APPENDIX to report of Amoco (UK) Exploration Co v. Imperial Chemical Industries plc
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1. Definitions and Interpretation
1.1 For all purposes of this Agreement (including the interpretation of the Recitals), except as is otherwise expressly provided herein, words and phrases defined in this Clause shall have the meanings ascribed thereto by this Clause.
"Capacity Facilities": means any offshore and/or onshore facilities used or to be used to produce, process and/or meter Capacity Gas, to cause the delivery of such Capacity Gas to an Entry Point, to accept Capacity Redelivery Gas at a Redelivery Point and deliver Capacity Redelivery Gas therefrom, or to accept Capacity NGL at an NGL Redelivery Point and deliver Capacity NGL therefrom. For the avoidance of doubt, Capacity Facilities do not include the CATS System;
"Capacity Gas": means that portion of CATS Gas delivered or to be delivered at an Entry Point or Points and transported or intended to be transported under the terms of the Capacity Reservation;
"Capacity Redelivery Gas": means Natural Gas redelivered or to be redelivered as Processed Gas or Unprocessed Gas to the ICI/Enron Party on behalf of a Capacity User at a Redelivery Point at the Redelivery Specification, in accordance with the Allocation Provisions;
"Capacity Reservation": has the meaning ascribed thereto by Clause 4.1;
"Capacity Reservation Rate": means a rate of 8,334,900 Cubic Metres of Capacity Gas per Day, as the same may be adjusted in accordance with this Agreement, as measured and determined at the Capacity Facilities upstream to the Entry Points in accordance with Clause 14;
"CATS Approvals": means all necessary consents and approvals in a form and substance satisfactory to the CATS Parties for the construction, operation and use of the CATS System, including without limitation the granting of all pipeline authorisations, planning and use permissions, pipeline wayleaves, consents of the Crown Estate Commissioners and the execution of pipeline crossing agreements;
"CATS System" means:
(a) the CATS Transportation Facilities.
"CATS Transportation Facilities": means the facilities to be constructed, owned and operated by the CATS Parties, as described in Schedule I;
"Commencement Date": means the later of 1st April, 1993 and the first day of the month commencing immediately after the date on which the CATS Operator notifies the ICI/Enron Party that:
(a) the CATS Approvals have been obtained by the CATS Parties;
(b) the CATS System has been tested and commissioned to the satisfaction of the CATS Parties; and
(c) the CATS Transportation Facilities are available to perform the Transportation Service for Capacity Gas at the Capacity Reservation Rate;
"Designated Field": has the meaning ascribed thereto by Clause 5.13(a);
"Entry Point": means one of the points described in Schedule IV or determined pursuant to Clause 3.4 or 3.5;
"Tie-In Works": means any activities of whatsoever nature undertaken within a distance of 5 kilometres from any part of the CATS Transportation Facilities related to the laying of a Capacity Pipeline or the tie-in of such Capacity Pipeline at a Connection Point, including, without limitation, any preconstruction seabed surveys, surveys involving drilling and seabed core sampling, excavation and site restoration work;
"Transportation Service": has the meaning ascribed thereto by Clause 6.1;
2. Effective Date and Conditions
2.4 (a) Subject to Clause 2.4(c), in the event the Commencement Date has not
occurred on or before 1st April, 1996, the ICI/Enron Party shall have the right, at any time after such date but prior to 1st April, 1998, by giving notice to the CATS Parties, to terminate this Agreement with immediate effect.
3. CATS Transportation Facilities
3.1 The CATS Parties shall cause the CATS Transportation Facilities to be constructed and capable of performing the Transportation Service for Capacity Gas in aggregate at the Capacity Reservation Rate by 1st April, 1993. The CATS System shall be owned by the CATS Parties.
3.2 (a) Subject to and in accordance with the other terms and conditions of this
Agreement, the CATS Parties and the CATS Operator shall construct, operate and maintain the CATS Transportation Facilities, at the cost of the CATS Parties, in accordance with the standard of a Reasonable and Prudent Operator and in such manner as to be capable of performing the Transportation Service for Capacity Gas in aggregate at the Capacity Reservation Rate from 1st April, 1993 until 1st October, 2018.
3.4 (a) The ICI/Enron Party shall be entitled, within 30 Days of the Effective Date, to
give one or more notices to the CATS Operator stating:
(i) the locations (stipulating latitude and longitude) of up to 5 sub-sea points at which any Capacity Facilities may be connected to the CATS Transportation Facilities (in addition to the points referred to in Schedule IV) and the diameters of the sub-sea tees to be installed at such points; and
(ii) the proposed Maximum Entry Point Rates for each such point.
3.6 The ICI/Enron Party shall be entitled to have one gas pipeline connected to the CATS Transportation Facilities at each Entry Point, provided that this Clause 3.6 shall not restrict the right of the ICI/Enron Party to select and determine the number of Designated Fields from which to produce and transport Capacity Gas to any Entry Point.
3.7 (a) The Entry Points referred to in Schedule IV shall be designed, procured,
constructed, installed, commissioned, certified and tested by the CATS Parties at their cost.
