FOR FORMS OF BID

FOR COMMERCIAL PROPOSAL

Quotation Prepared Notes

C4

AL-WAHA PETROLEUM Company LTD.

(WAPEC)

Provision of ESP Rental Services for Five Firm Years

Tender: No. 002/SC/22

1
1. The Day Rate
The day rate hereinafter stated shall be based on the work scope, Interface,

responsibilities and obligations, all personnel and field services and other pricing.

Another pricing is overhead, profit, taxes, personnel/field service incentives,

freight, accommodation, transportation, customs clearance, general &

administrative expense, etc., that includes but is not limited to all of the additional

costs in support of this CONTRACT.

2. Tax
CONTRACTOR shall be responsible to pay all taxes and duties levied under Iraqi

law and under laws of any other jurisdiction applicable to CONTRACTOR,

including CONTRACTOR's jurisdiction of incorporation. COMPANY shall deduct

the Withholding Tax from invoice payment and transfer to General Committee of

Taxation (GCT) of Iraq according to the law No. (19) 2010, No. (5) 2011 and its

instructions.
3. Day-rate
a) The day-rate includes the full day-rate and standby day-rate. The standby

day-rate is 30% of full day-rate.

b) Day-rate will be paid after ESP commissioning and be ceased once the DHP

is confirmed or ESP is pulled whatever the reason (intervention, resizing ESP,

tubing leakage, etc.).

c) If the pump running hours are no less than/greater than or equal to 12 hours

in a day, the full day rate will be paid.

d) If the pump running hours are less than 12 hours but more than 0 hour in a

day, then the standby day-rate will be paid.

e) The day-rates for the day of commissioning, the day of DHP and the day of

plug/stuck are calculated on the actual running hours.

f) When an ESP is stuck or plug. The rent will be ceased from the next date of

occurrence and then pull out it to make DIFA to analysis the root reasons of stuck

or plug, so the rent will be as follow:

2
  If stuck or plug is due to foreign materials from the well, the Contractor

will be compensated for all rents as stand by the rent from the

occurrence of the stuck/plug to pulling date. In this case, the TRL

penalty shall not be applied.

 If the stuck or plug is due to mechanical failure of the contractor ESP,

the Contractor will not be compensated for the rent stopping from the

occurrence of the stuck/plug until the pump is pulled out from the well.

The RL is calculated from the commission date to the occurrence date

of the stuck/plug and also the TRL penalty shall be applied based on

this RL, but if the pump is not pulled out within 60 days, then the TRL

penalty shall not be applied.

g) In the event where the well has to be shut-in due to non-ESP problems like

waiting for water injection effect to take place, water constrain, high WC, heavy

oil, inflow problems, export curtailment and so on, the day rate will be paid 30% of

full day-rate as the stand by day-rate.

h) In case the ESP downhole sensor data are missing (not fully functional),

day-rate will be deducted by 15% during two years after commissioning. No

deduction about the sensor if the data are missing after two years.
4. Mobilization fee
The Contractor shall mobilization the personnel, equipment, tools, instruments,

base, and facilities as per the request as SOW.

After the 1st stage mobilization (within 7 months upon signing the contract) The

Contractor shall have Support Base built in Ahdeb Oilfield with the ability to

perform the ESP installation, pulling, commissioning, troubleshooting, daily ESP

management, related reporting, etc.

After the final stage mobilization (within 11 months upon signing the contract) the

Contractor shall have the Full Functional Base built in Iraq with the ability to do

the ESP dismantle, ESP dismantles inspection failure DIFA, equipment

assembly, test, and other tasks.

Once the Contractor finishes all mobilization, he should submit a formal letter.

3
 After approval by the Company, the Contractor could submit the invoice for the

mobilization lump-sum fee.

5. Payment Rules
Attachment Payment List, details see SECTION GENERAL CONDITIONS OF

CONTRACT
6. Penalty of Contract
5.1 Delay in mobilization (Contract Mobilization)
A lump sum amount per day will be payable to the Company if the Contract is

delayed in its mobilization for whatsoever reason, other than force majeure or a

delay caused directly by the Company, stated in Attachment Penalty List (1, and

2). If the Contract mobilization is delayed for 120 days, the Company has the

right to terminate the Contract. The Company in such an event shall not be liable

to compensate the Contractor for any expenses incurred towards mobilization,

demobilization or otherwise. Stated in Attachment Penalty List 1 and 2.

