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National capital and activities to benefit the public

Key source of local content obligations in Equatorial Guinea is contained in articles 88 – 93 of the country's Hydrocarbons Law, which provide:

Article 88.The State, and the Contractors shall contribute to the study, design, construction, equipment, operation and maintenance of the Hydrocarbon Technological Institute of Equatorial Guinea and the creation of training centers for Persons from Equatorial Guinea working in Petroleum Operations or operations related thereto, regardless of their promotion, support and development of other training centers with similar purposes in existence in Equatorial Guinea.

Article 89.The Ministry shall adopt measures to guarantee, promote and encourage investment in the Hydrocarbon sector by Equatoguinean companies and shall create the conditions necessary for such purpose. As such, Contractors and their Associateswill comply with the measures adopted by the Ministry regarding the involvement of the National Companies in Hydrocarbons sector projects.

Article 90.Contractors and their Associates shall cooperate with the Ministry to carry out public benefit activities in order to promote the socio-economic development of Equatorial Guinea.

Article 91.The Government shall adopt measures aimed at the creation of national capital to encourage the participation of Persons of Equatoguinean origin to take part in Petroleum Operations. For that purpose, Contractors and their Associates must give preference to the use of goods, services, human resources and capital of Equatoguinean origin.

Article 92. Contractors shall train and integrate national personnel into all levels of
their organizations in accordance with this Law and the terms of their Contracts. In
addition to the above, each Contractor will likewise contribute to the training of
Ministry personnel. To that end, the Contractor shall annually provide the Ministry
with a sum in United States Dollars during the Exploration and Production periods.

This amount shall be determined by the Ministry in accordance with its prudent
judgment, by means of a resolution stating the grounds for such decision, and taking
into account factors such as the phase, whether Exploration or Production, in which
the Contractor is involved, as well as the level of activity being developed by the
Contractor within the country. These amounts shall be considered Petroleum
Operations costs.

Article 93. Contractors shall cooperate with the Government to identify projects
which promote the realization of public benefit activities of the broadest possible
impact on the public welfare. Contractors shall carry out all projects designated by
the Government and shall submit a proposal for approval by the Ministry prior to
undertaking any project not designated by the Government.

To that end, during both the Exploration and Production periods, the Contractor shall annually provide the Ministry with an amount in United States Dollars. This amount shall be determined by the Ministry in accordance with its prudent judgment, by means of a resolution stating the grounds for such decision, and taking into account factors such as the phase, whether Exploration or Production, in which the Contractor is involved, as
well as the level of activity being developed by the Contractor within the country.

Production sharing agreement terms

The following are typical Production Sharing Terms relating to local content:

Article 23
Local Content and Social Programs

23.1 Preference to Equatoguinean services

The contractor and its subcontractors undertake to give preference to Equatoguinean services, materials, equipment, consumables and other goods whose quality and time of delivery are comparable to those available internationally, provided that the cost in Equatorial Guinea is no more than 10% above the cost of similar services, materials, equipment, consumables and other equipment available internationally.

23.2 Employment and training of Equatoguineans

23.2.1 From the effective date, the contractor shall ensure priority employment for adequately qualified Equatoguinean personnel in all levels of their organisation, as the employee's skills allow, and as provided for in article 23.2.2, shall train or contribute in the training of such personnel to enable them to qualify for any position relating to petroleum operations. Expatriate personnel may only be employed if the contractor and its subcontractors have exhausted all possibilities of recruiting adequately qualified Equatoguinean personnel in the required area of specialization.

23.2.2 During the term of this contract, the parties comprising the Contractor (other than the National Company) shall spend a minimum (insert amount) Dollars per calendar year, to provide a mutually agreed number of ministry and National Company personnel with on-the-job training in the Contractor's operations in Equatorial Guinea and overseas and/or practical training at institutions abroad, particularly in the areas of natural earth sciences, engineering, technology, accounting, economics and other related fields of oil and gas exploration and exploitation. Additionally, during the term of this contract, the parties comprising the Contractor (other than the National Company) shall transfer to the Ministry a minimum of (insert amount) Dollars per calendar year which the Ministry shall use at its sole discretion to educate and train Equatoguinean personnel selected by the Ministry at universities, colleges or other training institutions selected by the ministry and for other general training and educational purposes.

The above costs will be recoverable as a Petroleum Operations Cost in accordance with the provisions of this contract.

23.2.3 If the Contractor funds any social projects outside of those approved in an Annual budget such costs shall not be recoverable as a Petroleum Operations cost.

23.2.4 Given that Equatoguinean civil society is a part of the local content in oil and gas contracts, the contractor shall contribute to and cooperate with non-governmental organizations in charitable works to develop society, sports activities and health programs to help fight and prevent disease, as well as other non-profit related activities.

23.3 National Technology Institute

The Contractor shall provide all reasonable assistance as may be requested from the ministry from time to time with the implementation and development of the National Technology Institute to train and develop mid and upper level personnel in the petroleum industry of Equatorial Guinea and in accordance with the Hydrocarbons Law.