(c) The Entry Points referred to in Schedule IV shall be inspected, repaired and maintained by the CATS Parties at their cost.
3.8 (a) All Entry Points and all facilities referred to in Clause 3.7(b) shall be owned by
the CATS Parties and all Entry Points shall be part of the CATS Transportation Facilities.
4. Capacity Reservation
4.1 Subject to the other terms and conditions of this Agreement:
(a) the CATS Parties hereby reserve exclusively for the ICI/Enron Party, and any Capacity Users designated by the ICI/Enron Party, capacity in the CATS Transportation Facilities which shall be the capacity necessary to perform the Transportation Service for Capacity Gas in aggregate at the Capacity Reservation Rate. The capacity so reserved is hereinafter referred to as the "Capacity Reservation"; and
(b) the ICI/Enron Party shall be free at any time to utilise the Capacity Reservation in whole or in part itself or to contract with one or more third parties for the use of such Capacity Reservation or any part thereof and to allocate the capacity reserved under the Capacity Reservation among such third parties on such terms as the ICI/Enron Party in its absolute discretion thinks fit.
4.2 The Capacity Reservation shall commence at 6 o'clock a.m. on 1st April, 1993 and continue until 6 o'clock a.m. on 1st October, 2018.
5. Notice of Intended Use of Capacity Reservation
5.2 In the event that the ICI/Enron Party intends in good faith to procure the use of the Capacity Reservation for Capacity Gas other than from a Designated Field, the ICI/Enron Party shall give the CATS Operator a notice containing the following information with respect to such Capacity Gas:
(a) the proposed Entry Point for such Capacity Gas;
(b) the proposed Redelivery Point or Points for the Capacity Redelivery Gas derived therefrom;
(c) the date on which the Transportation Service in respect of such Capacity Gas is proposed to commence;
(d) the non-binding estimate of the date on which the Transportation Service in respect of such Capacity Gas is proposed to terminate (but in any event not later than 1st October, 2018);
(e) the specification in a format to be agreed of such Capacity Gas at the proposed Entry Point (hereinafter called "the Notified Specification");
(f) the bona fide estimate of the composition of such Capacity Gas during the proposed period of Transportation Service;
(g) the maximum rate of delivery (which, without prejudice to Clause 9.8 or 9.12 shall not exceed the Capacity Reservation Rate) of such Capacity Gas at the proposed Entry Point during the proposed period of Transportation Service (hereinafter called "the Notified Rate");
(h) the bona fide but non-binding estimate of deliveries of such Capacity Gas at the proposed Entry Point for each Contract Year during the proposed period of the Transportation Service;
(i) without prejudice to the provisions of Clause 8, the proposed target date and estimated schedule for completion of testing and commissioning of Capacity Facilities insofar as such testing and commissioning relates to the transportation of such Capacity Gas; and
(j) without prejudice to the provisions of Clause 8, if a new tie-in of a pipeline to the CATS Transportation Facilities is required with respect to such Capacity Gas, the proposed target date and estimated schedule for completion of the tie-in of such pipeline to the proposed Entry Point.
At the request of the CATS Parties following delivery of such notice, the ICI/Enron Party shall provide to the CATS Parties such further information relating to such Capacity Gas as the CATS Parties may reasonably require in order to evaluate the proposal with respect to the transportation of such Capacity Gas.
5.3 Promptly and in any event within 30 Days after the Notification Date, the CATS Operator shall notify the ICI/Enron Party that the CATS Parties:
(a) agree to provide the Transportation Service in respect of the Capacity Gas the subject of such notice;
(b) agree to provide the Transportation Service in respect of the Capacity Gas the subject of such notice and stating that notification shall be given pursuant to Clause 5.4 in respect of such Capacity Gas; or
(c) object to providing the Transportation Service in respect of the Capacity Gas on the grounds (which shall be stated in the notice) that:
(i) such Capacity Gas does not comply with the provisions of Schedule XVI (as amended from time to time in accordance with Clause 11.3);
(ii) the provision of such service on the terms specified in the notice given pursuant to Clause 5.2 would, in the opinion of the CATS Parties acting in good faith, cause a breach of this Agreement by the ICI/Enron Party; provided that the fact that the aggregate of the Notified Rates for all Designated Fields and all Currently Notified Gas exceeds the Capacity Reservation Rate shall not constitute a breach of this Agreement; or
(iii) in the case of a notice pursuant to Clause 5.2 in which the Notified Specification does not comply with the Input Pipeline Specification, in the opinion of the CATS Parties acting in good faith as a Reasonable and Prudent Operator, such objection is reasonable on technical, operational or regulatory grounds.
