<PAGE>
Exhibit 10.33
FOIA CONFIDENTIAL TREATMENT REQUEST
COPY
WITH
REDACTED AREAS
CRUDE OIL PURCHASE/SALE AGREEMENT
INDEX OF CONFIDENTIAL TERMS
(i) Page
1, Title Page, Heading
(ii) Page 3,
Table of Contents
(iii) Pages 5, 8 and
9, Article 2.1
(iv) Page 11,
Articles 3.1 and 3.2
(v) Page
12, Article 4.1
(vi) Page 15,
Article 7.2(b)(ii)
(vii) Page 22,
Articles 10.2, 10.4 and 10.5
(viii)
Page 36, Article 17
GIANT INDUSTRIES, INC.
FORM 10-K
FISCAL YEAR ENDED DECEMBER 31, 2003
PORTIONS HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT
FILED BY THE REGISTRANT WITH THE
COMMISSION. THE OMITTED PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE COMMISSION.
<PAGE>
===========================================================================
***** CRUDE OIL
PURCHASE / SALE AGREEMENT
2004 - 2008
between
STATOIL MARKETING & TRADING (US) INC.
and
GIANT YORKTOWN, INC.
Contract Reference Number - CTC 2004/01
*****Confidential treatment requested.
Confidential
information redacted.
===========================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE
PAGE #
----------------------------
------
1.
CONTRACT PARTIES
4
2.
DEFINITIONS AND CONSTRUCTION
5
3.
QUALITY
11
4.
VOLUME AND DELIVERY RATE
12
5.
TITLE
13
6.
RISK OF LOSS
13
7.
SUPPLY AND DELIVERY
14
8.
SHIPPING AND DISCHARGE PORT
17
9.
NOMINATION
19
10.
PRICE COMPONENTS
20
11.
PAYMENT
23
12.
MEASUREMENT AND INSPECTION
25
13.
LAYTIME AND DEMURRAGE
28
14.
CREDIT CONDITIONS
31
15.
TAXES, DUTIES AND CHARGES
34
16.
INSURANCE
35
17. TERM
OF AGREEMENT
36
18.
REPRESENTATIONS, WARRANTIES AND COVENANTS
36
19.
AUDIT AND INSPECTION RIGHTS
39
20.
SUSPENSION AND TERMINATION
39
2
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21.
OBLIGATIONS AT TERMINATION
42
22.
INDEMNIFICATION AND CLAIMS
44
23.
DAMAGES
46
24.
ASSIGNMENT
46
25.
NOTICES AND ADDRESSES
47
26.
WARRANTIES AND WAIVERS
48
27.
APPLICABLE LAW, LITIGATION AND ARBITRATION
49
28.
VOICE RECORDING
51
29.
DISPOSAL
51
30.
NOTICE OF NORWEGIAN STATE'S SOURCED CRUDE OIL
51
31.
CONFIDENTIALITY
52
32.
MISCELLANEOUS
52
APPENDIX I ADJUSTMENT TO
QUALITY DIFFERENTIALS FOR *****
APPENDIX II THE ***** CRUDE OIL
ASSAY
APPENDIX III BUYER'S PRICING TRIGGER
PROCEDURE
APPENDIX IV CRUDE OPTIMIZATION
PROCEDURE
APPENDIX V INVENTORY AND
DELIVERY STATEMENTS
APPENDIX VI INTERCREDITOR
AGREEMENT
APPENDIX VII TANK OWNER'S AGREEMENT
*****Confidential treatment requested.
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information redacted.
3
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ARTICLE 1
CONTRACT PARTIES
THIS CRUDE OIL PURCHASE/SALE AGREEMENT
(this "AGREEMENT"), is made and entered
into as of the Effective Date between:
BUYER:
Giant Yorktown, Inc.
23733 North Scottsdale Road
Scottsdale, AZ 85255
SELLER:
Statoil Marketing & Trading (US)
Inc.
