AGREEMENT ENTERED INTO BY THE PEOPLE'S POWER MINISTRY OF ENERGY AND
PETROLEUM, BOLIVARIAN REPUBLIC OF VENEZUELA, AND THE MINISTRY OF BASIC INDUSTRY, REPUBLIC OF CUBA, ON DEVELOPMENT OF THE CHEMICAL AND PETROCHEMICAL INDUSTRY IN THE TERRITORIES OF CIEGO DE AVILA, NUEVITAS AND SAGUA LA GRANDE 

The People’s Power Ministry of Energy and Petroleum, Bolivarian Republic of Venezuela, on the one hand, and, on the other hand, the Ministry of Basic Industry, Republic of Cuba, hereinafter, the “Parties.”

WHEREAS

The governments of the Bolivarian Republic of Venezuela and the Republic of Cuba have taken the initiative in boosting sub-regional integration by means of partnerships in the chemical and petrochemical fields, in furtherance of the Bolivarian Alternative of the Americas, ALBA, wherein energy sources prompt development and well being for the Latin American and Caribbean peoples, based on complementation and solidarity.

The Bolivarian Republic of Venezuela has gas reserves available and is willing to develop the petrochemical industry in the Republic of Cuba, and the Parties deem it proper to implement projects for the proper use of natural resources in this field.

The Republic of Cuba has significant reserves of rock salt, which may be used as raw materials in the chemical and petrochemical industries, in addition to the ethylene available from Cienfuegos Refinery. The Republic of Cuba is interested in developing the domestic production of fertilizers; restructuring the current output of chlorine and caustic soda; expanding the current output of ammonium nitrate; building a manufacturing plant of raw materials for herbicides and petrochemical byproducts, and using domestic salt.

In April 2007, a Framework Agreement on Petrochemical Development in Cuba was entered into by Petroquímica de Venezuela, S.A. and the Chemical Industry Business Group, Ministry of Basic Industry and, in addition, the People's Power Ministry of Energy and Petroleum, Bolivarian Republic of Venezuela, and the Ministry of Basic Industry, Republic of Cuba initialed a memo of understanding, due to the need to implement projects in the chemical and petrochemical sectors.

NOW THEREFORE, the Parties hereby agree on the following terms and conditions:

FIRST ARTICLE
PURPOSE OF THE AGREEMENT

1.1. The purpose of this Agreement is to join efforts to carry out from 2008 in the province of Ciego de Ávila the following works:

a) Salt manufacturing plant in Punta Alegre, including the logistics to carry brine to Palo Alto.
b) Chlorine manufacturing plant in Palo Alto.
c) Manufacturing plant of monovinyl chloride and polyvinyl chloride, hereinafter MVC and PVC, respectively, in Palo Alto.

1.2. Further, the purpose of this Agreement is to complete three projects related to the chemical industry, namely: one project in Nuevitas and two projects in Sagua La Grande.

a) In Nuevitas, to recover the production capacity of the ammonium nitrate facilities from 50,000 tons annually to 200,000 tons annually. Pequiven shall supply the ammonia needed for such production until completion of the ammonia plant in Cienfuegos.
b) In Sagua la Grande, to replace the current manufacturing based on mercury at the chlorine plant with a membrane-based technology and build a new manufacturing plant of raw materials for herbicides.

1.2. The Parties agree that an Expert Steering Committee organized under the Memo of Understanding to develop the petrochemical industry, dated October 15th, 2007, hereinafter the "Committee," shall conduct the studies referred to herein above and assess any projects to be undertaken, terms and conditions thereof, and potential operation, markets and ownership of the facilities.

SECOND ARTICLE
BILATERAL STEERING COMMITTEE

2.1. Within thirty (30) calendar days following execution hereof, the Committee shall define the scope of the Comprehensive Feasibility Studies on building of a manufacturing plant to mine the area for rock salt in Punta Alegre; a caustic soda manufacturing plant and a MVC/PVC manufacturing plant in Palo Alto, all of them located in the province of Ciego de Ávila, Republic of Cuba. Further, the Committee shall work on reconstruction of an ammonium nitrate manufacturing plant in Nuevitas and building of facilities of chlorine and raw materials for herbicides in Sagua La Grande.

2.2 The Comprehensive Feasibility Studies referred to in item 2.1 above, shall include, at least:

a) the extent of the project to be developed to attain said goals;
b) the amount of the investment;
c) the most appropriate location of the processing facilities to be built, infrastructure works, and
d) the cutting-edge technology based on costs, time to implement the projects and related issues.

2.3 The Parties hereto represent and warrant that any subsequent agreements hereunder shall be governed by the domestic rules and regulations of the Parties, and the Comprehensive Feasibility Studies shall be submitted within a six-month (6) term.

THIRD ARTICLE
COMPLETION OF PROJECTS

Upon approval of the Comprehensive Feasibility Study within a thirty-day (30) term, the Parties shall agree on the way to conduct the projects resulting from said study and their overall implementation schedule.

FOURTH ARTICLE
CONFIDENCIALITY

6.1. Use of Confidential Information: The Parties shall consider Confidential Information the information herein and shall not disclose it to third parties unless otherwise agreed in writing.
 
6.2. Restrictions: The restrictions hereunder on disclosure and use of Confidential Information by Recipient shall not apply in the following events:

a) Confidential Information is released by Recipient to any director, executive officer, agent or employee of Recipient.
b) Confidential Information is revealed to a financial, legal or other counsel of Recipient or to a consultant, contractor or subcontractor of Recipient with a specific need to know. The persons referred to in items a) and b) hereof shall be designated jointly as the "Authorized Representatives."
c) Confidential Information is publicly available at the time of executing this Agreement.
d) Confidential Information is or becomes publicly available following the execution of this Agreement without breach hereof by Recipient or any Authorized Representative.
e) Recipient, except for breach of this Agreement, knows the Confidential Information before or after the execution hereof.
f) Recipient is requested by law, court order or judicial proceeding, or under the standards or policies of any securities commission or government or regulatory authority of competent jurisdiction, to release Confidential Information, and
g) Discloser agrees on writing to reveal Confidential Information.

FIFTH ARTICLE
DISPUTE SETTLEMENT

7.1 The Parties hereto shall compromise and settle in a friendly way any dispute related to this Agreement, that may arise out of, or result from the construction, implementation, enforcement or compliance hereof.

7.2 The Parties shall strive to settle any dispute in a prudential, reasonable term.
 

SIXTH ARTICLE
AMENDMENTS

This Agreement may be amended only through a written instrument signed by the Authorized Representatives of the Parties.

SEVENTH ARTICLE
GENERAL PROVISIONS

This Agreement shall bind the Parties as to the contents hereof and no preferential, preemptive or exclusive rights shall be derived.

EIGHTH ARTICLE
TERM

8.1. This Agreement shall come into force on the date of execution and shall be effective for twelve (12) months, from that date, and may be extended by the written consent of the Parties.

8.2. Either Party may terminate this Agreement upon a prior written notice to the other Party.

This done in the Province of Santiago de Cuba, Republic of Cuba, on this, the twenty-second (22nd) day of the month of December, year two thousand and seven (2007), in duplicate in the Spanish language, each copy of which shall be of equal authenticity.

People’s Power Ministry of Energy and Petroleum, Bolivarian Republic of Venezuela

By RAFAEL DARÍO RAMÍREZ CARREÑO
Minister 

 Ministry of Basic Industry, Republic of Cuba

By YADIRA GARCÍA VERA
Minister