NATIONAL EXECUTIVE

Decree No. 9.495/1965

Ratifícase the agreement with an oil company, declaring itself of national interest.

Bs. As., 28/10/65

VISTO is requested by the State Secretariat for Energy and Fuel, and

CONSIDERING:

On 1 October 1965, the Commission established by Decree No. 744/63 on behalf of the National Executive Branch was signed in pursuance of the mission mandated by article 7 of the same decree, the Agreement with Union Oil Company of California, which aims to settle the relations arising from the instrument declared null by the aforementioned Decree No. 744/63;

That Union Oil Company of California has waived to demand the application of the clauses of the declared invalid instrument, in the future the relations between the parties, derived from such an annulment, by the provisions of the Agreement referred to in this decree;

That the Agreement subject to the retification of the National Executive adequately contemplates the rights of both parties and, without any deviation, the purposes of the declaration of invalidity, while ensuring to the Union Oil Company of California the perception of the amounts actually invested in the work, arbitrating an appropriate procedure for its determination, and compensation with those amounts previously perceived by the Petroliferous Fiscal Powers, with the exception of any violation

That the aforementioned Agreement also provides for the recognition and consequent compensation that the Oil Company of California makes to the Petroliferous Fiscal Yacimientos, in the corresponding proportion, for the economic damage that it experienced as a result of having been compelled to restrict its own production to give preference to oil extracted by the Company;

That the Petroliferous Public Prosecutor ' s Offices have been supplemented in the work carried out by the aforementioned Company, replacing it with the fiscal obligations of a national, provincial and/or municipal character that correspond and may affect the resulting liquid balance, as well as the interest of the amount to be paid;

That Decree No. 744/63, in its article 10, provided that the financial resources in foreign currency and in national currency required for the implementation of the provisions of the said decree shall be accorded to the Petroliferous Fiscal Deposits;

That, therefore, it is appropriate to provide for the allocation of credits in the general budget of the national administration for the provision of the necessary funds, as a non-State contribution to the Petroliferous Fiscal Deposits;

That the above and other agreed clauses have given satisfaction to the demand promoted, with the effect of Decree No. 744/63;

Therefore,

The President of the Argentine Nation,

Decrete:

Article 1 - Ratify the Agreement of 1 October 1965 between the Commission established by Decree No. 744/63, on behalf of the Executive Branch of the Nation, and Union Oil Company of California, whose text is an integral part of this decree.

Article 2 of the Agreement ratified in article 1 above, for the purposes set out in article 11 of Act No. 15,273, in respect of taxes, fees, rights or surcharges assumed by Fiscal Petroliferous Deposits as stipulated in article 3 of the Agreement with the Oil Company of California.

Art. 3rd - The expenditure that demands the fulfilment of the obligations referred to in the Agreement ratified by the present decree shall be charged to the provisions that are provided in the general budget of the National Administration of each exercise as a contribution without the charge of the National State to the Tax Petroliferous Deposits, by the State Secretariat of the Treasury having to make the budget forecasts for that purpose.

Art. 4° - Fiscal Petroliferous Foundations will incorporate into their heritage the capital assets resulting from the Agreement between the National Executive and the Oil Company of California.

Art. 5 - Note the H. Congress of the Nation.

Article 6 - This decree shall be endorsed by the Ministers Secretaries of State and signed by the Secretaries of State.

Art. 7° - Communicate, publish, give to the General Directorate of the Official Gazette and Prints and archvese.

ILLIA. - Miguel A. Zavala Ortiz. - Fernando Solá. - Carlos R. S. Alconada Aramburú. - Leopoldo Suarez. - Arturo Oñativia. - Juan S. Palmero. - Miguel A. Ferrando. - Alfredo Concepción. - Carlos A. García Tudero. - Walter F. Kugler. - Antulio F. Pozzio. - Manuel A. Pita. - Mario Romanelli. - Miguel A. Martínez. - Antonio Pagés Larraya.



