Four Party Agreement - Agreed Form 18Mar11

AGREED FORM BANCO DE DESARROLLO ECONÓMICO Y SOCIAL DE VENEZUELA (BANDES), PETRÓLEOS DE VENEZUELA S.A., CHINA NATIONAL UNITED OIL CORPORATION AND AND CHIN CHINA A DEVE DEVELO LOPM PMEN ENT T BANK BANK CORP CORPOR ORAT ATIO ION N CONF CONFIR IRM M THAT THAT THIS THIS VERSION OF THE FOUR PARTY AGREEMENT IS THE FORM AGREED IN THEIR MEETINGS IN BEIJING AND SINGAPORE FROM 2 MARCH TO 18 MARCH 2011 AND IS IN SU SUBS BSTA TANT NTIA IALL LLY Y AGRE AGREED ED FORM FORM SU SUBJ BJEC ECT T TO REVI REVIEW EW BY LOCA LOCAL L COUNSEL, INTERNAL APPROVALS OF EACH PARTY, AND ANY AMENDMENTS OF A MINOR OR TYPOGRAPHICAL NATURE.

Ms Edmee Betancourt President For and on behalf of

Mr Tian Yunhai Deputy Director-General For and on behalf of

BANCO DE DESARROLLO ECONÓMICO Y SOCIAL DE VENEZUELA (BANDES)

CHINA DEVELOPMENT BANK CORPORATION

Mr Asdrubal Chavez Vice President For and on behalf of

Mr Zhao Yong Vice President For and on behalf of

PETRÓLEOS DE VENEZUELA S.A.

CHINA NATIONAL UNITED OIL CORPORATION

………………………….. 2011

BANCO DE DESARROLLO ECONÓMICO Y SOCIAL DE VENEZUELA (BANDES)

PETRÓLEOS DE VENEZUELA S.A.

CHINA NATIONAL UNITED OIL CORPORATION

and

CHINA DEVELOPMENT BANK CORPORATION

FOUR PARTY AGREEMENT

D:\Project Tango - 18 Mar 2011\Four Party Agreement - Agreed Form 18Mar11.DOC

1

AGREED FORM

TABLE OF CONTENTS

Clause

Headings

Page

1. DEFINITIONS AND INTERPRETATION.................... ........................................... ............................................. ...................... 4 2. PETROLEUM SALES AND PURCHASE CONTRACT.................... ............................. ............... ............ ........ ..5 5 3. AGREEMENT AS TO PAYMENT...................... ............................................. ................................. ................ ............ ............ ......... ... 5 4. DELIVERY AND SHIPMENT PROOF PROOF....................... ........................................... .......................... ............ ............ ............ ........ ..6 6 5. PAYMENT OF PROCEEDS..................... ............................................ .............................................. ...................................... .................... ..... 6 6. PROSPECTIVE DEBT SERVICE COVER RATIO ....................... ....................................... ...................... ............ ...... 7 7. DEALINGS WITH RESPECT TO THE PETROLEUM SALES AND PURCHASE CONTRACT..................... ............................................ .............................................. ................................ ............... ............ ............ ........ 8 8. REPRESENTATIONS AND WARRANTIES...................... .......................................... .......................... ............ ............ ...... 9 9. ADDITIONAL PDVSA REPRESENTATIONS AND WARRANTIES ........... ................. ........ ..10 10 10. PDVSA UNDERTAKINGS....................... .............................................. ......................................... ........................ ............ ............ ........ ..11 11 11. PURCHASER UNDERTAKINGS UNDERTAKINGS..................... ............................................ ........................................ ....................... ............ ........ 12 12. DURATION AND EFFECT OF THIS AGREEMENT....................... ...................................... .................... .....12 12 13. NOTICES.................... ........................................... .............................................. ............................................. ............................. ............. ............ ........... ..... 12 14. GENERAL GENERAL....................... .............................................. .............................................. .............................................. ......................................... .................... 14 15. CONFIDENTIAL INFORMATION ....................... .............................................. .............................................. .......................... ...14 14 16. ASSIGNMENT..................... ............................................ .............................................. .............................................. ..................................... .............. 15 17. WAIVER OF IMMUNITY...................... ............................................. .............................................. ...................................... .................. ... 15 18. GOVERNING LAW AND JURISDICTION..................... ............................................ ...................................... ............... 16 SCHEDULE 1.........................................................................................SIDE LETTER ...................................................................................................................18


2

AGREED FORM

THIS AGREEMENT is made as a Deed on [●], 2011. AMONG: (1)

BANC BANCO O DE DESA DESARR RROL OLLO LO ECON ECONÓM ÓMIC ICO O Y SO SOCI CIAL AL DE VENE VENEZU ZUEL ELA A (BANDES), an entity organised and existing under the Laws of the Bolivarian Republic of Venezuela, and subject to the oversight of the Ministry of People's Power for Planning and Finance of the Bolivarian Republic of Venezuela, created by Presidential Decree No 1.274 as published in Venezuelan Official Gazette No. 37.228 of June 27, 2001, as amended by Presidential Decree No. 6.214 dated July 15, 2008 as published in Venezuelan Official Gazette No 5.890 on July 31, 2008, as further amended by the Law for the Partial Reform of Decree No. 6.214 as published in Venezuela Official Gazette No. 39.429 on May 21, 2010 ("BANDES");

(2)

PETRÓLEOS DE VENEZUELA S.A. , a company registered with the First Commercial Registry of the Judicial Circuit of the Capital District and Miranda State on September 15, 1975 1975,, unde underr No. No. 23, 23, Volu Volume me 99-A 99-A-P -Pro ro., ., the the late latest st vers versio ion n of its its Arti Articl cles es of Incorporation/By-Laws evidenced through Presidential Decree No. 3.299, published in Venezuelan Official Gazette No. 38.081 of December 7, 2004 as amended by Presidential Decree No. 6.234, published in Venezuelan Official Gazette No. 38.988 of August 6, 2008, being its charter of incorporation and by-laws restated as per document registered with the First Commercial Registry of the Judicial Circuit of the Capital District and Miranda State on January 5, 2009, under No. 42, Volume 1-A-Pro., File 73023, with principal offices of URB. La Campiña, Campiña, Avda. Libertador Libertador,, Calle el Empalme Empalme EDIF. Petróleos Petróleos de Venezuela, Venezuela, Torre Oeste, Piso 7 Venezuela 1060 ( "PDVSA");

(3)

CHINA NATIONAL UNITED OIL CORPORATION , a company duly incorporated and validly existing under the laws of the People's Republic of China with its registered office at No. 27, Chengfang Street, Xicheng District, Beijing, the People's Republic of China, 100033 ( "Purchaser"); and

(4)

CHINA DEVELOPMENT BANK CORPORATION of No. 29, Fuchengmenwai Street, Xicheng District, Beijing, the People's Republic of China, 100037 ( "CDB").

WHEREAS (A)

CDB and BANDES BANDES have have ente entered red into into a facil facility ity agre agreeme ement nt date dated d on or or about about the date date of of this this Agre Agreem emen entt purs pursua uant nt to whic which h CDB CDB will will prov provid idee a USD USD term term loan loan faci facili lity ty of up to US$4 US$4,0 ,000 00,0 ,000 00,0 ,000 00 in two two tran tranch ches es (the (the "Facility") to BANDES (the "Facility Agreement").

