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As Of Filer Filing For/On/As Docs:Size 7/01/04 Metrogas Inc 20-F 6/30/04 12:169
Document/Exhibit Description Pages Size 1: 20-F Annual Report of a Foreign Private Issuer HTML 991K 2: EX-12 Statement re: Computation of Ratios HTML 9K 3: EX-13 Annual or Quarterly Report to Security Holders HTML 6K 4: EX-13 Annual or Quarterly Report to Security Holders HTML 6K 5: EX-12 Statement re: Computation of Ratios HTML 9K 6: EX-4 Instrument Defining the Rights of Security Holders HTML 44K 7: EX-4 Instrument Defining the Rights of Security Holders HTML 17K 8: EX-4 Instrument Defining the Rights of Security Holders HTML 40K 9: EX-4 Instrument Defining the Rights of Security Holders HTML 48K 10: EX-4 Instrument Defining the Rights of Security Holders HTML 52K 11: EX-1 Underwriting Agreement HTML 32K 12: EX-11 Statement re: Computation of Earnings Per Share HTML 23K
|Pan American Sur|
Pan American Sur
Buenos Aires, June 3, 2004
Gregorio Araoz de Lamadrid 1360 - 1 Piso
C1267AAB - Ciudad de Buenos Aires
Attn. Commercial Director
We are very pleased to submit our proposal for natural gas supply, hereinafter referred to as the "Agreement", within the framework of the AGREEMENT FOR THE IMPLEMENTATION OF THE NATURAL GAS PRICE STANDARIZATION PLAN AT ENTRY POINT TO THE TRANSPORTATION SYSTEM provided under Decree of the National Executive Branch No. 181/2004. This proposal, if accepted, will be governed by the terms and conditions detailed below:
NATURAL GAS PURCHASE AND SALE AGREEMENT
Pan American Sur S.R.L., hereinafter referred to as the "Seller".
MetroGAS S.A., hereinafter referred to as the "Buyer" and together with the Seller the "Parties".
3. Duration of the Agreement
4.1 The quantities of natural gas under this Agreement shall be expressed in standard cubic meters converted to cubic meters equivalent of 9300 kilocalories of higher calorific power per cubic meter ("m3 of 9300 kcal/m3"). Natural gas at standard condition shall mean the quantity of natural gas, which at a temperature of fifteen (15) Celsius degrees and an absolute pressure of 101.325 kilopascals occupies the volume of one (1) cubic meter.
5. Take or Pay Obligation
The minimum monthly quantity of natural gas which shall be taken, or which, if not taken, shall be nevertheless paid by Buyer ("Take or Pay Quantity") shall be 90% of the MDQ during each calendar month with deductions for (i) quantities corresponding to Acts of God or Force Majeure, (ii) quantities which having been properly nominated by Buyer are not made available to Buyer by Seller for any reason other than Acts of God or Force Majeure, and/or (iii) any reductions in MDQ as a result of a Yearly Scheduled Maintenance.
7.1 Buyer may recover the quantities of natural gas not taken, but invoiced and paid according to article 5 of this Agreement. The quantities of natural gas that Buyer is entitled to recover, which will be calculated according with article 7.3 shall be referred to as "Deferred Quantities".
7.2 Buyer may take such "Deferred Quantities" during the twelve (12) months immediately following the month in which they were originated, provided that Buyer has paid for each of the Deferred Quantities, and provided that Buyer has previously taken all the natural gas corresponding to the Take or Pay Quantity during the month in which it takes such Deferred Quantities. As long as Deferred Quantities exist, the quantities taken by Buyer in excess of the Take or Pay Quantity shall be automatically computed as recovered Deferred Quantities.
7.3 Buyer shall only recover Deferred Quantities in m3 of 9300 kcal/m3.
7.4 Should any Deferred Quantities exist at the expiration of this Agreement, Seller shall, on a daily basis during the 4 months immediately following the expiration of this Agreement, make available to Buyer a maximum of fifty thousand (50,000) m3 of 9300 kcal/m3.
7.5 Definitions: (i) "Winter Period" shall mean the time period commencing at 06:00 a.m. on May 1 of a year and ending at 06:00 a.m. on October 1 of the same year, and (ii) "Summer Period" shall mean the time period commencing at 06:00 a.m. on October 1 of a year and ending at 06:00 a.m. on May 1 of the immediately following year.
8. Seller Non Compliance
8.1 Is Seller fails to make available to Buyer the Adequately Nominated Quantity, and such non-compliance is not due to any of the reasons provided in 14 and/or 15 of this Agreement, Seller shall:
8.1.1 Make its best efforts to supply Buyer with natural gas from alternative sources ("Substitute Natural Gas"), and Seller shall bear any potential higher costs incurred by Buyer in taking such Substitute Natural Gas.