Among Dr. Antulio F. Pozzio, Secretary of State of Energy and Fuels, Dr. Facundo R. Suárez, President of the Petroliferous Publication Taxes, on behalf of and representation of the Argentine Nation and of the Petroliferous Public Prosecutors, Dr. Alejandro R. Ahumada, Sub-Procurator of the Treasury of the Nation according to the Procuration, is best represented by

As a result of the negotiations between the Commission established by Art. 7th of Decree No. 744/63, on the one hand, and Union Oil Company of California (hereinafter referred to as the Company), on the other, regarding the provisions of the decree of the Superior Government of the Nation, The Company formulates in this act expresses waiver to request the application of any clause of the document that is individualized with the number 7.536 (Seven thousand five hundred thirty-six), of the Y. P. F. Both parties also undertake not to make any other claim, judicial or extrajudicial, present and/or future for any concept directly or indirectly linked to the above-mentioned document or any activities that may relate to it, other than those arising from the implementation of this agreement, and La Companía ceases to act in the relevant areas within the time limit specified in Article 1, all of this in accordance with the following articles:

First: At thirty (30) working days of the signing of this agreement, Y. P. F. will be charged directly, exclusive and exclusive of all the operations that the company carried out in the areas referred to in the above-mentioned document number 7.536, to the date of this agreement. — On the same occasion, Y. P. F. will take over on the property of all existing and affected movable and real estates to the areas to which
refers to the above-mentioned document No. 7.536, and the company assigns and transfers to Y. P. F. its property rights over such property, as well as all related to its research and work aimed at locating hydrocarbon reserves and the results of the mines, including all information of a geological, geophysical and technical nature in general, or of any other character that it has obtained as a result of its action in the areas concerned. In addition, Y. P. F. will occupy — if necessary — the offices and will use all the elements of the company that has exclusively for the conduct and administration of the areas referred to in document number 7.536. And. P. F. will use all the staff that the company has in service at the time of the agreement, except the one who chooses not to work at the orders of Y. P. F. or the superior staff whose services Y. P. F. does not consider necessary.

Second: Each party designates on the date three incumbent and three alternate representatives, in order to define the details necessary to be able to comply with the provisions of this convention.— Such representatives shall perform their duties within a term of thirty (30) working days of mutual agreement, and submit their conclusions to the approval of the Commission referred to in Art. 7th Decree No. 744/63 and that of the company, which shall be issued within a maximum period of thirty (30) working days. — The points on which there is ultimately no agreement shall be subject to a court decision.

Tereero: Any tax, right, surcharge, tax, rate and/or royalty are national, provincial and/or municipal, including customs, as well as interest, surcharges and/or fines that may increase the amount of the same, which should apply to the company, its contractors, operators and/or agents according to the above-mentioned document. However, if the company, its contractors, or estors and/or agents, were intimated to precede the payment of any amount for the concepts set out in paragraph 1 of this article, the State and/or Y. P. F. will proceed to make available to them, as necessary in advance, the funds required to give effect to the said intimation and the same will subrogate to Y. P. F. in the corresponding rights and payment.

Fourth: Y. P. F. will return to the company the actual and appropriate sums invested by the company in the installations, works and works that are necessary and directly related to the exploration, development and exploitation of the areas, according to what results from the application of Art. 6°, from the initiation of the operations to the date on which Y. P. F. takes over the areas, as established in Art. 6°. 1st of this agreement. — On the other hand, the company recognizes as part of this refund:

(a) All amounts delivered by Y.P.F. to the company, from the start of operations set out in document No. 7.536, until 30 November 1964, which add to this last date u$s. 3.177.607, 19.

(b) All amounts from 1 December 1964 to the date on which Y. P. F. takes over the areas, as set out in Art. 1st of this agreement, Y. P. F. has delivered to the company, either in cash or in species for any emerging concept of document No. 7.536.

(c) Payments made by the State and/or Y. P. F. on behalf of the company, as a result of the precited document No. 7.536 and provided that such payments do not correspond to the obligations assumed by Y. P. F. on the basis of the third article of this agreement.

(d) All taxes, royalties, fees, fees, etc. that Y. P. F. paid or of those who take charge on account of the company, or
which are pending payment, according to the provisions of Art. 3rd precedent, provided that they do not correspond to the obligations assumed by Y. P. F. according to the third article of this agreement. — Reimbursements referred to shall be made in the same currencies that have been properly used when making investments and/or payments. - Y. P. F. will not recognize any compensation derived from emerging obligations of contracting made by the company, for work related to the development and exploitation of the area, whether that compensation is the result of contracting of jobs and/or services already completed or of contracts that are in force at the time when Y. P. F. takes over the areas decides to interrupt them. — Compensation to the staff of the company that had been paid prior to the date of Decree No. 744/63 shall be included as the expense of the exploitation; however, those produced after the date of Decree No. 744/63 shall be exclusively the responsibility of the company.

Fifth: The company will recognize and compensate Y. P. F. in the proportion that corresponds to it for the economic damages it experienced as a result of having been compelled to restrict its own production to give preference to the oil extracted by the company.

