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Act No. 36 of 1990 as made
An Act relating to the Treaty between Australia and the Republic of Indonesia on the Zone of Cooperation in an Area between the Indonesian Province of East Timor and Northern Australia
Date of Assent 07 Jun 1990
Date of repeal 20 May 2002
Repealed by Petroleum (Timor Sea Treaty) (Consequential Amendments) Act 2003
 

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - LONG TITLE

An Act relating to the Treaty between Australia and the
Republic of Indonesia on the Zone of Cooperation in an Area
between the Indonesian Province of East Timor and
Northern Australia

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - PART 1
PART 1 - PRELIMINARY

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 1
Short title

(Assented to 7 June 1990)
1. This Act may be cited as the Petroleum (Australia-Indonesia Zone of Cooperation) Act 1990.

(Minister's second reading speech made in-
House of Representatives on 9 May 1990
Senate on 28 May 1990)

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 2
Commencement

2. This Act commences on a day to be fixed by Proclamation, being a day not earlier than the day on which the Treaty enters into force for Australia.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 3
Object of the Act

3. The object of this Act is to enable Australia to fulfil its obligations under the Treaty.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 4
Ministerial Council and Joint Authority authorised to exercise rights of Australia

4. The Ministerial Council and the Joint Authority exercise the rights and responsibilities of Australia, in relation to the exploration for and exploitation of petroleum resources in Area A of the Zone of Cooperation, in accordance with the Treaty.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 5
Interpretation

5. (1) In this Act, unless the contrary intention appears:
"Area A of the Zone of Cooperation" means the area described as Area A in Annex A of the Treaty;
"Joint Authority" means the body established by Article 7 of the Treaty;
"Ministerial Council" means the body established by Article 5 of the Treaty;
"Treaty" means the Treaty between Australia and the Republic of Indonesia on the Zone of Cooperation in an Area between the Indonesian Province of East Timor and Northern Australia, done over the Zone of Cooperation on 11 December 1989, being the Treaty the text of which is set out in the Schedule, and includes that Treaty as amended from time to time.
(2) Unless the contrary intention appears, a word or an expression that is defined in the Treaty, when used in this Act, has the same meaning as in the Treaty.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - PART 2
PART 2 - GENERAL PROVISIONS

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 6
International Organisations (Privileges and Immunities) Act to apply to Joint Authority

6. The Joint Authority is an international organisation to which the International Organisations (Privileges and Immunities) Act 1963 applies.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 7
Prospecting for petroleum

7. A person must not prospect for petroleum in Area A of the Zone of Cooperation except with the approval of the Joint Authority.
Penalty: Imprisonment for 5 years.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 8
Petroleum operations

8. A person must not undertake petroleum operations in Area A of the Zone of Cooperation except under and in accordance with a production sharing contract, or with the approval of the Joint Authority.
Penalty: Imprisonment for 5 years.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 9
Powers of Inspectors

9. (1) An inspector appointed by the Joint Authority under Article 34 of the Petroleum Mining Code may, for the purpose of ascertaining whether the Petroleum Mining Code, the regulations and directions issued under Article 37 of the Petroleum Mining Code, and contract terms and conditions applying to petroleum operations in Area A of the Zone of Cooperation have been complied with, at all reasonable times and on production of a certificate of appointment as an inspector:
(a) enter or board any structure, vessel or aircraft that is in Area A and is being used for petroleum operations; and
(b) inspect and test any equipment being used or proposed to be used for petroleum operations in Area A; and
(c) enter or board any structure, vessel, aircraft or building in which the inspector has reason to believe that there are any documents relating to petroleum operations in Area A, and inspect, take extracts from and make
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copies of any of those documents.
(2) The person in charge of any structure, vessel, aircraft or building referred to in subsection (1) must, at the request of an inspector, provide the inspector with all reasonable facilities and assistance for the effective exercise of powers under this section.
(3) A person must not, without reasonable excuse, obstruct or hinder an inspector exercising powers under this section.
Penalty: $5,000.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 10
Jurisdiction of State and Territory courts

10. (1) Subject to this section, the courts of each State and Territory are invested with federal jurisdiction in civil matters:
(a) relating to an act or omission done in Area A of the Zone of Cooperation; and
(b) involving damage suffered or expenses incurred by Australia, by a State or Territory, or by a person who is a national or permanent resident of Australia.
(2) The jurisdiction with which courts are invested by subsection (1) is invested within the limits, other than limits having effect by reference to localities, of their respective jurisdictions (whether those limits are as to subject-matter or otherwise).
(3) This section does not limit the jurisdiction of the courts of a State or Territory arising otherwise than under this section.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 11
Northern Territory laws to be applied

11. (1) Subject to this section, in exercising jurisdiction conferred by section 10, a court is to apply the laws, whether written or unwritten, in force in the Northern Territory.
(2) The laws referred to in subsection (1) do not include laws that are criminal laws within the meaning of the Crimes at Sea Act 1979, but nothing in this section detracts from the operation of that Act.
(3) A law is taken to be in force in the Northern Territory even if it applies only in part of the Northern Territory.
(4) This section does not require a court to apply a law that is inconsistent with a law of the Commonwealth (including this Act).
(5) This section does not limit the operation that any law has apart from this section.
(6) The regulations may provide that a law, or specified provisions of a law, referred to in subsection (1) are not to be applied for the purposes of that subsection, or are to be so applied with specified modifications.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - PART 3
PART 3 - TAX PROVISIONS

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 12
Interpretation

"Australian tax'' means:
(a) tax imposed by the Fringe Benefits Tax Act 1986; or
(b) income tax imposed as such by any Act; or
(c) sales tax imposed by any of the following Acts:
(i) the Sales Tax Act (No. 5) 1930;
(ii) the Sales Tax Act (No. 6) 1930;
(iii) the Sales Tax Act (No. 7) 1930;
(iv) the Sales Tax Act (No. 8) 1930.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 13
Australian tax - Treaty and Taxation Code have the force of law

13. Subject to this Part, the provisions of the Treaty and of the Taxation Code, so far as those provisions affect Australian tax, have the force of law according to their tenor.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 14
Medicare levy to be treated as income tax

14. For the purposes of this Part, Medicare levy is taken to be income tax and to be imposed as such and, unless the contrary intention appears, references to income tax are to be construed accordingly.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 15
Incorporation of Australian tax laws

15. (1) Subject to subsection (2), the following Acts are incorporated and are to be read as one with this Part:
(a) the Fringe Benefits Tax Assessment Act 1986;
(b) the Income Tax Assessment Act 1936;
(c) the Sales Tax Assessment Act (No. 5) 1930;
(d) the Sales Tax Assessment Act (No. 6) 1930;
(e) the Sales Tax Assessment Act (No. 7) 1930;
(f) the Sales Tax Assessment Act (No. 8) 1930.
(2) The provisions of this Part have effect in spite of anything inconsistent with those provisions contained in any of the following Acts:
(a) the Fringe Benefits Tax Assessment Act 1986 (other than section 67 of that Act);
(b) the Income Tax Assessment Act 1936 (other than Part IVA of that Act);
(c) the Sales Tax Assessment Act (No. 5) 1930;
(d) the Sales Tax Assessment Act (No. 6) 1930;
(e) the Sales Tax Assessment Act (No. 7) 1930;

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(f) the Sales Tax Assessment Act (No. 8) 1930;
(g) an Act imposing Australian tax.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 16
Calculation of rebates under Taxation Code

16. (1) This section applies where, under Article 4, 9, 10 or 11 of the Taxation Code, a taxpayer is entitled to a rebate against income tax of 50% of the gross tax payable in Australia on particular profits, or particular income, derived by the taxpayer in a year of income.
(2) In determining that rebate, the gross tax payable in Australia on those profits or that income is calculated using the formula:
Notional Australian tax
X Rebatable amount
Taxable income
where:
"Notional Australian tax" means the amount of income tax that would be assessed under the Income Tax Assessment Act 1936 in respect of the taxpayer's taxable income of the year of income if:
(a) the taxpayer was not entitled to any rebate of income tax or credit against the taxpayer's liability for income tax; and
(b) the taxpayer was not liable to pay additional tax under Division 7 of Part III of that Act;
"Taxable income" means the number of whole dollars in the taxpayer's taxable income of the year of income;
"Rebatable amount" means so much of the taxpayer's taxable income of the year of income as is attributable to those profits or to that income, as the case may be.
(3) A reference in this section to income tax is a reference to income tax imposed as such by any Act.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - PART 4
PART 4 - REGULATIONS

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SECT 17
Regulations

17.(1) The Governor-General may make regulations, not inconsistent with this Act, prescribing all matters necessary or convenient to be prescribed for carrying out or giving effect to this Act.
(2) The regulations may prescribe penalties not exceeding a fine of $500 for offences against regulations made for the purposes of Part 3.

PETROLEUM (AUSTRALIA-INDONESIA ZONE OF COOPERATION) ACT 1990 No. 36, 1990 - SCHEDULE

SCHEDULE Section 5

TREATY BETWEEN AUSTRALIA
AND THE REPUBLIC OF INDONESIA
ON THE ZONE OF COOPERATION IN AN AREA BETWEEN
THE INDONESIAN PROVINCE OF EAST TIMOR
AND NORTHERN AUSTRALIA
AUSTRALIA and THE REPUBLIC OF INDONESIA
TAKING INTO ACCOUNT the United Nations Convention on the
Law of the Sea done at Montego Bay on 10 December 1982 and,
in particular, Article 83 which requires States with
opposite coasts, in a spirit of understanding and
cooperation, to make every effort to enter into provisional
arrangements of a practical nature which do not jeopardize
or hamper the reaching of final agreement on the
delimitation of the continental shelf;
DESIRING to enable the exploration for and exploitation of
the petroleum resources of the continental shelf of the
area between the Indonesian Province of East Timor and
northern Australia yet to be the subject of permanent
continental shelf delimitation between the Contracting
States;
CONSCIOUS of the need to encourage and promote development
of the petroleum resources of the area;
DESIRING that exploration for and exploitation of these
resources proceed without delay;
AFFIRMING existing agreements on the delimitation of the
continental shelf between their two countries;
DETERMINED to cooperate further for the mutual benefit of
their peoples in the development of the resources of the
area of the continental shelf yet to be the subject of
permanent continental shelf delimitation between their two
countries;
FULLY COMMITTED to maintaining, renewing and further
strengthening the mutual respect, friendship and
cooperation between their two countries through existing
agreements and arrangements, as well as their policies of
promoting constructive neighbourly cooperation;
MINDFUL of the interests which their countries share as
immediate neighbours, and in a spirit of cooperation,
friendship and goodwill;
CONVINCED that this Treaty will contribute to the
strengthening of the relations between their two countries;

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and
BELIEVING that the establishment of joint arrangements to
permit the exploration for and exploitation of petroleum
resources in the area will further augment the range of
contact and cooperation between the Governments of the two
countries and benefit the development of contacts between
their peoples;
HAVE AGREED as follows:
PART I
ZONE OF COOPERATION
Article 1
Definitions
1. For the purposes of this Treaty,
(a) "contract" or "production sharing contract"
means a contract between the Joint Authority and
corporations, concluded on the basis of the Model
Production Sharing Contract, entered into under Article 8
of this Treaty and in accordance with Part III of the
Petroleum Mining Code;
(b) "contract area" means the area constituted by the
blocks specified in the contract that have not been
relinquished or surrendered;
(c) "contractor" means a corporation or corporations
which enter into a contract with the Joint Authority and
which is registered as a contractor under Article 38 of the
Petroleum Mining Code;
(d) "Contractors' Income Tax" means tax imposed by the
Indonesian Laws No. 7 of 1983 on Income Tax and No. 6 of
1983 on General Tax Provisions and Procedures as amended
from time to time;
(e) "criminal law" means any law in force in the
Contracting States, whether substantive or procedural, that
makes provision for or in relation to offences or for or in
relation to the investigation or prosecution of offences or
the punishment of offenders, including the carrying out of
a penalty imposed by a court. For this purpose
"investigation" includes entry to a structure in Area A,
the exercise of powers of search and questioning and the
apprehension of a suspected offender;
(f) "good oilfield practice" means all those things
that are generally accepted as good and safe in the
carrying on of petroleum operations;
(g) "Model Production Sharing Contract" means the
model contract as appears in Annex C, on the basis of which
production sharing contracts for Area A should be
concluded, as may be modified from time to time by the
Ministerial Council in accordance with paragraph 1 (c) of
Article 6 of this Treaty;
(h) "petroleum" means
(a) any naturally occurring hydrocarbon, whether in a
gaseous, liquid or solid state;
(b) any naturally occurring mixture of hydrocarbons,
whether in a gaseous, liquid or solid state; or
(c) any petroleum as defined by sub-paragraph (a) or (b)
of this paragraph that has been returned to a reservoir in
the contract area;
(i) "Petroleum Mining Code" means the "Petroleum
Mining Code for Area A of the Zone of Cooperation" to
govern operational activities relating to exploration for
and exploitation of the petroleum resources in Area A of
the Zone of Cooperation contained in Annex B, as amended
from time to time by the Ministerial Council in accordance
with paragraph 1 (b) of Article 6 of this Treaty;
(j) "petroleum operations" means activities undertaken
to produce petroleum and includes exploration, development,
field processing, production and pipeline operations, and
marketing authorized or contemplated under a production
sharing contract;
(k) "Resource Rent Tax" means tax imposed by the
Petroleum Resource Rent Tax Act 1987 of Australia as
amended from time to time;
(l) "structure" means an installation or structure
used to carry out petroleum operations;
(m) "Taxation Code" means the "Taxation Code for the
Avoidance of Double Taxation in Respect of Activities
Connected with Area A of the Zone of Cooperation",
contained in Annex D;
(n) "taxation law" means the federal law of Australia
or the law of the Republic of Indonesia, from time to time
in force, in respect of taxes to which this Treaty applies

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but shall not include a tax agreement between the
Contracting States and a tax agreement of either
Contracting State with a third country;
(o) "Treaty" means this Treaty including Annexes A, B,
C and D;
(p) "Zone of Cooperation" refers to the area so
designated and described in Annex A and illustrated in the
maps forming part of that Annex, which consists of the
whole of the area embraced by Areas A, B and C designated
in that Annex.
2. For the purposes of Article 10 of this Treaty and the
Taxation Code, resident of a Contracting State means:
(a) in the case of Australia, a person who is liable to
tax in Australia by reason of being a resident of Australia
under the tax law of Australia; and
(b) in the case of the Republic of Indonesia, a person
who is liable to tax in the Republic of Indonesia by reason
of being a resident of the Republic of Indonesia under the
tax law of the Republic of Indonesia,
but does not include any person who is liable to tax in
that Contracting State in respect only of income from
sources in that Contracting State.
3. Where by reason of the provisions of paragraph 2 of
this Article, an individual is a resident of both
Contracting States, then the status of the person shall be
determined as follows:
(a) the person shall be deemed to be a resident solely
of the Contracting State in which a permanent home is
available to the person;
(b) if a permanent home is available to the person in
both Contracting States, or in neither of them, the person
shall be deemed to be a resident solely of the Contracting
State in which the person has an habitual abode;
(c) if the person has an habitual abode in both
Contracting States, or if the person does not have an
habitual abode in either of them, the person shall be
deemed to be a resident solely of the Contracting State
with which the person's personal and economic relations are
the closer.
4. Where by reason of the provisions of paragraph 2 of
this Article a person other than an individual is a
resident of both Contracting States, then it shall be
deemed to be a resident solely of the Contracting State in
which its place of effective management is situated.

Article 2
The Zone
1. A Zone of Cooperation is hereby designated in an area
between the Indonesian Province of East Timor and northern
Australia, which comprises Areas A, B and C.
2. Within the Zone of Cooperation activities in relation
to the exploration for and exploitation of petroleum
resources shall be conducted on the following basis:
(a) In Area A, there shall be joint control by the
Contracting States of the exploration for and exploitation
of petroleum resources, aimed at achieving optimum
commercial utilization thereof and equal sharing between
the two Contracting States of the benefits of the
exploitation of petroleum resources, as provided for in
this Treaty;
(b) In Area B, Australia shall make certain
notifications and share with the Republic of Indonesia
Resource Rent Tax collections arising from petroleum
production on the basis of Article 4 of this Treaty; and
(c) In Area C, the Republic of Indonesia shall make
certain notifications and share with Australia Contractors'
Income Tax collections arising from petroleum production on
the basis of Article 4 of this Treaty.
3. Nothing contained in this Treaty and no acts or
activities taking place while this Treaty is in force shall
be interpreted as prejudicing the position of either
Contracting State on a permanent continental shelf
delimitation in the Zone of Cooperation nor shall anything
contained in it be considered as affecting the respective
sovereign rights claimed by each Contracting State in the
Zone of Cooperation.
4. Notwithstanding the conclusion of this Treaty, the
Contracting States shall continue their efforts to reach
agreement on a permanent continental shelf delimitation in
the Zone of Cooperation.

