PetroChina International Iraq FZE Iraq Branch · a majority of its board of directors, (c) is a...

PetroChina International Iraq FZE Iraq Branch

فرع العراق نترناشيونال م.م.حاينا اششركة بترو

Tenders Announcement Tenders by: PetroChina International Iraq FZE Iraq

Branch (PetroChina), Operator at Halfaya Oil Field

(about 35km southeast of Amarah city) in Iraq,

PetroChina is assigned the operator in the consortium,

alongside partners TOTAL E&P Iraq PETRONAS

Carigali Sdn. Bhd. and the State Partner South Oil

Company to develop Halfaya Oil field under contract

(DPSC) with Missan Oil Company.

The Announced Tenders are listed below:

Tender No. Tender Title

HFY-PUR/PD0499-0486

Rebidding

Purchase of Load Bank Package

for CPF-02 Power Plant.

1

From 8:00 am on 24th April 2014 to

03:00 pm on 19th May 2014.

Bidding collection

period

USD 100.00 Bid Collection fee

[email protected] Contact Email

HFY-CON/F&C0526-0550

Provision of EPC of Road and

River Crossings of Pipelines and

Cables for Phase 2 and FSF

Sustainment Projects 2014-2015.

2


12:00 pm on 19th May 2014.

Bidding collection

period



HFY-CON/SEC0500-0524

Provision of 3 Set of Each X-Ray

Systems and Metal Detector

(Portal).

3


04:00 pm on 19th May 2014.

Bidding collection

period



HFY-CON/OP0515-0539 Provision of Directional Drilling

Equipment and Services. 4


04:00 pm on 26th May 2014.

Bidding collection

period



2. Qualifications and documents

required for ITB package request: 2.1) Filled ITB Package Request Form.

2.2) ITB request fees receipt.

2.3) Copy of Certificate of Incorporation.

2.4) Copy of Certificate of Contracting/Trade.

2.5) Original Power of Attorney to whom ITB package

إعالن عن مناقصاتالجهة المعلنة : شركة بتروشاينا انترناشيونال م.م.ح فرع العراق )شركة

كم للجنوب 53لمشروع حقل نفط الحلفاية ) الذي يبعد بتروشاينا( المنفذة

الشرقي من مدينة العمارة( في العراق، وقد اختيرت شركة بتروشاينا لتكون

بمثابة المنفذ مع شركائها شركة توتال وشركة بتروناس وشريكهم الحكومي

شركة نفط الجنوب لتنفيذ المشروع المذكور أعاله تحت العقد الموقع مع

ميسان . شركة نفط

عالن عنها مدرجة أدناه:المراد اال اتالمناقص

رقم المناقصة عنوان المناقصة

1

إعادة اعالى

لوحطت الكهربائيت األحوال رزهت شراء

الوعالجت وحذة في الكهرباء تىليذ

.الثاًيت الوركسيت

HFY-PUR/PD0499-0486

فترة استالم العطاءاث الساعت لغايت و 2002 ًيساى 22 يىم هي صباحا 0200 الساعت هي

2002 آيار 01 يىم هي هساءا 00200

دوالر اهريكي 000 لوشاركت بالوٌاقصتارسىم

يًالبريذ األلكترو [email protected]

2

والوعابر لطرقخذهاث أًشائيت ل تقذين

وكابالث أًابيب خطىط هي يتٌهرال

اداهت لوشاريع هٌشأة و الثاًيت للورحلت

.2002-2002 الخذهاث الحقليت

HFY-CON/F&C0526-0550





توفير ثالثة مجموعات لكل من منظومة 3 االشعة السينية واجهزة كشف المعادن

HFY-CON/SEC0500-0524



دوالر اهريكي 000 بالوٌاقصتلوشاركت ارسىم


والخدماتباشر الم الحفر معدات توفير 4 بها المرتبطة

HFY-CON/OP0515-0539





الوؤهالث و الىثائق الوطلىبت للوشاركت بالوٌاقصت2.2 ( يهيء إستًارج طهة انذػىج نهًشاركح تتمذيى انؼطاء.2-1

انثُك.( وصم استالو رسىو انطهة يٍ لثم 2-2

( َسخح يٍ شهادج تأسيس انشركح.2-3

انتجارج. /( َسخح يٍ شهادج انتؼالذ2-4

و يجة أٌ ( كتاب تخىيم نهشخص انًخىل تأستالو كراسح انؼطاء2-5

will be issued. This Power of Attorney must be signed

by the legal representative of the interested

company.

3. Contact information: All interested companies, shall submit all the required

documents to given email address or to PetroChina Amara

Office .Contact: Dept. of Contracts, Procurement & Logistics

PetroChina International Iraq FZE Iraq Branch.

Address: PetroChina Base Camp, Kahla’a Missan Governorate,

Iraq.

)يكىٌ انكتاب يىلغ يٍ لثم يًثم انشركح انماَىَي )انًذير انًفىض

تصال2هعلىهاث اال 3.انًهتًح تانتمذيى ، تمذيى كافح انىثائك انًطهىتح انى االيًيم ػهى جًيغ انشركاخ

.او انى يكتة تتروجايُا في انؼًارِ االنكتروَي اػالِ

شركح تتروشايُا و انذػى انهىجستي ، لسى انتؼالذ ،انًشترياخ االتصال:

. اَترَاشيىَال و.و.ح فرع انؼراق

ييساٌ انؼراق. انكحالء،يحافظح،لضاء تتروشايُاانؼُىاٌ: يخيى شركح

241b April2014

To: All bidders

Tender title Tender Number Subject

Provision of Directional Drilling Equipment and Services. HFY -CON/OPOSlS-0539 Invitation to bid.

To Whom It May Concern:

PetroChina International Iraq FZE Iraq Branch (the "COMPANY") is pleased to invite your company to participate in the aforementioned Bid for the above mentioned tender. The COMPANY is sincerely appreciative and thankful for your interest to bid and looks forward to a successful Bid process.

Included with this letter are the following documents (collectively with this letter, the "Bid Package"):

(a) (b) (c) (d)

(e)

Acknowledgement Form; Instructions to Bidder; Form of Bid; Pro-forma Agreement for the Provision of Directional and Services; Definitions.

Drilling Equipment

Please acknowledge receipt of this Invitation to Bid Letter and the Bid Package within seven (7) days from the date mentioned above by completing, executing and delivering the attached Acknowledgement Form to Tender Committee Secretary by email to halfaya [email protected]. Your failure to properly deliver the Acknowledgement Form within such time period may result in your disqualification.

Bidder must ensure that the Bid is received at the address set out in paragraph 5.5 mentioned in Section II - Instructions To Bidder no later than 12:00 pm on 26111 May 2014 -Monday (Local time in Iraq, the "Bid Closing Date").

Thank you for your time and consideration and for your interest in the Bid.

Tend

~ IV

Provision of D irectional Dril ling Equipment and Sllrvices. Tender No: IIFY -CON/OP0515-0539 Page 5 of69

PROVISION OF DIRECTIONAL DRILLING EQUIPMENT AND SERVICES

BETWEEN

PETROCHINA INTERNATIONAL IRAQ FZE IRAQ BRANCH

AND

[INSERT COMPLETE NAME OF CONTRACTOR]

Ref. №: HFY-CON/OP0515-0539

SAP No: [____________]

Dated as of

_____________, 2014

TABLE OF CONTENTS

PAGE NO.

1 DEFINITIONS AND INTERPRETATION .......................................................................... 1

2 AGREEMENT .......................................................................................................................... 5

3 TERM OF THE AGREEMENT ............................................................................................. 5

4 SUSPENSIONS IN THE SERVICES ..................................................................................... 6

5 INDEPENDENT CONTRACTOR ......................................................................................... 6

6 CONTRACTOR’S GENERAL OBLIGATIONS ................................................................. 6

7 BANK GUARANTEE AND PARENT COMPANY GUARANTEE ................................ 12

8 COMPANY’S RIGHTS AND OBLIGATIONS .................................................................. 13

9 INVOICING AND PAYMENT ............................................................................................. 15

10 CONTRACTOR’S WARRANTIES AND COVENANTS ................................................. 17

11 INSURANCE .......................................................................................................................... 18

12 LIABILITIES, RELEASES AND INDEMNIFICATION .................................................. 20

13 TAXES AND CUSTOMS DUTIES ...................................................................................... 24

14 APPLICABLE LAWS ........................................................................................................... 27

15 PATENT INFRINGEMENT ................................................................................................. 28

16 CONFIDENTIALITY ............................................................................................................ 29

17 HEALTH, SAFETY, SECURITY AND ENVIRONMENT PROTECTION ................... 30

18 FORCE MAJEURE ............................................................................................................... 37

19 NOTICE .................................................................................................................................. 39

20 SUBCONTRACTING AND ASSIGNMENT ...................................................................... 39

21 CONTRACTOR DEFAULT ................................................................................................. 40

22 TERMINATION .................................................................................................................... 41

23 GOVERNING LAW AND DISPUTE RESOLUTION ....................................................... 43

24 MISCELLANEOUS ............................................................................................................... 45

25 PROCUREMENT OF EQUIPMENT, FACILITIES, GOODS, MATERIALS, SUPPLIES AND SERVICES ........................................................................................................ 46

26 EMPLOYMENT OF PERSONNEL .................................................................................... 47

27 SECURITY ............................................................................................................................. 47

28 PRIVATE SECURITY COMPANIES ................................................................................. 48

29 AUDIT ..................................................................................................................................... 49

30 ECONOMIC SANCTIONS, BOYCOTTS AND EMBARGOES ...................................... 49

31 ARCHAEOLOGICAL OBJECTS ....................................................................................... 50

32 CHANGE ORDER ................................................................................................................. 50

APPENDICES

APPENDIX A – SCOPE OF WORK AND CONTRACTOR EQUIPMENT

APPENDIX B – PRICES AND RATES

APPENDIX C – CONTRACTOR’S PERSONNEL

APPENDIX D – MODEL CHANGE ORDER

APPENDIX E – INSURANCE

APPENDIX F – FORM OF BANK GUARANTEE

APPENDIX G – FORM OF PARENT COMPANY GUARANTEE

APPENDIX H – LETTER OF AWARD

APPENDIX I - NOTICE OF COMMENCEMENT

APPENDIX J - HSE AND SECURITY REQUIREMENT

1


This agreement for the Provision of Directional Drilling Equipment and Services (this “Agreement”) is made and entered into this ____ day of _____of 2014 (the “Effective Date”), by and between PetroChina International Iraq FZE Iraq Branch, a company duly domiciled in the Republic of Iraq, having its main office at PetroChina Halfaya Oilfield Base Camp, Kahla’a, Missan Governorate, Republic of Iraq (hereinafter referred to as the “Company”); and, ______________, a company registered under the laws of __________________ (hereinafter referred to as the “Contractor”). Company and Contractor hereinafter may also be referred to individually as a “Party” or collectively as the “Parties”.

WHEREAS, Company as Operator of the Development and Production Service Contract for Halfaya Contract Area, dated 27 January 2010, (herein after referred to as “DPSC”), shall carry out the exploration, appraisal, development and production, and generally any other Petroleum Operations in

Halfaya Contract Area;

WHEREAS, Company desires to engage Contractor to provide Directional Drilling Equipment and Services within Halfaya Contract Area, as more fully described in Appendix A (the “Services”) , in connection with Company activities in Halfaya Contract Area; and,

WHEREAS, Contractor, having financial, technical and professional competence and skills, is interested in providing the Services to Company in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual promises, terms and conditions contained in this Agreement, the sufficiency of which is hereby acknowledged, the Parties, acting according to principles of good faith and international commercial fair dealing, mutually agree as set forth below:

1 DEFINITIONS AND INTERPRETATION

1.1 For the purpose of this Agreement:

a. “Affiliate” means, with respect to any Party, any subsidiary or holding company of any company or any subsidiary of such holding company. A company is a subsidiary of another company, its holding company, if that other company: (a) holds a majority of the voting rights in it, (b) is a member of it and has the right to appoint or remove a majority of its board of directors, (c) is a member of it and controls alone, pursuant to an agreement with other members, a majority of the voting rights in it, or (d) is a subsidiary of a company that is itself a subsidiary of that other company. In this definition company includes any corporate body. “Control” in this context means the ownership directly or indirectly of more than fifty percent (50%) of the shares or voting rights in a company, partnership or legal entity.

b. “Agreement” means the recitals and the terms and conditions of the Agreement Body and the Appendices attached hereto, as amended from time to time.

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c. “Agreement Body” means Sections 1 to 32 inclusive of this Agreement.

d. “Agreement Value” shall mean the estimated total value of this Agreement being USD [________________] (United State Dollars [_______________]).

e. “Applicable Law” means all laws (national, state, municipal, local or others) and any requirement, by-law, ordinance, rule, regulation, enactment, order or decree of any governmental authority or agency (national, state, municipal, local or other) having jurisdiction over the Services on Worksite or other locations where the Services will be provided, including the laws and regulations related to health, safety, security and the environment.

f. “Approval” means printed or handwritten documentation evidencing the Company Representative’s consent or approval, and shall include faxes, e-mail and similar forms of written communication.

g. “Bank Guarantee” means an irrevocable and unconditional guarantee in form and content as set forth in Appendix H, issued by a commercial bank or other financial institution acceptable to Company that has at least A- rating of its long-term debt from Standard & Poor's Ratings Group (or any successor thereto) or at least A3 rating of its long-term debt from Moody's Investors Service (or any successor thereto);

h. “Business Day” means any day other than (i) a Friday or a Saturday or (ii) a day on which commercial banks in the Republic of Iraq and/or the United Arab Emirates are authorized or required to be closed.

i. “Change Order” has the meaning set forth in Section 32.

j. “Claims” has the meaning set forth in Section 12.1.

k. “Commencement Date” means the date on which the first down hole equipment runs through the rotary table at the first Worksite, following notification by Company to Contractor that Contractor Equipment and Contractor’s Personnel to be provided under this Agreement have been transported to the Worksite and have been inspected and accepted by Company.

l. “Company Base” means the area designated by Company within the Halfaya Contract Area as the Company’s base.

m. “Company Group” has the meaning set forth in Section 12.1

n. “Confidential Information” has the meaning set forth in Section 16.1

o. “Contractor Base” means the base to be set up by Contractor at cost of Contractor, designated by the Company within Halfaya Contract Area.

p. “Contractor Equipment” means the directional drilling and other related equipment, spare parts, materials, expendables and other supplies related thereto to be provided by Contractor, or required, in connection with the Services as more fully described in Appendix A.

q. “Contractor Group” has the meaning set forth in Section 12.1.

r. “Demobilization” means the departure of Contractor’s Personnel and Contractor Equipment from the Worksite upon completion of assignment or suspension or termination by Company of the Services. Contractor’s Personnel and Contractor

3

Equipment are considered as demobilized when Contractor’s Personnel and Contractor Equipment leave the Worksite (in the case of Contractor’s Personnel) or are removed from the Worksite (in the case of Contractor Equipment), each as designated by Company, at which time all charges as described herein will cease unless otherwise stipulated herein.

s. “Demobilization Site” means the last Worksite.

t. “Directional Drilling Service Unit” means the required Contractor Equipment, tools, and crew of directional drilling service Personnel necessary to provide Services for one (1) well at the Worksite.

u. “Documentation” means all documentation associated with the Services whether provided by any member of Company Group or created by any member of Contractor Group in conjunction with the Services and shall include plans, sketches, drawings, reports, calculations, manuals, procedures, schedules, recommendations, timesheets, specifications, logs, requisitions, patent documents, technical information, computer programs, raw data and field logs.

v. “Force Majeure” has the meaning set forth in Section 18.1.

w. “Group” means, in the case of Company, the Company Group, and in the case of Contractor, the Contractor Group.

x. “Halfaya Service Contract” has the meaning set forth in the preamble.

y. “HKIAC Rules” has the meaning set forth in Section 23.3.

z. “Legal Dispute” has the meaning set forth in Section 23.2.

aa. “Letter of Award” means the letter of award issued by Company to contractor with respect to this Agreement, a copy of which attached to this Agreement as Appendix H.

bb. “Logistics Base” means the logistics base maintained by Company in Dubai or other area specified by Company.

cc. “Mobilization” means the initial arrival of Contractor’s Personnel and Contractor Equipment at the Contractor Base to be ready for the commencement of the Services. Contractor’s Personnel and Contractor Equipment are considered as mobilized when Contractor’s Personnel and Contractor Equipment arrive at the Contractor Base and are ready to begin the Services (in the case of Contractor’s Personnel) or are delivered to the Contractor Base (in the case of Contractor Equipment), each as designated by Company.

dd. “Parent Company Guarantee” means duly executed parent company guarantee in form and content as set forth in Appendix G.

ee. “Person” means any individual, firm, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, governmental authority or any other entity.

ff. “Personnel” means either Company’s or Contractor’s employees, agents, consultants, representatives, directors, officers and servants; the term shall also include Affiliates’ and Subcontractors’ employees, agents, consultants, representatives, directors, officers and servants.

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gg. “Public Official” has the meaning set forth in Section 14.2.

hh. “Public Authority” means the government entity or any other agencies authorized or assigned by the former as well as the persons acting as their representatives having jurisdiction over the Halfaya Contract Area.

ii. “Services” has the meaning set forth in the preamble.

jj. “Subcontractor” has the meaning set forth in Section 20.1.

kk. “Term” has the meaning set forth in Section 3.1.

ll. “U.S. dollars” or “$” means the lawful currency of the United States of America.

mm. “Worksite” means the drilling location where the Services take place within the Halfaya Contract Area.

1.2 The fact that any one part of this Agreement shall specify Services or acts to be done in more particularity or shall require more Services or acts to be done in connection with any particular operation than is required by another part of this Agreement, shall not be considered as an ambiguity, discrepancy or conflict. It is the Parties’ intention that the provisions of this Agreement shall be cumulative and any additional detail or requirement provided in one part of this Agreement, but not in others, shall be applicable to and required for all references to that particular Service or operation.

1.3 In this Agreement, words importing the singular shall include the plural and vice versa, words importing one gender shall include other genders and words importing individuals shall include firms and corporations and vice versa, as the context may require.

1.4 In this Agreement, the term “shall” denotes a mandatory requirement of this Agreement and additionally, in the case of its use with respect to Contractor, the term means that any and all costs associated with the activity in question are to be borne by Contractor.

1.5 In this Agreement, the term “or” is not exclusive, and the word “including” (in its various forms) shall mean including (in its various forms) without limiting the generality of the description preceding such term.

1.6 Unless otherwise provided:

a. “this Agreement”, “hereto”, “herein”, “hereof”, “hereby”, “hereunder” and similar expressions refer to this Agreement in its entirety and not to any particular section, clause, subsection, paragraph or other portion thereof; and

b. reference to a section, clause, subsection or a paragraph refers to a section, clause, subsection or paragraph of the Agreement.

1.7 All references to months or years in this Agreement shall be computed in accordance with the Gregorian calendar. When not expressly specified, reference to day(s) shall be deemed as made to calendar or continuous day(s).

1.8 Any reference to Applicable Laws or any statutory provision shall include such laws, provision and any regulations made in pursuance thereof as from time to time modified or re-enacted whether before or after the date of this Agreement and (so far as liability thereunder may exist or can arise) shall include also any past statutory provisions or regulations (as from time to time modified or re-enacted) which such provisions or regulations have directly or indirectly replaced.

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1.9 The Appendices forming part of this Agreement are to be taken as mutually explanatory and complementary to one another.

1.10 Should any actual conflict or conflicts exist between or among the provisions of any of the Appendices and the provisions of Sections 1 to 32 of this Agreement, the provisions of Sections 1 to 32 of this Agreement shall take precedence and prevail.

1.11 In the case of discrepancies between the Appendices, Contractor shall notify Company of such discrepancy and the Company representative and the Contractor representative shall use reasonable efforts to agree in good faith on which Appendices shall prevail over the others.

1.12 All standards, codes, instructions, specifications, drawings and other documents which are referred to in the Appendices shall be deemed incorporated herein by reference and made a part hereof. If any discrepancies exist between any of the aforementioned documents or parts of any of them, Contractor shall immediately notify Company and Company and Contractor shall agree on which document shall prevail in regard thereto.

1.13 Should Contractor fail to notify Company as required by Section 1.12 or fail to discover such discrepancies as should reasonably have been discovered by Contractor, all costs directly resulting from such failure shall be borne by Contractor.

2 AGREEMENT

2.1 Pursuant to the provisions of this Agreement, Contractor hereby agrees to provide to the Company the Services, including the Contractor Equipment, as more fully described in Appendix A in accordance with the terms and conditions and subject to the limitations set forth in this Agreement, and Company hereby agrees to engage Contractor to provide the Services, including the Contractor Equipment, as more fully described in Appendix A, and to compensate Contractor therefor in accordance with the terms and conditions and subject to the limitations set forth in this Agreement.

2.2 Company shall be entitled to require that Services be performed under this Agreement for itself or for any of its Affiliates, provided that Company shall remain at all times responsible for the obligations of such Affiliate under this Agreement with respect to such Services.

3 TERM OF THE AGREEMENT

3.1 This Agreement shall become effective upon the Effective Date and shall remain in full force and effect for Two (2) years (the “Term”), unless earlier terminated by either Party in accordance with the provisions of this Agreement. Company has the right to renew this Agreement for an additional one (1) year period on the same terms and conditions set forth herein, by giving Contractor written notice of such renewal at least thirty (30) days prior to the expiration of the Term. However, Company reserves the right to advise the Contractor to continue performing work under this Agreement beyond the Agreement expiry date till the completion of the ongoing well(s) or work at the time of Agreement expiry.

3.2 The Term of this Agreement shall commence on Commencement Date. The calculation of the Rates and reimbursable fees (other than the Mobilization Fee and the Demobilization Fee) by Company to Contractor for the Services carried out by Contractor shall commence upon the occurrence of the Commencement Date.

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4 SUSPENSIONS IN THE SERVICES

4.1 Company has the right, at any time, to suspend all or any part of the Services for any reason whatsoever by giving written notice to Contractor specifying the part of the Services to be suspended and the effective date of the suspension. Contractor shall cease providing said suspended part of the Services on the effective date of suspension. Contractor shall continue to provide the unsuspended part of the Services. Contractor will be given sufficient time for orderly removal of Contractor’s Personnel and items not required during suspension.

4.2 Contractor shall comply with Company’s instruction with respect to all activities in connection with any suspension of the Services. Such compliance will be a factor in determining reasonableness of costs incurred. Compensation for suspension shall only be payable in cases where the suspension is not attributable to the actions or inactions of Contractor and shall be limited to reasonable ‘out of pocket’ expenses actually incurred and directly resulting from the suspension, including related reasonable Demobilization costs actually paid out for Contractor’s Personnel and Contractor Equipment actually demobilized. Nothing in this Section shall be interpreted as changing Company’s obligation to pay amounts properly due for the Services provided prior to the date of suspension.

4.3 Company has the right, at any time, to authorize resumption of all or any part of the suspended Services by giving at least ten (10) days prior written notice to Contractor specifying the Services to be resumed and the effective date of the withdrawal of suspension. Contractor shall resume the Services on the effective date of the withdrawal of suspension. Company shall pay reasonable actual re-Mobilization costs for Contractor’s Personnel and Contractor Equipment actually demobilized pursuant to Section 4.2 after a suspension that is not attributable to the actions or inactions of Contractor.

4.4 In the event that all or part of the Services are suspended for any reason for a period that exceeds sixty (60) days, either Party, upon three (3) days’ written notice to the other Party, and subject to Section 22.12, has the right to terminate such suspended Services.

5 INDEPENDENT CONTRACTOR

5.1 Contractor is an independent contractor and none of Contractor or its Group shall be deemed for any purpose under this Agreement to be an employee, agent, partner, servant or representative of any member of the Company and its Group. The performance of the Services shall be the sole responsibility and under the sole control, command and direction of Contractor. Any provision in this Agreement whereby Company would otherwise have the right to direct Contractor as to the manner of performing the Services shall be interpreted as meaning that Contractor shall follow the wishes of Company as to the results to be achieved and not in the means whereby the Services are to be accomplished.

5.2 All responsibilities undertaken by Contractor in connection with the Services including those concerning Contractor’s Personnel, shall be undertaken in the name of Contractor and not in the name of Company.

6 CONTRACTOR’S GENERAL OBLIGATIONS

6.1 Operation of Contractor Equipment. Contractor shall be responsible for the operation of Contractor Equipment and warrants that Contractor Equipment will operate efficiently and comply fully with the technical requirements in Appendix A.

7

6.2 Compliance with Company’s Instructions. Contractor shall comply with all instructions of Company consistent with the provisions of this Agreement. Such instructions shall, if Contractor so requires and time permits, be confirmed in writing by the Company’s representative. However, Company shall not issue any instructions which would be inconsistent with Contractor’s reasonable rules, policies or procedures pertaining to the safety of the Contractor’s Personnel or Contractor Equipment which have been notified in writing to Company, or require Contractor to exceed the capacity of Contractor Equipment.

6.3 Company Programs. Contractor shall follow any of Company’s instructions with respect to any program or programs, as may be specified by Company. Company shall provide Contractor with any such programs reasonably in advance of the start date of the Services to be provided under this Agreement with respect to each well in the Halfaya Contract Area being drilled and completed.

6.4 Technical Problems During Services. In the event of any technical problem which precludes the performance of the Services for any applicable well, Contractor may suspend the Services in progress and shall immediately notify the Company’s representative of the difficulty, and during such period exert its best efforts to overcome the technical problem.

6.5 Visas and Consents. Contractor shall be responsible to obtain at its cost and expense, visas, work and residence permits required for its expatriate staff, as well as all other all approvals, permits and authorizations required for the performance of the Services.

6.6 No Liens

a. Contractor shall not directly or indirectly create, incur, assume or suffer to be created by it, its Affiliates, any member of the Contractor Group or any Subcontractor, Personnel or other supplier of goods or services any right of retention, claim, lien, charge or encumbrance on the Company’s equipment, wells or any part thereof (each a “Contractor Lien”), and Contractor shall promptly pay or discharge, and discharge of record, any such Contractor Lien or other charges which, if unpaid, might be or become a Contractor Lien. Contractor shall immediately notify Company of the assertion of any Contractor Lien. Contractor shall be responsible for and hold harmless and indemnify Company from and against Contractor Liens.

b. Upon the failure of Contractor to promptly pay, discharge or provide security acceptable to Company for any Contractor Lien within thirty (30) days of notice of the existence thereof from any source, Company may, but shall not be obligated to, pay or discharge such Contractor Lien and, upon the payment or discharge thereof, shall be entitled to immediately recover from Contractor the amount thereof together with expenses incurred by it in connection with such payment or discharge or to set off all such amounts against any such sums owed by Company to Contractor pursuant to this Agreement.

6.7 Waste Disposal and Environmental Safeguards. Without limiting Section 14, in the provision of the Services, Contractor and its Affiliates engaged in performing obligations under this Agreement shall at all times (i) observe and comply with all Applicable Laws, rules and regulations concerning the production, carrying, keeping, treating and/or disposal of waste, and (ii) act to minimize the quantity of wastes. If the Contractor fails to comply with this Section 6.7 in any respect, then the Contractor shall bear any and all costs for cleaning up the Worksite and/or the affected part of the Halfaya Contract Area (to the extent of Contractor’s non-compliance), in the event that such cleaning up is requested by either the

8

Public Authority having jurisdiction over the Halfaya Contract Area or if requested by Company.

6.8 Contractor’s Representative

a. Contractor shall nominate one its employees as Contractor’s representative who shall be in charge of the remainder of the Contractor’s Personnel. Contractor’s representative shall be present at the Worksite and/or Contractor Base at all times during the provision of the Services by Contractor, its Affiliates or Subcontractors and shall have full responsibility and authority for undertaking, supervising and directing all operations performed, including the provision by Contractor or such Affiliates of the Services, and for resolving all day-to-day matters that arise between Company and Contractor.

b. In addition, Contractor’s representatives shall liaise:

i. with all parties in the Halfaya Contract Area with respect to the performance of the Services and report on an on-going basis to Company’s representatives on the performance of the Services on the Halfaya Contract Area; and

ii. with Company’s representatives on all technical, health, safety and environmental matters, as well as any compliance matters with respect to the Agreement and any Applicable Laws, rules and/or regulations.

c. Contractor shall inform Company in writing prior to changing any of its Contractor’s representatives.

6.9 Contractor’s Personnel

a. Contractor guarantees for the Term of the Agreement that the Contractor’s Personnel assigned to the performance of the Services shall be of international recognized qualifications, having an appropriate technical background and experience to provide the Services, and Contractor shall provide Contractor’s Personnel who have the certifications and work permits required by the Applicable Laws, rules and regulations. Contractor’s Personnel must have attended, at Contractor’s cost, the safety training courses required by the Company and/or any Applicable Laws, rules and/or regulations.

b. Contractor’s Personnel shall remain at all times and under all circumstances accountable to Contractor who is responsible for the management and administration, accounting and social welfare terms of the employees assigned by him to the execution of the Services.

c. Contractor shall be solely responsible for and shall promptly pay or cause to be paid all wages, salaries, costs, expenses, contributions and charges of any nature whatsoever that accrue to the Contractor’s Personnel of, or must be paid in relation to the employment of, Contractor and its Affiliates engaged in performing obligations under this Agreement arising out of or incidental to this Agreement, including, but not limited to, overtime, vacation, severance, social security, unemployment contributions, insurance, profit sharing, welfare funds, life insurance, pensions and annuities, rest and holiday pay, as well as compensation due to accidents, sickness, disability and death, of any such personnel. All costs and expenses arising as a result

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of or incidental to Contractor’s compliance with this Section 6.9.c, or the default of same, shall be for Contractor’s account.

d. Food and lodging for Contractor’s Personnel shall be for Contractor’s account, except for when such Contractor’s Personnel is on the Worksite.

e. Contractor shall maintain strict discipline and good order among the Contractor’s Personnel. Upon written request of Company, Contractor shall promptly remove from the provision of the Services any of the Contractor’s Personnel that Company, in its sole discretion, deems to be unsafe, incompetent, disorderly or otherwise unsatisfactory, including any person who fails to comply with any provision or requirement of this Agreement, and a replacement acceptable to Company shall be promptly provided by Contractor. The cost of any such removal and replacement, including any related labor liability of any nature whatsoever, shall be for the account of Contractor. Contractor shall ensure that the transition to new Contractor’s Personnel unfamiliar with Company’s or the Contractor’s operations under this Agreement shall be as seamless as reasonably possible to Company, and Contractor shall provide for appropriate knowledge sharing and training of the replacement Contractor’s Personnel in this regard at no charge to Company.

f. Contractor shall, if requested by Company, supply additional personnel under the conditions set out in Appendices B and C.

g. Contractor shall organise crew changes schedules for the Contractor’s Personnel in agreement with Company (if needed).

h. Contractor shall organise and assure, at its own cost, the transportation of the Contractor’s Personnel from points of origin up to Contractor Base in Iraq and/or the Halfaya Contract Area and return, and between the Contractor Base and the different Worksites and/or wells locations in the Halfaya Contract Area.

i. Contractor shall make all necessary arrangements to provide medical assistance for the Contractor’s Personnel. However it is understood that Company shall assist in the administration of first aid to Contractor’s Personnel while on the Worksite, and in the event of emergency, Company shall, at cost to Contractor, arrange transport to move Contractor’s injured or ill Personnel to the clinic closest to the Worksite using the resources available in the area. Upon arrival at such clinic, Contractor shall assume full care of such Personnel, Contractor’s representative shall be reachable 24 hours per day to take care of any injured or sick Contractor’s Personnel.

6.10 Contractor Equipment

a. Contractor guarantees that Contractor Equipment is in perfect operational condition and order, and that Contractor is able to carry out the operations efficiently and safely in conformity with the scope of work, with good international oil and gas industry practices and all Applicable Laws, rules and regulations.

b. Contractor shall effect Mobilization and Demobilization of Contractor Equipment at its own cost. Moreover, Contractor shall be responsible for the preparation of all administrative and customs formalities concerning the shipment and importation, if necessary, of its Contractor Equipment from point of origin and the Worksite.

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c. Contractor shall maintain throughout the Term of the Agreement a stock of spare parts and tools necessary for the maintenance and repair of Contractor Equipment, the cost of which is included in the Prices and Rates specified in Appendix B. Contractor shall also maintain a sufficient stock of consumable products in order to carry out the Services efficiently as set out in Appendix A.

d. Should Contractor be unable to provide Contractor Equipment and/or Services when needed on the Worksite (as per Appendix A of this Agreement), Contractor shall pay Company by way of Liquidated Damages and not as a penalty, the amount specify below of the Agreement Value for each day (or part thereof) of delay elapsing beyond such specified schedule. The Liquidated Damages shall accrue on a daily basis until Contractor shall have performed its obligations in accordance with the requirements of this Agreement, up to a maximum of ten percent (10%) of the Agreement Value. The Parties agree that such Liquidated Damages represent a genuine and reasonable pre-estimate of the losses likely to be suffered by Company in the event of any delay in the performance of its obligations by Contractor as specified in this Agreement or any of its Appendices. The Liquidated Damages have been agreed upon by the Parties, at the Effective Date of this Agreement, based on fair and equitable negotiations, because of the difficulty of ascertaining the exact amount of the losses and damages that Company would suffer in such circumstances, and shall be applicable regardless of the actual loss that Company sustains or incurs. Liquidated Damages shall be payable immediately as per Company’s notification that such Liquidated Damages are due.

Liquidated Damages to be applied on a daily basis shall be calculated based on the following equation:

(AV)

__________________ x 10% = Liquidated Damages per day of delay.

(Term)

Where: (AV) is Agreement Value

(Term) is Agreement Term of duration (in calendar days)

e. Contractor shall, on its own initiative and expense carry out, inspection, maintenance, and repairs of Contractor Equipment and shall maintain throughout the Term of the Agreement Contractor Equipment in a perfect operational condition. Contractor shall have available the necessary qualified Contractor’s Personnel to perform such maintenance.

f. Contractor shall replace all Contractor Equipment which is out of service or faulty as soon as possible in the normal course of operations and at its own cost, and the costs of transport of the replaced and replacement Contractor Equipment to and from the Worksite will be borne by Contractor according to the conditions set out in Section 6.10.b.

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g. Contractor shall immediately inform Company of any breakdown or faulty Contractor Equipment which does not necessarily cause a stoppage of operations, but decreases the efficiency of the Services, upon which Contractor shall promptly carry out repairs, modifications or replacement of such faulty Contractor Equipment.

h. If Contractor uses equipment made available by Company or any of Company’s other contractors, then Contractor shall take all necessary care of such equipment as if the said equipment belonged to Contractor and was furnished pursuant to the provisions of this Agreement.

i. Contractor shall furnish supplementary Contractor Equipment whenever requested by Company, according to terms and conditions set forth in the Agreement.

j. Contractor shall be responsible for and shall bear the cost of formalities relating to the importation and exportation of Contractor Equipment, machinery, products and supplies, including any forwarding agent costs, as set out in Section 13.

k. Contractor shall be responsible for the transfers of its Contractor Equipment, machinery, products and supplies to and from its point of origin and the Worksite according the conditions set out in the above Section 6.10.b and shall bear the cost of the associated formalities.

l. Contractor shall maintain at all times at least the minimum personnel necessary to perform the Services specified therein. Contractor shall be responsible, at its sole cost and expense, to provide and schedule for the normal rotation of all of its personnel for rest and leave purposes, including transportation. Contractor shall ensure that it has available sufficient other personnel who are suitably experienced and competent to replace such personnel when at rest or on leave. Before commencing the Services, Contractor shall provide Company with Contractor’s rotational leave schedule with respect to the Services to be provided thereunder.

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6.11 Use of local supplies

Contractor shall whenever possible, use locally available equipment or materials if such equipment and/or materials are technically acceptable and available at competitive prices and delivery.

6.12 Records and Accounts

a. Contractor shall maintain and shall cause its Affiliates and Subcontractors to maintain true and correct records of charges, including gift and entertainment expenses, and accounts in connection with the Services and all transactions related thereto and shall retain all such records and accounts for a period of not less than thirty-six (36) months after termination or completion of this Agreement. Notwithstanding the foregoing if any dispute remains unresolved at the end of the aforesaid thirty-six (36) months, Contractor shall maintain and cause its Affiliates and Subcontractors to maintain such records available to Company until all such disputes are resolved.

b. To the extent reasonably possible, Contractor shall make available such knowledgeable Personnel at their assigned locations as are necessary to permit Company and Company’s Personnel to efficiently conduct the audits.

c. Contractor shall ensure that the foregoing provisions of this Section 6.12 are included in all Subcontracts it may enter into with its Affiliates and Subcontractors who will supply any of the labour, Contractor Equipment, materials or Services to be provided under this Agreement.

7 BANK GUARANTEE AND PARENT COMPANY GUARANTEE

7.1 By way of guarantee for the due performance of Contractor’s obligations under this Agreement, Contractor shall within fourteen (14) days of the Letter of Award acceptance furnish Company with a Bank Guarantee in the form contained in Appendix F. The Bank Guarantee shall remain in force for the Term of this Agreement or any extension thereof and for an additional six (6) months after termination thereof or the end of any extension period (the “Guaranteed Period”), and its value shall be five percent (5%) of the Agreement Value specified in the Letter of Award. The Bank Guarantee shall be binding on the guarantor notwithstanding any variation, alteration or extension of time or any other terms and conditions of this Agreement as may be made, given, conceded or agreed under this Agreement. All costs related to the preparation, completion, issuance and delivery of the Bank Guarantee shall be borne by Contractor.

