PETROBRAS BUNKERING

 

GENERAL TERMS AND CONDITIONS OF SALE AND DELIVERY

OF MARINE FUELS ( GCS )

 

May 1998

 

 

 

1.   APPLICATION & DEFINITION

 

1.1.    These terms and conditions for the sale of Petrobras marine fuels are applicable to each and every sale of marine fuel by Petróleo Brasileiro S.A., Petrobras, Avenida República do Chile, 65 - 19º andar, Rio de Janeiro - Cable Address PETROBUNKER - Fax +55 21 262 8134 - Telex 021-23335 (hereinafter ¨Seller¨) to all parties purchasing the product (hereinafter ¨Buyer¨). These terms and conditions supersede any prior terms and conditions or general conditions for sale issued by Seller and shall override any other or different terms or conditions stipulated, incorporated or referred to by Buyer, whether in its purchase order or in any negotiations, unless otherwise agreed to in a subsequent writing.

 

1.2.          Marine fuel is defined as commercial grades of bunker fuel oil and/or marine gas oil or their mixtures offered at the time and place of delivery by Seller according to Brazilian official specifications.

 

2.   PRICE

 

2.1.    The applicable price shall be the one agreed upon at the time and place of nomination for the grade of Marine Fuel to be delivered and shall remain in force for a period of 48 hours after the ETA of the Vessel and the Seller hereby agrees to supply the Marine Fuel to the Vessel at the agreed price for a period of up to 48 hours after such ETA.

 

2.2.    In the event that the vessel is delayed in taking delivery of the Marine Fuel for a period of more than 48 hours after the ETA referred to at 2.1, the Seller is entittled in its absolute discretion to adjust the agreed price upwards to reflect any upward changes either in value, or market price, of Marine Fuel between the date of nomination and the date of actual delivery . The Seller shall be under no obligation, however, to reduce its price in the event that the value, or the market price, of Marine fuel falls between the expiry of such 48 hours period and the date of actual delivery.

 

2.3.          Should the vessel fail to take delivery within five days after the ETA given at the time of nomination, the Seller shall be forthwith released from the performance of all Seller’s obligations under these Terms and Conditions and any agreement with the Buyer to which these Terms and Conditions apply and shall be entitled immediately to invoice, and to be paid by the Buyer in a sum equivalent to ten per cent of the price agreed at the time of nomination in relation to the full quantity of Marine Fuel agreed at the time of nomination. Such sum, which shall not exceed United States Dollars fifty thousand, is hereby agreed by the Seller and the Buyer to be liquidated damages.

 

2.4.    The price excludes any government duties or taxes that may be levied by the Brazilian government (marine fuels are presently exempt).

 

3.   NOMINATIONS

 

3.1.    Buyer shall have the sole responsibility for the selection and acceptance of marine fuels. The quality of each grade of marine fuel shall be the usual production quality of that grade being sold by Seller at the time and place of delivery. The Buyer shall have the sole responsibility for any determination of compatibility of marine fuel purchased from Petrobrás with marine fuel already on board the vessel.

 

THERE ARE NO GUARANTEES OR WARRANTIES, EXPRESS OR IMPLIED, OF MERCHANTIBILITY, FITNESS OR SUITABILITY OF THE MARINE FUEL FOR ANY PARTICULAR PURPOSE OR OTHERWISE, WHICH EXTENDS BEYOND THIS SUBSECTION.

 

3.2.    Buyer shall provide Seller at least three (3) days prior written notice of the scheduled date of arrival of its vessel specifying the name of the vessel, vessel's agent, approximate date of arrival, bunkering port, grade and quantity of marine fuel and Buyer's address for invoicing.

 

3.3.    Buyer shall insure that either the Master of a nominated vessel or vessel's agent give not less than two (2) working days advance notice to the Seller's local office at each delivery port which notice shall identify the Buyer and specify place where and time when delivery is required. The Master or the vessel's agent shall give immediate notice to Seller of any delays of time or arrival. In case of failure to arrive at the schedule date, Seller will use its best efforts to reschedule Buyer's vessel but shall not be responsible for any attendant delays nor for any damages resulting therefrom.