PART II

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EXPLORATION AND EXPLOITATION
IN THE ZONE OF COOPERATION
Article 3
Area A
1. In relation to the exploration for and exploitation of
petroleum resources in Area A, the rights and
responsibilities of the two Contracting States shall be
exercised by the Ministerial Council and the Joint
Authority in accordance with this Treaty. Petroleum
operations in Area A shall be carried out through
production sharing contracts.
2. The Joint Authority shall enter into each production
sharing contract with limited liability corporations
specifically established for the sole purpose of the
contract. This provision shall also apply to the successors
or assignees of such corporations.

Article 4
Area B and Area C
1. In relation to the exploration for and exploitation of
petroleum resources in Area B Australia shall:
(a) notify the Republic of Indonesia of the grant,
renewal, surrender, expiry and cancellation of titles made
by Australia being exploration permits, retention leases
and production licences; and
(b) pay to the Republic of Indonesia ten (10) per cent
of gross Resource Rent Tax collected by Australia from
corporations producing petroleum from Area B equivalent to
sixteen (16) per cent of net Resource Rent Tax collected,
calculated on the basis that general company tax is payable
at the maximum rate.
2. In relation to exploration for and exploitation of
petroleum resources in Area C the Republic of Indonesia
shall:
(a) notify Australia of the grant, renewal, surrender,
expiry and cancellation of petroleum exploration and
production agreements made by the Republic of Indonesia;
and
(b) pay to Australia ten (10) per cent of Contractors'
Income Tax collected by the Republic of Indonesia from
corporations producing petroleum from Area C.
3. In the event that Australia changes the basis upon
which the Resource Rent Tax or general company tax is
calculated or that the Republic of Indonesia changes the
basis upon which Contractors' Income Tax is calculated, the
Contracting States shall review the percentages set out in
paragraphs 1 (b) and 2 (b) of this Article and agree on new
percentages, ensuring that the relative shares paid by each
contracting State to the other in respect of revenue
collected from corporations producing petroleum in Area B
and Area C remain the same.
4. In the event of any change occurring in the relevant
taxation regimes of either Contracting State, the
Contracting States shall review the formulation set out in
paragraphs 1 (b) and 2 (b) of this Article and agree on a
new formulation, ensuring that the relative shares paid by
each Contracting State to the other in respect of revenue
collected from corporations producing petroleum in Area B
and Area C remain the same.
5. With regard to Area B and Area C, the Contracting
States shall enter into necessary administrative
arrangements to give effect to the sharing arrangements in
the two Areas as provided in paragraph 1 (b) and paragraph
2 (b) of this Article at the time that production from
either Area commences. In particular, the arrangements
shall provide for the manner in which such a share shall be
paid from one Contracting State to the other Contracting
State. A Contracting State when making a payment to the
other Contracting State shall provide information on the
basis on which the relevant payment was calculated.
6. The Contracting States shall take necessary measures to
ensure the timely and optimum utilization of the petroleum
resources in Area B and Area C.

PART III
THE MINISTERIAL COUNCIL
Article 5
The Ministerial Council
1. A Ministerial Council for the Zone of Cooperation is
hereby established.
2. The Ministerial Council shall consist of those
Ministers who may from time to time be designated for that

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purpose by the Contracting States provided that, at any one
time, there shall be an equal number of Ministers
designated by each Contracting State.
3. The Ministerial Council shall meet annually or as often
as may be required.
4. The Ministerial Council shall normally meet alternately
in Australia or in the Republic of Indonesia. Its meetings
shall be chaired alternately by a Minister nominated by
each Contracting State.
5. Decisions of the Ministerial Council shall be arrived
at by consensus. The Ministerial Council may establish
procedures for taking decisions out of session.

Article 6
Functions of the Ministerial Council
1. The Ministerial Council shall have overall
responsibility for all matters relating to the exploration
for and exploitation of the petroleum resources in Area A
of the Zone of Cooperation and such other functions
relating to the exploration for and exploitation of
petroleum resources as the Contracting States may entrust
to it. The functions of the Ministerial Council shall
include:
(a) giving directions to the Joint Authority on the
discharge of its functions;
(b) of its own volition or on recommendation by the
Joint Authority, in a manner not inconsistent with the
objectives of this Treaty, amending the Petroleum Mining
Code to facilitate petroleum operations in Area A;
(c) of its own volition or on recommendation by the
Joint Authority, in a manner not inconsistent with the
objectives of this Treaty, modifying the Model Production
Sharing Contract to facilitate petroleum operations in Area
A;
(d) approving production sharing contracts which the
Joint Authority may propose to enter into with corporations;
(e) approving the termination of production sharing
contracts entered into between the Joint Authority and
corporations;
(f) approving the variation of the following provisions
of a production sharing contract, with the agreement of the
contractor:
(i) the Joint Authority's or the contractor's production
share;
(ii) the operating cost recovery provisions;
(iii) the term of the contract; and
(iv) the contract area relinquishment provisions;
(g) approving the variation of the annual contract service fee;
(h) giving approval to the Joint Authority to market any
or all petroleum production in circumstances determined by the Ministerial Council;
(i) approving the transfer of rights and
responsibilities by contractors to other corporations that will then become contractors;
(j) approving the distribution to Australia and the
Republic of Indonesia of revenues dervied from production
sharing contracts in Area A;
(k) through consultation, settling disputes in the Joint
Authority;
(l) approving financial estimates of income and
expenditure of the Joint Authority;
(m) approving rules, regulations and procedures for the
effective functioning of the Joint Authority including
staff regulations;
(n) reviewing the operation of this Treaty and making
recommendations to the Contracting States that the Council
may consider necessary for the amendment of this Treaty;
(o) appointment of the Executive Directors of the Joint
Authority;
(p) at the request of a member of the Ministerial
Council inspecting and auditing the Joint Authority's books
and accounts;
(q) approving the result of inspections and audits of
contractors' books and accounts conducted by the Joint
Authority;
(r) considering and adopting the annual report of the
Joint Authority; and
(s) reviewing the distribution among the Republic of
Indonesia, Australia and third countries, of expenditure on
petroleum operations related to Area A.
2. The Ministerial Council in exercising its functions

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shall ensure the achievement of the optimum commercial
utilization of the petroleum resources of Area A consistent
with good oilfield and sound environmental practice.
3. The Ministerial Council shall authorize the Joint
Authority to take all necessary steps to enable the
commencement of exploration for and exploitation of the
petroleum resources of Area A as soon as possible after the
entry into force of this Treaty.

PART IV
THE JOINT AUTHORITY
Article 7
The Joint Authority
1. A Joint Authority is hereby established.
2. The Joint Authority shall have juridical personality
and such legal capacities under the law of both Contracting
States as are necessary for the exercise of its powers and
the performance of its functions. In particular, the Joint
Authority shall have the capacity to contract, to acquire
and dispose of movable and immovable property and to
institute and be party to legal proceedings.
3. The Joint Authority shall be responsible to the
Ministerial Council.
4. Decisions of the Executive Directors of the Joint
Authority shall be arrived at by consensus. Where consensus
cannot be reached, the matter shall be referred to the
Ministerial Council.
5. Unless otherwise decided by the Ministerial Council,
the Joint Authority shall have its head office in the
Republic of Indonesia and an office in Australia, each of
which shall be headed by an Executive Director.
6. The Joint Authority shall commence to function on entry
into force of this Treaty.

Article 8
Functions of the Joint Authority
The Joint Authority, subject to directions from the
Ministerial Council, shall be responsible for the
management of activities relating to exploration for and
exploitation of the petroleum resources in Area A in
accordance with this Treaty, and in particular the
Petroleum Mining Code and with production sharing
contracts. These management functions shall be:
(a) dividing Area A into contract areas, issuing
prospecting approvals and commissioning environmental
investigations prior to contract areas being advertised,
advertising of contract areas, assessing applications, and
making recommendations to the Ministerial Council on
applications for production sharing contracts;
(b) entering into production sharing contracts with
corporations, subject to Ministerial Council approval, and
supervising the activities of the contractor pursuant to
the requirements of the Petroleum Mining Code, including
regulations and directions thereunder, and the terms and
conditions set out in the contract;
(c) recommending to the Ministerial Council the
termination of production sharing contracts where
contractors do not meet the terms and conditions of those
contracts;
(d) terminating production sharing contracts by
agreement with contractors;
(e) recommending to the Ministerial Council the approval
of transfer of rights and responsibilities by contractors
to other corporations that will then become contractors;
(f) collecting and, with approval of the Ministerial
Council, distributing between the two Contracting States
the proceeds of the Joint Authority's share of petroleum
production from contracts;
(g) preparation of annual estimates of income and
expenditure of the Joint Authority for submission to the
Ministerial Council. Any expenditure shall only be made in
accordance with estimates approved by the Ministerial
Council or otherwise in accordance with regulations and
procedures approved by the Council;
(h) controlling movements into, within and out of Area A
of vessels, aircraft, structures and other equipment
employed in exploration for and exploitation of petroleum
resources; and, subject to Article 23, authorizing the
entry of employees of contractors and their subcontractors
and other persons into Area A;
(i) establishment of safety zones and restricted zones,
consistent with international law, to ensure the safety of

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navigation and petroleum operations;
(j) issuing regulations and giving directions under the
Petroleum Mining Code on all matters related to the
supervision of and control of petroleum operations
including on health, safety, environmental protection and
assessments and work practices, pursuant to the Petroleum
Mining Code;
(k) making recommendations to the Ministerial Council to
amend the Petroleum Mining Code and to modify the Model
Production Sharing Contract consistent with the objectives
of this Treaty;
(l) requesting action by the appropriate Australian and
Indonesian authorities consistent with this Treaty
(i) for search and rescue operations in Area A; and
(ii) in the event of terrorist threat to the vessels and
structures engaged in petroleum operations in Area A;
(m) requesting assistance with pollution prevention
measures, equipment and procedures from appropriate
Australian or Indonesian authorities or other bodies or
persons;
(n) preparation of annual reports for submission to the
Ministerial Council;
(o) with the approval of the Ministerial Council, the
variation of the following provisions of a production
sharing contract with the agreement of the contractor:
(i) the Joint Authority's or the contractor's production
share;
(ii) the operating cost recovery provisions;
(iii) the term of the contract; and
(iv) the contract area relinquishment provisions;
(p) with the approval of the Ministerial Council, the
variation of the annual contract service fee;
(q) variation, with the agreement of the contractor, of
provisions in the production sharing contract other than
those in paragraphs (o) and (p) of this Article;
(r) with the approval of the Ministerial Council, the
marketing of any or all petroleum production in
circumstances determined by the Ministerial Council;
(s) inspecting and auditing contractors' books and
accounts relating to the production sharing contract for
any calendar year;
(t) monitoring and reporting to the Ministerial Council
the distribution among the Republic of Indonesia, Australia
and third countries, of expenditure on petroleum operations
related to Area A; and
(u) such other functions as may be conferred on it by
the Ministerial Council.

Article 9
Structure of the Joint Authority
1. The Joint Authority shall consist of:
(a) Executive Directors appointed by the Ministerial
Council comprising an equal number of persons nominated by
each Contracting State;
(b) the following three Directorates responsible to the
Executive Directors:
(i) a Technical Directorate responsible for operations
involving exploration for and exploitation of petroleum
resources including operations in respect of functions
referred to in paragraph (1) of Article 8;
(ii) a Financial Directorate responsible for collecting
fees and proceeds from the sale of the Joint Authority's
share of production; and
(iii) a Legal Directorate responsible for providing
advice on any legal issues relating to production sharing
contracts and on the operation of law applying in Area A;
and
(c) a Corporate Services Directorate, to provide
administrative support to the Executive Directors and the
three other Directorates and to service the meetings of the
Ministerial Council.
2. The personnel of the Joint Authority shall be appointed
by the Executive Directors under terms and conditions that
have regard to the proper functioning of the Joint
Authority and the nature of the exploration for and
exploitation of petroleum resources being undertaken from
time to time in Area A from amongst individuals nominated
by each Contracting State. Of the four Directors heading
the Directorates, the Executive Directors shall appoint two
from each Contracting State. If an Indonesian nominee is
appointed to head the Technical Directorate, then an

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Australian nominee shall be appointed to head the Financial
Directorate, and vice versa.
3. Unless otherwise decided by the Ministerial Council,
the Technical Directorate shall be in the Joint Authority
office located in Australia.
4. The Executive Directors and the four Directors shall
constitute the Executive Board.
5. The Executive Directors and personnel of the Joint
Authority shall have no financial interest in any activity
relating to exploration for and exploitation of petroleum
resources in Area A.

Article 10
Taxation of the Joint Authority and its Officers
1. The Joint Authority shall be exempt from the following
existing taxes:
(a) in Australia, the income tax imposed under the
federal law of Australia;
(b) in Indonesia, the income tax (Pajak-Penghasilan)
imposed under the law of the Republic of Indonesia,
as well as any identical or substantially similar taxes
which are imposed after the date of signature of this
Treaty in addition to, or in place of, the existing taxes.
2. The Executive Directors and other officers of the Joint
Authority:
(a) shall be exempt from taxation of salaries,
allowances and other emoluments paid to them by the Joint
Authority in connection with their service with the Joint
Authority other than taxation under the law of the
Contracting State in which they are deemed under the
provisions of Article 1 of this Treaty to be resident for
taxation purposes; and
(b) shall, at the time of first taking up a post with
the Joint Authority located in the Contracting State in
which they are not resident under the provisions of Article
1 of this Treaty, be exempt from customs duties and other
such charges (except payments for services) in respect of
imports of furniture and other households and personal
effects in their ownership or possession or already ordered
by them and intended for their personal use or for their
establishment; such goods shall be imported within six
months of an officer's first entry but in exceptional
circumstances an extension of time shall be granted by the
Government of the Contracting State; goods which have been
acquired or imported by officers and to which exemptions
under this sub-paragraph apply shall not be given away,
sold, lent, hired out, or otherwise disposed of except
under conditions agreed in advance with the Government of
the Contracting State in which the officer is located.
3. The Ministerial Council may recommend to the
Contracting States that additional privileges be conferred
on the Joint Authority or its officers, if that is
necessary to promote the effective functioning of the Joint
Authority. Such privileges shall be conferred only
following the agreement of the two Contracting States.

Article 11
Financing
1. The Joint Authority shall be financed from fees
collected under Part VI of the Petroleum Mining Code,
provided that the Contracting States shall advance such
funds as they jointly determine to be necessary to enable
the Joint Authority to commence operations.
2. In the event that the Joint Authority cannot meet an
obligation under an arbitral award arising from a dispute
under a production sharing contract, the Contracting States
shall contribute the necessary funds in equal shares to
enable the Joint Authority to meet that obligation.

PART V
COOPERATION ON CERTAIN MATTERS IN RELATION TO
AREA A
Article 12
Surveillance
1. For the purposes of this Treaty, both Contracting
States shall have the right to carry out surveillance
activities in Area A.
2. The Contracting States shall cooperate on and
coordinate any surveillance activities carried out in
accordance with paragraph 1 of this Article.
3. The Contracting States shall exchange information
derived from any surveillance activities carried out in
accordance with paragraph 1 of this Article.

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Article 13
Security Measures
1. The Contracting States shall exchange information on
likely threats to, or security incidents relating to,
exploration for and exploitation of petroleum resources in
Area A.
2. The Contracting States shall make arrangements for
responding to security incidents in Area A.

Article 14
Search and Rescue
The Contracting States shall cooperate on arrangements
for search and rescue in Area A taking into account
generally accepted international rules, regulations and
procedures established through competent international
organizations.

Article 15
Air Traffic Services
The Contracting States shall cooperate on the provision
of air traffic services in Area A taking into account
generally accepted international rules, regulations and
procedures established through competent international
organizations.

Article 16
Hydrographic and Seismic Surveys
1. Both Contracting States shall have the right to carry
out hydrographic surveys to facilitate petroleum operations
in Area A. Both Contracting States shall cooperate on:
(a) the conduct of such surveys, including the provision
of necessary on-shore facilities; and
(b) exchanging hydrographic information relevant to
petroleum operations in Area A.
2. For the purposes of this Treaty, the Contracting States
shall cooperate in facilitating the conduct of seismic
surveys in Area A, including in the provision of necessary
on-shore facilities.

Article 17
Marine Scientific Research
Without prejudice to the rights under international law
in relation to marine scientific research in Area A claimed
by the two Contracting States, a Contracting State which
receives a request for consent to conduct marine scientific
research into the non-living resources of the continental
shelf in Area A shall consult with the other Contracting
State on whether the research project is related to the
exploration for and exploitation of petroleum resources in
Area A. If the Contracting States decide that the research
is so related they shall seek the views of the Joint
Authority on the research project and, in the light of such
views, mutually decide on the regulation, authorization and
conduct of the research including the duty to provide data,
samples and results of such research to both Contracting
States and the Joint Authority and participation by both
Contracting States in the research project.

Article 18
Protection of the Marine Environment
1. The Contracting States shall cooperate to prevent and
minimize pollution of the marine environment arising from
the exploration for and exploitation of petroleum in Area
A. In particular:
(a) the Contracting States shall provide such assistance
to the Joint Authority as may be requested pursuant to
paragraph (m) of Article 8 of this Treaty; and
(b) where pollution of the marine environment occurring
in Area A spreads beyond Area A, the Contracting States
shall cooperate in taking action to prevent, mitigate and
eliminate such pollution.
2. Pursuant to paragraph (j) of Article 8 of this Treaty
the Joint Authority shall issue regulations to protect the
marine environment in Area A. It shall establish a
contingency plan for combating pollution from petroleum
operations in that Area.

