Annexure-A

TENDER ENQUIRY NO.PROC-FD/CBJV&BDD-1462/2010 TERMS OF REFERENCE (TOR)

FOR

TECHNICAL & FINANCIAL AUDIT STUDY

ON

Sara and Suri Joint Venture (Sara Suri D& PL Leases)

June 2010

OGDCL TENDER ENQUIRY N0.PROC-FD/CB/JV & BDD-1462/2010.

PAGE 1 OF 8

1. Objectives of the study A third party technical and financial audit with particular reference to the following questions: Current / remaining gas reserves available in Sara and Suri gas fields; Hydrocarbon potential / reserves in deeper, undrilled reservoirs (tight and shale gas reserves) in entire Sara and Suri D&PL areas; Possible justifications for approaching Government of Pakistan to re-negotiate the gas price of Sara and Suri gas fields; At what price, if any, may it be financially profitable for OGDCL to continue its working interest in the Sara and Suri D&PL areas; Present market price estimation of physical assets (Pipeline, equipment, etc.) in place at Sara and Suri gas fields. 2. Background information on Sara and Suri Gas Fields The Sara and Suri Gas Fields are located in the northern part of the East Badin Extension (Block B) concession in Sindh province. The fields are situated close to the Indian border, approximately 50 kilometers east of the town of Dharki. Tullow Pakistan (Developments) Ltd. currently operates the Sara and Suri Gas fields. Development and Production Lease for Sara Field was awarded in November 1998 and Development and Production Lease for Suri Field was awarded in June 2000. The commingled gas production from both fields commenced in December 1999. Sara Gas Field is operated by Tullow Pakistan Development Ltd. The percentage share of other Joint Venture partners, pre and post discoveries are as under: Tullow Pakistan Ltd. Attock Oil Company Ltd. Pre Discovery Development. 55.3846% 11.5385% 10% 23.0769% Post Discovery 38.1818% 7.2731% 40% 14.5451%

Oil & Gas Development. Company Ltd. Pakistan Oilfield Ltd.

OGDCL TENDER ENQUIRY N0.PROC-FD/CB/JV & BDD-1462/2010.

PAGE 2 OF 8

The discovery well Sara 01 was drilled during July - August, 1994 to a total depth of 3,185 meters and tested in the Chilton Limestone of Jurassic age, Lower Goru sandstone of cretaceous age, Basal part of Ghazij formation (BGS), Sui Main and Sui Upper formations of Eocene age. Analysis of the data indicated that the Basal Ghazij sand (BGS), Sui Main and Sui Upper formations were hydrocarbon bearing. A drill stem test conducted in the Basal Ghazij sand (BGS) and Sui Main formations recovered 17.75 MMcf per day of gas. In January, 1995, the well was completed in the Basal Ghazij sand (BGS) and Sui Main formations; testing indicated recoveries of 42.4 MMcf per day. Two additional wells, Sara 02 and 03 were drilled in 1996, the reservoir was found to be wet and the wells were abandoned. The Ghazij formation is predominantly shale prone, but has inter-bedded limestone and dolomite, many of which indicated gas shows during drilling. The thickest limestone, which is correlated to Sui Upper Limestone, was tested at 0.6 MMcf per day in Sara 01. This flow rate suggested that the reservoir is of fairly poor quality. The Sui Upper Limestone has an average net pay of 6 meters with a porosity of 12 percent and a water saturation of 45 percent. The Basal part of the Ghazij formation is sandstone and is of excellent reservoir quality with porosity of 19 to 32 percent and high permeability. Distribution of Ghazij sand and its relationship with the underlying Sui Main Limestone have not yet been resolved. The gas-water contact was observed in the Ghazij/Sui Main formations in Sara 01; however, pressure data in the water zone of Sara 02 indicates a gas-water contact at approximately 904 mss. Uncertainty in the accuracy of gauge readings suggests that the gas-water contact could be as deep as 909 mss. The well was placed on production in December 1999. However, the well was shut-in due to excessive water production in March 2003 after producing a total of 26.4 Bcf of gas out of total 28.06 Bcf (P-50) reserves.

Suri gas field is operated by Tullow Pakistan Development Ltd. (TPDL) and percentage share of other Joint Venture partners, pre and post discoveries are as under:

OGDCL TENDER ENQUIRY N0.PROC-FD/CB/JV & BDD-1462/2010.

PAGE 3 OF 8

Pre Discovery Tullow Pakistan Development. 55.3846% Ltd. Attock Oil Company Ltd. Oil & Gas Company Ltd. Pakistan Oilfield Ltd. 11.5385%

Post Discovery 38.1818% 7.2731% 40% 14.5451%

Development. 10% 23.0769%

The Suri discovery well 01 is located approximately 8 kilometers north west of Sara 01. The Suri 01 was spud-in on September 20, 1997 and drilled vertically to a depth of 1,249 meters. The well encountered gas bearing intervals in the Sui Upper, Sui Main formation of Eocene age and Ranikot formations of Paleocene age. Drill stem tests were conducted in the three formations and recovered gas at stabilized rates of 9.1 MMcf per day, 18.1 MMcf per day (after acidizing) and 12.24 MMcf per day, respectively. A separate analysis of gas recovered from these zones indicates qualities of 787 to 823 BTU. The Sui Main Limestone is the main reservoir in the field. Good vuggy porosity described at top of Sui Main Limestone and petrophysical analysis suggests that the top 15 meters are porous although only 7 meters are gas bearing. The Sui Main Limestone has average net pay of 17 meters, porosity of 12 percent and water saturation of 40 percent. Suri # 1 was completed in Ranikot formation in December 1999 and was watered out in 2003. Well was recompleted in Sui main and Sui upper formation. These formations also watered out in 2007. The Suri 02 was drilled and placed on production from the Ranikot formation in March 2002. The Ranikot formation watered out in early 2003 after producing a total of 10.7
OGDCL TENDER ENQUIRY N0.PROC-FD/CB/JV & BDD-1462/2010.