(B) (B)

BANDE ANDES S shall all use the proc procee eeds ds of the the Faci Facili lity ty in acco accord rdan ance ce with with the the ter terms and and conditions set out in the Facility Agreement.

(C) (C)

PDVS PDVSA, A, acting acting on on behal behalff of the Boliv Bolivar arian ian Rep Repub ublic lic of of Venez Venezue uela la thro throug ugh h the PDVSA PDVSA Subsidiary, and Purchaser will enter into a sales and purchase contract dated on or about the date of this Agreement (the "New Petroleum Sales and Purchase Contract" ).

(D)

The sales sales procee proceeds ds gene generat rated ed under under the the New New Petrole Petroleum um Sales Sales and and Purch Purchase ase Cont Contrac ractt shall shall be applied towards satisfaction of the Borrower's obligations under the Facility Agreement.


3

AGREED FORM

NOW IT IS HEREBY AGREED as follows: 1.

DEFINITIONS AN AND IN INTERPRETATION

1.1

Definitions Unless otherwise defined herein, or the context requires otherwise, terms defined in the Facili Facility ty Agreemen Agreementt shall shall have the same meaning meaning when used in this Agreemen Agreement. t. In addition: means fuel fuel and/or and/or crude crude oil of Venezu Venezuela elan n origin origin as suppli supplied ed by "Export "Export Goods" Goods" means PDVSA, PDVSA, acting acting on behalf behalf of the Boliva Bolivaria rian n Republ Republic ic of Venezu Venezuela ela throug through h PDVSA PDVSA Subsidiary, in accordance with the Petroleum Sales and Purchase Contracts; "First Supply Date" means 19 February 2012;

"Party" means a party to this Agreement and includes its successors in title, permitted assigns and transferees; means PDVSA PDVSA Petróle Petróleo o S.A., S.A., a wholly wholly owned owned subsid subsidiary iary of "PDVSA Subsidiary" Subsidiary" means PDVSA organised under the laws of Venezuela and acting as the seller under the New Petroleum Sales and Purchase Contract;

"Termination Date" means, the latest to occur of:

1.2

(i)

the Final Repayment Date; and

(ii) (ii)

the the unco uncond ndit ition ional al and and irr irrev evoc ocab able le pay payme ment nt and and disc discha harg rgee in full full of of all all pres presen entt and and future liabilities of the Borrower under or in relation to the Facility Agreement (including without limitation all liabilities of the Borrower arising out of any extens extension ion,, variati variation, on, modifi modificat cation ion,, reinst reinstate atemen mentt or nov novatio ation n of the Facilit Facility y Agreement).

Interpretation Unless a contrary indication appears, any reference in this Agreement to: 1.2.1

"Agreement" means this agreement, as may be amended from time to time;

1.2. 1.2.2 2

Clau Clause sess are are ref refer eren ence cess to to clau clause sess of of this this Agr Agreem eemen ent; t;

1.2.3 1.2.3

the singul singular ar shall shall incl include ude refere reference ncess in in the the plural plural and vice vice vers versa; a;

1.2.4 1.2.4

the words words "inc "includ lude" e" and and "inc "includ luding ing"" are are to be cons constru trued ed with without out limitat limitation ion;;

1.2.5

a "Person" includes any person, firm, company, corporation, government, state or agency of a state, or any association, trust or partnership (whether or not having separate legal personality) or two or more of the foregoing;

1.2.6

the "winding-up" of a Person also includes the amalgamation, reconstruction, reorganisation, administration, dissolution, liquidation, appointment of any receiver, liquidator or insolvency officer, merger or consolidation of that Person, and any equivalent or analogous procedure under the law of any jurisdiction in which that Person is incorporated, domiciled or resident or carries on business or has assets;


4

AGREED FORM

1.2.7 1.2.7

a docum document ent or any any other other agreeme agreement nt or or instr instrume ument nt (inc (includ luding ing this this Agree Agreemen ment), t), or to a provision contained in any of these, is a reference to it as amended, novated, supplemented, extended, restated, renewed or replaced; and

1.2. 1.2.8 8

Clau Clause se head headin ings gs are are for for ease ease of of ref refer eren ence ce only only..

1.3

Except Except as prov provide ided d in this this Agree Agreemen ment, t, the the term termss of of this this Agre Agreeme ement nt may may be be enfor enforced ced only only by a Party.

2.

PETROLEUM SA SALES AN AND PURCHASE CONTRACT

2.1

Subject to to Clause 2.2 below, PDVSA shall from the First Supply Date, through the PDVSA Subsidiary, deliver to the Purchaser, on behalf of the Bolivarian Republic of Venezuela, and the Purchaser shall purchase, purchase, Export Goods of 230,000 Barrels of fuel and/or crude crude oil per day (as may be adjusted in accordance with this Agreement and/or the New Petroleum Sales and/or Purchase Contract) until the Termination Date pursuant to and in accordance with the New Petroleum Sales and Purchase Contract and to ensure that the Actual Debt Service Cover Ratio is not less than 1.3 at the times required under the Facility Agreement.

2.2

Clause 2.1 above shall not prevent PDVSA (through the PDVSA Subsidiary), acting on behalf of the Bolivarian Republic of Venezuela, from increasing the Barrels of Export Goods specified in Clause 2.1 above pursuant to or otherwise in accordance with this Agreement.

2.3 2.3

In the the event event this this Agre Agreem emen entt requi requires res an an incre increas asee in the Barr Barrels els to to be deliv deliver ered ed unde underr the New Petroleum Sales and Purchase Contract, PDVSA shall cause the PDVSA Subsidiary to deliver to the Purchaser, on behalf of the Bolivarian Republic of Venezuela, and the Purchaser shall purchase, such increased Barrels.

3.

AGREEMENT AS TO PAYMENT

3.1 3.1

PDVS PDVSA A shall shall caus causee the PDVSA PDVSA Subs Subsid idiar iary y to irrev irrevoc ocab ably ly inst instru ruct ct the the Purch Purchas aser er to pay, pay, and the Purcha Purchaser ser shall pay, all amounts amounts due to PDVSA PDVSA Subsid Subsidiar iary y und under er the New Petrole Petroleum um Sales Sales and Purcha Purchase se Contra Contract ct in USD direct directly ly into into the Collect Collection ion Accoun Accountt pursuant to the Petroleum Sales and Purchase Contract and in accordance with the Letters of Instruction.

3.2 3.2

With With resp respec ectt to each each deli delive very ry of the Expo Export rt Good Goods, s, PDVS PDVSA A shal shalll proc procur uree the PDVSA PDVSA Subsidiary, no later than the date when the three-day loading window for such Export Goods is confirmed by the PDVSA Subsidiary and the Purchaser, to irrevocably inform the Purchaser in writing (with a copy to CDB) of the expected loading quantity, expected loading date and expected payment date.