To that end, the parties agree to set the amount of this compensation at u$s. 216,000. This sum shall be deducted from the amount of the firm recognized company's investment in this act in the manner prescribed by Article 7 (a). — The parties record that Union Oil Company has not incurred the following assumptions and that it does not therefore owe any amount in such concepts:

(a) Good rules of engineering for oil extraction have not been followed, resulting in excessive flooding or uneven progress in water, as a result of too intense exploitation and without the necessary regulation, especially of marginal wells, and

(b) By devaluation and devaluation caused by irrational exploitation or by inadequate storage.

Sixth: Having been determined by the study conducted by Y. P. F. of the investment account until 31 August 1964 submitted by the company, which can be accepted firmly the sum of u$s. 7,342,900, the parties agree to the following: Of the total of u$s. 11.692.459, 92 that the company presented as the value of investments made and accounted for by it until 31 August 1964, Y. P. F. recognizes from now on, in firm, the sum of u$s. 7,342,900. — This amount accepted in firm, will be settled in the form set out in Art. 7°. — The Commission designated in Article 2 shall conduct the study of the total amount of the investments reported by the company and, for the purposes specified in Article 4°, shall apply to the partials that make up the total, the removals that correspond, which together shall not exceed the amount not recognized in firm.

Seventh: The final balance that the debtor must return to the creditor shall be paid as follows:

(a) Within thirty (30) business days of signing this agreement Y. P. F. will pay the company the balance resulting from the recognized investment in firm u$s. 7.342,900, except the amounts appropriate to be deducted, until 30 November 1964, by the concepts mentioned in the Arts. 4°, subparagraphs (a) and (c) and 5°, all converted to dollars at the rate of exchange prevailing on the date of each payment and/or charge. The values referred to in Article 4 (b) and (d) which, after 30 November 1964, are not considered in the liquidation set out in this Article, shall be deducted from the balance to be paid to the company, in accordance with Article 6. — The share of investments made by the company that is recognized in this event, in firm, and those that are recognized in the future, as well as the payments and/or charges that correspond to deduct in favor of Y. P. F. will be added with the corresponding interest computed to the rate of six percent (6 %) per year, from the first calendar day of the month following which each investment and/or payment date and/or payment has been made. The resulting balance by capital and interest shall be paid through the delivery of twenty-four (24) notes with bank approval, with the amount of each document fixed in the 1/24 part of the corresponding balance. — The menoonized documents will have maturity: the first to the three hundred and sixty-five (365) days of signing this agreement and the subsequent ones every ninety days from the expiry of the first. — The amounts of the above-mentioned payees will accrue computed interest at the rate of 6 per cent (6 per cent) per year from the date of their issuance to the date of their expiry, which will be added in each case to the respective payable. — U.S. dollars will be released on the city of New York, United States, and will be paid at Y.P.F.'s offices in that city. — The documents given in payment shall not be discounted, negotiated or transferred by the company, to which name they shall be extended, either in this square or on any other outside until a calendar year has passed since the signing of this agreement.

(b) As you verify and accept, in short, amounts that exceed the already recognized sum of u$s. 7.342,000, such amounts will be paid through the delivery of documents of equal conditions and characteristics than the preceding, with also quarterly maturity.

(c) If the study to be carried out by the Commission referred to in Art. 2° it will be established that some investments are computed in national currency, such inversians will be liquidated in the same currency and the interest will be settled by applying the rates of the Banco de la Nación Argentina for discounts of public works certificates, valid at the time of investment and/or payment.

Octavo: Judicial and/or extrajudicial costs and expenses will be borne in the order caused. In the event of designation of experts, each party shall bear the fees that may correspond to those proposed by each party. The experts proposed by the National Government shall not receive any remuneration in accordance with the provisions of Art. 8th Decree No. 744/63. The designation of the third expert in the event that it was necessary, shall be made on the proposal of the parties, and shall be vested in one of the Deans of the Schools of Engineering of the National Universities, and the corresponding fees shall be assigned to enlarge the funds of the respective Faculty. In case there is no agreement between the parties about the Dean to designate, he will be elected by the Inter-University Council, among all the Deans of the Faculty of Engineering. The seal tax, if it is appropriate that this instrument is grave, will be carried out by Y. P. F.

Ninth: The company will supply Y. P. F. within the thirty (30) working days from the date of this agreement, all informations of a geological, geophysical, technical character in general or of any other character that it has obtained as a result of its performance in the areas corresponding to that document number 7.536.