7.2 Should the expiry date of a Bank Guarantee occur before the expiry of the Guarantee Period, Contractor shall furnish at least fourteen (14) days before the date of expiry of the Bank Guarantee, another Bank Guarantee in the same amount as previously provided, except with a revised date of expiry which shall not be earlier than the expiry of the Guarantee Period. Should Contractor fail to provide the new Bank Guarantee, Company has the right to demand payment of the full amount guaranteed under the unexpired Bank Guarantee without prejudice to all its other rights under this Agreement or at law or in equity.

7.3 If a Bank Guarantee is not duly furnished to Company within fourteen (14) days of the letter of award acceptance, Company has the right to, at its option and without prejudice to any rights or Claims it may have against Contractor by reason of Contractor’s non-compliance with any of the provisions of this Section 7, terminate this Agreement by giving seven (7)

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days written notice to Contractor. Company shall thereupon not be liable for any Claims or demands from Contractor under the provisions of this Agreement in respect to any matter or thing whatsoever in connection with or relating to this Agreement, whether or not already completed or furnished, and Company shall further be entitled to be repaid by Contractor for all reasonable out-of-pocket expenses incurred by Company in obtaining a new contractor to provide the Services. Notwithstanding the foregoing, Company shall compensate Contractor for the Services provided before the date of termination, subject to any deductions or set-offs in accordance with Section 9 and provided that such Services are unrelated to the reason for termination.

7.4 Company reserves the right to instruct Contractor to revise the Bank Guarantee amount to correspond to any increase in the Rates or Services to be provided. Failure to revise the Bank Guarantee amounts as required shall be deemed to be a default under this Agreement and Company has the right to demand payment of the full amount guaranteed under the Bank Guarantee without prejudice to all its other rights under this Agreement or at law or in equity.

7.5 In addition to the Bank Guarantee, Contractor shall furnish Company concurrently with the execution of this Agreement with a Parent Company Guarantee duly executed by an Affiliate of Contractor, such Affiliate having been approved by Company in writing. Failure to provide a Parent Company Guarantee or failure by the provider of such Parent Company Guarantee to maintain the Parent Company Guarantee in full force and effect throughout the Term of this Agreement, shall be deemed to be a default under this Agreement and Company has the right, without prejudice to all its other rights under this Agreement or at law or in equity, to demand payment of the full amount guaranteed under the Bank Guarantee.

7.6 Failure of Contractor to provide the Bank Guarantee or failure of Contractor to continue to provide the required Bank Guarantee throughout the duration required under Sections 7.1 and 7.2 above shall entitle Company to withhold payment of Contractor’s invoice(s) until such time as the equivalent amount required for the Bank Guarantee has been duly withheld by Company. This withheld amount shall not be released until the required Bank Guarantee is furnished to Company by Contractor or until all Contractor obligations related to this Agreement are satisfactorily completed.

8 COMPANY’S RIGHTS AND OBLIGATIONS

8.1 Company’s Representative. Company shall nominate one or more of its employees as Company’s representatives who shall be in charge of the Company’s Personnel. Company’s representatives shall be present at the Worksite at all times during the provision of the Services by Contractor and shall have full responsibility and authority to represent Company, including the provision by Contractor of the Services, and for resolving all day-to-day matters that arise between Company and Contractor.

8.2 Worksite and Access. Company will be responsible for providing access to each Worksite, as well as marking, clearing and preparing the location, and providing proper and sufficient certificates or permits or permission necessary to enter upon and operate on each Worksite.

8.3 Food and Lodging. Company shall provide food and lodging for Contractor’s Personnel while such Contractor’s Personnel is on the Worksite.

8.4 Sickness or Accident. In the event of either sickness or accident involving Contractor’s Personnel on the Worksite, Company shall provide assistance in the administration of the

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first aid at the cost of Contractor, and Contractor shall organize and assure the evacuation of the injured or sick personnel to the nearest hospital to the Worksite.

8.5 Contractor Equipment. Company shall have the right at any time to inspect Contractor Equipment and to request reconditioning or replacement of Contractor Equipment found at any time to be in poor condition or not in conformity with the specifications in Appendix A and/or with Applicable Laws, rules and regulations. It is expressly acknowledged that (i) such inspection, supervision and/or instructions by Company and/or (ii) actual or implied approval of Contractor Equipment by Company, shall not, in any way, release Contractor of all or any part of its liability under the Agreement in connection with the ownership or use of such Contractor Equipment, nor affect Contractor’s status as an independent contractor.

8.6 Fuel and Other Supplies. Company shall provide, according to available means, water, fuel, electricity and compressed air required to operate Contractor Equipment at the Worksite.

8.7 Right to Audit

a. Company or its authorized representatives shall have access at all reasonable times to all Documentation, records, certificates, correspondence, drawings, way bills, receipts, vouchers, memoranda and the like of Contractor, and of any Subcontractor, their agents and servants which were issued, written or made in connection with the Agreement. Company’s right of audit of receipts and vouchers shall be limited to that necessary to verify the costs of all items for which Contractor received payment on a cost reimbursable basis, to substantiate a rate or Agreement price adjustments, for any other reasonable purpose. Company, at its own cost, shall have a right to make or reproduce and retain copies of any such document or record for Company’s internal use.

b. Company or its authorized representatives shall have sufficient access for the purposes of the above Section 8.7.a to rate information to satisfy themselves that no Services that are supposed to be included in the Prices and Rates of Contractor (as described in Appendix B) are invoiced as directly reimbursable costs and that all Services that are supposed to be provided for in the Prices and Rates of Contractor are so provided. If any costs are in dispute and Contractor refuses to provide access, such costs shall be deemed to be included in the Prices and Rates of Contractor and shall not be allowable as reimbursable costs.

c. As a result of such audits, Company has the right to claim for omissions, corrections, overpayments and other errors in charges and credits for Company’s account as billed by Contractor and its Group. These claims may be presented at any time during the course of the related Services and before expiry of thirty-six (36) months after termination or completion of Services. Contractor shall preserve and shall cause its Subcontractors to preserve all Documentation for the same period.

8.8 Miscellaneous. Company shall issue to Contractor written instructions, operation procedures and safety rules, and any addendum or modification thereto as may be required from time to time.

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9 INVOICING AND PAYMENT

9.1 Contractor shall be compensated for the Services, including any Contractor Equipment and Contractor Personnel provided by Contractor, in accordance with this Section 9.

9.2 Contractor’s remuneration is set forth in Appendix B. The rates and fees are deemed to include all cost and expenses whatsoever payable by Contractor to the extent defined by the terms of the Agreement.

9.3 Unless otherwise stated in Appendix B, all payments by Company to Contractor hereunder shall be made in U.S. dollars. Payment to Contractor shall be made by wire transfer to Contractor’s bank and account and details of such bank account are as under:

Beneficiary Name:

Title of Account:

Bank Account No.

Bank Name & Address:

Swift Code

[Similar details shall be provided if intermediary bank is involved]

Provided that Contractor may specify different bank account details to Company in writing and such changes in bank account details shall be subject to Company’s approval and be effective within five (5) Business Days thereafter. Further, Company has the right to instruct the Contractor to change their bank details, in case major changes or incidents related to respective bank status, including, but not limited to, compliance with any Applicable Laws or Regulations concerning economic sanctions, boycotts or embargoes.

9.4 Settlement of Invoices

a. All invoices shall be prepared on the Contractor’s letterhead and shall be approved by the Authorized Signatory and shall stipulate the contract number, invoice number, time period covering the services and detail of the work order to which this invoice is related. The invoices shall be annexed with sufficient supporting documents to verify the claim of the Contractor and in the case of reimbursable cost, the original receipts thereof shall be annexed with the Contractor’s invoices.

b. Contractor shall submit the original invoices on or before the tenth (10th) day of each month for the work performed in the previous month and Company shall pay the undisputed items of each such invoice in arrears within forty-five (45) days of receipt of such invoices at the following address: Attention: Section Head – Accounts Payable PetroChina International Iraq FZE – Iraq Branch C/O PetroChina Halfaya FZ-LLC Dubai Internet City Building No. 10, 4th Floor P.O. Box 500486 Dubai, UAE

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c. Should Company wish to modify the terms of payment in this Agreement, then Company and Contractor shall meet together to evaluate in good faith the economic impact on the Agreement and increase or decrease the Prices and Rates accordingly.

d. In the event Company disputes any invoice in whole or in part, Company shall notify Contractor of the dispute, and Company shall pay the undisputed portion of such invoice in accordance with Section 9.2. Company and Contractor shall, in good faith, endeavor to settle and adjust any disputed amount. Payment in respect of disputed items in invoices shall be made within seven (7) Business Days of the settlement of dispute; provided that the initial payment period of forty five (45) days has already elapsed.

e. Six (6) months after the end of any given month in which the Services were performed Company shall be entitled to reject any further invoicing from Contractor for the Services carried out during such month.

f. As a condition precedent to making any payment to Contractor, Company may require from Contractor satisfactory documentation evidencing that it has complied with all relevant regulations and requirements of the Public Authority in connection with the use of labor, materials, payment of taxes and other obligations arising out of the Agreement.

9.5 Before incurring any expenses related to labor, supplies, equipment or any other expenses in connection with the Services, Contractor shall obtain Company’s prior written consent. Contractor shall be reimbursed by Company for the reasonable cost of any such additional expenses approved by Company in accordance with this Section 9.

9.6 If Contractor (i) fails to complete the Services, or any specified portion of them, in a manner acceptable to Company pursuant the schedule determined in this Agreement; or, (ii) is in breach of the conditions of this Agreement, Contractor shall pay Company as Liquidated Damages, and not as a penalty, the amount specified below of the Agreement Value, for each day (or part thereof) until such time that Contractor completes such Services or the Agreement is terminated, up to ten percent (10%) of the Agreement Value. The Parties agree that such Liquidated Damages represent a genuine and reasonable pre-estimate of the losses and damages likely to be suffered by Company in the event of the failure of its obligations by Contractor. The Liquidated Damages have been agreed upon by the Parties, at the Effective Date of this Agreement, based on fair and equitable negotiations, because of the difficulty of ascertaining the exact amount of the losses and damages that Company would suffer in such circumstances, and shall be applicable regardless of the actual loss or damage that Company sustains or incurs. Liquidated Damages shall be payable immediately as per Company’s notification that such Liquidated Damages are due. Liquidated Damages applied on a daily basis shall be calculated based on the following formula: Agreement Value divided by Term of Duration (in calendar days), multiply by ten percent (10%).

9.7 The rates and fees set forth in Appendix E are firm and not subject to escalation for the duration of this Agreement.

Any item drawn from Company Warehouse that is chargeable to Contractor shall be so charged at cost including freight charges plus administrative charges of five percent (5%) of the total chargeable cost at the time item is drawn from the warehouse.

9.8 Company has the right to withhold payment due to Contractor on account of:

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a. Unsatisfactory performance of the Services;

b. The filing of Claims against Company caused by acts or omissions of Contractor or the existence of evidence indicating the probability of imminent filing of such Claims;

c. The failure of Contractor to pay amounts due for labor or material or the Contractor Equipment used by Contractor in providing the Services or amounts due to Subcontractors in providing the Services;

d. Contractor’s failure to remedy defective portions of the Services where Company has given Contractor notice of any such defective Services; or

e. The failure of Contractor to provide adequate evidence of its compliance with the Insurance, Bank Guarantee and/or Parent Company Guarantee requirements contained in this Agreement.

Any payments withheld by Company pursuant to the terms of this Agreement shall be without prejudice to any other rights or remedies available to Company.

9.9 Company has the absolute right to recover any amounts whatsoever owed by Contractor to Company from any payment or monies otherwise due to Contractor.

9.10 Without prejudice to any other rights or remedies Company may possess and in addition to Company’s legal and equitable rights of set off, if Contractor causes Company loss by reason of any breach of this Agreement or by tortuous act or by any breach of statutory duty giving rise to a Claim by Company against Contractor for damages or indemnity or contribution, then without prejudice to and pending the final determination or agreement between the Parties as to the amount of such loss, indemnity, contribution or payment, Contractor shall forthwith pay or at Company’s sole option, Company has the right to deduct from any payment or monies otherwise due to Contractor, such sum as Company reasonable estimate as the amount of such loss, indemnity, contribution or payment and such estimate shall be binding and conclusive on Contractor until final determination or agreement between the Parties.

9.11 If Contractor is unable to fulfill its obligations under this Agreement, any costs incurred by Company to remedy the delinquency shall be borne by Contractor, and Company has the right, at its sole option, to deduct such costs from any payment due to Contractor.

9.12 Any payment made under this Agreement shall not constitute an admission by Company as to acceptance of the Services or the satisfactory performance thereof and in no event shall any such payment affect Contractor’s representations, warranties and undertakings.

10 CONTRACTOR’S WARRANTIES AND COVENANTS

10.1 Contractor represents, warrants and covenants that it has and will continue to have, the skill, expertise, ability and qualifications to provide the Services as required by this Agreement. Contractor agrees that it and its Group engaged in providing the Services shall provide the Services with due diligence and care and in a good, safe and workmanlike manner, all in accordance with this Agreement, to the extent not addressed or specified in this Agreement, in accordance with good international oil and gas industry practices.

10.2 Without prejudice to the generality of Section 10.1, Contractor warrants that the Services provided by Contractor and its Affiliates engaged in providing the Services shall conform in all material respects with the specifications expressly agreed, and that Contractor Equipment, materials, products, goods or other items furnished by Contractor and such Affiliates shall

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conform to the specifications expressly agreed or, in the absence of any such specifications, shall conform to Contractor’s published specifications.

10.3 In the event that any Services or any Contractor Equipment, materials, products, goods or other items provided by the Contractor or such Affiliates fail to conform to the foregoing standards as set forth in this Section 10, then Contractor shall, at Company’s option, either (i) re-perform, repair or replace the non-conforming Services, Contractor Equipment, materials, products, goods or other items at Contractor’s sole cost or (ii) refund to Company the compensation paid by Company to Contractor for all portions of the Services or any Contractor Equipment, materials, products, goods or other items provided by the Contractor or such Affiliates that are defective. If Contractor fails to complete such re-performance to the reasonable satisfaction of Company within fourteen (14) days, Company shall have the right to complete or correct the non-conforming Services by itself or through another Person, and Contractor shall be responsible for all costs incurred by Company in the completion or correction of the non-conforming Services.

10.4 Contractor and its Affiliates engaged in providing the Services shall furnish, all Personnel that are necessary for Contractor and such Affiliates to provide the Services. Contractor and such Affiliates shall provide sufficient support personnel to ensure the expeditious performance of the Services (such as drivers, equipment operators, maintenance/repair personnel, and administrative personnel) and the cost of such support personnel shall be borne by Contractor. Contractor represents, warrants and covenants that all of the Personnel that Contractor and such Affiliates shall provide are, and will be, fully trained, experienced, qualified and able to provide the Services. Contractor and its Affiliates shall be responsible for all salary, compensation, benefits, and personal and corporate income taxes for their Personnel.

10.5 Contractor and its Affiliates engaged in providing the Services shall maintain complete and accurate records of all Services performed under this Agreement shall report this information to Company in a form and at times specified in this Agreement or as may otherwise be required by Company, which for the avoidance of doubt, shall be part of the Confidential Information. Furthermore, Contractor and such Affiliates shall keep Company fully informed of the progress of the Services and shall submit to Company, for review and comment, all relevant documents related thereto. These documents shall be submitted to Company sufficiently in advance to allow Company to review and comment upon them without delaying the performance of the Services by Contractor. No document to be used in connection with the Services shall be deemed final until approved by Company.

11 INSURANCE

11.1 Contractor, at its sole expense, shall carry with solvent and reputable insurance carriers insurance coverage of the types and in the minimum amounts set forth in Appendix E at all times during the Term of this Agreement. Any and all deductibles shall be assumed by and shall be for the account of Contractor. All insurances arranged under this Agreement shall be in accordance with the Insurance Business Regulation Act, 2005 issued by the Republic of Iraq.

Prior to providing any Services, Contractor or its Affiliates engaged in providing the Services shall furnish to Company certificates, in a form acceptable to Company, signed by authorized representatives of the insurance companies providing the coverage, evidencing all coverages, extensions and limits required to be carried by Contractor or such Affiliates under the provisions of this Agreement. Upon request, Company shall have the right to

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examine or inspect the originals or certified copies of such insurance policies in the offices of Contractor or such Affiliates during normal business hours.

11.2 Contractor shall cause Company and Company Group to be included as additional insureds and to be covered by all insurances set forth in Appendix E except Workmen Compensation and/or Employer’s Liability insurances with respect to the operations conducted under this Agreement and shall cause the insurers thereof to waive all expressed or implied rights of subrogation against Company and Company Group. Contractor shall further cause the Comprehensive General Third Party Liability Insurance to contain a “severability-of-interests” (cross-liability) clause providing that in the event of one insured Party incurring liability to any of the other insured Parties, the insurance shall apply for the benefit of the Party against whom a claim is or may be made in the same manner as if separate policies had been issued to insure each Party.

11.3 All premiums, deductibles, exceptions and exclusions applicable to the foregoing insurances shall be for the account of and be paid by Contractor. Any breach of conditions and/or warranties contained in such policies of insurances shall also be for the account of Contractor.

11.4 Upon request by Company, Contractor shall furnish Company with appropriate acceptable evidence of policies of insurance as set forth in Appendix E accompanied by certified copies of official receipts evidencing full payment of premiums thereof. No insurance shall be canceled or materially discharged during the Term of this Agreement without Company’s prior written consent. Policies and/or extension certificates or documents shall be furnished to Company as and when requested by Company.

11.5 Contractor shall be responsible for, and liable to, and shall release, indemnify, defend and hold Company and Company Group harmless from and against any and all Claims or liability for loss or damage arising out of any failure to obtain or maintain such insurances specified by this Agreement or out of any act or omission which invalidates such insurances.

11.6 Should Contractor at any time neglect or refuse to provide or renew any insurance required herein, or should any insurance be canceled, Company shall have the right to procure such insurance and, in such event, any sum so paid by Company shall immediately become due and payable to Company by Contractor. Company shall be entitled to deduct such sums from any monies due or which may become due to Contractor under this Agreement in addition to any other remedies Company may have.

11.7 Contractor shall notify Company immediately upon receipt of any notice of Claims, incidents or demands or of any situation which may give rise to such Claims or demands being made with respect to this Agreement under the said policies. Written notice of any accident shall be given not later than two (2) Business Days after the occurrence of the accident. However, for serious accidents (including death or serious injuries) Contractor shall advise Company immediately and provide written confirmation within two (2) Business Days.

11.8 Contractor shall ensure that Subcontractors maintain similar insurance coverage as set forth in Appendix E and that Subcontractors similarly release, indemnify, defend, and hold Company and Company Group harmless from and against any and all Claims or liability for loss or damage arising out of any failure by Subcontractors to obtain or maintain such insurances specified by this Agreement or out of any act or omission which invalidates such

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insurances. Any deficiencies in the coverage or policy limits of any Subcontractor’s insurance shall be the sole responsibility of Contractor.

11.9 The insurance coverage amounts required to be obtained by Contractor pursuant to this Agreement shall be the minimum and not the maximum limits of liability. Contractor may provide other insurance coverage or higher limits of coverage. Company will bear no financial liability attributable to deficient insurance coverage by Contractor.

11.10 Without Company’s prior written consent, Contractor shall not be allowed to self-insure for one or more of the risks as to which coverage is required pursuant to this Agreement.

11.11 Contractor shall not begin to provide Services and shall not allow Subcontractors to begin to provide Services until all the insurances and Company’s written consent for self-insurance required by this Section 11 and set forth in Appendix E are in force.

11.12 Nothing in this Section 11 shall serve in any way to limit or waive Contractor’s responsibility under this Agreement.

12 LIABILITIES, RELEASES AND INDEMNIFICATION

12.1 For the purpose of this Agreement, the following definitions shall apply:

a. “Contractor Group” means (i) Contractor, (ii) its Subcontractors at any tier, (iii) its and their respective Affiliates, and (iv) its and their respective officers, directors, employees, agents and consultants, but shall not include any member of Company Group.

b. “Company Group” means (i) Company, (ii) Company’s co-venturers (which means any co-venturers with the Company from time to time having interest in the DPSC under which the Services are being performed), (iii) Company, its co-venturers, and their Affiliates’ subcontractors at any tier, , (iv) its and their respective Affiliates , and (v) its and their respective officers, directors, employees, agents and consultants, but shall not include any member of Contractor Group.

c. “Claims” means all claims, demands, causes of action, damages, judgments, fines, penalties, awards, losses, liabilities, costs and expenses (including attorneys’ fees and costs of litigation) of any kind or character arising out of, or related to, the performance of or subject matter of this Agreement and (including property loss, destruction or damage; personal or bodily injury, sickness, disease or death).

d. “Gross Negligence and Willful Misconduct” means any act (whether sole, joint or concurrent) by a Person that was intended to cause or was in reckless disregard of, wanton indifference to, the harmful consequences to the safety or property of another Person which the person acting or failing to act knew, or should have known, would result from such act or omission, provided that gross negligence and Willful Misconduct does not include any act or failure to act insofar as it:

(i) constituted mere ordinary negligence, meaning any act, omission or failure to as a reasonable and prudent person would under similar circumstances or proper standard of reasonable conduct, including those due to pre-existing conditions and/or defects of any property, equipment or materials; or,

(ii) was done or omitted in accordance with express instructions or approval of Company.

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12.2 Company shall be responsible for, indemnify and hold Contractor Group from and against any and all Claims, losses, damages, costs (including legal costs), expenses and liabilities in respect of any injury to or illness or death of any employee of Company Group, and for damage to or loss of property of Company Group, which arises out of or is incident to the performance of this Agreement, regardless of the cause; except if such injury, illness, death or damage is caused by the Gross Negligence and Willful Misconduct or violation of any Applicable Law or other legal fault of any member of the Contractor Group.

12.3 Contractor shall be responsible for, indemnify and hold harmless Company Group from and against any and all Claims, losses, damages, costs (including legal costs), expenses and liabilities in respect of any injury to or illness or death of any employee of Contractor Group, and for damage to or loss of property of Contractor Group, which arises out of or is incident to the performance of this Agreement, regardless of the cause; except if such injury, illness, death or damage is caused by the Gross Negligence and Willful Misconduct or violation of any Applicable Law or other legal fault of any member of the Company Group.

12.4 Each Party (the “Indemnitor”) shall be responsible for, indemnify, and hold harmless the other Party (the “Indemnitee”) from and against any and all Claims, losses, damages, costs (including legal costs), expenses and liabilities in respect of any injury, illness or death or damage to, or loss of the property of any third party, which results from, arises out of, or is incident to the negligence, Gross Negligence or willful Misconduct, strict liability, violation of any Applicable law or other legal fault of the Indemnitor. Third party for the purpose of this Subsection means any person other than Company Group and Contractor Group.

12.5 Contractor’s In-hole Equipment

(a) Contractor shall assume the risk of, and shall be solely responsible for and in this regard shall indemnify, defend and hold the Company harmless against any claims arising out of all damage to and/or loss or destruction of Contractor Equipment and property, and also of its Subcontractor’s equipment and property, from any cause whatsoever, at all times during the term of this Agreement. Contractor shall replace any lost or damage Contractor Equipment and equipment and property of its subcontractors at Contractor’s sole cost and expense.

(b) Company shall compensate Contractor for any Contractor’s Equipment and tools damaged or lost while in-hole below the rotary table, to the extent that the operation in which Contractor’s Equipment is lost or damaged has been approved by Company’s Representative, and that such loss or damage is not covered by Contractor’s insurance, or recoverable from other sources; provided that such loss or damage is not due to: (a) Contractor’s Gross Negligence and Wilful Misconduct, (b) Contractor’s failure to follow good drilling practices or to properly maintain and inspect the equipment, (c) negligence, omission or breach of duty (whether statutory or otherwise) on the part of Contractor, its employees, agents, contractors and subcontractors, (d) failure or malfunction of Contractor’s surface equipment, within Contractor’s control, and (e) ordinary and fair wear and tear. Where repair is possible, Company shall, at its sole option, reimburse Contractor in respect of the foregoing repair.

(c) Any reimbursement for which Company is liable shall not exceed the purchase price (excluding overhead costs) less accumulated depreciation determined on the straight line. The depreciation shall be calculated based on original purchase price or the cost of the last refurbishment, whichever is less, substantiated by original invoice or equivalent records with date of purchase or refurbishment, and the estimated useful life of equipment, for each item or component part, reduced by a depreciation of two percent (2%) per year up to a maximum

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of fifty percent (50%) of the value indicated before. However, if Contractor fails to furnish an original invoice or equivalent records, then the maximum depreciation percentage shall apply calculated on the estimated declared value of the Equipment hereunder.

(d) Rental of any item of Contractor equipment which is lost, damaged or destroyed shall cease for the period it is not available for the Services.

12.6 Liabilities concerning data interpretation

Except as otherwise provided in this Agreement, Contractor and Company agree that Contractor will be responsible to Company for the accuracy, correctness, or completeness of any interpretation of test or other data, and any recommendation or reservoir description, based upon any interpretation of logs or other data which Contractor provides or assists in providing to Company pursuant to this Agreement.

12.7 Liabilities concerning radioactive sources

(a) During running in hole, Company, with the help and support of Contractor, shall be responsible for the recovery of the radioactive source. If the source cannot be recovered, Company shall comply with Applicable Laws and regulations, including the isolation and marking of the location of the source.

(b) Contractor is responsible for the transportation of its equipment to the Worksite and its return, thus if any radioactive source is lost or the container broken during said transportation, Contractor shall comply with all Applicable Laws and regulations as owner of the source, including the isolation and marking of the location of the source, and shall defend, indemnify and hold harmless Company from and against any all liabilities arising out and with respect thereto, and shall further keep Company informed of all related developments. This obligation is to be kept regardless of the fact that Company provides security to Contractor for the transportation of the radioactive source

(c) Also Contractor is responsible for maintaining any storage location in the wellsite or in the Company or Contractor Base, as the case may be, secure from any incident it may occur. If any radioactive source is lost, or the container broken, during or at the storage location, Contractor shall comply with all Applicable Laws and regulations, and shall defend, indemnify and hold harmless Company from and against any and all liabilities arising out and with respect thereto, and shall further keep Company informed of all related developments. This obligation is to be kept regardless of the fact that Company provides a location or space to Contractor within its base camp or the wellsite to storage the radioactive source

(d) If any radioactive source is logged, lost or missing in a well or at the well site, while under the control or custody of Contractor or its Group, Contractor shall immediately notify Company. Contractor must exert its best efforts to locate and recover the source and shall take all necessary precautions to avoid breaking, damaging or rupturing the source. If a source that is lodged in a wellsite is not recovered or if it becomes irretrievable, Contractor shall immediately notify Company and comply with all applicable laws and regulations

(e) Contractor shall take all necessary actions to minimize the possibility of contamination and radiation exposure to personnel and to decontaminate the environment and any equipment or personnel who may be contaminated because of rupture of the radioactive source.

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(f) Company shall assume the entire responsibility for operations in which Company or its other contractor’s fish, attempt to fish, abandon, attempt to abandon, or any other operation that may jeopardize the retrieve-ability or the integrity of equipment, which contains radioactive sources. Company shall involve and inform Contractor of all plans and decisions concerning such operations and the final plan to proceed shall be subject to both parties documented mutual agreement.

12.8 Loss of Hole

(a) Company shall save, defend, indemnify and hold Contractor harmless from and against any and all claims (including any third party claims) arising out of or in connection with this Agreement from any act whatsoever of Contractor in respect of:

i) loss of or damage to any well, geological formation, strata and/or oil or gas reservoir;

ii) loss, damage, injury and/or death resulting from a blowout, crater explosion, catching fire or any well in any manner getting beyond control (including loss of oil or gas from the well);

iii) killing or bringing under control of without limitation any well, (including its costs thereof);

iv) loss of stored products from any property of Company or contamination of said products (manufactured or otherwise) resulting from a), b) or c) above;

v) loss, damage, injury and/or death resulting from pollution (including any environmental pollution) and/or contamination emanating from below the rotary table caused by a), b), c) or d) above including all cost of containment, clean-up and disposal;

vi) loss, damage (including the cost of containment, clean-up and disposal), injury and/or death resulting from radioactive contamination (including environmental contamination) originating below the surface or in the event of contamination originating above the surface, whilst the radioactive source is under Company or its Group direct or indirect custody and control; or

vii) loss, damage, injury and/or death suffered by any third party resulting from any of the above events.

(b) Provided, however, that if such loss or damage is caused by any negligent act or omission or Gross Negligence and Willful Misconduct on the part of Contractor or a member of its Group, the Contractor shall at the Company’s election to repair or re-drill the hole at Contractor’s sole cost and expense.

12.9 Contractor shall be responsible for and liable to and shall release, indemnify, defend and hold Company and Company Group harmless from and against any and all Claims, demands, causes and causes of action brought against Company and its Group in respect of pollution and/or contamination of sea, water, land or air, including clean-up costs, if such pollution or contamination arises as a result of the negligence or breach of duty (whether statutory or otherwise) of Contractor and Contractor Group. This indemnity shall include all costs, penalties, awards, damages and judgments; court and arbitration costs; counsel and witness fees; and all other reasonable expenses incurred by or assessed against Company and Company Group and associated with such Claims, demands, causes and causes of action. Contractor’s liability and responsibility to indemnify hereunder shall not be reduced even if

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the negligence or breach of duty (statutory or otherwise) of Company and Company Group contributed to such pollution or contamination.

12.10 If a Claim is asserted in circumstances which do or may give rise to an indemnity under this Agreement, the Party which is informed of such Claim shall forthwith give notice thereof to the other Party and the Parties shall consult and cooperate fully in respect thereof and in determining whether the Claim and any legal proceedings relating to a third party should be resisted, compromised or settled. Each Party shall make available to the other all information in its possession or to which it has access that is or may be relevant to the particular Claim.

12.11 Contractor shall notify Company immediately of any damage to, loss of, loss of use of, recovery of or destruction of property used in connection with the Services, any personal injury or death or disease of persons occurring in connection with the provision of Services and any incident, Claim or litigation affecting the provisions of this Section 12, and Contractor shall furnish to Company adequate written reports pertaining to same.

12.12 Contractor’s liabilities and indemnities in this Agreement shall not be reduced by reason of any omission, negligence or breach of duty (statutory or otherwise), by Company and Company Group in failing to supervise or control Contractor or Contractor Group or methods of working or to detect or prevent or remedy defective Services or to ensure proper performance of any other obligations of Contractor under this Agreement.

12.13 Neither Party shall be liable to the other for any consequential and indirect losses. In this Section, Consequential and Indirect Losses means any indirect, special, punitive, exemplary or consequential damages or losses, loss of earnings, loss of production, loss of value or decrease in earnings from any goods or property, loss of revenue, loss of profits, loss of business or loss of business opportunities, damages for loss of reserves, loss of use, loss of financial advantage, business interruptions and downtime.

12.14 Contractor acknowledges that there are certain risks, including personal security risks, in traveling to and working within Worksites. For the avoidance of doubt, Contractor acknowledges and agrees that Section 12.3 shall be deemed to include harm and loss associated with such risk and that Company and Company Group bear no responsibility for any such risks to Contractor or any member of the Contractor Group during the course of Contractor’s or such member’s travel to and from any Worksite or during its performance of the Services.

13 TAXES AND CUSTOMS DUTIES

13.1 Contractor shall be solely responsible for and shall bear and pay, at its own expenses, all taxes, charges and custom duties connected with the Services assessed or imposed on Contractor (including without limiting the foregoing taxes connected with personnel) and shall fulfill all administrative, registration and compliance requirements, Contractor shall procure that each Subcontractor shall bear and pay all taxes connected with the Services assessed or imposed upon such Subcontractor (including without limiting the foregoing taxes connected with personnel) and that such Subcontractor shall fulfill all administrative and registration requirements, maintain proper accounting records, and properly file all necessary documents.

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13.2 Contractor hereby indemnifies and undertakes to keep Company indemnified from and against all claims, losses, demands, proceedings and causes of action whatsoever connected with any assessment or imposition made in respect of all or any taxes upon Contractor or any Subcontractor related to the Services together with any costs of compliance. If Company is subject to any demand to pay other taxes arising out under this Contract, Contractor either assume, pay and discharge in a timely manner all such other or additional taxes. Company may offset any amounts due from Contractor under this indemnity from any payments Company is due to make to Contractor under this Contract.

13.3 Contractor shall, upon request, supply, and shall procure that Subcontractors supply to Company, such information (including documentary information) connected with the Services as may be required by Company for any of the following purposes:

(a) to enable Company to comply with the lawful demand or requirement for such information by any tax authority;

(b) to enable Company to conduct, defend, negotiate, or settle any claims, losses, demands, proceedings and causes of action whatsoever relating to taxes, whether or not the same shall have become the subject of arbitration or judicial proceedings; or

(c) to enable Company to make any application (including, but without limitation, any claims, losses, demands, proceedings and causes of action whatsoever for any allowances or relief) or representation connected with, or to contest any assessment on, or liability of Company to, any Taxes.

13.4 The obligations of Contractor set forth above shall subsist for a period of thirty six (36) months or such longer period as any Applicable Law may require, from the date of approval of Contractor’s final invoice/statement of account under this Agreement. Contractor shall retain and shall ensure that Subcontractors retain, all information and documents connected with its activities under or pursuant to this Agreement as shall enable Contractor to comply with its above obligations.

13.5 Where, under the provisions of any laws, regulations or directives for the time being in force, Company is required to deduct any amount, whether as tax or howsoever called, Company shall without further notification to Contractor deduct the specified amount from any amount payable to Contractor. Company shall deal with any amount so deducted in accordance with the provisions of the relevant laws or regulations providing for the deductions. Where Company makes any such deduction or withholding, Company shall, within a reasonable time upon receipt of the official receipt(s), or other satisfactory verification in respect of such deduction or withholding from the relevant authority, submit the same to Contractor. Upon expiry of the relevant year of withholding, Contractor shall advise Company of any official receipt(s) which remain outstanding for the aforesaid period whereupon Company shall within thirty (30) days of written request by Contractor, provide to Contractor either satisfactory verification documentation evidencing payment of such deduction or shall provide the official receipt(s) if received by Company.

13.6 (a) In the event Contractor claims to be exempted from any statutory deductions, it shall inform Company and provide any necessary documentation to support its case, including a valid certificate of exemption from the relevant authority, if applicable. Company shall proceed to deduct taxes as required by law, until the provision of such exemption certificate by Contractor. In the event where tax is retained by the Company, the Contractor shall be liable to provide Tax Clearance Certificate within prescribed time period and in the absence

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of such Clearance Certificate the Company shall be obligated to remit the retained amount to the Taxes General Commission of Iraq.

(b) If the Contractor disputes regarding the applicability of lower rate of withholding tax what is actually applied by the Company at the time of making payment, in such events he shall be required to provide a clarification in writing from the Taxes General Commission or any of its branches vested with the responsibility under the Income Tax Law to issue such clarifications.

13.7 Contractor is deemed to have taken into account, in its rates, sums, and prices contained in this Agreement and its Appendices all applicable taxes which may be applicable to payments made hereunder.

13.8 Contractor shall be responsible for moving personnel, plant and equipment into and out of any jurisdiction. Company will, if so requested by the Contractor, assist Contractor to the extent reasonably necessary with regard to the obtaining import assistance, or other governmental authorizations required for moving personnel, plant and equipment into and out of any jurisdiction.

(a) Contractor shall import or export plant and/or equipment in compliance with any and all applicable laws and regulations, including any mandatory security guidelines or policies applicable in each jurisdiction where such import and/or export activity occurs. Contractor shall be solely responsible for all import and/or export declarations connected with the Services. Company on the specific request from the Contractor or its Subcontractors shall provide information / assistance to the Contractor to import plant and equipment without payment of duties wherever applicable under the DPSC.

(b) Where the contract requires Company or any member of Company Group to import or export plant and/or equipment, Contractor shall assist Company to comply with any and all applicable laws and regulations, including any mandatory security guidelines or policies applicable in each jurisdiction where such import and/or export activity occurs, obtaining of import assistance, or other governmental authorizations required for moving such plant and/or equipment into and out of any jurisdiction. Contractor shall provide any and all such information (including copies of documentary information) as is necessary or deemed necessary by Company to ensure compliance with the aforementioned laws, regulations, guidelines, and policies. If as a result of Contractor’s act or omission Company or any member of Company Group incurs custom duties, including fines, penalties and interest, which otherwise would not have been due, Contractor shall indemnify and keep indemnified Company or such member of Company Group in respect of such custom duties and fines, penalties and interest. All costs arising in connection with the import/export of Contractor’s Equipment and/or consumable materials for use in connection with the Services shall be for the sole account of Contractor.

(c) Without prejudice to the generality of the foregoing provisions of this Subsection, Contractor shall (and where applicable Contractor shall procure that any Subcontractors shall) only import plant and/or equipment which it (or its Subcontractors where applicable) owns (including on a leased basis) to perform the Services on a temporary basis, and unless otherwise agreed by the relevant authority of the Republic of Iraq, such plant and equipment shall be re-exported from the

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Republic of Iraq as and when it is no longer required to perform the Services, and Contractor shall indemnify Company Group from and against all Claims/losses arising from any failure by Contractor and/or its Subcontractors (as applicable) to comply with this Subsection. The Parties acknowledge that the Ministry of Oil of the Republic of Iraq may require Company and/or Contractor to provide it with a letter of guarantee for the custom duties that would arise if the plant and/or equipment used to perform the Services is not re-exported from the Republic of Iraq. In such case, Contractor shall provide promptly on request by Company either (i) a letter of guarantee in favour of the Ministry of Oil of the republic of Iraq in the form required by the Ministry; or (ii) if the Ministry of Oil of the Republic of Iraq requires Company to provide a letter of guarantee to the Ministry, a letter of guarantee from Contractor to Company on equivalent terms.