225 High Ridge Road
Stamford, CT 06905
WHEREAS, the Parties agree that Seller
shall sell and Buyer shall purchase Oil
on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the
premises and the respective promises,
conditions and agreements contained herein,
and other good and valuable
consideration, the receipt and adequacy of
which are hereby acknowledged, the
Parties hereby agree as follows:
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ARTICLE 2
DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS.
For purposes of this Agreement, the
following terms shall have the meanings
indicated below:
"ACIDIC"
means that the total acid number ("TAN") of the crude oil
analyzed
is more than 1.3 mgKOH/Kg.
"AGREEMENT" or "THIS AGREEMENT" means this ***** Crude Oil
Purchase/Sale
Agreement,
as it may be amended, modified, supplemented, extended, renewed
or
restated from time to time in accordance with the terms hereof,
including
the Appendices and Exhibits hereto.
"API" means American
Petroleum Institute.
"ASTM"
means American Society for Testing Materials.
"BANKRUPT"
means a Person that (i) dissolved, other than pursuant to a
consolidation, amalgamation or merger, (ii) becomes insolvent or is
unable
to pay its
debts or fails or admits in writing its inability generally to
pay its
debts as they become due, (iii) makes a general assignment or
arrangement for the benefit of its creditors, (iv) has instituted
against
it a
proceeding seeking a judgment of insolvency or bankruptcy or
any
other
relief under any similar law affecting creditor's rights, or a
petition
is presented against it for its winding-up or liquidation, (v)
institutes
a proceeding seeking a judgment of insolvency or bankruptcy or
any other
relief under any bankruptcy or insolvency law or for
reorganization relief under the winding-up or liquidation, (vi) has
a
resolution
passed for its winding-up or liquidation, other than pursuant
to a
consolidation, amalgamation or merger, (vii) seeks or becomes
subject
to the
appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official
for
all or
substantially all of its assets, (viii) has a secured party
take
possession
of all or substantially all of its assets, or has a distress,
execution,
attachment, sequestration or other legal process levied,
enforced
or sued on or against all or substantially all of its assets,
(ix) files
an answer or other pleading admitting or failing to contest the
allegations of a petition filed against it in any proceeding of
the
foregoing
nature or (x) takes any other action to authorize any of the
actions
set forth above.
"BANKRUPTCY CODE" means Chapter 11 of Title 11, U.S. Code, as
amended.
"BARREL"
means a volume of forty-two (42) US gallons corrected for
temperature to sixty (60) degrees Fahrenheit, unless stated
otherwise.
"BFO"
means Brent/Forties/Oseberg.
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information redacted.
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"BUSINESS
DAY" means a day on which commercial banks are open for
business
(including
dealings in foreign exchange and foreign currency deposits) in
New York,
New York.
"BUYER'S
REFINERY UPGRADING TURNAROUND" means the scheduled upgrade of
the
Refinery,
including the installation of metallurgy and desalting
facilities, that Buyer shall implement and complete during the
fourth
quarter of
2004.
"BUYER'S
SUPPLY WINDOW" has the meaning given such term in Article 9(a).
"CARGO"
means any particular quantity of Oil loaded or to be loaded
into
Vessel as
set out in this Agreement and includes part Cargoes.
"COLLATERAL" has the meaning given such term in Article 14.3.
"COLLATERAL EVENT" has the meaning given such term in Article
14.3.
"COMMODITY
EXCHANGE ACT" means 7 U.S.C. Section 1, et seq.
"COMPLETION OF DISCHARGE" means, in respect of a Cargo, the
final
disconnection from a Vessel's discharge manifold following the
discharge
of
Oil.
"CRUDE
FIELD" means Buyer's crude oil storage tanks, including VEPCO
tanks
"C", "D",
and "E" if agreed to in advance by Seller, but excluding
Buyer's
Daily
Charge Tanks.