3.3 3.3

Each Each of of PDVS PDVSA A and and the the Purc Purcha hase serr ack ackno nowle wledg dges es and and agr agree eess that that:: 3.3. 3.3.1 1

PDVS PDVSA, A, actin acting g on beha behalf lf of the the Boliv Bolivar aria ian n Repub Republic lic of of Venez Venezue uela la thro throug ugh h the PDVSA PDVSA Subsid Subsidiary iary,, and the PDVSA PDVSA Subsid Subsidiary iary,, shall shall remain remain liable liable for the perfo performa rmance nce of all of the PDVSA Subsid Subsidiar iary's y's obligation obligationss und under er the New Petro Petrole leum um Sales Sales and and Purch Purchas asee Cont Contra ract ct and and BAND BANDES ES shal shalll not not have have any any obligations or liabilities to the Purchaser in respect of the New Petroleum Sales and Purchase Contract; and


5

AGREED FORM

3.3.2 3.3.2

BANDES' BANDES' obliga obligation tionss unde underr the the Facil Facility ity Agreem Agreement ent are indepe independe ndent nt and and abso absolute lute and shall not in any manner be affected, impaired, reduced, released or prejudiced by any act or omission to act on the part of PDVSA, the PDVSA Subsidiary, Purchaser or any other party to any of the Transaction Documents or by any unenforceability, illegality or invalidity of any obligation of any person under any Transaction Document or any other document or security.

4.

DELIVERY AND SHIPMENT PROOF

4.1

PDVS PDVSA A unde ndertak rtakes es to caus causee PDVS PDVSA A Subs Subsid idia iary ry to sell sell and and deli delive ver, r, and and Pur Purchas chaser er undertakes to take delivery of, and make payment for, the Export Goods (including those delivered pursuant to Clause 6.1 below) in accordance with the New Petroleum Sales and Purchase Purchase Contract in such manner and at such times that in respect respect of any Interest Interest Period following the First Supply Date, the value of such trade: 4.1. 4.1.1 1

is at leas leastt equ equiv ival alen entt to to the the Requ Requir ired ed Amou Amount nt;; and and

4.1. 4.1.2 2

is suff suffic icie ient nt to ensur ensuree that that,, on the the date date fall fallin ing g 30 days days prio priorr to each each Inte Intere resst Payment Date the Actual Debt Service Cover Ratio is not less than 1.3.

4.2 4.2

The The Purch Purchas aser er shal shalll subm submit it to CDB CDB with within in two two (2) (2) Busi Busine ness ss Day Dayss of rece receip iptt of the the same same a copy of each bill of lading and commercial invoice in respect of each shipment of Export Goods under the New Petroleum Sales and Purchase Contract.

4.3

On or or befor beforee the last last day day of each Intere Interest st Peri Period od in in relat relation ion to a Facilit Facility, y, the the Purch Purchase aserr shall shall provide provide a statement statement to CDB containing containing the details details of each delivery delivery that has been made in accordance with the New Petroleum Sales and Purchase Contract for such Interest Period and in each case, the statement shall include details of the time for each delivery, the quantity of each delivery, and the price and payment status in respect of each delivery and the amount paid into each Collection Account.

4.4

For the avoida avoidance nce of doub doubt, t, the the Parti Parties es agre agreee that that the the term termss of the New Petrole Petroleum um Sale Saless and and Purchase Contract shall be such to ensure compliance with Clause 4.1 above.

5.

PAYMENT OF PROCEEDS

5.1

The The Part Partie iess agre agreee tha that the the Purc Purch haser aser sha shall pay all amou amoun nts payab payable le under nder the New Petro Petrole leum um Sales Sales and and Purc Purcha hase se Cont Contra ract ct dire direct ctly ly into into the the Colle Collecti ction on Acco Accoun untt and and acknowledge and agree that the amounts standing to the credit of the Collection Accounts shal shalll be appl applie ied d in acco accord rdan ance ce with with Clau Clause se 16 ( Collection the Facil Facility ity Collection Account Account ) of the Agreement.

5.2 5.2

PDVS PDVSA, A, acti acting ng on beh behal alff of the the Boliv Bolivar arian ian Rep Repub ublic lic of of Venez Venezue uela la thro throug ugh h the PDV PDVSA SA Subsidiary, and BANDES acknowledge and agree that payment of the amounts to be made by the Purchaser into the USD Collection Account shall: 5.2. 5.2.1 1

cons consti titu tute te good good rece receip iptt of the same same amoun amountt unde underr the the Petr Petrol oleu eum m Sale Saless and and Purchase Contract; and

5.2.2 5.2.2

consti constitut tutee proce proceeds eds derived derived from from the the sale sale of of royal royaltie tiess in specie specie paid paid by by PDVSA PDVSA to to the Bolivarian Republic of Venezuela pursuant to applicable laws of Venezuela.


6

AGREED FORM

5.3 5.3

The The Purch Purchas aser er unde undert rtak akes es to BAN BANDE DES S and CDB CDB that that it will will perfo perform rm all all of its obl oblig igat atio ions ns under and in accordance with the New Petroleum Sales and Purchase Contract.

5.4 5.4

PDVS PDVSA A under undertak takes es to BAN BANDE DES S and CDB CDB that that the the PDVSA PDVSA Subs Subsid idiar iary y will will perf perfor orm m all of of PDVSA Subsidiary's obligations under and in accordance with the New Petroleum Sales and Purchase Contract.

5.5

The Purcha Purchaser ser und undert ertake akess to make make payme payment nt for for the the Expo Export rt Good Goodss delive delivered red und under er the the New New Petroleum Sales and Purchase Contract on the terms and conditions specified therein in order for BANDES to comply with its obligations to CDB under the Facili ty Agreement.

5.6 5.6

The The Purch Purchas aser er agre agrees es that that all all payme payment ntss to be mad madee by it unde underr the New New Petr Petrol oleu eum m Sales Sales and Purcha Purchase se Contra Contract ct shall shall be made made withou withoutt any withho withholdin lding, g, set-of set-off, f, deduct deduction ion or counterclaim.

6.

PROS OSP PECTIVE IVE DEBT SERVICE COVER RATIO

6.1

If, on on any any date date in which which the the Prospe Prospectiv ctivee Debt Debt Servic Servicee Cover Cover Ratio Ratio is calcul calculate ated, d, the the price price of of Export Goods is such that the Prospective Debt Service Cover Ratio is less than 1.3, either: 6.1.1

6.1. 6.1.2 2

6.2 6.2

PDVSA shall: (A) (A)

proc procur uree that that part part or all all of the the proc procee eeds ds gen gener erat ated ed from from the the sale sale of of Expor Exportt Good Goodss by PDVS PDVSA, A, actin acting g on beha behalf lf of the the Boli Boliva vari rian an Repu Republ blic ic of Venezuela through PDVSA Subsidiary, to the Purchaser (in addition to those those procee proceeds ds due in respec respectt of the Petroleum Petroleum Sales and Purchase Purchase Contracts) or to any other party (in each case, to the extent permitted under Venezuelan law), are deposited into the Collection Account to ensure ensure that the Actual Debt Service Cover Ratio on the 35 th day prior to the next immediate Interest Interest Payment Date is equal to or greater greater than 1.3 and, to the extent necessary PDVSA may, but is not obliged to, apply to the Bolivarian Republic of Venezuela for instructions to sell additional Export Goods on behalf of the Bolivarian Republic of Venezuela in order to ensure that the Actual Debt Service Cover Ratio on the 35 th day prior to the next immediate Interest Payment Date is equal to or greater than 1.3; or

(B) (B)

actin acting g on the the inst instru ruct ctio ion n of the the Boliv Bolivar aria ian n Repub Republic lic of of Venez Venezue uela la or as as otherwise permitted under Venezuelan law, cause PDVSA Subsidiary to increase the volume of Export Goods delivered pursuant to the New Petroleum Sales and Purchase Contracts (and notify CDB of any such increase), such that the total value of Export Goods to be delivered to the Purchaser pursuant to the New Petroleum Sales and Purchase Contract for that Interest Period causes the Actual Debt Service Cover Ratio to be no less than 1.3 on the date falling 35 days prior to the next immediate Interest Payment Date; or

the the Borro Borrowe werr shall shall pay pay an amoun amountt direc directly tly to to the Colle Collect ctio ion n Accou Account nt to ensu ensure re th that the Actual Debt Service Cover Ratio on the 30 day prior to the relevant Interest Payment Date is no less than 1.3.

