AGREEMENT BETWEEN THE PEOPLE’S MINISTRY FOR ENERGY AND PETROLEUM OF THE BOLIVARIAN REPUBLIC OF VENEZUELA AND THE MINISTRY OF THE BASIC INDUSTRY OF THE REPUBLIC OF CUBA, FOR THE ENHANCEMENT OF OIL REFINING CAPACITIES, THE CONSTRUCTION OF AN OLEFIN AND AROMATICS PLANT, THE INCREASE OF PRODUCT STORAGE CAPACITY IN THE CIENFUEGOS REFINERY, AND THE INSPECTION AND REACTIVATION OF THE MATANZAS-CIENFUEGOS OIL PIPELINE

The People’s Ministry for Energy and Petroleum of the Bolivarian Republic of Venezuela and the Ministry of the Basic Industry of the Republic of Cuba (hereinafter “The Parties”),

WHEREAS
The governments of the Bolivarian Republic of Venezuela and the Republic of Cuba have taken the initiative to promote actions towards sub-regional integration by setting up alliances in the field of petroleum industry and other areas;

WHEREAS
The governments of the Bolivarian Republic of Venezuela and the Republic of Cuba, expressing their will to strengthen the bonds within the framework of the Bolivarian Alternative for the Americas (ALBA), where energy sources are perceived as elements that pave the way for the development and well-being, based on complementarity and solidarity, of the Latin American and Caribbean peoples;

WHEREAS
The Bolivarian Republic of Venezuela and the Republic of Cuba, having organized through their national state-run oil industries a Mixed Company in Cuba for the rehabilitation and enhancement of the capacity of the Cienfuegos Refinery and expressed their interest in jointly expanding the oil refining capacities in the Republic of Cuba, consider opportune to advance the implementation of projects that pave the way for the attainment of this goal that is strategic for both parties hereto;

WHEREAS
The governments of the Bolivarian Republic of Venezuela and the Republic of Cuba have expressed their interest in strengthening a human integration model based on the principles of solidarity and generosity between their respective peoples, aimed at the solution of problems through the development of projects that reflect a high degree of commitment in accordance with the objectives proposed in the Agreement for the implementation of the Bolivarian Alternative for the Americas, signed by the President of the Bolivarian Republic of Venezuela and the President of the Councils of State and Ministers of the Republic of Cuba;

Agree to sign this Agreement under the following terms and conditions:

FIRST: PURPOSE
1.1. This Agreement is aimed at jointly carrying out a technical-economic feasibility study on the increase of the oil refining capacity up to 150 thousand barrels a day, the construction of an olefin and aromatics plant, the increase of oil product storage capacity in the Cienfuegos refinery, and the inspection and reactivation of the Matanzas-Cienfuegos oil pipeline.

1.2. To perform the studies referred to in the previous paragraph, the Parties hereto agree to set up a Technical Steering Committee, hereinafter the Committee, for the increase of the oil refining capacity up to 150 thousand barrels a day, the construction of an olefin and aromatics plant, the increase of the Cienfuegos refinery oil product storage capacity, and the inspection and reactivation of the Matanzas-Cienfuegos oil pipeline. This Committee shall be entrusted with the analysis of the project to be developed as well as its terms and conditions, and of the feasible operation, marketing and property schemes of these facilities.

SECOND: ON THE STEERING COMMITTEE
2.1  The Committee shall be made up of eight (8) members, four (4) of which shall be appointed by the People’s Ministry for Energy and Petroleum of the Bolivarian Republic of Venezuela and the other four (4) by the Ministry of the Basic Industry of the Republic of Cuba.

Each one of the Parties hereto may replace, at any moment, its members to the Committee, upon notification to the other Party at least ten (10) days in advance.

2.2 The Committee, within sixty (60) calendar days following the execution of this Agreement, shall define the scope of the Comprehensive Feasibility Studies on the increase of the oil refining capacity up to 150 thousand barrels a day, the construction of an olefin and aromatics plant, the increase of the Cienfuegos refinery oil product storage capacity, and the inspection and reactivation of the Matanzas-Cienfuegos oil pipeline.

The Comprehensive Feasibility Study mentioned in paragraph 2.2 shall determine, at least:

a) The scope of the increase of the oil product storage capacity,

b) The production capacity of the olefin and aromatics plant;

c) The projects to be developed to achieve the scope of each one of the works;

d) The amount of the investment;

e) Cash flows;

f) The most satisfactory location of the processing plants that need to be built and the infrastructure works; and

g) The appropriate technologies based on costs, project implementation time, and other related considerations.

The Committee, within six (6) months following the execution of this Agreement, shall submit the Comprehensive Feasibility Study on the project to be executed as part of the increase of the Cienfuegos refinery processing capacity, which includes the construction of an olefin and aromatics plant, as well as the increase of the oil product storage capacity and the inspection and reactivation of the Matanzas-Cienfuegos oil pipeline.

