Albania Ministry of Energy and Industry, has announced
the open of available Areas
4, 5 and Dumre, C and Panaja with deadline of application 15.07.2015. Meanwhile
for the onshore and other offshore Areas, due to the consolidation of seismic
data, to a postponed period. The “Petroleum Law”, No. 7746, date
28.07.1993, authorizes the Ministry to enter into a Production Sharing
Agreement (PSA).

According to “Petroleum Law”, the Production Sharing Agreements PSA based on Technical Clauses. First of all, under the petroleum agreement the Contractor is
authorized to conduct petroleum operations during an Initial Exploration
period, which can be extended twice. However, it is preferred that the
Exploration Period includes a drilling commitment by the Contractor. In more if
the Contractor declares a commercial discovery during the exploration period,
it has the right to extend for a development/production period of twenty-five
years, which can be prolonged according to the “Petroleum Law”.

During
the exploration period, the Contractor is subject to minimum work programs and
expenditure obligations. In the case of either the Initial Exploration period
or the additional Exploration period expiring and the Contractor not having
fulfilled its obligations for the said period, the Contractor must pay to the
Government the monetary equivalent in respect of the work not carried out. All
monetary obligations are expressed in US Dollars.

Before
the end of each Contract year, the Contractor must submit and present to
National Agency of Natural Resources the exploration program and budget for the
next Contract year. National Agency of Natural Resources may suggest
modifications to the said work program and budget and the Contractor shall
implement them when found in accordance with good international petroleum
industry practice.

In
the event of a discovery, the Contractor shall notify National Agency of
Natural Resources and evaluation of this discovery will be carried out pursuant
to an approved appraisal work program. After appraisal, the Contractor will
declare to National Agency of Natural Resources the commercial implications of
the discovery.

If
the Contractor considers the discovery commercial, the area in respect of that
commercial discovery is set apart from the Contract area as a Development Area.
The Contractor prepares then a development plan, which is submitted for
approval by National Agency of Natural Resources.

For
the exploitation of discovered marginal fields, or fields that have become
marginal due to their exploitation, pursuant to Decree No. 782, of February 22,
1994 “On the Fiscal System in the Petroleum Sector”, the Council of
Ministers may issue special decisions to alleviate the fiscal system in order
to render possible the exploitation of the marginal fields.

In
the case of an oil discovery together with the flow of associated gas, the
Contract considers the utilization of such gas. (Provisions concerning the
flare and use of such gas either in petroleum operations or in the local economy
are open for negotiations). Contractor has the right to develop and produce the
natural gas discovered in the Contract Area. Preferably, such gas will be
utilized in the internal market or exported.

In
case of a commercial Natural Gas discovery, National Agency of Natural
Resources and the Contractor will negotiate additional terms in the P.S.C,
which will endeavour to ensure that the proportion of economic returns for both
parties is similar to that for an oil discovery. National Agency of Natural
Resources may process and utilize the natural gas with no compensation to the
Contractor where the Contractor considers that either the natural gas is not
required for use in petroleum operations, or there is no possibility of
exporting it, or its utilization is not economical.

According
to the “Petroleum Law”, if a petroleum reservoir is located partly in
the Contract Area and partly in another Contract Area and where it appears to
the Ministry that gains in efficiency may be achieved through the joint
development and operation of that reservoir, the Ministry shall have the right
to order the Contractors to develop and operate the reservoir jointly under an
agreement entered into by them for that purpose.

If at any time during the which a Petroleum Agreement
is in force the petroleum bearing strata in the Contact Area, forming part of a
single Commercial Discovery, overlap an area over which the Government of
Albania has jurisdiction and in respect of which no contact or license has been
entered into or is in force, the National Agency of Natural Resources and
Contractor shall enter into an agreement to enlarge the Contact Area
accordingly and to provide for the proper development of the Commercial
Discovery.

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