5.4 If the CATS Operator shall give the notice referred to in Clause 5.3(b), the CATS Operator shall promptly and in any event within 60 Days of such notice:
(a) notify the ICI/Enron Party that, without prejudice to Clause 8, the CATS Parties accept the proposed target dates and estimated schedules for tie-in, testing and commissioning of the Capacity Facilities and commencement of the Transportation Service proposed by the ICI/Enron Party pursuant to Clause 5.2;
(b) notify the ICI/Enron Party of the earliest proposed target dates and estimated schedules for the tie-in, testing and commissioning of the Capacity Facilities which the CATS Operator, acting as a Reasonable and Prudent Operator, believes is possible in respect of such Capacity Gas, taking into account only: (i) the contractual commitments of the CATS Parties existing on the Notification Date; (ii) maintenance of the CATS System scheduled or reasonably anticipated as at the Notification Date; (iii) the fact that the CATS Operator may need to construct, install, test and commission, at the CATS Parties' expense, facilities (other than those referred to in Clause 5.4(c)) in order to be able to provide the Transportation Service in respect of such Capacity Gas in accordance with the terms of this Agreement; or
(c) subject to Clause 5.5, notify the ICI/Enron Party of:
(i) any modifications (including additions) to the CATS System and the CATS System Additions which are or will be necessary, in accordance with the standard of a Reasonable and Prudent Operator, to permit the commingled stream consisting of:
(A) Natural Gas being or to be transported through all or part of the CATS Transportation Facilities pursuant to a Contractual Commitment; and
(B) all Currently Notified Gas (to the extent not included in sub-paragraph (A) above);
to be redelivered in compliance with the Redelivery Specification (whether or not it is currently being so redelivered), having regard to the bona fide projection of the range of compositions that may result from the commingling of such gases and the bona fide estimates of deliveries given by the ICI/Enron Party pursuant to Clause 5.2(h) in respect of such gases (including amendments to such information notified pursuant to Clause 5.13);
(ii) its reasonable estimate of the cost of such modifications (including additions) to the CATS System, the CATS System Additions and/or the operation thereof, which costs would not be incurred but for the acceptance of such Capacity Gas the subject of such notice having the Notified Specification and being transported at the Notified Rate (hereinafter referred to as "Notified Gas"), such costs to be determined and contributed in accordance with Schedule III; and
(iii) (A) the estimate of the CATS Operator, acting as a Reasonable and Prudent Operator, of the period of time required to make such modifications (and additions), (B) a notification in the terms of Clause 5.4(b), and (C) the date on which the CATS Operator, acting as a Reasonable and Prudent Operator and taking into account only the matters referred to in sub-paragraphs (A) and (B), estimates that the provision of the Transportation Service in respect of such Notified Gas shall commence.
The CATS Operator shall supply such additional information with respect to the matters set out above as the ICI/Enron Party may reasonably request.
In the event that, during the 60 Day period referred to in this Clause 5.4, the ICI/Enron Party elects or is deemed to have elected pursuant to Clause 5.7 or 5.8 not to receive the Transportation Service in respect of any other Capacity Gas currently the subject of a notice pursuant to Clause 5.2, such 60 Day period shall be extended by a further period of 60 Days commencing on the date of such election or deemed election and the CATS Operator shall promptly advise the ICI/Enron Party of such extension.
5.5 The CATS Parties shall not unreasonably refuse to provide the Transportation Service in respect of Capacity Gas which does not comply with the Input Pipeline Specification. Without limitation to the foregoing, the CATS Parties shall not be entitled to give a notice pursuant to Clause 5.4(c) if:
(a) the Notified Specification of the Capacity Gas complies with the Input Pipeline Specification; or
(b) the provision of the Transportation Service in respect of the Notified Gas will not cause:
(i) the commingled stream consisting of:
(A) Natural Gas being or to be transported through all or part of the CATS Transportation Facilities pursuant to a Contractual Commitment; and
(B) all Currently Notified Gas (to the extent not included in sub-paragraph (A) above);
to fail to comply with the Redelivery Specification at the point of redelivery from the CATS Transportation Facilities (whether or not it is currently being so redelivered): or
(ii) the CATS Parties to incur any costs of modifications (including additions) to the CATS System or the CATS System Additions which are or will be necessary in accordance with the standard of a Reasonable and Prudent Operator to permit such commingled stream to be redelivered in compliance with the Redelivery Specification (whether or not it is currently being so redelivered), having regard in either case to the bona fide projection of the range of compositions that may result from the commingling of such gases and the bona fide estimates of deliveries given by the ICI/Enron Party pursuant to Clause 5.2(h) in respect of such gases (including amendments to such information notified pursuant to Clause 5.13).
5.6 Promptly after receipt of the notice referred to in Clause 5.4(b) or 5.4(c) (as the case may be), the Parties shall endeavour in good faith to agree the date on which the provision of the Transportation Service in respect of the relevant Capacity Gas shall commence and the timetable for addressing the matters to be agreed pursuant to Clause 8.
5.7 Promptly and in any event within 90 Days after receipt of the notice referred to in Clause 5.3(a), 5.4(a) or 5.4 (b) (or (if later) within 30 Days of reaching agreement pursuant to Clause 5.6), the ICI/Enron Party shall elect by notice to the CATS Operator either:
(a) subject to the budgeting procedures set out in Schedule III, to commit in good faith to receive the Transportation Service in respect of the relevant Capacity Gas. Following such commitment, the ICI/Enron Party shall use reasonable endeavours to procure the delivery of the Capacity Gas in accordance with the terms specified in Clause 5.2 (as amended by any agreement pursuant to Clause 5.6), provided that the ICI/Enron Party shall not be obligated to take any steps to procure such delivery which would not be taken by a Reasonable and Prudent Operator and provided further that the commercial terms and conditions of any agreement between the ICI/Enron Party and a Capacity User will be subject to the approval of the ICI/Enron Party in its absolute discretion; or
(b) not to receive the Transportation Service in respect of such Capacity Gas.
