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Minerals Report - International Seabed Authority

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challenged by the increasing desire for regional autonomy in which the<br />

provinces are now claiming substantial control over the mining resources in<br />

their province). Moreover, Pertamina has an “exclusive authority” to mine,<br />

while the contractor would assist Pertamina in accelerating the exploration<br />

and development of the resources within the contract area. The contracts<br />

further elaborate the following points.<br />

Scope and definitions: In the production-sharing contract, Pertamina shall<br />

have and be responsible for the management of the operation contemplated in<br />

the contract. The contractor shall be responsible to Pertamina and is<br />

appointed and constituted the exclusive company to conduct petroleum<br />

operations in the contract area. The contractor shall:<br />

Provide all the financial and technical assistance for such operations,<br />

Carry the risk of operating costs,<br />

Share an economic interest in the development of petroleum deposits<br />

in the contract area,<br />

Such cost shall be recoverable as provided in contract,<br />

Generally the contractor will not incur interests expenses to<br />

finance its operations,<br />

The total production achieved shall be divided in accordance with a<br />

scheme as decided in the contract.<br />

Terms of contract: The term of the contract is 30 years from the<br />

effective date. At the end of the initial 6 years, the contractor shall have the<br />

option to request for a 4-year extension, the approval of which shall not be<br />

unreasonably withheld. If at the end of the initial 6 years or the extension<br />

thereto no petroleum in commercial quantities is discovered, then the contract<br />

shall generally automatically terminate in its entirety. If petroleum is<br />

discovered within the initial 6 years or the extension thereof and can be<br />

produced commercially, then development will commence in that portion of<br />

the contract area immediately. In other portions of the contract area,<br />

INTERNATIONAL SEABED AUTHORITY 857

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