Tenth: This agreement is signed in Buenos Aires, on the one day of October of the year, a thousand nine hundred and sixty-five Dr. Antulio F. Pozzio, Secretary of State for Energy and Fuels, Dr. Facundo H. Suárez, President of the Petroliferous Fiscal Developments, and Dr. Alejandro R. Ahumada, Sub-Procurator of the Treasury of the Nation by the Procuration on the one hand, and Mr. Charles Stanley Martin, representative of Union Oil Company of California, on the other in two copies of the same tenor and only one effect; the same will be ratified by decree of the Executive, in the cars: "National Government and another c/Union Oil Company of California s/determination of legal effects of Decree No. 744/63" that deal with the National Civil and Commercial Court No. 3 of Dr. Jorge R. Pastor, Secretariat No. 42 by Dr. Jorge G. Anderson, in order to effect the transformation of the actions established by both parties, reducing the procedural scope of the contests and surrendering the accounts required by the actors, if the agreements referred to in articles 2 and 6 and 7 (b) were not obtained, and will eventually be communicated to the H. Congress of the Nation.


"It is resolved that Charles Stanley (Carlos Stanley) Martin, Manager of the branch in the Argentine Republic of Union Oil Company of California, be authorized as it is for the present, to negotiate with representatives of the Government of the Argentine Republic and/or of Fiscal Petroliferous Seeds (YPF) and with the officials and directors of the same, regarding the solution of the divergence that currently exists in relation to the company's contract with the company. "It is also resolved that Charles Stanley (Carlos Stanley) Martin is authorized as it is for the present, to grant on behalf of the Company the documents that he considers necessary or appropriate to solve that divergence, even, without limitation, an agreement that establishes the derogation or termination of the existing contract.

I subscribe, R. O. Hedley, a Prosecretary of Union Oil Company of California, certifico that the precedent is faithful, true and correct copy of resolutions adopted unanimously at a meeting of the Executive Committee of the Board of Directors of that Company, held in the main office of the corporation in Los Angeles, State of California, on Monday, 15 June, thousand nine hundred sixty-four, meeting in which there were quorum at all times and during the effect. — I also certify that the following is a faithful, true and correct copy of Article 2 of Chapter V of the Statutes of Society, namely: Article 2. Schools. The Executive Committee, during the intersessional intervals of the Board, shall have, and shall be hereby granted all the powers and authorizations of the Board in the administration of the business and affairs of the Company, except to declare dividends, adopt, modify or repeal Statutes, set the compensation of its own or fill the vacancies that occur within it.'' — In testimony, I sign and stamp the stamp of the Company on June 15, 1964. A signature: R. O. Hedley. Prosecretary. Union Oil Company of California. There is a stamp in relief of this Company. — On a signed form: State of California, Los Angeles County. On 15 June, a thousand nine hundred and sixty-four, before me, the subscriber, Public Scribe in and for the aforementioned State, personally appeared R. O. Hedley, who finds me to be Prosecretary of Union Oil Company of California, the conferred corporation of the previous instrument, person of my knowledge and who granted on behalf of that corporation that document, recognizing that it was done in accordance with the Statutes of the Board itself or with a resolution of the Board.

In testimony, I sign and stamp my official seal. A signature: Jo Anne Quintin, Public Writer in and for the aforementioned State: valid authorization until January 14, 1967. Seal in relief of the aforementioned Scribe, printed on red background. — In the form attached: State of California, County of Los Angeles, William G. Sharp, Secretary of the County and Supreme Court of the State of California, in and for the County of Los Angeles, Court of registration with authorized stamp, for the present certifies that Jo Anne Quintin was on that date, Public Writer in the County of Los Angeles, duly designated and sworn, with residence in it and that as a staff member of the State is properly certified — In testimony, sign and stamp the seal of the Supreme Court of the State of California, in Los Angeles County, on June 15, 1964. A signature: William G. Sharp, Secretary. Sello en relief sobre oblea dorada, de la Suprema Corte del Condado de Los Angeles, estampado a la vez en el formulario y en la foja principal del documento, al dorso de la cual aparece las legalizaciones por el Consulado Argentino en Los Angeles, California, con fecha 16 de junio de 1964, y por el Ministerio de Relaciones Exteriores de la República Argentina, de fecha 19 de junio de 1964. — It is a faithful translation of the original in English that I have had in my sight and to which I refer. — Get a certificate regarding resolutions of the Executive Commission of the Directory of Union Oil Company of California. - Buenos Aires, on the twenty-four days of June of the year, a thousand nine hundred sixty-four. - Clara Robine. — Volume I, F° 143 and 186.