Argentina - Oil And Gas Engineering Project : Loan 1880 - Loan Agreement - Conformed

=FFICTAL AN NUMBER 1880 AR Loan Agreement (Oil and Gas Engineering Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and YACIMIENTOS PETROLIFEROS FISCALES - SOCIEDAD DEL ESTADO Dated , 1980 LOAN NUMBER 1880 AR LOAN AGREEMENT AGREEMENT, dated ( 2 , 1980, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and YACIMIENTOS PETROLIFEROS FISCALES - SOCIEDAD DEL ESTADO (hereinafter called the Borrower). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the cost of the project described in Schedule 2 to this Agreement (hereinafter called the Project); (B) The Argentine Republic will carry out Part C of the Project and has undertaken to guarantee the loan hereinafter provided and the performance of the Borrower's obligations under this Agreement, all as set forth in a Guarantee Agreement of even date herewith between The Argentine Republic (hereinafter called the Guarantor) and the Bank; and (C) the Borrower will relend to the Guarantor part of the proceeds of the Loan for purposes of Part C of the Project as hereinafter provided; and WHEREAS the Bank is willing, on the basis inter alia of the foregoing, to make a loan to the Borrower on the terms and con- ditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guarantee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth. -2- ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or referred to, an amount in various currencies equivalent to twenty-seven million dollars ($27,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. Section 2.03. (a) Except as the Bank shall otherwise agree, services for Part B of the Project, to be financed out of the proceeds of the Loan, shall be procured on the basis of quotations from an adequate number of qualified and experienced firms accept- able to the Bank or in accordance with such other procedures as shall be satisfactory to the Bank. (b) The terms and conditions of the contracts for the services referred to in paragraph (a) of this Section shall be satisfactory to the Bank. Section 2.04. The Closing Date shall be June 30, 1983 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower and the Guarantor of such later date. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest at the rate of eight and twenty-five hundredths per cent (8.25%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time. Section 2.07. Interest and other charges shall be payable semiannually on January 1 and July 1 in each year. -3- Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of Parts A and B of the Project Section 3.01. (a) The Borrower shall carry out Parts A and B of the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and oil and natural gas exploration and production practices. (b) The Borrower shall, for purposes of Part C of the Project, transfer the proceeds of the Loan allocated to Category (4) of Schedule 1 to this Agreement to the Guarantor under contractual arrangements to be entered into between the Borrower and the Guarantor under terms and conditions which shall have been approved by the Bank and, except as the Bank shall otherwise agree, the Borrower shall duly perform its obligations thereunder, and not change or fail to enforce any provision thereof. Section 3.02. In order to ass'.t the Borrower .in the carrying out of Part A of the Project, the Borrower shall employ con- sultants whose qualifications, experience and terms and con- ditions of employment shall be satisfactory to the Bank. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan not transferred to the Guarantor against hazards incident to the acquisition, trans- portation and delivery thereof to the place of use or installa- tion, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan not transferred to the Guarantor to be used exclu- sively for Parts A and B of the Project. Section 3.04. (a) The Borrower shall furnish to the Bank: (i) promptly upon their preparation, the plans, specifications, reports, contract documents and work and procurement schedules for Part B of the Project, and any material modifications thereof or -4- additions thereto, in such detail as the Bank shall reasonably request; and (ii) promptly upon completion of the studies and the survey included in Parts A and B of the Project, respec- tively, the recommendations of such studies and a summary of the results of such survey and such other information related thereto as the Bank shall reasonably request. (b) The Borrower shall: (i) maintain records and procedures adequate to record and monitor the progress of Parts A and B of the Project (including their cost and the benefits to be derived from them), to identify the goods and services financed out of the proceeds of the Loan not transferred to the Guarantor, and to disclose their use in Parts A and B of the Project; (ii) enable the Bank's accredited representatives to examine the goods financed out of such proceeds and any relevant records and docu- ments; and (iii) furnish to the Bank at regular intervals all such information as the Bank shall reasonably request con- cerning Parts A and B of the the Project, their cost and, where appropriate, the benefits to be derived from them, the expenditure of such proceeds and the goods and services financed out of them. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reason- ably request, on the execution of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Bank of their respective obligations under the Loan Agreement and the accomplishment of the purposes of the Loan. (d) The Borrower shall enable the Bank's accredited repre- sentatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrower and any relevant records and documents, as required for purposes of this Agreement. Section 3.05. The Borrower shall take all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for carrying out Part B of the Project and shall furnish to the Bank, promptly after such acquisition, evidence satisfactory to the Bank that such land and rights in respect of land are available for purposes related to Part B of the Project. -5- ARTICLE IV Management and Operations of the Borrower Section 4.01. (a) The Borrower shall at all times manage its affairs, carry out its operations, plan the development of its business and undertaking and maintain its financial position, all in accordance with sound industrial, financial and administrative and petroleum exploration and production practices under the supervision of qualified and experienced management. (b) The Borrower shall: (i) operate and maintain its plants, equipment, properties and facilities and shall, from time to time, promptly as needed, make all necessary renewals and repairs thereof, all in accordance with sound engineering practices; and (ii) not sell, lease, transfer or otherwise dispose of any of its properties or assets required for the efficient carrying out of its business and undertaking, including the carrying out of Parts A and B of the Project, except in the normal course of its business. Section 4.02. The Borrower shall at all times take all steps necessary to maintain its right to carry on its operations, including Parts A and B of the Project. Section 4.03. The Borrower shall take out and maintain with responsible insurers, or make other provision satisfactory to the Bank for