In consideration of your entering into the agreement between us of even date herewith for the purchase and sale of crude oil (herein called "the First Purchase Agreement"), we confirm the following:— 1. The First Purchase Agreement is in no way inconsistent with or contrary to any arrangement in existence between this Company and the Gulf Oil Corporation or any of its subsidiary or affiliated companies, respecting oil produced in Kuwait. 2. We agree that during the term of the First Purchase Agreement this Company will not make any sale or other transfer of its interest under the Concession dated 29th April, 1933, from the Imperial Government of Iran to this Company (herein called "the Iranian Concession") or under any new concession in place thereof except to a company to which it has assigned the First Purchase Agreement in accordance with the provisions of Article XIV of that Agreement and that this Company will not exercise its vote in the Kuwait Oil Company Limited in favour of, or otherwise consent to, a sale or other transfer by the Kuwait Oil Company Limited of the Concession dated 23rd December, 1934, from the Shaikh of Kuwait to the Kuwait Oil Company Limited (herein called "the Kuwait Concession") or of any new concession in place thereof, except to a company with which this Company has made such arrangements as are necessary to ensure the continued fulfilment of this Company's obligations under the First Purchase Agreement. 3. Exhibit 1 attached hereto contains all the terms and conditions of the Kuwait Concession with respect to royalty and tax immunity payments thereunder and there are no other or further terms, conditions or agreements in effect between the Kuwait Oil Company Limited and the Shaikh of Kuwait in connection with any of such payments. Exhibit 2 attached hereto contains all of the terms and conditions of the Iranian Concession with respect to royalty, payments to the Iranian Government based on distributions to the ordinary shareholders of this Company, tax immunity payments and adjustments in royalty and tax immunity payments for fluctuations in the value of English currency, and there are no other or further terms, conditions or agreements in effect between this Company and the Iranian Government in connection with any of such matters. 4. With respect to the provisions of the Schedule to the First Purchase Agreement, relating to Cost of Production, any allowance of free petrol, or any allowance or payment of a similar nature, exclusive of extraordinary costs as defined below, made by Kuwait Oil Company Limited to the Shaikh of Kuwait or on his account will be treated as part of the Cost of Production. Any extraordinary costs in Kuwait which are incurred by Kuwait Oil Company Limited, for the purpose of concessionary relationships will be considered of a capital nature and will be written off at the rate of 22% per annum over a period of 40 years from the date of the expenditure. Only the annual write-off for any calendar year resulting from the foregoing provision will be included in the Cost of Production for that year. Extraordinary costs as used herein mean costs which in the aggregate represent a substantial expenditure. 5. If the hydrogen sulphide content of Kuwait or Iranian oil supplied to your Company by this Company under the terms of the First Purchase Agreement should give rise to trouble with local municipal or harbour authorities at the location of any of your Furopean or U.S.A. refineries, this Company will, at your request, take such steps as may be necessary and practical to eliminate most economically the source of the difficulty, on the understanding that if costs in connection with any facilities necessary to eliminate the difficulties arising out of hydrogen sulphide content are not included either in the Cost of Production as defined in the Schedule to the First Purchase Agreement or in the Cost of Gathering as defined in the Schedule to the First Purchase Agreement, your Company would be willing to bear such costs; provided, that if the costs in connection with any such facilities are not included either in the Cost of Production or in the Cost of Gathering, as aforesaid, and if such facilities are not used solely in respect of oil supplied to your Company then such costs will be apportioned on a throughput basis as between your Company and all of the users of such facilities. 6. This letter is of equal validity in all respects as if the contents of it had been incorporated in the First Purchase Agreement. We shall be glad if you will indicate your agreement with the contents of this letter by signing the attached copy of this letter in the space provided. Yours faithfully, For ANGLO-IRANIAN OIL COMPANY, LIMITED FREDERICK G. C. MORRIS [STAMP] Agreed to and accepted. 25th September, 1947. SOCONY-VACUUM OIL COMPANY, INCORPORATED B. B. JENNINGS |