"DAILY
CHARGE TANKS" means Buyer's crude oil tanks used to charge
crude
oil to
Buyer's crude units, excluding Buyer's Crude Field tanks.
"DEFAULT
INTEREST RATE" means the lesser of (i) the applicable LIBOR
rate
plus two
(2) percentage points and (ii) the maximum rate of interest
permitted
by Law.
"DELIVERED" or "DELIVERY" or "DELIVER" means when the Oil passes
the title
transfer
point from Seller to Buyer.
"DISCHARGE
PORT" means the customary dockage, anchorage or place where a
Vessel may
lie in connection with discharging a Cargo to the Refinery.
"DOLLARS"
or "USD" or "US DOLLARS" or "$" means dollars of the United
States of
America.
"EFFECTIVE
DATE" means the date on which Buyer obtains all necessary
amendments
to (i) the Credit Agreement referenced in Article 14.1 of this
Agreement
and (ii) the term Loan Agreement dated as of May 14, 2002 (as
the same
has been amended from time to time, the "Term Loan Agreement")
between
Giant Yorktown, Inc., Wells Fargo Bank Nevada,
6
<PAGE>
National
Association, and each of the Lenders named on Schedule IA of
the
Term Loan
Agreement, and the Parent Guaranty Agreement related to the
Term
Loan
Agreement.
"ENVIRONMENTAL LAW" means any Law, policy, judicial or
administrative
interpretation thereof
or any legally binding requirement that governs or
purports
to govern the protection of persons, natural resources or the
environment (including the protection of ambient air, surface
water,
groundwater, land surface or subsurface strata, endangered species
or
wetlands),
occupational health and safety and the manufacture, processing,
distribution, use, generation, handling, treatment, storage,
disposal,
transportation, release or management of solid waste, industrial
waste or
hazardous
substances or materials, as may be amended or modified from
time
to
time.
"ESTIMATED
WEEKLY QUANTITY" or "EWQ" means the approximate quantity of Oil
Delivered
to Buyer during a period of one (1) week (between midnight on a
Wednesday
to midnight on the previous Wednesday), as estimated by Buyer
and stated
on the EWQ statement in the format of Appendix V.
"E.T."
means the applicable, local Eastern Time in New York, New York.
"EVENT OF
DEFAULT" or "DEFAULT" has the meaning given such term in
Article
20.1.
"FORCE
MAJEURE" means any cause or event reasonably beyond the control
of
a Party
including perils of navigation, fires, acts of God, wars
(declared
or
undeclared), terrorism, or any act, order, directive or necessity
of
any
governmental, civil or military authority (de facto or de jure),
or
any
regulation or interference (including regulation or
interference
requiring
the shutting down of the Refinery or any of its operating units
or
requiring a substantial change in the manner of operating same),
labor
disputes
(whether or not involving a Party's employees), or partial
failure of
producing, transportation, utility, loading or delivery
facilities, inability of Seller or Vessels selected by it to obtain
war
risk
insurance from usual commercial markets, closing of or
restrictions
on use of
harbors, docks, canals, or other assistance to or adjuncts of
shipping
or navigation, actions by Seller to comply with directives of a
member
government or agency thereof in the implementation of an
emergency
allocation
program of the International Energy Agency, or any other cause
reasonably
beyond the control of either Party whether or not similar to
the
foregoing and whether or not foreseeable, all of which by the
exercise
of due
diligence such Party is unable to prevent or overcome. For
purposes
hereof,
"failure of producing facilities" means a major disruption to
the
Production
Facilities and Loading Terminal associated with them.
"FOUR-DAY
SUPPLY WINDOW" has the meaning given such term in Article 9(c).
"GALLON"
means a U.S. standard gallon of 231 cubic inches at 60 degrees
Fahrenheit.
7
<PAGE>
"GIANT"
means Giant Industries, Inc., a Delaware corporation. Giant is
the
ultimate
parent company of Buyer and the Guarantor described in Article
14.1(c).