insurance, against such risks and in such amounts as shall be consistent with appropriate practice. ARTICLE V Financial Covenants Section 5.01. The Borrower shal maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition, including separate accounts to be used exclusively for Parts A and B of the Project and to register in such accounts all funds received in connection with such Parts of the Project and all payments made therefor. Section 5.02. The Borrower shall: (i) have its accounts, including the accounts referred to in Section 5.01 of this Agree- ment, and financial statements (balance sheets, statements of -6- income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reason- ably request. Section 5.03. (a) The Borrower represents that at the date of this Agreement no lien exists on any of its assets as security for any debt. (b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if the Borrower shall create any lien on any of its assets as security for any debt, such lien will equally and ratably secure the payment of the principal of, and interest and other charges on, the Loan, and in the creation of any such lien express provision will be made to that effect, at no cost to the Bank; and (ii) if any statutory lien shall be created on any assets of the Borrower as security for any debt, the Borrower 'hall grant, at no cost to the Bank, an equivalent lien satis- factory to the Bank to secure the payment of the principal of, and interest and other charges on, the Loan; provided, however, that the foregoing provisions of this section shall not apply to: (A) any lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase price of such property; or (B) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. ARTICLE VI Effective Date; Termination Section 6.01. The date 4p i0 , is hereby speci- fied for the purpose of See on 12.04 f the General Conditions. -7- ARTICLE VII Addresses Section 7.01. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For the Borrower: Yacimientos Petrolilferos Fiscales - Sociedad del Estado Avenida Roque Saenz Peffa 777 (1364) Buenos Aires Argentina Cable address: Telex: PETROLEUM 21999 YPF SC AR Baires IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District -8- of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By 4V Regional Vice President Latin America and the Caribbean YACIMIENTOS PETROLIFEROS FISCALES - SOCIEDAD DEL ESTADO By Authorized Representative -9- SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Consultants' services 1,500,000 100% of for- for Part A.1 of the eign expendi- Project tures (2) Consultants' services 1,500,000 100% of for- for Part A.2 of the eign expendi- Project tures (3) Services for Part B 19,500,000 51% of the Project (4) Consultants' services 2,000,000 100% of for- for Part C of the eign expendi- Project tures (5) Unallocated 2,500,000 TOTAL 27,000,000 2. For the purposes of this Schedule the term "foreign expen- ditures" means expenditures in the currency of any country other than the Guarantor and for goods or services supplied from the territory of any country other than the Guarantor. 3. The disbursement percentages have been calculated in compliance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Guarantor on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds - 10 - of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Bank. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for: (a) expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equiv- alent of $5,000,000 may be made in respect of Category 2 on account of payments made for such expenditures before that date but after January 1, 1980; and (b) expenditures in respect of the consultants' services under Part C of the Project unless the Bank has been furnished with evidence satisfactory to the Bank that the contractual arrangements referred to in Section 3.01 (b) of this Agreement have been executed and delivered on behalf of the Borrower and the Guarantor and are legally binding upon the Borrower and the Guarantor in accordance with their terms. 5. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank, after consultation with the Borrower, may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated short- fall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Bank shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or limiting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of - 11 - the Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. - 12 - SCHEDULE 2 Description of the Project The purpose of the Project is to assist the Borrower in promoting oil and natural gas exploration and development and strengthening its technical capability in such matters, and to assist the Guarantor in optimizing the use of natural gas. The Project consists of the following parts: A. Audit of oil and gas reserves: Reservoir engineering studies: 1. (i) to determine proven secondary recovery oil reserves in about 9 reservoirs in various basins and enhance recovery methods in oil fields operated by the Borrower; (ii) to determine proven reserves in newly discovered oil and gas reservoirs in the Northwestern basin, including an evaluation of probable oil and gas reserves by statisti- cal methods; and 2. to review calculations for crude oil, gas and condensate reserves, mainly in the Southern basin and in all the other major reservoirs not included in Part A.l. B. Seismic Survey A seismic survey on the Northwestern basin consisting of about 1000 kilometers of seismic lines with stakes placed at intervals of 25 to 50 meters apart, with a coverage of 24-fold to 48-fold and with 20 to 40 holes per position at a depth of 1 to 3 meters and utilizing 96 channels for recording. C. Natural gas A study to optimize the use of natural gas including an analysis of: 1. the level and structure of liquid fuel prices and natural gas tariffs; 2. demand for natural gas and competing fuels; - 13 - 3. options for disposition of fuel oil surpluses; 4. optimization of future refining expansion and related investment requirements; and 5. transport and storage requirements for natural gas, including the scope for gas recycling and reinjection and the optimum development of natural gas fields. The Project is expected to be completed by December 31, 1982. - 14 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars)* On each January 1 and July 1 beginning January 1, 1984 through July 1, 1995 1,125,000 * To the extent that any portion of the Loan is repayable in a currency other than dollars (see General Conditions, Section 4.02), the figures in this column represent dollar equiva- lents determined as for purposes of withdrawal. - 15 - Premiums on Prepayment The following percentages are specified as the premiums payable on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the General Conditions: Time of Prepayment Premium Not more than three years before maturity 1.65% More than three years but not more than six years before maturity 3.30% More than six years but not more than eleven years before maturity 6.00% More than eleven years but not more than thirteen years before maturity 7.15% More than thirteen years before maturity 8.25% INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Bank for Reconstruction and Develop- ment. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Bank thereunto this -day of 0 9 198 2. FOR SECRETARY