5.2 Delay in equipment delivery during the Contract execution
When the Contractor is unable to deliver Downhole, Surface equipment,

materials, tools, instruments to the Ahdeb filed within five months after the

Company’s notice, the delay in equipment delivery penalty shall be applied as per

the Penalty List 3.

5.3 Delay in Service Performance
5.2.1 Delay in ESP installation/pulling service delivery
When the Contractor is unable to proceed with the services for a call-out due to

equipment/manpower unavailability (new ESP installation and replacement, or

others) or other reasons within the Contractor control, the Contractor is failed to

deliver services on the time, the Company has the right to deduct the amount

stated in Attachment Penalty List 4.

5.2.2 Non-Productive Time (NPT)
a) During the Rig workover, the Rig cannot follow the program to perform the

job due to the Contractor’s faults such as the absence of personnel and

material, equipment breakdown, instruments malfunction, etc. In this case,

4
 the non-productive time penalty shall be applied from the time the delay

started to the time the services are resumed from where they were

stopped. Deduct the amount stated in the Attachment Penalty List 5.1.
b) During ESP RIH, any failure may happen in ESP parts (cable, sensor,

MLE, motor, etc) and this failure lead to pull out ESP from the well, in such

case the non-productive time penalty shall be applied from the time the

stop started to the time the services are resumed from where they were

stopped unless it can prove and identify to be the responsibility of the non-

the Contractor. The penalty is stated in the Penalty list 5.2.

5.2.3 ESP system shutdown penalty
In case the well ceased to produce due to the failure of any part of the

Surface ESP equipment, the Contractor is unable to repair, or if necessary,

replace the defective components or other reasons within the Contractor

control, and restart the Surface ESP equipment within 48 hours after the

Company’s notice. The ESP system shutdown penalty shall be applied as

Penalty List 6.
5.2.4 Premature Failures penalty
Premature failure means the failure of any down-hole ESP equipment within

90 days from commissioning day to failure date (including the commissioning

date and failure date). In case the premature failure happens, the Premature

Failures penalty shall be applied as per the Penalty list 7.1.

5.2.5 RL/TRL penalty
In case of a failure that happened during the operation of ESP, the RL is less

than TRL. The penalty shall be applied after pulling out the failed equipment.

Stated in the Penalty list 7.2

A Target Run Life (TRL) is based on the historical average ESP run life in the

different field. The Contractor shall pay the amounts in Penalty Mythology as

the penalty in case the run life (RL) is less than 80%*TRL.
The premature failures penalty and RL/TRL penalty shall be applied unless it

can clearly prove and identify to be the responsibility of non-Contractor as

5
 - Mechanical downhole problem: pump block or pump stuck severely by

unknown material
- Wellbore issues to cause failure
- Lost in hole due to tubing parted or other Non-Contractor issues.
- Pulling out equipment as intervention, pump down/up sizing
- But excluding ESP running without recommended operation range (ROR)

unless it can clearly prove and identify that this running causes the failure

directly.
After a downhole problem only including mechanical problem happens,

normally the Company will try to arrange the rig to pull out the ESP within 90

days not only to recover the production but also to reserve the complete

evidence that will help to identify the reasons to cause failure special for

ESPs whose run-life are less than TRD. But sometimes for some reasons

such as no available rig, low priority, next actions not determined yet, etc. The

Company may delay pulling ESP. In this case, the penalty will not be applied.
5.2.6 Critical personnel replaced
The Contractor shall pay the amounts in attachment Penalty Mythology 8 as

the penalty in case the critical personnel is replaced without the Company's

approval.
5.2.7 Not finish the train task penalty
In the event the Contractor rejects the training application of the Company,

the training penalty shall be applied as per the penalty list 9.

5.2.8 Other issues
The Company may decide to pull out or shut down ESP and run ESP without

ROR for some reasons, in these cases no any additional payment shall be

paid for the Contractor. These cases shall be including but not limited to:
- Pull out ESP for intervention,
- Down/upsizing ESP
- Shut down ESP due to W/C, facilities, power, etc. issues