXPLOITATION CONCESSION: A combination of rights and obligations set out in article 27, following articles and associated sections of Law 17319, and which cover all the EXPLOITATION LOTS determined by the PERMIT HOLDER.
2.6 OPENING DAY: The 30th of June, 1992, and, as from 31st of August, 1992 and the 30th of October, 1992, and as from the 30th of November 1992, the last working day of each uneven month, with respect to AREAS included at the request of interested parties or areas tendered for which no bids were received or when the bids presented have been re~ected by the ENFORCEMENT AUTHORITY.
2.7 EFFECTIVE DATE OF THE PERMIT: The day following the date on which the National Executive Power decree granting the EXPLORATION PERMIT to the awardee is published in the Official Gazette of the Argentine Republic.
2.8 HYDROCARBONS: CRUDE OIL, NATURAL GAS AND LIQUEFIED GAS, in any of the conditions and relationships in which they are joined.
2.8.1 CRUDE OIL: A mixture of liquid HYDROCARBONS in their natural state and those obtained by the condensation or extraction of NATURAL GAS that remains liquid under normal pressure and temperature conditions (760 mm Hg and 15 degrees C). Included are the HYDROCARBONS obtained from the gaseous phase, after the first separation of the oil (gas condensates) for its transport by gas pipeline (gasolene from gas).
2.8.2 NATURAL GAS: A mixture of HYDROCARBONS in a gaseous state in surface conditions (760 mm Hg and 15 degrees C) after the separation of the crude oil and the eventual extraction of LIQUEFIED GASES, which in their natural state are in any one of the conditions defined below:
a) ASSOCIATED GAS: The gas related to oil fields, which may be found, at reservoir pressure and temperature conditions, in the form of gas dissolved in the oil, or free and forming a gas cap in contact with the oil.
b) GAS FROM CONDENSED GAS FIELDS: The gas which being in this state at reservoir pressure and temperature conditions has components which, by isothermal pressure reduction, undergo the phenomenon of "retrograde' condensation.
c) GAS FROM A GAS FIELD: The gas which being in this state at reservoir pressure and temperature conditions, does not have the properties of retrograde condensation.
2.8.3 LIQUEFIED GASES: Propane and butane.
2.9 EXPLOITATION LOTS: The lots defined in articles 33 and subsequent articles of Law 17319.
2.10 BIDDERS: Company or companies that present bids in the conditions herein established, for the Call for Bids.
2.11 OPERATOR: The OPERATOR shall be the Company proposed by the bidder in its bid or the company replacing the former during the life of the PERMIT or CONCESSION, proposed by the PERMIT HOLDER or CONCESSIONARY and accepted by the ENFORCEMENT AUTHORITY.
2.12 PERMIT HOLDER: The BIDDER that is the awardee of the Call for Bids.
2.13 EXPLORATION PERMIT or PERMIT: The permit granted to the PERMIT HOLDER by a National Executive decree, for the AREA awarded to him.
2.14 EXPLORATION PERIOD(S):
FIRST PERIOD: The time T established in the proposal.
SECOND PERIOD: The time T estab.lished in the proposal minus ONE (1) year.
THIRD PERIOD: The time T established in the proposal minus TWO (2) years.
2.15 TERM OF THE PERMIT: The sum of the terms indicated in 2.14 plus the respective extensions thereof.
2.16 EXPLORATION WELL: Any well drilled into a possible separate trap into which no well considered economically productive has previously been drilled. Also included shall be the wells used to investigate strategic traps.
2.17 UPDATED OUTSTANDING BALANCE: The difference, at a certain date, between the updated valuation of the WORK UNITS committed by the PERMIT HOLDER in its bid and the updated valuation of the WORK UNITS actually carried out by the PERMIT HOLDER for the purpose of performing the committed WORK UNITS.
2.18 FINAL TITLE: The instrument granted under article 55 of Law 17319, in accordance with the procedures of article 8 hereof.
2.19 PROVISIONAL TITLE: A copy, certified by the ENFORCEMENT AUTHORITY, of the National Executive decree granting the EXPLORATION PERMIT to the awardee.