In the the event event that that the the PDVSA PDVSA Subsid Subsidia iary ry incr increa ease sess the Barr Barrel elss of Expor Exportt Goods Goods deliv deliver ered ed under the New Petroleum Sales and Purchase Contract pursuant to this Agreement, the


7

AGREED FORM

Purcha Purchaser ser und underta ertakes kes to purcha purchase se such such additio additional nal Barrels Barrels and to make make paymen payments ts in accord accordanc ancee with with the New Petrol Petroleum eum Sales and Purchase Purchase Contra Contract ct in respec respectt of the additional Barrels delivered. 6.3

Notwithstanding Clause 6.1 above, BANDES agrees and acknowledges that it is, and shall at all times and under all circumstances be, liable for the full repayment of all amounts owing to CDB pursuant to the Facility Agreement.

6.4 6.4

PDVS PDVSA A acknow acknowle ledg dges es the the instr instruc uctio tions ns cont contain ained ed in the the Letter Letterss of Instr Instruc uctio tion n and shal shalll procure that all amounts due in respect of the sale of Export Goods to which the Letters of Instruction relate shall be paid directly to the Collection Account or the Existing Collection Account (as the case may be).

6.5 6.5

On the the first first day day of each each Inte Intere rest st Peri Period od,, CDB shal shalll send send a noti notice ce to each each of PDV PDVSA SA,, BANDES and the Purchaser setting out: 6.5.1 6.5.1

the Averag Averagee Pric Pricee of of Expo Export rt Goods Goods in respec respectt of of that that Intere Interest st Period Period;;

6.5. 6.5.2 2

the the calcu calcula latio tion n of the the Pro Prosp spec ectiv tivee Debt Debt Serv Servic icee Cove Coverr Ratio Ratio;;

6.5. 6.5.3 3

base based d on the the calc calcul ulat atio ion n of the the Pros Prospe pect ctiv ivee Debt Debt Servi Service ce Cover Cover Ratio Ratio,, the the estimated amount of any shortfall (if any) in the Collection Account on the next calculation date of the Actual Debt Service Cover Ratio; and

6.5. 6.5.4 4

the the amoun amountt of princ princip ipal al and and inter interes estt and any any other other amou amount ntss due and and paya payable ble in in respect of that Interest Period.

7.

DEAL DEALIN INGS GS WIT WITH H RESP RESPEC ECT T TO THE THE PET PETRO ROLE LEUM UM SAL SALE ES AND AND PURC PURCHA HASE SE CONTRACT

7.1

PDVSA, PDVSA, the Purcha Purchaser ser and BANDES BANDES shall shall not, not, and PDVSA PDVSA shal shalll proc procure ure that that the the PDVSA PDVSA Subsidiary shall not, assign, transfer, novate and/or dispose of to any Person any interest in or any rights and/or obligations under the New Petroleum Sales and Purchase Contract.

7.2

PDVSA, PDVSA, the Purcha Purchaser ser and BANDES BANDES shall shall not, not, and PDVSA PDVSA shal shalll proc procure ure that that the the PDVSA PDVSA Subsidiary shall not, create in favour of any Person any mortgage, charge, pledge, lien or other security interest or any other agreement or arrangement having a similar effect over or in resp respec ectt of all all or any any part part of the the New New Petr Petrol oleu eum m Sales Sales and Purc Purcha hase se Cont Contra ract ct including, but not limited to, the proceeds due thereunder.

7.3

Each Each of PDVS PDVSA A and and the the Purc Purch hase aser con confirm firmss that that it has not not rece receiv ived ed noti noticce of any any mortgage, charge, pledge, lien or other security interest securing any obligation of any Person or any other agreement or arrangement having a similar effect granted over or in respect of all or any part of the New Petroleum Sales Sal es and Purchase Contract.

7.4 7.4

In the the event event that that ther theree is a fai failur luree by BAN BANDE DES S to pay pay any any amoun amountt owed owed by it und under er the the Facility Agreement by its stated final repayment date (such amount being the "Remaining Amount"), PDVSA shall procure the PDVSA Subsidiary to, and Purchaser shall, upon the written request of CDB, extend the New Petroleum Sales and Purchase Contract for an additional period up to six (6) months, for a volume of Export Goods equivalent to the Remaining Amount plus any interest accrued on the Remaining Amount and otherwise on the same terms and conditions set out in the New Petroleum Sales and Purchase Contract, such that the amount to be deposited into the Collection Account pursuant to the extension


8

AGREED FORM

of the New Petroleum Sales and Purchase Contract is not less than the Remaining Amount plus any interest accrued thereon (including any default interest). 7.5 7.5

Save Save for for any any amen amendm dmen entt requ requir ired ed to affec affectt any any incr increa ease se in Expor Exportt Good Goodss deli delive vere red d as described described in Clauses Clauses 6.1 and 6.2, or the extens extension ion descri described bed in Clause Clause 7.4 of this this Agreement, BANDES, PDVSA (acting through the PDVSA Subsidiary), and the Purchaser shall not amend or waive any of their respective rights and/or obligations under the New Petroleum Sales and Purchase Contract without the prior written consent of CDB.

7.6 7.6

CDB' CDB'ss prior prior writ writte ten n conse consent nt shal shalll be obtain obtained ed for for any subs substi titu tutio tion n of Expor Exportt Goods Goods unde under r the New Petroleum Sales and Purchase Contract. Contract. If PDVSA (acting through through the PDVSA Subsidiary) and the Purchaser wish to make a substitution of Export Goods under the New Petroleum Sales and Purchase Contract, the Purchaser shall immediately deliver a notice of intention to CDB (the "Substitution Notice") with a copy to PDVSA and the PDVSA Subsidiary. Subsidiary. CDB shall provide provide its written consent consent or otherwise to the Purchaser Purchaser (with a copy to PDVSA) within five (5) Business Business Days of receipt of the Substitution Substitution Notice. Notice. If CDB does not provide its written consent or otherwise within five (5) Business Days of receipt of a Substitution Notice, the substitution detailed in that Substitution Notice shall be deemed to have been approved by CDB.

8.

REPRESENTATIONS AN AND WARRANTIES

8.1

Each Party makes the the representation ions and warranties set out in this Clause 8 ( Representations Representations and Warranties) to and for the benefit of each other Party (i) on the date of this Agreement; (ii) on each date a utilisation request is delivered under the Facility Agreement; (iii) on the date of each utilisation of the Facility; and (iv) on the first day of each Interest Period, in each case, by reference to the facts and circumstances then existing on such date. 8.1. 8.1.1 1

It is duly duly estab establi lish shed ed and vali validl dly y exis existi ting ng under under the the law law of its juri jurisd sdic icti tion on of establishment.