(d) When applicable, Contractor shall demobilize and re-export all equipment, materials and tools, if any, used in the performance of this Agreement, outside the Republic of Iraq within six (6) months from the termination of this Agreement. As it may be requested by Company, Contractor shall provide to Company actual governmental evidence that such obligation of re-exportation has been duly fulfilled. Company may have the right to (i) withhold an appropriate percentage from the last payment to Contractor, up to ten percent (10%) of such payment, to guarantee the compliance with the re-export obligation, if Contractor does not provided appropriate and timely evidence of having complied with its re-export obligation; or, (ii) take any measure as it may be deemed appropriate.”

13.9 Contractor shall, in relation to the performance of this Agreement, apply all tax benefits, reductions and reliefs by all legally available means conferred by applicable legislation and applicable double tax conventions, and Contractor shall procure that Subcontractors shall also seek to apply such legally available reductions, benefits and reliefs.

13.10 Contractor shall immediately inform Company of any change in the tax status of Contractor, including without limitation, Contractor’s tax residence, domicile, permanent establishment, tax nexus, tax registration or otherwise. Company shall be entitled to vary the administration of this Agreement as required by law as a consequence thereof. Company shall be under no obligation to compensate Contractor for additional taxes arising as a consequence thereof.

14 APPLICABLE LAWS

14.1 Each Party shall be subject to all Applicable Laws which are or may become applicable to the provision of the Services or that Party’s operations covered by or arising out of the performance of this Agreement.

14.2 Contractor warrants and agrees with Company that Contractor Group shall take all necessary steps to cause it and its Personnel to abide by international conventions and standards of business conduct and ethics, and anticorruption and bribery regulations, and related Iraqi laws where applicable. Contractor agrees that neither it nor any member of the Contractor Group will offer, pay, promise or authorize to pay any money, gift or anything of value (i) directly or indirectly to a Public Official (as defined below), or (ii) directly or indirectly to any Person while knowing or suspecting that the payment or gift will be passed on to a Public Official or (iii) directly or indirectly to or for the benefit of Company Group or any Company representative, all with the intent of causing the recipient to misuse his or its

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position to obtain or retain business or to secure any improper advantage. In addition, Contractor shall take all necessary steps to prevent any member of the Contractor Group from accepting any payment or gift of money, or anything of value, paid by a third party for the purpose of improperly influencing any act or decision of such member. As used in this paragraph, the term “Public Official” shall mean (i) any employee or officer of a government of a country, including any national, provincial, regional or local department or agency thereof, or any person exercising a public function; (ii) any enterprise owned or controlled by a government; (iii) any official of a political party; (iv) any official or employee of a public international organization; (v) any person acting in an official capacity for, or on behalf of any of the entities above mentioned; (vi) any candidate for political office; and, (vii) any person that holds a legislative, administrative or judicial position whether appointed or elected.

14.3 Contractor shall, at Contractor’s own cost, obtain all necessary licenses for Contractor to provide the Services and to do business in the country or countries wherein any part of the Services is provided and shall obtain all permits and authorizations required by Applicable Laws that must be obtained in Contractor’s name.

14.4 Contractor shall be responsible for, and liable to, and shall release, indemnify, defend, and hold Company and its Group harmless from and against any and all Claims or liability for Claims, demands, causes or causes of action of whatever kind or nature based on any and all forms of penalty which may be imposed on Company or its Group by reason of any violation or alleged violation of Applicable Laws by Contractor or its Group and also from all Claims, suits or proceedings that may be brought by or against Company or its Group arising under, growing out of, or by reason of the Services with respect to such violation or alleged violation of Applicable Laws whether brought by Contractor, any member of its Group, a third party or by any governmental authority. This indemnity shall include all costs, penalties, awards, damages and judgments, court and arbitration costs, counsel and witness fees, and all other reasonable expenses incurred by or assessed against Company or its Group and associated with such Claims, demands, and causes of action.

14.5 If Contractor discovers any discrepancies, inconsistencies or conflicts between this Agreement and any Applicable Laws, Contractor shall immediately notify Company and the Parties shall agree on the amendments that need to be made to this Agreement. Should Contractor fail to notify Company as required by this subsection 14.5 or fail to discover such discrepancies, inconsistencies or conflicts as should reasonably have been discovered by Contractor, all costs directly resulting from such failure shall be borne by Contractor.

15 PATENT INFRINGEMENT

15.1 Contractor shall release, indemnify, defend and hold the Company and its Group harmless from and against any and all damages and expenses arising out of a claim of actual or alleged infringement of patent or other intellectual property rights asserted by any Person in connection with the use, under this Agreement, of (i) Contractor Equipment, materials, methods of operations, products and information of the Contractor and its Group engaged in providing the Services, and (ii) the use by Contractor and its Group of Contractor Equipment, materials, methods of operations, products and information. In the event that Contractor and/or its Group are enjoined or otherwise prohibited or restrained from using such equipment, materials, methods of operations, products and information, Contractor shall

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promptly, at its own cost and expense, either procure for Company the right to continue using the equipment, materials, methods of operations, products and information, replace the same with non-infringing equipment, materials, methods of operations, products and information, or modify the same so that they become non-infringing.

15.2 Company shall release, indemnify, defend and hold the Contractor and its Group harmless from and against any and all damages and expenses arising out of a claim of actual or alleged infringement of patent or other intellectual property rights asserted in connection with the use, under this Agreement, of (i) the equipment, materials, methods of operations, products and information of the Company and any Affiliate, and (ii) the use by Company or such Affiliate of equipment, materials, methods of operations, products and information.

15.3 Each Party shall notify the other Party of any claim regarding any such infringement within thirty (30) days after it becomes aware of such claim.

16 CONFIDENTIALITY

16.1 (a) “Confidential Information” shall mean all information of Company of a proprietary or confidential nature that is furnished by or on behalf of Company to Contractor, whether written or oral and in whatever form or medium it is provided, and shall specifically include: (i) this Agreement and its Appendices; and (ii) all data, documents, Documentation, diagrams, patterns, designs, processes, techniques, systems, know-how, trade secrets and other technical data and information furnished by or on behalf of Company to Contractor in connection with the Services. Confidential Information shall also include all information generated by Contractor or its Group that is based on or reproduces such information of Company.

(b) Information shall not be deemed Confidential Information, and the provisions of this Section 16 shall not apply to: (i) information which is or becomes generally available to the public other than as a result of a disclosure in violation of this Agreement; (ii) information which was already known to Contractor or its Group prior to being furnished pursuant to this Agreement, other than by way of disclosure from a third party under an obligation of confidence to Company; (iii) information which becomes available to Contractor or its Group on a non-confidential basis from a source other than Company or its Group if such source was not subject to any prohibition against transmitting the information to Contractor or its Group; and (iv) information independently developed by Contractor or its Group without use or knowledge of Confidential Information.

16.2 Contractor shall not disclose any Confidential Information to any Person other than to: (i) Contractor’s representative, Company or Company’s representative; (ii) a financial advisor or legal counsel, in each case that has a legitimate business need to be informed and has signed an agreement to protect the Confidential Information from further disclosure to the same extent as Contractor is obligated under this Section 16; or (iii) subject to subsection 16.3, a governmental authority or to a Person to which Contractor or its Group is required by Applicable Law or the applicable rules of any established stock exchange to disclose the Confidential Information.

16.3 If Contractor or any member of its Group reasonably believes it is required by Applicable Law or the applicable rules of any established stock exchange (whether requested by oral question, interrogatory, request for information or documents, subpoena, civil investigative

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demand, similar law or legal process or otherwise) to disclose any Confidential Information, Contractor (through its representative or otherwise) shall promptly notify Company of such requirement as soon as it becomes aware of it so that the Company may seek an injunction, appropriate protective order or waiver of compliance with the provisions of such Applicable Law or rule.

16.4 All written Confidential Information will be promptly returned upon written request of Company or, at the election of Company, destroyed, and no copies shall be retained by Contractor, its representative or any member of its Group.

16.5 Contractor shall ensure that any contract or contracts entered into by it with any Subcontractor contains a provision imposing on such Subcontractor the same confidentiality obligations set forth in this Section 16.

16.6 No public announcement or press release concerning the Services shall be made by Contractor without the prior written consent of Company; provided that this provision shall not prohibit any public announcement or press release required to be made pursuant to Applicable Laws; provided, further, that Contractor shall consult with Company concerning the timing and content of any such announcement before such announcement is made and shall give a copy thereof to Company at least three (3) days prior to the making of such announcement.

16.7 Without Company’s prior written consent, Contractor shall not use Company or any of its Group’s names in any advertising, promotional material or publicity release relating in any way directly or indirectly, to the Services or the results thereof. Contractor shall not publish or cause to be published any statement, or encourage or approve any advertising or practice that is or may reasonably be expected to be detrimental to the name, goodwill, reputation or trademarks of Company or any of its Group.

16.8 Contractor agrees that money damages would not be a sufficient remedy for any breach of the above provisions of this Section 16 and Company shall be entitled to seek specific performance and injunctive relief as remedies for any such breach. Such remedies shall not be deemed to be the exclusive remedies for any such breach but shall be in addition to other remedies available at law or in equity.

17 HEALTH, SAFETY, SECURITY AND ENVIRONMENT PROTECTION

17.1 Objectives and Targets

17.1.1 Policy Statement and Objectives

Contractor shall conduct its operations in such a manner as to:

(a) Provide a safe working environment for all employees and subcontractor

(b) Ensure the safety, security and health of Contractor’s Personnel working within the Contract Area.

(c) Protect the general public and third parties from injury or ill health, and prevent loss or damage to properties resulting from its activities.

(d) Ensure and safeguard the conservation and protection of the environment by adhering to Iraqi regulation and PetroChina’s HSE MS system regarding conservation and environment..

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17.1.2 Safety Targets

In taking steps to ensure a safe working environment, Contractor shall aim for:

(a) No fatalities. Working environment is safe to prevent the potential for loss of life or serious injury.

(b) No lost time accidents and any significant incidents;

(c) No roll over to vehicles. Ensure that they have a vehicle safety policy and adhere to it. Company will conduct traffic speed checks and any violations may result in the contractors vehicles being removed from Petrochinas sites. PCH HSE Disciplinary Procedure may also be enforced if company deems necessary.

(d) Contractor is obliged to install Vehicles Tracking System device supplied by Company and ensure is protected from intentional damages by drivers.

(e) If stopped by Company Trafic Safety Supervisor all drivers of vehicle shall give full name and company name. Noncompliance may result in driver and vehicles being banned from site as per PCH HSE Disciplinary Procedure

17.1.3 Implementation Aspects

HSE policy is implemented with special attention to the following specific aspects, to ensure that:

(a) Site Specific HSE Plan is developed and adhered to,

(b) The requirements of all relevant and Applicable Laws and Regulations are followed;

(c) Company standards, specifications, procedures and regulations are applied;

(d) Safety is given equal importance to productivity and cost;

(e) Each employee is given specific procedures related to his work;

(f) Each employee receives suitable technical and safety training.

(g) Each employee should receive suitable Personal protective equipment,

(h) Work instructions are clear and pay due regard to HSE requirements.

(i) Experience gained, lessons learned from accidents/incidents and new technical developments to be widely distributed amongst staff.

(j) Measures and standards in practice regarding the protection of the Environment, and Safety, Security and Health comply with Company policy and standards.

(k) An effective HSE Management System covers all aspects of the activities.

(l) Complete documentation of all procedures and manuals relating to the work, including accident/incident reporting, are maintained and available for audit

(m) Shipment of regulated hazardous materials to Company are consigned to Company’s destination in full compliance with shipper and carrier

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responsibilities as stipulated by the applicable international, national, provincial and local laws, regulations and practices, relating to packaging, documentation, handling, use, storage and disposal.

(n) Worksite, work areas are designed, built and operated in such a way that works can be carried out safely and in an environmentally sound manner.

(o) Only materials, tools and equipment which meet regulation and high standards are used.

(p) The safety aspects of Worksite, work area, materials and tools are reviewed continually.

(q) Contractor is required to adopt and maintain the same high standards as per Company requirement.

(r) All work carried out, whether by Contractor or its Subcontractors, is effectively monitored by Contractor.

(s) Regular safety meetings are held at all levels in the organization to ensure that HSE occupy an important aspect of work planning and execution.

17.2 RESPONSIBILITY

17.2.1 Unit Safety Officer

Contractor shall have at all times a fulltime responsible person appointed as Unit competent Safety Officer with minimum NEBOSH IGC qualifications and experienced in services provided to Company. The Unit Safety Officer shall oversee all matters pertaining to safety in all operations and shall:

(a) Conduct weekly safety meetings with all Contractor’s Personnel assigned.

(b) Follow-up safety items raised during safety meetings.

(c) Ensure accident/incident reports are completed and forwarded to the Company’s Representative and the HSE Coordinator within twenty four (24) hours.

(d) Set up a system to enhance the safety attitudes and awareness of all Contractor’s Personnel.

(e) Participate in safety program or meeting conducted by Company.

(f) Arrange or Participate in the accident/incident investigation team if it has happened on their site or be prepared to be asked to participate in companies investigation team if company deems necessary.

17.2.2 All Personnel

It is the responsibility of every personnel to maintain a safe working environment, both at his assigned work place and in other parts of the Contract Area.

Inappropriate conduct or mischievous acts shall not be allowed, as this presents a safety hazard to the entire crew. Subject to regulation enforced, firearms, weapons, prohibited drugs or alcohol shall not be allowed at base camp, work place or the Contract Area.

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All Contractors’ Personnel are to undergo an annual medical check-up at Contractor expense, to certify their fitness for duties in harsh environment. Valid medical certificates are to be kept together with the personnel records for inspection purposes.

17.3 TRAINING REQUIREMENTS

17.3.1 First Aid, Resuscitation and Fire-Fighting

(a) There must be an adequately trained first aider at work location.

(b) All personnel must be trained to operate fire-fighting equipment at their own workstations.

(c) Contractor is require to develop annual training and drill plan for all personnel,

(d)

17.3.2 Operation of Geological Equipment /Machinery/Lifting equipment

Formal training must be provided for operators of Geological equipment / machinery/lifting equipments, Only qualified/competent and certified operators to operate crane Third Party inspection for lifting equipment, devices, cranes should be available for audit purpose,.

(a) Trainee shall not be left to work unsupervised.

17.4 SAFETY MEETINGS AND AUDITS

17.4.1 Safety Inspections/Audits

Prior to start the performance of Work/Service, Contractor’s equipment shall be inspected by Company Representative(s), satisfied for operation and must meet all Company safety specifications and regulations.

Subsequent inspections will be made to ensure that proper actions have been taken to rectify earlier identified unsafe situations and that equipment is in working order.

17.4.2 Safety Awareness / Meetings

Contractor must be responsible for maintaining and enhancing the safety awareness of its personnel and Subcontractor personnel, including arranging and/or participating in regular safety meetings/briefing and emergency drills.

The objectives of safety meetings are to:

(a) Provide opportunities for personnel to voice their concern over unsafe situations or procedures in their respective work places.

(b) Provide information and warning for other personnel in regard to potential or existing hazards.

(c) Allow collective solutions to be put forward through discussion.

It is Company's requirement that all Contractor’s Personnel attend regular safety meetings and names of attendees shall appear on the minutes of such meetings. Non-attendance at a safety meeting must be authorized by a responsible person and a reason for non-attendance must be given in the minutes.

17.4.3 Frequency

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(a) The meeting shall be held weekly and include a safety talk or presentation on a chosen subject aimed at enhancing safety awareness on site.

(b) Safety audits shall be conducted by the respective Safety Officer in conjunction with the Company Representative on a monthly basis or whenever deemed necessary.

17.4.4 Tool Box Meeting

Contractor shall conduct Tool Box Meeting at the work place in the morning before start of the work about the nature of job to be done. What are the safety aspects to be observed and whom to contact in case of emergency. Tool box meeting shall be conducted by authorized Safety Officer.

17.5 REPORTING

(a) All safety meetings are to be recorded in minutes and forwarded to Company Representative and HSE Department.

(b) All emergency drills are also to be forwarded to the Company’s Representative and HSE Department.

(c) All safety audits are to be reported to Company’s Representative and HSE Department monthly, with action points listed.

(d) All accidents and incidents related to the survey shall be reported in accordance with Company Accident Reporting Procedure, within twenty four (24) hours in the event of:

(i) Any loss of or damage to material or equipment supplied by either the Company or Contractor.

(ii) Any personal injury to any Company or Contractor’s Personnel, its agents or Subcontractors.

(iii) Any injury to any third party.

(iv) Any near miss incident.

Immediate notification by phone should be made to Company Safety Superintendent. A full detailed report via telex or fax sent to Company’s representative and Safety Superintendent within twenty-four (24) hours, and an Accident or Incident Report filled out by Contractor’s HSE Manager immediately. A first report should be submitted to company representative and Safety Superintendent within the first 24 hours. All investigations and follow up reports should also be forwarded once complete in a reasonable time frame. Full investigations and incident reports should also be forwarded to company representative and Safety Superintendent.

17.6 SAFETY TOOLS AND EQUIPMENT

The use of correct, properly designed and serviceable tools and safety equipment is required. All working personnel should be taught the proper and correct way of using safety tools and equipment.

17.6.1 Fire-Fighting Equipment

(a) Fire-Fighting systems are to be checked and tested periodically.

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(b) All fire extinguishers are to be checked and certified twice annually.

(c) Fire extinguishers and fire hose stations are to be prominently marked and located at all the worksite or Operational Site.

(d) Fire water pump to be inspected, serviced regularly and maintained in operational mode at all times.

(e) Alarm system to be tested during every drill.

(f) Fire detection system/devices should be installed in all accommodation rooms as well in other location where risk of fire exist.

17.6.2 First Aid and Survival Equipment

(a) Adequate number of first-aid boxes and resuscitation units are to be placed at strategic points.

(b) First aid boxes are to be inspected regularly and stocks replenished.

(c) Prescription drugs are to be certified and administered by pharmacist and kept under lock.

17.6.3 Personal Protective Equipment (PPE)

(a) All Personal Protective Equipment (PPE) shall be of types manufactured to standards and approved by Company.

(b) PPE shall be worn at all times at the Work areas.

Contractor is responsible to ensure that all workers are supplied with minimum required PPE to carry out task being performed. Some tasks will require additional specific PPE and this is to be available at work sites

17.7 HOUSEKEEPING

17.7.1 Contractor shall ensure good housekeeping at the Worksite.

17.7.2 Washrooms and toilets shall be serviced and cleaned regularly.

17.8 EMERGENCY EQUIPMENT AND PROCEDURES

17.8.1 Emergency Procedures

Contractor shall have in place an Emergency Response Procedure (ERP) describing in detail the communication system, site emergency response operation, duties and responsibilities of personnel and action to be taken in the event of an emergency.

Contractor ERP, which is to be consistent with the Company ERP, shall be reviewed and approved by the Company prior to the commencement of the performance of Work/Service.

17.8.2 Emergency Response

Contractor shall provide adequate first aid, firefighting, lifesaving and other safety equipment and shall maintain this equipment in a professional manner and where appropriate re-certify as dictated by legal and industry standards. Contractor shall keep up-to-date records of all said equipment, including equipment location plans.

Contractor shall provide a designated vehicle to be used as an ambulance at Worksite.

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17.9 ACCIDENT REPORTING AND INVESTIGATION

17.9.1Accident is defined as any unintentional or unplanned event or condition which has or could have resulted in injury to a person and loss or damage to equipment, plant or property.

17.9.2 It is Company requirement that all accident, no matter how trivial, must be reported to Company’s Representative. Contractor shall ensure that its employees are aware of this mandatory requirement.

Contractor shall be responsible to investigate, in a professional manner, all accidents that occur during the performance of the Work/Service and the investigation report shall be made available to Company within twenty four (24) hours of its occurrence. Contractor shall also be responsible to assist Company in accident investigation if so required. Company may call for a joint investigation with Contractor if necessary.

17.9.3 Contractor shall where applicable have, prior to commencement of Contract, accident reporting and investigation procedures in place and shall maintain accident statistics, compatible with Company Accident Reporting Procedures. Otherwise, Contractor shall adopt the current Company Accident Reporting Procedures.

17.9.4 Contractor shall submit the basic safety information to the appropriate Company Representative not later than the first day of the month following the month under review, by telex or fax.

17.10 ALCOHOL AND DRUG POLICY

17.10.1 Contractor personnel, agents and Subcontractors shall not misuse legitimate drugs or possess, use, distribute, or sell illicit or unprescribed controlled substances or drug on Company Operational Site premises. Contractor shall adopt and enforce work rules and policies in order to assure compliance with this obligation.

17.10.2 Contractor is reminded that alcohol and illegal drugs are totally prohibited from Worksite.

Company also reserves the right to conduct searches on possession of drugs and/or alcohol to the persons, vehicles, and other property of Contractor, its personnel, agents or Subcontractors while on the Operational Site premises owned or controlled by Company. Any person who refuses to cooperate with any such search shall be removed from the premises and not permitted to return.

17.10.3 Contractor shall require its personnel, agents and Subcontractor to submit to medical evaluation on alcohol or drugs testing where cause exists to suspect alcohol or drugs use.

17.10.4 Contractor warrants that any of its personnel, agent or Subcontractor who either (a) refuses to participate in medical evaluation or alcohol or drugs tests, or (b) tests positive for alcohol or controlled substance, shall be removed from the premises and not be permitted to perform any work with Company.

17.10.5 Contractor shall maintain strict discipline and good order among its personnel, agents and Subcontractors, and shall not permit any of them to engage in activities which Company deems contrary or detrimental to Company interests. If Company should request that any personnel of Contractor or of Subcontractors be removed from Company’s Operational Sites premises or Worksite for any reason, Contractor

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shall accede to such request and shall provide a replacement acceptable to Company at no additional cost to Company.

17.10.6 In the event Contractor is unable to comply with these obligations, Company shall have the right to terminate this Contract.

17.11 MEDICAL WELFARE

17.11.1 Contractor shall ensure that all its personnel and/or other personnel assigned by Contractor for the performance of the Work/Service are medically fit and healthy. Any medical disabilities including such disabilities which Contractor may consider will not adversely influence the person's ability to perform his role in the Works should be reported to Company prior to the start of the Works. Contractor, if requested by Company, shall provide medical certificates for Contractor and Subcontractor personnel.

Contractor shall subject its key personnel and its Subcontractor personnel to regular medical examination at their cost. Records of such examination shall be made available to Company on request.

17.11.2 Contractor shall at no cost to Company be responsible for the medical welfare of its own and Subcontractor personnel and shall take care of arrangements for medical attendance treatment or hospitalization if and when necessary and will arrange suitable insurance coverage for such contingencies. In cases of emergency, Company may make or provide for, the necessary emergency arrangements, the costs of which shall be reimbursed to Company by Contractor.

17.11.3 Contractor shall make first aid arrangements for all of its personnel and ensure that all personnel are informed of such arrangements.

17.11.4 Where applicable, Contractor shall provide a suitably equipped and staffed first aid room if the Worksite presents a high risk from hazards.

17.12 REPORT

Contractor should document its performance in HSE for the duration of the contract and submit to Company at the end of contract or when requested by Company.

18 FORCE MAJEURE

18.1 (a) Neither Party shall be responsible or liable for or deemed in breach of this Agreement because of any delay in or failure of performance of its respective obligations hereunder (excluding the lack of financial resources and the inability to pay under this Agreement) if and to the extent such delay or failure is attributable to any event or circumstance (i) beyond the reasonable control of the non-performing Party, (ii) that was not reasonably expected to occur at the Effective Date, or (iii) that could not reasonably has been avoided (an “Event of Force Majeure”).

(b) An Event of Force Majeure includes, but is not limited to: (a) war (whether declared or not), armed conflict or the serious threat of same (including but not limited to hostile attack, blockade; military embargo), hostilities, invasion, act of a foreign enemy, extensive military mobilization; (b) civil war, riot insurrection and revolution, military or usurped power, insurrection, civil commotion or disorder, mob violence,

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act of civil disobedience; (c) act of terrorism, sabotage or piracy, (d) act of authority whether lawful or unlawful, compliance with any law or governmental order, rule, regulation or direction, curfew restriction, expropriation, compulsory acquisition, seizure of works, requisition, nationalization; (e) act of God, plague, epidemic, natural disaster such as, but not limited to) violent storm, cyclone, typhoon, hurricane, tornado, blizzard, earthquake, volcanic activity, landslide, tidal wave, tsunami, flood, damage or destruction by lightning, drought; (f) explosion, fire, destruction of machines, equipment, factories and any kind of installation, facilities, prolonged breakdown of transport, telecommunication or electric current; and, (g) general labor disturbance such as, but not limited to, boycott, strike and lock-out, go-slow, occupation of factories and premises (however, the mere shortage of labor or equipment shall not constitute an Event of Force Majeure, unless caused by events or circumstances that are themselves an Event of Force majeure); provided that (i) the Party affected by the Event of Force Majeure notifies the other Party in writing within seven (7) Business Days after such Party became aware or should become aware of the occurrence of the Event of Force Majeure, and describes the particulars of the occurrence, (ii) the suspension of performance is of no greater scope and of no longer duration than is required or imposed by the Event of Force Majeure, (iii) the Party affected by the Event of Force Majeure uses its best efforts to remedy its inability to perform, (iv) when the Party affected by the Event of Force Majeure is able to resume performance of its obligations under this Agreement, that Party shall give the other Party written notice to that effect, and (v) the Event of Force Majeure was not caused by or connected with any negligent or intentional acts, errors, or omissions, or any breach or default of any Applicable Law, rule, regulation, order or ordinance, or any breach or default of this Agreement, in each case on the part of the Party affected by the Event of Force Majeure or its Group, engaged in providing the Services. After receiving the notice, the Company shall proceed to analyze and determine all related matters concerning the Event of Force Majeure, to agree or reject the notification.

18.2 Should the Contractor is prevented from performing any of his obligations under this Contract by an Event of Force Majeure, which notice has been given to the Company, and it causes delay of thirty (30) calendar days, then the Term of this Contract shall be extended accordingly.

18.3 The Contractor, having given notice and it being accepted by Company, be excused from the performance of its obligations for so long as such the Event of Force Majeure prevents it from performing them.

18.4 At no time during the Term of this Agreement shall either the security conditions prevailing in the worksite, or the Halfaya Contract Area, and/or the political and security conditions generally prevailing in the Republic of Iraq on the Effective Date constitute an Event of Force Majeure, unless these conditions prevent the performance of the object of this Agreement.

18.5 Each Party shall at all times use all reasonable endeavors to minimize any delay in the performance of this Contract as a result of an Event of Force Majeure.

18.6 Should the performance of substantially all the object of this Agreement is prevented for a continuous period of sixty (60) days by reason of an Event of Force Majeure; or, for multiple (even not continuous or consecutives) periods which total more than hundred and twenty

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(120) days, in a three hundred and sixty (360) days period, due to the same Event of Force Majeure, then this Agreement may be terminated, giving a written notice; termination of this Agreement shall take effect seven (7) working days after the notice is received.

18.7 Upon termination of this Agreement due to an Event of Force Majeure, Company shall determine the value of the Services effectively performed, completed and accepted, and issue a payment including the amounts payable for any Services carried out for which a price is stated in the Agreement.

19 NOTICE

All notices and other communications required hereunder shall be in written, in English and properly addressed and delivered to the other Party to the address shown below. Oral communications and emails do not constitute Notice for purposes of this Agreement. A Notice given under any provision of this Agreement shall be deemed delivered only when actually received by the Party to whom the Notice is directed or addressed, provided that if the reception is not in a Business Day or after business working hours, the reception is deemed to have been made on the next Business Day.

a. If to Company, to:

b. If to Contractor, to:

20 SUBCONTRACTING AND ASSIGNMENT

20.1 Upon obtaining the prior written consent of Company, Contractor may engage other contractors (each a “Subcontractor”) to perform portions of the Services to be provided or performed by Contractor under this Agreement. Such consent by Company to the engagement of any Subcontractor shall not create any contractual relationship whatsoever between Company and such Subcontractor. Contractor shall ensure that all of Company’s rights under this Agreement are incorporated in all Subcontracts hereunder.

20.2 Contractor shall guarantee that each Subcontractor complies with the provisions of this Agreement as if the relevant Services were provided or performed by Contractor, and Contractor shall be liable to Company for any failure of or breach by any such Subcontractor. In the event that any such Subcontractor does not provide or perform the Services pursuant to the requirements thereof and of this Agreement, Contractor shall promptly remove such Subcontractor upon written notice by Company and shall provide or perform such Services itself.

20.3 The employment of any Subcontractor to provide or perform any Services under this Agreement shall not relieve Contractor of any of its obligations and liabilities under this Agreement. Contractor shall remain fully responsible for any acts, defaults and omissions of any Subcontractor to the same extent as it would be responsible for its Personnel.

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20.4 Without prejudice to the generality of Section 12 of this Agreement, Contractor shall release, indemnify, defend and hold Company harmless from all acts and omissions of its Subcontractors and against any consequences arising from the engagement of Subcontractors.

20.5 Contractor shall not assign or novate this all or part of this Agreement without Company’s prior written consent; which consent shall not unreasonable denied or withheld. However, Company may assign or novate all or part of this Agreement to any of its Affiliates or Subsidiaries by giving written notice to Contractor.

20.6 Without receiving Company’s prior written consent, Contractor shall not mortgage, hypothecate, encumber or convey title to any of Contractor Equipment or materials or deliverables or other items associated with the performance of this Agreement to a third party.

21 CONTRACTOR DEFAULT

21.1 The occurrence of any of the following events shall be deemed a default by Contractor under this Agreement:

a. any attempted transfer or assignment by Contractor of its rights or duties under this Agreement without prior Approval;

b. the failure of Contractor to satisfy within thirty (30) days of its entry any final judgment upon which execution is possible or the attachment of any Contractor Lien against all or a substantial part of the real or personal property of Contractor and the continued existence thereof for more than thirty (30) days;

c. if Company, acting reasonably, determines that Contractor or Contractor’s Personnel have failed to comply with the requirements of this Agreement, are incompetent, have acted in a manner which is prejudicial to Company’s best interest, or have failed to comply with Company’s health, safety, environment or other rules or regulations and procedures;

d. if Contractor has failed to provide a Bank Guarantee pursuant to Section 7.1;

e. if Contractor has failed to provide a Parent Company Guarantee when requested pursuant to Section 7.5; or

f. if Contractor is otherwise in default under this Agreement.

21.2 If Contractor is in default pursuant to Section 21.1, Company shall give Contractor notice of such default and shall require Contractor to take appropriate corrective action at Contractor’s expense and without prejudice to Company’s other rights under this Agreement or at law or in equity.

21.3 Should Contractor fail or refuse to remedy or fail to commence remedying the matters which are set forth in the notice of default within ten (10) days after Contractor receives such notice of default, or if once commenced, Contractor does not continue and bring the matter to a conclusion which is satisfactory to Company in a reasonable period of time, Company shall have the right to terminate all or any part of the Services or this Agreement by giving a notice of termination to Contractor.

21.4 If Company terminates all or any part of the Services or this Agreement pursuant to this Section 21, Contractor shall not be entitled to claim compensation from Company in respect

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to such termination, provided however that Company shall pay Contractor for the Services satisfactorily provided prior to the date of termination, subject to any deductions or set-offs in accordance with Section 9.

22 TERMINATION

22.1 Without prejudice and in addition to the other termination rights contained in this Agreement, Company has the right, at any time, to terminate all or any part of the Services with or without cause by giving thirty (30) days prior written notice to Contractor specifying that Company intends to terminate the Services, the Services to be terminated, and the effective date of termination. Company shall pay Contractor, upon receipt and verification of Contractor’s invoice, all amounts properly due for the Services provided before the date of termination plus reasonable expenses actually incurred and directly resulting from the termination, subject to any deductions or set-offs in accordance with Section 9.

22.2 Subject to the requirements of Section 21 hereof, Company has the right to immediately terminate all or any part of the Services for cause, by giving prior written notice to Contractor. Company’s termination right shall not prejudice its other rights under this Agreement or at law or in equity including the right to be indemnified or to bring an action before an arbitration tribunal for damages. Company shall retain all amounts which are then due and payable to Contractor less reimbursements due to Contractor for its reasonable and auditable costs incurred in the provision of Services to the extent such Services were authorized in advance by Company and not related to the cause of termination.

22.3 Notwithstanding Section 21 or other provisions of this Section 22, in the event that Contractor:

a. fails to mobilize Contractor Equipment or its Personnel as required under this Agreement or as instructed by Company;

b. breaches any of its representations, warranties and undertakings as set forth in Section 10;

c. fails to provide proof of an acceptable insurance program;

d. makes an assignment for the benefit of creditors;

e. is judged bankrupt or has a petition in bankruptcy filed by or against Contractor;

f. has a receiver or a receiver-manager appointed;

g. has taken any steps to liquidate or voluntarily wind up its operations;

h. has a winding-up petition presented against it;

i. is wound up by the courts;

j. is responsible for any theft or misappropriation of Company’s property;

k. is prevented from performing the services for a period of three (3) consecutive days by reason of legal proceedings based upon a claim of infringement (as provided in Section 15).

l. undergoes a corporate reorganization; or

m. commits a material breach as described in Section 17.

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then this Agreement shall, at the sole option of Company, be immediately terminated by Company upon serving such notice of termination on Contractor and Contractor shall not be entitled to claim compensation from Company in respect to such termination; provided however, that Company shall pay Contractor for the Services provided before the date of termination, subject to any deductions or set-offs in accordance with Section 9.

22.4 Upon receipt of a notice of termination, Contractor shall ensure that no further commitments with respect to the terminated Services are undertaken, and Contractor shall take all reasonable steps necessary to minimize any costs arising from commitments made prior to receipt of the notice of termination. On the effective date of the notice of termination, Contractor shall cease providing all terminated Services.

22.5 If this Agreement is terminated and unless Company directs otherwise, Contractor shall immediately make every reasonable effort to cancel existing Subcontracts, purchase orders or other obligations entered into by Contractor with Subcontractors, suppliers or others upon terms satisfactory to Company.

22.6 If this Agreement is terminated, Company has the right to direct Contractor to execute and deliver to Company all Documentation, and to take all necessary steps to fully vest in Company the rights and benefits of Contractor under existing Subcontracts or other obligations with Subcontractors, suppliers and others. In addition, Contractor shall take all reasonable steps to preserve and protect the Services already in progress, to protect materials, Documentation, Contractor Equipment and supplies in transit or at the Worksite and to minimize all costs to Company and Contractor resulting from the suspension or termination.

22.7 Except as otherwise provided in this Agreement, in the event of termination hereunder, the Parties shall each be released and discharged from any Claims by one Party against the other in connection with the terminated Services.

22.8 If the Services, any part of the Services, or this Agreement is terminated by Company pursuant to Sections 21.3, 22.2 or 22.3, Company shall have the option to thereafter enforce the Bank Guarantee and/or the Parent Company Guarantee for monies owed or reasonably anticipated to be owed to Company by Contractor without prejudice to all its other rights under this Agreement or at law or in equity.

22.9 After giving notice of termination pursuant to Sections 21.3, 22.2, or 22.3, Company shall have the right to locate a suitable alternative contractor and Contractor shall cooperate to ensure a stable transition of the terminated matters to the alternative contractor.

22.10 If all or any part of the Services or this Agreement is taken over by an alternative contractor as described in Section 22.9, any cost arising out of the change and borne by the alternative contractor or by Company, shall be deducted from the amounts due or that may become due to Contractor. If such additional cost is greater than the amounts due to Contractor, Company shall notify Contractor and Contractor shall immediately pay Company the amount of additional costs that exceeds the amount due to Contractor, failing which Company shall have the right to recover such additional costs from the Bank Guarantee and/or the Parent Company Guarantee.

22.11 If Company terminates all or any part of the Services or this Agreement, Contractor shall not be entitled to claim compensation from Company in respect to such termination, provided however that Company shall pay Contractor for the Services provided before the date of termination, subject to Company’s right to deduct and/or set off from any payment due to

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Contractor: (a) against any amounts due to Company under the terms and conditions of this Agreement; (b) any amounts that Company is required, pursuant to Applicable Laws, rules and regulations, to withhold or pay on behalf of Contractor; and (c) any amounts disputed by Company.

22.12 In the event that this Agreement is terminated pursuant to this Section 22 or any other provision of this Agreement, Company shall not be obligated to make any reimbursement to Contractor for the cost of Demobilization; provided however that, in the event this Agreement has been terminated by Company pursuant to Sections 4.4, 18.2 or 22.1, Company shall reimburse Contractor for its cost of Demobilization.

23 GOVERNING LAW AND DISPUTE RESOLUTION

23.1 This Agreement shall be construed in accordance with and governed by the laws of England and Wales (without reference to its rules as to conflicts of law), excluding the Contracts (Rights of Third Parties) Act 1999.

23.2 The Parties agree to negotiate in good faith to resolve any Legal Dispute that may arise first by negotiations between representatives of each Party who have authority to settle the controversy. When a Party believes there is a Legal Dispute relating to this Agreement, the Party will give the other Party written notice of the Legal Dispute. The authorized representatives of the Parties shall meet at a mutually acceptable time and place within thirty (30) days after the date of the notice to exchange relevant information and to attempt to resolve the Legal Dispute. The authorized representatives of the Parties shall be entitled to representation by legal counsel at the negotiations. All negotiations shall be confidential and shall be treated as compromise, without compromise, and settlement negotiations. Notwithstanding the above provisions, if either Party deems that time is of the essence in resolving the Legal Dispute, it may initiate arbitration and seek an expedited formation of the tribunal, seek interim measures, if appropriate, and then comply with the requirements for negotiations as long as they are fully completed before the commencement of the final hearing on the merits in the arbitration proceeding. A “Legal Dispute” means any dispute, controversy or claim, of any and every kind or type, whether based on contract, tort, statute, regulations or otherwise, arising out of, connected with, or relating in any way to this Agreement or the obligations of the Parties, including any dispute as to the existence, validity, construction, interpretation, negotiation, performance, non-performance, breach, termination or enforceability of this Agreement.