2.20 WORK UNIT(S): Conventional economic unit(s) that will allow the comparison, measurement and addition of different works and services (meters drilled, kilometers of seismic lines and other geophysical work), the valuation of which will allow to obtain a total value repre~entative of the various sections of the exploitation program offered.
Article 3: Bid Presentation
3.1 The bids will be received in the Ceremonies Room of the UNDERSECRETARIAT OF FUELS, located at Av. Julio A. Roca 651, 9th floor, Buenos Aires, Argentine Republic (C.P. 1322), under sealed cover, with the following wording: MINISTRY OF ECONOMY AND PUBLIC WORKS AND SERVICES, UNDERSECRETARIAT OF FUELS, INTERNATIONAL PUBLIC CALL FOR BIDS NO. E-01/92. Within the first envelope mentioned above, TWO (2) sealed envelopes shall be enclosed, one containing the "Background Information", marked with the letter "A", and the other marked with the letter B", containing the bid. Both these envelopes shall also bear the name of the BIDDER and the name and number of the AREA.
3.2 The bids shall be clear and complete, worded in Spanish, and shall contain the original document and TWO (2) copies, signed on every page by the person(s) that furnish proof of being duly authorized by the BIDDER, who must certify with their initials any corrections made. The TWO (2) copies accompanying the original copy of the bid need not bear holographic signatures.
3.3 The bids will be received on the OPENING DAY
P.M., on which occasion the general envelope and envelope ~A" shall be opened in the Ceremonies Room of the UNDERSECRETARIAT OF FUELS, Av. Julio A. Roca 651, 9th floor, Buenos Aires, Argentine Republic, putting it on record that envelope ~B" shall be retained for eventual future consideration in a box sealed and signed by a notary public and by any bidders that may wish to do so. The analysis of the background data contained in envelope "A" and its subsequent approval shall lead to the opening of envelope ~B' of all qualified BIDDERS. The qualified BIDDERS will be invited to the opening of envelope "B".
The ENFORCEMENT AUTHORITY shall reach a decision with respect to the evaluation of the background information within TWENTY (20) days of the date of the opening of the Call for Bids.
3.4 If the background information contained in envelope "A" is not considered acceptable, the UNDERSECRETARIAT OF FUELS will notify this circumstance to the BIDDER at its legal domicile. If the BIDDER has not withdrawn envelope "B" within FIFTEEN (15) days after the date of such notification, the UNDERSECRETARIAT OF FUELS will proceed to incinerate envelope "B~.
3.5 Any enquiries and requests for clarification that the purchaser may wish to make must be presented in writing at the National Department of Resources of the UNDERSECRETARIAT OF FUELS, Av. Julio A. Roca 651, 8th floor, Sector 9, Buenos Aires, Argentine Republic (C.P. 1322), up to TEN (10) days prior to the OPENING DATE. Those arriving at the UNDERSECRETARIAT OF FUELS by mail or similar means before 12 P.M. that day will also be considered. The enquiries and the replies thereto will be made known to all the purchasers of the Bidding Conditions.
3.6 The amount of the bid maintenance guarantee for each of the AREAS is established at ONE HUNDRED THOUSAND U.S. DOLLARS (US$ 100,000) and the term of maintenance of the bids is established at ONE HUNDRED AND TWENTY (120) days. Such guarantee shall be included in envelope "A' and may be constituted in cash, by means of a Bank guarantee, securities quoted in the Stock Exchange, or other similar guarantees to the entire satisfaction of the UNDERSECRETARIAT OF FUELS. The UNDERSECRETARIAT OF FUELS will not pay any interest on guarantee deposits, but interest accrued by bonds or securities will be the property of the depositors and will be available to them when the issuing authority effects payment.
3.7 In order to facilitate the preparation of bids, the interested parties may visit and have access to the operations area and the facilities of YPF S.A. related to the AREAS tendered, with the prior authorization of the UNDERSECRETARIAT OF FUELS.
3.8 The interested parties who have participated in any of the calls for bids carried out in accordance with the system established in the decree which approves the present Bidding Conditions and whose background information has been accepted by the UNDERSECRETARIAT OF FUELS need not present this information again in future openings, but shall update the original information if necessary.
