Consideration of the Investor's Work Program and Budget in Production Sharing Agreements

The investor, sending for consideration to the representative of the other party to the production sharing agreement (the representative of the State) a draft annual Work Program and Budget, awaits its approval by the representative of the State.

Without approval by the State of the draft Work Program and Budget, the Investor may be exposed to the risk of incurring costs that may not be compensated in the future.

Considering that the State party will carefully and strictly consider the Work Program and Budget for approval, it is worth paying attention to the following.

The State may recommend that the Investor provide copies of documents regarding the circumstances of the Investor's acquisition of the rights and obligations of the Operator under the Production Sharing Agreement, as well as request an explanation and justification of the amount of expenses in the draft Work Program and Budget, broken down by item.