CONCESSION Deal FOR THE Purely natural Gas TRANSPORTATION BY PIPELINES FROM CAMISEA UP TO THE Town GATE

CONCESSION Deal FOR THE Purely natural Gas TRANSPORTATION BY PIPELINES FROM CAMISEA UP TO THE Town GATE

SUMMARY

Contracting Events

• Grantor:    Ministry of Electricity and Mines
• Grantee Partnership:     Consortium composed by Tecgas N.V., Pluspetrol Sources Corporation, Hunt Pipeline Enterprise of Perú L.L.C., SK Corporation, L’ Entreprise Nationale Sonatrach and Graña y Montero S.A.A.

Deal Supervising Entity

OSINERG

Deal Function

Structure, provide of products and services, development, procedure and servicing of the Procedure of Purely natural Gas Transportation by pipelines from Camisea up to the Town Gate, and rendering of the Purely natural Gas Transportation service from Camisea to the Town Gate.

Phrases of the Deal

• BOOT Deal for the Concession of the Purely natural Gas Transportation from Camisea to the Town Gate.
• The Grantee Partnership included by virtue of the Deal hereof was granted the both, concessions of Purely natural Gas Distribution in Lima and Callao and Liquid Transportation, signing the corresponding concession contracts. Within a highest term of fifteen months as of the closing day (Deal signing day), claimed Grantee Partnership shall assign the Concession Deal for the Purely natural Gas Distribution to a Distribution Grantee Partnership, getting the unique Grantee Partnership the holder of the Concessions of Purely natural Gas Transportation from Camisea to the Town Gate and Liquid Transportation.

Concession Scope

The concession addresses the route of the Purely natural Gas pipeline from Camisea up to the Town Gate. The town Gate shall be situated in Pampa Río Seco at Santa María del Mar in the Province of Lima.

The granting of the concession does not confer exclusiveness of the route

Concession Exploitation

• Concession Products:

These are the complete realties and personalities, these kinds of as legal rights, pipes, machines, compression stations, delivery systems, fittings and, in basic, all functions, machines and services needed for the Purely natural Gas Transportation, applied by the Grantee Partnership, pursuant to the Regulation conditions for Hydrocarbon Transportation by Pipelines and the Concession Deal for Purely natural Gas Transportation, to render the service of Purely natural Gas Transportation. The Concession products shall be furnished by the Grantee Partnership and transferred to the Grantor at the Concession Termination.

• Services of Purely natural Gas Transportation:

This is the utility rendered by the Grantee Partnership consisting of acquiring, transporting and providing a decided quantity of Purely natural Gas, by means of the Procedure of Purely natural Gas Transportation, from the reception place (Las Malvinas in Camisea) up to the delivery place (situated in the Town Gate), pursuant to the Concession Deal for the Purely natural Gas Transportation by Pipelines and the Relevant Regulations. For the Services rendering, the Grantee Partnership shall function the Procedure of Purely natural Gas Transportation and use the relaxation of products forming the Concession Products.

Concession Term

The Concession is granted for a 30-three calendar year term as of the Closing Date. Four a long time just before the termination, the Grantee Partnership may perhaps request the term extension, up to 10 a long time and so forth till finishing a highest of sixty a long time, integrated the standard legal result and extensions. The General Hydrocarbon Bureau of the Ministry of Electricity and Mines shall evaluate and confess the extension purposes. A Supreme Resolution shall be issued and an extension Arrangement shall be subscribed.  Likewise, new disorders that shall regulate the extension shall be decided on that event.

Payment conditions of the Concession

• The granting of the concession shall be free of any cost.
• The Grantee Partnership, even so, shall make a payment to OSINERG (Supervising Human body of Financial commitment in Electricity), CTE (Electricity Tariff Fee) and DGH (General Hydrocarbon Bureau), pursuant to what is furnished in Post 3° of the Regulation No. 27116 furnished by the Electricity Tariff Fee. The whole amount of claimed payment shall not exceed the 1{3ab7c693efb495afa9cfa5ed3bae9ca6a83fc9331ececd25f4b8df6798b4d127} of its yearly product sales.