Article 19
Liability of Contractors for Pollution
of the Marine Environment
Contractors shall be liable for damage or expenses
incurred as a result of pollution of the marine environment
arising out of petroleum operations in Area A in accordance
with contractual arrangements with the Joint Authority and
the law of the State in which a claim in respect of such
damage or expenses is brought.

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Article 20
Unitization between Area A and Areas outside Area A
If any single accumulation of petroleum extends across
any of the boundary lines of Area A of the Zone of
Cooperation as designated and described in Article 1 and
Annex A of this Treaty, and the part of such accumulation
that is situated on one side of a line is exploitable,
wholly or in part, from the other side of the line, the
Contracting States shall seek to reach agreement on the
manner in which the accumulation shall be most effectively
exploited and on the equitable sharing of the benefits
arising from such exploitation.

Article 21
Construction of Facilities
In the event that exploration for and exploitation of
petroleum resources in Area A necessitates the construction
of facilities and provision of services outside Area A, the
Contracting States shall provide every assistance to
contractors and the Joint Authority to enable the
construction and operation of those facilities, and the
provision of those services. Construction and operation of
such facilities and provision of such services shall be
subject to the law and regulations of the relevant
Contracting State and any terms and conditions set by the
Contracting States.

PART VI
APPLICABLE LAWS
Article 22
Law Applicable to Production Sharing Contracts
The law applicable to a production sharing contract shall
be specified in that contract.

Article 23
Application of Customs, Migration
and Quarantine Laws
1. Each Contracting State may, subject to paragraphs 3 and
5 of this Article, apply customs, migration and quarantine
laws to persons, equipment and goods entering its territory
from, or leaving its territory for, Area A. The Contracting
States may adopt arrangements to facilitate such entry and
departure.
2. Contractors shall ensure, unless otherwise authorized
by the Contracting States, that persons, equipment and
goods do not enter structures in Area A without first
entering Australia or the Republic of Indonesia, and that
their employees and the employees of their subcontractors
are authorized by the Joint Authority to enter Area A.
3. One Contracting State may request consultations with
the other Contracting State in relation to the entry of
particular persons, equipment and goods to structures in
Area A aimed at controlling the movement of such persons,
equipment or goods.
4. Nothing in this Article prejudices the right of either
Contracting State to apply customs, migration and
quarantine controls to persons, equipment and goods
entering Area A without the authority of either Contracting
State. The Contracting States may adopt arrangements to
coordinate the exercise of such rights.
5.(a) Goods and equipment entering Area A for purposes
related to petroleum operations shall not be subject to
customs duties.
(b) Goods and equipment leaving or in transit through a
Contracting State for the purpose of entering Area A for
purposes related to petroleum operations shall not be
subject to customs duties.
(c) Goods and equipment leaving Area A for the purpose
of being permanently transferred to a part of a Contracting
State may be subject to customs duties of that Contracting
State.

Article 24
Employment
1. The Contracting States shall take appropriate measures
to ensure that preference is given in employment in Area A
to nationals or permanent residents of Australia and the
Republic of Indonesia, and to their employment in
equivalent numbers over the term of a production sharing
contract, but, with due regard to efficient operations and
to good oilfield practice.
2. The terms and conditions under which persons are
employed on structures in Area A shall be governed by
employment contracts or collective agreements. The terms

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and conditions shall include provisions on insurance and
compensation in relation to employment injuries, including
death or disability benefits, and may provide for use of an
existing compensation system established under the law of
either Contracting State. The terms and conditions shall
also include provisions in relation to remuneration,
periods of duty or overtime, leave and termination. The
terms and conditions shall be no less favourable than those
which would apply from time to time to comparable
categories of employment in both Australia and the Republic
of Indonesia.
3. Paragraph 2 of this Article shall also apply to persons
employed on seismic, drill, supply and service vessels
regularly engaged in activities related to petroleum
operations in Area A, regardless of the nationality of the
vessel.
4. In relation to the provision of facilities and
opportunities, there shall be no discrimination on the
basis of nationality amongst persons to which paragraphs 2
and 3 of this Article apply.
5. Disputes arising between employers and employees shall
be settled by negotiation in the first instance. Disputes
which cannot be settled by negotiation shall be settled
either by recourse to a tripartite dispute settlement
committee, comprising representatives of employers,
employees and persons nominated by the Contracting States,
or by recourse to a conciliation and arbitration system
available in either Contracting State.
6. Employer and employee associations recognised under the
law of either Contracting State may respectively represent
employers and employees in the negotiation of contracts or
collective agreements and in conciliation and arbitration
proceedings.
7. An employment contract or collective agreement shall
provide that it shall be subject to the law of one or other
Contracting State and shall identify, consistent with
paragraph 5 of this Article, the applicable dispute
settlement mechanism. Any arbitration decision shall be
enforceable under the law of the Contracting State under
which it is made.

Article 25
Health and Safety for Workers
The Joint Authority shall develop, and contractors shall
apply, occupational health and safety standards and
procedures for persons employed on structures in Area A
that are no less effective than those standards and
procedures that would apply in relation to persons employed
on similar structures in both Australia and the Republic of
Indonesia. The Joint Authority may adopt, consistent with
this Article, standards and procedures taking into account
an existing system established under the law of either
Contracting State.

Article 26
Petroleum Industry Vessels
Except as otherwise provided in this Treaty, vessels
engaged in petroleum operations shall be subject to the law
of the Contracting State whose nationality they possess
and, unless they are a vessel with the nationality of the
other Contracting State, the law of the Contracting State
out of whose ports they operate, in relation to safety and
operating standards, and crewing regulations. Such vessels
that enter Area A and do not operate out of either
Contracting State shall be subject to relevant
international safety and operating standards under the law
of both Contracting States.

Article 27
Criminal Jurisdiction
1. Subject to paragraph 3 of this Article a national or
permanent resident of a Contracting State shall be subject
to the criminal law of that State in respect of acts or
omissions occurring in Area A connected with or arising out
of exploration for and exploitation of petroleum resources,
provided that a permanent resident of a Contracting State
who is a national of the other Contracting State shall be
subject to the criminal law of the latter State.
2.(a) Subject to paragraph 3 of this Article, a national
of a third State, not being a permanent resident of either
Contracting State, shall be subject to the criminal law of
both Contracting States in respect of acts or omissions
occurring in Area A connected with or arising out of the

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exploration for and exploitation of petroleum resources.
Such a person shall not be subject to criminal proceedings
under the law of one Contracting State if he or she has
already been tried and discharged or acquitted by a
competent tribunal or already undergone punishment for the
same act or omission under the law of the other Contracting
State or where the competent authorities of one Contracting
State, in accordance with its law, have decided in the
public interest to refrain from prosecuting the person for
that act or omission.
(b) In cases referred to in sub-paragraph (a) of this
paragraph, the Contracting States shall, as and when
necessary, consult each other to determine which criminal
law is to to be applied, taking into account the
nationality of the victim and the interests of the
Contracting State most affected by the alleged offence.
3. The criminal law of the flag State shall apply in
relation to acts or omissions on board vessels including
seismic or drill vessels in, or aircraft in flight over,
Area A.
4.(a) The Contracting States shall provide assistance to
and cooperate with each other, including through agreements
or arrangements as appropriate, for the purposes of
enforcement of criminal law under this Article, including
the obtaining of evidence and information.
(b) Each Contracting State recognizes the interest of
the other Contracting State where a victim of an alleged
offence is a national of that other State and shall keep
that other State informed to the extent permitted by its
law of action being taken with regard to the alleged
offence.
5. The Contracting States may make arrangements permitting
officials of one Contracting State to assist in the
enforcement of the criminal law of the other Contracting
State. Where such assistance involves the detention of a
person who under paragraph 1 of this Article is subject to
the jurisdiction of the other Contracting State that
detention may only continue until it is practicable to hand
the person over to the relevant officials of that other
Contracting State.

Article 28
Civil Actions
Claims for damages or restitution of expenses as a result
of activities in Area A may be brought in the Contracting
State which has or whose nationals or permanent residents
have suffered the damage or incurred the expense. The court
in which the action is brought shall apply the law and
regulations of that State.

Article 29
Application of Taxation Law
1. For the purposes of the taxation law related directly
or indirectly to:
(a) the exploration for or the exploitation of petroleum
in Area A; or
(b) acts, matters, circumstances and things touching,
concerning, arising out of or connected with any such
exploration or exploitation,
Area A shall be deemed to be, and be treated by, each
Contracting State as part of that Contracting State.
2. In the application of the taxation law:
(a) in Area A;
(b) to interest paid by a contractor; or
(c) to royalties paid by a contractor,
each Contracting State shall grant relief from double
taxation in accordance with the Taxation Code.
3. A Contracting State shall not impose a tax not covered
by the provisions of the Taxation Code in respect of or
applicable to:
(a) the exploration for or exploitation of petroleum in
Area A; or
(b) any petroleum exploration or exploitation related
activity carried on in Area A,
unless the other Contracting State consents to the imposition of that tax.

PART VII
SETTLEMENT OF DISPUTES
Article 30
Settlement of Disputes
1. Any dispute arising between the Contracting States
concerning the interpretation or application of this Treaty
shall be resolved by consultation or negotiation between

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the Contracting States.
2. Each production sharing contract entered into by the
Joint Authority shall contain provisions to the effect that
any dispute concerning the interpretation or application of
such contract shall be submitted to a specified form of
binding commercial arbitration. The Contracting States
shall facilitate the enforcement in their respective courts
of arbitral awards made pursuant to such arbitration.

PART VIII
FINAL CLAUSES
Article 31
Amendment
1. This Treaty may be amended at any time by agreement
between the Contracting States.
2. The Petroleum Mining Code, in accordance with paragraph
1 (b) of Article 6 of this Treaty and the Model Production
Sharing Contract, in accordance with paragraph 1 (c) of
Article 6 of this Treaty, may also be amended or modified
by decision of the Ministerial Council. Such amendments or
modifications shall have the same status as the Petroleum
Mining Code and the Model Production Sharing Contract.

Article 32
Entry into Force
This Treaty shall enter into force thirty (30) days after
the date on which the Contracting States have notified each
other in writing that their respective requirements for
entry into force of this Treaty have been complied with.

Article 33
Term of this Treaty
1. This Treaty shall remain in force for forty (40) years
from the date of entry into force of this Treaty.
2. Unless the two Contracting States agree otherwise, this
Treaty shall continue in force after the initial forty (40)
year term for successive terms of twenty (20) years, unless
by the end of each term, including the initial term of
forty years, the two Contracting States have concluded an
agreement on a permanent continential shelf delimitation in
the area covered by the Zone of Cooperation.
3. Where the Contracting States have not concluded an
agreement on a permanent continental shelf delimitation in
the area covered by the Zone of Cooperation five years
prior to the end of any of the terms referred to in
paragraphs 1 or 2 of this Article, representatives of the
two Contracting States shall meet with a view to reaching
agreement on such permanent continental shelf delimitation.
4. This Article shall be without prejudice to the
continued operation of Article 34 of this Treaty.

Article 34
Rights of Contractors
1. In the event that
(a) this Treaty ceases to be in force following
conclusion of an agreement between the Contracting States
on permanent continental shelf delimitation in the area of
the Zone of Cooperation; and
(b) there are in existence immediately prior to the date
on which this Treaty ceases to be in force, production
sharing contracts with the Joint Authority,
production sharing contracts shall continue to apply to
each Contracting State or some other person nominated by
the Contracting State concerned, in place of the Joint
Authority, in so far as the contract is to be performed
within the territorial jurisdiction of each Contracting
State, having regard to the agreement on delimitation. Each
Contracting State shall apply to contractors performing
contracts within its territorial jurisdiction a regime no
more onerous than that set out in this Treaty and the
relevant production sharing contract.
2. The two Contracting States shall at the time of the
conclusion of the permanent delimitation agreement make
arrangements to give effect to paragraph 1 of this Article.
IN WITNESS WHEREOF the undersigned, being duly authorized
thereto by their respective Governments, have signed this
Treaty.
DONE over the Zone of Cooperation on this eleventh day of
December, one thousand nine hundered and eighty nine, in
two originals in the English language.
FOR AUSTRALIA FOR THE REPUBLIC OF
GARETH EVANS INDONESIA
MINISTER FOR FOREIGN ALI ALATAS
AFFAIRS AND TRADE MINISTER FOR FOREIGN AFFAIRS

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ANNEX A
DESIGNATION AND DESCRIPTION INCLUDING MAPS AND COORDINATES
OF THE AREAS COMPRISING THE ZONE OF COOPERATION
NOTE
Where for the purposes of this Treaty it is necessary to
determine the position on the surface of the Earth of a
point, line or area, that position shall be determined by
reference to the Australian Geodetic Datum, that is to say,
by reference to a spheroid having its centre at the centre
of the Earth and a major (equatorial) radius of 6 378 160
metres and a flattening of 1/298.25 and by reference to the
position of the Johnston Geodetic Station in the Northern
Territory of Australia. That station shall be taken to be
situated at Latitude 25 degrees 56'54.5515" South and at
Longitude 133 degrees 12'30.0771" East and to have a ground
level of 571.2 metres above the spheroid referred to above.
ZONE OF COOPERATION
WHOLE
The area bounded by the line -
a) commencing at the point of Latitude 9 degrees 12'19"
South, Longitude 127 degrees 33'32" East;
b) running thence south-easterly along the geodesic to the
point of Latitude 9 degrees 22'53" South, Longitude
127 degrees 48'42" East;
c) thence south-easterly along the geodesic to the point
of Latitude 9 degrees 28'00" South, Longitude
127 degrees 56'00" East;
d) thence south-easterly along the geodesic to the point
of Latitude 9 degrees 29'57" South, Longitude
127 degrees 58'47" East;
e) thence south-easterly along the geodesic to the point
of Latitude 10 degrees 29'17" South, Longitude
128 degrees 12'24" East;
f) thence south-easterly along the geodesic to the point
of Latitude 11 degrees 42'10" South, Longitude
128 degrees 29'10" East;
g) thence south-westerly along the geodesic to the point
of Latitude 12 degrees 3'17" South, Longitude
127 degrees 45'00" East;
h) thence south-westerly along the geodesic to the point
of Latitude 12 degrees 15'28" South, Longitude
127 degrees 08'28" East;
i) thence north-westerly along the geodesic to the point
of Latitude 11 degrees 20'08" South, Longitude
126 degrees 31'54" East;
j) thence north-westerly along the geodesic to the point
of Latitude 10 degrees 28'00" South, Longitude
126 degrees 00'00" East;
k) thence north-easterly along the geodesic to the point
of Latitude 10 degrees 06'40" South, Longitude
126 degrees 00'25" East;
l) thence north-easterly along the geodesic to the point
of Latitude 9 degrees 46'01" South, Longitude
126 degrees 00'50" East; and
m) thence north-easterly along the geodesic to the point
of commencement.

ZONE OF COOPERATION
AREA A
The area bounded by the line -
a) commencing at the point of Latitude 9 degrees 22'53"
South, Longitude 127 degrees 48'42" East;
b) running thence south-westerly along the geodesic to the
point of Latitude 10 degrees 06'40" South, Longitude
126 degrees 00'25" East;
c) thence south-westerly along the geodesic to the point
of Latitude 10 degrees 28'00" South, Longitude
126 degrees 00'00" East;
d) thence south-easterly along the geodesic to the point
of Latitude 11 degrees 20'08" South, Longitude
126 degrees 31'54" East;
e) thence north-easterly along the geodesic to the point
of Latitude 11 degrees 19'46" South, Longitude
126 degrees 47'04" East;
f) thence north-easterly along the geodesic to the point
of Latitude 11 degrees 17'36" South, Longitude
126 degrees 57'07" East;
g) thence north-easterly along the geodesic to the point
of Latitude 11 degrees 17'30" South, Longitude
126 degrees 58'13" East;
h) thence north-easterly along the geodesic to the point

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of Latitude 11 degrees 14'24" South, Longitude
127 degrees 31'33" East;
i) thence north-easterly along the geodesic to the point
of Latitude 10 degrees 55'26" South, Longitude
127 degrees 47'04" East;
j) thence north-easterly along the geodesic to the point
of Latitude 10 degrees 53'42" South, Longitude
127 degrees 48'45" East;
k) thence north-easterly along the geodesic to the point
of Latitude 10 degrees 43'43" South, Longitude
127 degrees 59'16" East;
l) thence north-easterly along the geodesic to the point
of Latitude 10 degrees 29'17" South, Longitude
128 degrees 12'24" East;
m) thence north-westerly along the geodesic to the point
of Latitude 9 degrees 29'57" South, Longitude
127 degrees 58'47" East;
n) thence north-westerly along the geodesic to the point
of Latitude 9 degrees 28'00" South, Longitude
127 degrees 56'00" East; and
o) thence north-westerly along the geodesic to the point
of commencement.