8.1 8.1.2

It has has the the powe powerr to own own its ass assets ets and and carry carry on its its busin busines esss as it is bein being g conducted.

8.1. 8.1.3 3

It has has the pow power er to enter enter int into, o, perf perfor orm m and del deliv iver er,, and has has take taken n all nec neces essa sary ry action to authorise its entry into, performance and delivery of, this Agreement and each other Transaction Document to which it is a party, and the transactions contemplated therein.

8.1. 8.1.4 4

The The oblig obligat atio ions ns expr expres esse sed d to be assu assume med d by it unde underr this this Agre Agreem emen entt and eac each h other Transaction Document to which it is a party are legal, valid, binding and enforceable in accordance with their terms.

8.1. 8.1.5 5

The The entry entry into into and and perfo perform rman ance ce of it, and and the the trans transac actio tions ns cont contem empl plat ated ed by the the Transaction Documents to which it is a party do not and will not conflict with: (A)

any law or regu regulat lation ion or any offici official al or or judic judicial ial order order applic applicabl ablee to it; and

(B) (B)

any any agre agreem emen entt or ins instru trume ment nt bin bindi ding ng upo upon n it or or any any of of its its asse assets ts..


9

AGREED FORM

8.1. 8.1.6 6

All All Auth Author oris isat atio ions ns req requi uire red d or des desir irab able le:: (A) (A)

to enab enable le it to law lawfu fully lly ent enter er into into,, exerc exercis isee its rig right htss and and comp comply ly with with its its obligations in the Transaction Documents to which it is a party;

(B) (B)

to mak makee the the Tran Transa sact ctio ion n Docu Docume ment ntss to whi which ch it it is a par party ty adm admis issi sibl blee in evidence in Venezuela (in the case of PDVSA and BANDES) and China (in the case of CDB and Purchaser); or

(C) (C)

for for it it to to car carry ry on thei theirr bus busine iness ss and and whi which ch are are mat materi erial al,,

have been obtained or effected and are in full force and effect. 8.1. 8.1.7 7

No meet meeting ing has has been been conv conven ened ed for for its wind windin ingg-up up,, no such such step step is inte intend nded ed by it and, so far as it is aware, no petition, application or the like is outstanding with a view for its winding-up.

9.

ADD ADDITIO ITIONA NAL L PDV PDVSA SA RE REPRE PRESENT SENTAT ATIIONS ONS AND AND WARR WARRAN ANTI TIES ES

9.1 9.1

In addi additi tion on to the the repr repres esen enta tati tion onss and and warra warrant ntie iess made made in Cla Claus usee 9 ( Representations and Warranties) above, PDVSA makes the representations and warranties set out in this Clause 10 ( Additional PDVSA Representations and Warranties) to and for the benefit of CDB (i) on each date a utilisation request is delivered under the Facility Agreement; (ii) on the date of each utilisation of the Facility and (iii) on the first day of each Interest Period, in each case, by reference to the facts and circumstances then existing on such date. 9.1. 9.1.1 1

It is the the legal legal and and benef benefic icial ial own owner er of 100 100% % of the the entire entire iss issue ued d share share cap capita itall of PDVSA Subsidiary.

9.1. 9.1.2 2

The The entry entry into into and and perf perfor orma manc ncee by it or or by the the PDVSA PDVSA Subs Subsid idia iary ry of, of, and and the the transactions contemplated by, the Transaction Documents to whi ch either of them is a party do not and will not conflict with any laws of the Bolivarian Republic of Venezuela (including its constitution) or any agreement binding on it or the PDVSA Subsidiary.

9.1. 9.1.3 3

No even eventt or circu circums msta tanc ncee is outst outstan andi ding ng which which con const stitu itutes tes a defa defaul ultt under under any any othe otherr agre agreem emen entt or inst instru rume ment nt whic which h is bindi binding ng on it or on the PDVSA PDVSA Subsidiary or to which their respective assets are subject.

9.1.4 9.1.4

All inform informatio ation n supp supplied lied by it it or the PDVSA PDVSA Subsi Subsidia diary ry to to CDB CDB in relatio relation n to the transactions contemplated by the Transaction Documents is true, complete and accurate in all material respects as at the date it was given and is not misleading in any respect.

9.1. 9.1.5 5

The The Expo Export rt Goods Goods deli delive vere red d unde underr the the New New Petr Petrol oleu eum m Sale Saless and and Purc Purcha hase se Contra Contract ct consti constitut tutee royalt royalties ies in specie specie payabl payablee by PDVSA PDVSA to the Boliva Bolivaria rian n Republic of Venezuela under the Organic Law of Hydrocarbons of the Bolivarian Republic of Venezuela and other applicable laws.

9.1. 9.1.6 6

All All Author Authoris isat atio ions ns requ requir ired ed in conne connecti ction on with with the appl applic icat atio ion n by BANDE BANDES S of such proceeds to repay the Facilities have been obtained and are in full force and effect effect and shall shall be in full full force force and effect effect for the durat duration ion of the Facility Facility Agreement.


10

AGREED FORM

9.1.7 9.1.7

The Lette Letters rs of of Instru Instructio ction n are legal, legal, vali valid, d, bind binding ing and and enfor enforceab ceable le under under the laws laws of the Bolivarian Republic of Venezuela.

9.1.8

9.1. 9.1.9 9

(A) (A)

It and and the PDVS PDVSA A Subsi Subsidi diar ary y are are subje subject ct to civi civill and com comme merc rcia iall law with respect to its obligations under the Transaction Documents to which it is a party;

(B) (B)

the the entry entry into into and and perfo perform rman ance ce by it it or the the PDVSA PDVSA Subs Subsid idia iary ry of the the Transaction Documents to which any of them is a party constitute private and commercial acts;

(C) (C)

neit neithe herr it nor the the PDVSA PDVSA Subs Subsid idia iary ry or or any of thei theirr asset assetss enjoy enjoyss any any right of immunity (sovereign or otherwise) from set-off, suit or execution in respect of their obligations under any Transaction Document to which either is a party; and

(D) (D)

its its agre agreem emen entt not not to cla claim im imm immun unit ity y unde underr Clau Clause se 17 below (Waiver of Immunity) is legal, valid, binding and enforceable under the laws of the Bolivarian Republic of Venezuela.

No mater materia iall defa defaul ultt is conti continu nuin ing g unde underr the the Petr Petrol oleu eum m Sale Saless and and Purc Purcha hase se Contracts.

10.

PDVSA UN UNDERTAKINGS

10.1 10.1

PDVS PDVSA A shal shalll supp supply ly to CDB promp promptl tly y upon upon becomi becoming ng aware aware of them, them, detai details ls of any litigat litigation ion,, arbitr arbitrati ation on or admini administr strativ ativee procee proceedin dings gs which which are curren current, t, threat threatene ened d or pending pending against it or the PDVSA Subsidiary, Subsidiary, which may call into question the validity or performance of either of their obligations under any Transaction Document to which any of them is a party.