"GOVERNMENTAL AUTHORITY" means any federal, state, regional, local,
or
municipal
governmental body, agency, instrumentality, authority or entity
established or controlled by a governmental or subdivision
thereof,
including
any legislative, administrative or judicial body, or any Person
purporting
to act therefore.
"GPW"
means Gross Product Worth as defined in Appendix I.
"*****"
means ***** crude oil of normal export quality.
"INDEPENDENT INSPECTOR" means a company that is approved by U.S.
Customs
and that
is mutually appointed by the Parties for reporting the
measurement of quality and quantity of Oil.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement
substantially
in the
form attached hereto as Appendix VI.
"INVENTORY" OR "INVENTORIES" means the Oil inventories that Seller
owns
and
intends to sell to Buyer under this Agreement, wherever
located,
including
at the Refinery, VEPCO tanks `C', `D' or `E', loaded upon
Vessels
and injected into or received from pipelines or other
transport.
"IPE"
means International Petroleum Exchange.
"LAW"
means (i) any law, statute, regulation, code, ordinance,
license,
decision,
order, writ, injunction, decision, directive, judgment, policy,
decree and
any judicial or administrative interpretations thereof, (ii)
any
agreement, concession or arrangement with any Governmental
Authority
and (iii)
any license, permit or compliance requirement, in each case
applicable
to either Party and as amended or modified from time to time.
"LIABILITIES" means any losses, claims, charges, damages,
deficiencies,
assessments, interests, penalties, costs and expenses of any
kind
(including
reasonable attorneys' fees and other fees, court costs and
other
disbursements), including any Liabilities directly or
indirectly
arising
out of or related to any suit, proceeding, judgment, settlement
or
judicial
or administrative order and any Liabilities with respect to
Environmental Law.
"LIBOR"
means, as of the date of any determination, the London
Interbank
Offered
Rate for One-Month U.S. Dollar deposits appearing on page 3750
of
the Telerate screen (or any
successor page) at approximately 11:00 a.m.
(London
time). If such rate does not appear on page 3750 of the
Telerate
screen (or
otherwise on such screen), LIBOR shall be determined by
reference
to such other comparable publicly available service for
displaying
Eurodollar rates as the Parties may mutually select. LIBOR
shall be
established on the first day on which a determination of the
interest
rate is to be made
*****Confidential treatment requested.
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information redacted.
8
<PAGE>
under this
Agreement and shall be adjusted daily based on the LIBOR quotes
made
available through the foregoing sources.
"LOADING
TERMINAL" means the port of loading of the Vessel for the
applicable
Oil being Supplied.
"MONTH"
means a calendar month. Where a specified Month is defined as
Month "M",
Month M-1 shall mean the Month prior to Month M and Month M+1
shall mean
the Month subsequent to Month M.
"OIL"
means crude oil specified in this Agreement.
"NORMAL
REFINERY OPERATIONS" means periods of time when the Refinery is
operating
in a routine manner with all operating units on-line. Normal
Refinery
Operations exclude maintenance turnarounds and shutdown
periods.
For any
periods of time other than during Normal Refinery Operations,
Buyer
shall invoke the provisions of Articles 7.2 and/or 7.3.
"PARTY" or
"PARTIES" means each Buyer and Seller defined in Article 1
"Contract
Parties" and collectively, both Buyer and Seller.
"PERSON"
means an individual, corporation, partnership, limited
liability
company,
joint venture, trust or unincorporated organization, joint
stock
company or
any other private entity or organization or Governmental
Authority,
whether acting in an individual, fiduciary or other capacity.
"PREPRODUCTION ASSAY" means the ***** Crude Oil Assay, (Report
number
04263/96,
dated August 23, 1996) attached as Appendix II.
"PRODUCTION FACILITIES" means the offshore field production
facilities
used for
the production of *****.
"PROPERTY
TAX" means any and all tangible personal property taxes, ad
valorem
property taxes or the like imposed on the value of the Oil held
for sale
by Seller to Buyer under this Agreement.