ZONE OF COOPERATION
AREA B
The area bounded by the line -
a) commencing at the point of Latitude 10 degrees 29'17"
South, Longitude 128 degrees 12'24" East;
b) running thence south-easterly along the geodesic to the
point of Latitude 11 degrees 42'10" South, Longitude
128 degrees 29'10" South;
c) thence south-westerly along the geodesic to the point
of Latitude 12 degrees 03'17" South, Longitude
127 degrees 45'00" East;
d) thence south-westerly along the geodesic to the point
of Latitude 12 degrees 15'28" South, Longitude
127 degrees 08'28" East;
e) thence north-westerly along the geodesic to the point
of Latitude 11 degrees 20'08" South, Longitude
126 degrees 31'54" East;
f) thence north-easterly along the geodesic to the point
of Latitude 11 degrees 19'46" South, Longitude
126 degrees 47'04" East;
g) thence north-easterly along the geodesic to the point
of Latitude 11 degrees 17'36" South, Longitude
126 degrees 57'07" East;
h) thence north-easterly along the geodesic to the point
of Latitude 11 degrees 17'30" South, Longitude
126 degrees 58'13" East;
i) thence north-easterly along the geodesic to the point
of Latitude 11 degrees 14'24" South, Longitude
127 degrees 31'33" East;
j) thence north-easterly along the geodesic to the point
of Latitude 10 degrees 55'26" South, Longitude
127 degrees 47'04" East;
k) thence north-easterly along the geodesic to the point
of Latitude 10 degrees 53'42" South, Longitude
127 degrees 48'45" East;
l) thence north-easterly along the geodesic to the point
of Latitude 10 degrees 43'43" South, Longitude
127 degrees 59'16" East; and
m) thence north-easterly along the geodesic to the point
of commencement.

ZONE OF COOPERATION
AREA C
The area bounded by the line -
a) commencing at the point of Latitude 9 degrees 12'19"
South, Longitude 127 degrees 33'32" East;
b) running thence south-easterly along the geodesic to the
point of Latitude 9 degrees 22'53" South, Longitude 127 degrees
48'42" East;
c) thence south-westerly along the geodesic to the point
of Latitude 10 degrees 06'40" South, Longitude 126 degrees
00'25" East;
d) thence north-easterly along the geodesic to the point
of Latitude 9 degrees 46'01" South, Longitude 126 degrees
00'50" East; and
e) thence north-easterly along the geodesic to the point
of commencement.

ANNEX B
PETROLEUM MINING CODE FOR AREA A

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OF THE ZONE OF COOPERATION
PART I
DEFINITIONS
Article 1
Definitions
1. For the purposes of this Petroleum Mining Code:
(a) "block" means a block constituted in accordance
with Article 2 of this Petroleum Mining Code;
(b) "calendar year" means a period of twelve (12)
months commencing on 1 January and ending on the following
31 December, according to the Gregorian Calendar;
(c) "contract operator" means the contractor appointed
and authorized by the contractors to be responsible for
petroleum operations and all dealings with the Joint
Authority under the contract on behalf of the contractors;
(d) "contract year" means a period of twelve (12)
consecutive months according to the Gregorian Calendar
counted from the effective date of the contract or from the
anniversary of such effective date;
(e) "discovery area" means the blocks declared by the
Joint Authority under Article 16 of this Petroleum Mining
Code to contain petroleum;
(f) "effective date" means the date a production
sharing contract is entered into by and between the Joint
Authority and the contractor;
(g) "operating costs" means those costs defined in a
production sharing contract which are incurred and are
recoverable by the contract operator in the course of
undertaking petroleum operations;
(h) "petroleum pool" means a discrete accumulation of
petroleum under a single pressure system;
(i) "pipeline" means a pipe or system of pipes and
associated equipment necessary for conveying petroleum;
(j) "work program and budget of operating costs" means
the details of petroleum operations to be carried out in or
related to the contract area and the aggregate cost
estimates for those operations;
(k) "Treaty" means the Treaty between Australia and
the Republic of Indonesia on the Zone of Cooperation in an
Area between the Indonesian Province of East Timor and
Northern Australia to which this Petroleum Mining Code is
an Annex.
2. The terms used in this Petroleum Mining Code shall,
unless otherwise specified, have the same meaning as those
in the Treaty.

PART II
AREA A
Article 2
Graticulation of Area A
1. The surface of Area A shall be divided by the Joint
Authority into graticular sections defined by meridians of
five (5) minutes of longitude (reference the meridian of
Greenwich) and by parallels of latitude of five (5) minutes
(reference the Equator). A block shall constitute a
graticular section as described above and shall include
part graticular sections. Each block in Area A shall be
allocated a discrete identifying number.
2. The Joint Authority may subdivide each block into
graticular sections. Where this is done, the graticular
sections shall be defined by meridians of longitude and by
parallels of latitude, and each section shall form a block.
Each block so defined shall be allocated a discrete
identifying number.
3. Contract areas within Area A shall be described in
terms of the component blocks.

Article 3
Geodetic Datum
Whenever it is necessary to determine the position of a
line in Area A that position shall be determined by
reference to a spheroid having its centre at the centre of
the earth and a major (equatorial) radius of 6378160 metres
and a flattening of 100/29825 and by reference to the
position of the Johnston Geodetic Station in the Northern
Territory of Australia. That station shall be taken to be
situated at 133 degrees, 12 minutes and 30.0771 seconds of
East Longitude and at 25 degrees, 56 minutes and 54.5515
seconds of South Latitude and to have a ground level of
571.2 metres above the spheroid referred to above.

PART III
THE CONTRACT

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Article 4
Rights Conferred by Contract
1. A production sharing contract entered into by the Joint
Authority, with the approval of the Ministerial Council,
shall give to the contractor the exclusive right and the
responsibility to undertake petroleum operations in a
contract area, subject to the provisions of the Treaty,
relevant regulations and directions issued by the Joint
Authority, and the terms and conditions of the contract.
2. During each calendar year, any petroleum production
shall be shared between the Joint Authority and the
contractor.
3. The contract shall not confer on the contractor
ownership of petroleum in the ground but shall provide for
the contractor to take a share of petroleum production as
payment from the Joint Authority for the petroleum
operations undertaken by the contract operator pursuant to
the contract. Ownership of the Joint Authority's share of
petroleum production shall remain with the Joint Authority.
Except as provided in paragraph 5 of this Article, the
Joint Authority shall authorize the marketing of its share
of petroleum production by the contractor who shall market
all petroleum produced from the contract area.
4. Title to the contractor's portion of petroleum
production shall pass to the contractor at the point of
tanker loading. Subject to paragraph 5 of this Article the
contractor shall have the right to lift, dispose of and
export its share of petroleum, and retain abroad the
proceeds obtained therefrom. Except where the Joint
Authority markets petroleum as provided in paragraph 5 of
this Article, the contract shall require the contractor to
pay to the Joint Authority, at regular periods during each
calendar year, an amount of money estimated to be equal to
the value of the Joint Authority's share of petroleum
production lifted for those periods. The contract shall
specify the length of each period, monthly if workable, the
means by which the value of the Joint Authority's share of
petroleum production is estimated for each period, and when
each payment shall be made. The estimated value of the
Joint Authority's share of petroleum production for each
period shall be based on the work program and budget of
operating costs and revisions to it, and the expected value
of quantities of petroleum to be produced. The estimated
value shall be revised during the calendar year having
regard to the actual operating costs and value of sales of
petroleum.
5. The Joint Authority, with the approval of the
Ministerial Council, may market any or all petroleum
production. Where it is the Joint Authority's share of
petroleum production which is to be marketed by the Joint
Authority, the method of determining the estimated value of
the Joint Authority's share shall be based on that method
described in paragraph 4 of this Article. Where petroleum
production marketed by the Joint Authority includes the
contractor's share, the contract shall require the Joint
Authority to pay to the contractor, at regular periods
during each calendar year, an amount of money estimated to
be equal to the value of the contractor's share of
petroleum production so lifted for those periods. The
method of determining the estimated value of the Joint
Authority's and the contractor's shares shall be based on
that method described in paragraph 4 of this Article. The
contract operator shall be obliged to coordinate the
efficient lifting of the petroleum production, including
tanker nomination and scheduling.
6. The contract shall also specify that within thirty (30)
days after the end of each calendar year, adjustments and
cash settlements between the contractor and the Joint
Authority shall be made on the basis of the actual
quantities, amounts and prices involved, in order to ensure
that the Joint Authority receives the correct share of
petroleum production for each calendar year.
7. In the case of a contract entered into with a group of
corporations, each corporation shall be jointly and
severally liable for meeting the conditions of the
contract, and for complying with the requirements of this
Petroleum Mining Code and the regulations and directions
issued by the Joint Authority. Each corporation shall be a
signatory to the contract with the Joint Authority.

Article 5

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The Contract
1. Without limiting the matters to be dealt with, the
contract shall be concluded on the basis of the Model
Production Sharing Contract and shall include:
(a) the definition of the responsibilities and rights of
the contractor, the contract operator and the Joint
Authority;
(b) the term of the contract and block relinquishment
provisions;
(c) the work program and expenditure commitments;
(d) the definition of operating costs and the method of
recovery of those costs by the contract operator;
(e) the petroleum production share to be allocated to
the contractor;
(f) provisions for the termination of the contract;
(g) provisions for exemption from and variation of
contract conditions;
(h) provisions for the resolution of disputes between
the contractor and the Joint Authority; and
(i) any other provisions that are consistent with the
Treaty.

Article 6
Contract Operator
1. Where a number of corporations enters into a contract
with the Joint Authority, the corporations shall appoint
and authorize one of their number to be the contract
operator responsible, on behalf of the group of
corporations, for petroleum operations and all dealings
with the Joint Authority under the contract.
2. The contract operator shall undertake petroleum
operations in an efficient manner which minimizes costs and
in a manner in accordance with the provisions of the
production sharing contract. Costs incurred by the contract
operator in undertaking petroleum operations shall not
include any component of profit which accrues to the
contract operator solely by virtue of its role as contract
operator.
3. All communications on matters related to the contract
shall be effected between the contract operator and the
Joint Authority. The contract operator shall establish an
office in either the Republic of Indonesia or Australia.

Article 7
Term of Contract
1. Subject to the provisions of this Article, and Articles
22 and 48 of this Petroleum Mining Code, the term of a
production sharing contract shall be thirty (30) years. In
addition, the provisions of the production sharing contract
shall include:
(a) an obligation on the Joint Authority to give
sympathetic consideration to an extension of the term of
the contract beyond the thirtieth (30th) contract year if
petroleum production has not ceased by that year; and
(b) automatic extension of the term of the contract to
allow continuation of petroleum production to meet natural
gas sales contracts the terms of which extend beyond the
thirtieth (30th) contract year of the production sharing
contract.
2. The production sharing contract may also include a
specified term after which the contract may be terminated
if a discovery is not made.

PART IV
PETROLEUM EXPLORATION AND EXPLOITATION
Article 8
Advertisement of Blocks
1. The Joint Authority shall invite applications to enter
into a contract over specific blocks. The invitation for
applications shall specify:
(a) the blocks over which the rights shall be granted;
(b) the bidding system to apply;
(c) the basis on which bids shall be assessed;
(d) details of the contract to be entered into including
the rights and responsibilities of the parties to the
contract; and
(e) the period within which applications may be made.
2. Details of the invitation for applications shall be
published in official Australian and Indonesian Government
Gazettes and in such other ways as the Joint Authority
decides.

Article 9
Bidding System

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1. The Joint Authority shall invite applications to enter
into a contract over parts of Area A using a work program
bidding system which identifies annual exploration work
program and expenditure commitments to be undertaken in the
contract area.
2. The Joint Authority shall make available full details
of the bidding system to be used at the time applications
are invited.

Article 10
Application for Contracts
1. The Joint Authority shall set out in formal guidelines
the form in which applications shall be prepared and
lodged. As a minimum requirement a draft contract based on
the Model Production Sharing Contract shall be completed
and lodged, and applications shall set out details of the
work program and expenditure commitments, and the financial
capability and technical knowledge and ability available to
the applicant.
2. Where an application is lodged by a group comprising
several corporations, the application shall be accompanied
by evidence that an agreement can be reached between those
corporations for cooperation in petroleum operations in the
contract area.
3. The application shall be accompanied by the fee
specified in Article 44 of this Petroleum Mining Code.

Article 11
Consideration of Application
1. The Joint Authority shall set out in formal guidelines
the basis on which applications will be considered and the
relevant criteria which applicants will be expected to
meet. Contracts shall be offered in accordance with the
published criteria for that bidding round. The principal
criteria shall be the amount and quality of the exploration
work bid.
2. The Joint Authority shall be satisfied that an
applicant has the necessary financial capability and
technical knowledge and ability to carry out petroleum
operations in a manner consistent with the terms and
conditions of the contract and this Petroleum Mining Code,
including the necessary environmental and safety
requirements.

Article 12
Grant or Refusal of Contracts
1. The Joint Authority shall seek prior approval from the
Ministerial Council to enter into a contract with the
preferred applicant or group of applicants.
2. Subject to that approval, the Joint Authority shall
notify in writing the successful applicant that it has
Ministerial Council approval to enter into a contract with
the applicant covering petroleum operations in a specified
contract area on terms and conditions set out in the
contract. The applicant shall have thirty (30) days within
which to accept or refuse the offer in writing. On the
applicant accepting the offer, paying the contract service
fee, and providing evidence that it has fulfilled any
prerequisite conditions such as insurance cover, the Joint
Authority shall enter into the contract with the applicant.
3. Unsuccessful applicants shall be advised accordingly.

Article 13
Publication of Contracts
The Joint Authority shall publish in official Australian
and Indonesian Government Gazettes summary details of:
(a) contracts entered into; and
(b) termination of contracts.

Article 14
Commencement of Work
The contract operator shall commence petroleum operations
within six (6) months from the date the contract is entered
into, except for reasons of force majeure.

Article 15
Discovery of Petroleum
1. The contract operator shall notify the Joint Authority
in writing within twenty four (24) hours whenever any
petroleum is discovered and on request by the Joint
Authority shall provide details in writing of the:
(a) chemcial composition and physical properties of the
petroleum; and
(b) the nature of the sub-soil in which the petroleum
occurs.
2. The contract operator shall provide the Joint Authority

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with any other information concerning the discovery on
request by the Joint Authority.
3. The contract operator shall also do such things as the
Joint Authority requests to determine the chemical
composition and physical properties of any petroleum
discovered, and to determine the geographical extent of any
petroleum pool and the quantity of petroleum in that pool.

Article 16
Declaration of Discovery Area
1. The Joint Authority shall declare the blocks within the
contract area covering a petroleum pool as a discovery
area, provided that the joint Authority and contract
operator agree that the petroleum pool can be produced
commercially. These blocks shall form a single contiguous
area.
2. At any time after a discovery area has been declared,
the Joint Authority may, of its own volition or on request
from the contract operator, agree that certain blocks be
included in or excluded from the discovery area. Blocks
included in the discovery area in this way shall be from
within the contractor's contract area.

Article 17
Approval to Produce Petroleum
The contract operator shall not construct any production
structures without the approval of the Joint Authority. The
Joint Authority shall not unreasonably withhold approvals.

Article 18
Approval to Construct Pipeline
1. The contract operator shall not construct a pipeline
for the purpose of conveying petroleum within or from Area
A without the approval of the Joint Authority, nor shall
the contract operator operate or remove that pipeline
without the approval of the Joint Authority.
2. The Joint Authority may direct a contract operator
owning a pipeline to enter into a commercial agreement with
another contract operator to enable the second mentioned
operator to transport petroleum.

Article 19
Petroleum Production Work
Unless otherwise agreed between the contract operator and
the Joint Authority, work on a permanent structure to
produce petroleum shall commence within six (6) months of
approval to construct the structure.

Article 20
Rates of Production
The Joint Authority may direct and make regulations about
the commencement of petroleum production and the specific
rates of petroleum production. In giving such directions
and making such regulations the Joint Authority shall take
account of good oilfield practice.

Article 21
Unitization
Where a petroleum pool is partly within a contract area
and partly within another contract area, but wholly within
Area A, the Joint Authority shall require the contractors
to enter into a unitization agreement with each other
within a reasonable time, as determined by the Joint
Authority, for the purpose of securing the more effective
and optimized production of petroleum from the pool. If no
agreement has been reached within such reasonable time, the
Joint Authority shall decide on the unitization agreement.
Without limiting the matters to be dealt with, the
unitization agreement shall define or contain the approach
to define the amount of petroleum in each contract area,
the method of producing the petroleum, and shall appoint
the contract operator responsible for production of the
petroleum covered by the unitization agreement. The Joint
Authority shall approve the unitization agreement before
approvals under Article 17 of this Petroleum Mining Code
are given. Any changes to the unitization agreement shall
be subject to approval by the Joint Authority.

Article 22
Block Relinquishment
1. The contract shall contain provisions for the
progressive relinquishment of blocks from the contract
area.
2. In calculating the relinquishment requirements, the
blocks in a discovery area shall not be counted as part of
the original number of blocks in the contract area.
3. In the event that no discovery area has been declared

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in the contract area before the end of an initial period
specified in the contract, the contract operator shall
either relinquish all remaining blocks in the contract area
and the contract shall be terminated, or the contract
operator shall exercise the option provided in the contract
to extend the term of the contract.