Article 4: Fnvelope "A~ (Background Information)
4.1 Proof of the experience and capacity of the BIDDERS, not only from the technical point of view but also in connection with their financial stability and backing, such that, in the opinion of the UNDERSECRETARIAT OF FUELS, the performance of their obligations under this Call for Bids will be ensured. If technical, economic or financial backing guarantees are issued by third parties which are not BIDDERS, they shall be worded in terms that ensure their enforceability in an explicit manner. During the life of the PERMIT such guarantees may only be replaced with the prior express agreement of the UNDERSECRETARIAT OF FUELS.
4.2 Certified documentation evidencing the incorporation of the companies and the legal status of their representatives.
4.3 Establishment of domicile on the Federal Capital of the Argentine Republic for all purposes derived from the Call for Bids and from the eventual PERMIT granted.
4.4 Express statement by the companies that present bids jointly, stating their joint and several liability vis-a-vis the ENFORCEMENT AUTHORITY, for all purposes resulting from the Call for Bids. Such companies shall also constitute a domicile and unify their legal status.
4.5 Bid maintenance guarantee.
4.6 Statement by the BIDDER accepting the present Bidding Conditions and the pertinent explanation and circulars.
4.7 Receipts evidencing the purchase of the Bidding Conditions and the respective technical documentation.
4.8 The bid presentation form, in accordance with the model attached (ATTACHMENT 2).
4.9 Name and background information of the OPERATOR and its professional technical personnel.
4.10 Evidence of the registration with the Registry, as set out in article 50 of Law 17319, or evidence of having initiated the pertinent registration formalities TEN (10) days prior to the OPENING DAY.
Article 5: Envelope ~B~ (Bid~)
5.1 Envelope "B" must contain:
5.1.1 The WORK UNITS that the BIDDER undertakes to carry out during the first EXPLORATION PERIOD over and above the X basis. The performance of such WORK UNITS, plus the ONE HUNDRED FIFTY.(150) WORK UNITS corresponding the K basis, shall be mandatory and shall refer to a tentative program that shall include the performancae of geophysical work, and which may include well drilling work, to be carried out with the most modern and efficient techniques, valuated and grouped in accordance with the sections indicated in ATTACHMENT 4. The Bid must be written on the Quotation Sheet (ATTACHMENT 3).
5.1.2 The commitment to drill at least ONE (1) EXPLORATION WELL plus ONE HUNDRED FIFTY (150) WORK UNITS AS MINIMUN during the SECOND PERIOD in the event of choosing to pass on to such period. If perfectly demonstrable technical reasons indicate the need to carry out prospection work prior to drilling the well, the drilling may be performed in the THIRD PERIOD, with the previous authorization of the ENFORCEMENT AUTHORITY.
In the event of not entering the THIRD PERIOD, the PERMIT HOLDER shall pay to the National State the updated outstanding balance corresponding to the well not drilled, minus the value of the WORK UNITS carried out which exceed the amount offered.
If the PERMIT HOLDER decides to pass on to the following period and does not make the investments committed for such period, it shall pay to the National state the amount of the investments committed and not made, and may apply equivalent amounts if the type of work carried out was different from that initially committed for the period.
5.1.3 The commitment to drill at least ONE (1) EXPLORATION WELL during the THIRD PERIOD, in the event of choosing to pass on to such period.
5.1.4 The time T established in the proposal for the duration of the FIRST PERIOD, stated in complete years, within one of the following options:
In Land Areas: THREE (3) or TWO (2) years.
In Offshore Areas: FOUR (4), THREE (3) or TWO (2) years.
5.2 In the event of participating in TWO (2) or more AREAS, the BIDDER shall deliver a "B" envelope for each AREA.
Article 6: Bases of comparison and procedures.
6.1 The BIDDER offering the highest values of G calculated according to the following formula will be the awardee of the Call for Bids.
G = U + (K/T)
G = Value of Bid
U = WORK UNITS committed by the BIDDER for the first exploration period.
K = 150 WU (Work Units). Minimum basis to be performed.