"REFINERY"
means the petroleum processing and refining facilities located
in
Yorktown, Virginia that are currently owned and operated by
Buyer.
"SAMPLER"
means an automatic in-line sampler located in the immediate
vicinity
of the Vessel's discharge manifold and the Refinery's receiving
pipeline
connection.
"SELLER'S
SUPPLY WINDOW" has the meaning given such term in Article 9(b).
*****Confidential treatment requested.
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"SUPPLIED"
or "SUPPLY" or "SUPPLIES" means or refers to when the Oil
passes the
flange connection between Seller's Vessel's permanent discharge
manifold
and the receiving pipeline or hose at the Discharge Port.
"TANK
OWNER'S AGREEMENT" means the Tank Owner's Agreement substantially
in
the form
attached hereto as Appendix VII.
"TAXES"
means any and all (i) U.S. federal, state and local taxes,
duties,
fees and
charges of every description, including all fuel, excise,
environmental, spill, gross earnings, gross receipts and sales and
use
taxes,
however designated (except for taxes on income), paid or
incurred
with
respect to the purchase, storage, exchange, use,
transportation,
resale,
importation or handling of the Oil and (ii) Property Taxes.
"TERMINATION DATE" has the meaning given such term in Article
21.1.
"UCC"
means the Uniform Commercial Code in effect in the relevant
state
jurisdiction.
"VESSEL"
means the ship or barge, whether owned or chartered or
otherwise
obtained
by Seller and employed by Seller to transport the Oil to the
Discharge
Port.
2.2 CONSTRUCTION.
(a) All headings herein are intended solely
for convenience of reference and
shall not affect the meaning or
interpretation of the provisions of this
Agreement.
(b) Unless expressly provided otherwise,
the word "including" as used herein
does not limit the preceding words or
terms.
(c) Unless expressly provided otherwise,
all references to days, weeks, months
and quarters mean calendar days, weeks,
Months and quarters, respectively. For
purposes of this Agreement, a calendar day
shall begin at 12:00 a.m. E.T. and
end at 11:59 p.m. E.T.
(d) Unless expressly provided otherwise,
references herein to "consent" mean the
prior written consent of the Party at
issue, which shall not be unreasonably
withheld, delayed or conditioned.
(e) The Parties acknowledge that they and
their counsel have reviewed and
revised this Agreement and that no
presumption of contract interpretation or
construction shall apply to the advantage
or disadvantage of the drafter of this
Agreement.
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ARTICLE 3
QUALITY
3.1 NORMAL EXPORT QUALITY. The
Oil to be Supplied under this Agreement shall
be ***** crude oil of normal export
quality. Other crude oils may be Supplied
under this Agreement to replace part of the
***** should a substitution be
agreed to between the Parties. Any such
substitution will be made in accordance
with the procedures set out in Appendix
IV.
3.2 VARIATIONS IN QUALITY. Both
Parties recognize that the quality of *****
may vary from the quality of ***** defined
in the Preproduction Assay and as
included as Appendix II. A significant
variation in the quality of ***** from
the Preproduction Assay to subsequent
assays will result in an adjustment of the
price as set out in Appendix I.
Notwithstanding any quality variation, Seller
shall Supply the ***** and Buyer shall
receive of the ***** subject to the
following:
(a)
In the event the
quality of the ***** is substantially different
from the quality defined in the Preproduction Assay, and this
directly results in significant technical problems to Buyer's
Refinery or Buyer is not able to manufacture finished petroleum
products meeting current specifications for the products in
Buyer's
normal markets except under significant economic hardship, then
the
Parties agree to meet in an expeditious manner to resolve the
situation in good faith. In order to resolve the technical
problems
associated with the quality of the ***** being substantially
different from the quality defined in the Preproduction Assay,
Buyer
shall take reasonable measures to receive alternative crude oils
or
crude oil blends (Acidic or non-Acidic crude oils) Supplied by
Seller in substitution for the *****.