23.3 If the Legal Dispute has not been resolved within sixty (60) days after the date of the notice of the Legal Dispute, or if the Party receiving such notice fails or refuses to meet within such time period, either Party may initiate arbitration proceedings. The arbitration shall be conducted in accordance with the Hong Kong International Arbitration Centre Administered Arbitration Rules (the “HKIAC Rules”)as in effect on the date of commencement of the arbitration proceeding. The arbitration shall be conducted and finally settled by three arbitrators. All Legal Disputes shall be settled through final and binding arbitration, it being the intention of the Parties that this is a broad form arbitration agreement designed to encompass all possible Legal Disputes between the Parties relating to the transactions that are the subject of this Agreement.

23.4 The arbitration process referred to in the preceding paragraph shall take place in Hong Kong, Special Administrative Region of the People’s Republic of China, shall be administered by

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the Hong Kong International Arbitration Centre and shall be conducted in the English language, with appropriate arrangements made for the translation of any oral testimony.

23.5 The Party in whose favor the Legal Dispute is resolved may request the enforcement of the arbitration award before any court of competent jurisdiction if the other Party does not comply with what is resolved.

23.6 Each Party agrees that service of process in any action, suit or proceeding referred to in this Section 23 shall be deemed in every respect effective service of process upon it if sent to it at the address specified in Section 19 for notice purposes pursuant to the provisions of this Agreement. The arbitrators shall apply principles of legal privileges, such as those involving the confidentiality of communications between a lawyer and a client. The arbitrators shall render any monetary award in U.S. dollars, with pre-award and post-award interest calculated at an agreed interest rate thereon and are authorized to award costs and attorney’s fees or allocate them between the Parties.

23.7 Each Party expressly acknowledges and agrees that this Agreement is being executed and delivered as part of a commercial transaction. Each Party hereby:

a. waives (for itself, its assets and its revenues, including those of its subdivisions, agencies, instrumentalities or state enterprises, if any) any defense based on immunity from suit or execution to the extent that it may at any time exist whether on grounds of sovereignty, state act or otherwise (including immunity to arbitration, immunity to judicial proceedings to enforce or to aid any such arbitration, and immunity to enforcement and execution of the award or any judgment entered thereon), which such Party or its assets or revenues may now have or may in the future have under the laws of any jurisdiction, and each Party agrees not to assert any such immunity or defenses in any proceedings with respect to this Agreement or in the enforcement of any award, judgment or execution resulting therefrom or from any transactions contemplated hereby or hereunder; and

b. consents generally to the giving of any relief or the issue of any process, writ of execution or order by any court or arbitral tribunal in connection with or arising from any such action, arbitration proceeding or other proceeding including the enforcement or execution of any award or judgment which may be made in the proceeding against any property whatsoever, whether used for commercial or non-commercial purposes.

23.8 Each of the Parties, together with their Affiliates, as relevant, shall appoint one arbitrator, within thirty (30) days of receipt of notice of the commencement of the arbitration, and the two arbitrators so appointed shall select the presiding arbitrator within thirty (30) days of their nomination. If either Party does not appoint an arbitrator as specified in the immediately preceding sentence or if the party-appointed arbitrators fail to agree on the presiding arbitrator within thirty (30) days of their nomination, then the Hong Kong International Arbitration Centre Council shall appoint such arbitrator.

23.9 A majority of the arbitrators may grant interim measures including injunctions, attachments and conservation orders in appropriate circumstances, which measures the Parties agree may be immediately enforced by the arbitrators or by court order. Hearings on requests for interim measures may be held in person, by telephone or by video conference, and requests for relief, responses, briefs or memorials may be sent to, and orders or awards received from, the arbitrators by facsimile or other similar means which include a confirmation of delivery.

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Notwithstanding the requirements for negotiation between the Parties, prior to the constitution of the arbitration tribunal and thereafter as necessary to enforce the arbitrators’ rulings or in the absence of the jurisdiction of the arbitrators to rule on interim measures in a given jurisdiction, either Party may apply to a court for interim measures, and the Parties agree that seeking and obtaining such measures shall not waive the right to arbitration.

24 MISCELLANEOUS

24.1 Severability

If any term or other provision of this Agreement is determined by a court of competent jurisdiction or an arbitration tribunal to be invalid, illegal or incapable of being enforced by any Applicable Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated in this Agreement are not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated herein or therein are consummated as originally contemplated to the fullest extent possible.

24.2 Waivers

Any failure of a Party to comply with any obligation, covenant, agreement or condition contained herein may be waived only if set forth in an instrument in writing signed by the Party or Parties to be bound thereby, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure.

24.3 Amendment

This Agreement shall not be modified or supplemented unless the proposed modification or supplementation states an express intent to modify or supplement this Agreement and such modification or supplementation is signed by both (i) a duly authorized representative of Company and (ii) a duly authorized representative of Contractor.

24.4 Headings

The paragraph headings shall not be considered in interpreting the text of this Agreement.

24.5 Entire Agreement

This Agreement contains all of the terms and conditions as agreed upon by the Parties and supersedes all prior agreements, negotiations and representations with respect to the subject matter hereof, either written or oral.

24.6 Exclusion or Limitation of Liability

Any exclusion or limitation of liability under this Agreement shall exclude or limit such liability not only in contract but also in tort or otherwise at law.

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24.7 Survival

The provisions, terms and conditions of this Agreement and specially those provisions which by their nature are intended to survive (including, but not limited to confidentiality and indemnity obligations), as appropriate and applicable, shall survive the expiration or other form of termination to the fullest extent necessary and required for their enforcement, and for the realization of the benefit thereof by the Party in whose favor they operate.

24.8 Parties in Interest

This Agreement shall be binding upon and inure solely to the benefit of each Party and their successors, assigns and transferees, and, notwithstanding the Contracts (Rights of Third Parties) Act 1999, nothing in this Agreement, express or implied, is intended to confer upon any other Person (other than the indemnified parties as provided in this Agreement) any rights or remedies of any nature whatsoever under or by reason of this Agreement.

24.9 Counterparts

This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, all of which shall be considered one and the same Agreement and shall become effective when one or more counterparts with respect to such Agreement have been signed by each of the Parties and delivered to the other Party, it being understood that all Parties need not sign the same counterpart.

24.10 Language

All documents, instructions, agreements, authorizations, approvals, acknowledgements, correspondence and communications between Company and Contractor in connection with this Agreement shall be in writing and in the English language, which is hereby designated the governing language of this Agreement. If for any reason it is considered necessary by Company to give an instruction to Contractor orally in the first instance, Contractor shall comply with such instruction, but it shall be confirmed in writing as soon as possible; provided that, if Contractor confirms in writing any such oral instruction, which is not contradicted by Company without undue delay, it shall be deemed to be an instruction in writing by Company. Contractor and Company may use any other language within their own organizations, except that all Subcontracts and all written communications pertaining to them shall be in English.

24.11 Time is of the Essence

Contractor agrees that time is of the essence for this Agreement and that it shall complete the Services, or elements thereof, within the stipulated time periods or within other time periods that Company has approved in writing.

24.12 Counsel Assistance

The parties hereto agree that they have been represented by counsel during the negotiation, drafting, preparation and execution of this Agreement and, therefore, waive the application of any Applicable Law or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

25 PROCUREMENT OF EQUIPMENT, FACILITIES, GOODS, MATERIALS, SUPPLIES AND SERVICES

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25.1 Contractor shall have a tendering and contract awarding procedures for services, and purchasing goods, materials and equipment on a competitive basis, taking into account best international petroleum industry practices and standards. Preference shall be given to Iraqi entities and firms or foreign firms in association therewith, provided that their relevant capabilities, prices, and time of delivery are comparable to those available in the international market. Contractor shall ensure that their subcontractors, agents, assignees and employees shall strictly adhere to the provisions of this Section in the procurement of services and equipment.

25.2 In the procurement of equipment, facilities, goods, materials and supplies required for the Services, Contractor shall use its best endeavors to (i) the enhancement of effective local Iraqi participation in management and employment; and, (ii) the transfer of technology to local Iraqi firms and companies with the objective of developing local technical and managerial capabilities.

26 EMPLOYMENT OF PERSONNEL

26.1 Contractor shall pay all Iraqi nationals engaged in the performance of the Services a competitive and fair salary and benefits package commensurate with their performance and position and the prevailing rates for Iraqi nationals employed in comparable positions.

26.2 During the Term of this Agreement, a Party shall not hire the other Party’s employees who have been assigned to perform any portion of the Services, unless the hiring Party has obtained prior consent from the other Party, which consent shall not be unreasonably withheld.

27 SECURITY

27.1 Company is only responsible for the provision of physical security measures for Contractor’s personnel for any and all activity related to the Services within the Halfaya Contract Area (Halfaya Oil Field Operations). This will include concrete “T” wall barriers, a ditch, berm and fence obstacle and manned access control points. Company will coordinate the human security resources provided by the Iraqi State, in the form of Oil Police Forces (“OPF”), Iraqi Army and civil guards to support the Contractor's operations. The benchmark will remain the provisions of the Development and Production Service Contract which stipulates that security within the Halfaya Contract Area is the sole responsibility of the Iraqi State.

27.2 Contractor is responsible for the security of its Personnel and Equipment outside the Halfaya Contract Area (area of operations), including the transportation from elsewhere in Iraq to the area of Halfaya Contract Area. Contractor is also responsible for the security of its Equipment within the Halfaya Contract Area (area of operations). Iraqi State forces will be responsible for the personal safety of Contractor’s staff.

27.3 PetroChina agrees to grant Contractor’s appointed Security Representative access to all relevant sites, facilities and documentation in relation to PetroChina’s security policy, in so far

48

as is reasonable, for the purpose of verifying that all security arrangements in relation to the performance of Services by Contractor within the Halfaya Contract Area are consistent with the Contractor's security plan and minimum standards at the Effective Date of the Agreement or its signing date whatever is first.

27.4 In the event of deterioration in the security situation directly affecting the Halfaya Contract Area, measured against the situation prevailing at Effective Date of the Agreement or its signing date, whatever is first, Company agrees to discuss in good faith with Contractor the possible enhancement of physical security measures, as may be appropriate for any and all activity related to the performance of the Services by Contractor for Company within Halfaya Contract Area and subject to an agreed timeframe for implementation, at Company’s sole cost, as a condition for the continued performance of Services by Contractor.

27.5 Consistent with the provisions of this Section, Company shall not be liable for emergency evacuation of any Contractor’s Personnel from the Worksite to a place providing suitable safe haven or medical care; but Company will coordinate available resources to assist the Contractor.

27.6 Contractor shall be liable to provide food, water and any other logistical elements to Iraqi Security Forces dedicated to their support.

28 PRIVATE SECURITY COMPANIES

28.1 Security services within Halfaya Contract Area, and for land transportation between Halfaya Contract Area and Amarah or Basra, are provided by Missan Oil Company by means of National Police, Oil Police Force, or Army personnel. Company is responsible for the coordination of these services. Other destinations for land transportation will be evaluated on a case by case basis.

28.2 Company does not allow any type of weapons in its facilities, including, but not limited to, camp, drilling locations, construction sites, and production facilities. The only personnel allowed, under the applicable Iraqi law and regulations, to carry weapons in our facilities are government official security personnel, such as: Army, National Police, Oil Police Force.

28.3 In case that the Contractor or Subcontractor considers that they need to use Private Security Companies (PSC) static services during the performance of the Services, they need to submit a formal request to Company for evaluation and consideration. In any case, PSC service is not allowed in the well sites. However, (i) PSC service in Contractor's area in Halfaya Camp will be allowed only with the use of local personnel, without carrying any type of weapons, wearing plain clothes and inside the Contractor's camp perimeter; (ii) PSC service personnel shall be registered, identified and security background checked before any service begins.

28.4 In case that the Contractor or Subcontractor considers that they need to use PSC escort services for land transportation during their Services to Company, they need to submit a formal request to Company for evaluation and consideration. In any case, the following conditions will apply: (i) Contractor or Subcontractor shall provide all the vehicles details (brand, model, color, plates) and guards identification details at least forty-eight (48) hours before the time of the land transportation escort service; (ii) PSC vehicles are not allowed to enter Company facilities; (iii) PSC shall use only local personnel for these work; and, (iv) PSC personnel are not allowed to

49

carry any type of weapons when outside the vehicles in any place located inside Halfaya Contract Area boundaries.

29 AUDIT

29.1 Contractor shall maintain and shall cause its Affiliates and Subcontractors to maintain true and correct records of charges, including gift and entertainment expenses, and accounts in connection with the Services and all transactions related thereto and shall retain all such records and accounts for a period of not less than thirty-six (36) months after termination or completion of this Agreement. Notwithstanding the foregoing if any dispute remains unresolved at the end of the aforesaid thirty-six (36) months, Contractor shall maintain and cause its Affiliates and Subcontractors to maintain such records available to Company until all such disputes are resolved.

29.2 From the Effective Date and within the thirty-six (36) months period, Company, upon twenty-four (24) hours notice, shall have the right, during regular scheduled business hours, to inspect and audit the procedures, plans, instructions, control, records, including gift and entertainment expenses, and accounts of Contractor, its Affiliates and Subcontractors, which are deemed to be pertinent to the correctness of any invoice presented for payment in connection with the performance of this Agreement and to verify compliance with the terms and conditions of this Agreement. Such audit may also cover the application of Contractor’s Rates in determining the value of the Work provided and records connected with a dispute between the Parties, but not the composition of such Rates. Accounting records shall be sufficiently adequate so as to allow Company to conduct an audit in conformance with generally accepted accounting principles. Company shall have the right to photocopy or otherwise reproduce any documents that have been inspected.

29.3 To the extent reasonably possible, Contractor shall make available such knowledgeable personnel at their assigned locations as are necessary to permit Company and Company's Personnel to efficiently conduct the audits.

29.4 As a result of such audits, Company may claim for omissions, corrections, overpayments and other errors in charges and credits for Company’s account as billed by Contractor, its Affiliates and Subcontractors. These Claims may be presented at any time during the course of the Services and before expiry of the thirty-six (36) months period after termination or completion of this Agreement. Contractor shall make a written response to such Claims as soon as possible, and in no event, later than sixty (60) days from the date it receives notice of such Claims.

29.5. Contractor shall ensure that the foregoing provisions of this Section are included in all subcontracts it may enter into with its Affiliates and Subcontractors who will supply any of the labour, Equipment, materials or Work to be provided under this Agreement.

30 ECONOMIC SANCTIONS, BOYCOTTS AND EMBARGOES

Notwithstanding any other provision of this Agreement, Contractor shall not take, agree to take, or refrain from taking any action prohibited or penalized under laws regulating economic boycott,

50

sanctions and embargoes; therefore, any goods, service, technology or software provided hereunder is subject to any applicable laws, regulations, export control to the extent they are applicable to Contractor. It is Contractor’s intent to provide a notice of such requirements and not to make them a part of this Agreement terms and conditions.

31 ARCHAEOLOGICAL OBJECTS

In the event that during the performance of the Services archaeological objects or similar objects of artistic, scientific or historical interest are discovered on or around the Worksite, Contractor shall immediately inform Company and any government agency, if required by law, and shall hand-over such object to Company. Contractor shall immediately, if so notified by Company, stop Services until the site is explored by experts. In and insofar as such stoppage of Services amounts to suspension of the Services, the relevant provisions shall apply.

32 CHANGE ORDER

32.1 The Parties anticipate that over time, changes in the Services may be required. These changes may affect the cost of or the time required to provide the Services. Such changes may include:

a. revisions to Documentation supplied by Company or administration procedures that affect the Services;

b. providing services not related to or reasonably inferable from the Services; or

c. revisions required by Company to the Services already accomplished in accordance with the specifications;

Provided, however, those revisions required to achieve compliance with specifications or to correct errors, omissions or poor workmanship or engineering on the part of Contractor shall not be considered as changes.

32.2 Company has the unfettered right to order changes to the Services through the issuance of a change order in the form attached hereto as Appendix C (a “Change Order”). Changes in the Services shall be made by a Change Order issued in accordance with the provisions of this Agreement, including Appendix D. Save as provided herein, Contractor shall not proceed with any changes to the Services prior to receipt of a Change Order, unless otherwise authorized in writing by Company.

32.3 Company shall have the right to issue a Change Order for changes to the Services that, in Company’s sole opinion, do not have a significant impact on the anticipated costs or anticipated timing of the Services, and no Contractor consent or agreement shall be required for such Change Order.

32.4 Without prejudice to Company’s rights under this Section, either Party has the right to request a Change Order to change the Services or a portion thereof, and if both Parties agree to be bound by the change, Company shall issue a Change Order and Contractor shall indicate its consent to the change by signing the Change Order and delivering the executed

51

Change Order to the Company Representative. Any adjustment to pricing of the Services resulting from any such changes shall be valued at the appropriate rates and prices included in Appendix D to this Agreement or, in the absence of any appropriate rates and prices, a fair valuation shall be made and mutually agreed by Company and Contractor. All such adjustments shall be agreed between the Parties and set forth in the Change Order. In the event that specific rates are not incorporated in Appendix D, such rates shall be mutually agreed by the Parties. All provisions of this Agreement and the Appendices shall apply to the Change Order.

32.5 No adjustment to the Rates shall be made except by issuance by Company of a Change Order.

32.6 If Contractor believes that any change requested by Company affects or will affect the cost of or time required for the Services, then Contractor shall promptly notify Company before proceeding with that part of the Services in question and the Parties shall attempt to reach an agreement regarding the changes to the Services. In no event will Company be obligated to adjust the Rates if Contractor proceeds with the part of the Services in question before giving notification to Company in accordance with this Section.

[Signature Page Follows]

Signature Page

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement with effect as of the Effective Date, and the signatories below warrant, individually, that they have the full right, power and authority to enter into this Agreement on behalf of the respective Parties hereto.


By: ______________________________

Name : Title :

Witness: _____________________________

Name : Title :

as Company [insert the name of contractor]

By: ______________________________

Name: Title:

Witness:_____________________________ Name: Title: as Contractor

Appendix A

1

APPENDIX A

Part I - Scope of Work and Contractor Equipment

1 SCOPE OF WORK

1.1 DIRECTIONAL DRILLING EQUIPMENTS

1.1.1 Contractor shall provide directional drilling and associated services pursuant to the Company’s requirements specified hereafter.

1.1.2 The Halfaya Contract Area is situated in the southern part of Iraq, 400km southeast from Baghdad. It was discovered in 1976 by well HF-1. Commercial oil was declared in eight (8) reservoirs within an oil bearing area of 288km2. A total of sixty-six (66) wells have been drilled up until 2013.

1.1.3 The maximum well depth is 5,000m with 800m length 8½″, 6″ or 5⅞″ size horizontal section. Company shall have the option to deepen the wells according to the lithology of the formation and the actuality to be drilled. Company shall have the option to drill additional wells; Company shall exercise this option by providing written notice to the Contractor thirty (30) calendar days before the completion of the firm well.

1.1.4 Contractor shall provide all equipment and supplies as specified in this Agreement including but not limited to the specifications set out in Appendix A and with spare parts to ensure efficient and continuous drilling operations.

1.1.5 Company requests for a two (2) year and optional one (1) year extension contract for the performance of the Services with four (4) sets of Directional Drilling Service Units on Call Out Basis (about the estimated number of wells is around 140 wells in total and the workload can be split). Company reserves the right to advise the Contractor to continue preforming work under this Contract beyond the Contract expiry date till the completion of the ongoing wells or work at the time of Contract Expiry.

1.2 AXIAL/LATERAL VIBRATION, SHOCK ABSORBING AND FRICTION REDUCTION TOOL AND SERVICES (DOWN HOLE AGITATOT TOOLS)

1.2.1 Contractor shall provide Axial / Lateral Vibration, shock absorbing and friction reduction Tool and Services having similar characteristics / function as of National Oilwell Varco’s (NOV) Agitator Tools pursuant to the Company’s requirements specified hereafter on call out basis. The tool must be capable to oscillate the BHA to improve the weight transfer to bit and reduce the stick / slip especially when oriented with steerable motor.

1.2.2 Contractor shall provide the matching X-overs for connecting their tool with the drill string

Appendix A

2

1.2.3 Many deviated, horizontal and multi-lateral wells are planned to be drilled in Halfaya field in coming years, the targeted reservoirs are Jerrib, Sadi, Khasib, Mishrifand Nahr Umr formation…etc. The buildup section is 8-1/2” and the horizontal section is 6” or 5⅞”.

1.2.4 Bidders are requested to recommend suitable vibrational, shock absorbing and friction reducing tool for the below-mentioned formations. Please provide detailed information and specification for the items mentioned here.

1.2.5 Contractor shall provide all tools with spare parts and services; workshop is required to ensure efficient and continuous operations.

1.2.6 It normally takes 15 ~ 20 days to drill 8-1/2” section and 15 ~ 20 days to drill 6” hole section.

1.2.7 The tool should be compatible with all suppliers Motors, MWD / LWD tools, Fishing Tools…etc.

1.2.8 The tool should reduce shocks, lateral and torsional vibrations.

1.3 CONTRACTOR WAREHOUSE, OPEN STORAGE AND CAMP FACILITIES

1.3.1. Contractor shall, at its sole expense, establish and maintain main warehouse, sub warehouses whenever required by Company and open storage space at Halfaya Oil Field or at any other reasonable location designated by the Company.

1.3.2. Company shall provide land locations at Halfaya Oil Field for Contractor to establish Contractor’s warehouse and open storage space. Any additional land required for Contractor warehouse space shall be entirely for Contractor's account with no charge for use of the land. Any transportation of warehouses from location to location shall be at Contractor's expenses.

1.3.3. Contractor shall submit the proposed setup of the warehouse, open storage and personnel camp to Company for the necessary approval. The proposal shall describe in details the proposed plan and design with all the necessary dimensions, equipment or material lists and other relevant information.

1.3.4. Contractor shall also setup base camp for its personnel. The camp shall be of the international standard. Contractor shall provide meals and catering for its personnel in warehouse and base camp.

1.3.5. Company shall have the right to request Contractor to jointly establish base camp for its personnel with any other Company’s Contractor as to provide more synergy to the overall Company’s operations through a third party service provider or joint development among the Contractors.

1.3.6. Contractor who has been awarded other contract (s) with Company shall setup only one (1) warehouse, open storage area and camp facilities that can accommodate the whole services.

Appendix A

3

1.3.7. Company shall be responsible to provide fencing and gravelling of pad for the warehouse, camp and open storage area.

1.3.8. Contractor shall be given a period not exceeding six (6) months from the date of awarding this Agreement to establish the warehouse, open storage yard and camp facilities within Company provided secured area in Halfaya field. As a temporary measure during this six (6) months period, Company's existing warehouse and facilities may be used to accommodate the Contractor's requirements free of charge. In case the Contractor fails in establishing its warehouse in the field within the grace period, Company reserves the right to terminate this Agreement for not meeting the agreed contractual obligations/targets. Company may elect to continue with this Agreement after the said grace period if the Contractor has already made reasonable progress in establishing the warehouse and the Contractor is willing to pay a monthly rental of USD 20,000.00 for further using Company's furnished warehouse facility in Halfaya field till the completion of work at Contractor's warehouse.

1.3.9. All expenses for the establishment of this warehouse, open storage area and camp facilities inclusive of meals and catering services shall be at Contractor’s cost except for items to be provided by Company.

Appendix A

4

2. FIELD DATA

2.1 Basic geology and reservoir data

2.2 Basic geology data

Up Fars formation interval generally at about 0 to 1343 m

Lower Fars formation range generally from 1343 to 1902m

Jeribe/Eup formation range generally from 1902 to 1913m

UP. Kirkuk formation range generally from 1913 to 2262m

Dammam formation thickness generally from 2262 to 2461m

Aliji/ Shiranish/Quma formation generally from 2461 to 2563m

Appendix A

5

Hartha formation generally from 2563 to 2609 m

Sadi formation generally from 2609 to 2733 m

Tanuma formation generally from 2733 to 2754 m

Khasib formation generally from 2754 to 2833 m

Mishrif formation generally from 2833 to 3237 m

Rumaila formation generally from 3237 to 3286 m

Ahamadi formation generally from 3286 to 3304 m

Mauddud formation generally from 3304 to 3503 m

Nahr Umr formation generally from 3503 to 3727m

Shuaiba formation generally from 3737m to 3916m

Ratawi formation generally from 3916m to 4106m

Yamama formation generally from 4106m to

Yamama Reservoir permeability: 20~30 mD

Yamama Reservoir porosity: 12~16 %

Maximum depth: 4600 m TVD

2.3 Basic reservoir data

Height:

Jeribe-kirkuk: 20~40m

Sadi: about 30m

Mishrif: 60~150m

Nahr Umr: 7.6~18m

Yamama: 10m

Pressure gradient:

1.10-1.18 variable due to depletion

1300~1900m, pore pressure coefficient reach to 2.0

Yamama formation pore pressure coefficient reach to 1.9

Maximum bottom hole temperature(°C):

Jeribe-kirkuk: 66.7°C

Sadi: 92.8°C

Mishrif: 96.1°C

Nahr Umr: 117.8°C

Yamama: 140.4°C

Appendix A

6

H2S maximum content: 0.06%-1.5% in Mishrif formation

Maximum depth : 3300 m TVD

Reservoir height : 200mTV on average

Pressure gradient : 1.10-1.18variable due to depletion

Maximum bottom hole temperature: 71.1-85°C

Oil gravity : 0.7539-0.7941 g/m3

H2S maximum content : 0.06%-0.1%

Appendix A

7

2.4 Indicative well design & trajectory

Sadi, Mishrif and Nahr Umr Formation Horizontal Well Design

Mishrif directional Well Design

Appendix A

8

Yamama Formation Vertical Well Design

Appendix A

9

3. GENERAL DRILLING PROGRAMMES

The following information is indicative only. All information hereafter, such as lengths, mud weight and so on, are approximations only. All details are liable to change before or in the course of the Term of the Agreement.

(a) Well Information of Appraisal well

Section Vertical Section Build-up Section Horizontal Section

Hole size 17 1/2” 12 1/4” or

8-1/2”

8 1/2” or 5-7/8”

Mud type and MW Polymer mud

1.12~1.20 SG

salt mud

1.20~1.25 SG

salt mud

1.20~1.25 SG

Casing OD 20” 9 5/8” or

7”, 5-1/2”

7”

5-1/2”, 4-1/2” liner

Approx. interval (m)

1350 2000-3100 3100-4500

Particulars for this section

Max DLS 9deg/30m

Firm data requirement

MWD /LWD

real-time

MWD/LWD

real-time

(b) Standard Operation Appraisal/Development Well

Drill 26” surface hole

Run and cement 20” casing. Install casing housing and BOP and test.

Drill 17 1/2” vertical hole and take check shot with electric multi-shot.

Run and cement 13 3/8” casing. Install wellhead and BOP and test.

Drill 12 1/4” vertical hole and take check shot with electric multi-shot.

Run and cement 9 5/8” casing. Install wellhead and BOP and test.

Drill 8 1/2” vertical hole to KOP and take check shot with electric multi-shot or MWD.

RIH Directional BHA with MWD/LWD with GR/Resistivity.

Drill about 500~800 meters horizontal section with 8-1/2” or 6” bit.

Circulate to crude.

Run completion. N/d BOP, N/u X-mass tree & test.

Appendix A

10

4. CONTRACTOR’S SPECIFIC OBLIGATIONS

Contractor shall provide all necessary equipment to perform the directional and survey services and directional program mentioned in the above Section 3(b).

4.1 Equipment and Service Required

4.1.1 The Services to be performed by the Contractor shall encompass all Directional Drilling, MWD (Measure While Drilling) and LWD (Logging While Drilling) Services associated with the drilling operations in the Worksite. For this purpose, Contractor shall furnish all Personnel, Contractor Equipment and technical expertise required for the performance of Services herein contemplated.

4.1.2 Unless otherwise stated, there shall be a full set of on-site back-up of Contractor Equipment (while Contractor Equipment has been placed at the Worksite to make sure the operation continuity).

4.1.3 Contractor Equipment should be technologically up to date and compatible (i.e. Contractor provides cross over) with other tools utilized for drilling operation.

4.1.4 The Contractor shall provide technical data and schematic drawings for all down-hole tools.

4.1.5 The Contractor shall provide equipment and services to measure hole inclination and Azimuth while drilling the 17 1/2” hole section. The Contractor shall provide MWD if so needed.

4.1.6 The Contractor shall provide 9 5/8” Steerable Positive Displacement Mud Motors and all necessary directional equipment for drilling the 17 1/2” hole section if needed.

4.1.7 The Contractor shall provide equipment and services to measure hole inclination and Azimuth while drilling the 12 1/4” hole section. The Contractor shall provide MWD/LWD with Gama or Resistivity if so needed.

4.1.8 The Contractor shall provide 8” Steerable Positive Displacement Mud Motors and all necessary directional equipment for drilling the 12 1/4” hole section if needed.

4.1.9 The Contractor shall provide equipment and services to measure hole inclination and Azimuth while drilling the 8 1/2” hole section. The Contractor shall provide MWD/LWD with Gama or Resistivity if so needed.

4.1.10 The Contractor shall provide 6¾” Steerable Positive Displacement Mud Motors and all necessary directional equipment for drilling the 8 1/2” hole section.

4.1.11 The Contractor shall provide equipment and services to measure hole inclination and Azimuth while drilling the 6” hole section. The Contractor shall provide MWD/LWD with Gama or Resistivity if so needed.

Appendix A

11

4.1.12 The Contractor shall provide 4¾” Steerable Positive Displacement Mud Motors and all necessary directional equipment for drilling the 6” hole section.

4.1.13 The Contractor shall provide Jar, Jar Accelerators and Shock sub for the directional drilling hole section.

4.1.14 The Contractor shall provide Shock Absorbing and Friction reducing tools for drilling 8 ½” and 6” hole section.

4.1.15 When on duty, the Contractor’s Personnel shall remain at the Worksite twenty-four (24) hours a day.

4.1.16 The Contractor shall guarantee that for the Term of this Agreement its Contractor Equipment is fully maintained in perfect working condition.

4.1.17 Free Support Service:

- 3 prints and 1 soft copy of End of Well Report which must include but not be limited to all directional data, actual well path plot, BHA, drilling parameter, anti-collision data / plot, and analysis of actual to planned directional drilling results.

- Directional Drilling Programme including but not limited to trajectory data / plot, BHA, drilling parameter, cluster well plan, anti-collision plan, hydraulic plan.

4.2 Detailed Specifications of Contractor Equipment

[continues on next page]

Appendix A

10

DIRECTIONAL DRILLING EQUIPMENT

Note: All Equipment must be H2S-resistent when relevant. The detail technical description and necessary photo of Contractor’s Equipment shall be submitted in the technical proposal.

Item Company Requirement Contractor Specification

1 PERFORMANCE MUD MOTOR

1.1 9 1/2” or 9 5/8” OD high performance positive downhole motors with AKO bend housing for vertical and directional hole.

BUR Capacity up to 5 deg/30 m

Flow rate up to 75 L/S

Maximum RPM up to 150 RPM

Operating torque up to 15000 N.m

Temperature up to 120 ºC.

7 5/8” Reg box x 6 5/8” Reg box

- manufactory

- model & type

1.2 8” or 8 1/4” OD high performance positive downhole motors with AKO bend housing for vertical and directional hole.

BUR Capacity up to 8 deg/30 m

Flow rate up to 55L/S

Maximum RPM up to 170RPM


Temperature up to 120ºC.

6 5/8” Reg box x 6 5/8” Reg box

Appendix A

11


1.3 6 1/2” or 6¾” OD high performance positive downhole motors with AKO bend housing for vertical and directional hole.

BUR Capacity up to 10deg/30 m


Maximum p to 200 RPM

operating torque up 6500 N.m

Temperature up to 130ºC

4 1/2” Reg box x 4 1/2” IF box.

1.4 4¾” OD high performance positive downhole motors with AKO bend housing for vertical and directional hole

BUR Capacity up to 12deg/30 m


Maximum RPM up to 200RPM


Temperature up to 130ºC

3 1/2” Reg box x 3 1/2” IF box.

Appendix A

12


2 NON MAGNETIC DRILL COLLAR

8” OD 30 ft long Non-Magnetic drillcollar w/ 6 5/8” Reg pin x box.

8” OD 10 ft long Non-Magnetic drillcollar w/ 6 5/8” Reg pin x box.

6 1/2” OD 30 ft long Non-Magnetic drillcollar w/ 4 1/2” IF pin x box.

6 1/2” OD 10 ft long Non-Magnetic drillcollar w/ 4 1/2” IF pin x box.

4¾” OD 30 ft long Non-Magnetic drillcollar w/ 3 1/2” IF pin x box.

4¾” OD 10 ft long Non-Magnetic drillcollar w/ 3 1/2” IF pin x box.

5” OD Non-Magnetic HWDP w/ 4 1/2” IF pin x box.

3 1/2” OD Non-Magnetic HWDP w/ 3 1/2” IF pin x box.

3 DRILLING STABILIZER

17 1/2” Hole UG Stabilizer (three spiral, suitable for vertical and directional section) w/ 6 5/8” Reg pin x box.

12 1/4” Hole UG Stabilizer (three spiral, suitable for vertical and directional section) w/ 6 5/8” Reg pin x box.

8 1/2” Hole UG Stabilizer (three spirals, suitable for vertical and directional section) w/ 4 1/2” IF pin x box.

Appendix A

13


4 FLOAT SUB

8” OD Float Sub w/ valve and 6 5/8” Reg pin x box.

6 1/2” OD Float Sub w/ valve and 4 1/2” IF pin x box.

4¾” OD Float Sub w/ valve and 3 1/2” IF pin x box.

5 CIRCULATING SUB

8” Circulating Sub, Multi Active w/ 6 5/8” Reg pin x box.

6 1/2” or 6¾” OD Circulating Sub, Multi Active w/ 4 1/2” IF pin x box.

6 DRILLING JAR

8” OD Drilling Jar w/ 6 5/8” Reg pin x box.

Up and Down Action, Max Load During Delay up to 220KLBS

6 1/2” OD Drilling Jar w/ 4 1/2” IF pin x box.


4 3/4” OD Drilling Jar w/ 3 1/2” IF pin x box.


Appendix A

14


7 JAR ACCELERATOR

8” OD Accelerator w/ 6 5/8” Reg pin x box.

6 1/2” OD Accelerator w/ 4 1/2” IF pin x box.

4¾” OD Accelerator w/ 3 1/2” IF pin x box.

8 SHOCK SUB

8” OD Shock Sub w/ 6 5/8” Reg pin x box.

6 1/2” OD Shock Subr w/ 4 1/2” IF pin x box.

4¾” OD Shock Sub w/ 3 1/2” IF pin x box.

9 MWD (Basic)

Mud Weight: 1.12-2.25SG

Mud Type: Polymer Mud, Organic salt mud Temperature: 125oC

System Accuracy of Azimuth: ±1.5° for Inclination>10°and Dip<70°

Inclination: ±0.2°for 0-180°

Magnetic Toolface: ±2.8°

Highside Gravity Toolface: ±2.8°

Appendix A

15


10 GAMMA RAY (Basic)

Real time transmission plus down hole memory with a recording capability of 400 hours.

11 RESITIVITY (Basic)

2 MHz improves vertical response for thin-bed identification.

400kHz enables deeper lateral investigation of permeable zones.

Real-time and memory-stored data.

Compatible with standard drilling MWD BHAs.

Range: 0.1-1000 ohm-m

Accuracy: ±1%(0.1-25 ohm-m)

12 MAGNETIC MULTI SHOT KIT

12.1 droppable inside drill string before POOH and retrievable with an overshot run with wire line and permanently available on the rig.

12.2 Gyro

13 OTHER EQUIPMENT

Appendix A

16


13.1 ROTARY STEERABLE SYSTEMS

13.1.1 Automatic Rotary Steerable Drilling System for 12 ¼” hole size

9 5/8” OD

Fully rotating rotary steerable

Automatic vertical drilling optimization

Can be combined with a mud motor.