If such notice is not given within such period, the ICI/Enron Party shall be deemed to have elected not to receive the Transportation Service in respect of such Capacity Gas.
5.8 Promptly and in any event within 90 Days after receipt of the notice referred to in Clause 5.4(c) (or (if later) within 30 Days of reaching agreement pursuant to Clause 5.6), the ICI/Enron Party shall elect by notice to the CATS Operator either:
(a) subject to Schedule III and the provisos in Clause 5.7(a), to commit in good faith to receive the Transportation Service in respect of the relevant Capacity Gas and to either:
(i) contribute all the costs of the modifications (and additions) and operations referred to in Clause 5.4(c)(i); or
(ii) subject to the prior written consent of the CATS Parties and procedures to be agreed between the Parties (which procedures shall be consistent with the standard of a Reasonable and Prudent Operator), itself provide such modifications (and additions) referred to above; or
(b) not to receive the Transportation Service in respect of such Capacity Gas.
If such notice is not given within such period, the ICI/Enron Party shall be deemed to have elected not to receive the Transportation Service in respect of such Capacity Gas.
5.9 (a) In the event of an election pursuant to Clause 5.8 (a)(i), the CATS Parties
shall use reasonable endeavours to:
(i) design, procure, construct, install, tie-in, certify, test and commission such modifications (including additions) in a timely manner and within the cost estimated by the CATS Operator pursuant to Clause 5.4(c)(ii) but at the cost of the ICI/Enron Party contributed in accordance with the provisions of Schedule III; and
(ii) commence the Transportation Service by the date agreed by the Parties pursuant to Clause 5.6.
(b) If the ICI/Enron Party elects, pursuant to Clause 5.8 (a)(i), to contribute all the costs referred to therein, such costs shall be determined and payable in accordance with Schedule III (whether or not such costs exceed the estimated costs but provided they are reasonable and reasonably necessary in accordance with the standard of a Reasonable and Prudent Operator).
(c) In the event of an election pursuant to Clause 5.8 (a)(ii) and subject to the prior written consent of the CATS Parties, the Parties shall use reasonable endeavours to agree (in a timely manner) procedures (which shall be consistent with the standard of a Reasonable and Prudent Operator) for the making of the modifications (including additions) notified pursuant to Clauses 5.4(c)(i). Subject to such prior written consent of the CATS Parties and such agreed procedures, the ICI/Enron Party shall design, procure, construct, install, tie-in, certify, test and commission such modifications (including additions) at the cost of the ICI/Enron Party and hand-over such modifications (and additions) to the CATS Operator. The CATS Parties shall (to the extent reasonable) co-operate with the ICI/Enron Party so as to permit it to carry out such modifications (including additions) in accordance with the agreed procedures (including without limitation by granting reasonable and timely access to the CATS System) and shall use reasonable endeavours to commence the Transportation Service by the date agreed between the Parties pursuant to Clause 5.6.
(d) The modifications (and additions) referred to in Clause 5.4(c)(i) shall, following testing, commissioning and (if applicable) hand-over, to the extent that they are required to process CATS Gas, form part of the CATS System and, to the extent that they are required to process Capacity Gas to meet the Redelivery Specification and the NGL Redelivery Specification, form part of the CATS Transportation Facilities.
5.10 The CATS Parties shall be entitled to withhold their agreement to the provision of the Transportation Service for any Capacity Gas if such gas does not comply with the provisions of Schedule XVI (as amended from time to time in accordance with Clause 11.3).
5.11 If the CATS Operator shall give the notice referred to in Clause 5.3(c)(ii) and if, within 30 Days from such notice, the Parties have not agreed whether or not the provision of the Transportation Service in respect of the Notified Gas would cause a breach of this Agreement, either the CATS Parties or the ICI/Enron Party may refer the dispute to an Expert for resolution. The Expert shall determine whether or not the provision of such service in respect of such Notified Gas would cause a breach of this Agreement. If the Expert determines that the provision of such service in respect of such Notified Gas would cause a breach of this Agreement, the CATS Parties shall be entitled to refuse to provide the Transportation Service in respect of such Notified Gas. If the Expert determines that the provision of such service in respect of such Notified Gas would not cause a breach of this Agreement, the CATS Operator shall notify the ICI/Enron Party in accordance with Clause 5.3 (other than Clause 5.3(c)(ii)) within 30 Days from the date of the Expert's determination and the remaining provisions of this Clause 5 shall apply as though there had been no reference to the Expert.