(b)
In the event
that the quality of the ***** is substantially
different from the quality defined in the Preproduction Assay
such
that ***** is clearly worth substantially more than the
Agreement
price based on market prices obtained by Seller from third
parties,
the Parties agree to meet and discuss in good faith how to
reduce
Seller's economic disadvantage from Supplying ***** to Buyer
according to the agreed prices. Buyer shall take reasonable
measures
to receive alternative crude oils or crude oil blends (Acidic
or
non-Acidic crude oils) Supplied by Seller in substitution for
the
*****. Seller shall take reasonable measures to Supply crude oils
or
crude oil blends at prices that provide Buyer with comparable
economics as if Buyer were receiving ***** as defined in the
Preproduction Assay.
----------
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ARTICLE 4
VOLUME AND DELIVERY RATE
4.1 TOTAL VOLUME. Seller shall
Deliver, and Buyer shall take Delivery of, a
minimum of ***** Barrels of Oil under this
Agreement. Buyer shall take delivery
of all Oil Supplied under this Agreement to
the Refinery. The intent of the
Parties is that the first Cargo shall be
Supplied during February 2004. The last
Cargo to be Supplied under this Agreement
will include the ***** Barrel, so that
it is ensured that the minimum quantity is
Supplied. Any quantity in addition to
the minimum that is Supplied in the last
Cargo will be considered to be part of
the quantity to be Delivered under the
Agreement.
4.2 DELIVERY RATE.
(a) Delivery Prior to Buyer's Refinery
Upgrading Turnaround. From March 1st
2004, until the last day prior to Buyer's
Refinery Upgrading Turnaround, Buyer
shall take Delivery of the Oil ratably at
twenty thousand (20,000) Barrels per
day during periods of Normal Refinery
Operations.
(b) Delivery Subsequent to Buyer's Refinery
Upgrading Turnaround. From the first
day after the completion of Buyer's
Refinery Upgrading Turnaround, Buyer shall
take Delivery of the Oil ratably at forty
thousand (40,000) Barrels per day
during periods of Normal Refinery
Operations; except that, if Buyer is able to
complete its turnaround prior to the end of
September 2004, Seller shall have
the right to Deliver Oil at the rate of
twenty thousand (20,000) Barrels per day
until September 30, 2004 and shall increase
the rate of delivery of Oil to forty
thousand (40,000) Barrels per day beginning
October 1, 2004. Notwithstanding the
foregoing, Buyer and Seller may mutually
agree to an increase in the rate of
Deliveries prior to October 1, 2004, should
this be acceptable to both Parties.
If Buyer is unable to take delivery at the
higher rate as soon as reasonably
practical following Buyer's Refinery
Upgrading Turnaround, then Buyer shall
invoke the provisions of Article 7.2 below,
citing unscheduled downtime.
(c) Intended Delivery Rate. Buyer shall
make best efforts to take Delivery of
the Oil at a rate as close as operationally
possible to the agreed rate. For the
avoidance of doubt, this shall not mean
that Buyer shall be required to take
Delivery on any day at that exact rate but
that, as a maximum deviation from
ratability, should Buyer be taking
Deliveries at a higher or lower rate than the
agreed rate for a period of approximately
two (2) Months (as first evidenced by
Buyer's EWQ's), then Buyer shall undertake
to reduce or increase Deliveries, as
the case may be, in the third Month in
order to compensate for the deviation in
the previous two (2) Months. In any case,
excluding any reduction in volume as a
result of Articles 7.2 and/or 7.3 being
invoked, the maximum deviation from
ratability over any Month shall be plus or
minus five percent (5%).
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ARTICLE
5
TITLE
5.1 TRANSFER OF TITLE. Title to
the Oil shall pass from Seller to Buyer when
the Oil passes through the outlet flange of
Buyer's Daily Charge Tanks. Delivery
shall be considered to be taken by Buyer at
the same point as title passes to
Buyer.