 

3.4.    If any nomination is given by an agent for a Buyer hereunder, then such agent shall be independently liable, as if it were the principal, for the performance of all the obligations hereunder. Should the quantity requested locally exceed by ten percent (10%) the nominated quantity in any grade, Buyer shall give Seller telex authorization to supply such increased quantity.

 

4.   DELIVERY

 

4.1.    Buyer shall without charge immediately furnish clear and safe berth alongside vessel's receiving lines and shall render all other necessary assistance to the barge effecting delivery on a 24 hours per day basis.

 

4.2.    Seller shall have the right to shift or require Buyer to shift its vessel at load port from one berth to another or to anchorage.

 

4.3.    Buyer shall make all connections and disconnections between the delivery hose and vessel's intake pipe or furnish steam, if necessary, and provide sufficient tankage equipment to receive promptly all deliveries.

 

4.4.    The delivery shall be made during normal working hours unless required and available at other times (holidays, Saturday afternoons and Sundays) and permitted by port regulations, in which event Buyer shall reimburse Seller for any and all additional expenses incurred in connection therewith, including overtime.

 

4.5.          Vessels will be bunkered as promptly as possible, but Seller shall not be liable for demurrage, detention or any other or different damages due to any delay caused by weather (whether usual or unusual), congestion at the terminal or prior commitments of available barges or existing facilities, howsoever caused.

 

4.6.          Anything herein to the contrary contained notwithstanding, Seller's obligation to make any delivery hereunder is at all times subject to the availability to Seller at the port at which delivery is requested of the particular grade of marine fuel requested by Buyer.

 

5.   QUALITY AND QUANTITY DETERMINATIONS

 

5.1.    The quality and quantity of the marine fuel shall be determined by Seller's personnel using Seller's equipment according to Seller's official methods. Buyer may be present or represented when such quality determinations and quantity measurements are taken, but whether or not Buyer or Buyer's representative accepts or declines such invitation, Seller's determination of quality and quantity shall prevail and be binding.

 

5.2.    Seller shall draw two representative sealed samples of each of marine fuel delivered. Buyer may attend or be represented during such sample takings in which event he shall countersign each sample and may retain one sealed and countersigned sample. The sealed samples shall be deemed conclusive and binding as to quality of the delivered marine fuel.

 

5.3.    Seller or Seller's agent may inspect Buyer's vessel in the event of any complaint, whether at the request of Buyer or otherwise. Such inspection or any analysis made in connection therewith shall be made entirely without any obligation on behalf of Seller to consider or act upon any claim or complaint by Buyer or otherwise and shall be entirely without prejudice to Seller's position.

 

 

6.   PAYMENT

 

6.1.    Buyer shall make payment (without any deduction, discount or setoff whatsoever) in U.S. dollars to Seller's account at a bank designated by Seller. Payment shall be deemed to have been made on the date when full payment is credited to Seller's account and Seller's head office has been duly informed that payment has been received.

 

6.2.    Buyer may not at any time or for any reason whatsoever assert a setoff or invoke any counterclaim or other right as basis for withholding payment.

 

6.3           Unless otherwise agreed in writing, payment shall be made prior  to delivery. Seller is entitled to request security for payment and shall not be under any obligation or liability to make any delivery until either payment or security has been provided and Seller's head office has been duly informed of the receipt of said payment or security.

 

6.4.    When marine fuel is supplied on a credit basis, full payment shall be received by the due date specified in Seller's telex invoice. If the established credit period expires on a day when Seller's bank is closed for business, then Buyer shall arrange for payment to be made by the last day within the applicable credit period when the Seller's bank was open for business. Seller will in due course provide Buyer by ordinary mail with a commercial invoice and a copy of a bunker receipt.

 

6.5.          Seller's telex invoice shall be based on advice as to the quantity delivered and of other charges and surcharges if incurred and payment made pursuant to 5.1. above shall be subject to such subsequent adjustment as may be necessary on receipt by the Seller of further delivery details.