5.12 If the CATS Operator shall give the notice referred to in Clause 5.3(c)(iii) and if, within 30 Days from such notice, the Parties have not agreed whether or not the CATS Parties, acting as a Reasonable and Prudent Operator, are reasonably withholding their agreement to provide the Transportation Service in respect of the Notified Gas, either the CATS Parties or the ICI/Enron Party may refer the dispute to an Expert for resolution. The Expert shall determine whether or not the CATS Parties, acting as a Reasonable and Prudent Operator, are reasonably withholding their agreement to provide the Transportation Service in respect of such Notified Gas, and in making such determination shall only take into account technical, operational and/or regulatory grounds. If the Expert determines, in accordance with the foregoing, that the CATS Parties are reasonably withholding their agreement to provide the Transportation Service in respect of such Notified Gas, the CATS Parties shall be entitled to refuse to provide the Transportation Service in respect of such Notified Gas. If the Expert determines, in accordance with the foregoing, that the CATS Parties are unreasonably withholding their agreement to provide the Transportation Service in respect of such Notified Gas, the CATS Operator shall be required to notify the ICI/Enron Party pursuant to Clause 5.3 (other than Clause 5.3(c)(iii)) within 30 Days from the date of the Expert's determination and the remaining provisions of this Clause 5 shall apply as though there had been no reference to the Expert.
5.13 (a) If the ICI/Enron Party shall give a notice referred to in Clause 5.7(a) or 5.8(a),
then the Capacity Field from which such Capacity Gas shall be produced shall immediately become a Designated Field with respect to the Capacity Gas the subject of the notice pursuant to Clause 5.2 (as such notice may be amended pursuant to Clause 5.13(f)). A Capacity Field may consist of one or more Designated Fields as a result of separate notices pursuant to Clause 5.2.
(b) The Transportation Service shall be provided in respect of Capacity Gas from any Designated Field and the ICI/Enron Party may use the Capacity Reservation for Capacity Gas from any one or more Designated Fields.
(c) Subject to Clause 16, the ICI/Enron Party shall not be permitted to use the Capacity Reservation for Natural Gas from any source other than a Designated Field.
(d) The ICI/Enron Party shall notify the CATS Operator of the following information promptly upon the designation of a Designated Field pursuant to Clause 5.13(a) if such information has not previously been notified to the CATS Parties:
(i) the Capacity Field from which the Capacity Gas referred to in Clause 5.2 shall be produced;
(ii) the particular Capacity Facilities through which such Capacity Gas shall be metered and transported to the Entry Point;
(iii) the particular Capacity User(s) for whom the Transportation Service shall be provided together with the address and contact details of such Capacity User(s); and
(iv) the name, address and contact details of the operating company who shall deliver such Capacity Gas on behalf of such Capacity User(s).
(e) In accordance with the timetable agreed pursuant to Clause 5.6, the ICI/Enron Party shall, without prejudice to the provisions of Clause 8, notify the CATS Operator of the following information (if such information has not previously been notified to the CATS Parties):
(i) such details as shall reasonably be required by the CATS Parties relating to the technical characteristics of the relevant Capacity Facilities, or, in the case of existing Capacity Facilities, any additions or modifications to such Capacity Facilities, so as to enable the CATS Parties to assess their compatibility with the CATS System;
(ii) the proposed methods for testing and commissioning Capacity Facilities, or, in the case of existing Capacity Facilities, any additions or modifications to such Capacity Facilities, insofar as such testing and commissioning relate to the transportation of the Notified Gas; and
(iii) the proposed methods for tying in Capacity Facilities to the CATS Transportation Facilities.
(f) (i) If the ICI/Enron Party proposes to make any amendments to any of the
information previously provided pursuant to Clause 5.2 in respect of a Capacity Field prior to its designation as a Designated Field, the ICI/Enron Party shall, as promptly as practicable, give the CATS Operator a notice containing the revised information. If the CATS Parties determine, in accordance with the standard of a Reasonable and Prudent Operator, that such revised information would have a material effect on the evaluation of the matters referred to in Clause 5.4 the date of such notice shall constitute a new Notification Date and the provisions of this Clause 5 shall be applicable as if a new notice had been given pursuant to Clause 5.2.
(ii) Promptly upon becoming aware of any change to the information previously provided pursuant to Clauses 5.2(d), (f) and (h) or this Clause 5.13(f)(ii) in respect of a Designated Field, the ICI/Enron Party shall as promptly as practicable give the CATS Operator a notice containing the revised information, but the Designated Field shall continue to be a Designated Field notwithstanding such change.
(iii) If the ICI/Enron Party proposes to make any amendments in any of the information previously provided pursuant to Clause 5.2 (other than the information referred to in Clause 5.13(f)(ii)) in respect of a Designated Field, the ICI/Enron Party shall, as promptly as practicable, give the CATS Operator a notice containing the revised information. If the CATS Parties determine, in accordance with the standard of a Reasonable and Prudent Operator, that such revised information would have had a material and adverse effect on the evaluation of the matters referred to in Clause 5.4, the date of such notice shall constitute a new Notification Date and the provisions of this Clause 5 shall be applicable as if a new notice had been given pursuant to Clause 5.2, unless the CATS Parties otherwise agree in writing (such agreement not to be unreasonably withheld). In such case, the Designated Field shall continue to be a Designated Field in accordance with the original notification but shall not become a Designated Field on the terms of the revised information unless and until the requirements of this Clause 5 have been satisfied with respect thereto.