5.2 COMMINGLED INVENTORY.
(a) Seller shall not have, or assert any
claim to, title over, or any other
interest in, Buyer's segregated inventory
or any portion of unsegregated
inventory with which the Oil inventories
owned by Seller are commingled in
storage.
(b) Buyer shall not have or assert any
claim to, title over, or any other
interest in, or cause or allow any claim
to, title over or any other interest
in, Seller's portion of any segregated or
commingled Oil with which the crude
oil inventories owned by Buyer are
commingled in storage. Nothing in this
Agreement shall be deemed to grant to Buyer
or any person claiming by, through
or against Buyer, title to or create a
security interest in, any of Seller's
Oil. Buyer authorizes Seller to file in all
appropriate jurisdictions one (1) or
more UCC financing statements.
ARTICLE 6
RISK OF LOSS
Risk of loss of the Oil shall pass from
Seller to Buyer when the Oil passes the
flange connection between Vessel's
permanent discharge manifold and the
receiving pipeline or hose at the Discharge
Port.
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ARTICLE 7
SUPPLY AND DELIVERY
7.1 SUPPLY.
(a) All Cargoes Supplied under this
Agreement will be nominated in accordance
with Article 9 hereof and shall be subject
to draught restrictions at the
Discharge Port as detailed in Article 8.
All Oil will be Supplied outside of
U.S. Customs at the Refinery.
(b) The Oil shall be Supplied in Cargoes in
a normal range of volume between
five hundred seventy thousand (570,000)
Barrels and six hundred twenty thousand
(620,000) Barrels into Buyer's Refinery.
Deviations to the normal range of
volume may occur in accordance with the
following:
(i)
Seller has the
option at any time prior to the day that Seller
designates
the Four-Day Supply Window to Supply Cargoes of a volume
between
four hundred thousand (400,000) Barrels and seven hundred
thousand
(700,000)
Barrels. Seller shall communicate to Buyer its intention to
nominate
such a volume so that Buyer can exercise its right to
re-nominate
subsequent
Cargoes in accordance with Article 9.3, and further, Seller
will
ensure that it can comply with any changes to the Supply of
subsequent
Cargoes. Seller may Supply Cargoes of volume less than four
hundred
thousand (400,000) Barrels only with Buyer's prior consent.
(ii)
Seller has the option,
with Buyer's prior consent, to Supply Cargoes
up to
approximately one million (1,000,000) Barrels. Buyer shall be
granted
substantially earlier notice of such Supply and shall be able
to
nominate a
narrower Buyer's Supply Window. Buyer agrees to use its best
efforts to
accommodate Seller's option.
(c) Seller may not change any Cargo volume
fewer than twenty (20) days prior to
the beginning of the subject Cargo's
Four-Day Supply Window without Buyer's
prior consent.
(d) For Oil Supplied pursuant to this
Agreement, Buyer represents to Seller that
Buyer shall not use any tanks leased from
any third parties, including, but not
limited to, VEPCO, without first notifying
Seller and obtaining either a Tank
Owner's Agreement substantially in the form
attached hereto as Appendix VII or
providing additional security in the form
of a letter of credit or cash deposit
reasonably satisfactory to Seller.
7.2 SCHEDULED AND UNSCHEDULED
DISRUPTION TO SUPPLY OR RECEIPT OF OIL. Any
reduction in volume as a result of the
provisions of this Article 7.2 shall only
be temporary and the total volume of Oil to
be Delivered under this Agreement
shall not be affected. The Parties agree
that the provisions of this Article 7.2
shall not be used for commercial gain.
(a) Buyer's Refinery.
(i)
Scheduled
Maintenance. Buyer shall give Seller at least ninety (90)
days'
notice of any scheduled maintenance at the Refinery, which
could
affect the
rate at which the
14
<PAGE>
Oil is
Delivered. During such scheduled maintenance, Buyer's obligation
to
take
Delivery of Oil from Seller will be reduced, to the extent
required,
for the
affected period.