10.2

PDVSA sh shall: 10.2.1 10.2.1

duly duly and prompt promptly ly perfor perform m all of its oblig obligatio ations ns set forth forth herei herein, n, failing failing which which,, PDVSA shall procure the PDVSA Subsidiary to perform such obligations as if it were a party to this Agreement;

10.2.2 10.2.2

take take all necessar necessary y measures measures includ including ing making making the releva relevant nt shippin shipping g arrangem arrangement entss for the Export Goods to ensure due and prompt performance by the PDVSA Subsid Subsidiar iary y of its obligat obligation ionss und under er the New Petrol Petroleum eum Sales Sales and Purcha Purchase se Contract;

10.2 10.2.3 .3

for for the the bene benefi fitt of the Purch Purchas aser er and CDB, CDB, proc procur uree that that the PDVSA PDVSA Subsid Subsidiar iary y will perform all its obligations under and in accordance with the Petroleum Sales and Purchase Contracts or PDVSA shall perform such obligations itself or cause such obligations to be performed by a third party;

10.2 10.2.4 .4

proc procur uree the the PDVS PDVSA A Subs Subsid idia iary ry to duly duly and promp promptl tly y exec execut utee the the Side Side Lette Letter r substantially in the form of Schedule 1 ( Side Letter ) contemporaneously with the execution of this Agreement and within three (3) days of execution deliver a copy of such executed Side Letter to each of CDB, BANDES and the Purchaser; and


11

AGREED FORM

10.2.5 10.2.5

prompt promptly, ly, upon upon becom becoming ing aware aware of of the same, same, prov provide ide CDB CDB and BANDE BANDES S with details of any default under, or breach of, a Petroleum Sales and Purchase Contract.

10.3 10.3

PDVSA PDVSA shall shall not assig assign, n, transf transfer, er, sell, sell, dispo dispose se of or creat createe any securi security ty interes interestt over all all or any any part part of its its shar shareh ehol oldi ding ng in PDVS PDVSA A Subs Subsid idia iary ry or enter enter into into any any agre agreem emen entt or arrangement to effect any of the foregoing without the prior written consent of CDB.

10.4 10.4

PDVSA PDVSA shall shall strength strengthen en and expand expand its co-o co-oper peratio ation n with the Purch Purchase aserr and other other releva relevant nt Chinese entities accepted by CDB in the development and implementation of energy and other projects in the Bolivarian Republic of Venezuela.

11.

PURCHASER UNDERTAKINGS

11.1 11.1

The Purc Purchas haser er shall shall supp supply ly to CDB CDB promp promptly tly upon upon becomi becoming ng aware aware of of the same same:: 11.1 11.1.1 .1

deta details ils of any any litiga litigatio tion, n, arbi arbitr trat ation ion or admin adminis istr trati ative ve proc proceed eedin ings gs which which are current, threatened or pending against it which might, if adversely determined, have a material adverse effect on its ability to perform its obligations under the Petroleum Sales and Purchase Contracts; and

11.1 11.1.2 .2

deta detail ilss of any defa defaul ultt unde under, r, or breac breach h of, of, a Petr Petrol oleu eum m Sale Saless and and Purc Purcha hase se Contract.

12. 12.

DUR DURATIO ATION N AND AND EFFE FFECT OF THIS HIS AGR AGREE EEME MENT NT

12.1 12.1

This This Agree Agreemen mentt shal shalll commen commence ce on the date date hereof hereof and and shall shall continu continuee in full full force force and effect until the earlier of: 12.1 12.1.1 .1

Term Termin inat atio ion n Dat Date; e; and and

12.1.2 12.1.2

termin terminatio ation n by the written written agreem agreement ent by all all the the Parti Parties. es.

12.2 12.2

The The Parti Parties es ackno acknowl wled edge ge and agree agree that that none of the provi provisi sion onss of this this Agreem Agreemen entt shal shalll affect, increase or reduce any obligation of the Purchaser, BANDES or PDVSA or the PDVSA Subsidiary under any of the the Transaction Documents. For the avoidance of doubt, doubt, notwithstanding anything to the contrary in this Agreement, or the failure of any Party (other than CDB) to perform any of its obligations hereunder, BANDES shall at any time be responsible and liable to perform all of its obligations under and pursuant to the Facility Agreement.

13.

NOTICES

13.1 13.1

Any comm communi unicat cation ion to to be made made under under or in conn connect ection ion with with this this Agreem Agreement ent shall shall be made made in writing and, unless otherwise stated, may be made by fax or international courier.

13.2

The addre address ss and and fax fax number number (and the depart department ment or officer officer,, if any, for whose attention attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with this Agreement is as follows:

PDVSA Address:

Av. Libertador, Edificio Petróleos de Venezuela, Torre Este, Piso PH, Urb. La Campiña,


12

AGREED FORM

Caracas, Venezuela. Fax:

+58 212 7084666

Attention:

President

BANDES Address:

Banco de Desarrollo Económico y Social de Venezuela (BANDES) Av. Universidad Traposos a Colón Torre BANDES Caracas 1010 Venezuela

Fax:

+58 212 5058404

Attention:

President

Purchaser Address:

No. 27, Chengfang Street Xicheng District Beijing, People's Republic of China 100033

Fax:

+86 (10) 6622 7151

Attention:

Vice President

CDB Address:

No. 29, Fuchengmenwai Street Xicheng District Beijing, The People's Republic of China 100037

13.3 13.3

Fax:

+86 (10) 8830 9170

Attention:

Mr. Tian Yunhai, Director

Any commu communic nicatio ation n or docum document ent made made or or deliver delivered ed by one one Party Party to anothe anotherr under under or in connection with this Agreement will be effective: 13.3.1 13.3.1

if by by way way of of fax, fax, only only when when receiv received ed in in legib legible le form form;; or

13.3 13.3.2 .2

if by way way of couri courier er,, when when it has been been left left at the the releva relevant nt addr addres esss or when when a delivery confirmation from the courier company is received,

and, if a particular department or officer is specified as part of its address details provided under this Clause 13 ( Notices Notices), if addressed to that department or officer.


13

AGREED FORM

14.

GENERAL

14.1 14.1

No variat variation ion of this this Agreem Agreemen entt shal shalll be effe effect ctive ive unles unlesss in writ writin ing g and signe signed d by or on behalf of each of the Parties.

14.2 14.2

No failur failuree to exer exerci cise se,, nor any delay delay in exer exerci cisi sing ng,, on the the part of any Part Party, y, any any right, right, power or remedy under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any right, power or remedy prevent any further or other exercise or the exercise of any other right right or remedy. The rights and remedies provided provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

14.3 14.3

If, If, at any time, time, any provi provisi sion on of this this Agree Agreeme ment nt is or becom becomes es illeg illegal al,, inva invali lid d or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction, will in any way be affected or impaired.

14.4 14.4

Neithe Neitherr this Agree Agreemen mentt nor any other other agree agreemen mentt or arrange arrangemen mentt of which it it forms forms part, part, nor the performance by the Parties of their respective obligations under any such agreement or arrangement, shall constitute a partnership between the Parties.

14.5 14.5

This This Agree Agreeme ment nt may be execu executed ted in any numb number er of count counter erpa parts rts and and this has has the same same effect as if the signatures on the counterparts were on a single copy of the Agreement.

