Shtokman Development AG

Transcription

1 Shtokman Development AG Integrated Development of the Shtokman Gas- Condensate Field. Phase 1 SDAG Standard EPC Contract. Main Principles.

2 EPC Contracts What is an EPC contract? - Contract for Engineering, Procurement and Construction. Why EPC contracts? Types of EPC Contracts EPSC EPSCC EPCI

3 SDAG EPC CONTRACT (1) SDAG EPC Contract Structure: Articles + Annexes + Exhibits

4 ARTICLES OF THE AGREEMENT: Preamble SDAG EPC CONTRACT (2) Chapter I Subject Matter of the Contract and Definitions Chapter II General Chapter III The Performance of the Work Chapter IV Conditions for the Performance of the Work Chapter V Financial Conditions Chapter VI Liabilities and Insurances Chapter VII Industrial Property Rights Title Confidentiality Chapter VIII Defective Performance Convenience Force Majeure; Suspension Termination Take-over Chapter IX Governing Law Conflict of Interests Liens Disputes Notices Chapter X Effective Date Provisions Surviving the Contract Chapter XI Limitation of Liability

5 ANNEXES TO THE AGREEMENT: SDAG EPC CONTRACT (3) Annex 1 - Guarantees 1/A - Form of Bank Guarantee (Performance Guarantee) 1/B - Form of Bank Guarantee (Advance Payment Recovery) 1/C - Form of Demand 1/D - Form of Parent Company Guarantee Annex 2 - Form of Final Account Certificate Annex 3 - Deeds of Mutual Indemnity and Waiver Of Recourse 3/A - Form for Contractor 3/B - Form for Subcontractors Annex 4 - Deed of Liability and Insurance from Subcontractors Annex 5 - Assignment Agreement Annex 6 - Certificate of Endorsement of Design Dossier Annex 7 - Interim Certificates (Load-out, Commissioning, Hand-over) Annex 8 - Provisional Acceptance Certificate Annex 9 - Final Acceptance Certificate Annex 10 - Contractor s Insurance Status ALL ANNEXES FORM AN INTEGRAL PART OF THE CONTRACT. WHEN SIGNED, DOCUMENTS BASED ON ANNEXES BECOME STAND-ALONE DOCUMENTS.

6 EXHIBITS TO THE CONTRACT: SDAG EPC CONTRACT (4) Exhibit A - Exhibit B - Exhibit C - Exhibit D - Exhibit E - Exhibit F - Exhibit G - Exhibit H - Scope of Work and Services to Company Schedule of Prices Work Time Schedule Performance Guarantees Project Description and Design Dossier Particular Conditions for the Performance of the Work Co-ordination Procedure Quality Assurance and Quality Control Exhibit I - Company Items and Early Contracts Exhibit J - Exhibit K - Exhibit L - List of Subcontractors and Vendors Contractor's Organisation and Key Personnel Health Safety and Environment Requirements THE EXHIBITS FORM AN INTEGRAL PART OF THE CONTRACT.

7 ED Example of EPSCC Contract Scheme E, P, S, C, C HAND OVER TO SDAG Start Up and PAC FAC Performance Tests Bank guarantee down, release of last payment INTERIM CERTIFICATES Warranty Period READY FOR LOAD OUT READY FOR TRANSPORTATION READY FOR COMMISSIONING HAND OVER LDs Care of the Plant by Contractor

8 Main Specificities of EPC Contracts (1) Endorsement of Design Dossier Documents to be endorsed and not to be endorsed Interim Certificates Hand-over PAC Warranty FAC Surviving Obligations Bank Guarantees (advance payment, performance) Parent Company Guarantee Liquidated Damages Care of the Plant Damages to Property/Personnel/Third Parties Consequential Losses

9 Main Specificities of EPC Contracts (2) Principle of Waiver of Recourse + Indemnity and Hold Harmless Company Insurance and Contractor Insurance Confidentiality Suspension/Termination by Company for Contractor Default Force Majeure Company Convenience Suspension by Contractor Force Majeure Termination by Contractor Force Majeure Long Suspension for Company Convenience English Law ICC Arbitration in Stockholm English Language all neutral

10 Subcontracts and Subcontractors Subcontracting requires prior approval by Company Pre-approved Subcontractors and Vendors listed under the Contract Terms and Conditions of main subcontracts to be similar to those of the EPC Contract Contractor is solely liable for subcontracting, and indemnifies and hold harmless Company from any consequences thereof

11 FINANCIAL CONDITIONS The Contract Price is on a lump sum basis with some elements under provisional sums (concept of reimbursable basis: time rates, unit rates, at cost plus fee) Contract Price is established net of Russian VAT and is deemed to include all other taxes and Customs Duties. Russian VAT is payable by COMPANY (as applicable) Amount to appear on invoices Payment of invoices within 30 days from end of the month of receipt Bank Guarantees and Parent Company Guarantees Liquidated Damages (delays, substitution / late mobilisation of keypersonnel, performance)