Real-time data using MWD

Continuous near-bit surveys

(inclination and azimuth)

Near-bit shocks/vibration

Bit rpm

Near-bit azimuthal gamma ray for geo-stopping

Automatic inclination hold

Temperature: 150 degC

Flow range: 480–1,900 gpm

Pressure: 20,000 psi

rpm: 220 rpm

13.1.2 Automatic Rotary Steerable Drilling System for 8 ½” hole size

Appendix A

17


6 ¾” OD

Fully rotating rotary steerable directional service

Ability to perform openhole sidetracks

BUR: up to 8°/100 ft

Ability to drill in overgauge holes

Ability to use with bicentered bits


Continuous near-bit surveys

Automatic inclination

Automatic Azimuth hold

Bit rpm

High steerability


Flow range: 290–800 gpm

pressure: 20,000 psi

rpm: 350 rpm

13.1.3 Automatic Rotary Steerable Drilling System for 5 7/8” hole size

Appendix A

18


4 ¾” OD

Fully rotating rotary steerable directional service

Real-time data with MWD

Continuous near-bit surveys (inclination and azimuth)

Near-bit shocks/vibration

Bit rpm

Near-bit gamma ray for geosteering

Automatic inclination hold


Build: 8°/100 ft



rpm: 250 rpm

13.2 ADVANCE MWD TOOLS

Appendix A

19


13.2.1 Advance MWD for 12 ¼” Nominal Hole size

Real-time data (0.5–12 bps)

Toolface

Direction and inclination

Downhole tool power

Continuous rotary surveys

Gamma ray

Downhole: weight/torque/rpm/Stick/slip

4-axis vibration/shocks


Tool curvature:

7°/100 ft rotating

12°/100 ft sliding



13.2.2 Advance MWD for 8 ½” Nominal Hole size

Appendix A

20


Real-time data (0.5–12 bps)

Toolface


Downhole tool power

Continuous rotary surveys

Gamma ray

Downhole: weight/torque/rpm Stick/slip

4-axis vibration/shocks


Tool curvature:

8°/100 ft rotating

16°/100 ft sliding



13.2.3 Advance MWD for 5 7/8” Nominal Hole size

Appendix A

21


Real-time [0.5–6 bps]

Memory data

Gamma ray

10 multi-depth resistivity (five-phase and five-attenuation)

Toolface


Downhole tool power


Tool curvature:

15°/100 ft rotating

30°/100 ft sliding

Flow: 400 gpm


13.3 LWD tools

Appendix A

22


13.3.1 Well Placement tool for 5 7/8” Nominal Hole size

360º, directional, deep reading (21 ft) bed boundary sensitivity, identification, and mapping for optimal well placement

Gamma ray

Real-time while-drilling data using MWD

Precision well placement of well relative to reservoir boundaries

Water detection and avoidance

Refining reservoir models

Operations in carbonates, clastics, and coalbed methane

APWD Annular Pressure While Drilling


Tool curvature:


30°/100 ft sliding

Flow rate: 400 gpm


13.3.2 Resistivity Imaging tool for 5 7/8” Nominal Hole size

Real-time image and dip calculation

Appendix A

23


High-resolution imaging

Invasion profile analysis

Thin bed analysis

Three azimuthally focused electrode resistivity measurements

High-resolution focused ring resistivity

At-the-bit resistivity

Azimuthal gamma ray

High-resolution multi-depth resistivity


Tool curvature:


30°/100 ft sliding

Flow rate: 400 gpm


13.3.3 Azimuthal Density & Neutorn Porosity tool for 5 7/8” Nominal Hole size

Azimuthal density/PEF

Appendix A

24


Neutron porosity

Downhole shocks/rpm


Applicable to all hole deviations

Formation evaluation

Formation dip

Fault identification

Thin bed identification

Caliper applications

Borehole imaging (density and PEF)

3D density caliper

Image-derived density

Borehole invariant porosity

Slick or stabilized

Wireline retrievable sources


Tool curvature:

10°/100 ft rotating (IBS collar)

15°/100 ft rotating (slick)

30°/100 ft sliding

Flow rate: 400 gpm


13.3.4 Azimuthal Density & Neutorn Porosity tool for 8 ½”” Nominal Hole size

Azimuthal density/PEF

Appendix A

25


Neutron porosity

Downhole shocks/rpm


Applicable to all hole deviations

Formation evaluation

Formation dip

Fault identification

Thin bed identification

Caliper applications

Borehole imaging (density and PEF)

3D density caliper

Image-derived density

Borehole invariant porosity

Slick or stabilized

Wireline retrievable sources


Tool curvature:

8°/100 ft rotating (IBS collar)

16°/100 ft sliding (slick)

Flow rate: 700 gpm


14 Down Hole Axial / Lateral Vibration, Shock Absorbing & Friction Reduction Tools

Contractor shall provide Axial / Lateral Vibration, shock Please specify in details the tools components,

Appendix A

26

Item Company Requirement Contractor Specification absorbing and friction reduction Tool and Services equivalent to National Oilwell Varco’s (NOV) Agitator Tools .

The tool must be capable to oscillate the BHA to improve the weight transfer to bit and reduce the stick / slip especially when oriented with steerable motor.

Contractor shall provide the matching X-overs for connecting their tool with the drill string

Contractor shall provide 6 ¾” & 4 ¾” sets for drilling 8 ½” & 6” hole section respectively.

manufacture, model, sets…etc.

Appendix A

26

Part II - Summary of Responsibilities

TABLE OF CONTENTS

SSEECCTTIIOONN

TITLE

11

TRANSPORTATION

22

FUEL, LUBES AND COMMUNICATION EQUIPMENT

33

MAINTENANCE SERVICES

44

STORAGE AND OTHER FACILITIES

55

HOUSING, CATERING AND MEDICAL

SERVICES

66

PERSONNEL

77

SAFETY APPAREL

Appendix A

27

ITEMS

PROVIDED BY AT COST OF

CONTR COMPANY CONTR COMPANY

Section 1 Transportation

1.1 Mobilization of Contractor Equipment and

Personnel from Point of Origin to the Contractor Base.

1.2 Transportation of Contractor Personnel on duty between Worksite and Contractor Base.

1.3 Transportation and handling of Contractor Equipment between Worksite and Contactor Base.

1.4 Forklift or crane for loading and unloading of Contractor Equipment at Worksite.

1.5 Transportation and handling of Contractor Equipment from Contractor Base to Demobilization Site.

1.6 Provision for and maintenance of adequate roadway between well sites.

1.7 Towing services for Contractor Equipment due to the road condition.

1.8 Preparation of all necessary documents including certificates, licenses, equipment list, etc. required by Iraqi authorities.

1.9 Obtaining the necessary consents, rights of ways, permits and clearance from Iraqi authorities to mobilize Contractor Equipment between Port of Iraqi and the Company base.

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

Section 2 Security

2.1 All Contractor’s personnel security at Worksite.

2.2 Transportation Security of personnel, materials and equipment

X

X

X

X

Appendix A

28

ITEMS



Section 3 Fuel, Lubes And Communication Eqpt.

3.1 Diesel fuel, water and electricity for Contractor

Equipment

3.2 Lubricants for Contractor Equipment

3.3 Communication equipment for Contractor’s

communication between Company base and Worksite

3.4 Telephone and fax machine at Company base.

3.5 Charges related to personal usage of communication equipment as described in Item 3.4 above.

X

X

X

X

X

X

X

X

X

X

Section 4 Maintenance Services.

4.1 All repair and replacement work to Contractor

Equipment including spare parts and consumables.

4.2 Maintenance of all Contractor Equipment in

accordance with the Agreement.

X

X

X

X

Section 5 Storage and Other Facilities.

5.1 Yard or open storage at Company base for

Contractor Equipment.

5.2 Enclosed storage space at the Company base

and at Worksite to keep Contractor’s tools, spare parts and consumables.

X

X

X

X

Appendix A

29

ITEMS



Section 6 Housing, Catering and First Aid Services.

6.1 Food and accommodation for Contractor Personnel at Contractor Base.

6.2 Food and accommodation for Contractor Personnel at Worksite.

6.3 First aid and ambulance services for

Contractor Personnel at Contractor Base and Worksite.

6.4 Transport to carry Contractor Personnel for

emergency medical treatment.

6.5 Emergency evacuation of personnel from the

Worksite to the point specified by Company.

X

X

X

X

X

X

X

X

X

X

X

X

X

Section 7 Personnel

7.1 Additional Contractor’s engineer furnished by Contractor as approved in advance by Company Agreement Administrator over and above the normal crew.

7.2 Casual labor for the maintenance of Contractor Equipment at work shop.

7.3 Travel time and any associated personnel expenses for Contractor Personnel between point of origin and Company base.

7.4 Visa, work permit and related documentation required to maintain Contractor Personnel in Iraq.

X

X

X

X

X

X

X

X

Section 8 Safety Apparel

8.1 Safety apparels such as clear lens safety glasses, safety boots, coveralls, etc. for each of Contractor Personnel.

X

X

Appendix B

1

APPENDIX B

PRICES AND RATES

1. GENERAL

Contractor shall provide the Services more fully described in Appendix “A” of the Agreement at the rates and prices laid down in this Appendix B. Contractor is required to submit its tender in accordance with the format detailed in this Appendix B.

The program laid down in Appendix “A” is intended to give Contractor the best information at the time of tendering. Company shall pay in consideration of the satisfactory execution and completion of the Services in accordance with the following terms.

The prices and rates shall be deemed to include all elements of direct and indirect costs, overhead costs, contingencies, profit and all other things necessary and required for the proper execution of the Services and to cover all Contractor’s obligations under the Agreement.

All prices and rates are stated in USD and shall remain fixed and firm during the whole duration of the Agreement.

2. PRICES AND RATES

The quotation shall be structured as follow:

2.1 Mobilization Fee and Demobilization Fee

(a) After the Commencement Date, Company shall pay Contractor the lump sum Mobilization Fee as specified in Appendix B for its completion of Mobilization. The Mobilization Fee shall be deemed to cover all costs and expenditures of whatever nature incurred by Contractor for the completion of Mobilization.

(b) Upon completion of Services, all Rates shall cease and Contractor shall commence rigging-down operations in preparation for Demobilization. Upon completion of Demobilization, Company shall pay Contractor the lump sum Demobilization Fee as specified in Appendix B, which shall be deemed to cover all costs and expenditures of Contractor in completely rigging down and demobilizing Contractor Equipment (including but not limited to such Contractor Equipment utilized as part of the Directional Drilling Service Unit) and Contractor’s Personnel from the Demobilization Site as set forth under this Agreement.

2.2 Contractor Equipment Fee

a. Operation Daily Rate

The operation daily rate specified in Appendix B shall be payable for the Contractor Equipment running in hole. The operation daily rate shall start to apply when such Contractor Equipment run through the rotary table, and shall cease to apply when such Contractor Equipment is pulled out of the rotary table. If pipe-stuck or fishing occurs while Contractor Equipment is in the bore hole and the occurrence of such

Appendix B

2

pipe-stuck or fishing is not attributable to Contractor, then the operation daily rate shall be payable by Company to Contractor for the maximum of seventy-two (72) hours for such stuck or fishing period, no matter whether such stuck or fishing period exceeds seventy-two (72) hours. In addition, Company shall only be charged for one (1) set/joint of down-hole equipment even though more than one (1) set of such equipment may be placed at the Worksite for backup purposes.

b. Standby Daily Rate

The standby daily rate shall apply when the specified Contractor Equipment kept on rig site by the Company. The standby daily rate shall start and cease to apply when Company informs Contractor.

c. Downtime Rate (Zero Rate):

The Downtime Rate (Zero Rate) shall mean the cumulative elapsed time of all Contractors’ incidents of unsuccessful performance. It shall include the Equipment failure provided such failure is not due to measurable borehole conditions which exceed the published operating range of Contractor’s Equipment or Company is satisfied that hostile or unusual borehole conditions or Company’s specified operating procedures were the cause of such failure. Should stuck Equipment necessitate a fishing operation, no “Downtime” will be assessed unless the fishing operation is caused by Contractor’s sole negligence. Similarly, no “Downtime” will be assessed in cases where equipment owned by another contractor is used as a primary integral part of the Drilling Operation carried out by the Contractor unless such “Downtime” is due solely to failure of Contractor’s Equipment.

d. Lost in Hole Charge

The lost in hole charge specified in Appendix B shall be payable when Contractor Equipment is permanently lost in hole. Lost in hole charges shall be calculated and applied according to the Section 12.5 of this Agreement.

e. Survey Charge

The survey charge shall be payable at each run when the multi shot survey kit without running gear is used.

f. The Rates specified in this Section shall cover costs for all surface Contractor Equipment and the inspection, maintenance, redressing, repairing and spare parts in association of such Contractor Equipment.

2.3 Contractor Personnel

Operating Daily Rate

The operating daily rate specified in Appendix B shall be payable for Contractor’s Personnel providing Services at the Worksite. The operating daily rate shall start to apply when such Personnel assigned by Contractor arrive at the Worksite or when the Company informs Contractor to send such Personnel to the Worksite, whichever occurs later. Operating daily rate with respect to any individual Personnel shall cease to apply when such individual Personnel is released from the Worksite or when the

Appendix B

3

Company informs Contractor to release such individual Personnel from the Worksite, whichever is earlier.

I. Mobilization Fee and Demobilization Fee

1 Mobilization Fee USD

2 Demobilization fee USD

II. Contractor Equipment

No. Description

A 17-1/2”HOLE SECTION UOM Standby daily Rates US$

Operation

Daily Rates US$

Lost in Hole charge US$

1 Nominal 9 5/8”OD Steerable Mud Motor 1 ea

2 Nominal 8”OD×30’Non Mag Drill Collar 1 ea


4 Nominal 16”OD Under Gauge Stabilizer 1 ea

5 Nominal 8”OD Jar 1 ea

6 Nominal 8”OD Float Sub w/Float Valve 1 ea

7 Nominal 8”OD MWD 1 ea

8 Nominal 8”OD LWD Natural Gamma Ray 1 ea

B 12-1/4”HOLE SECTION UOM Standby daily Rates US$

Operation Daily Rates US$


1 Nominal 8”OD Steerable Mud Motor 1 ea



4 Nominal 11¾”OD Under Gauge Stabilizer 1 ea

5 Nominal 8” OD Float Sub w/Float Valve 1 ea

6 Nominal 8”OD Jar 1 ea

7 Nominal 8” OD circulating sub 1 ea

8 Nominal 8”OD MWD 1 ea

9 Nominal 8”OD LWD Natural Gamma Ray 1 ea

10 Nominal 8”OD LWD Resistivity 1 ea

C 8-1/2”HOLE SECTION UOM Standby Operation Lost in Hole

Appendix B

4

daily Rates US$

Daily Rates US$

charge US$

1 Nominal 6¾”OD Steerable Mud Motor 1 ea

2 Nominal 6 1/2”OD×30’Non Mag Drill Collar 1 ea

3 Nominal 6 1/2”OD×10’Non Mag Drill Collar 1 ea

4 Nominal 5” OD NMDP 1 ea

5 Nominal 8”OD Under Gauge String Stabilizer 1 ea

6 Nominal 6 1/2” OD Float Sub w/Float Valve 1 ea

7 Nominal 6¾”OD Jar 1 ea

8 Nominal 6¾″ OD Jar Accelerators 1 ea

9 Nominal 6¾″ OD Shock Sub 1 ea

10 Nominal 6¾″ OD PBL 1 ea

11 Nominal 6¾″ OD MWD 1 ea

12 Nominal 6¾″ OD LWD Natural Gamma Ray 1 ea

13 Nominal 6¾″ OD LWD Resistivity 1 ea

D 6”HOLE SECTION UOM Standby daily Rates US$

Operation

Daily Rates US$


1 Nominal 4¾”OD Steerable Mud Motor 1 ea

2 Nominal 4¾”OD×30’Monel Drill Collar 1 ea

3 Nominal 4¾″OD×10’Monel Drill Collar 1 ea

4 Nominal 3 1/2″ OD NMDP 1 ea

5 Nominal 4¾″ OD Float Sub w/Float Valve 1 ea

6 Nominal 4¾”OD Jar 1 ea

7 Nominal 4¾″ OD Jar Accelerators 1 ea

8 Nominal 4¾”OD Shock Sub 1 ea

9 Nominal 4¾″ OD MWD 1 ea

10 Nominal 4¾″ OD LWD Natural Gamma Ray 1 ea

11 Nominal 4¾″ OD LWD Resistivity 1 ea

12 Nominal 4¾″ OD PBL 1 ea

E Measuring Equipment UOM Standby daily Rates

Operation Daily Rates


Appendix B

5

US$ US$

1 MWD (including 8″, 6¾″ and 4¾″ size) 1 set

2 LWD (Gamma and Resistivity including 8″, 6¾″ and 4¾″ size)

1 set

F Rotary Steerable System UOM Standby daily Rates US$



1 Automatic Rotary Steerable Drilling System for 12 ¼” hole size

1 set

2 Automatic Rotary Steerable Drilling System for 8 ½” hole size

1 set

3 Automatic Rotary Steerable Drilling System for 5 7/8” hole size

1 set

G Advance MWD Tools UOM Standby daily Rates US$



1 Advance MWD for 12 ¼” Nominal Hole size 1 set

2 Advance MWD for 8 ½” Nominal Hole size 1 set

3 Advance MWD for 5 7/8” Nominal Hole size 1 set

H LWD tools UOM Standby daily Rates US$



1 Well Placement tool for 5 7/8” Hole size 1 set

2 Resistivity Imaging tool for 5 7/8” Hole size 1 set

3 Azimuthal Density & Neutorn Porosity tool for 8 ½”” Nominal Hole size

1 set

4 Azimuthal Density & Neutorn Porosity tool for 5 7/8” Nominal Hole size

1 set

I Vibration, Shock absorption & Friction Reduction System

UOM Standby daily Rates US$



1 6 ¾” set tools for 8 1/2” Hole size 1 set

2 4 ¾” set tools for 6” Hole size 1 set

III Survey Equipment

Appendix B

6

No. Description UOM Survey Charge(US$/run)


1 Multi Shot Survey Kit w/no Running Gear 1 ea

2 Gyro 1 set

IV PERSONNEL

No. Position UOM Operating Daily Rate(US$)

1 Senior Directional Driller 1 ea

2 Directional Drilling Engineer 1 ea

3 MWD/LWD Engineer 1 ea

Appendix C

1

APPENDIX C

CONTRACTOR’S PERSONNEL

1. REFERENCE

Contractor’s personnel defined hereunder, will be made available to Company as required to perform the Services requested by Company.

2. CONTRACTOR’S PERSONNEL CREW

The Contractor shall provide competent, fully qualified and trained Directional Drillers, Directional MWD Engineers and LWD Engineers to perform the Services for Company.

A Directional Drilling Services Unit crew includes four (4) Engineers, which constitute: one (1) Senior Directional Driller; one (1) Directional Drilling engineer; and two (2) MWD/LWD Engineers.

Contractor shall supply professional curricula for all personnel proposed, indicating background, training and work experience. During the Term of the Agreement, before any operative personnel are replaced, Contractor shall send updated CV to the Company of substitute(s) for approval.

Contractor shall ensure, at Contractor’s time, cost and expense that its personnel shall have passed all relevant safety courses in accordance with the applicable rules and regulations and Company’s procedures prior to the Commencement Date (said courses shall include, but not be limited to, H2S Awareness & Escape, IADC Well Control, SCBA and Basic Fire Fighting). Furthermore, all of Contractor’s Personnel shall be qualified to perform their allocated tasks.

Below is the minimum experience requirement for the personnel:

Senior Directional Driller

Should have seven (7) years directional drilling experience, of which four (4) years are related to horizontal or cluster (or platform) wells drilling. The experience of drilling cluster or platform is necessary for this programme because nearly all the wells will be cluster well.

Directional Drilling Engineer

Should have five (5) years directional drilling experience of which two (2) years are related to horizontal or cluster (or platform) wells drilling.

MWD/LWD Engineer

Appendix C

2

Should have five (5) years directional drilling experience of which two (2) years are related to horizontal or cluster (or platform) wells drilling.

3. SPECIAL PROVISIONS RELATING TO CONTRACTOR’S PERSONNEL

Contractor shall appoint ______ as its representative at the Halfaya Contract Area in Iraq (“Contractor Representative”).

The Contractor Representative shall be available for daily technical and service meetings and provide proposal reports on the Services.

All of Contractor’s personnel shall be subordinate to the Contractor Representative. The Contractor Representative should be an expert and shall have at least eight (8) years directional drilling experience, of which four (4) years must be related to horizontal/cluster well drilling and programme management.

4. SPECIAL REQUEST

Prior to Commencement Date of the Services, Contractor shall submit, for Company’s approval, a list of all personnel appointed or intended to be appointed for the performance of the Services, together with details of qualifications and experience (detailed CV).

Contractor shall ensure, at Contractor’s time, cost and expense, that its personnel shall have passed all relevant safety courses in accordance with the applicable rules and regulations and Company’s procedures prior to the Commencement Date (said courses shall include, but not be limited to, H2S Awareness & Escape, IADC Well Control, SCBA, Chemical Hazard Awareness and Basic Fire Fighting). Furthermore, all of Contractor’s Personnel shall be qualified to perform their allocated tasks.

5. PERSONNEL QUALIFICATION CARD

Contractor agrees to submit sufficient information to Company with respect to the qualification of its Personnel before they are brought to work at the Worksite for Contractor.

Name:

Date of birth:

Employed as:

Length of service:

Languages: English

Present position:

Appendix C

3

Education:

Vocational training:

Certificates: Basic H2S

Basic Fire Fighting

First Aid

IADC Well Control

Professional experience:

Areas where worked

on-shore

off-shore

COMPANIES worked for

Appendix D

1

APPENDIX D

MODEL CHANGE ORDER

Change Order No. _____

Pursuant to the agreement for the Provision of Directional Drilling Equipment and Services, dated _____ between _____________ and ____________ (the “Agreement”),

Company:

Contractor:

Pursuant to the Agreement (as amended and/or modified), Company has the right to order changes to the Services through the issuance of a change order. Company hereby orders changes to the Services as specified in this Change Order, and Contractor shall provide the modified Services in accordance with the Agreement and the particulars contained in this Change Order (the “Modified Services”).

Country:

Operation Area:

Logistics Base:

Work Location:

Commencement Date of the Modified Services: Term of the Modified Services to be performed under this Change Order:

Description of the Modified Services to be provided:

Description of Services which Contractor shall continue to provide, if any:

Appendix D

2

Personnel and equipment to be furnished by Contractor:

Personnel rotation schedule and work schedule for personnel:

Subcontractor handling/administration fee:

Compensation rates and fees (including standby rates, LIH charges, any early termination fees or minimum equipment hire periods):

Point of origin for personnel:

Point of entry for personnel:

Point of origin for equipment:

Point of entry for equipment:

Responsibility for transportation, fuel and board/lodging arrangements:

List of items or services to be provided by Company:

Company payment of import/export costs:

Yes: _____ No: _____

Import/Export Instructions:

Products supplied on a consignment basis:

Payment and currency terms (if different than the terms set forth in the Agreement):

Company’s address for submission of Contractor’s invoices:

Contractor’s banking information:

Appendix D

3

Address and fax number for Company notices:

Address and fax number for Contractor notices:

Identification of the Company Representative(s):

Identification of the Contractor Representative(s):

Other terms:

Company and Contractor have executed this Change Order, in duplicate, with effect as of the date written above, as evidenced by the following signatures:

[name of Company entering [name of Contractor entering

into this Change Order] into this Change Order]

By:_______________________ By:_________________________

Title:______________________ Title:________________________

Appendix E

1

APPENDIX E

INSURANCE

Contractor shall carry and maintain in full force for the duration of the Agreement, at a minimum, the following insurance with companies satisfactory to Company:

1. Workers’ compensation and occupational disease insurance in accordance with the Applicable Law requirements of the jurisdiction in which the Services are to be performed, the jurisdiction in which Contractor’s Personnel reside and the jurisdiction in which Contractor is domiciled, covering all liabilities owed for compensation and other benefits under the relevant workers’ compensation laws of each such jurisdiction.

2. Personal accident insurance and/or Employer’s Liability Insurances, as required by Applicable Law and which may be applicable and/or accidental death or dismemberment insurance, covering all Contractor’s Personnel engaged in accomplishing the Services. The employer’s liability policy shall provide an indemnity based on the statutory limit for any one occurrence.

3. In the event that Contractor provides any automobiles in association with its provision of the Services, motor (automobile) insurance covering owned, non-owned, hired, operated or licensed automobiles by Contractor providing unlimited coverage for injury or death and a minimum limit of U.S. Dollars Two Hundred Fifty Thousand ($250,000.00), per occurrence for property damage.

4. Fire insurance covering all operations hereunder against bodily injury, death, loss or property damage with minimum limits of U.S. dollars Five Million ($5,000,000.00), for any one occurrence. Such insurance shall include the following extensions of cover commonly known as products and completed operations, sudden and accidental pollution, personal injury, occurrence property damage, broad form property damage and cross liability.

5. Commercial general liability (bodily injury and property damage) insurance with limits of not less than U.S. dollars Five Million ($5,000,000.00) per occurrence, including the following supplementary coverages:

(a) Products hazard coverage for any and all products provided or furnished by or on behalf of Supplier during the course of Services provided or performed by Supplier.

(b) Completed operations hazard coverage for any claim relating to defects or deficiencies in goods, products, materials or Services used, provided or performed by supplier in connection with its operations.

(c) Broad form property damage liability insurance.

(d) Pollution exclusion clause.

(e) Independent supplier’s contingent coverage.

(f) Personal injury liability.

(g) In Rem endorsement.

Appendix E

2

(h) Territorial extension to cover all Worksites.

9. Property / Equipment All Risk Insurance covering Contractors owned / leased equipment with a value not less than the book value / replacement cost of the equipment.

10. Comprehensive general third party liability insurance (to the extent not covered above).

11. Any other insurance which may be relevant and/or which may be required by any Applicable Law to which supplier and/or sub-suppliers are subject.

Appendix F

1

APPENDIX F

FORM OF BANK GUARANTEE

[Issuing Branch Bank Letterhead or SWIFT identifier Code]

To: PetroChina International Iraq FZE Iraq Branch

PetroChina Halfaya Base Camp

Kahla’a, Missan Province, Republic of Iraq

Date:

Guarantee No. [Bank to insert reference number]

This Bank Guarantee (hereinafter referred to as the “Guarantee”) is made on [Insert date of issue] and issued by [Insert complete name of bank, branch and address] (the “Guarantor”), to PetroChina International Iraq FZE Iraq Branch (hereinafter referred to as the “Company”), a company duly domiciled in the Republic of Iraq, pursuant the contract No. [Insert contract reference number] for [Insert object of the contract] (hereinafter referred to as the “Agreement”), dated [Insert Effective Date of the Agreement], executed by and between Company and [Insert Contractor’s complete company name and address] (hereinafter referred to as the “Contractor”).

1. At the request of Contractor, Guarantor hereby irrevocably and unconditionally guarantee the sum of [Insert amount in figures and words, and currency] (hereinafter referred to as the “Guarantee”), that is the amount of the bank guarantee required for the Agreement. Guarantor assumes its obligation as primary obligor and not as surety only. The Guarantee shall be drawable and shall become payable by Guarantor on first demand by Company without proof or conditions and notwithstanding any contestation or protest by Contractor or any other third party, upon presentation of a Demand for Payment in writing in English stating that Contractor is in breach of its obligations under the Agreement, without the need of submitting any additional document(s) to support the Demand for Payment. Company may demand all or part of the Guarantee. Any part of the Guaranteed which is undrawn may be drawn by Company in a subsequent demand or demands. Company shall submit the Demand for Payment at Guarantor offices located in [Insert exact address of the bank branch] (the “Place of Presentation”), on or before the Expiry Date of this Guarantee.

2. Guarantor shall not be discharged or released from this guarantee by any alteration in the obligations undertaken by Contractor or by any forbearance whether as to payment, time, performances or otherwise, or by any change in name or constitution of Company or Contractor.

3. All sums payable under this Guarantee shall be paid in full without set-off or counter-claim and

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free and clear of and without deduction of or withholding for or on account of any present or future taxes, duties or other charges.

4. This Guarantee is a continuing security and accordingly shall remain valid until [Insert exact date until which the Guarantee shall be valid and enforceable] (The “Expiry Date”).

5. This Guarantee shall be construed in accordance with and governed by the laws of England and Wales (without reference to its rules as to conflicts of laws), excluding the Contracts (Rights of Third Parties) Act 1999. Any dispute concerning the construction, interpretation and enforcement of the Guarantee shall be finally and exclusively settled by arbitration under the Honk Kong International Arbitration Centre Administered Arbitration Rules, as in effect on the date of the issue of this Guarantee; the arbitration shall take place in Honk Kong, Special Administrative Region of the People’s Republic of China, in the English language.

Signature(s)

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1

APPENDIX G

FORM OF PARENT COMPANY GUARANTEE

Date:

To: PetroChina International Iraq FZE Iraq Branch

PetroChina Halfaya Base Camp

Kahla’a, Missan Province, Republic of Iraq

Whereas PetroChina International Iraq FZE Iraq Branch (hereinafter referred to as the “Company”) has entered into the agreement No. [Insert name and date of Contract] (hereinafter referred to as the “Agreement”), for [Insert object of Contract] with [Insert Contractor’s complete company name and address] (hereinafter referred to as the “Contractor”); and,

Whereas Contractor is a subsidiary of [Insert complete company name and address of the Parent Company] (hereinafter referred to as the “Guarantor”).

Guarantor hereby unconditionally and irrevocably guarantee to Company, as primary obligor and not as surety only (a) the due and punctual performance and observance by Contractor of the terms and conditions of the Agreement, (b) to perform or take such steps, as necessary, to achieve performance of such obligations, and (c) to indemnify and keep hold Company harmless against any and all losses, damages, claims, costs, charges and expenses, howsoever arising from Contractor’s failure.

The undertaking assumed by Guarantor hereunder shall not be reduced, discharge or prejudiced by (i) any alteration in the relationship between Guarantor and Contractor; (ii) any arrangement between Contractor and Company; (iii) any amendment, variation, supplement, renewal or replacement, from time to time, to the Agreement; (vi) any forbearance or indulgence by Company toward the Contractor; (vii) any act or omission which might exonerate or discharge Guarantor; or, (viii) any invalidity or enforceability, insolvency, bankruptcy, winding up or reorganization of Contractor.

Guarantor represent and warrants that (a) it has the power to enter into and perform this Guarantee and has taken all necessary corporate actions to authorize the execution, delivery and performance of this Guarantee, and (b) the execution, delivery and performance of the Guarantee will not contravene any law or regulation to which the Guarantor is subject to or any provision of the Guarantor’s Memorandum and Articles of Association, and that all other consents require for such execution, delivery and performance are in full force and effect.

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This is an irrevocable and unconditional on-demand Guarantee. Guarantor agrees to make any performance due hereunder upon first written demand for payment from Company and without any legal formality such as protest or notice being necessary, and waives all privileges or rights which it may have as Guarantor.

The Guarantee shall continue to be in force and effect after expiry or termination of Agreement, until all duties, obligations and liabilities have been fully discharged; even if Company terminates the Agreement pursuant to its provisions.

Company agrees that the total responsibilities and liabilities of Guarantor shall in no event be beyond those for which Contractor shall assume, be responsible or liable for under the Agreement.

This Guarantee shall be governed by and interpreted in accordance with the laws of England and Wales (without reference to its rules as to conflicts of law), excluding the Contracts (Rights of Third Parties) Act 1999. Any dispute concerning the existence, validity or termination of this Guarantee shall be finally and exclusively settled by arbitration, according to the Hong Kong International Arbitration centre Administered Arbitration Rules, in force as of the date of commencement of any proceeding; the arbitration shall take place in Hong Kong, Special Administrative Region of the People’s Republic of China, in the English language.

This Guarantee shall become effective on [Insert Effective Date of the Agreement].

Signature(s)

Appendix H

1

APPENDIX H

LETTER OF AWARD

Appendix I

1

APPENDIX I

NOTICE OF COMMENCEMENT

Appendix J

1

APPENDIX J

HSE AND SECURITY REQUIREMENT

POLICY AND OBJECTIVES

Contractor and its Personnel shall strictly comply with all relevant Company, statutory and local authorities’ rules, regulations, requirements and procedures, as amended from time to time, that apply to the project and that pertain to health, safety, environmental protection, fire protection and security regulations and shall ensure that, in any event, the standards applied are not less than generally accepted international petroleum industry standards. Protection of health, safety, and the protection of environment is a primary goal of the Contractor and management of Contractor shall take such actions as are reasonable and necessary to achieve such goal and carry out this policy. The following HSE objectives are set by the Company for the Halfaya Project:

Zero injuries to personnel

Zero material or property loss

Zero pollution and damages for environment

An efficient emergency response organization Contractor will continuously evaluate the health, safety and environmental aspects of his services. The goal will be to develop and provide services that have no undue environmental impact and are safe in their intended use, efficient in their consumption of energy and natural resources and can be recycled, reused or disposed of safely. Contractor shall ensure that all materials and Contractor Equipment to be used in the provision of Services comply with all relevant Company, statutory and local authorities’ rules, regulations, requirements and procedures, as amended from time to time, that apply to all Company Facilities and that pertain to health, safety, environmental protection, fire safety and security regulations and shall ensure that the standards applied are no less than the generally accepted international petroleum industry standards. All such material and Contractor Equipment requiring Company certification shall be so certified before it is brought onto Company’s premises or the Well site. Contractor shall be solely responsible for the safety of its Personnel, vehicles and all Contractor Equipment and shall be solely responsible for necessary trainings of its Personnel on safety and safe working practices. Contractor shall ensure that Contractor’s Personnel are adequately trained in safety precautions and safe working practices before they are involved in the Services and that they are competent and qualified to undertake their required duties in a safe and efficient manner.

KEY PERSONNEL STRUCTURE

Contractor shall advise Company on his field organization structure by providing the organogram showing key personnel and their contact details.

RESPONSIBILITY AND ACCOUNTABILITY

Contractor is responsible for his own safety policy, which shall fully integrate with Company Safety Policy and requirements. Contractor is responsible for:

Implementation of management safety program directed at providing a safe work site

Implementing an on-site safety program

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Safety of Contractor and its subcontractor’s personnel

Control of work and health conditions on the rig sites.

Training Contractor’s and its subcontractors’ personnel to ensure safe operations

Providing Contractor personnel with necessary protective and safety equipment and appropriate training in the use of such equipment

Performing proper maintenance of all Contractors’ machinery and equipment and appropriate training in use of such machinery and equipment.

Preparing and ensuring readiness and functionality of the Emergency Contingency Plans for major scenarios such as evacuation, escape and rescue, fire/explosion, toxic material release, loss of well control and weather conditions.

Compliance with all applicable laws and regulations. The Contractor Rig Manager is responsible to communicate and make clear to the rig workforce the Contractors and Company HSE policies, the project expectations, rules and requirements. Line management personnel (both contractor’s and subcontractors’) are expected to demonstrate the highest levels of the active and visible involvement and commitment to HSE and project objectives by:

Applying and communicating the project objectives, expectations, rules and requirements

Empowering employees, giving the authority and responsibility to conduct their operations safely, to be responsible for stopping work when is not safe and make employees accountable

Actively participating in, setting personnel visible and consistent examples

Motivating, recognizing, and reinforcing pro-active / positive HSE behaviors and practices Responsibilities of all personnel:

Each individual has the responsibility for his /her own safety and safety of others therefore must act accordingly.

It will be the responsibility of every employee to follow the HSE rules and procedures

Short Service Employees (SSE) will be managed by both Company and Contractor site representatives to ensure that these employees are properly versed in site HSE rules and policies.

TRAINING AND COMPETENCY ASSURANCE

a. Manning Program

Contractor shall make available sufficient and competent resources for execution of the project activities, the achievement of the HSE and operational objectives, and the supervision of the project personnel and activities to ensure adherence to applicable safety and operational requirements.

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Contractor shall ensure that the personnel required to manage and conduct the operations are competent, timely available and ready for work at the work site or rig when required, and accounted for all times. Contractor shall ensure the implementation of an effective hand over process including the documentation and personal discussion of hand over notes during change. Copies of notes shall be submitted to their respective line management supervisors and shall be filed in project documents repository. This applies for all key project roles including operations, drilling supervisors, rig managers, HSE Site Supervisors, crew changes and other rotational positions or shift changes.

b. Worksite Arrival Program

Contractor shall ensure that new project personnel or any person who has not been at the project for last 90 days including client, subcontractors, and visitors receive induction on the project HSE requirements, rules, expectations, security and emergency procedures, hazards, risk and controls to manage those risks, alarm types and muster points, designated smoking areas, current ongoing operations. Records of attendance of these inductions shall be maintained. Contractor shall establish a process to account for any personnel working in the project sites and shall provide new arrival person with the security and safety induction including a detailed explanation (T Card System or alternative as developed) of this system. Contractor shall maintain a rotation personnel schedule and shall provide notification prior arrival or leaving the worksite the list of personnel arriving or leaving the project site along with the assurance of their training compliance, competency and medical fitness. Contractor shall have an established competency assurance system to ensure his employees are competent to carry out their assigned responsibilities and to effectively handle both routine and abnormal situations. Contractor shall assure that personnel delegated to perform services at Company facilities meet Company criteria, is experienced and fully competent to undertake required tasks. Company reserve the right to request CVs of Contractor’s proposed personnel and reject individual if his experience and competency does not meet Company requirements. Continued safety awareness and training and education shall be an integral part of each employee’s expected job duties. Contractor shall ensure that its employees and subcontractors personnel prior to starting their work are experienced in their job and have received all necessary HSE and job related training required by law, Company and internal contractor’s requirements. Contractor personnel delegated to work shall undergo minimal safety training requirements as outlined below:

Basic Fire Fighting

H2S Awareness Training

SCBA Training

Work at height

Risk Management – Hazard Identification

Personal Protective Equipment

Permit To Work

Lock out / Tag Out

Noise,

COSHH Safety

Radiation General Awareness

Confine Space Entry

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Basic Electric Safety

First Aid Training

Back Safety

Ergonomics

Manual Handling Contractor shall provide their respective training matrix and demonstrate compliance to its requirements and provide as appropriate certifications. Contractor is responsible for providing continued training and keeping an up to date log to illustrate each employee’s proficiencies.

c. Short Service Employee

Contractor shall have implemented a Short Service Employee Program (SSE). The objective of the Short Service Employee Program is to ensure that short service employees are identified, appropriately supervised, trained, mentored and managed in order to prevent accidents such as injury, environmental damage or property damage. Short Service Employee (SSE) Definition – any Contractor or subcontractor personnel with less than six months experience in the same job type or with his/her present employer. A SSE cannot work alone at any time, nor can a department of work crew comprised entirely by the SSE’s. All visitors, regardless of position, will be considered SSE while on the crew and will abide by the SSE Procedure. When arriving on field location, all visitors will be given safety induction. All SSE’s will be visibly identified. Identification in field operations will be formally determined and communicated to all crew members and visitors. Contractor will monitor their employees, including SSE personnel, for HSE awareness. If, at the end of six-month period, an SSE has worked safely and adhered to HSE polices, the SSE’s identification may be removed. For experienced personnel, the six month period may be shorter by mutual agreement of the Company and Contractor site supervisors so long as the employee has demonstrated clear understanding of the workplace hazards and controls present in the workplace. Contractor shall have in place mentoring process, designated to provide guidance and development for SSE personnel.

