Contract Terms & Conditions

 

Type of Contract
Under the License Contract, the Contract holder acquires ownership of the hydrocarbons produced in the contracted area and pays a royalty to the state. The Contract holder assumes the exploration risk and provides all technical, economic and financial resources to carry out the contract.



Contract Term
The contract term includes 2 phases: exploration and exploitation. For oil, the contract runs for a total of 30 years. In the case of natural gas and condensates, the total term of the contract is 40 years.



Exploration Phase
The exploration phase has duration of seven years with an eligible three years extension that may be divided into several periods as agreed upon in the contract. The Contract may be ended at the end of any of the periods, depending of the results of the exploration activities and the fulfillment of the

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Minimum Work Program.

If during any period in the exploration phase the Contract holder strikes an oil discovery which is not commercial due to the lack of transportation infrastructure, he may request that the discovered field or fields be retained for a period of up to five years, in order to develop the infrastructure necessary to transport the hydrocarbons to market.

Should the Contract holder discover non-associated gas or natural gas with condensates during any period in the exploration phase, he can request a retention period of up to ten years in order to develop a market for these products.

In case of drilling one unsuccessful exploratory well, the Contract holder may request the extension of the exploratory period to study and integrate the exploration results before assuming the obligation of a new exploratory period.



Work Programs
Perupetro is open to negotiate flexible work programs for each of the exploration phase periods agreed upon the contract. The work program may be established in Exploratory Working Units (Unidades de Trabajo Exploratorio - UTE) according to which the Contract holder is free to execute a work program in order to fulfill the number of UTEs agreed upon for each period.



Release of Areas
Area relinquishments will be negotiated for each contract. Perupetro’s flexible criteria may allow the Contract holder to retain exploration areas beyond the exploration phase.



Valuation
The valuation of the crude oil and condensates produced is based on the international prices of a basket of hydrocarbons by common consent of the parties. Gas valuation is based on the actual selling price for the natural gas produced in the contract area. This price should reflect the market price of the gas produced in the contract area.

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Assignment
The Contract holder, or any of the individuals or companies of which it consists, may assign its share of the contract or enter into association with third parties, subject to prior approval granted through Presidential Decree.



International Arbitration
Contract is under jurisdiction of Peruvian laws. International arbitration is considered an alternative for any controversy, difference, conflict or complaint regarding the contract that may arise between the Contract holder and Perupetro and which can not be resolved by mutual agreement.