14.6 14.6

This This Agre Agreeme ement nt (tog (toget ethe herr with with the other other Tran Transa sact ctio ion n Docu Docume ment nts) s) cons constit titut utes es the entire entire agreement between the Parties, with respect to the subject matter of this Agreement and supersedes any prior written or oral agreement between them with respect to such subject matter.

14.7 14.7

This This Agreem Agreemen entt is draw drawn n up in the Engl Englis ish h langua language ge and shal shalll be tran transl slat ated ed into into the Chines Chinesee and Spanish Spanish languag languages. es. The Spanish Spanish transla translatio tion n shall shall be prepar prepared ed at the Borrower's sole cost by a certified public interpreter of Venezuela designated by CDB. The Parties acknowledge and agree that they have signed the English, Chinese and Spanish versions of this Agreement and in the event of any discrepancy between the three (3) versions, the English language version shall prevail.

15.

CONFIDENTI NTIAL INFORM ORMATION

15.1

Subject to C la lause 15.2 below, each Party undertakes to the other that it shall treat as confidential all information received or obtained as a result of entering into or performing this Agreement or any other Transaction Document to which it is a party which relates to:

15.2

15.1.1 15.1.1

the othe otherr Partie Partiess and their their busi busines ness, s, asse assets ts and and affa affairs irs;;

15.1 15.1.2 .2

the the prov provis isio ions ns or the the subj subjec ectt matt matter er of any any Tran Transa sact ctio ion n Docu Docume ment nt or any any document referred to therein and any claim or potential claim thereunder; or

15.1.3 15.1.3

the negotia negotiations tions relating relating to to the Transactio Transaction n Documen Documents ts or any docume documents nts referr referred ed to therein.

Clause 15.1 above does not apply to disclosure of any such information by a Party to: 15.2 15.2.1 .1

any any of its its bra branc nche hess or rela related ted com compa pani nies es;;


14

AGREED FORM

15.2.2 15.2.2

any of of its profession professional al adviser adviserss or other persons persons provid providing ing services services to it; it;

15.2 15.2.3 .3

any any pers person on per permi mitt tted ed by by the the othe otherr Part Partie ies; s;

15.2 15.2.4 .4

any any pers person on to whom whom,, and and to the exten extentt that that,, info inform rmat atio ion n is requi require red d to be disclosed by any applicable law or regulation; and

15.2 15.2.5 .5

any any prop propos osed ed transf transfer eree ee or assi assign gnee ee of, or subsub-pa part rtic icip ipan antt unde underr any any of the Facility Agreements,

provided that prior to such disclosure the persons listed in sub-clauses 15.2.1, 15.2.1, 15.2.2, 15.2.2, 15.2.3 and 15.2.5 enter into a confidentiality undertaking satisfactory to those parties to whom the confidential information subject to such disclosure relates. 15.3 15.3

The The restr restric icti tion onss conta contain ined ed in this this Clau Clause se 15 (Confidential Information) shall continue to apply for five (5) years after the termination of this Agreement without limit in time.

16.

ASSIGNMENT

16.1 16.1

This This Agreeme Agreement nt shall shall benefi benefitt and be bindin binding g on the Partie Parties, s, their their respec respectiv tivee success successors ors and and any permitted assignee or transferee of all or some of a Party's rights and obligations under this Agreement.

16.2 16.2

No Party Party may assig assign n or transfe transferr all or any of of their their respect respective ive right rights, s, benefi benefits ts or obliga obligatio tions ns under this Agreement except with the prior written consent of each other Party.

17.

WAIVER OF IMMUNITY

17.1 17.1

Each Each Par Party ty irre irrevo voca cabl bly y and and unco uncond nditi ition onal ally ly::

17.2

17.1.1 17.1.1

agrees agrees that that if any other other Party Party bring bringss proceed proceeding ingss against against it or its its assets assets in relat relation ion to this Agreement, no immunity (sovereign or otherwise) from those proceedings (includ (including ing,, withou withoutt limitat limitation ion,, suit, suit, attach attachmen mentt prior prior to judgem judgement ent,, other other attachment, the obtaining of judgement, execution or other enforcement) will be claimed by or on behalf of itself or with respect to its assets;

17.1 17.1.2 .2

waiv waives es any any such such right right to immun immunit ity y whic which h it or its asset assetss now now has has or may may subsequently acquire; and

17.1.3 17.1.3

consen consents ts genera generally lly in respe respects cts of any any such proce proceedi edings ngs to the the giving giving of any relief relief or the issue of any process in connection with those proceedings, including, withou withoutt limitat limitation ion,, the making making,, enforc enforceme ement nt or execut execution ion agains againstt any assets assets whatsoever (irrespective of its use or intended use) if any order or judgement which may be made or given in those proceedings.

Exceptions Notwithstanding Clause 17.1 above, no Party waives such immunity in respect of any of its property or assets which are: 17.2 17.2.1 .1

used used by a dipl diplom omat atic ic or cons consul ular ar missi mission on of Vene Venezu zuel elaa (ex (except cept as may may be necessary to elect service of process);


15

AGREED FORM

17.2.2 17.2.2

proper property ty of a militar military y charact character er and under under the the control control of a milita military ry author authority ity or defence agency or property forming part of the cultural heritage of Venezuela; or

17.2.3 17.2.3

subjec subjectt to immuni immunity ty under under the laws laws of PRC PRC or the laws laws of of Venezue Venezuela, la, irres irrespec pective tive of the location of such assets.

18.

GOVERNING LA LAW AN AND JU JURISD SDIICTI CTION

18.1

Governing Law This This Agreem Agreement ent and any dispute dispute or claim claim arisin arising g out of or in connec connection tion with it or its subject matter, existence, negotiation, validity, termination or enforceability (including any non-contractual disputes or claims) shall be governed by and construed in accordance with English law.

18.2

Dispute Resolution All disput disputes, es, controver controversie siess or claims claims arisin arising g out out of or in relati relation on to this this Agreem Agreement ent,, including the validity, invalidity, breach or termination thereof, shall be settled exclusively by arbitration in accordance with the UNCITRAL Arbitration Rules ( "Rules") in effect at the time of the arbitration, except as such Rules may be modified herein or by mutual agreement of the parties: 18.2.1 18.2.1

the arbitr arbitrati ation on shall shall be administe administered red by the Singap Singapore ore Inter Internat nation ional al Arbitra Arbitration tion Centre ("SIAC") in accordance with its practice rules and regulations;

18.2 18.2.2 .2

the the place place of arb arbit itra ratio tion n shal shalll be Sing Singap apor ore; e;

18.2.3 18.2.3

the langua language ge of of the the arbit arbitrat ration ion shall shall be be Engl English ish;;

18.2.4 18.2.4

the numb number er of arbi arbitra trator torss shall shall be three three (3) (3) to be appo appointe inted d as follo follows; ws;

18.2.5 18.2.5

(A)

the claima claimant nt shal shalll appoi appoint nt one one (1) (1) arbi arbitra trator tor in the the requ request est for arbitr arbitrati ation. on. If there is more than one (1) claimant, all claimants shall jointly appoint one (1) arbitrator in their request request for arbitration. If they cannot agree on their choice of arbitrator, arbitrator, any claimant claimant may request request the SIAC in writing writing to appo appoin intt the arbi arbitr trato atorr for for them them and and the the SIAC SIAC shal shalll appo appoin intt the the arbitr arbitrato atorr for them them as soon soon as practi practicab cable le follow following ing receip receiptt of such such request;

(B) (B)

the the resp respon onde dent nt shall shall appoi appoint nt one (1) (1) arbi arbitr trat ator or withi within n thir thirty ty (30) (30) days days following following the service service of the request request for arbitration arbitration upon the responden respondent. t. If there is more than one respondent, all respondents shall jointly appoint one (1) arbitrator within thirty (30) days following the service of the request for arbitration upon upon the respondents. If at the end of the 30-day period the second arbitrator has not been appointed, the Chairman or Deputy Chairman of the SIAC shall appoint the second arbitrator as soon as practicable.

the two two (2) (2) arbitra arbitrators tors thus appointed appointed shall shall choose choose the third arbitrator arbitrator who will act act as the presidin presiding g arbitrato arbitratorr of the tribuna tribunal. l. If within within thirty (30) (30) days of the appointment of the second arbitrator, the two (2) appointed arbitrators fail to appoint the presiding arbitrator, the Chairman or Deputy Chairman of the SIAC shall appoint the presiding arbitrator.