(ii)
Unscheduled Downtime.
Unscheduled downtime at the Refinery due to an
event of
Force Majeure shall be handled in accordance with Article 7.3.
During any
period of unscheduled downtime not caused by an event of Force
Majeure,
Buyer shall make reasonable attempts to take Delivery of Oil
under this
Agreement. Should unscheduled downtime not caused by an event
of Force
Majeure exceed five (5) days, Buyer is entitled to request the
rescheduling of future Cargoes. However, Seller shall not be
required to
reschedule
or delay any Cargo that has been accepted by Buyer for Supply
within a
forty-five (45) day period immediately following the date Buyer
gives
Seller notice of unscheduled downtime.
(b) Seller's Production Facilities and
Loading Terminal.
(i)
Scheduled
Maintenance. Seller shall give Buyer at least ninety (90)
days
notice of any scheduled maintenance at the Production Facilities
or
at the
Loading Terminal that could affect Supply of Oil under this
Agreement.
(ii)
Supply Shortage. If,
by reason of any of the causes described in
this
Article 7.2, or by reason of production problems at the
offshore
facility
or any problems at the Loading Terminal or reduction of
production
by a Governmental Authority, a shortage of supply occurs such
that the
total of Seller's volumes, SDFI volumes ("State Direct
Financial
Interest"
volumes), and other third party volumes under long term
contracts
to Seller, of ***** for any such period of supply shortage is
lower than
the total of Seller's own system requirements (meaning Seller's
own
refining system and its long term processing arrangements) and
the
total
nominated deliveries committed to other supply agreements for
that
period,
then Seller has the right to freely withhold, reduce or suspend
Deliveries
under this Agreement to a level below the nominated quantity
for that
period as set forth below. Any shortage of supply shall result
in
Seller
first canceling any uncommitted spot volumes. If that is not
sufficient
to deal with the supply shortage, then any reduction in
Deliveries
under this Agreement that Seller imposes shall correspond with
the
reduction in volume imposed on other third party long-term buyers
of
***** from
Seller. For the purposes hereof, Buyer shall be considered a
long-term
***** customer.
If Seller
has to reduce Deliveries under any of the above circumstances,
the
Parties will discuss in good faith a new nomination plan to take
into
account
the reduced ***** volume. The Parties also shall discuss the
option of
substituting alternative crude oils for any reduced *****
volumes.
Such alternative crude oils will be considered, where possible,
on spot
terms, based on fair market prices and relative values to
*****.
Should the
Parties fail to agree on terms for the supply of alternative
crude
oils, Buyer shall have the option to secure such supplies
directly
from third
parties. In this case, Buyer shall propose to Seller for its
consent an
amended nomination schedule for future deliveries of Oil.
----------
***** Confidential treatment requested.
Confidential information redacted.
15
<PAGE>
7.3 FORCE MAJEURE. The Parties
agree that the provisions of this Article 7.3
shall not be used for commercial gain.
(a) Neither Party shall be liable to the
other if it is rendered unable by an
event of Force Majeure to perform in whole
or in part any obligation or
condition of this Agreement, for so long as
the event of Force Majeure exists
and to the extent that performance is
hindered by the event of Force Majeure;
provided, however, that the Party unable to
perform shall use any and all
commercially reasonable efforts to avoid or
remove the event of Force Majeure.
(Notwithstanding the foregoing, neither
Party shall be required to (i) settle
labor disputes by acceding to the demands
of the opposing party or parties to
such disputes or (ii) incur a major capital
expenditure). During the period that
performance by one (1) of the Parties of a
part or whole of its obligations has
been suspended by reason of an event of
Force Majeure, the other Party likewise
may suspend the performance of all or a
part of its obligations to the extent
that such suspension is commercially
reasonable, except for any