(iv) If the ICI/Enron Party proposes to make any amendments to any of the information previously provided pursuant to Clauses 5.13(d) and (e), the ICI/Enron Party shall, as promptly as practicable, give the CATS Operator a notice containing the revised information. In such case the Designated Field shall continue to be a Designated Field, but the provisions of Clause 8 shall apply to such revised information provided pursuant to Clause 5.13(e).
(g) A Designated Field shall cease to be a Designated Field if delivery to an Entry Point of Capacity Gas from such Designated Field has not occurred before the expiry of 3 years from:
(i) where the ICI/Enron Party has elected in accordance with Clause 5.7(a), the date specified in Clause 5.2(c) (as varied by any agreement between the Parties pursuant to Clause 5.6); or
(ii) where the ICI/Enron Party has elected in accordance with Clause 5.8(a)(i) or (ii), the date agreed between the Parties pursuant to Clause 5.6.
In such event, the ICI/Enron Party shall, if it intends to procure the Transportation Service in respect of Capacity Gas from such Designated Field, be required to give a new notice pursuant to Clause 5.2 in respect of the relevant Capacity Gas as if that Designated Field had not previously been a Designated Field.
5.14 The Transportation Service for a Designated Field shall not commence unless and until:
(a) the Capacity Facilities that are required for the processing, metering and delivery to the CATS Transportation Facilities of Notified Gas from such Designated Field have been constructed, installed, tied-in, certified, tested, and commissioned and are capable of delivering Notified Gas to the CATS Transportation Facilities, all in accordance with the agreements of the Parties reached in accordance with Clause 8;
(b) the composition of the Notified Gas from the relevant Designated Field has been tested by the relevant Capacity User to the reasonable satisfaction of the CATS Operator;
(c) the modifications and additions (if any) referred to in Clause 5.4(c)(i) have been tied-in (if required), certified, tested, commissioned and paid for by the ICI/Enron Party; and
(d) all governmental consents required in order to fulfil the foregoing obligations and to allow the performance of the Transportation Service with respect to such Notified Gas have been obtained.
6. Transportation Service
6.1 With effect from the Commencement Date and for each Day thereafter during the term of this Agreement, the CATS Parties shall provide the Transportation Service in respect of Capacity Gas delivered from a Designated Field(s). The Transportation Service shall mean a service whereby, subject to the other terms and conditions of this Agreement and the Allocation Provisions, the CATS Parties shall:
(a) accept during each Day at the relevant Entry Point Capacity Gas delivered from a Designated Field(s) complying with the Notified Specification up to the Notified Rate;
(b) transport such Capacity Gas through the CATS Transportation Facilities;
(c) redeliver Capacity Redelivery Gas complying with the Redelivery Specification to the ICI/Enron Party on behalf of the relevant Capacity Users at the relevant Redelivery Point; and
(d) redeliver Capacity NGL complying with the NGL Specification to the ICI/Enron Party on behalf of the relevant Capacity Users at the NGL Redelivery Point.
7. Transportation Fee, Send-or-Pay, Capacity Fee and Reimbursements
7.1 In consideration of the reservation of the Capacity Reservation and the provision of the Transportation Service the ICI/Enron Party shall pay the CATS Parties the amounts specified in this Agreement.
7.2 A transportation fee per Gigajoule (hereinafter referred to as the "Transportation Fee") shall be payable by the ICI/Enron Party to the CATS Parties in respect of the period from 6 o'clock a.m. on the Commencement Date until 6 o'clock a.m. on 1st October, 2013.
7.4 An amount (hereinafter referred to as the "Send-or-Pay Payment") shall be payable by the ICI/Enron Party to the CATS Parties for each Quarter effective from 6 o'clock a.m. on the Commencement Date until 6 o'clock a.m. on 1st October, 2013 and shall be calculated in the manner set forth below:
Z = (C-S) (K) (T)
1000
where:
Z = the Send-or-Pay Payment for the Quarter in question;
C = an amount equal to the sum of the Capacity Reservation Rates (expressed in Cubic Metres) applicable on each Day of the Quarter in question adjusted in accordance with Clause 7.5(a);
S = the aggregate quantity of Capacity Gas (expressed in Cubic Metres) actually delivered by the Capacity Users to the Entry Points in the Quarter in question;
K = 42.91 MJ per Cubic Metre; and
T = the Transportation Fee per Gigajoule prevailing under Clause 7.2 for the Contract Year in question.
On no account shall S be greater than C. In the event that, for any reason, S exceeds C, S shall be deemed to equal C.
7.5 (a) Factor "C" in Clause 7.4 shall be reduced to the extent that capacity is not
available (as determined pursuant to Clause 7.5(b)) for the provision of the Transportation Service.