16

AGREED FORM

18.2.6 18.2.6

the arbit arbitral ral award award shall shall be in in writing writing and and shall shall be final final and and binding binding on the the Parties Parties.. The award may include an award of costs, including reasonable attorney's fees and disburs disburseme ements nts.. Judgme Judgment nt upon the award award may be entered entered by any court court having jurisdiction thereof or having jurisdiction over party against which the award is entered or its assets;

18.2 18.2.7 .7

duri during ng arbi arbitr trat atio ion, n, all all the the Part Partie iess shal shalll cont contin inue ue to fulf fulfil illl thei theirr resp respec ecti tive ve obligations under this Agreement and the other Transaction Documents; and

18.2.8 18.2.8

the Parties Parties agree to waive, waive, for purposes purposes of arbitra arbitration tion pursuant pursuant to this this Clause Clause 18.2 ( Dispute Dispute Resolution), any right of application to determine a preliminary point of law or appeal to any court of law on a point of law which may be available to it under any applicable law.


17

AGREED FORM

SCHEDULE 1 SIDE LETTER

China Development Bank Corporation ("CDB") No. 29 Fuchengmenwai Street, Xicheng District Beijing 100037 The People's Republic of China Attention: Mr. Chen Yuan, Chairman of the Board China National United Oil Corporation No. 27 Chengfang Street, Xicheng District Beijing 100033 The People's Republic of China Attention: Ms. Wang Lihua, President of China National United Oil Corporation Caracas, August ____, 2010 Dear Sirs, We are a 100% subsidiary of Petrόleos de Venezuela S.A. ( "PDVSA"). We have have entered entered into into a petroleum sales and purchase contract (the "New Petroleum Sales and Purchase Contract" ), dated __________________, 2011, under which we act on behalf of the Bolivarian Republic of Venezuela as seller to sell fuel oil and/or crude oil to China National United Oil Corporation (the "Purchaser"). We write to confirm that we are aware of the following: (a) PDVSA is a party to the Framework Agreement among CDB, the Purchaser, Banco de Desarrollo Económico y Social de Venezuela (BANDE (BANDES) S) ("BANDES"), PDVSA, El Fondo Fondo De Desarr Desarroll ollo o Nacion Nacional al S.A., S.A., the Minist Ministry ry of People's Power for Planning and Finance of the Bolivarian Republic of Venezuela (" MPF") and the Ministry of People's Power for Energy and Petroleum of the Bolivarian Republic of Venezuela ("MEP"), dated [●], 2011, and the four party agreement among BANDES, PDVSA, CDB and Purchaser, dated __________________, 2011 (the "Four Party Agreement" ); (b) CDB as lender, and BANDES BANDES as borrow borrower, er, have have entere entered d into a US$4,0 US$4,000, 00,000 000,00 ,000 0 facilit facility y agreeme agreement nt dated dated __________________, 2010 (the "Facility Agreements"); and (c) MEP has issued a letter of instructions to PDVSA, dated __________________, 2011, instructing, inter alia: (i)

the delive delivery ry by by PDVSA PDVSA to to the the Purch Purchase aserr of of 230, 230,000 000 barrel barrelss of of fuel fuel and/ and/or or crud crudee oil oil per per day day (as may be adjusted in accordance with the Four Party Agreement and the New Petroleum Sales Sales and Purchase Purchase Contra Contract) ct) from from 19 Februa February ry 201 2012 2 until until the full repaym repayment ent of all amounts due and payable under the Facility Agreement, to the payment of royalties in specie, according to Article 44 and Article 45 of the Organic Law of Hydrocarbons of the Bolivarian Republic of Venezuela;

(ii) (ii)

all all sales sales proc procee eeds ds gene genera rate ted d under under the the New Petro Petroleu leum m Sales Sales and and Purch Purchas asee Contr Contrac actt to be deposited directly into the collection account of BANDES opened and maintained at CDB in accordance with the terms and conditions of the Facility Agreement, the Four Party Agreement and the New Petroleum Sales and Purchase Contract;


18

AGREED FORM

(iii) (iii)

all deliv deliveri eries es of fuel fuel oil and/o and/orr crude crude oil oil desti destined ned to to the Purc Purchas haser er under under the the New New Petrol Petroleum eum Sales and Purchase Contract be registered as payment of royalties in specie to the Bolivian Republic of Venezuela.

We further confirm that (a) the fuel and/or crude oil to be sold under the New Petroleum Sales and Purchase Contract will constitute payment of royalties in specie by virtue of the MEP instructions; (b) the proceeds from the sale of fuel and/or crude oil under the New Petroleum Sales Sa les and Purchase Contract will be deposited directly into the collection account of BANDES opened and maintained at CDB in accordance with the terms and conditions of the Facility Agreement, the Four Party Agreement and the New Petroleum Sales and Purchase Contract and such deposit constitutes good receipt of the same amount under the New Petroleum Sales and Purchase Contract; (c) we will perform our obligations in accordance with the New Petroleum Sales and Purchase Contract, the MEP instructions and any instructions that PDVSA may give to us from time to time in accordance with the Four Party Agreement and other relevant documents; and (d) we will not create in favor of any person any mortgage, charge, pledge, lien or other security interest or any other agreement or arrangement having a similar effect over or in respect of all or any part of the New Petroleum Sales and Purchase Contract including, but not limited to, the proceeds due thereunder. Very Truly Yours,

PDVSA Petróleo S.A

By:

_____________________________

Name: Title:


19

AGREED FORM

IN WITNESS whereof this Agreement has been executed and delivered as a deed on the date first above written.

Counterparty SIGNED and DELIVERED AS A DEED by [●]

) ) On behalf of ) BANCO DE DESARROLLO ECONOMICO ) ) Y SOCIAL DE VENEZUELA (BANDES) In the presence of: )

SIGNED and DELIVERED AS A DEED by [●] On behalf of

PETROLEOS DE VENEZUELA, S.A. In the presence of:


CHINA NATIONAL UNITED OIL CORPORATION In the presence of:


CHINA DEVELOPMENT BANK CORPORATION In the presence of:

__________________________

) ) ) ) )

__________________________

) ) ) ) ) )

__________________________

) ) ) ) ) )

__________________________


20

Four Party Agreement - Agreed Form 18Mar11

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