CONTRACTOR SITE SAFETY REPRESENTATIVE

Contractor shall employ fulltime at least one international and professional safety supervisor, who shall be the advisor to the Contractor Representative and the Company Representative on all safety matters relating to Services. The minimum Company’s requirements for the safety supervisor position are:

Technical Higher Education Degree/Diploma

Knowledge in Health, Safety and Environment and certified by NEBOSH

Minimum 3 years of experience in O&G industry (drilling, workover, services) Contractor shall send their CV prior to mobilization and get the approval from the Company. Contractor’s Safety Supervisor shall meet at least once in every week with the Company Representative, or as and when requested by the Company Representative, to discuss matters of safety and proper minutes shall be kept of such meetings.

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ROUTINE COMMUNICATION

To ensure the timely communication to the appropriate persons and to reduce the risk of miscommunication, Contractor’s Project Manager shall develop and submit to Company the list of Contractor’s key personnel assigned to project and produce the Contractor – Company Communication Matrix addressing the contract and operations communications requirements. Specifically the communication Matrix shall contain the communications and approvals for change of HSE, programs, schedules, equipment modifications and personnel changes. The same way, Contractor shall develop a communication matrix with other contractors present at the well site and his subcontractors to ensure that proper communications are done to the right persons at all time, in the proper format and through the agreed channels. The communication matrix will be reviewed, modified and distributed to appropriate recipients during the project progress and organizational changes. It is the responsibility of the Contractor to maintain this document current and establish with the Company representative the mechanism to incorporate changes required. Contractor shall ensure effective means to communicate effectively and appropriate language to the project personnel HSE and operational issues and shall provide means to ensure that personnel are aware of the operations, hazards and risk of the work and controls necessary to mitigate those hazards; and the emergency response actions in the event of an incident. Contractor shall provide and maintain required communication equipment to ensure that all field operations are communicated to Company.

SAFETY MEETINGS

Contractor shall schedule, arrange, conduct and ensure attendance to regular HSE meetings throughout the project operations. These meetings purpose is to:

Maintain high level of awareness regarding hazard and risk of the operations

Disseminate and ensure that Contractor’s employees are familiar with their specific HSE requirements, procedures, practices and control systems

Communicate lessons learnt, performance results and issues.

a. Company HSE Meetings

Contractor shall participate as required in Company HSE Meetings and shall ensure all discussed points and requirements are addressed and followed in timely and appropriate manner.

b. Rig Site Operational Meetings Contractor’s personnel shall participate and actively contribute to operational meetings held at the rig site by Company as requested. As part of those meetings, HSE issues are also discussed along with associated drilling, completion and well services operational activities.

c. Daily Rig Management Meetings

These meetings are led by the Rig Manager, with attendance of the HSE Supervisor, Maintenance Supervisor, Third Parties’ Supervisors and Camp Boss. These meetings are required to discuss the daily operations requirements and forecast strategies for the subsequent shift and next 48 hours.

d. Pre Job Safety Meetings

Prior to hazardous and/or non - routine operations (e.g. casing running) a Pre Job Safety Meeting shall take placewith all involved personnel, led by the Line Supervisor. This is to ensure the job and its inherent hazards are understood, controls are in place, the tools and work practices are

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appropriate, relevant expertise is available, and permit requirements are understood and verified as being in place.

e. Toolbox Talks

This safety talks are intended to educate workers about creating and maintaining safer work conditions.

f. "On the Spot" Safety Meetings

They are called by a responsible line supervisor to immediately correct any unsafe practice. These meetings should be brief but directed at educating personnel. Note that the instigator must ensure the work area is safe prior to the meeting and that monitoring of the suspended activity is maintained during the meeting.

g. Site Safety Induction All new comers and visitors to location receive a rig induction to ensure they are aware of current operations and hazards that exist at the time of their visit and emergency policies and procedures.

SAFETY OBSERVATION PROGRAM

Employees and all personnel working in the project are empowered and have clear expectations, accountability and authority to take responsible actions to stop and correct unsafe behaviours and/or operations, as well as to pro-actively recognize and reinforce positive safety behaviours. Contractor shall ensure the effective implementation of the Observation Program (STOP).

RISK MANAGEMENT

Contractor shall implement the processes and tools to ensure that all work related hazards and potentially adverse environmental aspects are identified, the impact and consequences analyses, the risk and/or impact significance assessed and evaluated, controls defined and implemented. Contractor shall conduct the risk assessment of identified hazards for entire scope of work activities, including mobilization assuring all risks are mitigated to As Low As Reasonably Practicable (ALARP). It is mandatory to conduct risk assessment prior the initiation of all non-routine activities. Contractor shall document all risk assessment and produce risk register that shall be used for communication, tracking, monitoring and review.

a. Hazard Identification and Worksite Hazard Management

Contractor shall use a variety of tools to aid in the hazard identification. Among those are an observation program, Planning Hazard Identification and program review, road and site assessment, mobilization and demobilization planning, hazard hunt, walkthrough, analysis of inspections, job safety analysis.

b. Job Safety Analysis (JSA) and Work Methods (WM)

Contractor shall ensure that Job Safety Analysis and Work Methods are systematically produced and implemented at worksite. JSA is mandatory for each medium and high risk activities, execution of non-routine activities and for simultaneous operations including maintenance and man riding activities. Job Safety Analysis (JSA) will include environmental aspects to make sure that any harm to the environment will be prevented. Contractor shall review and discuss the work, JSA and WM with other contractors present at the drilling site and those, direct involved in the activity making sure to complement it with real time

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assessment of the area activities, circumstances and conditions of operation prior initiation of all new activities.

c. Hazard Communication and Awareness

Communication methods with the purpose to maintain a high level of awareness about the hazards, risks, controls and the appropriate methods shall include: tour changes, safety meetings, toolbox talks, safety alerts, induction program, safety meetings, hazard observation program, hazardous materials communications, material safety data sheets, signs posted, chemicals containers identification and hazard warning labels etc.

d. Risk Mitigation and Controls

Contractor shall maintain a risk register defining actions and controls ownership to ensure proper tracking and implementation of the controls.

EMERGENCY RESPONSE

Contractor shall have in place an Emergency Response Plan (ERP), describing in detail the communication system, emergency response operation, duties, and responsibilities of personnel and action to be taken in the event of an emergency. Only trained personnel are in charge of the situation and ensure that all site personnel are accounted for. A copy of this document shall be forwarded to Company HSE together with list of all emergency equipment for approval prior to commencement of the performance of work/Service. Contractor shall provide on his cost adequate first aid, firefighting, lifesaving and other required safety equipment and shall maintain this equipment in a professional manner and where appropriate re-certify as dictated by legal and industry standards. Contractor shall keep up to date records of all said equipment, including equipment location plans. Emergency Response Plan shall cover emergencies of all levels of severity that cause or may cause hazard for people’s health and life, environment, assets/production, social order and the Contractor/Company reputation,including:

Fire

Explosion

H2S Release

Oil Spillage

Vehicle Incident

Well Control Scenarios

Exposure to Ionizing Radiation

Natural Disasters (sandstorm, flood, natural calamity, earthquake, pandemic diseases)

Property Damage

Kidnap

War Crises

Civil Unrest

Terrorist Attacks

Loss of Electricity

Water Supply

Loss of Communications

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The list is not exhaustive and shall be made specific to country and environment locations.

EMERGENCY DRILLS

Contractor shall plan and conduct simulated emergency drills and/or exercises at the worksites including offices and camps, as per plan to assess the adequacy and to demonstrate its ability to respond to different emergencies, train the personnel in responding and handling emergencies and test the equipment required to respond in case of emergency. The drill plan shall include following exercises:

Medevac Drill

Rig Fire Drill

Kick/Shut/Pit Drill

Stripping Drill

H2S Drill Including Breathing Apparatus

Camp/Office Fire Drill

Full Emergency Exercise Including Camp/Rig Abandonment

Security Drill It shall be the Contractor’s Project Manager Responsibility with the support of the Project HSE Leader to develop, maintain the Emergency Drills and exercises plan.

FIRE PROTECTION / PREVENTION / DETECTION AND FIRE FIGHTING.

To minimize the risk of fire at the well site the Contractor shall implement its Fire Prevention Program including but not limited to the following: Prevention

Fire Risk Assessment

Hazardous Area Classification

Handling and Storage of Flammable Substances

Training Programme

Fire and Evacuation Drills

Inspections and Audits

Housekeeping and Procedures Protection

Fixed Fire Detection Systems

Manual Fire Detection

Personnel Response To Fire Alarm Intervention

Emergency Response Plan

Fixed Fire Fighting Equipment

Portable Fire Fighting Equipment Contractor shall ensure the availability of person responsible for the operation, maintenance and training of its personnel in the use of fire control and safety equipment listed:

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Contractor shall implement hazard area classification, designate smoking and non-smoking areas and shall post visible and readable signs in English, Chinese and Arabic language.

Contractor shall enforce the implementation of the PTW System for all hot work activities (welding, grinding, cutting, burning, etc.) and assign a firewatcher for these operations. No operation involving any of activities of this nature shall start without the Permit to Work duly signed and approved by Rig Manager,

Contractor shall ensure that fire and gas detection systems are installed and operable at the operation site and they shall be integrated with the drilling unit alarm system. The system shall be designed to trigger a warning bell and/or light in case of fire and/or gas detected on any auxiliary equipment or in the rig itself. The same shall apply for accommodation area, smoke detectors and fire detectors shall be wired up to central alarm system.

Contractor shall implement a systematic inspection and testing of these systems, all records shall kept in recording book as per Company Fire Safety Procedure,

Contractor shall enforce all procedures to ensure safe fueling and fuel operations to prevent spills, overflow, leaks, electric sparks, risk caused by simultaneous operations, etc. Fuel delivery, offloading, general fuel filling instructions shall be given to fuel delivering, subcontractor,

Contractor shall enforce a safe chemical storage procedures, including segregation, labeling, isolation, ventilation, distances, bounding containment and other required controls,

Contractor shall enforce the use of explosion proof electrical devices (lights, electric outlets, cables connectors) in potentially explosive areas.

Contractor shall ensure that all areas at all times are clean, ordered, free of potential ignitable materials, trash, rags, etc. and shall enforce safe storage procedures,

Contractor shall implement a procedure to discard in safe fire retardant or well-ventilated containers any materials such as sacks, rags, domestic trash, etc. thus preventing spontaneous combustion,

Contractor shall adhere and implement the routine electrical inspections of the electrical circuits and devices to ensure proper grounding and functionality and fix any problem immediately as identified,

Contractor shall ensure the safe location of the fuel storage tanks in compliance with the distance requirements. All tanks should be labeled as to contents.

FIRST AID ARRANGEMENTS

Contractor is responsible to provide 24h medical services to support his site operations. The scale and size of this service should be in accordance to the labor populations and as per local labor law and regulations as well as international standards. To manage a medical emergency the Contractor shall develop site specific Medical Emergency Response Plan (MERP), taking into account the potential for individual and multiple causalities, describing the response to various medical emergency scenarios based on the health risk and impact assessment, and utilizing available resources(communication, first responders,train competent health-care professionals, adequate means of transportations, adequate medical structure).The

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MERP shall consider specific needs of the work activities and the general situation of the country in which these activities are carried out, as well as any collaboration with local authorities. Contractor shall ensure that the response time for provision of basic life support and immediate aid should be less than 4 minutes, and for advanced life support less than 20 min. Access the more advanced level health-care units should be based on the result of the site-specific health risk assessment, considering that timings shall be as short as reasonably practicable. Recommendation as per OGP Guide 343 Managing Health for Field Operations in Oil and Gas Activities. Contractor shall provide first aid training and related wellness awareness to his employees on continues basis. Contractor shall ensure that adequate number of equipment andindividuals trained in first aid and cardiopulmonary resuscitation (CPR) techniques shall be available at the worksite to render the aidif necessary on both day and night operations. Those individuals should be trained using internationally recognized and approved training centers. First aid kits shall be available at worksite. Kits shall contain appropriate materials for the potential injuries and shall be inspected at frequent intervals, replenished as necessary and be immediately available at all times. Where the eye or body of personnel may be exposed to hazardous materials i.e. all chemical mixing stations, mud tank, premix tank, rig floor, dog house,eyewash and shower equipment for emergency use shall be provided in immediate location.

PROJECT GENERAL SAFETY RULES

a. Personal Protective Equipment (PPE)

For Services that are to be provided at the Company Facilities, Contractor shall furnish, at no cost to Company, appropriate standard of Personal Protective Equipment. The PPE standard shall be aligned with Company Personal Protective Equipment Policy. Provision of PPE must always be considered to be a last resort, as per hierarchy of hazard control, when it is impractical to reduce the risk to acceptable level by other means, such as engineering controls and safe system of work. Only internationally approved i.e. ANSI, CE marked or BS kite mark PPE shall be used. Following basic rules concerning PPE shallbe strictly obeyed by Contractor:

Additional PPE requirements will be established through Job Safety Analysis and Risk Assessments

No one shall be allowed to work without PPE that is required and specified for areas, as determined by risk assessment and indicated by signage

All provided PPE shall be appropriate for the work

Personnel shall inspect daily their PPE and shall report any defects

Worn out or dysfunctional PPE will be exchanged for new items

Coveralls must have visible reflective strips

Lace-up safety boots will be worn on operations areas where deemed necessary by risk assessment and management of change requirements

Working clothes and shoes shall be adequate to the seasonal weather conditions.

It is prohibited to use of loose or floppy clothing while working around rotating or moving equipment

Wearing of rings, neck chains, or loose jewelry is prohibited while at work

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It is prohibited to possess /use mobile phones and lighters on the rig site beyond the non PPE mandatory areas.

No weapon allowed on Company’s premises.

b. Substance Abuse

Contractor shall maintain strict discipline and good order among its Personnel and Subcontractors’ personnel and will not permit any of them to engage in any activities that might, in the reasonable opinion of Contractor or Company be contrary or detrimental to the performance of the services or the interests of Company. Contractor is responsible for ensuring that its personnel as well as subcontractors’ personnel are not using, in possession of or under the influence of any alcohol, prohibited drug or substance unless legally prescribed by a medical practitioner, while at the well site or other Company sponsored premisesor at the Contractor Base, or during travel in Company sponsored transport or during the performance of the Services. Company reserves the right to conduct searches on possession of drug and/or alcohol to the person, vehicles, and other property of Contractor, its Personnel or Subcontractors while on premises owned or controlled by Company. Any person who refuses to cooperate with any such search shall be removed from the premises and not permitted to return.

c. Smoking and Hygiene and Welfare

Contactor shall ensure his employees and subcontractors will adhere to Company’s smoking policy. Smoking will only be permitted on Company’s well site in dedicated and marked areas.

d. Manual Handling

When the manual handling of hazardous equipment or material or oversized equipment is required, Contractor will ensure that the proper techniques are in place and that only competent persons are handling any hazardous material. Direct supervision shall be enforced by Contractor site representatives and JSA, PTW, MSDS sheets and toolbox talk enforced and documented. During the handling of flammable goods ensure that all crews suspend any other hot work on location until the flammable liquids are in their intended destination and secured properly.

e. Control of Substances Hazardous to Health (COSHH)

Contractor shall submit,at least two week in advance prior mobilization date to Company the list of chemicals, amounts intended to use and store, Material Safety Data Sheets of each Hazardous Material, he requires bringingto any Company Premises, the volumes of waste generated, the recycling / re-use method and if required to dispose the appropriate mechanism. Contractor shall also keep copies of MSDS of all hazardous materials, both in the storage area and inside the Contractor office.Electronic version of MSDS shall also be available at well locations. MSDS shall be available in English, Chinese and Arabic language. Contractor shall conduct a Chemical Risk Assessment to identify risks connected with handling, storing, transporting of all substances hazardous to health and safety. Contractor will ensure that all necessary controls measures identified are in place according to chemical risk assessments. All chemicals used during contractor’s operations at Company locations will be registered and labeled according to REACH and CPL regulations. Shipment of regulated hazardous materials to Company are consigned to Company’s destination in full compliance with shipper and carrier responsibilities as stipulated by the applicable international, national, provincial and local laws, regulations and practices, relating to packaging, documentation, handling, use, storage and disposal. Transporters of these goods should be suitably qualified in

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hazardous goods transportation and all transportation vehicles should have relevant signage. It is also their responsibility to ensure that cargo manifest and MSDS are available with goods.

f. Noise and Vibration

Contractor shall have hearing conservation program in place including noise baseline survey conducted for Contractor’sall equipment and identification of all areas at well site where noise is 85 dB and above. Hearing conservation program must include employee training, noise reduction through administrative and engineering controls, and noise reduction through the use of personal protective equipment (hearing protectors). Contractor’s personnel shall be supplied with appropriate Personal Protective Equipment in order to minimize the risk of injury or ill health from exposure to noise levels on all Company operated assets and will wear them in the high noise areas as identified by warning sings placed in the appropriate locations.

g. Ionizing / Non IonizingRadiation and Explosives

Contractor shall manage the administration, training, facilities, storage, transportation, waste, emergency and reporting, security and well site operations of radioactive and explosives materials for the project as per local regulations, international and Company’s standards. Contractor shall obtain and maintain all required authorizations, approvals, permits, licenses from any and all governmental or regulatory body having jurisdiction over the radioactive sources and explosives. Contractor shall submit to Company all relevant required documentation relevant to the radioactive sources and explosives.

h. Hydrogen Sulphide - H2S

Contractor shall establish H2S Contingency Plan aligned with Company requirements. Contractor shall ensure to provide a rig with adequate fixed monitoring and alarm system for detection of H2S, as per industry standards, shall have available certified breathing apparatus (15 minutes escape sets) to all personnel and shall provide portable H2S detection instruments for use to all personnel at site. H2S Contingency plan includes the following aspects: exposure limits and its hazards, detection and measurement of H2S gas and all related actions as below:

Precautionary measures to avoid or reducing the gas exposure to the crew

Emergency measures to counter act in the event of an H2S scenario at the rig site

Availability of necessary quantities of breathing apparatus and supplied air breathing systems at various locations of the rig. Also necessary training of personnel to don the BAs and SCBAs.

Provide training for Medics and crew (rescue breathing /CPR) for providing First Aid treatment to counter act H2S victims.

Contractor shall ensure that all its personnel and of the Subcontractors potentially exposed to H2S are trained as per requirements in the basic fundamentals of hydrogen sulfide safety, in the emergency response, rescue, maintenance and use of the respiratory protection equipment and shall maintain proof of competence for all workers. In addition, ensures the implementation of the emergency drills plan to ensure effective response when an actual life threatening emergency arises. Facial hair (beard or long sideburns) is not permitted,nor do glasses that could interfere with the sealing of the face mask, unless special facemasks have been provided that permit the wearing of spectacles. Contact lenses shall not be worn with breathing apparatus. All personnel shall be informed by Contractor of the hazard relating to hydrogen sulfide and shall receive instruction in the correct use of any personal safety equipment, H2S detectors and warning system associated with.

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Contractor is responsible for providing, placing, maintaining, inspecting, testing, certifying the rig H2S equipment and ensuring it is fully operational at all times. Contractor shall make available H2S and other safety equipment inventory list with serial numbers, equipment lay out diagrams, maintenance, inspections, certifications program and records.

i. Temporary Pipework

All Temporary Pipe work equipment for drilling, completion and well service operations shall be: Inspected and tested prior to use and installation

Have servicing and maintenance programs implemented

Service designs and programs validated for adequacy

Properly secured by restraint systems (soft or hard) and anchorage if required to prevent injury resulting from sudden failure and disconnection of the line.

j. Maintenance Management

Contractor shall ensure that all Contractor Equipment, any facilities and other items in any way associated with this Agreement or the Services are maintained in a safe, sound and proper condition, and comply with Applicable Laws and Company’s requirements. Where Contractor, acting reasonably, considers that any equipment (including Contractor Equipment), Personnel or work conditions are not safe or in compliance with Company’s rules and regulations, it shall notify Company immediately and Company and Contractor shall meet and agree on what action, if any, is required and whether any Services should be suspended. The Contractor Representative shall, prior to commencing the Services and on a regular basis during the performance of the Services, inspect Well Sites to identify any defects, potential sources of injury or dangerous conditions and operations. Contractor shall alert its Personnel and the Company Representative of such defects or conditions and use its best endeavors to rectify them immediately. All equipment introduced to the site by Contractor, its Subcontractor or Third Parties shall as a minimum be inspected by Company prior to service. At minimum best practice standards for integrity, basic surface safety equipment shall be in place to the operation of the equipment on the site. All major items of Contractor equipment shall be provided with a logbook/equipment records card (paper or electric) that contains:

Current copy of registration or certificate where applicable

Operation manual

Any relevant checklist

Maintenance records for prior history and provision for future entries

Mobilization inspection checklist completed by an appropriately qualified or competent person.

k. Lifting Operations

If the use of cranes is required on location, Contractor will ensure that the personnel are trained and certified lifting equipment is used. Contractor shall ensure that proper safety zones and tag lines are in place prior to all lifts and communication to all workers is communicated through the use of JSA and toolbox talks. Following basic safety rules shall apply for all lifting operations at Company locations:

All lifting operations shall be properly planned,

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Specific Risk assessment shall be conducted, including identification of overhead,underground and weather hazards

Ensure sufficient ground conditions

Only competent and qualified persons shall perform lifting operations.

Permit to Work shall be issued for all critical lifts and in dangerous areas

Proper selection of right lifting gear and accessories

All lifting operations done with respect to crane manufacturer manual

Cane and all lifting appliances must be certified with valid technical inspection report

Communication between crane operator and signaller maintained at all times

Deployment of tag lines

Lifting area restricted for authorized personnel only

Trial lift shall be conducted prior to ensure lift has been properly arranged.

l. Work At Height (WAH)

All working at height operations on Company sites shall be in compliance with Company requirements. Contractor shall ensure that all its personnel who perform work at height operations undergone required medical examination and are declared to be fit. Tasks must be risked assessed prior to commencing the operation. Unless the outcome of the risk assessment establishes an alternative safe working practice, full body harness with shock absorbing lanyards shall be providedfor all persons exposed to fall of 2 meters or grater.The provision of fall below 2 m will depend on the outcome of the risk assessment. However, for all work activates conducted above water, irrespective of height, fall protection shall be provided. Fall protection devices will be maintained free of defects. Working at height operations will be authorized and controlled through the Contractor’s Permit to Work System. All work conducted at height where there is a risk of fall shall require fall protection. Contractor shall ensure that his employees required to work at height are trained in safe work at height practices. Contractor shall ensure that fall restraint and fall protection equipment is provided for all work at height and that this equipment is certified and in safe, operable condition. Contractor shall comply with the following safe work at height requirements: Risks and hazards associated with work at height must be identified and controlled via a Job

Safety Analysis prior to the commencement of any work at height;

Collective prevention measures will be considered prior to personal protective equipment

Fall restraint and fall protection equipment is provided and must be used at all times;

All personnel responsible for, involved in or supervising working at height must be trained in work at height safety procedures;

Fall protection equipment must be inspected for wear and damage and have a current inspection tag from and authorized inspector prior to use;

Areas where work at height is undertaken shall be suitably cordoned and appropriate signage installed to eliminate the risk of injury from dropped objects. Contractor must ensure that risks associated with dropped objects while working at height with hand tools and equipment is controlled at all times. Ensure that work procedures/standing instructions or Job Safety Analysis are developed to control work/personnel movement in the drop zone below

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Before any WAH activities a rescue plan shall be developed and implemented.

a. Permit ToWork System (PTW)

Contractor shall ensure implementation of Permit to Work System to ensure hazards and risk associated with work activities are identified and controlled and that the PTW system meets Company standards and requirements.Critical operations shall include the use of one or more permits types:

Hot work

Simultaneous operations

Working at height

Use of man basked attached to crane

Energy isolation

Pressure testing

Confined space entry

Excavation and trenching

Handling of radioactive and explosive materials Contractor shall provide training on Permit to Work Procedure to his subcontractors and other service companies present at the well site. It is mandatory that all operations included in the PTW are approved, and the permit is signed by Contractor Rig Manager and Company site representative.

b. Energy Isolation

For the project, Contractor shall ensure the implementation of the processes to identify and control all energy sources during service and maintenance of machines and equipment in which the unexpected energy, start up, or release of energy could result in an injury. Contractor shall implement at the rig site all required controls, have required devices and have identified and given clear authority to the persons responsible for lock out / tag out of energy sources.

c. Electrical Safety

Contractor shall ensure that all electrical systems at the drilling site are designed and constructed in accordance with the requirements of national regulations and international standards to prevent any incident involving electricity, with consideration of:

The suitability of the equipment during the selection process

The strength and capability of the equipment

The manufacturer’s guidance of the equipment

Load and fault conditions

The need for suitable electrical protective devices

The environmental conditions and mechanical strength, protection required Contractor shall employ competed and qualified personnel with electrical knowledge to work on electrical systems. Contractor shall perform commissioning and testing of electrical systems before putting into a service and shall have in place a maintenance program. The frequency of the inspection and maintenance shall be determined by risk assessment, industry standards and manufacturers’ manuals. Records of maintenance of electrical systems, including commissioning and tests shall be kept.

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All works on electrical system must only be done on isolated systems unless there is no other reasonably practicable method available, this includes:

Live testing

Diagnostic testing

Testing of the circuits for certification purposes

Testing of existing circuits as a part of maintenance and inspection regime

Proving isolation

Commissioning and monitoring

d. Confined Space Entry

Contractor shall avoid entry into confined space to carry any work, during operations on Company locations. If confined space entry is unavoidable, contractor is obligated to conduct specific risk assessment and apply a safe system of work to ensure that risk to his personnel will be as low as reasonably practicable. Contractor is responsible for the development of a specific rescue plan for each confine space entry work, ensuring emergency equipment personnel and communications are established before commencement of the work in confine space.

e. Motor Vehicle Safety

Contractor shall develop and implement a Vehicle Safety policy which shall be compliant with company requirements. When developing the Policy, the Contractor shall take the following aspects in to account: Hazard assessment related to work location and industry Journey Management Drivers’ fitness for duty Local rules and regulations Driving licenses required as per local driving regulations Training Requirements Monitoring Drivers performance Vehicle Inspection and Maintenance Program Vehicle Safety Equipment Speed Limits Hazardous Locations Only armored vehicles must be used by all expats. Rollover protection fitted, except armored vehicles and minibuses. Contractor shall ensure that its employees and subcontractors are conversant with and at all times strictly comply with this policy. The Policy shall be communicated through induction program, and through the driver’s training program. Contractor shall implement specific processes, controls and maintain records to provide evidence of compliance with the requirements of the policy. Company strictly forbids operating a vehicle under influence of alcohol, drugs, narcotics, or medication that could impact on driving ability and shall implement a testing program for drivers. Drivers shall not be allowed to neither initiate nor answer a mobile phone call when driving vehicle (this includes hands-free devices).

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i. Vehicle Requirements Contractor shall assure that vehicles utilized in the project are fit for purpose based on its established assessment of usage and comply with all local rules and requirements and international standards. In addition to above:

Cabs of the vehicles to be fitted with a serviceable air conditioning/heating system that is able to maintain an incab temperature range of 5o to 30o under all local climatic and driving conditions.

In vehicle monitoring system shall be mounted in all vehicles, All vehicles shall be equipped with head rest, air bags, side impact protection, side mirrors, minimum

1kg DCP fire extinguisher, first aid kit and flashlight/torch, seatbelts for all passengers, anti-lock brakes, suitable spare wheel, warning triangle,

Additionally to above point, the following equipment shall be installed on heavy duty vehicles: under-run protection, single-piece rims as available

Reversing alarm system Run flat tires Wheel chocks (on passenger side) Where risk assessment demonstrates that the risk of rollover due to terrain, vehicle type or work

condition are higher than normal, a properly engineered rollover protection device must be installed (internally or externally)

Loose items which might cause injury in the event of an incident shall not be carried in the passenger compartment of any vehicle. Any vehicle with non-segregated storage shall be equipped with a cargo net or equivalent to separate the storage area from passenger area.

Any heavy equipment carried inside the cab of pick-up truck or cargo vehicle, such as jacks, fire extinguishers, etc. shall be firmly secured in such a way that they will not become a hazard in a crash.

All loads transported in pick-up (or utility) truck or other cargo vehicle shall be securely fastened, and shall not exceed the manufacturer’s specification and legal limits for the vehicle.

f. Simultaneous Operations (SIMOPS)

Contractor shall develop and implement SIMOPS procedure to control site operations. This procedure is subjected to Company approval and shall be followed in the event of two or more separate operations are taking place on the same pad at the same time. Under this procedure, SIMOPS includes:

Oil well drilling

Work over activities

Rig-less work over(s)

Construction activities

Painting/sand blasting

Other non –routine maintenance work that is to be performed in or close to facilities that are in hydrocarbon service

Contractor shall ensure there is no Simultaneous Operations Conflicts before commencement of works.

g. Environment Aspects

Contractor shall develop Environmental Management Plan (EMP) and minimize operational impact on the environment. Contractor shall:

Conduct environmental identification of risks associated with project.

Identify the legal and other requirements

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Define environmental objectives and targets in agreement with Company

Ensure of availability of resources for implementation

Define roles and responsibilities, training, documentation, operational controls and emergency preparedness and response

All mandated environmental regulations shall be enforced and audited regularly

Measure, monitor and evaluate the implementation of the environmental plan, performance, ensure the implementation of corrective actions as required and shall maintain records and information management

Conduct environmental audits and reviews and shall drive improvement processes

The Contractor shall implement an environmental management system in accordance with ISO14001:2004; and this system shall be used to manage the activities of the contractor and its sub-contractors so as to minimise any environmental impacts.

Prior to commencement of work/services, the Contractor shall obtain approval of its Environmental Management Plan from PetroChina's Environmental Section; the Plan shall include the identification of the significant environmental impacts of the work/services together with proposed mitigation and control methods.

The Contractor shall be responsible for the collection and disposal of all waste generated as a result of the contract, and these waste shall be disposed of in accordance with Iraqi legal requirements.

In order to prevent or minimize environmental impacts resulting from drilling operations at rig sites, Contractor shall ensure the implementation of procedures and methods aiming to prevent pollution by confining the movement of any contamination of the ground to a limited area and to minimizing downward migration. With attention to site design and construction, housekeeping during the operation and reinstatement afterwards it shall be possible to leave the site in a state similar to that found and without any concerns over future pollution from the wastes left behind. Contractor shall identify key personnel and shall provide them environmental management training and maintain appropriate record of such training. This training shall be reflected in Contractor’s training matrix.

i. Air Contractor shall identify all sources of emission to air (stationary and mobile) and shall keep records of all emissions in accordance with the defined Company’s requirements and shall monitor and report the noise level on work site. Contractor shall minimize atmospheric emissions and operate within emission limits set by the local agencies in relation to the project permits.

ii. Water Contractor shall not discharge any waste materials or effluents to surface or shallow waters. Contractor’s facilities shall have an effluent treatment system; this shall be maintained and used for the treatment of domestic sewage waste in compliance with local standards and requirements. Drainage shall be prevented from entering the surface water.

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Contractor shall ensure that all hydrocarbons and chemicals are properly stored and portable containers are secured to prevent leakage or spill. All equipment containing chemicals, refined hydrocarbons or other pollutants shall be provided with a drip pan or other method of containment. Contractor shall take necessary precaution to prevent accidental spillage of fuel and chemicals and shall nominate and suitable emergency response personnel and equipment to respond to spills if they occur. Contractor shall ensure that waste mud pit and sewage pit shall be lined to contain all containments and the implementation of Company waste management requirements for storing fuel and lubes, possible oil storage, tubular washing, chemical storage, drilling waste, well cellar decontamination and site reinstatement. Contractor shall cooperate with Company in compilation of all necessary data and documentation, for the certain construction and other operations that require Environmental Impact Assessment, approvals and permits from authorities. Contractor shall confirm that its activities are covered by the necessary approvals and bring the attention of the Company to any deficits in timely fashion.

iii. Land Contractor shall ensure that all petroleum or chemicals storage tanks are provided with spill containment and leak detection devices to avoid the potential for release to the surrounding environment.

iv. Oil Spill Contingency Planning. Contractor shall have an oil cleanup plan for his sites in place, which should describe in detail means of disposal. This shall include provision of ready to use oil spill cleanup equipment. Contractor shall ensure the availability of sufficient and suitable emergency response personnel and equipment to respond to spills if they occur. Contractor shall maintain records of all spills of hazardous substances and hydrocarbons and report spillages in accordance with regulatory, Company and internal requirements.

v. Site Reinstatement and Abandonment Contractor shall implement the remediation actions of land, soil, water which may be necessary as a result of its operations to acceptable levels. This shall be the subject to Company approval prior to any operations commencement.

vi. Environmental Monitoring and Reporting Contractor shall monitor the implementation of the environmental plan and the environmental performance to ensure environmental compliance, and shall reportto Companyon regular basis, as instructed by Company.

h. Waste Management

Contractor shall develop and manage its Waste Management Plan aligned to Company requirements. Contractor shall:

Eliminate pollution to the air, ground and water reservoirs.

Identify all waste streams and implement necessary steps to minimize quantity of waste

Estimate waste volumes and provide the recycle/reuse methods, treatment requirements, and/or disposal methods and vendors.

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Comply with all local laws and regulation concerning the production, carrying, keeping, treating, and/or disposal of waste.

Obtain required permits from concerned authorities.

Have a contract with approved and licensed company for waste disposal.

Keep records of all project generated waste in accordance with Company requirements

Implement procedures for control of treatment and disposal of all effluents arising from the project facilities in compliance with Company requirements and local legislations

Mutually agree with the Company aprocess to dispose of non-hazardous waste, when no regulatory disposal requirements exist.

Implement a procedure to collect, segregate and classify as hazardous and no hazardous waste for proper temporary storage. All areas shall be kept clean and free from improper waste management.

Sanitary facilities shall be provided at the well sites and at the camp. These shall be sized to suit the maximum number of personnel expected on location. Sanitary wastes from accommodation shall be disposed of as per allowable infrastructure preferable to an approved sewage plant.

In the performance of the scope of work, Contractor shall at all times act to minimize the quantity of waste and shall observe and comply with all laws and regulations concerning the production, carrying , keeping, treating and/or disposal of waste.

MANAGEMENT OF CHANGE

Contractor is responsible for establishing,aligned with The Company Management of Change Process to ensure that changes are identified, risks assessed and controlled to acceptable levels, reviewed, approved, and communicated. The scope of changes considered includes but is not limited to:

Operational Changes

Operational Infrastructure Changes

Process Control changes

Equipment changes

Non-Conformance or Corrective Action

Equipment Changes

Personnel Changes

Organization and structure changes (including staffing rotations)

Performance variances. In the event that any changes are made to Contractor’s Management System that affect any level of Company, Contractor must submit these changes to Company for review,prior to the revision being implemented. The following areas should be addressed to manage change satisfactorily but not limited to:

Review process to be changed and determine the effect of the change on those that have input into the process or are a customer of the process;

Development of a detailed plan that addresses the following:

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- Definition of resources needed to carry out the planned change; - Definition roles and responsibilities and delegate tasks to those accountable for

carrying out the planned change; - Identification of performance measure for determining if the planned change has

been implemented and is effective;

Communicate the plan to personnel and other affected groups or individuals including

necessary training for those personnel whose roles have changed;

Communicate and coordinate plans with internal and external groups involved in

implementing the change.

Gather information during the change in order to monitor progress against plans and

performance criteria and to allow for meaningful review;

Review HS&E significant aspects to eliminate or manage potential adverse impacts in order

to optimize resources.

A management of change system is a collection of formal, documented procedures that defines how the process of changes takes placeon the rig site, within a project, or across the company as a whole.

All changes shall be recorded in dedicated register and documentation filed including any supporting documents.

SELECTION AND CONTROL OF THIRD PARTIES.

Contractor shall have an approved by Company contractors’ selection and control system. For the purpose of the Company Health, Safety and Environment management process, Contractor’s subcontractors are considered as part of Contractor workforce. Therefore it is responsibility ofthe Contractor to ensure that, as required, these subcontractors meet Company HSEMS. Subcontractors working for Contractor shall maintain an effective safety program that includes:

Management accountability for safety

Safety orientation and training for new or experienced employees

Documentation of safety trainings and safety awareness efforts

Documented safety performance reporting and monitoring

Assigned safety support responsibilities

Incident investigation and reporting to determine the “Root Cause”

Implementation and re-enforcement of appropriate resources to support the safety program

Compliance with all applicable laws, ordinances, rules and regulations

A written and enforced drug and alcohol policy

Reinforcement of employee’s authority to stop work when hazard arise

Compliance with Contractor Health, Safety and Environment Policy and Procedures.

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Contractor shall perform periodical assessments of his subcontractors to ensure theirperformance end continuous improvement.

WELL CONTROL

Contractor shall develop a Well Control Prevention and Contingency Plan. Contractor shall ensure that the key site personnel received Well Control Training certified by IADC or IWCF. Contractor shall ensure that current certification and operational readiness of all well control equipment through the duration of the project. Allwell control related Procedures and Plans shall be subjected to Company approval before commencement or performance of work/service. Drilling shall stop whenever problems are experienced with any of the BOP components or BOP control system. Company is responsible for development and implementation of Blowout Contingency Plan (BOCP).