PAGE 4 OF 8

Bcf from Suri-01-R and 2.173 Bcf from well Suri-02-R. Water production from Suri field forced the operator to squeeze off the perforations of Lower Ranikot. The well was completed in Sui main formation in February 2003. In 2007 due to very low pressure, compression was installed in Suri 02, presently well is producing from the Sui Upper/Sui Main formation at an average rate of 0.8 MMcf per day with pressure of 370 Psi. The dehydrated gas is transmitted through 35 kilometers long pipeline to the Mari central facilities installed at Mari # 06 well, from where it was combined with Mari gas for onward transmission to Guddu Thermal Power Station. The injection pressure is about 500 Psi. 3. Scope of Work 3.1 Existing reservoirs in Sara and Suri fields The Consultant will be required to review all geophysical, geological, petrophysical and engineering data pertaining to these two fields. The data to be reviewed will include seismic data, time/depth structure maps, well logs, well correlations/cross sections, pressure surveys, PLT/PSP, TDT/RST, PVT, production data, well tests, completion histories and all data relating to current or proposed well drilling, workovers, compression installation, secondary recovery projects or other information relating to past, current or anticipated well activity. The Consultant will also review all in-house reports and those of operator geological, engineering or reservoir simulation reports as well as reports prepared by independent consultant. Based upon its review, the consultant would prpepare in-place and recoverable quantities of gas and oil/condensates (if any) for each well/field in the existing reservoirs. In addition to volumetric estimates, the Consultant will use material balance and other methods of estimating reserves where sufficient data is available. 3.2 Exploratory potential of deeper reservoirs

OGDCL TENDER ENQUIRY N0.PROC-FD/CB/JV & BDD-1462/2010.

PAGE 5 OF 8

The consultant will be required to evaluate the upside exploration reserves potential (P90, P50, P10 & Mean) along with the expected gas quality in the deeper and undrilled parts of Sara and Suri D&PLs at the following reservoir levels: Base Ghazij Sands Sui Upper Limestone Sui Main Limestone Ranikot Sands Lower Goru Sequence 6 Sands (tested at Sara West wells)

3.3 Gas pricing re-negotiation matters The Consultant would be required to carry out an in-depth analysis of the relevant documents including the Petroleum Concession Agreements, D&P Leases, applicable 1994 Petroleum Policy, GSA with WAPDA, the 1997, 2001 and 2009 Petroleum Exploration and Production Policies to determine the appropriate gas price which can be legally claimed by the joint venture (including OGDCL) for the present production and future production with or without the payment development surcharge (currently under judicial review in Lahore High Court). The gas price which can be legally claimed will need to be determined under the existing contractual and policy framework for likely new gas discovery and production from the deeper prospects as a result of the new exploratory effort in a lease area. Most appropriate legally tenable rational basis for approaching the Government to re-negotiate the gas price and possible justification for the existing production from Sara and Suri gas fields. It has also to be seen whether the economic hardship principle can be applied in view of the changed economic conditions. At what gas price will it be economically feasible for OGDCL to continue to participate as JV partner with existing working interest in Sara Suri gas field. of gas

OGDCL TENDER ENQUIRY N0.PROC-FD/CB/JV & BDD-1462/2010.

PAGE 6 OF 8

3.4 Breakeven and other financial analysis The Consultant should be in a position, after review of all technical, commercial and other data of the two fields and the legal framework, to carry out a breakeven analysis taking into account all financial aspects including the field abandonment cost for the remaining life of the fields. The outcome of the analysis would inter alia specifically address the following questions under different likely scenarios: At what gas price will it be economical feasible for OGDCL to continue to participate as JV partner with existing working interest in Sara and Suri gas fields? The effect of likely discovery and new gas production from deeper prospects may be shown as a separate scenario. Financial analysis including economic value assessment, if OGDCL retains it 40% working interest in the two fields, till abandonment. The effect of likely discovery and new gas production from deeper prospects may be shown as a separate scenario. 3.5 Market value of physical assets The Consultant will be required to estimate the market value of the physical assets of the Sara Suri Joint Venture which include but may not be limited to land, civil works, pipeline, process equipment, and inventory. The Consultant would also be required to estimate the market value that may be realized by OGDCL subject to applicable rules and regulations. 4. Data collection All the data available will be collected by the consultants from OGDCL offices in Islamabad and will be subject to signing a Confidentiality Agreement. data requirement during the data collection phase. 5. Final report The consultants will conduct an initial review/scrutiny of the data to identify any additional

OGDCL TENDER ENQUIRY N0.PROC-FD/CB/JV & BDD-1462/2010.

PAGE 7 OF 8

The Consultant will need to present its findings within one month or a mutally agreed time frame. The Consultants report should incorporate all data accumulated to May 31, 2010. The report should include, in detail, all aspects of the study. The Consultant may be required to present the key findings of the study to OGDCL management at OGDCL head office, Islamabad. All the points raised in the presentation / reports will be submitted in triplicate (hard and soft copies) by [date].

OGDCL TENDER ENQUIRY N0.PROC-FD/CB/JV & BDD-1462/2010.

PAGE 8 OF 8