2.3 The Parties hereto agree that the contracts to be signed within the framework of this Agreement shall be governed by the national legislation of each one of the Parties hereto.

THIRD:
Upon approval of the Comprehensive Feasibility Study, in a period no longer than thirty (30) days, the Parties hereto shall agree on how the projects deriving from said study shall be implemented and on their general completion schedule.

FOURTH: ON THE FUNCTIONS OF THE TECHNICAL STEERING COMMITTEE
4.1. The Committee, in accordance with the bases for its creation, shall have the following functions:

a) Identifying the principles based on which they shall study and negotiate all the matters related to the increase of the oil refining capacity up to 150 thousand barrels a day, the construction of an olefin and aromatics plant, the increase of the Cienfuegos refinery oil product storage capacity, as well as the inspection and reactivation of the Matanzas-Cienfuegos oil pipeline in the Republic of Cuba;

b) Putting forward and assessing the participation terms and conditions in the projects to be executed;

c) Assessing and suggesting methods to increase knowledge and resources of the Bolivarian Republic of Venezuela and the Republic of Cuba in the field of oil refining and basic petrochemical industry and in the design of training and technology exchange plans;

d) Exchanging all the information required with a view to fulfilling the purpose of this Agreement;

e) Submitting to their respective authorities possible schemes and specifications of the activities and the eventual projects to be executed;

f) Implementing any work agenda, previously agreed upon, in order to develop determined activities and projects;

g) Estimating the requirements, cash flows, and the corresponding financial scheme of the different activities and projects;

h) Determining any other actions required to perform the activities and implement the projects submitted by the Committee.

FIFTH: ON THE COMMITTEE MEETINGS
5.1 The Committee shall hold quarterly ordinary meetings and may hold extraordinary meetings whenever it is necessary, upon previous request by any of the Parties.

5.2 The Committee shall meet alternatively in the territory of each one of the Parties hereto. The dates of the meetings shall be agreed upon by the Parties hereto, and the Committee shall set in its first meeting its meeting schedule.

5.3 The Committee, at its first meeting, shall set the schedule for its subsequent meetings.

SIXTH: ON CONFIDENTIALITY
6.1 Use of confidential information: The Parties hereto agree to consider the information included herein as Confidential Information and pledge not to disclose to third parties said information, unless the Parties agreed otherwise in written.

6.2. Restrictions: The restrictions referred to herein on the disclosure and use of the Confidential Information by the Receiver of said information shall not apply when:

a) The Confidential Information is disclosed by the Receiver to any of his/her Directors, Executives, Agents or employees;

b) The Confidential Information is revealed to a financial, legal or any counsel of the Receiver or to a advisor, contractor or subcontractor of said Receiver, in the event that these individuals have to know necessarily said Confidential Information (the individuals referred to in paragraphs a) and b) of this Section shall be jointly appointed “Authorized Representatives”);

c) The Confidential Information is of public domain on the date of execution of this Agreement;

d) The Confidential Information is made public after the date of execution of this Agreement by the Receiver or by any Authorized Representative in any way other than the breaching of any provision of this Agreement;

e) The Receiver, independently, in a way other than the breaching of any provision of this Agreement, has known the Confidential Information, either before or after the execution of this Agreement;

f) The Receiver is required by law, judicial order, legal proceeding or rules or policies of any securities commission or governmental or regulatory authority whatsoever with jurisdiction in this matter to disclose the Confidential Information; and

g) The individual that discloses the information agrees by written on the disclosure of said Confidential Information.

SEVENTH: ON DISPUTE SETTLEMENT
7.1. Any dispute related to this Agreement or deriving from its construction, application, implementation or fulfillment, shall be amicably settled by the Parties hereto.

7.2. The Parties hereto pledge to apply their best efforts in order to settle said disputes within a prudential and reasonable time.

EIGHT: AMENDMENTS
This Agreement may be modified only by means of written document, signed by the authorized representatives of the Parties hereto.

NINTH: GENERAL PROVISIONS
The Parties hereto are legally bound by the provisions contained herein, which shall not generate preferring, exclusive or excluding rights.

TENTH: ENTRY INTO FORCE
10.1. This Agreement shall enter into force on its execution date and shall remain in force for twelve (12) months, starting from said execution date.

10.2. Any of the Parties hereto may terminate this Agreement, by means of previous written notice to the other Party.

Executed in the Province of Santiago de Cuba, Republic of Cuba, on the 22nd day of the month of December, 2007, in two original documents, written in the Spanish language, both texts being identical.

On behalf of the Peoples’ Ministry for Energy and Petroleum of the Bolivarian Republic of Venezuela

RAFAEL DARIO RAMÍREZ CARREÑO
Minister 

 On behalf of the Ministry of the Basic Industry of the Republic of Cuba

YADIRA GARCIA VERA
Minister