HEALTH SURVEILLANCE

Contractor shall, at no cost to Company, be responsible for the medical welfare of its own and its Subcontractor’s personnel and shall take care of arrangements for medical attendance treatment or hospitalization if and when necessary and will arrange suitable insurance coverage for such contingencies. In cases of emergencythe Company may make or provide with the necessary emergency arrangements, the costs of which shall be reimbursed to Company by Contractor. Contractor is liable and responsible for providing health surveillance (regular health checks) for all Contractor’s employees and maintaining health records for employees. A medical certificate to state fitness to work will be issued by Contractor’s company doctor for all personnel working on Company well sites. This will be subjected to verification by Company on demand. Contractor shall acknowledge the health condition of each employee and shall ensure that only medically fit employees, without any chronic diseases, perform work on remote sites operations.

HEALTH AND SAFETY PERFORMANCE TARGETS

Company will advise Contractor of how they intend to measure safety, health and environmental performance and will send appropriate forms with HSE indicators to be monitored by Contractor during its activities at Company facilities. It shall be the responsibility of Contractor to monitor performance against the set indicators and report it through given forms on daily, weekly and monthly basis.

DROPPED OBJECTS PREVENTION

Contractor shall implement Dropped Objects Prevention Policy to set out mandatory requirements to prevent harm to personnel and damage to equipment from dropped objects in the execution of contracted services activities. Contractor’s Dropped Object Prevention Policy shall include all operations, mobilization and transportation of involved equipment. Contractor’s dropped Object Prevention Policy will be subject to Company approval. Dropped Objects Policy shall include:

Systematic dropped objects Inspection program

Work site hazard management for dropped objects

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Audit to check compliance with Drops Object Prevention Program Dropped objects are considered to be anything that can fall from height. Items left in the derrick can be vibrated from the resting positions and fall to the rig floor. Additionally fixed objects can over time be considered a dropped object. Contractor shall ensure that all subcontractors providing equipment or personnel at the worksites is fully aware of the program, actively participate in the Worksite Hazard Management for dropped objects and as required take the corrective actions resulting from any of the inspections / audits findings.

HOUSEKEEPING

All Personnel at Company well sites are jointly responsible for maintaining a high standard of general housekeeping around all well sites. Contractor’s Supervisors will ensure that there are persons clearly identified for maintaining a high standard of housekeeping at well sites. If the Contractor performance regarding housekeeping will not be satisfactory, Company reserve the rights to use their own resources and charge the cost back to Contractor.

ACCIDENT INCIDENT NOTIFICATION/INVESTIGATION

Contractor shall have an accident and incident reporting and investigation procedurecompatible with Company Accident Reporting Proceduresand maintainrecords of any accident/incidentoccurred. Otherwise, Contractor shall adopt the current Company Accident Reporting Procedures. Following incident classification shall apply for the project:

First Aid

Medical Treatment Case

Restricted Work Case

Lost Time Incident

Fatality

Occupational Illness

Near Miss

Fire Incident

Property Damage

Vehicle Incident

Security Incident

Environmental Damage Contractor requirement is to report all accidents and incidents no matter how trivial they are. Contractor shall ensure his employees are aware of this requirement. Verbal notification shall be done immediately after incident occurred. The verbal notification shall always be supported by written statement submitted to Company no later than one hour from incident occurrence time. Contractor shall be responsible to investigate, in a professional manner, all accidents that occur during the performance of the Work/Service. Investigation report shall be made available to the Company within twenty four (24) hours of its occurrence. Contractor shall also be responsible to assist Company in accident investigation if required. Company reserves the right to call for a joint investigation with Contractor if necessary.

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SAFETY AND WELLBEING AT CAMP

Contractor shall implement procedures and controls to ensure wellbeing and minimize the risk of injury, illness of personnel while in the camps. Following shall be taken in to account when developing safety and wellbeing procedures at camp:

Catering

Wellbeing Program. Nutrition, exercise, entertainment

Religion Practices

Stress Management Education

Violence in the Worksite

Potable and Drinking Water

Exposure Control Plan and Procedures for Bio-hazards (sharps), Hygiene and infectious diseases, climate

Garbage and Waste storage, disposal procedures and facilities

Emergency Preparedness and Emergency Response Plan, Evacuation Plan integrated with Project ERP

Carbon Monoxide detectors required near all carbon producing appliances

Fire and smoke detectors and alarm system in all cabins connected to a central alarm system unit

Control and Safety of Camp Machinery and Equipment

Lock-out or De-energize equipment or machinery

Fall Protection for working at heights

Electrical Safety – generator and electrical circuits, cabins grounding

Fuel transfer and storage fill up vehicles, storage tanks grounding, and distance to facilities

AUDITS

Contractor shall support Company audits and Reviews Program prior to initiation of the work, during execution of the work and at the conclusion of work and shall promptly address any notifications, findings and recommendations received and shall keep records.The Contractor shall make available all documents requested by the Company for audits. Contractor shall have his own Audit and review Program implemented which covers his and the Subcontractors’performance.

INSPECTIONS

Prior to commencement of operation, the Contractor’s preparedness and equipment shall be inspected by Company Representative(s), and found in satisfied condition for operation. All Company’s safety specifications and regulationsmust be met. Subsequent inspections will be made to ensure that proper actions have been taken to rectify earlier identified unsafe situations and that equipment is in working order. In the event of Services being provided by Contractor or any Subcontractor in an unsafe manner with respect to health, safety, environmental protection, fire safety or security, or if the Contractor’sequipment requires modification or replacement to meet Company or statutory safety requirements, Company has the right to immediately suspend all or part of the Services by delivering to Contractor written notification of such suspension (“Suspension Notice”). A Suspension Notice shall state the reasons for the suspension of Services and shall outline the steps required to be taken by Contractor to rectify the hazard. If the Company issues a Suspension Notice,

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Contractor shall be deemed to be in default of this Agreement until the matters set forth in the Suspension Notice are rectified to the full satisfaction of Company.

SECURITY

a) COMPANY is only responsible for the provision of physical security measures for Contractor’s personnel for any and all activity related to the performance of Services within the Halfaya Contract Area (Halfaya Oil Field Operations). This will include concrete “T” wall barriers, a ditch, berm and fence obstacle and manned access control points. Company will coordinate the human security resources provided by the Iraqi State, in the form of Oil Police Forces (“OPF”), Iraqi Army and civil guards to support the Contractor's operations. The benchmark will remain the provisions of the Development and Production Service Contract which stipulates that security within the Halfaya Contract Area is the sole responsibility of the Iraqi State.

b) Contractor is responsible for the security of its Personnel and Equipment outside the Halfaya Contract Area (area of operations), including the transportation from elsewhere in Iraq to Halfaya Contract Area. Contractor is also responsible for the security of its Equipment within the Halfaya Contract Area (area of operations). Iraqi State forces will be responsible for the personal safety of Contractor’s staff.

c) COMPANY agrees to grant Contractor’s appointed Security Representative access to all relevant sites, facilities and documentation in relation to COMPANY’s security policy, in so far as is reasonable, for the purpose of verifying that all security arrangements in relation to the performance of Services by Contractor are consistent with the Contractor's security plan and minimum standards at the Effective Date of the Agreement.

d) In the event of deterioration in the security situation directly affecting the Halfaya Contract Area, measured against the situation prevailing at Effective Date of this Agreement, whatever is first, COMPANY agrees to discuss in good faith with Contractor the possible enhancement of physical security measures, as may be appropriate for any and all activity related to the performance of the Services by Contractor for COMPANY within Halfaya Contract Area and subject to an agreed timeframe for implementation, at COMPANY’s sole cost, as a condition for the continued performance of Services by Contractor.

e) Consistent with the provisions of this Section, COMPANY shall not be liable for emergency evacuation of any Contractor’s Personnel from the Worksite to a place providing suitable safe haven or medical care; but COMPANY will coordinate available resources to assist the Contractor.

f) Contractor shall be liable to provide food, water and any other logistical elements to Iraqi Security Forces dedicated to their support.

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g) Security Services within Halfaya Contract Area, and for land transportation between Halfaya Contract Area and Amarah or Bashra, are provided by Missan Oil COMPANY by means of National Police, Oil Police Force, or Army personnel. COMPANY is responsible for the coordination of these Securities Services. Other destinations for land transportation will be evaluated on a case-by-case basis.

h) Security Clearance:

All contractors are individually responsible to ensure they comply with the MOC instructions regarding to security clearance and registration.

All contractors must have registered with the MOC information and security clearance office to be able to work on the oilfield and surrounding areas.

Process: A focal point from each COMPANY/ organization/ group is to register with the MOC information and security clearance office as soon as possible. This is to be done in person (not email or mobile phone!). On registration they will be given a CD disc with documents that the MOC require all to complete and return to the MOC office as soon as possible to commence the security clearance process. On the issuance of the CD disc a temporary permit of authority will be issued to that COMPANY, valid for 30 days. Once the security clearance process has been completed a full and permanent authority permit/letter will be issued to allow the COMPANY to work/ enter / leave the oilfield (MOC property). All contractors and their subcontractors are to carry out this process immediately.

If companies do not register, or fail to return the documentation, or fail the security clearance, then the COMPANY will not be permitted to work on the oilfield areas and surrounding areas. These are instructions from the MOC.

If you have any questions about this process send a focal point to the PetroChina security office and it can be explained in detail.

Please note that this process is not for the application or issue of movement letters.

This process must be completed before MOC allow the application for movement letters to carry out cross provincial travel.

i) Movement Letters:

It is the individual responsibility of each contractor and their subcontractor to

obtain movement letters for provincial travel ( off the oilfield area), however PetroChina can assist each contractor by providing a covering letter showing that the COMPANY are contractors to PetroChina. This can be arranged at the PCH security office.

These movement latters/ documents are valid for one month and separate movement letters are to be obtained from each province the COMPANY wishes to transit. The request for movement letters is also made at the information and security office, but until the security clearance process has

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been completed moment letters will not be issued. The process for movement letters takes 5-7days so planning needs to be in place to ensure the correct documentation is in place before any travel is made.

Rotational convoy movement and escorts to Basra international airport will come under PetroChina responsibility and escorts and movement letters will be in place for these trips.

OPF Escorts: All companies must ensure that any international staff who intend to travel off the camp area ONLY travel in armoured vehicles. Travel within the oilfield is to be carried out with an OPF escort. Anyone not complying with these instructions will be turned back by the OPF/IA checkpoints.

Travel beyond the oilfield and within the Maysan province, such as to MOEP camps and IPS - additional escorts will be required. When requesting the escorts from the security office the level of escort required will be identified. These requests must be placed with security by at least 1700hrs the night before the task is required.

If any COMPANY intends to move across provincial borders with international staff they must have a full OPF escort acCOMPANYing them (2 x police vehicles – ford super duty type and at least 8 OPF men) or they will not be able to cross the provincial borders. This is a requirement from Basra Operations Command.

j) Private Security Companies (PSC's)

Security services in Halfaya oil field and for land transportation between Halfaya oil field and Amara or Basra are provided by MOC by means of National Police, Oil Police or Army personnel. PetroChina is responsible for the coordination of these services. Other destinations for land transportation will be evaluated on a case by case basis.

PetroChina (Halfaya) DOES NOT allow any type of weapons in its facilities (camp, drilling locations, construction sites, production facilities, etc.). The only personnel allowed (by country law and regulations) to carry weapons in our facilities are government official security personnel such as: Army, National Police, Oil Police, etc.

In case that the Contractor or Sub - Contractor considers that they need to use PetroChina static services during their services to PetroChina, they need to submit a formal request to PetroChina for evaluation and consideration. In any case, the following pre - conditions apply:

PSC service is not allowed in the well sites. PSC service in the Contractor's area in Halfaya's Camp will be

allowed only with the use of local personnel WITH OUT any type of weapons, wearing plain clothes and inside the Contractor's camp perimeter.

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PSC service personnel shall be registered identified and security background checked before any service begins.

k) In case that the Contractor or Sub - Contractor considers that they need to use PSC escort services for land transportation during their services to PetroChina, they need to submit a formal request to PetroChina for evaluation and consideration. In any case, the following pre - conditions apply:

Contractor or Sub - Contractor shall provide all the vehicles details (brand, model, color, plates) at least 48 hours before the time of the land transportation escort service.

PSC vehicles are not allowed to enter PetroChina facilities.

PSC shall use only local personnel for these services.

PSC personnel are not allowed to carry weapons when outside the vehicles

in any place located inside Halfaya's oil field boundaries.

INVITATION TO BID

FOR

TENDER NO: HFY-CON/OP0515-0539

FOR


Provision of Directional Drilling Equipment and Services. Tender No: HFY-CON/OP0515-0539 Page 2 of 69

INDEX TO TENDER FORM INVITATION TO BID LETTER

SECTION I ACKNOWLEDGEMENT FORM

SECTION II INSTRUCTIONS TO BIDDER

1. PURPOSE OF INSTRUCTIONS

2. ITB ACKNOWLEDGEMENT

3. GENERAL

4. PREPARATION OF BID

5. SUBMISSION OF BID

6. TECHNICAL CLARIFICATION AND INSPECTION

7. CONSIDERATION OF BID

8. ACCEPTANCE OR REJECTION OF BID

9. REQUEST FOR FURTHER INFORMATION BY BIDDER

10. MODIFICATION BY COMPANY

11. CONFIDENTIALITY OF BID

12. VALIDITY OF BID

13. DESCRIPTION OF THE SERVICES

SECTION III FORM OF BID

PART 1 FORM OF BID LETTER

PART 2 BID EXCEPTIONS

PART 3 GENERAL AND TECHNICAL BID SUBMISSION

3.1 GENERAL

FORM G1: BIDDER’S QUESTIONNAIRE (DETAILS OF BIDDER)

FORM G2: BIDDER’S QUESTIONNAIRE (FINANCIAL INFORMATION OF BIDDER)


FORM G3: PARENT COMPANY GUARANTEE

FORM G4: CONFIDENTIALITY STATEMENT

FORM G5: DECLARATION

FORM G6: LETTER OF INDEMNITY

FORM G7: ITB SUPPLEMENTS

3.2 TECHNICAL

FORM T1: PERSONNEL AND KEY PERSONNEL

FORM T2: EXECUTION PLANS AND MANAGEMENT OF THE SERVICES

FORM T3: SUBCONTRACTOR(S) AND SUBCONTRACT PLAN

FORM T4: PREVIOUS AND CURRENT WORK

FORM T5: COMPULSORY INSURANCES

FORM T6: QUALITY ASSURANCE DOCUMENTATION

FORM T7: SAFETY PROGRAM

FORM T8: BIDDER QUESTIONNAIRES

FORM E PART A: BID EXCEPTIONS

PART 4 COMMERCIAL BID

FORM C1: FORM OF QUOTATION

FORM E PART B: BID EXCEPTIONS

PART 5 COMPANY REGISTRATION DOCUMENTATION AND AUTHORIZATION

PART 6 BID BOND

FORM B1: BID BOND

SECTION IV PRO-FORMA AGREEMENT FOR THE PROVISION OF DIRECTIONAL DRILLING EQUIPMENT AND SERVICES.

SECTION V DEFINITIONS


INVITATION TO BID LETTER


24th April 2014

To: All bidders Tender title : Provision of Directional Drilling Equipment and Services. Tender Number : HFY-CON/OP0515-0539 Subject : Invitation to bid. To Whom It May Concern:

PetroChina International Iraq FZE Iraq Branch (the “COMPANY”) is pleased to invite your company to participate in the aforementioned Bid for the above mentioned tender. The COMPANY is sincerely appreciative and thankful for your interest to bid and looks forward to a successful Bid process. Included with this letter are the following documents (collectively with this letter, the “Bid Package”):

(a) Acknowledgement Form; (b) Instructions to Bidder; (c) Form of Bid; (d) Pro-forma Agreement for the Provision of Directional Drilling Equipment

and Services; (e) Definitions.

Please acknowledge receipt of this Invitation to Bid Letter and the Bid Package within seven (7) days from the date mentioned above by completing, executing and delivering the attached Acknowledgement Form to Tender Committee Secretary by email to [email protected]. Your failure to properly deliver the Acknowledgement Form within such time period may result in your disqualification. Bidder must ensure that the Bid is received at the address set out in paragraph 5.5 mentioned in Section II – Instructions To Bidder no later than 12:00 pm on 26th May 2014 – Monday (Local time in Iraq, the “Bid Closing Date”). Thank you for your time and consideration and for your interest in the Bid.

___________ Tender Committee Secretary


SECTION I

ACKNOWLEDGEMENT FORM


ACKNOWLEDGEMENT FORM [LETTERHEAD OF BIDDER]

To: PetroChina International Iraq FZE Iraq Branch Department of Contract, Procurement and Logistics

P.O. Box: 500486, Office No. A 409, Fourth Floor, Building No. 10, Dubai Internet City, Dubai, United Arab Emirates Email : [email protected]

Attn: Tender Committee Secretary Tender title : Provision of Directional Drilling Equipment and Services Tender Number : HFY-CON/OP0515-0539 Subject : Acknowledgement Form

Note: Bidder is required to indicate its intention to bid by completing and returning this form within seven (7) calendar days from the issuance date of the invitation to bid documents (the “ITB Documents”).

We acknowledge receipt of your ITB Documents for the above services. * A) We intend to submit a bona fide and compliant bid by the date and time stated in the

ITB Documents.

The person handling this bid on our behalf is:

Name…………………Designation………………Telephone No…………………… Fax No……………………Cell-phone No………………. Email Address:……………

*B) Please be advised that we will not be participating in this bid because: ………………………………………………………………………………………………………………………………………

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

We will return the full ITB Documents by:…………………………………………..

*Delete either A) or B) C) Acknowledged by:

Name : …………………………………………………… Designation : ……………………………………………………

Date : …………………………………………………… Company Name : ……………………………………………………

Signature : …………………………………………………… Company Address and Stamp : ……………………………………………………


SECTION II

INSTRUCTIONS TO BIDDER


TABLE OF CONTENTS Page No.

1. PURPOSE OF INSTRUCTIONS ........................................................................................ 10

2. ITB ACKNOWLEDGEMENT ........................................................................................... 10

3. GENERAL ....................................................................................................................... 11

4. PREPARATION OF BID ................................................................................................... 11

5. SUBMISSION OF BID ...................................................................................................... 14

6. TECHNICAL CLARIFICATION AND INSPECTION ......................................................... 17

7. CONSIDERATION OF BID ............................................................................................... 17

8. ACCEPTANCE OR REJECTION OF BID .......................................................................... 17

9. REQUEST FOR FURTHER INFORMATION BY BIDDER ................................................. 18

10. MODIFICATION BY COMPANY ..................................................................................... 19

11. CONFIDENTIALITY OF BID ........................................................................................... 19

12. VALIDITY OF BID .......................................................................................................... 19

13. DESCRIPTION OF THE SERVICES .................................................................................. 20


INSTRUCTIONS TO BIDDER

1. PURPOSE OF INSTRUCTIONS

(a) Where reference is made to Bidder, it shall also include Bidder’s principal where appropriate.

(b) Unless otherwise defined herein or the context requires, the expressions herein shall have meanings ascribed to them in Section V.

(c) These instructions are to inform Bidder of the proper practices, which must be adopted to satisfy the requirements of COMPANY for the submission of Bid and the award of AGREEMENT. Deviations from these instructions may result in Bidder’s Bid being disqualified.

(d) The Instructions to Bidder are part of and are to be read in conjunction with all other sections of the invitation to bid documents (the “ITB Documents”).

(e) The ITB Documents comprise the following:

Invitation to Bid Letter

Section I Acknowledgement Form

Section II Instructions to Bidder

Section III Form of Bid

Section IV Pro-forma Agreement for the Provision of Directional Drilling Equipment and Services

Section V Definitions

2. ITB ACKNOWLEDGEMENT

2.1 Completeness of ITB Documents

Bidder shall check the contents of the ITB Documents to ensure that there are no omissions or discrepancies. Bidder shall immediately notify COMPANY in writing of any omissions or discrepancies found in the ITB Documents or any doubt as to the precise meaning of any item, word or figure or any other question whatsoever.

2.2 Intention to Bid

(a) Bidder is required to complete the Acknowledgement Form and return the signed copy to the COMPANY by fax or email within seven (7) calendar days of the issuance date of the ITB Documents.

(b) Bidder is advised to confirm its company’s address and name a representative to whom all communication from COMPANY shall be addressed.


2.3 Decline to Bid

Should Bidder decline to submit a Bid, Bidder is required to give reason(s) and return the ITB Documents before the Bid Closing Date with the following sentence clearly marked in bold on the cover envelope:

(a) “Decline to Bid – documents returned”

(b) Tender number and title

(c) Bidder’s name

3. GENERAL

(a) COMPANY herein invites Bidder to submit a Bid for the subject tender on the terms and conditions contained in this ITB package. The successful Bidder shall perform in accordance with the requirements set out in the ITB.

(b) Bidders are expected to submit a Bid for the entire scope of Services as described in the ITB Documents, and any Bid that does not cover such scope of Services shall be deemed to be non-compliant with these instructions and subject to rejection.

4. PREPARATION OF BID

4.1 Bid Forms

In order to conduct a thorough, efficient and objective evaluation, certain minimum information is required to be included in the Bid. Bidder is required to strictly follow the Bid forms format as set forth in Section III in the presentation of its capabilities. Failure to comply strictly with this instruction may result in Bidder’s Bid being rejected and disqualified from this tender.

4.2 Provision of Sufficient Information

The Bidder’s technical ability to perform the Services is an integral part of the evaluation process. Bidder is therefore advised that the Bid should include sufficient technical information to enable this matter to be considered properly. Failure to include sufficient technical information may result in the Bid not receiving appropriate attention and recognition, and thus damaging its chance of award.

4.3 Bidder’s Form of Bid

(a) The original Form of Bid Letter in Section III must be included with the Bid and shall show the full legal name, place of incorporation and registered business address of Bidder including its mailing address. It shall be signed by the person duly authorized to bind Bidder to the Bid and shall be dated. In addition, Bidder shall provide evidence of authority of the person signing the Bid, such as a Power of Attorney and/or authenticated copy of minutes or resolutions of its board of directors.

(b) Bidder’s company name must be inserted at the foot of each page of the Form of Bid and all pages are to be signed/ initialed by the individual


signing the Bid. If erasures or changes appear in the Bid, each such erasure or change shall be initialed and dated by the individual signing the Bid.

(c) The language of all documents and communications pertaining to this Bid shall be English.

(d) Bidder is to ensure that all prices and other details in the Bid are correct at the time of submission. COMPANY will not entertain any changes or revisions including without limitation any revisions of typographical or arithmetical errors after the Bid Closing Date.

(e) All costs in the preparation and submission of the Bid including any clarifications, discussions and/or meetings shall be at Bidder’s cost, irrespective of whether an AGREEMENT is entered into or not.

4.4 Bid Bond

(a) Each Bidder is required to submit, as part of its Bid, a bid bond in the form identified below, and in the amount one percent (1%) of the bid value in accordance with the information it provides in Part 6 of Section III (the “Bid Bond”).

(b) The form of the required Bid Bond is included in the ITB Documents as Form B1 (Bid Bond) in Part 6 of Section III. The Bid Bond shall be issued by a commercial bank or other financial institution acceptable to the COMPANY based on its long-term debt rating; provided, however, that COMPANY shall have the right to accept a commercial bank or other financial institution with no rating.

(c) An unsuccessful Bidder will be returned with its Bid Bond within thirty (30) days following notification by the COMPANY that its Bid was unsuccessful. The COMPANY shall return the Bid Bond to the successful Bidder following delivery by the successful Bidder to the COMPANY of the Performance Security (Bank Guarantee), the Bank Guarantee shall be issued in the form of Exhibit F attached to the AGREEMENT (the “Bank Guarantee”). In case bidder selected the Retention Money option, the COMPANY shall return the Bid Bond upon the execution of the AGREEMENT.

(d) The Bid Bond may be called upon by the COMPANY, in its sole and absolute discretion, in the following cases:

(i) if a Bidder, having been declared to be the successful Bidder by the COMPANY, refuses to execute the AGREEMENT within three (3) days from the date of a written demand by the COMPANY to enter into the AGREEMENT;

(ii) if a Bidder withdraws or repudiates its Bid after the Bid

Closing Date but before the expiry of the Bid Validity Period; (iii) if a Bidder violates any of the COMPANY's guidelines on

business conduct;


(iv) if a Bidder violates any applicable law with respect to the submission of its Bid;

(v) if a Bidder fails to submit the required content of the

commercial and technical schedules required under Parts 3 and 4 of Section III of the ITB Documents; or

(vi) if a Bidder, having been declared to be the successful Bidder,

and had selected the Bank Guarantee Option, fails to extend its Bid Bond until it is replaced with the Bank Guarantee.

4.5 Bid Currency

(a) Bidder is required to price all Services as required in Section III.

(b) Bids shall be quoted inclusive of all Taxes and shall be based on the information and materials provided in Sections IV and V of the ITB Documents.

(c) Bidder is required to submit the Bid in U.S. Dollars. The price shall prevail throughout the duration of the AGREEMENT and shall not be subject to revision by reason of currency fluctuations.

4.6 Licensing

Bidder shall obtain and submit copies of all necessary consents, permits, licenses, approvals, authorizations, executions and/or waivers.

4.7 Subcontracting

If a Bid has not been specifically submitted by a joint venture or other form of association and Bidder proposes to associate with an affiliated or non-affiliated company for any Services, such other company shall be a Subcontractor and shall not be a party to the proposed AGREEMENT, unless otherwise agreed in writing by COMPANY.

4.8 Joint Venture/Partnership/Agency

(a) Joint venture or contractor partnership arrangements (if any) must be clearly indicated under the relevant area in Form G1 of Section III. Co-ventures or joint ventures shall be jointly and severally liable under any Contract awarded to them. Certified assurances regarding the financial structure and standing of any such partner companies will be required by COMPANY. Bids by partnership shall disclose the full names of all partners and shall be signed with the partnership name by one of the members of the partnership or by an authorized representative, for which details of such authority is requested by COMPANY. The details of any partnership structure shall be submitted in the Bid together with a copy of the formal association or joint venture agreement.

(b) A successful Bidder who is agent for another organization or organizations shall be required, as a condition of award of the AGREEMENT, to provide: (i) an authorization letter by such organization; and (ii) a Parent


Company Guarantee by such organization of the performance and financial obligations to be assumed by such Bidder under the AGREEMENT.

5. SUBMISSION OF BID

5.1 Bid Package

(a) Each submission of a Bid must be made separately in a sealed package (the “Bid Package”) containing the following:

(i) One (1) original copy of the duly completed and executed Bid Letter in the form set out in Part 1 of Section III;

(ii) One (1) sealed envelope containing one (1) original set of the duly completed forms set out in, and the information and other materials as required in, Part 3 of Section III (the “General and Technical Bid Submission”). In addition, the electronic copy of the technical bid should be prepared and sealed inside the envelope;

(iii) One (1) sealed envelope containing one (1) copy set of the General and Technical Bid Submission;

(iv) One (1) sealed envelope containing the first one (1) original set of the duly completed forms set out in, and the information and other materials as required in, Part 4 of Section III (the “First Commercial Bid Submission”). The electronic copy of the commercial bid should be prepared and sealed inside as well; and

(v) One (1) sealed envelope containing the second one (1) original set of the duly completed forms set out in, and the information and other materials as required in, Part 4 of Section III (the “Second Commercial Bid Submission”). The electronic copy of the commercial bid should be prepared and sealed inside as well; and

(vi) One (1) sealed envelope containing one (1) copy set of the Commercial Bid Submission.

(vii) One (1) sealed envelope containing original of the duly signed Bid Bond as per FORM B1 attached to PART 6 - BID BOND.

(viii) One (1) sealed envelope labelled as “Company Registration Documentation and Authorization” containing one (1) copy set of the corporate legal documents as further detailed in Part 5 – COMPANY REGISTRATION DOCUMENTATION AND AUTHORIZATION

(b) In the event of any discrepancy between the original set and copies, the original set shall govern.

(c) Any Bid submitted to the COMPANY that does not comprise all of the above 8 (eight) documents will be deemed invalid, and will not be considered for the commercial evaluation.


(d) Any Bid submitted to the COMPANY in which any of the above documents are not sealed separately, will be deemed invalid, and will not be considered in the evaluation.

(e) General and Technical Bid Submission and Commercial Bid Submission

shall be submitted separately, fails to meet this requirement will be considered invalid and will not considered in the evaluation.

(f) The General and Technical Bid Submission must not contain any information regarding Bidder’s proposed pricing of or compensation for the Services. If any Bidder includes any such information or materials in its General and Technical Bid Submission, its Bid will be deemed invalid, and will not be taken into consideration of evaluation.

5.2 Bid Labelling

(a) The word “Original” and “Copy” shall be clearly marked on each envelope. Bids shall be clearly marked “Confidential” and shall be sealed in separate packages, clearly marked in bold letters as follows and submitted to the following address:

CONFIDENTIAL

BID LETTER; OR

ORIGINAL GENERAL AND TECHNICAL PROPOSAL; OR

FIRST ORIGINAL COMMERCIAL PROPOSAL; OR

SECOND ORIGINAL COMMERCIAL PROPOSAL; OR

COPY GENERAL AND TECHNICAL PROPOSAL; OR

COPY COMMERCIAL PROPOSAL; OR

ORIGINAL BID BOND; OR

COMPANY REGISTRATION DOCUMENTATION AND AUTHORIZATION.

Tender No.: HFY-CON/OP0515-0539

Tender Title: Provision of Directional Drilling Equipment and Services.

To: PetroChina International Iraq FZE Iraq Branch Department of Contract, Procurement and Logistics PetroChina Halfaya Base Camp, Halfaya Oilfield, Missan Province, Republic of Iraq Email :[email protected]

ATTN: Tender Committee Secretary

Submitted By : [Name of Bidder]

[Contact Person, Address and Phone and Fax Numbers of Bidder]

(b) Each envelope within the Bid Package must also be clearly marked and labelled as set out in paragraph (a) above, and shall also clearly identify the


contents therein, i.e. whether it is the General and Technical Bid Submission or the Commercial Bid Submission, and whether it is the original set or the copy set. Each envelope must also be sealed. Any Bid Package without the above mentioned label on the envelope will be considered invalid and will not be considered in the evaluation process.

5.3 Delivery of Bid

(a) Bidder is strongly advised to deliver the Bid by hand to ensure timely receipt by COMPANY. If Bidder elects to mail the Bid, Bidder is advised to use fast and reliable delivery service e.g. courier.

(b) Responsibility of timely delivery of the Bid to the correct address within the required time period rests fully with the Bidder.

5.4 Bid Closing Date

Bidder must ensure that the Bid is received at the address set out in paragraph 5.5 hereafter no later than the Bid Closing Date as mentioned in the Invitation To Bid Letter.

5.5 Bid Submission Place

The only official place where the BIDS should be delivered, submitted to COMPANY, and received by COMPANY.


Department of Contract, Procurement and Logistics

PetroChina Halfaya Base Camp, Halfaya Oilfield,

Missan Province, Republic of Iraq


6. TECHNICAL CLARIFICATION AND INSPECTION

6.1 Technical Clarifications

COMPANY shall be entitled to seek technical clarifications after submission of Bids.

If a Bidder’s response to the technical clarifications fails to comply with the clarification requirements including, but not limited to, an unclear or ambiguous response or a response containing inconsistencies or deviations, or submitted the response after the Clarification Closing Date, Bidder shall bear the risk of having their Bid being rejected without further opportunity to make amendments.

6.2 Interviews/Reviews by COMPANY

(a) In addition to reviewing the Bidder’s Bid, COMPANY may interview Key Personnel nominated in the Bid as part of the Bid evaluation process. COMPANY may also require a detailed demonstration of Bidder’s facilities to obtain a full understanding of Bidder’s Bid.

(b) COMPANY’s Bid review team may visit the Bidder’s and/or Subcontractors’ facilities. COMPANY may also require a detailed demonstration of Subcontractors’ facilities and conduct interviews with Subcontractors’ key personnel. COMPANY anticipates that the key personnel proposed will be involved in the preparation of the Bid and will be willing and able to perform the Services.

Notwithstanding the requirements of this clause 6.2, COMPANY reserves the right to audit Bidder’s quality, safety, health and environment management systems during the Bid evaluation period.

7. CONSIDERATION OF BID

(a) COMPANY reserves the right to request any further information it may deem necessary to evaluate the Bid, which may include but not be limited to a breakdown of, or supplement to, any lump sum prices, rates or percentages proposed.

(b) No part of any Bid submitted will be returned to Bidder except for the bid bond.

8. ACCEPTANCE OR REJECTION OF BID

(a) COMPANY may reject any or all Bids received, or may accept any Bid that, in COMPANY’s sole judgment, is the most advantageous to COMPANY. COMPANY reserves the right to accept or reject, all, or parts of, Bidder’s Bid at COMPANY’s discretion, and will be under no obligation to explain the reasons thereof.

(b) The successful Bidder will be required to enter into a formal AGREEMENT with COMPANY which will be on the same terms and subject to the same conditions as are contained in the ITB Documents, subject to any clarifications issued during or prior to the evaluation of the Bid.


(c) COMPANY shall not be deemed to have accepted any offer unless and until an AGREEMENT is duly signed or COMPANY sends a binding Letter of Award to the successful Bidder, signed by a duly authorised representative of COMPANY.

(d) COMPANY reserves the right to require the successful Bidder to enter into the AGREEMENT with an affiliated entity of the COMPANY.

(e) COMPANY may at its own discretion split the AGREEMENT to more than one Bidder at its own discretion and will be under no obligation to explain the reasons thereof.

9. REQUEST FOR FURTHER INFORMATION BY BIDDER

(a) Any further information which may be required by Bidder in order to complete its Bid or any interpretation thereof, must be obtained by facsimile or by writing, sent to the address given below:

PetroChina International Iraq FZE Iraq Branch Department of Contract, Procurement and Logistics PetroChina Halfaya Base Camp, Halfaya Oilfield, Missan Province, Republic of Iraq

Email : [email protected] Attn: Tender Committee Secretary

Any such request must be delivered to COMPANY not later than seven (7) calendar days prior to the Bid Closing Date.

Request shall be prepared in the following form and failing to comply with this form may lead to rejection of the request.

FURTHER INFORMATION REQUEST FORM

Tender Title: Tender No.: Request Date:

Item No Reference Part/Article No. in

ITB/Page Questions Description COMPANY’s Answers


(b) Any further information, interpretation, advice or modifications given by or agreed upon by COMPANY shall be distributed to all Bidders by letter or facsimile without revealing the identity of the original enquirer.

(c) Except as provided herein, Bidder is not permitted to contact or communicate with any members of COMPANY’s staff (nor any staff of consultant companies engaged by COMPANY for the preparation of the ITB Documents) on any matter relating to this Bid. Uninvited visits to COMPANY’s offices to discuss the ITB Documents are not permitted.

10. MODIFICATION BY COMPANY

(a) COMPANY reserves the right to modify the ITB Documents following issue of the same to the Bidder. Any modification to the ITB Documents made by COMPANY shall be advised to Bidder not later than seven (7) calendar days prior to the Bid Closing Date. Any modification shall be issued as invitation to bid supplements (notice-to-Bidders and/or addendum) and shall be deemed to constitute part of the ITB Documents.

(b) COMPANY reserves the right to issue clarifications modifying the ITB Documents during the evaluation period if it so requires.

11. CONFIDENTIALITY OF BID

By submission of a Bid, Bidder warrants that:

(a) All documents delivered to Bidder shall be handled confidentially and shall be used only for the purpose of preparing the Bid. Such documents shall not be duplicated or disclosed to others unless explicitly for the purpose of formulating the Bid in response to this invitation to Bid;

(b) The prices in the Bid have been arrived at independently, without consultation, communication, agreement or understanding for the purpose of restricting competition, as to any matter relating to such prices, with any other bidders or with any competitors;

(c) Unless otherwise required by law, the prices which have been quoted in the Bid have not knowingly been disclosed by Bidder, directly or indirectly, to any other bidders or competitors, nor will they be so disclosed;

(d) No attempt has been made or will be made by Bidder to induce any other person or company to submit or not to submit a Bid for the purpose of restricting competition; and

(e) Bidder has adhered to the highest standards of business ethics and, in particular, has established precautions to prevent any of its officers, employees, or agents from making, receiving or offering substantial gifts, entertainment, payment, loans, or other considerations which may influence individuals in respect of this invitation to Bid.

12. VALIDITY OF BID

(a) The Bid shall be firm and irrevocable and shall be valid for a period of ninety (90) calendar days from the Bid Closing Date (as may be extended


by the Bidder and COMPANY pursuant to paragraph (b) below, the “Bid Validity Period”), and shall not be retracted or withdrawn during the period. COMPANY shall have the right to accept any Bid at any time before the expiration of such period.

(b) Bidder shall indicate in the Form of Bid (Section III) the price adjustment to extend the Bid Validity Period for each 30-calendar day period up to an additional period of 60 calendar days beyond the initial Bid Validity Period.

13. DESCRIPTION OF THE SERVICES

Please refer the AGREEMENT set out in Section IV.