Article 23
Surrender of Blocks
1. The contractor may surrender some or all of the blocks
in a contract area provided the conditions of the contract
have been met to the satisfaction of the Joint Authority.
Blocks surrendered in this way shall be credited towards
the block relinquishment requirement in Article 22 of this
Petroleum Mining Code.
2. Before agreeing to an application to surrender some or
all of the blocks in a contract area, the Joint Authority
may direct the contract operator to clean up the contract
area or remove structures, equipment and other property
from the contract area and the contract operator shall
comply with that direction.

PART V
GENERAL ARRANGEMENTS
Article 24
Work Practices
It shall be the responsibility of the contract operator
to ensure that petroleum operations are carried out in a
proper and workmanlike manner and in accordance with good
oilfield practice. The contract operator shall take the
necessary action to:
(a) protect the environment in and about the contract
area; and
(b) secure the safety, health and welfare of persons
engaged in petroleum operations in or about the contract
area.

Article 25
Insurance
1. The Joint Authority shall require the contractor to
take out and maintain from the effective date of the
contract, to the satisfaction of the Joint Authority,
insurance on a strict liability basis and for an amount
determined by the Joint Authority in consultation with
applicants for contracts. It shall also agree with the
contractor on a mechanism whereby compensation claims can
be determined. The insurance shall cover expenses or
liabilities or any other specified things arising in
connection with the carrying out of petroleum operations
and other activities associated with those operations in
the contract area, including expenses associated with the
prevention and clean-up of the escape of petroleum.
2. The contract operator shall ensure that transportation
of petroleum in bulk as cargo from Area A only takes place
in tankers with appropriate insurance commensurate with
relevant international agreements.

Article 26
Maintenance of Property
The contract operator shall be responsible for
maintaining in safe and good condition and repair all
structures, equipment and other property in the contract
area.

Article 27
Removal of Property
1. As directed by the Joint Authority, the contract
operator shall remove all property brought into the
contract area and comply with regulations and directions
concerning the containment and clean-up of pollution.
2. In the event that the contract operator does not remove
property or pollution to the satisfaction of the Joint
Authority or take such other action as is necessary for the
conservation and protection of the marine environment in
that contract area, the Joint Authority may direct the
contract operator to take such remedial action as the Joint
Authority deems necessary. If the contract operator does
not comply with that direction, the contractor shall be
liable for any costs incurred by the Joint Authority in
rectifying the matter.

Article 28
Exemption from or Variation of Conditions
1. The Joint Authority may agree to exempt the contractor
from complying with the conditions of the contract. The
Joint Authority may also agree to vary those conditions.

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2. The Joint Authority shall not exempt the contractor
from or vary the following conditions of a contract without
prior approval of the Ministerial Council:
(a) the Joint Authority's or the contractor's production
shares;
(b) the operating cost recovery provisions;
(c) the term of the contract;
(d) the block relinquishment provisions; and
(e) the annual contract service fee.

Article 29
Provision of Information
1. The Joint Authority may direct the contractor to
provide the Joint Authority with data, documents or
information relating to petroleum operations including but
not limited to routine production and financial reports,
technical reports and studies relating to petroleum
operations.
2. The Joint Authority may require the contractor to
provide that information in writing within a specified
period. The Joint Authority shall have title to all data
obtained from the petroleum operations.
3. A contractor shall not be excused from furnishing
information on the grounds that the information might tend
to incriminate the contractor but the information shall not
be admissible in evidence against the contractor in
criminal proceedings.

Article 30
Safety Zones
1. The Joint Authority may declare a safety zone around
any specified structure in Area A, and may require the
contract operator to install, maintain or provide thereon,
navigation, fog and illumination lighting, acoustic and
other devices and equipment necessary for the safety of the
petroleum operations. A safety zone may extend up to five
hundred (500) metres from the extremities of the structure.
Unauthorized vessels shall be prohibited from entering the
safety zone.
2. Additionally, a restricted zone of one thousand two
hundred and fifty (1250) metres may be declared around the
extremities of safety zones and pipelines in which area
unauthorized vessels employed in exploration for and
exploitation of petroleum resources are prohibited from
laying anchor or manoeuvring.

Article 31
Records to be Kept
The Joint Authority shall require the contractor to keep
accounts, records or other documents, including financial
records, in connection with petroleum operations and to
furnish the Joint Authority in a specified manner data,
reports, returns or other documents in connection with
those activities. These arrangements shall also apply to
cores, cuttings and samples taken in connection with
petroleum operations in the contract area.

Article 32
Prospecting Approval
The Joint Authority may issue a prospecting approval to
any person to carry out petroleum exploration activities in
blocks not in contract areas. The prospecting approval
shall specify those conditions to which the person shall be
subject. The conditions of a prospecting approval shall not
include any preference for or rights to enter into a
contract over those blocks. All data and reports resulting
from such activities shall be submitted to the Joint
Authority for its own free use.

Article 33
Access Approval
1. In order to promote the optimum exploration for and
exploitation of petroleum resources in Area A, the Joint
Authority may give approval to a contract operator, and
persons holding prospecting approvals or undertaking marine
scientific research, to enter a contract area, not being
its contract area, to carry out activities in accordance
with that approval. The Joint Authority shall consult with
the contract operator of the contract area into which
access is sought before giving approval. The terms and
conditions of approval shall include an obligation to
furnish to the Joint Authority in a specified manner data,
reports, returns or other documents in connection with
activities carried out under the access approval and a
prohibition on the drilling of exploration wells.

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2. The Joint Authority may also give approval to a
contract operator to lay and fix petroleum production
facilities on the seabed in a contract area not being its
contract area, provided that such activities do not
interfere with the petroleum operations in the first
contract area.

Article 34
Inspectors
1. The Joint Authority may appoint a person to be an
inspector for the purposes of this Petroleum Mining Code,
the regulations and directions issued under Article 37 of
this Petroleum Mining Code, and contract terms and
conditions applying to petroleum operations in Area A. A
person so appointed shall, at all reasonable times and on
production of a certificate of appointment:
(a) have the right to enter any structure, vessel or
aircraft in Area A being used for petroleum operations;
(b) have the right to inspect and test any equipment
being used or proposed to be used for petroleum operations;
and
(c) have the right to enter any structure, vessel,
aircraft or building in which it is thought there are any
documents relating to petroleum operations in Area A and
may inspect, take extracts from and make copies of any of
those documents.
2. The contractor shall provide an inspector with all
reasonable facilities and assistance that the inspector
requests for the effective exercise of the inspector's
powers.

Article 35
Service of Notices
1. A document to be served on a person other than the
Joint Authority or a corporation shall be served:
(a) by delivering the document to that person;
(b) by posting the document as a letter addressed to
that person;
(c) by delivering the document to that address and
leaving the document with a person apparently in the
service of that person;
(d) by sending the document in the form of a telex or
facsimile to that person's telex or facsimile number, as
appropriate; or
(e) by sending the document as a telegram addressed to
that person.
2. A document to be served on a corporation shall be
served by complying with sub-paragraphs (b), (c), (d) or
(e) or paragraph 1 of this Article.
3. A document to be served on the Joint Authority shall be
served by leaving it with a person apparently employed in
connection with the Joint Authority, at a place of business
of the Joint Authority specified in the contract or by
posting the document as a letter or telegram addressed to
the Joint Authority at that place of business or by sending
the document as a telex or facsimile to the Joint
Authority's telex or facsimile number.
4. Where a document is posted as a letter, service shall
be deemed to have been effected within seven (7) days of
the letter having been posted, unless the contrary is
proved.

Article 36
Release of Information and Data
1. The Joint Authority may make such use as it wishes of
information and data contained in a report, return or other
document furnished to the Joint Authority, provided that
information and data is not made publicly known before the
periods of confidentiality identified below have expired.
2. Basic information and data about petroleum operations
in a contract area may be released two (2) years after it
was lodged with the Joint Authority or when the blocks to
which that information and data relates cease to be part of
the contract area, if earlier. However, conclusions drawn
or opinions based in whole or in part on that information
and data shall not be released until five (5) years after
that information and data was lodged with the Joint
Authority.
3. Information and data relating to a seismic or other
geochemical or geophysical survey shall be deemed to have
been lodged no later than six (6) months after the survey
was essentially completed. Information and data on wells
shall be deemed to have been lodged no later than three (3)

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months after the well was essentially completed.
4. Notwithstanding paragraph 2 of this Article, the
contract operator shall have the right to have access to
and use all information held by the Joint Authority
relating to the blocks in Area A adjacent to its contract
area. Where information and data has been released by the
person or some party acting on the person's behalf, the
Joint Authority shall not be obliged to maintain the
confidentiality of that information and data.
5. The Joint Authority shall be free to use any
information and data relating to relinquished, surrendered
and other blocks outside the contract area, including
releasing it to any party.
6. Contractors shall not use such information and data
outside Australia or the Republic of Indonesia without the
approval of the Joint Authority.
7. Officials of the Australian and Indonesian Governments
may have access to information and data provided to the
Joint Authority under this Petroleum Mining Code, provided
such officials comply with the provisions of this Article.

Article 37
Regulations and Directions
1. The Joint Authority shall issue regulations and
directions to apply to persons, consistent with the Treaty
including this Petroleum Mining Code, in order to carry out
its functions. In particular, the regulations and
directions shall deal with, but are not limited to, the
following matters:
(a) the exploration for petroleum and the carrying on of
operations, and the execution of works, for that purpose;
(b) the production of petroleum and the carrying on of
operations, and the execution of works, for that purpose;
(c) the measurement and the sale or disposal of the
Joint Authority's and the contractor's petroleum
production, and the carrying on of operations for that
purpose, including procedures for transfer of title to
petroleum and measurement and verification of petroleum so
transferred;
(d) the conservation, and prevention of the waste of,
the natural resources, whether petroleum or otherwise;
(e) the construction, erection, maintenance, operation,
use, inspection and certification and re-certification of
structures, pipelines or equipment;
(f) the control of the flow or discharge, and the
prevention of the escape, of petroleum, water or drilling
fluid, or a mixture of water or drilling fluid with
petroleum or any other matter;
(g) the clean-up or other remedying of the effects of
the escape of petroleum;
(h) the prevention of damage to petroleum-bearing
strata;
(i) the prevention of the waste or escape of petroleum;
(j) the removal from a contract area of structures,
equipment and other property brought into the contract area
for or in connection with petroleum operations;
(k) the carrying on of petroleum operations in a safe
and environmentally sound manner;
(l) the preparation of assessments of the impact of
petroleum operations on the environment;
(m) the authorization by the Joint Authority of entry
into Area A by the employees of contractors and the
employees of their sub-contractors; and
(n) the control of movement into, within and out of Area
A of vessels, aircraft, structures and equipment employed
in petroleum operations.
2. The Joint Authority may, by instrument in writing
served on a person or class of persons, make a regulation
or direction on a matter consistent with the above to apply
specifically to that person or class of persons.

Article 38
Register of Contractors
The Joint Authority shall maintain a register setting out
summary details of:
(a) areas over which contracts are in force;
(b) the contract operator and the contractor for each
contract area;
(c) work and expenditure commitments relating to the
contract area;
(d) changes to contract conditions, the contract
operator and the undivided participating interest of the

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contractor in a contract area;
(e) blocks relinquished or surrendered from contract
areas;
(f) changes in names and addresses of the contract
operator and the contractor; and
(g) unitization agreements.

Article 39
Approval of Contractors
Corporations wishing to hold an undivided participating
interest which would result in changes to the contractor or
the contract operator in a contract area shall be required
to obtain the Joint Authority's approval of those changes.
The Joint Authority shall note such approval in the
register. Until such approval is given by the Joint
Authority, with the prior consent of the Ministerial
Council, the new participating interest holders' agreement
shall not be recognized by the Joint Authority, and the
contractor's and contract operator's liabilities under a
contract shall remain unchanged.

Article 40
Inspection of Register
The Joint Authority shall ensure the register is
available for inspection by any person at all convenient
times.

Article 41
Auditing of Contractor's Books and Accounts
The contractor's books and accounts shall be subject to
audit by the Joint Authority, which shall be conducted
annually. The Joint Authority may issue regulations and
directions with respect to the auditing of books and
accounts.

Article 42
Security of Structures
1. Operators of vessels, drilling rigs and structures in
Area A shall be responsible for controlling access to their
facilities; providing adequate surveillance of safety zones
and their approaches; and establishing communications with,
and arranging action by, the appropriate authorities in the
event of an accident or incident involving threat to life
or security.
2. To assist operators in meeting these responsibilities,
the Joint Authority shall appoint persons, to be stationed
at the office of the Technical Directorate of the Joint
Authority, responsible for liaising with appropriate
Australian and Indonesian authorities.

Article 43
Amendment of Petroleum Mining Code
Except in the case of amendments to Part VI of this
Petroleum Mining Code, where the provisions of this
Petroleum Mining Code are amended, to the extent that the
amendments are not consistent with the provisions of
contracts in force prior to the amendments, those
amendments may only apply to such contracts by agreement
between the contract operator and the Joint Authority.

PART VI
FEES
Article 44
Application Fees
1. The fee to be lodged with applications for production
sharing contracts is US$ three thousand (3000).
2. The fee to be lodged with applications for a
prospecting approval is US$ five hundred (500).
3. Application fees shall not be refunded to unsuccessful
applicants.

Article 45
Contract Service Fee
1. At the beginning of each contract year, the contract
operator shall pay to the Joint Authority a contract
service fee of US$ fifty thousand (50,000).
2. In addition, if one or more discovery areas have been
declared in the contract area, the contract operator shall
pay to the Joint Authority at the beginning of the contract
year a service fee of:
(a) US$ twenty thousand (20,000) for the first discovery
area; and
(b) US$ ten thousand (10,000) for each additional
discovery area within the contract area.
3. Where more than one production structure is installed
in a discovery area in the contract area, the contract
operator shall pay to the Joint Authority at the beginning

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of the contract year an additional service fee of US$ ten
thousand (10,000).

Article 46
Registration Fees
For the approval and registration of agreements between
corporations which result in changes to the undivided
participating interests of the contractor in a contract
area, a fee of US$ five hundred (500) shall be payable.

Article 47
Amendment of Fees
With the approval of the Ministerial Council, the Joint
Authority may change the fees specified in this Part to
reflect any changes in the costs of administration. Those
changes in fees shall not be made more frequently than once
a year and shall not be applied retrospectively.

PART VII
PENAL PROVISIONS
Article 48
Termination of Contracts
1. Where the contractor has not complied with the
provisions of this Petroleum Mining Code, the regulations
and directions issued by the Joint Authority, or the terms
of the contract the Joint Authority may recommend to the
Ministerial Council that the contract be terminated. The
Joint Authority shall give thirty (30) days written notice
to the contractor of the Joint Authority's intention to
recommend termination of the contract.
2. The Ministerial Council shall not agree to the
termination of the contract until the contractor has had an
apportunity to provide the Joint Authority with reasons why
the contract should not be terminated, and the Joint
Authority has given full consideration to those reasons.
The contractor must provide reasons for non-termination
within thirty (30) days of receipt of notice of the Joint
Authority's intention to terminate.
3. Notwithstanding the termination of a contract, the
contractor shall remain liable to take such action as is
necessary to clean-up the contract area and remove all
property brought into that area. The contractor shall
remain liable to the Joint Authority to pay any outstanding
debts due to the Authority.
ANNEX C
MODEL PRODUCTION SHARING CONTRACT
BETWEEN THE JOINT AUTHORITY AND (CONTRACTORS)
This production sharing contract, which has been approved
by the Ministerial Council established under the Treaty
between Australia and the Republic of Indonesia on the Zone
of Cooperation in an Area between the Indonesian Province
of East Timor and Northern Australia (hereinafter called
the Treaty), is made and entered into on this day of ,
19 by and between the Joint Authority established under
the Treaty and , (a) corporation(s) organized and
existing underthe law of hereinafter called the
"contractor", both hereinafter sometimes referred to
either individually as the "Party" or collectively as the
"Parties".
WITNESSETH
WHEREAS, petroleum existing within Area A of the Zone of
Cooperation established by the Treaty is a resource to be
exploited jointly by the Contracting States;
WHEREAS, the Joint Authority, with the approval of the
Ministerial Council, has an exclusive authority to contract
for petroleum operations in and throughout the area
described in Appendix A of this Contract and outlined on
the map which is Appendix B of this contract, which area is
hereinafter referred to as the "contract area";
WHEREAS, the Joint Authority wishes to promote petroleum
operations in the contract area and the contractor desires
to join and assist the Joint Authority in accelerating the
exploration and development of the potential petroleum
resources within the contract area;
WHEREAS, the contractor has the necessary financial
capability, and technical knowledge and ability to carry
out the petroleum operations hereinafter described;
WHEREAS, in accordance with the Treaty, including the
Petroleum Mining Code set out in Annex B of the Treaty, a
cooperative agreement in the form of a production sharing
contract may be entered into between the Joint Authority
and corporations for the purpose of petroleum operations;
and

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NOW, therefore, in consideration of the mutual covenants
herein contained, it is agreed as follows:
SECTION 1
SCOPE AND DEFINITIONS
SCOPE
1.1. This contract is a production sharing contract
subject to the Treaty, including the Petroleum Mining Code.
The Joint Authority shall be responsible for the management
of the operations contemplated hereunder in accordance with
its management functions defined under the Treaty,
including the Petroleum Mining Code. The contractor
appoints and authorizes (name of corporation to be the
contract operator), being one of the contracting
corporations, to be the contract operator who, on behalf of
the contractor, shall be responsible to the Joint Authority
for the execution of petroleum operations in accordance
with the provisions of this contract, and is hereby
appointed and constituted as the exclusive corporation to
conduct petroleum operations. The contractor shall provide
all human, financial and technical resources required for
the performance of petroleum operations authorized by the
contract, and shall therefore have an economic interest in
the development of the petroleum pools in the contract area
and be entitled to share in petroleum produced from the
contract area in accordance with the provisions of Section
7 of this contract.
1.2. Except for expenditures on capital costs for the
development of petroleum pools, the contractor shall not
incur interest expenses to finance petroleum operations.

