Terms of Reference
High Prices Right

FOR OIL

Is the amount that the Contractor shall pay since the moment the accumulated production of each Exploitation Area, including the royalty volumes, exceeds 5 million barrels of liquid hydrocarbons and in the event the price of the WTI benchmark (West Texas Intermediate) exceeds the Po base price.

Formula defined in the E&P Contract, Clause 16.2

Q= [(P-Po)/P] xs

FOR GAS

Is the amount that the Contractor shall pay to the ANH five (5) years after the start of the exploitation of the field, in the event that the price of the natural gas “US Gulf Coast Henry Hub” benchmark exceeds the Po base price.

Formula defined in the E&P Contract, Clause 16.2

Po = Po(n-1) x (1+ I(n-2))

The Contractor must pay to the ANH an amount in US dollars payable per calendar month lapsed, within the thirty (30) calendar days following its expiration.

The Po base price is adjusted annually with the variation of the US producers’ price index.

The E&P Contract determines a special base price for heavy liquid hydrocarbons with an API gravity higher than 10 degrees (10o).

For heavy liquid hydrocarbons, with an API gravity lower or equal to ten degrees (10o), there is no right for high prices in favor of the ANH.

For natural gas destined to domestic consumption within the country, in case its price is regulated by the Energy and Gas Regulatory Commission - CREG - or the entity that replaces it, there shall not be right of high prices in favor of the ANH either.

Royalties


API gravitry of Liquid Hydrocarbons produced
Po (USD $/Bl)
(year 2009)
More than 29° API

$30.22

More than 22° API and less or same as 29° API $31.39
More than15° API and less or same as 22° API $32.56
Discoveries located deeper than 300 meters of water depth. $37.20
MMore than 10° API and less or same as 15° API $46.50
Natural Gas exploited:
Straight line distance between delivery and receiveing point in the destination country.
Po
(USD $/MMBTU)
Less or same as 500 km $6.98
More than 500 km and less or same as 1000 km $8.13
More than 1000 km or LNG plant $9.30

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