T = Time, stated in years, proposed by the Company to carry out the work indicated in the proposal (U) and the basis (R) in the first PERIOD OF EXPLORATION, in accordance with 5.1.4.
6.3 The UNDERSECRETARIAT OF FUELS is empowered to request from the selected BIDDER the improvements it deems necessary to reach satisfactory conditions. Likewise,. it may request the improvements deemed appropriate to make the selection easier, should it be considered that the bids are similar. The UNDERSECRETARIAT OF FUELS may reject the bids that it does not consider convenient or that do not meet the Bidding Conditions.
6.3 The only admissible conditions are those that do not breach express regulations of the Argentine law, and the UNDERSECRETARIAT OF FUELS may consider them and even admit them, provided that they do not affect the equality in the treatment of the bids for comparison purposes.
Article 7: Awarding of the Call for Bids
7.1 The ENFORCEMENT AUTHORITY, within TEN (10) days of having reached a decision in accordance with 3.3, will proceed to award the Call for Bids to the BIDDER whose bid meets the conditions of article 6.1 hereof.
7.2 Should any disagreement arise that prevents the awarding, the ENFORCEMENT AUTHORITY may re~ect the selected BIDDER and choose either to call the BIDDERS that follow in order of merit to negotiate with them successively, or declare the AREA in question not awarded, all this without the re~ected BIDDERS being entitled to any indemnity, claim or payment whatsoever.
7.3 The awarding of the AREA shall be approved by a National Executive decree granting the EXPLORATION PERMIT, under the provisions of article 16 and associated articles of Law 17319.
Article 8: Delivery of the Permit Title
8.1 The awardee will be allowed to enter the AREA as from the EFFECTIVE DATE OF THE PERMIT.
8.2 Within FIFTEEN (15) days after the National Executive decree approving the awarding of the Call for Bids to the BIDDER is published in the Official Gazette of the Argentine Republic, the ENFORCEMENT AUTHORITY shall deliver to the National Government General Notary's Office the following original documents:
8.2.1 A certified copy of the National Executive decree approving the present Bidding Conditions, together with their attachments.
8.2.2 The enquiries, explanations and amendments to the Bidding Conditions, with the responses from the ENFORCEMENT AUTHORITY, which are applicable to the relationship between the PERMIT HOLDERS and the ENFORCEMENT AUTHORITY.
8.2.3 The proposal delivered by the BIDDER that was awarded the Call for Bids.
8.2.4 A certified copy of the administrative proceeding by which the ENFORCEMENT AUTHORITY awarded the AREA to the BIDDER.
8.2.5 If applicable, a certified copy of the documentation resulting from article 11 of the decree approving the present Bidding Conditions.
8.2.6 A certified copy of the National Executive decree approving the awarding of the AREA to the BIDDER.
8.3 The General Notary of the Government will record or transcribe in the National Register the documentation delivered by the ENFORCEMENT AUTHORITY.
8.4 The official transcript of the documentation entered in the National Register will con~titute the FINAL TITLE to the right granted and will be delivered to the BIDDER who has become the awardee within ONE HUNDRED AND TWENTY (120) days from the date the National Executive decree that grants the EXPLORATION PERMIT is published in the Official Gazette of the Argentine Republic.
8.5 Prior to the delivery of the FINAL TITLE, Companies established abroad must furnish proof of their compliance with the registration stipulated in article 118 and associated articles of Law 19550.
Article 9: Rights and Obligations
9.1 The rights and obligations of the awardees will be as established in Title III of Law 17319 and associated articles, those arising from Decrees No. 1055/89, 1212/89, 1589/89 and the decree approving the present Bidding Conditions, and the rights and obligations established in the special conditions.
9.2 The awardee may make use in advance of the extension period evisaged in article 23 of Law 17319, adding up to ONE
(1) year of extension to the expiry of each EXPLORATION PERIOD.
Such extension may not be used in respect of the FIRST EXPLORATION PERIOD.