DEFINITIONS
1.3. Words and terms used in this contract shall have the
same meaning as those defined in the Treaty, including the
Petroleum Mining Code set out in Annex B to the Treaty,
except where a new definition is expressly provided for in
this contract.
(a) "Affiliated corporation or affiliate" means a
corporation or other entity that controls, or is controlled
by, a Party to this contract, it being understood that
control shall mean ownership by one corporation or entity
of at least fifty (50) per cent of:
(i) the voting stock, if the other corporation is a
corporation issuing stock; or
(ii) the controlling rights or interests, if the other
entity is not a corporation.
(b) "Barrell" means a quantity or unit of oil, having
a volume of forty-two (42) United States gallons at the
temperature of sixty (60) degrees Fahrenheit.
(c) "Contract area" means the area not relinquished or
surrendered, constituted by the blocks which are the
subject of this contract and which are specified in
Appendices A and B of this contract.
(d) "Crude oil" means crude mineral oil and all liquid
hydrocarbons in their natural state or obtained from
natural gas by condensation or extraction.
(e) "Development plan" means a description of the
proposed petroleum reservoir development and management
program, details of the production facilities, the
production profile for the expected life of the project,
the estimated capital and non-capital expenditure covering
the feasibility, fabrication, installation and
pre-production
stages of the project, and an evaluation of the
commerciality of the development of the petroleum from
within a discovery area.
(f) "Exploration and appraisal strategy" means a brief
description of the exploration/geological play concepts
for, the extent to which the leads and prospects are
identified in, and the data reviews, seismic surveys and
exploration wells planned for the contract area.
(g) "First tranche petroleum" means the quantity of
petroleum production defined in subsection 9 of Section 7.
(h) "Force majeure" means circumstances beyond the
control and without the fault or negligence of the contract
operator and the Joint Authority including but not
restricted to acts of God or the public enemy, perils of
navigation, fire, hostilities, war (declared or
undeclared), blockade, labor disturbances, strikes, riots,
insurrections, civil commotion, quarantine restrictions,
epidemics, storms, earthquakes, or accidents.
(i) "Natural gas" means all gaseous hydrocarbons,

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including wet mineral gas, dry mineral gas, casinghead gas
and residue gas remaining after the extraction of liquid
hydrocarbons from wet gas.

SECTION 2
TERM OF THIS CONTRACT
2.1. Subject to the provisions of this Section and Section
13, the term of this contract shall be thirty (30) years as
from the effective date.
2.2. If at the end of the initial six (6) years as from
the effective date, no petroleum is discovered in
commercial quantities in the contract area, the contractor
shall have the option either to terminate this contract or
to request the Joint Authority, by means of a sixty (60)
days written notice prior to the end of the initial six (6)
years, to extend this contract to the end of the tenth year
from the effective date. Where a discovery is made but has
not been appraised before the end of the tenth contract
year, the Joint Authority shall extend the term of this
contract so as to allow completion of an expeditious
appraisal of the discovery, or if necessary in the case of
a natural gas discovery, until marketing arrangements and
sales contracts are completed. The extension shall be
promptly granted, without prejudice to the provisions of
Section 13 of this contract relating to termination,
provided a work program and expenditures are agreed in
accordance with subsection 3 of Section 4 of this contract.
2.3. If, at the end of the term of this contract as
extended under subsection 2 of this Section, no petroleum
is discovered in commercial quantities in the contract
area, this contract shall automatically terminate in its
entirety.
2.4. If petroleum is discovered in any block or blocks of
the contract area within the initial six (6) year period or
any extension pursuant to subsection 2 of this Section,
which the Joint Authority and the contract operator agree
can be produced commercially, based on the consideration of
all pertinent operating and financial data, then as to that
particular block or blocks of the contract area the Joint
Authority shall declare a discovery area and the contract
operator shall commence development. In other blocks in the
contract area, the contract operator shall continue
exploration without prejudice to the provisions of Section
3 regarding the relinquishment of blocks.
2.5. If petroleum production has not ceased permanently in
and from the contract area by the end of the thirtieth
contract year, the Joint Authority shall give sympathetic
consideration to extending the term of this contract beyond
the thirtieth contract year until production ceases
permanently. In the case of a natural gas project, the
contract term shall be automatically extended to the end of
the term of the natural gas sales contract.
2.6. If petroleum production has ceased permanently in and
from the contract area before the end of the thirtieth
contract year, then this contract shall be terminated upon
the permanent cessation of production.

SECTION 3
RELINQUISHMENT OF BLOCKS
3.1. On or before the end of the third contract year as
from the effective date, the contract operator shall
relinquish twenty-five (25) per cent of the blocks in the
original contract area.
3.2. On or before the end of the sixth contract year the
contract operator shall relinquish an additional
twenty-five
(25) per cent of the blocks in the original total
contract area.
3.3. Subject to the provisions of Section 2 of this
contract, on or before the end of the tenth contract year,
the contract operator shall relinquish all of the blocks in
the contract area not contained in discovery areas.
3.4. The contract operator's obligation to relinquish
parts of the contract area under the preceding provisions
shall not apply to any blocks in the contract area declared
as a discovery area. In this respect, in calculating the
percentages under subsections 1 and 2 of this Section,
blocks in discovery areas shall be excluded from the
original contract area.
3.5. Upon thirty (30) days written notice to the Joint
Authority prior to the end of any contract year, the
contract operator shall have the right to surrender some,

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but not all, of the blocks in the contract area, provided
the conditions of the contract have been met to the
satisfaction of the Joint Authority and such blocks shall
then be credited against the blocks in the contract area
which the contract operator is next required to relinquish
under the provisions of subsections 1, 2 and 3 of this
Section.
3.6. The contract operator shall advise the Joint
Authority in advance of the date of relinquishment of the
blocks to be relinquished. For the purpose of
relinquishments, the contract operator and the Joint
Authority shall consult with each other regarding which
blocks are to be relinquished. So far as is reasonable,
such blocks shall form an area of sufficient size and
convenient shape to enable petroleum operations to be
conducted thereon.
3.7. For the purposes of calculating the number of blocks
to be relinquished under subsections 1 and 2 of this
Section, where the number of blocks is not exactly
divisible by four (4), only the whole number of blocks
after the division by four (4) shall be relinquished.

SECTION 4
WORK PROGRAM AND EXPENDITURES
4.1. The contract operator shall commence petroleum
operations not later than six (6) months after the
effective date.
4.2. The amount of exploration work to be undertaken by
the contract operator pursuant to the terms of this
contract during the first six (6) years following the
effective date shall, unless otherwise approved by the
Joint Authority, be at least that specified for each of
these six (6) years as follows:
Data Seismic Wells Expenditure
Review Surveys
US$ Kms No. US$
First Contract Year
Second Contract Year
Third Contract Year
Fourth Contract Year
Fifth Contract Year
Sixth Contract Year
4.3. If the contract is still in force after the sixth
contract year, the Joint Authority and the contact operator
shall agree to an exploration work program and expenditures
for those subsequent contract years.
4.4. The Joint Authority and the contract operator may
negotiate a change to the exploration work program and
expenditures covering contract years four (4) to ten (10),
provided the changes are made at least three (3) months
prior to the beginning of the contract year affected by the
changes.
4.5. If during:
(a) the first three (3) contract years the contract
operator completes less than the amount of exploration work
required to be completed during those years, the Joint
Authority shall terminate the contract;
(b) any of the contract years four (4) to ten (10) the
contract operator completes less than the amount of
exploration work required within that year, the Joint
Authority may terminate the contract and, if the contract
is not terminated, the Joint Authority shall require the
completion of that work in the following contract year; or
(c) any contract year the contract operator completes
more than the amount of exploration work required to be
completed by the end of that year, the excess shall be
counted towards meeting the exploration work obligations of
the contract operator during succeeding contract years.
4.6. For the purpose of subsection 5 of this Section, the
Joint Authority, in determining whether the contract
operator has completed the exploration work required to be
completed in the first three (3) contract years, and in
later contract years if work commitments are specified,
shall have regard to the actual physical work completed,
and not the estimates of expenditure. Where work
commitments are not specified, the Joint Authority shall
have regard to the estimates of expenditure.
4.7. At least two (2) months prior to the beginning of
each calendar year, the contract operator shall prepare and
submit, for approval by the Joint Authority, an exploration
and appraisal strategy to be adopted for the ensuing

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contract year for the contract area.
4.8. At least one (1) month prior to the beginning of each
calendar year, the contract operator shall prepare and
sumit, for approval by the Joint Authority, a work program
and budget of operating costs to be carried out during the
ensuing calendar year for the contract area.
4.9. Before work can commence on the development of a
petroleum discovery, the contract operator shall prepare
and submit, for approval by the Joint Authority, a
development plan.
4.10. Should the Joint Authority wish to propose a
revision to specified aspects of the work program and
budget of operating costs, the Joint Authority shall
specify its reasons for requesting those changes but shall
not require the contract operator to undertake more
petroleum operations than the minimum work program and
expenditure commitments specified in this contract. The
Parties shall reach agreement on any changes before they
become effective.
4.11. It is recognized by the Joint Authority that the
details of the work program and budget of operating costs,
and the development plan may require changes in the light
of existing circumstances and nothing herein contained
shall limit the rights of the contract operator to make
such changes, provided they do not change the general
objective, quantity and quality of the petroleum
operations.
4.12. The Joint Authority shall ensure that every effort
is made to avoid delays in approving the exploration and
appraisal strategy, the work program and budget of
operating costs, and the development plan.

SECTION 5
RIGHTS AND OBLIGATIONS OF THE
PARTIES
5.1. The contract operator shall have the rights accorded
to it under the Treaty, including the Petroleum Mining Code
and the Taxation Code, and in particular shall:
(a) subject to paragraph (k) of subsection 2 of this
Section, have the right to enter and leave the contract
area and move to and from the contract operator's
facilities wherever located at all times;
(b) have the right to have access to and use all
geological, geophysical, drilling, well (including well
location maps), production and other information held by
the Joint Authority relating to the contract area; and
(c) in accordance with the provisions of the Petroleum
Mining Code, have the right to have access to and use all
geological, geophysical, drilling, well, production and
other information now or in the future held by the Joint
Authority relating to the blocks in Area A adjacent to the
contract area.
5.2. The contract operator shall comply with all of the
obligations imposed on it by the Treaty, including the
Petroleum Mining Code and the Taxation Code, and the
regulations and directions issued under the Petroleum
Mining Code and, in particular, shall:
(a) provide all human, financial and technical resources
required for the performance of the petroleum operations;
(b) carry out petroleum operations in a proper and
workmanlike manner and in accordance with good oilfield
practice;
(c) take the necessary precautions to avoid interference
with navigation and fishing;
(d) develop an environmental management plan to be
approved by the Joint Authority, prevent pollution of the
marine environment, and pay for the costs associated with
clean-up of any pollution from any petroleum operations
within the contract area;
(e) upon the termination of this contract, clean-up the
contract area and remove all structures, equipment and
other property brought into the contract area;
(f) submit to the Joint Authority copies of all original
geological, geophysical, drilling, well, production and
other data (including cores, cuttings an samples taken in
connection with petroleum operations in the contract area)
and reports compiled during the term of this contract;
(g) appoint and authorize a person to represent the
contract operator and communicate with the Joint Authority,
and that person shall have an office in either Jakarta or
Darwin or both;

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(h) give preference to goods and services which are
produced in Australia or the Republic of Indonesia, or
provided by subcontractors operating out of Australia or
the Republic of Indonesia, provided they are offered on
competitive terms and conditions compared with those
available from other countries;
(i) give preference to the employment of Indonesian and
Australian nationals and permanent residents, and employ
them in equivalent numbers over the term of this contract,
having due regard to safe and efficient operations and good
oilfield practice;
(j) take out and maintain, to the Joint Authority's
satisfaction, from the effective date of this contract,
insurance cover to the value of US$ in accordance with
Article 25 of the Petroleum Mining Code;
(k) except as otherwise approved by the Joint Authority,
ensure that all persons, equipment and goods do not enter
structures in the contract area without first entering
Australia or the Republic of Indonesia, and notify the
Joint Authority of all persons, vessels, aircraft and
structures entering or leaving the contract area, and of
movements within the contract area; and
(l) make secure and safe all structures in the contract
area, including the installation of warning lights, radar
and other appropriate equipment.
5.3. The contractor shall have the rights accorded under
the Treaty, including the Petroleum Mining Code and the
Taxation Code, and in particular shall:
(a) have the right to appoint a new contract operator
subject to prior approval by the Joint Authority;
(b) have the right to transfer all or part of its
undivided participating interest in this contract to any
affiliated corporation or any other corporation with the
approval of the Joint Authority. Such approval shall not be
unreasonably withheld provided the corporation taking up
those rights and obligations under this contract has, in
the opinion of the Joint Authority, the necessary financial
capability and technical knowledge and ability, in
accordance with Article 11 of the Petroleum Mining Code;
(c) have the right during the term of this contract to
lift, dispose of and export its share of petroleum
production, subject to Section 7 of this contract, and
retain abroad the proceeds obtained therefrom; and
(d) have the right to retain ownership and control of
all property purchased or leased for the purposes of
complying with the conditions of this contract, and be
entitled to freely remove the same from the contract area,
Australia or the Republic of Indonesia provided the
conditions of this contract have been met.
5.4. The contractor shall comply with all of the
obligations imposed on it by the Treaty, including the
Petroleum Mining Code and the Taxation Code, and the
regulations and directions issued under the Petroleum
Mining Code and, in particular, shall:
(a) be jointly and severally liable to meet the
obligations imposed on the contract operator; and
(b) be subject to the taxation law of the Contracting
States, in accordance with Article 29 of the Treaty.
5.5. The Joint Authority shall comply with all of the
obligations imposed on it by the Treaty, including the
Petroleum Mining Code and, in particular, shall be
responsible for the management of the petroleum operations
contemplated hereunder having regard to the contract
operator's responsibilities for undertaking the petroleum
operations.

SECTION 6
OPERATING COSTS
GENERAL PROVISIONS
6.1. The accounting procedures in this Section shall be
followed and observed in the performance of the
contractor's obligations under the contract.
6.2. The contractor's books and accounts shall be prepared
and maintained in accordance with a generally accepted and
recognized accounting system consistent with modern
petroleum industry practices and procedures. Books and
accounts shall be available for the use of the Joint
Authority in order that it may carry out its auditing
responsibilities under this contract.
6.3. "Operating costs" means the sum of the following
costs incurred in petroleum operations undertaken before or

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at the point of tanker loading:
(a) current calendar year exploration costs;
(b) current calendar year non-capital costs;
(c) current calendar year depreciation of capital costs;
and
(d) allowable operating costs incurred in previous
calendar years which have not been recovered in accordance
with subsection 2 of Section 7 of this contract;
less
(e) miscellaneous receipts as defined in subsection 8 of
this Section.
6.4. All calculations required to determine operating
costs shall be done in United States dollars. Where costs
are denoted in any other currency, they shall be translated
into United States dollars at the exchange rate set, on the
day the cost was incurred, by a bank designated by the
Joint Authority.

EXPLORATION COSTS
6.5. "Exploration costs" means those operating costs
incurred which relate directly to the current calendar
year's exploration operations in the contract area and
include but are not limited to the following:
(a) costs of exploratory and appraisal drilling in the
contract area including labor, materials and services used
in the drilling of wells with the object of finding
unproven reservoirs of petroleum;
(b) costs of surveys in the contract area including
labor, materials and services (including desk studies and
analysis of survey data) used in aerial, geological,
geochemical, geophysical and seismic surveys, and core hole
drilling; and
(c) costs of other exploration directly related to
petroleum operations in the contract area, including the
cost of auxiliary or temporary facilities used in
exploration.

NON-CAPITAL COSTS
6.6. "Non-capital costs" means those operating costs
incurred that relate directly to the current calendar
year's operations in the contract area, excluding
exploration costs and capital costs. Non-capital costs
include, but are not limited to the following:
(a) costs of labor, materials and services used in day
to day well operations, field production facilities
operations, secondary recovery operations, storage
handling, transportation and delivery operations, gas
processing auxiliaries and utilities, and other operating
activities, including repairs and maintenance;
(b) costs of office, services and general administration
directly related to the petroleum operations carried out in
the contract area including technical and related services,
office supplies, office rentals and other rentals of
services and property, and personnel expenses;
(c) costs of production drilling in the contract area
including labor, materials and services used in drilling
wells with the object of penetrating a proven reservoir
such as the drilling of delineation wells as well as
redrilling, deepening or recompleting wells;
(d) costs of feasibility studies and environmental
impact assessments directly related to petroleum operations
in the contract area;
(e) application fees, contract service fees, and
registration fees directly related to petroleum operations
in the contract area;
(f) premiums paid for insurance normally required to be
carried for the petroleum operations carried out by the
contract operator under this contract;
(g) closing down costs, being those expenditures
incurred at the end of the production life of a petroleum
pool in the contract area which could include the costs of:
(i) removal of all production facilities including the
removal of platforms and associated facilities;
(ii) environmental restoration including any feasibility
studies; and
(h) costs of purchased geological and geophysical
information.