 

6.6.    If marine fuel is supplied on a credit basis and full payment is not received by the due date, Buyer shall immediately be in default. A service charge of 1,5% a month will be assessed on all late payments and shall be payable as subsequently directed by Seller. This shall be in addition to any other remedies which Seller may have by reason of such default.

 

6.7.    If buyer is in default of full payment, or if its financial condition in the Seller's opinion becomes impaired, or if proceedings in bankruptcy or insolvency are instituted by and or against Buyer, or in the case of liquidation or dissolution of Buyer, any and all postponed or deferred payments including interest thereon, shall become immediately due and payable and Seller reserves the right to offset same against any debts to buyer or its affiliates. Exercise of any such rights shall be without prejudice to Seller's rights to recover damages or losses sustained and resulting from any default by Buyer and Seller shall have the right to suspend deliveries hereunder.

 

6.8.    Seller reserves the right to modify or terminate any credit arrangement without notice and to demand payment in advance, further security or payment in anticipation of maturing invoices prior to accepting any marine fuel nomination. The amount due and payable by Buyer hereunder shall become a maritime lien on the vessel to which the marine fuel is delivered, and taking of any additional security measures by Seller shall not operate as a waiver of this provision. Buyer agrees that Seller may set off any claim against Buyer against any amounts due and owing to Buyer's affiliates.

 

7.   TITLE & RISK

 

7.1.    All deliveries shall be deemed complete and title and risk of losses shall pass to Buyer when the marine fuel has passed the flange connecting the delivery facilities provided by Seller. Thereafter, Seller shall in no event be responsible or liable for any loss or damage.

 

8.   LIABILITY

 

8.1.    Seller shall not be liable for any damage which the Buyer or any third parties sustain because of the alleged negligence or misconduct of Seller's contractees in the execution of the nomination or delivery.

 

8.2.    Seller does not warrant nor shall be deemed to warrant the safety of any place(s) or facility(ies) where Buyer's vessel loads and assumes no liability in respect thereof, except for loss or damage demonstrably caused by its failure to exercise reasonable care.

 

9.   DELAYS

 

9.1.    If Buyer, its agents, servants, vessel officers or vessel crew causes any delay to Seller's facilities in effectuating deliveries of fuel oils, Buyer shall pay demurrage to Seller at Seller's established rates and reimburse Seller for any and all other expenses in connection therewith.

 

10.   FORCE MAJEURE

 

10.1.  Seller shall not be in breach of its obligations hereunder to the extent that performance is prevented, delayed or (in the sole but reasonable judgment of Seller) made substantially more expensive as a result of any one or more of the following contingencies :

 

          a)  any cause beyond reasonable control of Seller;

 

          b)  labor disturbance, whether involving the employees of Seller or otherwise and regardless whether the disturbance could be settled by acceding to the demands of a labor group;

 

          c)  compliance with a request or order of any government authority or person purporting to act therefor;

 

          d)  shortage in raw material, transportation equipment, manufacturing capacity, or marine fuel from Seller's then contemplated source of supply, thereof or generally, not demonstrated by Buyer to be due to Seller's lack of diligence.

 

11.   CLAIMS

 

11.1.  Buyer waives any and all claims against Seller with respect to any claimed shortage in quantity, unless Buyer or Buyer's representative shall give written notice both to the terminal operator and to the Seller at the time of loading. Seller shall also be notified in writing of any claimed defect in the quality immediately after such alleged defects are discovered. Each of the foregoing preliminary notices shall be followed by a formal written notice of claim to Seller containing all details necessary to allow evaluation of the claim. IF BUYER FAILS TO GIVE ANY INITIAL NOTICE OR IF THE FORMAL WRITTEN NOTICE IS NOT RECEIVED BY THE SELLER WITHIN THIRTY (30) DAYS AFTER DELIVERY OF THE MARINE FUEL TO VESSEL, ANY CLAIM SHALL BE CONCLUSIVELY DEEMED TO HAVE BEEN WAIVED.

 

12.   WAIVER

 

12.1.  No waiver by either party of any breach of any of the terms and conditions herein contained to be performed by the other party shall be constructed as a waiver of any succeeding breach of the same or any other term or condition.