Services of Purely natural Gas Transportation

• The Grantee Partnership shall account on a Strategic Operator of Transportation. This Prequalified Strategic Operator shall have out the complex operations of the Procedure of Purely natural Gas Transportation and Liquid Transportation, shall appoint the Transportation Procedure Supervisor and shall be the holder of the Minimum amount Functioning Fascination at least for a 10 calendar year-term, as of the closing day. The Minimum amount Functioning Fascination of the claimed Operator is thirty{3ab7c693efb495afa9cfa5ed3bae9ca6a83fc9331ececd25f4b8df6798b4d127} of the Grantee Partnership’s funds inventory.
• Tecgas N.V. Enterprise is the claimed Prequalified Strategic Operator of Transportation.
• The Unbiased Customers of Purely natural Gas situated in the Distribution Concession Space (Office of Lima and Constitutional Province of Callao), that is, those people which have a usage greater than 30 thousand cubic meters per working day (thirty 000m³ /working day), people of Purely natural Gas situated out of that place, the New Holder Grantee Partnership of the Concession for the Purely natural Gas Distribution in Lima and Callao soon after the corporate brake-up and the traders, all they shall have appropriate to open accessibility to the Procedure of Purely natural Gas Transportation from Camisea to the Town Gate, but only for transporting Gas made by the Producer holder of the hydrocarbon exploitation license in block 88, Camisea, all through the first ten a long time as of the Industrial Procedure Beginning Up. Following the expiration of that term, the fuel made by other producers may perhaps be transported.

·        The Services of Purely natural Gas Transportation ought to be rendered in equal treatment method, with out discrimination, in a trustful, private, constant and productive way.

Tariffs of Purely natural Gas Transportation ·        The tariffs for the Services of Purely natural Gas Transportation are fastened by immediate consequence of the Economic Offer you made in the bidding.

• The Economic Offer you of the Grantee Partnership was as follows:

