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LAW OF TURKMENISTAN

of August 20, 2008 No. 208-III

About hydrocarbonic resources

(as amended on 14-03-2020)

This Law establishes the legal basis of the relations arising in the course of investigation, production and conversion of hydrocarbonic resources and accomplishment of other types of oil works in the territory of Turkmenistan including the Turkmen sector of the Caspian Sea, and is aimed at providing rational use of hydrocarbonic resources and preserving natural wealth of Turkmenistan for future generations.

Chapter I. General provisions

Article 1. Basic concepts

In this Law the following basic concepts are used:

1) Ceased to be valid

2) Blok - the site of the territory on the land or on water, being fully or partially under jurisdiction of Turkmenistan and appropriately designated on specially constituted card of blocks.

3) Internal reservoirs - lakes, artificial water storage basins and other surface of the water surrounded with the land, which are under jurisdiction of Turkmenistan.

4) Production - all work types on extraction from subsoil of Hydrocarbonic resources by primary methods or with artificial maintenance of energy of layer, to storage, preparation, loading, warehousing, transportation, measurements, delivery, marketing and realization of Hydrocarbonic resources (including shares of Concern) and other types of activity, including implementation of construction of facilities of infrastructure and other construction, acquisition and lease of tangible and intangible assets, according to the Agreement and the corresponding License or at the request of Concern;

5) the Agreement - the agreement signed between Concern and the Contractor on carrying out Oil works.

6) the Contractual territory - the territory delineated and determined by geographical coordinates within which the Contractor is allowed to carry out Oil works and which description is given in appendices to the Agreement.

7) Concern - the legal entity who according to this Law and acts of the President of Turkmenistan is given authority on management and use of hydrocarbonic resources (Turkmenneft and Turkmengaz state concerns).

8) The license - the legal tool expressed in the form of the legal act, issued by Concern to the Contractor and the Operator and granting the right to carrying out Oil works or their separate types according to provisions of this Law.

9) Person - physical person or legal entity.

10) the Field of industrial value - the field of Hydrocarbonic resources which after its opening and studying of all relevant data, operational, technical and economic performances can be developed commercially in accordance with the terms of the Agreement.

11) Oil works – all works on Investigation, Production and Conversion performed according to the Agreement and the corresponding License.

12) the Normal atmospheric pressure and temperature - pressure of 1,01325 of the atmospheres and temperature is 60 degrees Fahrenheit.

13) Owner of the license - Person who obtained the License according to this Law and other regulatory legal acts of Turkmenistan.

14) Detection - any new detection of Hydrocarbonic resources which was performed in the Contractual territory and in case of need can be assessment object for determination by the Contractor of whether this detection by the Field of industrial value is.

15) Operator - Person whose activities consist in direct daily and current operational implementation of Oil works for and on behalf of the Contractor according to the License of the Operator.

16) Contractor - The person (Persons) who is the Owner of the License and signed with Concern the Agreement according to this Law.

17) Rules of development - Rules of development of hydrocarbon fields of Turkmenistan of October 22, 1999.

18) Natural gas - the hydrocarbons which are in gaseous state with Normal atmospheric pressure and temperature, gases, passing and not passing to Crude oil.

19) the Field pipeline - the technical construction including also land, underwater and other objects, communications and the equipment used for transportation of Hydrocarbonic resources from the place of Production to the Delivery point.

20) the Delivery point - Item or Items within the Contractual territory or beyond its limits where the got Hydrocarbonic resources in which their measurements and where Agreement parties according to the Agreement receive the share of Hydrocarbonic resources are made are delivered.

21) Investigation - the geological, geophysical and other works including also the drilling of shots, selection of cores, stratigrafichesky testing, well-drilling, space shootings, acquisition and lease of tangible and intangible assets which are carried out for the purpose of discovery of the fields of Hydrocarbonic resources and performed according to the Agreement and the corresponding License.