8.1.2. Should Seller fail to supply Buyer with Substitute Natural Gas, Seller shall, as the only remedy, pay Buyer hundred percent (100%) of the average Selling Price established for the corresponding month, in respect of the quantity of m3 of 9300 kcal/m3 that Seller failed to deliver each day for reasons other than those provided in 14 and/or 15.
8.2 Buyer shall make its best efforts to mitigate any cost or damage for which it is to be indemnified by Seller.
8.3 Payment of the amounts set forth in 8.1 shall be the only compensation paid to Buyer as a result of Seller's failure to supply. Such payment shall be formalized by issuing a Credit Note in Buyer's favour, pursuant to the invoicing procedure set forth in 13.7 of this Agreement.
9. Delivery Point(s)
9.1 Delivery Point(s) shall be located at Cuenca Marina Austral (producing field) on TGS's San Martín trunk gas pipeline, at which measurement and transfer of liability and risks of natural gas is to be performed.
9.2 Seller shall have responsibility for all costs, expenses (including tax costs of any nature) associated with the natural gas, which is the subject matter of this Agreement, until Delivery Point(s).
9.3 Buyer shall have responsibility for all costs, expenses (including tax costs of any nature) and obligations associated with the transportation of natural gas after Delivery Point(s).
10 Quality Specifications
The natural gas that is the subject matter of this Agreement shall, at Delivery Point(s), meet the quality requirements established in ENARGAS Resolution No. 622/98 or in any resolution which may substitute or replace it, and that Seller declares that it knows and accepts it entirely.
11.1 Before Delivery Point(s), Seller reserves the right to extract any substance contained in natural gas other than methane ("Processing"), provided however that in such case calorific values shall not be reduced to values lower than those required as to meet the Quality Specifications set out in article 10 of this Agreement.
11.2 After Delivery Point(s), Buyer reserves the right to Process fifteen percent (15%) of the quantity of natural gas effectively delivered, being Seller entitled to carry out Processing of the remaining eighty-five percent (85%).
11.3 Should Seller exercise its right as provided in 11.2, Seller shall contract the transportation capacity needed to compensate for the calories retained during Processing, corresponding to the natural gas quantities effectively processed by Seller. Seller shall always maintain the Quality Specifications set out in article 10 of this Agreement.
11.4 During the days in which Seller does not, wholly or in part, exercise its right pursuant to article 11.2, Buyer shall have first priority for processing (for itself) the quantity of natural gas not wholly or partially processed by Seller, without any compensation in favour of Seller.
12. Sale Price
12.1 Buyer shall pay the Sale Price to Seller according to articles 12.2 and 12.3, for the quantities of natural gas delivered and taken, or those made available to Buyer at the Delivery Point(s) and not taken (Take or Pay Quantity), in accordance with the terms of this Agreement.
12.2. The Sale Price of Residential Gas shall be as follows:
0.039461 $/ m3 of 9300 kcal/m3, the variation of which is defined in accordance with Annex I-b to the Resolution.
12.3 The Sale Price for Industrial Gas shall be as follows:
SPB = 0.039461 $/ m3 of 9300 kcal/m3
The price shall be adjusted in line with the percentages set out in Annex I-a to the Resolution for "Industrial Users" and "Power Plants" customer segments. The first adjustment shall consist of an increase of 42.71% as from May 11, 2004.
12.4 Seller shall have responsibility for all taxes, encumbrances, royalties and other applicable charges until Delivery Point(s). Buyer shall be responsible of all taxes, encumbrances and other applicable charges as from Delivery Point(s). The Sale Price includes all transportation expenses until Delivery Point(s), including treatment of gas, compression, Seller's measurement equipment, and connection expenses. The Sale Price does not include Value Added Tax (VAT), the Fiduciary Fund surcharge for residential consumption of gas (Section 75 of Law 25565), as well as any other national or provincial taxes payable by Buyer.
13. Invoicing and Payments
13.1 Seller shall issue two invoices in Pesos on a monthly basis considering for these purposes the provisions in i) or in ii) below, as applicable.
13.2 Buyer shall make monthly payments in Pesos ("Pesos") to the Seller's stipulated account on the payment date, i.e., within 15 days of receipt of each invoice issued by Seller, or on the last working day (whichever is the later) of the month following the month in which deliveries of the gas were made. Payment date shall mean the date on which the funds involved are effectively credited to the account.
13.3 Any amounts due from Buyer to Seller pursuant to article 5 hereof (Take or Pay Quantity) shall be invoiced at the Sale Price for each month in question, considering for these purposes the Residential Percentage and the Industrial Percentage, as appropriate, together with the invoicing for that month. Deferred Quantities shall be accounted by the end of each month.