The combined extensions may not exceed a maximum of FOUR (4) years. The unused remainder of the extension may be added to the THIRD EXPLORATION PERIOD. Should the EXPLORATION PERIOD comprise only TWO (2) periods through the application of point 2.14, the remaining period of the extension may be added to the SECOND EXPLORATION PERIOD.
9.3 For the calculation of the remaining area mentioned in article 26 of Law 17319,, the awardee is authorized to exclude, in addition to the areas converted into lots of an EXPLOITATION CONCESSION, the following:
a) For a term of up to ONE (1) year, the lots whose declaration of commerciality is under study, and
b) For a term of up to FIVE (5) years, the lots corresponding to fields that are predominantly gas fields, contingent upon the prior development of the NATURAL GAS market, upon the possibility of its industrialization, and upon the available transportation capacity. Such term may be extended by the ENFORCEMENT AUTHORITY should it be proven that unsuitable market conditions persist.
9.4 Should the PERMIT HOLDER fail to perform the committed WORK UNITS, it shall pay to the National State the UPDATED OUTSTANDING BALANCE within THIRTY (30) days after returning the AREA or after the end of the first EXPLORATION PERIOD, whichever is first.
During the following PERIODS, the abandonment of the EXPLORATION PERMIT by the PERMIT HOLDER will oblige the same to pay to the National State the amount corresponding to the WORK UNITS included but not performed that correspond to the PERIOD in which the abandonment took place.
If during any of the PERIODS the WORK UNITS carried out exceed the respective commitments, the PERMIT HOLDER may credit the excess amount to the following PERIOD(S).
9.5 The awardee shall pay annually and in advance, for every km2 or fraction thereof, the canon (specific charge) envisaged in articles 57 and/or 58 of Law 17319 and decree No. 3036/68, which will be fixed by the National Executive Power prior to the opening of the Call for Bids and maintained without any adjustment other than the one resulting from the eventual application of article 102 of Law 17319.
Should the awardee make use in advance of the extension period under article 9.2 hereof, the amount of the canon payable for the respective extension will be the one payable for the extended PERIOD.
The amount of the canon payable in respect of the EXPLOITATION CONCESSION will be calculated on the acreage of the EXPLOITATION LOTS included in the respective concession.
9.6 The PERMIT HOLDERS and CONCESSIONARIES will be free to dispose of the HYDROCARBONS produced in the AREA, in accordance with Law 17319 and National Executive Decrees No. 1055 (10 Oct. 89), 1212 (8 Nov. 89) and 1589 (27 Dec. 89), the terms of which shall be incorporated to the Title of the PERMIT and of the CONCESSION, as applicable.
In accordance with National Executive Power Decree No. 1589 (27 Dec. 89), the export and import of hydrocarbons and byproducts will be exempted from any customs duties, charges or withholdings, whether present or future.
Permit holders and concessionaries will be free to dispose of SEVENTY PERCENT (70%) of the foreign currency resulting from the sale of the hydrocarbons extracted from the AREA, under the terms and conditions of article 5 of Decree 1589 (27 Dec. 89), unless another regulation should authorize a higher percentage or no obligation should exist to surrender foreign currency.
9.7 Any restrictions on the free disposal referred to in the preceding article will entitle permit holders and concessionaries to receive, during the period of the restriction, a value not below that specified in article 6 of Decree 1589 (27 Dec. 89) under the terms and conditions therein established.
9.8 Holders of EXPLORATION PERMITS and/or CONCESSIONARIES will be sub~ect to the general laws on profit tax, as article 56, subsections c) and d) of Law 17319 is not applicable to them, and they will be exempted from any provisions that tax separately or specifically persons, their legal status or activities, the equity applied to the exploration or concession, or the tasks arising therefrom, including the disposal of the hydrocarbons produced.
9.9 The concessionary will be responsible for paying the royalties resulting from the application of articles 59 and 62 of Law 17319 directly to the province where the PERMITS apply, for the account of the National State.
To this end, the CONCESSIONARY will pay up to TWELVE PERCENT (12%) of the production, whose value will be calculated on the basis of the prices actually obtained by the concessionary for the sale of hydrocarbons obtained in the
AREA, with the deductions provided for in articles 61 and 62 of Law 17319.