12 LIQUIDATED DAMAGES FOR DELAYS - PRINCIPLES LDs for delays under English Law are deemed to be a genuine preestimate of the damages suffered by the Client as a result of the delays to the works / services ( liquidated and ascertained damages ) LDs should then apply at milestones when Company eventually needs the result of the works / services for further use i.e. at interfaces with other tasks under Company s responsibility, such as: EFFECTIVE DATE DELIVERY OF DOCUMENTS: - FOR APPLYING TO AUTHORITIES - FOR INTERFACED CONTRACTORS HAND-OVER OF PLANT UNIT X TO COMPANY HAND-OVER OF CERTAIN PARTS OF THE PLANT TO COMPANY s OTHER CONTRACTOR

13 LIABILITIES AND INSURANCES. BASIC PRINCIPLES Types of Risks: Damage to the facilities in course of construction (Plant) Personal injury/disease/death of Parties personnel Damage to or loss of Parties property Damage, loss, injury or death to Third Parties Liabilities as per oil & gas industry practice: Knock for knock for the other Party property, the other Party personnel, damage to third parties, own consequential losses Applicable Law for damage / loss to third parties Insurances in accordance with: Worldwide insurance programmes (e.g. Welcar 2001) Insurance market and its cycles and trends

14 KNOCK FOR KNOCK Party A Damage X Party B No recourse Party A Insurers X Party B Insurers FAULT BASED Party A Damage Party B Recourse Party A Insurers Party B Insurers

15 KNOCK FOR KNOCK PRINCIPLE Contractual obligation of one party (the indemnitor) to indemnify another party (the indemnitee) for damage/losses the indemnitee may cause or for which he may be held liable due to his fault or even his negligence Duty to get insured: a promise to indemnify from a non-solvent indemnitor (or his insurer) is worthless Advantages: No disruption of performance of contracts as avoiding the burden of claims between the Parties More effective management of key areas of risks, and potential for reduced insurance premiums

16 LIABILITIES AND INSURANCES CLAUSES (1) Each Party remains liable for: Damages to its personnel (injury, disease, death, property), Damages to its property Damages it caused to third party, and Each Party carries its own consequential losses irrespective of the cause Each Party remains liable for damage to Third Parties

17 LIABILITIES AND INSURANCES CLAUSES (2) Contractor liable for the Care of the Plant Contractor has the benefit of Company s Insurance Construction All Risk Insurance Policy (CAR) for the Plant Subject to deductibles, payable by Contractor Company liable for damages to existing property owned or operated by Company other than the Plant Deductibles payable by Contractor if damage/loss to Company s existing facilities are caused by Contractor Contractor liable for damages to his equipment

18 LIABILITIES AND INSURANCES CLAUSES (3) Between Company and Subcontractors Through execution of «Deeds of Liability and Insurance» to be signed by subcontractors Between Contractor & his Subcontractors, and Company other contractors Through execution of «Deeds of Mutual Indemnity and Waivers of Recourse»

19 MIWRA The Mutual Indemnity and Waiver of Recourse Agreements (MIWRA) system has been proven This system is in place with most offshore operators worldwide, extended to onshore in complex Projects, especially involving sea transportations Widespread implementation in UK Oil & Gas Industry - Industry Mutual Hold Harmless (IMHH)

20 MIWRA BETWEEN CONTRACTORS AND SUBCONTRACTORS SDAG CTR 2 CTR 1 CTR 3 Sub-CTR 1 Sub-CTR 2

21 CONTRACTOR INSURANCES Contractor to take insurances: Workmen s compensation / employer s liability All risk insurance for his equipment (e.g. cranes, ) Comprehensive General Third party liability insurance Hull and Machinery All risk insurance for Contractor Items up to Worksites Automobiles, aircrafts Underwriters to waive their rights of subrogation against Company and Company s underwriters Company to be Additional Assured Contractor to provide insurance certificates

22 COMPANY CAR INSURANCE «All risk» insurance Contractor Indemnified Parties are additional assureds Waiver of insurers rights of subrogation Includes third party liability but solely at Site and up to PAC only Effective date of CAR policy as of commencement of the works Deductibles to be borne by Contractor when he has caused the damage to the Plant at Worksite

23 CONFIDENTIALITY All information and data issued by SDAG constitute confidential information Such confidential information can only be disclosed to third parties with prior SDAG consent, and against a similar undertaking of confidentiality from the recipient third party Confidentiality Agreements have to be signed by Tenderers prior to receiving call for tender documents

24 SUSPENSION AND TERMINATION Defective Performance Company's Convenience Force Majeure (3 conditions: events unforeseeable, insurmountable and outside of the control of the Party which invokes it)