Cost of Gas Transportation Services from Camisea to the Town Gate US$956,340.00

Cost of Liquid Transportation Services from Camisea to Coast

US$ 401,373.00

Cost of Gas Distribution Services in Lima and Callao

US $91,287.00

= Full Services Cost: US$ 1,449,000.00

• The Tariff is the payment for the use of the Transportation Community.  The claimed tariff shall be reviewed in the term and less than the disorders furnished by the Advertising Regulation for the Purely natural-Gas-Market Progress, its Regulation, the Regulation of Hydrocarbon Transportation by Pipelines in whichever it is relevant, and the dispositions of the CTE.
• The Economic Offer you has been presented looking at that the ensuing tariff of the proposed Cost of Services for the Purely natural Gas Transportation (Cost of Services) shall be to compensate the development and procedure of a Purely natural Gas pipeline with a least capability of four hundred and fifty million cubic feet per working day (450 MCFD), which shall be reached gradually.
• The tariff shall be named Controlled Tariff.  For the circumstance of the Electric powered Generators, the Controlled Tariff shall be equal to the Essential Tariff, which is the quotient divided into the Cost of Gas Transportation Services and the whole Guaranteed Capacity of the Transportation Community.  The Full Guaranteed Capacity of the Transportation Community shall be equal to the present worth of the regular Guaranteed Capacities, looking at the Period of time of Recovery (interval among the Industrial Procedure Environment Up and the thanks day of the Deal) and the Discounted Charge fastened in the Concession Deal for the Gas Transportation. The Controlled Tariff for Other Customers (other than the Electric powered Generators) shall be equal to the quotient of the present worth of yearly Guaranteed Revenues divided into the present worth of the projections of the yearly Contracted Capacities.
• The Grantee Partnership shall style and design, provide the needed products and services for the development of the Procedure of Purely natural Gas Transportation by pipelines, function and retain the referred Procedure, as very well as render the service of Purely natural Gas Transportation from Camisea to the Town Gate.
• The Grantee Partnership shall execute the functions included in these kinds of a way that the commercial procedure starting off up occurs inside of 44 months soon after the Closing Date. As soon as the Industrial Procedure Starts Up, the Procedure of Purely natural Gas Transportation shall be ready to transport Purely natural Gas from the reception place to the delivery place, covering at least the assured capability, as it is indicated in the clause 14 of the Deal.
• The service shall be trustful, productive, constant, with equal treatment method for each service group and it shall meet up with the good quality benchmarks of the Relevant Regulations, the intercontinental benchmarks acknowledged in the Relevant Regulations and in the Appendix Nº 1 of the Concession Deal.
• The Grantee Partnership shall have contractual and non-contractual civil liability insurances. Likewise, it shall get a coverage that addresses the worth of the program of Purely natural Gas Transportation and the fuel losses.
• The financial proposal of the Grantee Partnership is comprised by the Full Services Cost, which is made up of the Cost of Gas Distribution Expert services, Gas Transportation and Liquid Transportation. The Cost of Purely natural Gas Transportation Services, as very well as the expenditures of every segment, is formed by the financial commitment charge as well as the procedure and servicing charge. On the foundation of the Cost of the Purely natural Gas Transportation Services, the Grantee Partnership shall be entitled to cost the Controlled Tariff for the use of the Gas Transportation Community. Its financial commitment dedication shall be formed by the Procedure of Purely natural Gas Transportation from Camisea to the Town Gate.
• The Grantee Partnership shall be granted the incentives furnished by the Supreme Decree Nº 059-96-PCM, its regulation and other relevant supplementary dispositions for the traders that have been granted concessions less than the scope of claimed rule. On top of that, the Ministry of Electricity and Mines, by proposal of the CTE and by Supreme Decree Nº 057-ninety nine-EM dated 11.eighteen.ninety nine have granted to the Camisea venture of transportation program main community and superior tension distribution, the assurance regarded in the Regulation Nº 27133, Advertising Regulation for the Purely natural-Gas-Market Progress. This system assures the Grantee Partnership the yearly revenues that thoroughly compensate the expenditures of the superior-tension community services, matter make any difference of its financial provide. Likewise, the S.D.057-ninety nine-EM appointed the Empresa Transmisión Eléctrica Centro Norte S.A. (ETECEN) (Heart North Electric powered Transmission Enterprise) as the entity liable for the assortment of the yearly amount fastened by the CTE to make productive the afore talked about assurance of main community, and its payment to the Grantee Partnership, in regular installments.
• At the closing day, the Grantee Partnership submitted in favor of the Ministry of Electricity and Mines, a assurance (Stand By letter of credit score) of devoted success for US $92 tens of millions, with legal result up to one hundred and fifty (150) calendar times soon after the commercial procedure starting off up. Mentioned assurance is the very same one granted for the Concession Deal for the Purely natural Gas Distribution and the Concession Deal for Liquid Transportation from Camisea to the coast.
• On the day of the Industrial Procedure Beginning Up, a US$ 2 million lender assurance shall be granted to include all the Grantee Partnership’s liabilities till the expiration of the Deal term or its Forfeiture.
• Expiration of the Deal term.
• Arrangement among the functions
• Rescission of the Concession Deal
• Declaration of forfeiture for the grounds and less than the procedure regarded in the Regulation of Hydrocarbon Transportation by Pipelines.
• Acceptance of the Concession abandonment submitted by the Grantee Partnership pursuant to the provisions of the Regulation for the Hydrocarbon Transportation by Pipelines.
• All conflicts and controversies concerning the Deal shall be solved right by the Events.
• In circumstance that the Events do not fix right the conflict or controversy in the term set for it, it shall be outlined as follows:
• Technological controversy: Conclusion of an skilled appointed by the functions.
• Non-Technological Controversy: Intercontinental arbitration to be carried out in Washington D.C., United States of The united states, in accordance to the regulations of Reconciliation and Arbitration of the Intercontinental Heart of Disputes Arrangement on Investments (“CIADI”) recognized in the Arrangement of Disputes Arrangement on Investments among States and Nations of other States, authorised by Peru by Legislative Resolution No. 26210, if the non-complex controversy includes an amount greater than 10 million of US Bucks or if it can not be quantified or valued in revenue or if the quantity of which is not agreed by the functions.  For controversies of an amount equal or lesser than 10 million of US Bucks, the system will be the countrywide arbitration in accordance to the Polices of Reconciliation and Arbitration of the Heart of Nationwide and Intercontinental Arbitration of the Chamber of Commerce of Lima, with supplementary application of Regulation No. 26572, General Arbitration Regulation.

Rights and Duties of the Grantee Partnership

Investments and Incentives

Ensure of Deal Success

Concession Forfeiture

Controversies Resolution