SECTION III

FORM OF BID


TABLE OF CONTENTS BIDDER SHALL SUBMIT ITS BID IN THE FORMAT AND SEQUENCE PROVIDED BY THE FOLLOWING BID FORMS:

Page No. TABLE OF CONTENTS ...................................................................................................... 22

PART 1. FORM OF BID LETTER ................................................................. 23

PART 2. BID EXCEPTIONS .......................................................................... 27

PART 3. GENERAL AND TECHNICAL BID .............................................. 29

3.1 GENERAL .......................................................................................................... 31

FORM G1: BIDDER’S QUESTIONNAIRE (DETAILS OF BIDDER) ................. 31 FORM G2: BIDDER’S QUESTIONNAIRE (FINANCIAL INFORMATION OF

BIDDER) ............................................................................................... 36 FORM G3: PARENT COMPANY GUARANTEE ................................................. 37 FORM G4: CONFIDENTIALITY STATEMENT .................................................. 38 FORM G5: DECLARATION ................................................................................... 39 FORM G6: LETTER OF INDEMNITY…………………………………………..40 FORM G7: ITB SUPPLEMENTS………………………………………………...41

3.2 TECHNICAL ........................................................................................................ 43

FORM T1: PERSONNEL AND KEY PERSONNEL ............................................. 43 FORM T2: EXECUTION PLANS AND MANAGEMENT OF THE SERVICES 44 FORM T3: SUBCONTRACTOR(S) AND SUBCONTRACT PLAN .................... 45 FORM T4: PREVIOUS AND CURRENT WORK ................................................. 47 FORM T5: COMPULSORY INSURANCES .......................................................... 48 FORM T6: QUALITY ASSURANCE DOCUMENTATION ................................ 49 FORM T7: SAFETY PROGRAMME ..................................................................... 54 FORM T8: BIDDER QUESTIONNAIRES ............................................................. 55 FORM E PART A - BID EXCEPTIONS ............................................................................. 56

PART 4. COMMERCIAL ............................................................................... 58

FORM C1: FORM OF QUOTATION ..................................................................... 58 FORM E PART B - BID EXCEPTIONS ............................................................................. 59

PART 5 – COMPANY REGISTRATION DOCUMENTATION AND AUTHORIZATION61

PART 6 - FORM OF BID BOND ..................................................................................... 63

FORM B1: FORM OF BID BOND ......................................................................... 63


PART 1

FORM OF BID LETTER

Unless the context requires, capitalized terms not otherwise defined in this document shall be defined in accordance with Section V Definitions. PART 1. FORM OF BID LETTER

The original Bidder's Bid Letter (strictly in the form specified below) shall be signed by the person duly authorized to bind the Bidder to the Bid and shall be dated. Date: ___________ To: PetroChina International Iraq FZE Iraq Branch Department of Contract, Procurement and Logistics

P.O. Box: 500486, Fourth Floor, Building No. 10, Dubai Internet City, Dubai, United Arab Emirates Email : [email protected]

Attn.: Tender Committee Secretary Tender No. : HFY-CON/OP0515-0539 Tender Title : Provision of Directional Drilling Equipment and Services. Subject : Bid Letter Dear Sir/Madam, We, the undersigned (the “Bidder”), having carefully examined and understood the ITB Documents, hereby submit to you (the “COMPANY”) our Bid, comprising this letter, the General and Technical Bid Submission and the Commercial Bid Submission. We agree to be bound by this Bid for the validity period specified, and we further agree: 1. The Services

If selected by Company, (i) to perform the Services in the manner specified in the AGREEMENT and in accordance with the methods specified in Form T2 Execution Plans and Management of the Services by using the organization and personnel specified in Form T1 Personnel and Key Personnel; (ii) to perform all other obligations in accordance with the AGREEMENT; and (iii) to assume all responsibilities imposed upon us by the AGREEMENT;

2. Bidder's Bid

We confirm that the Bid fully complies in all respects to the requirements of the ITB Documents issued by COMPANY, except for the Bid Exceptions listed in Form E;


3. Compensation If selected by COMPANY, to accept as compensation for satisfactory provision of the Services specified in the AGREEMENT, the compensation specified in our Commercial Bid Submission;

4. Timing If selected by COMPANY, we shall commence and complete the Services in

accordance with the time required to complete such Services in accordance with the AGREEMENT;

5. Insurance If selected by COMPANY, upon award of AGREEMENT, we will provide

COMPANY with certificates of insurance required including all endorsements required by the AGREEMENT. Said certificates shall contain the AGREEMENT identification number to which they apply;

6. Validity of Bid That this Bid shall be firm and irrevocable and shall be valid for ninety (90) calendar

days from the Bid Closing Date (as may be extended by the Bidder and COMPANY pursuant to paragraph 12 (b) in SECTION II-INSTRUCTIONS TO BIDDER) and may be accepted by COMPANY at any time during the validity period by written notification to us;

7. Exclusive Right of COMPANY That COMPANY reserves the right to reject any and all offers made by us in our

Bid without giving reasons therefore. COMPANY also reserves the right to proceed with performing the Services. COMPANY in its sole discretion may award the AGREEMENT to any Bidder submitting a Bid. We further agree that the submission of this Bid and possible subsequent discussions, meetings and clarifications do not involve COMPANY incurring any costs whatsoever; and

8. Correspondence That all written correspondence from Bidder with regard to this Bid is to be

addressed to the following:

Attn: Tender Committee Secretary PetroChina International Iraq FZE Iraq Branch Department of Contract, Procurement and Logistics PetroChina Halfaya Base Camp, Halfaya Oilfield, Missan Province, Republic of Iraq Email : [email protected]


Bidder’s Signature The undersigned is duly authorized to sign on behalf of and to bind us to the provision of this Bid. Bidder: Authorized signature: Name: Title/Designation:


PART 2

BID EXCEPTIONS


PART 2. BID EXCEPTIONS

If Bidder has any change that is considered of mutual benefit or if there is any exception to the terms and conditions of the AGREEMENT or any other part of the ITB Documents, Bidder must state the changes or exceptions proposed by using the format in Form E Part A (to be submitted in the Technical Proposal) and Form E Part B (to be submitted in the Commercial Proposal) and giving specific reasons thereof.

Bidder shall maintain the same changes/exceptions for both Form E Part A (to be submitted in the Technical Proposal) and Form E Part B (to be submitted in the Commercial Proposal). If COMPANY finds additional changes/exceptions in Form E Part B during the commercial evaluation, COMPANY shall reject the additional changes/exceptions without applying any cost impact.

Bidder must indicate clearly the effect, if any, these changes or exceptions may have on Bidder's general, technical or commercial if the changes or exceptions are rejected by COMPANY.

Change(s) or exception(s) to the AGREEMENT or any other part of the ITB Documents expressed after the closing date of the bid will not be entertained.

COMPANY reserves the right to accept or reject any or all of the proposed change(s) or exception(s). COMPANY will review each change or exception on a case-by-case basis.

If Bidder cannot accept COMPANY's wording at any price, and is willing to take risk having its Bid Proposal rejected on this basis, then Bidder must make the following statement:

"FIRM - Will not accept COMPANY's wording at any price".

The above statement shall be clearly mentioned under the "COST IMPACT" column in the following forms:

1. FORM E PART A: BID EXCEPTIONS (to be submitted in the Technical Proposal) and;

2. FORM E PART B: BID EXCEPTIONS (to be submitted in the commercial proposal)


PART 3

GENERAL AND TECHNICAL BID SUBMISSION


PART 3. GENERAL AND TECHNICAL BID (a) Bidder shall comply with all requirements to perform and complete the

Services as set forth in the AGREEMENT and shall, as a demonstration of its experience and capabilities, complete Parts 3.1 and 3.2. It should be noted that non-compliance with the requirements set forth herein or omission of any Bid form may render Bidder's Bid to be unacceptable.

(b) When a Bid form contains more than one (1) sheet, the Bid form shall be

paginated in such a way that the response can be easily identified, e.g. pagination in the form of “Form G1, page 1 of 5” and so on. The first sheet of each form shall be given “Page 1”. Each page shall bear the AGREEMENT number at the top right hand corner of the sheet.

(c) The corresponding forms under individual parts to be completed and

submitted in Bidder's General and Technical Bid Submission are listed below.

(d) Technical Proposal shall not contain any price information; otherwise the Bid

may be rejected. 3.1 GENERAL

FORM G1: BIDDER’S QUESTIONNAIRE (DETAILS OF BIDDER) FORM G2: BIDDER’S QUESTIONNAIRE (FINANCIAL INFORMATION OF

BIDDER) FORM G3: PARENT COMPANY GUARANTEE FORM G4: CONFIDENTIALITY STATEMENT FORM G5: DECLARATION FORM G6: LETTER OF INDEMNITY FORM G7: ITB SUPPLEMENTS

3.2 TECHNICAL

FORM T1: PERSONNEL AND KEY PERSONNEL FORM T2: EXECUTION PLANS AND MANAGEMENT OF THE SERVICES FORM T3: SUBCONTRACTOR(S) AND SUBCONTRACT PLAN FORM T4: PREVIOUS AND CURRENT WORK FORM T5: COMPULSORY INSURANCES FORM T6: QUALITY ASSURANCE DOCUMENTATION FORM T7: SAFETY PROGRAMME FORM T8: BIDDER QUESTIONNAIRES FORM E PART A: BID EXCEPTIONS


GENERAL AND TECHNICAL BID SUBMISSION

PART 3.1

GENERAL


3.1 GENERAL

BIDDER’S QUESTIONNAIRE

FORM G1: BIDDER’S QUESTIONNAIRE (DETAILS OF BIDDER)

This form MUST be completely filled in by Bidder. Write ‘Nil’ or ‘NA’ (not applicable) where appropriate. INSTRUCTIONS : This form is divided into two (2) sections: 1. Section 1 : to be completed by the Bidder. 2. Section 2 : to be completed by the principal company of the Bidder, if the

Services is to be performed by it.

SECTION 1

1.2 Please provide the following information with regard to your company. (a) Nature of company: ………………………………………………………

(Private Limited, Public, Corporation, Proprietorship, Partnership or others)

(b) Date of company registration: …………………………………………

1.1 PARTICULARS OF COMPANY

Company Registered Name

Registered Business Address

Correspondence Address

Contact Person and Email Address

Telephone and Cell-phone

Fax


(c) File registration number: ………………………………………………… (Registrar of Companies)

(d) Date of commencement of business operations: …………………………

1.3 Is your company a tax-resident in the Republic of Iraq? Please answer YES or NO. …………………

If so, provide a copy of its tax withholding exemption certificate, as issued by the proper Tax Bureau.

1.4 Bidders confirmation on taxes

Taxes

Please refer to Contract Articles on “TAXES AND CUSTOMS”. Bidder shall confirm that it has understood and accept the taxes provision as stipulated in the Contract Articles.

Please indicate “YES” or “NO” here

1.5 Provide COMPANY with evidence of your company’s authorized scope of business. 1.6 COMPANY SHAREHOLDERS

No. Name of Shareholders Percentage Held

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

(k)

1.7 COMPANY DIRECTORS

Please attach a copy of the most recent list of directors of your company from the Registrar of Companies in the jurisdiction in which your company is established.


No. Name of Directors Designation Period

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

1.8 Please complete the following table with respect to your staff:

No. Description Number of Staff Members

Total (%)

(a) Management

(b) Technical

(c) Non-technical

(d) Others

1.9 Please attach a list of your key management staff with the following details:

(a) their designation; (b) their qualification; and (c) their length of service with your company.

1.10 Is your company a local affiliate of an overseas parent/principal company involved in similar nature of work?

Please answer YES or NO:

If YES, please provide a corporate organization chart indicating the structure of

Bidder in relation to its parent/principal company, affiliated companies and subsidiaries and the ultimate holding company.

If No, is your company registered as a foreign company doing business in the Republic of Iraq? Please answer YES or NO:


If YES, please give specific details as to the names of these companies and services you offer for them.

1.11 Does your company have joint venture/consortia partner(s) for this Bid?


If YES, please list your joint venture/consortia partners: Attach a copy of your Joint Venture/Consortia Agreement which shall include inter

alia joint and several liability. 1.12 Does your company have any subsidiary company(s)? Please answer YES or NO: If YES, please list the name of the subsidiary company(s). 1.13 Has or are there any litigation, suits or court action been taken or taken against your

company?


If YES, please provide details. 1.14 Who is authorized to sign this AGREEMENT on behalf of your company? 1.15 We also require any printed technical and operational information detailing the

general capabilities, services offered and any information which would be helpful in the analysis of your company. Please attach the information to this Form G1.

Information provided by : ………………………………..(signature)

Name : ……………………………………………

Designation : ……………………………………………

Date : ……………………………………………


SECTION 2 (To be completed by the principal company of the Bidder, if any if the Services is to be provided by it)

2.1 PARTICULARS OF PRINCIPAL COMPANY

Principal Company Name

Registered Business Address

Correspondence Address

Contact Person

Telephone

Fax

Name of Local Agent appointed by Principal

2.2 Who, either your company or your associate or subcontractor, will perform the Services? 2.3 We also require any printed technical and operational information detailing your

company’s general capabilities, services offered, etc. Please attach the information to this Form G1.

Information provided by : ……………………..……..(signature) Name : …………………………………….… Designation : ……………………………………….

Date : ………………………………………


FORM G2: BIDDER’S QUESTIONNAIRE (FINANCIAL INFORMATION OF BIDDER)

1. Bidder shall attach the following information as evidence of the Bidder's credit

worthiness and financial soundness:

(a) Capital structure

i) authorized capital ii) paid-up capital iii) working capital

iv) amount of loan/overdrafts and sources v) amount of loan repayment and sources

(b) A certified copy of each of Bidder's and its parent company's last three (3)

years audited accounts, including:

i) statement of Financial Position ii) profits and loss account and statement of Comprehensive Income iii) Statement of Cash Flows; and iv) Notes to and forming part of the Financial Statements

Certified last three (3) years audited accounts of joint-venture partners shall also be submitted where applicable.

2. Bidder shall provide Bank Statement, listing details of Bidder’s account.


FORM G3: PARENT COMPANY GUARANTEE

Bidder confirms that if it is the successful bidder, it shall submit a Parent Company Guarantee in the form provided in Appendix G of the AGREEMENT concurrent with the execution of the AGREEMENT.


FORM G4: CONFIDENTIALITY STATEMENT

Bidder shall submit the following statement duly signed by its authorized representative: Date : To : PetroChina International Iraq FZE Iraq Branch Department of Contract, Procurement and Logistics


Attn: Tender Committee Secretary Tender title : Provision of Directional Drilling Equipment and Services. Tender No. : HFY-CON/OP0515-0539 Subject : Confidentiality Undertaking We hereby declare that the Letter of Invitation to Bid and all documents attached thereto and any other documents subsequently issued by COMPANY to us (collectively referred to as the “ITB Documents”) in connection with the preparation of a Bid for the captioned Tender, shall remain COMPANY’s property. We hereby agree to maintain all ITB Documents in strict confidence and acknowledge that any use of the information contained in the ITB Documents for purposes other than for bidding is strictly prohibited. We hereby agree to immediately destroy all ITB Documents and supplements furnished by COMPANY upon notification that COMPANY has decided to reject our Bid. __________________________ Company __________________________ Signature __________________________ Name of Bidder’s Authorized Representative


FORM G5: DECLARATION

Bidder shall submit the following statement duly signed by its authorized representative:

Date : _______________ To: PetroChina International Iraq FZE Iraq Branch Department of Contract, Procurement and Logistics,


Attn: Tender Committee Secretary

Tender title : Provision of Directional Drilling Equipment and Services. Tender No. : HFY-CON/OP0515-0539 Subject : Declaration We hereby declare that we have carefully examined the ITB Documents in sufficient detail and to our satisfaction and have acquainted ourselves with the AGREEMENT, and hereby accept all responsibility for having properly evaluated all costs and contingencies for successfully performing the Services and satisfying all Contractual obligations (as modified by the Bid Exceptions pursuant to Form E) and agree to bear all and any consequences resulting from improper valuation. Should any conflict or ambiguity transpire during the performance of the Services which is not disclosed by us herein whether inadvertently omitted or otherwise, we shall be solely responsible for and shall not be excused from complying with the terms and conditions of the AGREEMENT or any of our obligations thereunder. __________________________ Company __________________________ Signature __________________________ Name of Bidder’s Authorized Representative


FORM G6: LETTER OF INDEMNITY Bidder shall submit the following letter duly signed by its authorized representative: Date: _______________ To: PetroChina International Iraq FZE Iraq Branch Department of Contract, Procurement and Logistics,


Attn: Tender Committee Secretary

Tender title : Provision of Directional Drilling Equipment and Services. Tender No. : HFY-CON/OP0515-0539 Subject : Letter of Indemnity We hereby acknowledge to COMPANY as follows: 1. at our request, COMPANY has extended the above mentioned ITB Documents to us

to enable us to submit a Bid for the Services for consideration by COMPANY; and 2. we note and have understood that this Letter of Indemnity shall form part of the Bid

documents. In consideration of the foregoing and in acknowledgement of the sole right, prerogative and control of COMPANY over its Bid evaluation and AGREEMENT award processes, we hereby expressly agree to indemnify and hold harmless COMPANY against all Claims and damages, whether brought by our company, Bid partner(s)/associate(s), proposed subcontractor(s) and/or any party(ies) who participated with us or related to us in the Bid in any manner whatsoever, for any matter in relation to the above mentioned Bid and any decision(s) arising therefrom.

This Letter of Indemnity shall be valid from the date hereof and shall continue to survive beyond the Bid Closing Date and the subsequent AGREEMENT Award Date.

__________________________ Company __________________________ Signature __________________________ Name of Bidder’s Authorized Representative


FORM G7: ITB SUPPLEMENTS 1. Bidder confirms receipt of the following notice-to-Bidders and addendum, the

effects of which have been included in the Bid. Notice-to-Bidders No. * Dated Addendum No. * Dated

* Bidder to list


GENERAL AND TECHNICAL BID

PART 3.2

TECHNICAL


3.2 TECHNICAL

FORM T1: PERSONNEL AND KEY PERSONNEL

Bidder shall provide the following information: 1. Bidder shall list in tabular form the names and functions of all personnel and Key

Personnel that it proposes to use for the performance of the Services. The Bidder shall notify the COMPANY of the Bidder’s representative. Such representative shall have the right to bind the Bidder in all matters, financial and otherwise, related to the Services.

2. Bidder shall provide an overall company level organization chart and a detailed team

organization chart for the purpose of performing the Services in family tree form. 3. Bidder shall submit detailed resumes of all personnel and Key Personnel proposed

and shall include the following information as a minimum:

(a) Name

(b) Date of birth

(c) Nationality

(d) Academic and professional qualifications

(e) Experience and levels of responsibility held to-date


FORM T2: EXECUTION PLANS AND MANAGEMENT OF THE SERVICES

(a) Bidder shall provide the following information:

1. Bidder shall submit detailed Execution Plans.

2. Bidder shall confirm, in writing, its ability to perform the Services by the required time specified in the AGREEMENT.

(b) Management of the Services

1. Provide management team experience/qualification required for personnel proposed to perform the Services

2. Management methodology that demonstrates the responsibility, authority and accountability of the management team


FORM T3: SUBCONTRACTOR(S) AND SUBCONTRACT PLAN

Bidder shall provide the following information: 1. Bidder shall state in the enclosed Subcontract Plan, the names, addresses and other

details listed therein of Subcontractor(s) whom it proposes to employ to perform any of the Services upon which the Bid is based.

2. Bidder shall submit a brief report on financial status, summary of relevant work

experience and technical capabilities of each of its proposed Subcontractors.


ANNEX 1 TO FORM T3

SUBCONTRACT PLAN

Description Of

Services

Date of Award

(Planned)

Proposed

Subcontractor

Basis For Selection Of

Subcontractor (Proposed) **

Remarks

**Please indicate the basis for selection of Subcontractor:

(1) Lowest bidder (2) Proprietary (3) Others


FORM T4: PREVIOUS AND CURRENT WORK

1. Bidder shall provide details of previous and current work and all those works and

services that Bidder is presently tendering. Emphasis shall be given to those contracts which are similar. Provide details for those since the year 2000. Bidder shall also provide the names and details of the last three (3) companies that have contracted your services in the world with a contact number for their focal point for information evaluation.

2. Bidder may provide the same information for its Parent Company but on separate

sheets.


FORM T5: COMPULSORY INSURANCES

Bidder shall provide the following information which, following review and evaluation by COMPANY, will be incorporated in full or in part in the Contract which may result from this Bid:

Types of Insurances

Limit Of Insurances

Name and Address of Insurer

(1) Workmen's Compensation and Employer's Liability Insurance

(2) Comprehensive General Liability Insurance

(3) Any other Insurance(s)

Notes: (i) Bidder shall insert any other insurances that it intends to take out. (ii) The above shall not prejudice Bidder’s liabilities as set forth in the AGREEMENT

upon a successful Bid by the Bidder.


FORM T6: QUALITY ASSURANCE DOCUMENTATION

Bidder shall provide the following information: A. QUALITY ASSURANCE DOCUMENTATION 1. Bidder shall establish, implement and maintain an effective and documented quality

assurance system with respect to the Services.

2. Bidder is required to submit the following documentation:

(a) Quality assurance manuals of Bidder’s organization and of key Subcontractors;

(b) Copy of the approval certificate for the quality assurance system from any

authority or assessment agency for Bidder’s organization, if available; (c) A quality assurance plan; and (d) A completed quality assurance questionnaire in the form of Annex 1 to this

Form T6. The questionnaire shall also be filled in by Bidder’s key Subcontractors.

B. QUALITY ASSURANCE EVALUATION 1. COMPANY may perform a pre-award assessment of technical and quality assurance

capabilities based on the quality assurance requirements set out in the AGREEMENT.

2. Bidder shall confirm in its Bid that COMPANY will be given access to Bidder’s and

Subcontractors’ facilities and sites for the purpose of such evaluation. In the event of an AGREEMENT being awarded, COMPANY reserves the right to require the Contractor to take remedial actions within the time specified by the COMPANY if any of the stated system requirements are not met.


ANNEX 1 TO FORM T6: QUALITY ASSURANCE QUESTIONNAIRE This questionnaire shall be completed by Bidder and is intended to help the COMPANY's assessment of Bidder’s quality assurance system and its ability to comply with the requirements of the ITB Documents. Please answer all questions accurately and comprehensively. If a particular question is not applicable, write “N/A”. 1. BIDDER’S DECLARATION

We confirm that the COMPANY and/or its representative will be given access to all relevant matters/persons/facilities/sites to conduct a pre-award on-site evaluation, if deemed necessary by the COMPANY.

We confirm that the information provided in response to this questionnaire is correct to the best of our knowledge.

__________________________ Company __________________________ Signature __________________________ Name of Bidder’s Authorized Representative

__________________________ Date


2. QUALITY ASSURANCE SYSTEM 2.1 What national/international quality assurance system standard is the basis for the

quality assurance system of your organization? ______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________

2.2 When was a formal documented quality assurance system first established? ______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________ Does the quality assurance system meet the full quality assurance requirements stated in the Contract? _________ Yes _________ No __________ Partly, give details

2.3 Does the organization hold a valid certificate of approval from any authority or assessment agency? _________ No _________ Yes, give details If yes, please attach a copy of this certificate and state its validity date.

2.4 If the organization does not hold a valid certificate of quality assurance system approval from any authority or assessment agency, does it intend to get a certificate in future?

____________Yes ___________ No

If yes, state when ______________________________________________________________________________________________________________

2.5 Have you been audited by COMPANY or its representative? ____________Yes ___________ No If yes, please state date of last audit. ______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________


2.6 Is the quality assurance manual/system description submitted with this enquiry an accurate description of the present quality assurance manual/system adopted by the organization? Please give details in answer _____________________ Requirements fully implemented _____________________ Requirements partly implemented _____________________________________________________________________________________________________________ Were there any relevant recent changes in the organization or procedures which are not addressed in your quality assurance manual? Give details. ______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________ Provide details of the nominated quality assurance manager/representative for each respective organization Name: _______________________ Job title: _______________________ To whom does he/she report: _______________________ What function does he/she perform? (State all functions and not only those performed as quality assurance manager/ representative). ______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________

2.7 Has the quality assurance manager/representative received any formal training in

quality assurance? Please answer for each organization. If so please provide details (i.e. training received, dates, where, etc.) ______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________

2.8 Are quality assurance system audits performed within the organization?

_____________ Yes __________________ No If Yes, please state who performed these audits. When the last audit was performed (month/year)? Please attach a sample copy of an audit report and a copy of your audit schedule. ______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________


2.9 How are the organization’s Subcontractors evaluated and followed-up on? (Tick as

applicable) __________________ Quality surveys/quality assurance system audits __________________ Record of Subcontractors’ performance __________________ Planned inspection visits to Subcontractors __________________ Others (Please specify):

2.10 List planned procedures to be employed for this Bid. ______________________________________________________________________________________________________________ ______________________________________________________________________________________________________________


FORM T7: SAFETY PROGRAMME

Bidder shall provide the following information: 1. Bidder shall provide details of its proposed HSE Plan and measures to be taken to

ensure safe competent behavior of Bidder’s and Subcontractor’s employees in order to comply with the provisions of the AGREEMENT.

2. The Plan shall address such items as training, induction courses, medical facilities

and safety equipment to be provided by Bidder. 3. Bidder shall submit its last five (5) years and year-to-date safety record. The record

shall indicate Bidder’s overall safety statistics.

As a minimum the following information shall be furnished:

(a) number of lost time injury;

(b) number of minor injuries;

(c) number of fatalities;

(d) total lost workdays;

(e) lost time injury frequency;

(f) severity; and

(g) major fires. 4. Bidder shall submit a copy of its latest safety manual together with the HSE plan.

The HSE plan shall include, but not be limited, to the following:

(a) safety organization for the performance of the Services;

(b) ratio of supervisors to workers;

(c) a register of hazards identified in performing the Services;

(d) control measures to manage item (c);

(e) management audits and inspections;

(f) name(s) of competent safety officer(s); and

(g) safe handling and storage of substances hazardous to health.


FORM T8: BIDDER QUESTIONNAIRES

Bidders are hereby required to respond to each of the following mandatory questionnaire: 1. Kindly specify the manufacturing date of the quoted Directional Tools. Also

mention if they are brand new or used tools?

2. Kindly provide the detailed mobilization schedule of the directional drilling tools i.e. time required to start the services at first well after signing the Agreement.

3. Please provide detail list of your total international projects involving similar services for the past ten years.

4. Please provide your HSE manual and Risk Register developed for the operations. Please also provide us your safety records and LTI (lost Time Injury) record for last four (4) years operations.

5. Do you have any operational and Logistics base support in Iraq? If YES, Please specify the location. If NO, please mention your plan to establish your supporting base in

Iraq.

6. What is the average cash flow of the last three (3) years of your operations? Also provide the audited annual financial report for the last three years.


FORM E PART A - BID EXCEPTIONS

(To be submitted In Technical Bid Proposal submission only without revealing any cost impact)

No

ITB Reference

(Section no. or Appendix no.)

Exact New Wording Proposed By Bidder

Reason(s) For

Exceptions

Effect On The Works

(time, scope etc.)

Cost Impact

(Value to be revealed in Commercial Bid Proposal only. For Part A, please indicate with

the asterisk [*] sign in the corresponding row the item

which has cost impact) 1

*

2

*

3

*

4

*

Note

If Bidder cannot accept COMPANY's wording at any price, and is willing to take risk having its Bid Proposal rejected on this basis, then Bidder must state “FIRM - will not accept COMPANY's wording at any price" in the Cost Impact column.


PART 4

COMMERCIAL BID SUBMISSION


PART 4. COMMERCIAL

FORM C1: FORM OF QUOTATION

4.0 INTRODUCTION

All quotation submitted herein shall be deemed to be inclusive for the satisfactory performance of the Work as detailed in the Invitation To Bid Document. All quotation submitted herein shall then form Appendix B – Prices and Rates for the satisfactory performance of the Contract.

Bidder shall provide the following information:

1. Bidder shall specify a detailed breakdown of the:

(a) price/fee for performing the Services on daily rate basis; and (b) the prices of Equipment and goods and other consumables to be supplied in

connection with the performance of the Services; for the avoidance of doubt, the successful Bidder shall be responsible for delivering all such Equipment, goods and other consumables to the worksite specified in the Contract.

All prices, fees and rates shall be inclusive of any applicable Taxes.

2. Bidder shall specify the price/fee adjustment to extend the Bid validity for each

30-calendar day period up to an additional period of 60 calendar days beyond the initial Bid Validity Period.

3. In providing such information, please use the form provided in Appendix B – Prices

and Rates (Pro-forma Agreement for the Provision of Directional Drilling Equipment and Services).

Bidder shall specify the price/fee adjustment to extend the Bid validity for each 30-calendar day period up to an additional period of 60 calendar days beyond the initial Bid Validity Period. For extension of Bid Validity period beyond the date specified above, the price adjustment, if any, shall be as follows:

% Increase For the first 30 days extension of Bid Validity …………….. For the second 30 days extension of Bid Validity ……………..


FORM E PART B - BID EXCEPTIONS

(To be submitted In Commercial Bid Proposal submission with cost impact revealed. The items must be similar to Form E, Part A)

No

ITB Reference

(Section no. or Appendix no.)

Exact New Wording Proposed By Bidder

Reason(s) For

Exceptions

Effect On The Works

(time, scope etc.)

Cost Impact

(Please state cost addition or reduction if exceptions are to be

rejected or accepted by COMPANY.)

1

2

3

4

Note

If Bidder cannot accept COMPANY's wording at any price, and is willing to take risk having its Bid Proposal rejected on this basis, then Bidder must state “FIRM - will not accept COMPANY's wording at any price" in the Cost Impact column.


PART 5

COMPANY REGISTRATION DOCUMENTATION AND AUTHORIZATION


PART 5 – COMPANY REGISTRATION DOCUMENTATION AND

AUTHORIZATION

BIDDER shall submit in a separate and clearly marked envelop as “COMPANY REGISTRATION DOCUMENTATION AND AUTHORIZATION”, the following documentation (i) a copy of the Certificate of Incorporation and existence in the relevant jurisdiction, (ii) a copy of the Articles and/or Memorandum of Association, and/ or Bylaws, as the case maybe under the relevant jurisdiction, (iii) appropriate authorization and/or Power of Attorney for bidder’s legal representative(s), and (iv) a copy of Business License required for performance of the Work of Bidder, or each member of Bidder in case Bidder is a Joint-Venture/Consortium. For Work to be performed in Iraq or Dubai, the appropriate Iraqi Business License or the Registration of the Branch in Iraq or in Dubai is required. If a Parent Company Guarantee is required, then the same documentation provided by bidder shall be required for the parent or controlling company; as well as, the corporate structure showing the relationship between bidder and the parent company, authorized by an appropriate officer of the parent company. All the documents above mentioned under (i), (ii), (iii) and (iv) shall be duly legalized and/or notarized and/or authenticated according to the applicable rules in the respective jurisdiction, as per common usage in the international oil and gas industry. If the documents required are not originally in the English language, they have to be translated into English by public authorized translator (except if documents are issued by the Iraqi authority).


PART 6

FORM OF BID BOND


PART 6 - FORM OF BID BOND

FORM B1: FORM OF BID BOND

Date: [Insert date of issue and Reference Number] To: PetroChina International Iraq FZE Iraq Branch A company duly domiciled in the Republic of Iraq and having its main office at PetroChina Halfaya Base Camp, Kahla’a, Missan province, Republic of Iraq (the “Company”). We, [Insert name and branch address of the issuing bank] (the “Guarantor”), hereby issue in favour of Company this Bid Bond number [Bank to insert reference number], in the aggregate maximum amount of [Insert amount in figures and words, and currency] (hereinafter referred to as the “Bid Bond”) on behalf of [Insert Bidder complete company name and address] (the “Bidder”), in connection with its bid for Tender No. [insert bidding reference number].

Guarantor unconditionally and irrevocably undertake to pay to Company, without deduction or set-off of any kind, the Bid Bond upon receipt of a Demand for Payment stating that Bidder (i) has withdrawn its offer during the tender period or before the expiry of this Bid Bond, (ii) has increased its quotation without technical deviations approved by Company during the original bid validity period, (iii) has increased its quotation with amount more than the amount specified in form of commercial proposal in case Company extends the bid validity period, or (iv) while was declared the successful bidder, Bidder did not sign the contract corresponding to its offer or failed to provide the Performance Guarantee requested in the tender process, without Company consent. Company is not required to substantiate its Demand for Payment or submitting any additional document(s). Payment under this Bid Bond shall be made by wire transfer of immediately available funds to the account specified in the Demand for Payment on the second banking day after the day on which the Demand for Payment is received or on the third banking day after the day on which the Demand for Payment is received, if the day of reception is not a banking working day or the Demand for Payment is received after banking working hours at the Payment Office.

Demand for Payment shall be submitted at [Insert exact location and addres of the issuing bank branch] (the “Payment Office”), to the attention of: [Issuing bank to insert reference] and shall mention this Bid Bond number.

All drawings under this Bid Bond must be made on or before [Insert exact expiry date] (the “Expiry Date”). Upon the Expiry Date, this Bid Bond shall become null and void, whether returned to the Guarantor for cancellation or not and any claim or statement received after the Expiry Date shall be ineffective and not accepted; provided, however, that any claim or demand received by us prior to the Expiry Date in accordance with its terms shall not be affected.

This Guarantee shall be construed in accordance with and governed by the Laws of England and Wales (without reference to its rules as to conflicts of laws), excluding the Contracts (Rights of Third Parties Rights) Act 1999. Any dispute arising out of the terms and conditions, interpretation, validity or enforceability of this Guarantee shall be shall be finally and exclusively settled by arbitration according to the Hong Kong International


Arbitration Centre Administered Arbitration Rules, as in effect on the date of the isuue of this Bid Bond; the arbitration shall take place in Hong Kong, Special Administrative Region of the People’s Republic of China, in the English language. Signature(s),


ANNEX 1

Form of Payment Demand

Date: [date]

To: [Issuing bank name and address]

From: [COMPANY name and address]

Re: Demand on the Bid Bond number [·] issued on [date] by [issuing bank name and address] (the “Bid Bond”).

Dear Sirs,

We, the undersigned, being the beneficiary under the above captioned Bid Bond issued by [issuing bank's name and address] on the instructions of [Bidder's name] (the “Bidder”), hereby request you to pay to us on receipt by you of this demand the amount of [currency and amount in figures and letters] only.

We certify that this demand for payment is permitted under the terms of the Instructions to Bidder issued on [●] by the COMPANY to the Bidder.

Please make payment on this demand by wire transfer of immediately available funds to the following account:

[to be provided when demand is delivered]


By: ______________________

Name: ______________________

Title: ______________________


SECTION IV PRO-FORMA AGREEMENT FOR THE


ATTACHED


SECTION V

DEFINITIONS


DEFINITIONS AND INTERPRETATIONS

For the purpose of the ITB Documents, unless the context otherwise requires or unless defined elsewhere in the ITB Documents, the terms defined in this Section V shall have the meanings ascribed to them in this Section V. All words (whether gender-specific or gender neutral) shall be deemed to include each of the masculine, feminine and neuter genders, and words importing the singular include the plural and vice versa.

AGREEMENT means the Pro-forma Agreement for the Provision of

Directional Drilling Equipment and Services as originally executed or as it may be supplemented or amended from time to time.

Bid means the bid submitted by the Bidder.

Bank Guarantee

means an irrevocable and unconditional guarantee in form and content as set forth in Appendix H (of Pro-forma Agreement) and issued by a commercial bank acceptable to the COMPANY that has at least A- rating of its long-term debt from Standard & Poor's Ratings Group (or any successor thereto) or at least A3 rating of its long-term debt from Moody's Investors Service (or any successor thereto).

Bidder

means the person or entity to which the COMPANY intends to provide and has provided the ITB Documents.

Claim means any cost, demand, loss, delay, liability, expense of any kind or nature (including legal costs on a full indemnity basis, and any penalties or fines) or any other obligation of whatever nature.

COMPANY means PetroChina International Iraq FZE Iraq Branch or its successor, assignee or designee.

AGREEMENT Award Date

means the date when COMPANY notifies Contractor that it has been awarded the Agreement.

Contractor means the successful Bidder to the Agreement or the successor of the Bidder.

Insurances means all policies and contracts of insurance which are from time to time taken out or entered into in respect of the Equipment and all benefits of such policies and contracts including all claims of whatsoever nature and return of premiums.

Key Personnel means the key persons nominated by the Contractor in carrying out the Agreement.

Parent Company means the company which is the ultimate registered and/or beneficial owner of Contractor.


Parent Company Guarantee

means the guarantee to be provided by the Parent Company guaranteeing the due and proper performance of Contractor's obligations under the Agreement in the form set forth in Appendix I of the Agreement.

Scope of Services means the requirements set forth in the AGREEMENT.

Specifications means any documentation which have been or are to be provided by COMPANY to Contractor by way of guidance for performing the Services but on the strict understanding that COMPANY shall have no liability or obligation to ensure the accuracy or completeness of such documentation and Contractor shall always be responsible for checking their content and accuracy prior to using them.

Subcontract means any contract between Contractor and any other third party or parties for performance of any of the Services.

Subcontractor means any third party entering in to a Subcontract with Contractor.

Tax means any and all forms of taxes, levies, imposts, contributions, duties and charges in the nature of taxation, value added tax, goods and services tax and any other stamp, transaction or transfer taxes and all withholdings or deductions in respect thereof of whatever nature whenever imposed and whether directly or primarily chargeable against, recoverable from or attributable to the Contractor or any other person, with respect to or arising from the performance of the Services, including all fines, penalties, charges and interest relating to, and all amounts required by law to be paid pending resolution of disputes (including payments for tax reserve certificates) on account of, the same and any failure to lodge or prepare or an error or omission in relation to any document, statement or other information relating to Tax required to be lodged.

PetroChina International Iraq FZE Iraq Branch · a majority of its board of directors, (c) is a...

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