CAPITAL COSTS
6.7. "Capital costs" means expenditure made for items
directly related to petroleum operations in the contract
area and which normally have a useful life of more than one
(1) year. Capital costs include but are not limited to the

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following:
(a) costs of construction utilities and auxiliaries,
workshops, power and water facilities, warehouses, site
offices, access and communication facilities;
(b) costs of production facilities including offshore
platforms (including the costs of labor, fuel hauling and
supplies for both the offsite fabrication and onsite
installation of platforms, and other construction costs in
erecting platforms), wellhead production tubing, sucker
rods, surface pumps, flow lines, gathering equipment,
delivery lines, storage facilities, all other equipment,
facilities and modules on platforms, oil jetties and
anchorages, treating plants and equipment, secondary
recovery systems, gas plants and steam systems;
(c) costs of pipelines and other facilities for the
transporting of petroleum produced in the contract area to
the point of tanker loading;
(d) costs of movable assets and subsurface drilling and
production tools, equipment and instruments, and
miscellaneous equipment used for production in the contract
area;
(e) costs of floating craft, automotive equipment,
furniture and office equipment; and
(f) if approved by the Joint Authority, costs of
employee and welfare housing, recreational, educational,
health and meals facilities, and other similar costs
necessary for petroleum operations in Area A.

MISCELLANEOUS RECEIPTS
6.8. "Miscellaneous receipt" means the value of property
defined in paragraph (c) below and all monies received by
the contractor, other than for the disposal of petroleum
produced from the contract area, which are directly related
to the conduct of petroleum operations in the contract
area. Miscellaneous receipts include, but are not limited
to, the following:
(a) any amounts received from the sale or disposal of
petroleum produced from production testing operations
undertaken in exploration and appraisal wells;
(b) any amounts received for the disposal, loss, or
destruction of property the cost of which is an operating
cost;
(c) the value of property, the cost of which is an
operating cost, when that property ceases to be used in
petroleum operations in the contract area;
(d) any amounts received by the contract operator under
an insurance policy, the premiums of which are operating
costs, in respect of damage to or loss of property;
(e) any amounts received as insurance, compensation or
indemnity in respect of petroleum production lost or
destroyed prior to the point of tanker loading;
(f) any amounts received from the hiring or leasing of
property, the cost of which is an operating cost;
(g) any amounts received from supplying information
obtained from surveys, appraisals, or studies the cost of
which is an operating cost;
(h) any amounts received as charges for the use of
employee amenities, the cost of which is an operating cost;
and
(i) any amounts received in respect of expenditures
which are operating costs, by way of indemnity or
compensation for the incurring of the expenditure, refund
of the expenditure, or rebate, discount or commission in
respect of the expenditure.

INELIGIBLE COSTS
6.9. The following expenditures are not eligible as
operating costs:
(a) payments of principal or interest on a loan or other
borrowing costs unless approved by the Joint Authority
under paragraph (c) of subsection 10 of this Section;
(b) payments of interest components of credit-purchase
payments;
(c) payments of dividends or the cost of issuing shares;
(d) repayments of equity capital;
(e) payments of private override royalties;
(f) payments associated with a farm-in agreement;
(g) payments of taxes under the taxation law of either
Contracting State made in accordance with Article 29 of the
Treaty;
(h) payments of administrative accounting costs, and
other costs indirectly associated with petroleum operations

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in the contract area;
(i) costs incurred once petroleum production has passed
the point of tanker loading;
(j) costs incurred as a result of non-compliance by the
contract operator with the provisions of this contract, the
Petroleum Mining Code or the regulations and directions
issued under the Petroleum Mining Code; and
(k) Unless otherwise approved by the Joint Authority,
costs incurred by contractors other than the contract
operator.

ACCOUNTING METHODS TO BE USED TO CALCULATE RECOVERY OF
OPERATING COSTS
6.10. The following methods shall be used to calculate the
recovery of operating costs.
(a) Depreciation
Depreciation shall be calculated beginning in the calendar
year in which the asset to be depreciated is placed into
service. A full year's depreciation shall be allowed in
that calendar year. In each calendar year the allowable
recovery of capital cost depreciation shall be twenty (20)
per cent of the individual asset's initial capital cost
(calculated using the straight line method of
depreciation).
(b) Allocation of overhead costs
General and administration costs, such as those listed in
paragraph (b) of subsection 6 of this Section, but other
than direct charges, allocable to petroleum operations in
the contract area shall be determined by a detailed study,
and the method determined by such a study shall be applied
each year consistently. The method determined shall require
agreement of the Joint Authority and the contractor.
(c) Interest Recovery
Interest on loans obtained by a contractor at rates not
exceeding prevailing commercial interest rates on loans for
capital investments in development of petroleum pools may
be recoverable as an operating cost provided the Joint
Authority has given its approval. The Joint Authority may
give its approval if it is satisfied that recovery of
interest is necessary to ensure the financial viability of
the project.
(d) Gas Costs
The following procedures shall be used to allocate
operating costs related to natural gas production.
(i) Operating costs directly related to the production
of natural gas shall be directly chargeable against natural
gas revenues in determining the entitlements of the Joint
Authority and the contractor under Section 7.
(ii) Operating costs incurred for the production of both
natural gas and crude oil shall be allocated to natural gas
and crude oil revenues based on the relative value of the
products produced for the current calendar year. Common
support costs shall be allocated on an equitable basis
agreed to by both Parties.
(iii) If after commencement of production, the natural
gas revenues do not permit full recovery of natural gas
costs, as outlined above, then the excess costs shall be
recovered from crude oil revenues. Likewise, if there are
excess crude oil costs (crude oil costs less crude oil
revenues), this excess shall be recovered from natural gas
revenues.
(iv) If production of either natural gas or crude oil
has commenced while the other has not, the allocable
production costs and common support costs shall be
allocated on an equitable basis agreed to by both Parties.
Propane and butane fractions extracted from natural gas but
not spiked in crude oil shall be deemed as natural gas for
the purpose of accounting.
(e) Inventory Accounting
Inventory levels shall be based on normal good oilfield
practice. The value of inventory items used outside the
contract area or sold, the cost of which has been recovered
as an operating cost, shall be treated as miscellaneous
receipts in accordance with subsection 8 of this Section.
The costs of items purchased for inventory shall be
recoverable as operating costs at such time as the items
are landed in Area A.
(f) Insurance and Claims
Operating costs shall include premiums paid for insurance
normally required to be carried for the petroleum
operations relating to the contractor's obligations

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conducted under the contract, together with all
expenditures incurred and paid in settlement of any and all
losses, claims, damages, judgments and other expenses,
including fees relating to the contractor's obligations
under the contract.
(g) Apportioning of Costs and Miscellaneous Receipts
Where property, or any other thing, for which an operating
cost is allowable or a miscellaneous receipt is assessable,
is only used partially in conducting petroleum operations
in the contract area, only that proportion of the cost or
the receipt which relates to the conduct of petroleum
operations in the contract area shall be allowed as an
operating cost or assessed as a miscellaneous receipt.

SECTION 7
RECOVERY OF OPERATING COSTS AND SHARING
OF PETROLEUM PRODUCTION
7.1. The contractor is authorized by the Joint Authority
and obliged to market all petroleum produced and saved from
the contract area subject to the following provisions.
7.2. Subject to subsections 9 and 10 of this Section, to
recover operating costs, the contract operator shall be
entitled to a quantity of petroleum production, which is
produced and saved hereunder and not used in petroleum
operations, equal in value to those costs. If in any
calendar year, the operating costs exceed the value of
petroleum produced and saved hereunder and not used in
petroleum operations, then the unrecovered excess of
operating costs shall be carried forward and recovered in
succeeding years.
7.3. In each calendar year in which petroleum is produced
from the contract area, if the investment credit and
operating costs recoverable under subsections 10 and 2 of
this Section respectively are less than the value of the
quantity of petroleum produced from the contract area, then
of the petroleum production remaining after deducting the
quantity of petroleum production equal in value to the
investment credit and operating costs, the Parties shall be
entitled to take and receive the following:
(a) the Joint Authority fifty (50) per cent and the
contractor fifty (50) per cent for the tranche of 0 to
50,000 barrels daily average of all crude oil production
from the contract area for the calendar year;
(b) the Joint Authority sixty (60) per cent and the
contractor forty (40) per cent for the tranche of 50,001 to
150,000 barrels daily average of all crude oil production
from the contract area for the calendar year; and
(c) the Joint Authority seventy (70) per cent and the
contractor thirty (30) per cent for the tranche of more
than 150,000 barrels daily average of all crude oil
production from the contract area for the calendar year.
7.4. The method of recovering investment credits and
operating costs before the entitlements are taken by each
Party as provided under subsection 3 of this Section shall
be subject to the following proration method. For each
calendar year, the recoverable investment credits and
operating costs shall be apportioned for deduction from the
production of each of the tranches defined in subsection 3
of this Section using the same ratios as the production
from each such tranche over the total production of that
calendar year.
7.5. Of the amount of natural gas, including propane and
butane fractions extracted from natural gas but not spiked
in crude oil, remaining after recovering investment credits
and operating costs associated with natural gas operations,
the Joint Authority shall be entitled to take and receive
fifty (50) per cent and the contractor shall be entitled to
take and receive fifty (50) per cent.
7.6. Title to the contractor's share of petroleum
production under subsections 3, 5 and 9 of this Section as
well as to the shares of petroleum production exported and
sold to recover investment credits and operating costs
under subsections 10 and 2 of this Section respectively
shall pass to the contractor at the point of tanker
loading.
7.7. The contractor shall use its best reasonable efforts
to market petroleum production to the extent markets are
available.
7.8. Any natural gas produced from the contract area and
not used in petroleum operations hereunder may be flared if
the processing and utilization of the natural gas is not

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considered by the Parties to be economic. Such flaring
shall be permitted to the extent that gas is not required
to enable the maximum economic recovery of petroleum by
secondary recovery operations, including repressuring and
recycling.
7.9. Notwithstanding the other provisions of this Section,
in the initial five (5) calendar years of production from
the contract area, the Parties shall be entitled to take
and receive a quantity of petroleum equal to ten (10) per
cent of the petroleum production in those years, called the
"first tranche petroleum", before any recovery of
investment credits and operating costs. In each subsequent
calendar year, the first tranche petroleum shall be equal
to twenty (20) per cent of the petroleum produced in that
year. The quantity of first tranche petroleum from crude
oil production for each calendar year shall be shared
between the Joint Authority and the contractor in
accordance with the sharing percentages as provided under
subsection 3 of this Section, by apportioning it as
applicable to the respective production tranches as therein
defined, using the same ratios as the production from each
such tranche over the total production of that calendar
year. The quantity of first tranche petroleum from natural
gas production for each calendar year shall be shared
between the Joint Authority and the contractor in
accordance with the sharing percentages as provided under
subsection 5 of this Section.
7.10. Investment credits for exploration and capital costs
defined in subsection 5 of Section 6 and paragraphs (b),
(c) and (d) of subsection 7 of Section 6 shall be allowed
to the contract operator, and, in each calendar year, shall
be recoverable by the contract operator after the sharing
of the first tranche petroleum but before the recovery of
operating costs. The contract operator shall recover the
investment credits, as a quantity of petroleum production
equal in value to one hundred and twenty seven (127) per
cent of such exploration and capital costs incurred.
Investment credits not recovered in the calendar year in
which the exploration and capital costs were incurred may
be carried forward and recovered in subsequent years.
7.11. Notwithstanding the provisions of subsection 1 of
this Section which oblige the contractor to market all
petroleum produced from the contract area, the Joint
Authority may market any or all petroleum when the Joint
Authority secures a net realized price for the petroleum,
f.o.b. the contract area, which is greater than the price
which can be realized by the contractor. The Joint
Authority's right to market any or all of the petroleum
shall continue for such period as it can secure a net
realized price, f.o.b. the contract area, greater than that
which can be realized by the contractor. The contract
operator shall coordinate the efficient lifting of the
petroleum production, including tanker nomination and
scheduling.

SECTION 8
VALUATION OF PETROLEUM PRODUCTION
8.1. Petroleum production sold to third parties shall be
valued as follows:
(a) all petroleum production to which the contractor is
entitled under this contract and which is sold to third
parties, shall be valued at the net realized price, f.o.b.
the contract area;
(b) all petroleum production to which the Joint
Authority is entitled under this contract which is sold to
third parties shall be valued at the net realized price,
f.o.b. the contract area; and
(c) where a contract of sale involves other than a net
realized price f.o.b., the Joint Authority shall determine
a fair and reasonable net f.o.b. price for the purposes of
that sale.
8.2. Petroleum production sold to other than third parties
shall be valued by the Joint Authority as follows:
(a) by using the weighted average per unit price,
adjusted as necessary for quality, quantity, grade and
specific gravity of the petroleum production, received by
the contractor and the Joint Authority from sales to third
parties during the three (3) months preceding such sale,
excluding commissions and brokerages incurred in relation
to such third party sales; and
(b) if there are no third party sales as defined in

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paragraph (a), at prevailing market prices, adjusted to
take account of quality, quantity, grade and specific
gravity of the petroleum production and taking into
consideration any special circumstances with respect to
sales of such petroleum production.
8.3. For the purpose of this Section, "third party
sales" means sales by the contractor to independent
purchasers with whom, at the time the sale is made, the
contractor has no direct or indirect contractual
relationship or joint interest.
8.4. Commissions or brokerages incurred in connection with
sales to third parties, if any, shall not exceed the
customary and prevailing rate.
8.5. During any calendar year in which petroleum is
produced from the contract area, the contractor shall be
liable to make provisional payments to the Joint Authority,
equal to the estimated value of petroleum to which the
Joint Authority is entitled under Section 7 of this
contract. The provisional payments shall be made on a
monthly basis unless the Joint Authority and the contractor
agree on alternate arrangements. The amount of each
provisional payment shall be calculated by the contractor
using the estimates of operating costs contained in the
work program and budget of operating costs, and the
contractor's estimate of the value of quantities of
petroleum sold. During the calendar year the provisional
payments may be adjusted having regard to actual operating
costs and the actual value of sales of petroleum. Within
thirty (30) days after the end of the calendar year,
adjustments and cash settlements between the Joint
Authority and the contractor shall be made on the basis of
the actual amounts of the operating costs and actual value
of sales of petroleum made during the calendar year, in
order to comply with Section 7. Similarly, where the Joint
Authority markets petroleum production pursuant to
subsection 11 of Section 7, the Joint Authority shall be
liable to make provisional payments to the contractor in a
manner consistent with this subsection.
8.6. Petroleum production disposed of other than by sale
or destruction shall be valued using the method defined in
subsection 2 of this Section.
8.7. The contractor shall notify the Joint Authority of
quantities and sales prices of all petroleum production
sold or disposed of before the sales or disposals are made.

SECTION 9
PAYMENTS
9.1. The contract operator shall make all payments to the
Joint Authority for which it is liable under this contract
in United States dollars or some other currency agreed
between the contract operator and the Joint Authority.
Payments shall be made to a bank designated by the Joint
Authority. Where a payment is made in currency other than
United States dollars, the exchange rate used to convert
the United States dollars liability into that currency
shall be the exchange rate set down on the day of payment
by a bank designated by the Joint Authority.
9.2. The Joint Authority shall make all payments to the
contract operator in United States dollars or some other
currency agreed between the contract operator and the Joint
Authority. Where a payment is made in currency other than
United States dollars, the exchange rate used to convert
the United States dollar liability into that currency shall
be the exchange rate set down on the day of payment by a
bank designated by the Joint Authority.
9.3. Any payments required to be made pursuant to this
contract shall be made within ten (10) days following the
end of the month in which the obligation to make such
payments is incurred.

SECTION 10
TENDERS FOR PETROLEUM OPERATIONS
10.1. The contract operator shall draw invitations to
tender for sub-contracts to the attention of Australian and
Indonesian sub-contractors.
10.2. Subject to subsection 4 of this Section, all tenders
for petroleum operations called by the contract operator
shall be subject to approval by the Joint Authority.
10.3. The Joint Authority shall provide its approval or
non-approval within thirty (30) days of receipt of the
tender details from the contract operator. The tender
details to be provided by the contract operator shall

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include a summary of the tenders received compared against
the tender criteria determined by the contract operator and
the reasons for the selection of the preferred tender.
10.4. Notwithstanding subsection 2 of this Section, the
contract operator may enter into sub-contracts without the
approval of the Joint Authority where:
(a) the tender for petroleum operations is expected to
involve expenditure of less than US$ two million
(2,000,000);
(b) the tender for petroleum operations is expected to
involve expenditure of less than US$ ten million
(10,000,000) and those operations form part of a project
for the development of petroleum resources, the cost of
which is expected to exceed US$ one hundred million
(100,000,000); or
(c) the tender selected by the contract operator is the
lowest cost tender and has been submitted by an Australian
or Indonesian corporation.
10.5. The contract operator shall provide the Joint
Athority, for information, with the full financial details
of the sub-contract, irrespective of the amount of the
expenditure involved.