In the absence of sales, or if the hydrocarbons extracted are intended for subsequent industrialization processes, or if disagreements arise a~ to the price applied to determine the amount payable, or as to the deductions made to such amount, the permit holder or concessionary may, unless otherwi~e agreed, make payments in kind.
Notwithstanding the above, the concessionary is authorized to agree mutually acceptable alternative direct payments, in cash or kind, with the provinces where the AREA is located. The concessionary may make the agreements conditional upon being subjected only to the general tax laws applicable.
The provisions of the present article will also be applicable to the permit holder as regards the fifteen percent (15%) royalties payable under article 21 of Law 17319.
9.10 To calculate the limitations indicated in articles 25, second para., and 34, second para., of Law 17319, when the permit holders or concessionaries are single corporations, a UTE tJoint Venture) or some other association, the restriction will be applicable exclusively to such corporation, UTE or association, with an equal make-up of members.
9.11 The failure of the awardee to comply with hi~ obligations will entitle the ENFORCEMENT AUTHORITY to start actions in order to verify such failure and decide, if necessary, to apply the penalties established in article 80 and Title VII of Law 17319.
9.12 The service contracts referred to in article 73 of Law 17319 shall be approved by the MINISTRY OF ECONOMY AND PUBLIC WORKS AND SERVICES or its delegate, in accordance with article 13 of the decree approving these Bidding Conditions.
Article 10: Performance Guarantees
10.1 The PERMIT HOLDER must furnish the following guarantees:
10.1.1 Within THIRTY (30) days from the EFFECTIVE DATE OF THE PERMIT, the PERMIT HOLDER shall furnish a performance guarantee in respect of the WORK UNITS committed for the FIRST EXPLORATION PERIOD, for an equivalent amount in U.S. dollars.
10.1.2 On the date of initiation of the subsequent EXPLORATION PERIOD the PERMIT HOLDER ~hall furnish a performance guarantee in respect of the drilling program established for that period, for an equivalent amount in U.S. dollars.
Such guarantees shall be furnished in cash, by means of a bank guarantee, securities quoted in the Stock Exchange, performance bonds or similar guarantees, to the entire satisfaction of the UNDERSECRETARIAT OF FUELS. The UNDERSECRETARIAT OF FUELS will not pay any interest on guarantee deposits but interest accrued by bonds or securities will be the property of the depositors and will be available to them when the issuing authority effects payment.
10.2 The amounts of the guarantees shall be ad~usted and the guarantees shall be renewed on a quarterly basis, as the WORK UNITS mentioned in 10.1.1 are performed and/or as the program referred to in 10.1.2 advances, deducting from the amount of the guarantee ONE HUNDRED PERCENT (100%) of the amount corresponding to each completed WORK UNIT or finished well.
10.3 The guarantees furnished according to 10.1.1 and 10.1.2 will be returned to the PERMIT HOLDER within THIRTY (30) days after the end of each EXPLORATION PERIOD, provided the PERMIT HOLDER has no outstanding obligations covered by such guarantees.
10.4 Within THIRTY (30) days from the date of initiation of the EXPLOITATION PERIOD, the CONCESSIONARY will furnish a performance guarantee for the CONCESSION.
The corresponding guarantee shall be provided in accordance with the paragraph before last of point 10.1.2 and for the equivalent amount in U.S. dollars.
Such guarantee shall be returned to the CONCESSIONARY within THIRTY (30) days after the end of the CONCESSION, provided that no obligations of the CONCESSIONARY remain outstanding.
Likewise, the provisions of the last paragraph of point 10.1.2 shall apply.
Article 11: Act of God or Force Majeure
In the event of an ACT OF GOD or FORCE MAJEURE case, the rights and obligations arising herefrom, from the BIDDER's proposal and from the applicable regulations shall be suspended while this circumstance persists.
The party affected shall notify such circumstance to the ENFORCEMENT AUTHORITY, informing the duration and extent of the suspension, whether it will be total or partial, and the nature of the FORCE MAJEURE case.
The obligations 80 suspended shall again become binding as soon as the cause of the FORCE MAJEURE disappears, and this fact shall be notified to the ENFORCEMENT AUTHORITY.