22) Parent company - the legal entity who owns more than 50 percent or the controlling stake of shares, shares, the shares of the Contractor granting to it the right of management and control over the Contractor.

23) the Related company - the legal entity exercising control over the Contractor either who is controlled this Contractor, or controlled other legal entity who is at the same time exercising control over the Contractor. For the purposes of this concept control is understood as powers by determination of strategy of the legal entity or Contractor by the direct or mediated property right to more than 50 percent of shares, shares, shares granting the right of management and control.

24) Services - the separate types of Oil works performed according to the Contract for Services with risk.

25) Joint activities - the activities performed by consolidation of Persons without education of the new legal entity jointly participating in provision of technical, financial and other resources for implementation of the Agreement signed between Concern and such consolidation of Persons.

26) Agreement parties - The concern and the Contractor which signed the Agreement.

27) Crude oil - any hydrocarbons, including the distillates and condensates which are in liquid state with Normal atmospheric pressure and temperature upon the mouth of well or in oil and gas separator extracted from Natural gas.

28) Subcontractor - Person performing delivery of goods, performance of works and rendering the services to the Contractor stated in the contract with the Contractor on accomplishment of separate types of Oil works (including joint activities) within the Agreement of such Contractor. Person which is carrying out separate types of Oil works for the Subcontractor within accomplishment of other agreement by it is also determined as the Subcontractor.

29) Pipeline transport - set of the technical constructions including the Field pipeline and the Export bulk distribution line.

30) Hydrocarbonic resources – The crude oil and Natural gas and also made from them, received as a result of their cleaning or products and components, including oil, petrochemical and gas-chemical products received as a result of their conversion, the liquefied gas and other products extracted together with them.

31) the Export bulk distribution line - the technical construction including the land, underwater and other objects of communication and the equipment used for transportation of Hydrocarbonic resources from the Delivery point to Export Item.

32) Export Item - Item or Items within the territory of Turkmenistan where according to the Agreement the shares of Hydrocarbonic resources of Agreement parties intended for export arrive.

33) Conversion – all work types on conversion of Hydrocarbonic resources at all stages for receipt of oil, petrochemical and gas-chemical products, the liquefied gas and to other products, construction of facilities for their conversion at all stages (production) at the expense of the means which are completely belonging to foreign investors and also all types of activity on designing, construction, operation and management of other infrastructure facilities for storage, preparation, loading, warehousing, transportation, measurements, delivery, marketing and the sales of products received as a result of their conversion (including shares of Concern), and other types of activity, including acquisition and lease of tangible and intangible assets, according to the Agreement and the corresponding License.

Article 2. Scope of this Law

1. This Law governs the relations arising in the course of accomplishment of Oil works in the territory which is under jurisdiction of Turkmenistan including in the Turkmen sector of the Caspian Sea and in Internal reservoirs, procedure for issue of Licenses, the conclusions and execution of Agreements on carrying out such works, regulates functions and powers of state bodies, and also Persons which are carrying out Oil works.

2. If the legislation of Turkmenistan establishes other rules, than those which are provided by this Law are applied rules of this Law.

3. If this Law does not govern these or those relations arising in the course of accomplishment of Oil works, answering to the signs specified in part one of this Article, such relations are governed by other regulatory legal acts of Turkmenistan.

4. If the international treaty which participant is Turkmenistan establishes other rules, than those which contain in this Law then are applied rules of the international treaty.

Article 3. Applicable law

Applicable law under this Law is the exclusive right of Turkmenistan according to which the Agreement signed according to this Law is regulated and interpreted.

Article 4. Property right to Hydrocarbonic resources

1. Hydrocarbonic resources in their natural state in subsoil of the territory of Turkmenistan are exclusive property of Turkmenistan.

2. Competences on ownership, use and the order of Hydrocarbonic resources the Cabinet of Ministers (Government) of Turkmenistan has.

3. Management of Hydrocarbonic resources and their use within the powers established by this Law performs Concern.

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