SECTION 11
TITLE TO EQUIPMENT
11.1. Equipment purchased by the contract operator
pursuant to the work program and budget of operating costs
remains the property of the contractor and shall be used in
petroleum operations.

SECTION 12
CONSULTATION AND ARBITRATION
12.1. Periodically, the Joint Authority and the contract
operator shall meet to discuss the conduct of petroleum
operations under this contract and shall make every effort
to settle amicably any problems arising therefrom.
12.2. Disputes, if any, arising between the Joint
Authority and contractor relating to this contract or the
interpretation and performance of this contract which
cannot be settled amicably shall be submitted to
arbitration.
12.3. Except as may be otherwise agreed by the Parties,
arbitration shall be conducted in accordance with the Rules
of Arbitration of the International Chamber of Commerce.
12.4. The Joint Authority on the one hand and the
contractor on the other hand shall each appoint one
arbitrator and so advise the other Party, and these two
arbitrators shall appoint a third. If either Party fails to
appoint an arbitrator within thirty (30) days after receipt
of a written request to do so, such arbitrator shall, at
the request of the other Party, if the Parties do not
otherwise agree, be appointed by the President of the
International Chamber of Commerce. If the first two
arbitrators appointed as aforesaid fail to agree on a third
within thirty (30) days following the appointment of the
second arbitrator, the third arbitrator shall, if the
Parties do not otherwise agree, be appointed, at the
request of either Party, by the President of the
International Chamber of Commerce. If an arbitrator fails
or is unable to act, that arbitrator's successor shall be
appointed in the same manner as the arbitrator who is
replaced.
12.5. The decision of a majority of the arbitrators shall
be final and binding upon the Parties and an award may be
enforced in any court having jurisdiction for that purpose.
In accordance with paragraph 2 of Article 11 of the Treaty,
in the event that the Joint Authority cannot meet an
obligation under an arbitral award arising from a dispute
under this contract, the Contracting States shall
contribute the necessary funds in equal shares to enable
the Joint Authority to meet that obligation.
12.6. The place of arbitration shall be (to be
agreed by the Parties before the contract is signed). The
language of the arbitration shall be (to be agreed by
the Parties before the contract is signed).

SECTION 13
TERMINATION
13.1. This contract shall not be terminated during the
first three (3) years from the effective date.
13.2. Subject to subsection 1 of this Section, this
contract may be terminated at any time by agreement of the
Parties or in accordance with Article 48 of the Petroleum

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Mining Code.

SECTION 14
BOOKS, ACCOUNTS AND AUDITS
BOOKS AND ACCOUNTS
14.1. In addition to any requirements pursuant to
paragraph (b) of subsection 4 of Section 5, the contractor
shall keep complete books and accounts recording all
operating costs as well as monies received from the sale or
disposal of petroleum production.

AUDITS
14.2. The Joint Authority may require independent auditing
of the contractor's books and accounts relating to this
contract for any calendar year and may require the
independent auditor to perform such auditing procedures as
are deemed appropriate by the Joint Authority. The
contractor shall forward a copy of the independent
accountant's report to the Joint Authority within sixty
(60) days following the completion of the audit. The Joint
Authority reserves the right to inspect and audit the
contractor's books and accounts relating to this contract.

SECTION 15
OTHER PROVISIONS
NOTICES
15.1. Any notices required or given by either Party to the
other shall be served in accordance with Article 35 of the
Petroleum Mining Code.
15.2. All notices to be served on the contract operator
shall be addressed to:
(contract operator's address)
15.3. All notices to be served on the Joint Authority
relating to matters for which the head office of the Joint
Authority is responsible shall be addressed to:
(address of the Joint Authority's head office)
15.4. All notices to be served on the Joint Authority
relating to matters for which the Technical Directorate of
the Joint Authority is responsible shall be addressed to:
(address of the Joint Authority's Technical Directorate)
15.5. Either Party may substitute or change the above such
address by giving written notice to the other.

APPLICABLE LAW
15.6. Subject to the provisions of the Treaty, including
the Petroleum Mining Code, the law of shall apply to
this contract.

SUSPENSION OF OBLIGATIONS
15.7. Any failure or delay on the part of either Party in
the performance of its obligations or duties under the
contract shall be excused to the extent that such failure
or delay is attributable to force majeure.
15.8. If exploration is delayed, curtailed or prevented by
force majeure the Joint Authority shall agree to vary the
work program and expenditure commitments or exempt the
contract operator from part or all of the work program and
expenditure commitments during the period of force majeure.
15.9. The Party whose ability to perform its obligations
is so affected by force majeure shall immediately notify
the other Party in writing, stating the cause, and both
Parties shall do all that is reasonably within their power
to discharge their obligations.

SECTION 16
EFFECTIVENESS
16.1. This contract shall come into effect on the day it
is entered into by and between the Joint Authority and the
contractor.
16.2. This contract shall not be amended or modified in
any respect, except by the mutual consent in writing of the
Parties.
IN WITNESS WHEREOF, the Parties hereto have executed this
contract, in triplicate and in the English language, on
this day of , 19 .
THE JOINT AUTHORITY
BY
(CONTRACTOR)
BY
APPROVED BY THE MINISTERIAL COUNCIL on this day of
, 19
BY BY
Minister of Minister for
on behalf of the GOVERNMENT on behalf of the GOVERNMENT
OF THE REPUBLIC OF OF AUSTRALIA
INDONESIA

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ANNEX D
TAXATION CODE FOR THE AVOIDANCE OF DOUBLE TAXATION
IN RESPECT OF ACTIVITIES CONNECTED WITH
AREA A OF THE ZONE OF COOPERATION
Article 1
General Definitions
1. In this Taxation Code, unless the context otherwise
requires:
(a) the term "Australian tax" means tax imposed by
Australia, other than any penalty or interest, being tax to
which this Taxation Code applies;
(b) the term "company" means any body corporate or any
entity which is treated as a company or body corporate for
tax purposes;
(c) the term "competent authority" means, in the case
of Australia, the Commissioner of Taxation or an authorised
representative of the Commissioner and, in the case of the
Republic of Indonesia, the Minister of Finance or an
authorised representative of the Minister;
(d) the term "Indonesian tax" means tax imposed by the
Republic of Indonesia, other than any penalty or interest,
being tax to which this Taxation Code applies;
(e) the term "law of a Contracting State" means the
law of that Contracting State from time to time in force
relating to the taxes to which this Taxation Code applies;
(f) the term "person" includes an individual, a
company and any other body of persons; and
(g) the terms "tax" or "taxation" mean Australian
tax or Indonesian tax, as the context requires.
2. In the application of this Taxation Code by a
Contracting State any term not defined in this Taxation
Code or elsewhere in the Treaty shall, unless the context
otherwise requires, have the meaning which it has under the
law of that Contracting State from time to time in force
relating to the taxes to which this Taxation Code applies.

Article 2
Personal Scope
The provisions of this Taxation Code shall apply to
persons who are residents of one or both of the Contracting
States as well as in respect of persons who are not
residents of either of the Contracting States, but only for
taxation purposes related directly or indirectly to:
(a) the exploration for or the exploitation of petroleum
in Area A; or
(b) acts, matters, circumstances and things touching,
concerning, arising out of or connected with any such
exploration or exploitation.

Article 3
Taxes Covered
1. The existing taxes to which this Taxation Code shall
apply are:
(a) in Australia:
(i) the income tax imposed under the federal law of
Australia:
(ii) the fringe benefits tax imposed under the federal
law of Australia; and
(iii) the sales tax imposed under the federal law of
Australia;
(b) in Indonesia:
(i) the income tax (Pajak-Penghasilan), including the
tax on profits after income tax payable by a contractor,
imposed under the law of the Republic of Indonesia, and its
implementing regulations;
(ii) the value-added tax on goods and services and sales
tax on luxury goods (Pajak Pertambahan Nilai atas Barang
dan Jasa dan Pajak Penjualan atas Barang Mewah) imposed
under the law of the Republic of Indonesia, and its
implementing regulations.
2. The provisions of this Taxation Code shall also apply
to any identical or substantially similar taxes which are
imposed after the date of signature of this Treaty in
addition to, or in place of, the existing taxes. The
competent authorities of the Contracting States shall
notify each other of any substantial changes which have
been made in their respective taxation laws within a
reasonable period of time after such changes.

Article 4
Business Profits
1. For the purposes of the taxation law of each
Contracting State, the business profits or losses of a

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person, other than an individual, derived from, or incurred
in, Area A in a year shall be reduced by fifty (50) per
cent.
2. Business profits derived from Area A in a year by an
individual who is a resident of a Contracting State shall
be taxable only in that Contracting State.
3. Business profits derived from Area A in a year by an
individual who is not a resident of either Contracting
State may be taxed in both Contracting States but subject
to a rebate entitlement against the tax payable in each
Contracting State of fifty (50) per cent of the gross tax
payable on those profits in that Contracting State.
4. Business losses, incurred in Area A in a year by an
individual who is not a resident of either Contracting
State, that are eligible under the law of a Contracting
State to be carried forward for deduction against future
income shall, for the purposes of that law, be reduced by
fifty (50) per cent.
5. For the purposes of paragraphs 1 and 4 of this Article
any losses brought forward from prior years in accordance
with the law of a Contracting State as a deduction from
income shall not be taken into account in determining the
profit or loss for the year.
6. For the purposes of this Article:
(a) the term "year" means:
(i) in Australia, any year of income;
(ii) in Indonesia, any taxable year; and
(b) the terms "business profits" and "business
lossess" do not include gains or losses of a capital
nature to which Article 8 of this Taxation Code applies.

Article 5
Dividends
1. Dividends which are paid by a company which is a
resident of a Contracting State wholly or partly out of
profits derived from sources in Area A, and which are
beneficially owned by a resident of the other Contracting
State, may be taxed only in that other Contracting State.
2. The term "dividends" as used in this Article means
income from shares or other rights participating in profits
and not relating to debt claims, as well as other income
which is subjected to the same taxation treatment as income
from shares by the law of the Contracting State of which
the company making the distribution is a resident.

Article 6
Interest
1. Interest paid by a contractor, being interest to which
a resident of a Contracting State is beneficially entitled,
may be taxed in that Contracting State.
2. Such interest may also be taxed in the other
Contracting State, but the tax so charged shall not exceed
ten (10) per cent of the gross amount of the interest.
3. Where such interest is taxed in the other Contracting
State in accordance with paragraph 2 of this Article, that
interest shall, for the purposes of determining a foreign
tax credit entitlement under the taxation law of the
Contracting State referred to in paragraph 1 of this
Article, be deemed to be income derived from sources in the
other Contracting State.
4. Interest paid by a contractor, being interest to which
a person who is not a resident of either Contracting State
is beneficially entitled, may be taxed in both Contracting
States but the taxable amount of any such interest shall be
an amount equivalent to fifty (50) per cent of the amount
that would be the taxable amount but for this paragraph.

Article 7
Royalties
1. Royalties paid by a Contractor, being royalties to
which a resident of a Contracting State is beneficially
entitled, may be taxed in that Contracting State.
2. Such royalties may also be taxed in the other
Contracting State, but the tax so charged shall not exceed
ten (10) per cent of the gross amount of the royalties.
3. Where such royalties are taxed in the other Contracting
State in accordance with paragraph 2 of this Article, those
royalties shall, for the purposes of determining a foreign
tax credit entitlement under the taxation law of the
Contracting State referred to in paragraph 1 of this
Article, be deemed to be income derived from sources in the
other Contracting State.
4. Royalties paid by a Contractor, being royalties to

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which a person who is not a resident of either Contracting
State is beneficially entitled, may be taxed in both
Contracting States but the taxable amount of any such
royalties shall be an amount equivalent to fifty (50) per
cent of the amount that would be the taxable amount but for
this paragraph.

Article 8
Alienation of Property
1. Where a gain or loss of a capital nature accrues to or
is incurred by an individual who is a resident of a
Contracting State, from the alienation of property situated
in Area A or shares or comparable interests in a company,
the assets of which consist wholly or principally of
property situated in Area A, the amount of the gain or loss
shall be taxable, or otherwise recognised for taxation
purposes, only in that Contracting State.
2. Where a gain or loss of a capital nature accrues to or
is incurred by a person, other than an individual who is a
resident of a Contracting State, from the alienation of
property situated in Area A or shares or comparable
interests in a company, the assets of which consist wholly
or principally of property situated in Area A, the amount
of the gain or loss shall, for the purposes of the law of a
Contracting State, be an amount equivalent to fifty (50)
per cent of the amount that would be the gain or loss but
for this paragraph.

Article 9
Independent Personal Services
1. Income derived by an individual who is a resident of a
Contracting State in respect of professional services, or
other independent activities of a similar character,
performed in Area A shall be taxable only in that
Contracting State.
2. Income derived by an individual who is not a resident
of either Contracting State in respect of professional
services, or other independent activities of a similar
character, performed in Area A may be taxed in both
Contracting States but subject to a rebate entitlement
against the tax payable in each Contracting State of fifty
(50) per cent of the gross tax payable in that Contracting
State on the income referred to in this paragraph.

Article 10
Dependent Personal Services
1. Salaries, wages and other similar remuneration derived
by an individual who is a resident of a Contracting State
in respect of employment exercised in Area A shall be
taxable only in that Contracting State.
2. Remuneration derived by an individual who is not a
resident of either Contracting State in respect of
employment exercised in Area A may be taxed in both
Contracting States but subject to a rebate entitlement
against the tax payable in each Contracting State of fifty
(50) per cent of the gross tax payable in that Contracting
State on the income referred to in this paragraph.

Article 11
Other Income
1. Items of income of a resident of a Contracting State,
derived from sources in Area A, not dealt with in the
foregoing Articles of this Taxation Code shall be taxable
only in that Contracting State.
2. Items of income of a person who is not a resident of
either Contracting State, derived from sources in Area A
and not dealt with in the foregoing Articles of this
Taxation Code may be taxed in both Contracting States but
subject to a rebate entitlement against the tax payable in
each Contracting State of fifty (50) per cent of the gross
tax payable in that Contracting State on the income
referred to in this paragraph.

Article 12
Fringe Benefits
For the purposes of the taxation law of Australia, the
taxable value of any fringe benefits provided in a year of
tax to employees, who are not residents of either
Contracting State, in a year of tax in repsect of
employment exercised in Area A shall be reduced by fifty
(50) per cent.

Article 13
Goods Imported into Area A
Goods imported into Area A from a place other than either
Contracting State shall not be taxable in either
Contracting State unless and until such goods are
permanently transferred to another part of a Contracting
State in which case the goods may be taxed only in the
Contracting State last referred to.

Article 14
Mutual Agreement Procedure
1. Where a person considers that the actions of the
competent authority of one or both of the Contracting
States result or will result for the person in taxation not
in accordance with the provisions of this Taxation Code,
the person may, irrespective of the remedies provided by
the domestic law of the Contracting States, present a case
to the competent authority of the Contracting State of
which the person is a resident, or to either competent
authority in the case of persons who are not residents of
either Contracting State. The case must be presented within
three (3) years from the first notification of the action
resulting in taxation not in accordance with the provisions
of this Taxation Code.
2. The competent authority shall endeavour, if the claim
appears to it to be justified and if it is not itself able
to arrive at a satisfactory solution, to resolve the case
by agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation
which is not in accordance with the provisions of this
Taxation Code. Any agreement reached shall be implemented
notwithstanding any time limits in the domestic law of the
Contracting States.
3. The competent authorities of the Contracting States may
communicate with each other directly for the purpose of
giving effect to the provisions of this Taxation Code.

Article 15
Exchange of Information
1. The competent authorities of the Contracting States
shall exchange such information as is necessary for
carrying out the provisions of this Taxation Code or of the
domestic law of the Contracting States concerning taxes
covered by this Taxation Code, insofar as the taxation
hereunder is not contrary to this Taxation Code, in
particular for the prevention of avoidance or evasion of
such taxes. Any information received by the competent
authority of a Contracting State shall be treated as secret
in the same manner as information obtained under the
domestic law of that Contracting State and shall be
disclosed only to persons or authorities (including courts
and administrative bodies) involved in the assessment or
collection of, the enforcement or prosecution in respect
of, or the determination of appeals in relation to, the
taxes covered by this Taxation Code and shall be used only
for such purposes.
2. In no case shall the provisions of paragraph 1 of this
Article be construed so as to impose on the competent
authority of a Contracting State the obligation:
(a) to carry out administrative measures at variance
with the law or the administrative practice of that or of
the other Contracting State;
(b) to supply information which is not obtainable under
the law or in the normal course of the administration of
that or of the other Contracting State; or
(c) to supply information which would disclose any
trade, business, industrial, commercial or professional
secret or trade process, or information the disclosure of
which would be contrary to public policy.