 

13.   INDEMNITY

 

13.1.  Buyer shall indemnify Seller against any and all damages and liabilities arising out of or resulting from any act(s) or omission(s) of Buyer, its servants, agents, vessel officers or vessel crew in connection with marine fuel delivery. Indemnification shall include all costs, reasonable attorneys fees and other damages, including but not limited to, the costs of compelling Buyer's compliance with these terms and conditions.

 

14.   ASSIGNMENTS

 

14.1.  Seller may assign its obligations in whole or in part or may cause any or all of its obligations hereunder to be performed by an affiliate.

 

14.2.  Buyer shall not assign any right and delegate any obligation under this GCS without the prior written consent of Seller.

 

 

 

 

15.   ENVIRONMENTAL PROTECTION

 

15.1.  If a spill occurs while marine fuels are being delivered, Buyer shall promptly take such action as is reasonably necessary to remove the spilled marine fuels and to mitigate the effects of such spills. Buyer shall cooperate and render such assistance as is required by Seller in the course of such action. All expenses, claims, losses, damages, liabilities and penalties arising from such spills shall be borne by the party that caused the spill, by a negligent act or omission. If both parties have acted negligently, all expenses, claims, damages, liabilities and penalties shall be divided between the parties in accordance with the comparative degree of negligence. The burden of proof to show Seller's negligence shall be on the Buyer. Buyer shall give Seller all documents and other information concerning any spill, any program for the prevention thereof, that are required by Seller or required by law or regulation applicable at the time and place of delivery.

 

16.   NOTICES

 

16.1.          Unless otherwise provided, all notices, statements and other communications, including invoices to be given, submitted or made hereunder by either party to the other, shall be sufficiently given if in writing and sent by post or by telegraph, telex or cable to the address designated by Buyer for invoicing or to the Seller at the address stated in the opening of the terms and conditions herein. Either party may change its designated address by giving fifteen (15) days prior written notice of its new address to the other party.

 

17.   CANCELLATION & BREACH

 

17.1.  If, because of the occurrence of any of the events referred to in Section 10.1, there is, in Seller's sole discretion, such a shortage of Seller's supply of the quality and grade of marine fuel or other petroleum products sold hereunder at the loading ports designated herein that Seller is unable to meet its own planned requirements and those of its subsidiary and affiliated companies and its requirements for sales to other customers of all kinds or otherwise, Seller may without liability withhold, reduce, suspend or cancel deliveries hereunder to such extent as Seller considers necessary in the circumstances.

 

17.2.          Notwithstanding the provisions of Sections 10.1 and 17.1, Buyer shall not be relieved of any obligation to make payments hereunder in U.S. dollars for all marine fuel delivered hereunder.

 

17.3.  Under no circumstances shall Seller be obligated to purchase or acquire marine fuel to replace supplies lost as a result of any of the events enumerated in Section 10.1. Should Seller thereafter purchase or otherwise acquire additional marine fuel of the same grade and quality, whether from a current supplier or otherwise, Seller shall not be required to allocate any such marine fuel to Buyer.

 

17.4.          Performance shall be excused as provided herein even though the occurrence of the contingency in question may have been foreseen or be foreseeable at the time of nomination acceptance or subsequently become foreseeable.

 

18.   ADDITIONAL PROVISIONS

 

18.1.  No claim shall be made and no recovery shall be had hereunder for any indirect special, incidental or consequential damages.

 

18.2.  This GCS shall be governed by the Brazilian law applicable in Rio de Janeiro, to the exclusion of any other legal system. Each party expressly submits itself to the jurisdiction of the Rio de Janeiro courts without prejudice to Seller's right to enforce maritime liens in any appropriate court.

 

18.3.  There is no implied warranty of workmanlike performance with respect to this GCS other that services provided by employees of Seller in conjunction with the delivery of marine fuels as provided for in this GCS.

 

18.4.  This GCS contains the entire agreement of the parties  with respect to the subject matter hereof and there are no other promises, representations or warranties affecting it and shall not be modified or amended in any except in writing by parties.