13.4 In the event of any dispute that may arise in connection with any of the invoices, Buyer shall only make payment of any undisputed amount and shall give prompt notice of the amount in dispute and the reasons therefore to Seller.
13.5 Parties shall negotiate, in good faith, immediately after receipt of notice relating to any disputed invoice, so as to resolve such dispute in a mutually acceptable manner. In the event the parties are unable to resolve such dispute within thirty (30) days of receipt of notice, then, at the request of any of the Parties, such dispute shall be settled by arbitration pursuant to article 17 hereunder. After resolution of such dispute, the prevailing Party shall be entitled to receive the amount claimed plus interest on that amount accrued from the date due (or from the date indicated as the due date) until the value date of the payment, at a rate equal to 100% of the annual stated lending interest rate corresponding to the one-month rate of Banco Nación in force.
13.6 Notwithstanding any other resources available to Seller, any non compliance with payment of sums due hereunder, other than any payment resulting from an objection made in good faith, shall be subject to an interest rate equal to 150% of the annual stated lending interest rate corresponding to the one-month rate of Banco Nación in force, during the days in arrears.
13.7 In the event that confirmed allocations are not available, Seller may invoice Buyer based on preliminary allocations made by TGS. If there is any difference between the preliminary and final allocations, Seller shall issue a credit/debit note, as applicable, within seventy two (72) hours of receipt of the allocations confirmed by TGS, which shall be paid as follows (i) in case of debit note/s, within 15 (fifteen) days of the date of issue, or (ii) in case of credit note/s, with the first invoice issued by Seller.
14. Acts of God or Force Majeure
14.1 The legal scope and effects provided in the Argentine Civil Code, the Buyer's Service Rules, TGS Regulations as well as the legal effects of any Acts of God or Force Majeure provided in the following situations shall apply:
14.2 The events that constitute Acts of God or Force Majeure in respect of Buyer shall include:
14.2.1 Any act of God which may physically affect Buyer's facilities, provided that Buyer distributes the impact of the Force Majeure event proportionally among its different suppliers based on the average distribution recorded during the sixty (60) days immediately prior to the Force Majeure event.
14.2.2. Any Force Majeure event which may physically affect the TGS gas pipeline between Tierra del Fuego and Greater Buenos Aires, which may prevent Buyer from utilizing its firmly contracted transportation capacity, provided that Buyer distributes any available capacity on a proportional basis between the natural gas supplied by its different suppliers based on the average distribution recorded during the sixty (60) days immediately prior to the Force Majeure event.
14.3 For clarifications purposes, it is hereby indicated that Act of God or Force Majeure shall not include -whichever the cause- the absence or reduction of demand, or any Force Majeure event associated with Buyer's customer(s), or any situation associated with credit risks of Buyer or its customer(s).
14.4.1. Any Force Majeure event that may physically affect Seller's facilities and/or third party facilities used to deliver natural gas at Delivery Point(s). In such case, Seller declares its intention to deliver Substitute Gas, provided it is available.
14.4.2 Provisions or decisions taken by any government authority which may prevent or prohibit Seller from selling to Buyer the natural gas herewith, even when such decision is adopted or the act is performed on the basis of standards issued prior to the date of this Agreement, irrespective of whether or not such standards, acts, decisions or provisions are questioned by any of the parties.
After providing Buyer with a minimum sixty (60)- day prior notice, Seller, in any Winter Period, shall be entitled to designate one or more time periods, which as a whole shall not exceed fifteen (15) Operational Days for each Winter period, in which MDQ may be reduced to carry out major works and/or maintenance of its facilities ("Yearly Scheduled Maintenance"). Insofar as possible, Seller shall endeavor to carry out the Yearly Scheduled Maintenance between October of one year and January of the following year.
16.1 Buyer shall be entitled to terminate this Agreement if Seller, for any reason whatsoever other than an Act of God or Force Majeure, fails to provide Buyer with natural gas acceptable for transportation for more than fifteen (15) running Operational Days during any Winter Period and/or thirty five (35) running Operational Days during any Summer Period, but this shall not affect any rights or obligations pursuant to article 8 that may have accrued until such termination. Termination of this Agreement by Buyer under this article shall not affect its right to claim any amounts due by Seller, which shall not claim any compensation by reason of the mentioned termination.
16.2 If Buyer fails to pay wholly or in part the invoice(s) issued by Seller, and they are not the subject of a dispute resolution procedure under the provisions in article 15 hereunder, Seller shall, after thirty (30) days counted as from the expiration of the invoice payment date, be entitled to suspend delivery of natural gas until the effective payment date. If within forty-five (45) days of the invoice due date, Buyer fails to pay the amount due plus corresponding interest, Seller shall be entitled to terminate this Agreement, with no need of any further prior notice. Termination of this Agreement by Seller in line with this article, shall not affect its right to claim any amounts due by Buyer, which shall not claim any compensation by reason of the mentioned termination and shall not seek the recuperation of Deferred Quantities.