(b) (i) Capacity shall be deemed not to be available for the provision of the Transportation Service when (and to the extent that) the CATS Parties are unable or fail to redeliver Capacity Redelivery Gas at the relevant Redelivery Point for whatever reason, including without limitation:
(A) periods of maintenance of the CATS System;
(B) Force Majeure affecting the CATS Parties, the CATS Operator, the CATS Transportation Facilities or the operation thereof;
(C) the failure of the CATS Parties or the CATS Operator to accept at any relevant Entry Point Capacity Gas at the relevant Capacity Input Rate and at the relevant Notified Specification; and
(D) the exercise of any remedy pursuant to Clause 6.8(b) arising out of circumstances referred to in Clause 6.8(a) which are caused by an act or omission of the CATS Parties or the CATS Operator or the improper exercise of any remedy referred to in Clause 6.8(b) including without limitation as a result of the provision of inaccurate information under Clause 6.8(c)(i) (unless such information is based on inaccurate information provided by a relevant Capacity User);
unless such inability or failure of the CATS Parties is due to any of the following:
(E) an act or omission of the ICI/Enron Party or any Capacity User;
(F) failure of the ICI/Enron Party to request redelivery of Capacity Redelivery Gas pursuant to Clause 9 or to accept redelivery of Capacity Redelivery Gas requested pursuant to Clause 9 at the relevant Redelivery Point for any reason, including without limitation Force Majeure affecting Persons other than the CATS Parties, the CATS Operator, or any Non-Capacity User that prevents acceptance of redelivery of such Capacity Redelivery Gas, but excluding any such failure of the ICI/Enron Party caused by an act or omission of the CATS Operator or any of the CATS Parties;
(G) failure of the ICI/Enron Party or any Capacity User to deliver Capacity Gas to any Entry Point at the relevant Capacity Input Rate and at the relevant Notified Specification for any reason, including without limitation Force Majeure affecting Persons other than the CATS Parties, the CATS Operator or any Non-Capacity User that prevents such delivery of Capacity Gas, but excluding any such failure caused by an act or omission of the CATS Operator or any of the CATS Parties.
8. Facilities and Pipeline Works
8.1 The CATS Parties and the ICI/Enron Party shall meet in accordance with the timetable agreed pursuant to Clause 5.6 and shall use reasonable endeavours to agree the matters referred to in Clauses 5.13(e) and no Party shall unreasonably withhold its agreement to such matters, provided that the provisions of Clauses 8.3(b)(i),(iii) and (iv), 8.3(c), S.4(a) to (d) (both inclusive) and 8.8 shall apply, mutatis mutandis, to the testing and commissioning of Capacity Facilities as if references to "Tie-In Works" were references to the testing and commissioning of Capacity Facilities.
8.2 The ICI/Enron Party shall:
(a) procure that Capacity Facilities shall be designed, constructed, installed, certified, inspected, maintained, repaired, operated and abandoned in accordance with the standard of a Reasonable and Prudent Operator and that such Capacity Facilities shall be compatible with the design, construction and operation of the CATS System and the operating practices of the CATS Operator, as in existence at the time the agreement referred to in Clause 8.1 is reached, to the extent reasonably necessary for the CATS Parties to perform their obligations under this Agreement. If, subsequent to such agreement, the CATS Parties propose any change to the design, construction or operation of the CATS System or the operating practices of the CATS Operator which would cause such Capacity Facilities to cease to be so compatible, then the CATS Operator shall give the ICI/Enron Party notice of such proposed change, including reasonable detail of the proposed change and the proposed date of such change. The Parties shall meet within 30 Days to discuss the proposed change and shall negotiate in good faith to reach agreement on the proposed change and the time schedule therefor; provided, however, that the ICI/Enron Party may not withhold its consent to any such change that is in accordance with the standard of a Reasonable and Prudent Operator; and provided further that the CATS Parties shall give such advance notice of the proposed change as is reasonable having regard to all the circumstances, including without limitation the estimated magnitude of the expenditure required by the ICI/Enron Party or the relevant Capacity User as a result of the proposed change and the estimated time required to permit the ICI/Enron Party or the relevant Capacity User to procure any necessary equipment or facilities. Subject to the foregoing, the ICI/Enron Party shall procure that the Capacity Facilities shall be promptly modified and/or operated to the extent and in the manner required to maintain compatibility with the CATS System or the operation thereof as so modified from time to time;
(b) procure the design, construction, installation, commissioning, certification, testing, inspection, maintenance, repair and operation in accordance with the standard of a Reasonable and Prudent Operator of such other facilities as the CATS Parties may from time to time require in accordance with the standard of a Reasonable and Prudent Operator to be designed, constructed, installed, commissioned, certified, tested, inspected, maintained, repaired and operated in or on Capacity Facilities to ensure that the CATS Transportation Facilities are capable of being operated safely and in compliance with any applicable law or Regulation; and
(c) use reasonable endeavours to procure that the construction, installation, commissioning, certification, testing, inspection, maintenance, repair and operation of the Capacity Facilities shall not delay the construction, installation, commissioning, certification, testing, inspection, maintenance, repair or operation of the CATS System or cause additional works to be carried out on the CATS System.
