About MOO
We are Isa bin Salman Al Khalifa, the Emir of the Bahrain State,
After reading the Constitution,
And on princely order no. 4 of 1975,
Law No. (12) of 1975 approves the partnership agreement between the Government of the State of Bahrain and The Bahrain Oil Company Ltd., and the agreement on the full ownership of the rights of exploration, facilities and production related to it between the government of the State ofBahrain and the Company ofBahrain Oil Ltd.,
Based on the offer of the Minister of Development and Industry,
After cabinet approval
We draw the following:
Article 1
The agreement on the full ownership of the rights of exploration, production, facilities and production was approved between the government of the State of Bahrain andthe Bahrain Oil Company Limited signed in Manama on 25 Muharram 1400 H, 15 December 1979, accompanying this law.
Article 2
Ministers must implement this law and work on it from the date it is published in the Official Gazette.
Prince of TheBahrin
Isa bin Salman Al Khalifa
Issued at The Rifaa Palace
Date: 10 February 1400 E
Corresponding: January 28, 1980
Agreement between the Government of the State ofBahrain
Bahrain Oil Co., Ltd.
1) The date of operation of this agreement:
The provisions of this agreement apply from the first day of the gregorian month immediately following the month in which the parties sign this agreement.
The financial settlement should be made on the basis that the financial implications of what is entrusted to the government are the same as if all these provisions were comprehensively implemented as of January 1979.
2) Production and escort:
2-1 Devolution of exploration and production rights:
The government will have the company's remaining 40% (40%) stake in exploration and production rights as well as related operations, facilities and production. In return for the receipt of the company payments stipulated in paragraph (2) the following:
2-2 Payments due from the proceeds of production:
The company is entitled toreceive27.78 US cents per barrel of crudeoil produced.
If the total crudeoil produced in any year is less than 20 million barrels, the company is entitled to a sum similar to the above amount for each barrel below the total amount mentioned, with a maximum capacity of 6,667,000 barrels.
3) Production processes:
The company continues to manage and managetheproduction facilities and operations on behalf of the government in exchange for compensation for all costs resulting from this in accordance with an employment agreement governing the rights and obligations of both the government, the NationalBahrain Oil Company and the company.
4) Sales of crudeoil and its prices:
The government agrees to sell to the company, as the company agrees to buy from the government all the crudeoil produced at a price determined on the basis of the commercial market price of medium Arab crudeoil of a qualitative weight of 31 degrees on the scale of the American Petroleum Institute as the price is determined from time to time in accordance with the arrangements in force in Saudi Arabia for sales of medium Saudi crudeoil with a similar specific weight.
The estimated price should be adjusted as mentioned above, taking into account the density difference according to the American Petroleum Institute's scale between this average Saudi crudeoil andBahrain oil, as well as a premium for the provision of shipping facilities.
5) Gas:
The government agrees to providea gascompany for its operations and the result ing from the field intended to apply the provisions ofthis agreement (field gas) at a price agreed by both parties from time to time.
6) Local marketing:
6-1. The assetsare given to the government and themarketing liability is taken over:
The government owns the company's assets in the petrol stations and related means of transportation, andthe government is responsible formarketing refinedoilproducts manufactured in the company's refinery and sold for consumption in thebahrin (local marketing).
6-2 Services:
The services that the company will provide and agreed upon, as well as the fees due for them in the field of technical advice, product distribution and other local marketing activities, are reviewed.
7) Compensation:
A- The Government pays the company after the necessary audit compensation equal to the net book value of the company's remaining 40% (40%) in exploration and production facilities as recorded in the company's records on January 1, 1979, estimated at US$5,800,000.
B- The government pays the company $620,000 for the company's assets at the gas stations and related transportation as it is on January 1, 1979.
8) General provisions:
8-1 escalation:
Both the Government and the Company agreed to increase the amount paid by the government to the company of 78.27 US cents from the proceeds of crudeoil production per barrel under the provision of paragraph (2) of section (2) of this agreement as well as the amount of the shipping facilities allowance referred to in the previous article (4). This is a monthly escalation on the basis of the escalation arrangements agreed between the parties.
8-2 Facilities:
The government agrees to grant the company all the appropriate facilities that meet the operating conditions agreed between the two parties and to the extent that the company can continue its remaining work inBahrain.
8-3 Fulfilling financial obligations:
The financial obligations of implementing the provisions of this agreement will be implemented as soon as possible after the date of its implementation.
8-4 Arbitration:
If the parties are unable to reach a amicable settlement in relation to any matter relating to the implementation of the provisions of this agreement or its interpretation, it shall be referred to arbitration inBahrain at the request of one of the parties to the dispute, provided that this is in accordance with the arbitration rules set out in Title VII of the Civil and Commercial Litigation Act issued by decree no. (12) of 1971, and the decision of the arbitrators is binding and final on both parties.
8-5 Existing agreements:
All agreements between the government and the company shall be cancelled prior to the date of operation of this agreement, except for agreements that expressly state that it will continue to operate.
9- The Minister of Development, Industry and Company may, in the public interest, make an amendment from time to time on any of the side books associated with the Convention, by agreement prior to the effective date of this amendment, this amendment was written in The City of Manama on 25 Muharram 1400 H on December 15, 1979 from two original copies in Arabic and English, and the two texts have the same authenticity.
About The Government forBahrain Oil Co., Ltd.