INDEX OF ATTACHMENTS
ATTACHMENT 1: DISTINCTIVE FEATURES OF THE AREAS TENDERED
ATTACHMENT 2: BID PRESENTATION FORM
ATTACHMENT 3: QUOTATION SHEET
ATTACHMENT 4: LIST OF WORK UNITS
The missing attachments will be prepared in due course by the ENFORCEMENT AUTHORITY.
ATTACHMENT 2
BID PRESENTATION FORM
INTERNATIONAL PUBLIC CALL FOR BIDS NO. E-01/92
AREA
(1) ........ , represented by ....... , who provide proof of their legal status with the attached documentation, hereinafter referred to as the BIDDER, declare:
a) That they attach the background information re~uired by art. 4 of the Bidding Conditions.
b) That they establish their domicile at. of the Federal Capital, accepting the jurisdiction of the Federal Courts of the Argentine Republic for all purposes derived from the PERMIT or eventual CONCESSION.
c) That they bind themselves ~ointly and severally both as creditors and debtors vis-a-vis the UNDERSECRETARIAT OF FUELS for all purposes derived from the Call for Bids, unifying their legal status by constituting the company
(2) and declaring the following equity percentage:
d) That they know and accept the Bidding Conditions of International Public Call for Bids No. E-01/92, to the provisions of which they will conform.
e) That they know the laws, provisions and regulations in force in the Argentine Republic that might in any way relate to the obligations resulting from this Call for Bids.
f) That they waive any claim or indemnity in the event of having misinterpreted the documents of the Call for Bids.
g) That they accept that the UNDERSECRETARIAT OF FUELS is not bound to award the Call for Bids to any of the BIDDERS and that the UNDERSECRETARIAT OF FUELS will not reimburse the expenses incurred by them in order to present the bid.
BIDDER's signature
(1) Name of the company or companies presenting themselves.
(2) To be completed in the event of a bid made by two or more companies ~ointly.
ATTACHMENT 3
QUOTATION SHEET
PROPOSED WORR PROGRAM
SECTION DESCRIPTION
OF TASKS
1 . 1
1.2
1.3
1.4
2.1
2.2
Quotation term of the proposed program
Award value (G)
Km Km
Km Km
Well Wells
No. Depth
TOTAL
Work Units
UNIT QUANTITY EQUIVALENCE
IN WORK UNITS
ATTACHMENT 4
LIST OF WORR UNITS
VALUATION OF THE VARIOUS WORK UNITS, FOR BID CQNPARISON
PURPOSES AND Tn~ P~RFORMANCE OF THE PROGRAMS COMNITTED
VALUE OF THE WORK UNIT: USS 5,000
Type of Work Equivalence in Work Units
1. Geophysical
1.1 Land
Reflection seismic registration (km) Reprocessing (km) Seismic registration 3-D (km2)
1.2 Offshore
Reflection seismic registration (km) Reprocessing (km) Seismic registration 3-D (km2)
1.3 Magnetometry (km2)
1.4 Gravimetry (km2)
2. Exploration Wells (*)
2.1 Land
Depth 1,000 meters 2.000 " 3,000 " 4,000 " 5,000 " 6,000 "
2.2 Offshore
Depth 1,000 meters 2,000 " 3,000 " 4,000 " 5,000 " 6,000 "
0.006
0.05
210 300 620 1 , 100 1,700 2,800
600
1, 000 2,100 4,000 6,100 8,300
(*) a) In the case of simple pipe setting (surface piping + casing), an additional 10~ in work units will be recognized above the value corresponding to the depth of the well, if the latter is encased up to that depth.
If only partial casing is installed, a percentage of that 10% will be recognized, equivalent to the percentage that the encased length represents with respect to the total depth.
b) In the case of complex pipe setting (surface piping + intermediate piping + casing), an additional 25% in work units will be recognized above the value corresponding to the final depth of the well if the latter is totally encased.
In the absence of total casing, a percentage of this 25% will be recognized, equivalent to the percentage that the length of casing and intermediate piping represents with respect to the total depth.