16.3 Parties may terminate this Agreement without any compensation when such Parties fail to deliver or accept the delivery of natural gas, as applicable, for a period exceeding three (3) consecutive months, due to TGS' Force Majeure, Buyer's Force Majeure and /or Seller's Force Majeure.
17. Governing Law and Arbitration.
17.1 This Agreement shall be governed by and construed in accordance with the laws of the Republic of Argentina.
17.2 Any disputes or controversies, excepting those that parties may agree to submit to an expert, shall be settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by three (3) arbitrators appointed in accordance with the said Rules. Such arbitration proceedings shall be conducted in the Spanish language and take place in Buenos Aires.
18.1 Seller's assignment
18.1.1. Seller may freely assign its share in this Agreement, either wholly or partially, to any of its respective affiliates, or to other members of the UTE (temporary union of enterprises) - Cuenca Marina Austral. Seller must previously inform Buyer.
18.1.2. Subject to Buyer's prior written consent, which may only be denied on well-founded grounds, Seller shall be entitled to wholly or partially assign its interests, rights and obligation hereunder. In the event of such assignment, assignee shall submit any guarantees required by Buyer, and shall assume its share of all the rights and obligations under this Agreement.
18.2 Buyer's assignment
18.3 Nothing in this article shall prevent the Parties from assigning in guarantee their respective rights under this Agreement.
19.1 Parties undertake to keep confidential any information they receive under this Agreement at all times. Disclosure of information shall only be permitted insofar as it is needed to advance with the proposed transaction. It is understood that no press release shall be released without prior written consent of the Parties.
19.2 Notwithstanding the provisions in article 19.1 above, it is hereby agreed that confidentiality shall not prevent any of the Parties from complying with any request or requirement of disclosure made under any provision or in accordance to a requirement of ENARGAS or the Secretariat of Energy of the Republic of Argentina or any agency/ies that may replace it, any court having jurisdiction, any other government agency or body with jurisdiction in the matter, or if required by law.
20.1 For all legal purposes derived from this Agreement, the Parties establish their respective domiciles in the following locations, where all notices submitted by the Parties shall be considered valid.
Pan American Energy Sucursal Argentina LLC
Leandro N. Alem 1180, Piso 10
Fax: (54-11) 43104515
Attn: Manager, Gas Marketing
Gregorio Araoz de Lamadrid 1360 -1 Piso
Fax: (54-11) 4309-1201
Attn: Gerente de Administración de Compra de Gas y Transporte (Manager, Gas Purchase and Transportation Management)
20.2 The Parties shall be entitled to change their special domicile established, after duly notifying the other Party with a minimum ten (10) day prior notice.
20.3 Notices associated with the daily operations under this Agreement shall be made by fax or any other electronic media. Notices associated with any non-compliance, events and/or acts entailing the assignment or alteration of the liability under this Agreement, shall be made in writing and duly notified.
21. Condition Subsequent
The Resolution, the Standardization Agreement and its Annexes are an integral part of this Agreement.
In the event of an early termination of the Standardization Agreement, this Natural Gas Purchase and Sale Agreement shall be automatically extinguished on the same date.
22. Suspension of Claims. Consent.
22.1 Seller ratifies the commitment assumed in accordance with article 2 "Suspension of Proceedings and Waivers" of the Complementary Act of the Resolution.
22.2. Furthermore, in order to comply with the provisions of article 2.5.iii) of the Resolution, Buyer hereby declares its consent to: (i) the interruption of the running of the statute of limitations foreseen in article 2.3 of the Complementary Act of the Resolution; (ii) the suspension of the proceedings already initiated in whatever jurisdiction, and (iii) the waiver to invoke the extinction of obligations due to the running of the statute of limitations and the lapsing of the proceedings during the life of the commitment foreseen in article 2.1 of the Complementary Act of the Resolution.
22.3 In accordance with the provisions in article 22.2 above, the parties undertake to sign any other documentation needed to comply with the commitments assumed by Buyer under such article.
This Proposal shall be valid for ten (10) business days, and will be considered accepted by MetroGAS SA when ninety two pesos ($92) have been deposited by MetroGAS SA in PAE's checking account No. 0/813926/016 of the Citibank NA Bank, Main Office.
Very truly yours,
José Luis Sureda
Gas Sales Vice-president
Pan American Sur
Av. Leandro Alem 1180
C1001AAT Buenos Aires Argentina
Tel. (54 11) 4310-4100
Fax: (54 11) 4310-4319)
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