8.3 (a) The ICI/Enron Party shall give the CATS Operator not less than 100 Days (or such shorter period as may be agreed pursuant to Clause 5.6) prior notice of the proposed commencement of Tie-In Works and shall, in such notice, provide the CATS Operator with information in reasonable detail as to the following matters in respect of such Tie-In Works:
(i) timing;
(ii) design and specifications of materials to be used;
(iii) methods and programme of execution, including without limitation preconstruction surveys (including surveys involving drilling, seabed core sampling and excavation) and installation;
(iv) equipment to be used;
(v) estimated vessel movements within the area covered by the Tie-In Works prior to, during and after the Tie-In Works, including without limitation vessel-operating and anchor-handling procedures;
(vi) record keeping procedures;
(vii) site-restoration plan; and
(viii) such further information relating to the Tie-In Works as the CATS Operator may reasonably require to satisfy it as to the safety and security of the CATS System and the technical adequacy of the Tie-In Works.
(b) The CATS Operator and the ICI/Enron Party shall use reasonable endeavours to agree the matters referred to in Clause 8.3(a) and neither of them shall unreasonably withhold or delay its agreement to such matters, provided that it is hereby acknowledged that such agreement shall comply (inter alia) with the following:
(i) the Tie-In Works shall be performed in such a manner as not to affect adversely the transportation of CATS Gas in the CATS Transportation Facilities;
(ii) any movements of vessels during performance of the Tie-In Works within the area covered by such Tie-In Works shall be subject to the CATS Operator's prior approval, such approval not to be unreasonably withheld or delayed;
(iii) without prejudice to Clause 19, any contractor used by a Capacity User for the purposes of the Tie-In Works shall be suitably qualified and experienced in carrying out the type of work for which it is engaged; and
(iv) the ICI/Enron Party shall procure that all necessary statutory consents and approvals for the execution of the Tie-In Works have been obtained prior to the commencement of the Tie-In Works and shall furnish copies thereof to the CATS Operator on request.
(c) The Tie-In Works shall not commence unless and until the agreement referred to in Clause 8.3(b) has been reached.
8.4 The ICI/Enron Party shall procure that a Capacity User engaged in performing the Tie-In Works shall:
(a) carry out such works in accordance with the standard of a Reasonable and Prudent Operator, all applicable laws and Regulations, the agreement reached pursuant to Clause 8.3(b) and all statutory consents and approvals referred to in Clause 8.3(b) (iv);
(b) without prejudice to Clause 19, take all reasonable precautions to avoid damage to the CATS Transportation Facilities;
(c) suspend the Tie-In Works in whole or in part at any time if the CATS Operator shall so require if, in the CATS Operator's opinion, the safety of or damage to the CATS Transportation Facilities or personnel working thereon is threatened or if the Tie-In Works adversely affect to a material extent the operation of the CATS Transportation Facilities and keep them suspended for as long as such threat or adverse effect continues. In the event of such suspension, the CATS Operator and the ICI/Enron Party shall discuss and agree the actions required prior to the resumption of the Tie-In Works, such agreement not to be unreasonably withheld or delayed; and
(d) keep the CATS Operator advised on a daily basis of the progress of the Tie-In Works in accordance with record-keeping procedures previously agreed by the Parties.
8.5 (a) The CATS Operator shall be entitled to have 4 representatives present whenever Tie-In Works are being carried out. Such representatives shall be subject to the approval of the ICI/Enron Party, such approval not to be unreasonably withheld. The ICI/Enron Party shall provide or procure the provision of transport to and from each vessel from which the Tie-In Works are being carried out for such representatives and shall make available to such representatives the facilities described in Schedule XI. All such facilities shall be provided at no cost to the CATS Operator or the CATS Parties.
(b) The only function of the representatives referred to in Clause 8.5(a) shall be to safeguard the interests of the CATS Parties and they shall have no duty whatsoever to ensure or procure the doing of anything for the benefit of the ICI/Enron Party or Capacity Users or to prevent anything which may be to the detriment of the ICI/Enron Party or Capacity Users.
(c) The representatives referred to in Clause 8.5(a) shall communicate only with the representatives of a Capacity User and shall not give or make any directions, requests or communications to the contractors or sub-contractors of a Capacity User in connection with the execution of Tie-In Works. All such directions, requests or communications to the contractors or sub-contractors of the Capacity User shall be made or given only by the representatives of the Capacity User.
SCHEDULE I
CATS TRANSPORTATION FACILITIES
The CATS Transportation Facilities means the facilities listed below and such modifications thereto and/or replacements thereof (made in accordance with the standard of a Reasonable and Prudent Operator) from time to time:
5. the CATS 36" export riser, the 36" pipeline running from the CATS Riser Platform to the CATS Terminal together with the ancillary equipment installed for the purpose of transporting CATS Gas and CATS NGL from any points of entry to the CATS Terminal (including but not limited to equipment comprising or relating to all points of entry into the CATS Transportation Facilities);
SCHEDULE IV
INITIAL ENTRY POINTS
The initial Entry Points shall be:
2. an entry point consisting of a subsea tee/Y-piece and all necessary valving and equipment to allow for the tie-in of a Capacity Pipeline without shutting down or depressurising the CATS Transportation Facilities. The location of the entry point described in this paragraph 2 (hereinafter called the "Original Subsea Location") shall be designated by the ICI/Enron Party within 30 Days after the Effective Date of this Agreement. The entry point at the Original Subsea Location shall have a nominal diameter of 16".