Resolution of natural gas price for Small-scale Liquefaction Natural Gas Units (SLNGU) and Compression Natural Gas Unit (SCNGU) with the aim of exporting

With reference to the duties and authorities due to the section 4, para A, Article 1 of the “Act of incorporation of some articles to the Act regulating part of government’s financial regulation Act (2)”, and based on the assessments, and expert reports, with the aim of encouraging investment in construction of SLNGU in southern coast of country and presence in the LNG market, herewith the price of sweet and dry natural gas delivered by Ministry of Petroleum’s affiliated state owned companies to newly constructed SLNGU with capacity of utmost 1.5 MMTPA in aforementioned region is determined and communicated as follows:

Article 1- Natural gas allocation as well as granting license to the applicants for SLNGUs subject of this resolution will be done by Planning Deputy of MOP as usual, and the relevant Gas Sales and Purchase Agreement (GSPA) with applicants will be signed by the National Iranian Oil Company (NIOC). 9. The price formula of natural gas delivered to SLNGU with the capacity of more than 1.5 MMTPA will be determined according to circumstances by Ministry of Petroleum (MOP).

Article 2- The base formula for calculating delivered sweet natural gas price to the SLNGUs subject of this resolution in terms of US$/MMBTU is as follows:

Pn = 50% × PLNG-JKM – F           If       PLNG-JKM <12$/MMBTU

Pn = PLNG-JKM – 6 – (50%×F)       If       PLNG-JKM >=12$/MMBTU

Pn is the price of delivered natural gas to the SLNGU in month (n) in terms of USD/MMBTU

PLNG-JKM is the monthly average price of LNG in month (n) in Japan-Korea Market announced by reliable magazines in terms of USD/MMBTU

F is the monthly average cost of LNG shipping from the Middle East to East Asia announced by reliable journals in terms of USD/MMBTU

Note 1: The price for delivered feed natural gas to the petrochemical companies shall be considered as the floor price.

Note 2: The price for delivered natural gas as fuel to SLNGUs shall be equal to the price for fuel of petrochemical units in Iran.

Article 3- Measurement

Units receiving feedstock are obliged to install separate standard metering systems, as approved by the Supervision on Petroleum Export and Domestic Transactions Directorate of MOP, in order to meter received natural gas quantities as feed and fuel.

Article 4- Based on this resolution, Planning Deputy of MOP is obliged to calculate and declare delivered sweet natural gas price to SLNGUs for the preceding Persian Month in accordance with the Article 2, within first 15 days of each Persian month to be performed by affiliated companies. These prices shall be publicly declared in the Planning Deputy’s web site.

Article 5- Natural gas price, subject of this resolution, from beginning of Farwardin to the end of Shahrivar is 10% lower than the calculated gas price stipulated in Article 2, and also, from beginning of Mehr to the end of Esfand is 10% higher than the calculated gas price stipulated in Article 2.

Article 6- The natural gas invoice received by SLNGUs will be issued by NIOC to the contractual counter party according to calculations instructed in this resolution.

Note1: Prices declared in Article 2 are not containing tax and legal charges which shall be calculated and received in accordance with related instructions.

Note2: Invoices for onshore LNG units shall be issued in Rials and for offshore LNG unites (FLNG) shall be issued in other exchangeable currencies. The currency exchange rate shall be official currency exchange rate of Central Bank of the I.R. Iran (CBI).

Article 7- This price formula is valid until 19th march 2035 for the applicants who sign GSPA before 22nd Sep 2018. In case that MOP recognizes any necessity to revise the price formula after 19th march 2035, the new formula according to regional-global LNG prices, assuming full amortization of asset (SLNGUs) as well as considering reasonable operational expenditures of counter party, will be determined and declared by MOP.

In the case of any objections concerning non-compliance with the pricing criteria after 2035 mentioned above, buyers can refer to the competitiveness council.

Article 8- The terms and conditions as well as the price formula declared in this resolution is also valid for delivered natural gas to SCNGUs which will operate in southern coat of country in order to export CNG.

Article 9- The price formula of natural gas delivered to SLNGU with the capacity of more than 1.5 MMTPA will be determined according to circumstances by Ministry of Petroleum (MOP)

Article 10- The contents of this resolution, shall be replaced the content of resolution No. 20/2–268015 dated 09/03/2016 from the date declared.