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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission File Number: 001-39171
BROOGE ENERGY LIMITED
(Exact name of Registrant as specified in its charter)
| Not applicable | Cayman Islands | |
| (Translation of Registrant’s name into English) | (Jurisdiction of incorporation or organization) |
c/o Brooge Petroleum and Gas Investment Company
FZE
P.O. Box 50170
Fujairah, United Arab Emirates
+971 9 201 6666
(Address of Principal Executive Offices)
Siavosh Hossein
P.O. Box 50170
Fujairah, United Arab Emirates
+971 9 201 6666
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Ordinary shares, $0.0001 par value per share | BROG | The Nasdaq Stock Market LLC | ||
| Warrants to purchase ordinary shares | BROGW | The Nasdaq Stock Market LLC |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 109,587,853 ordinary shares out of which 21,552,500 are held in Escrow
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☐ No ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “accelerated filer,” “large accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ |
| Emerging growth company ☐ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| U.S. GAAP ☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ | Other ☐ |
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
BROOGE ENERGY LIMITED
TABLE OF CONTENTS
INTRODUCTION
Brooge Energy Limited (the “Company”) was incorporated under the laws of the Cayman Islands as an exempted company on April 12, 2019, under the name Brooge Holdings Limited. On April 7, 2020, the Company changed its name to Brooge Energy Limited. The Company was incorporated for the purpose of effectuating the Business Combination (as defined below) and to hold Brooge Petroleum and Gas Investment Company FZE, a company formed under the laws of the Fujairah Free Zone, United Arab Emirates (“BPGIC”). Prior to the Business Combination, the Company owned no material assets and did not operate any business.
On December 20, 2019, pursuant to a business combination agreement (the “Business Combination Agreement”) among the Company, Twelve Seas Investment Company (now known as BPGIC International), a Cayman Islands exempted company (“Twelve Seas”), Brooge Merger Sub Limited, the Company’s wholly-owned subsidiary (“Merger Sub”), BPGIC, BPGIC Holdings Limited, a Cayman Islands exempted company (“BPGIC Holdings”), among other things:
| (i) | Twelve Seas merged with and into Merger Sub, with Twelve Seas continuing as the surviving entity and a wholly-owned subsidiary of the Company (under the name BPGIC International (“BPGIC International”)), with the holders of Twelve Seas’ securities receiving substantially equivalent securities of the Company; and |
| (ii) | the Company acquired all of the issued and outstanding ordinary shares of BPGIC from BPGIC Holdings in exchange for 98,718,035 Ordinary Shares of the Company and cash in the amount of $13,225,827.22, with BPGIC becoming a wholly-owned subsidiary of the Company. |
The foregoing transaction is referred to in this Annual Report on Form 20-F (this “Report”) as the “Business Combination”.
Upon consummation of the Business Combination, the Company’s Ordinary Shares and warrants to purchase Ordinary Shares became listed on the Nasdaq Capital Market.
Unless otherwise indicated, the “Company,” the “Group,” “we,” “us,” “our,” and similar terminology refers to Brooge Energy Limited together with its subsidiaries subsequent to the Business Combination.
The Company previously filed an Annual Report on Form 20-F on April 5, 2021, as amended by Amendment No. 1 to the Annual Report on Form 20-F/A filed with the Securities and Exchange Commission on April 6, 2021, inclusive of any six month financial statements previously filed (collectively, the “Previous 2020 Form 20-F”). As previously reported, as a result of an investigation by the Audit Committee of the Board of Directors, the Committee decided to withdraw reliance on such filings on August 17, 2022. Due to the on-going investigation by Securities and Exchange Commission previously disclosed, the Company was not able to file the required Annual Reports on Form 20-F for fiscal years ended December 31, 2021 and December 31, 2022, including any related six month financial statements that should have been filed. On April 26, 2023 (with amendments on May 1 and May 2, 2023), the Company filed a Form 20-F which replaced and restated in full the Previous 2020 Form 20-F, which also covered the fiscal years ended December 31, 2021 and December 31, 2022, inclusive of any six month financial statements that should have been filed.
Following a winding up order made on November 20, 2023 by the Grand Court of the Cayman Islands (the “Court”), the majority shareholder of the Company, BPGIC Holdings, was placed into official liquidation and Messrs. Alexander Lawson and Guy Wall were appointed by the Court as joint official liquidators (“JOLs”) of BPGIC Holdings.
Following a request from the JOLs, on December 14, 2023, the Board of Directors of the Company appointed the JOLs as directors of the Company.
During the Company’s 2023 Annual General Meeting (the “2023 AGM”) that took place on December 15, 2023, the JOLs attended the meeting in person and cast their votes on behalf of BPGIC Holdings, voting against the reelection of the previous directors and declaring themselves the only two directors of the Company, with effect from December 15, 2023.
Following the 2023 AGM, the two new directors were supposed to appoint new independent board members and to constitute the audit and compensation committees accordingly.
On December 27, 2023, BPGIC, a subsidiary of the Company was served with a court order from a court in the UAE and as a precautionary measure, the court appointed a Judicial Guardian (“JG”) over BPGIC.
On March 12, 2024, Mr. Guy Wall resigned from his position as director of the Company and Mr. Alexander Lawson became the sole director of the Company.
With the absence of an audit committee, the Company was unable to confirm the engagement of a PCAOB certified accounting firm to file its Form 20-F in a timely manner. Additionally, the gap or lack of communication between the JOLs at the shareholder level and the JG at the subsidiary level contributed to delays in decision-making processes. Consequently, this Form 20-F has been filed hereby on a delayed basis.
On September 02, 2024, the Company held an extraordinary general meeting of shareholders (the “2024 EGM”).
At the 2024 EGM, holders of ordinary shares of the Company were asked to consider and vote upon the proposals set forth on the proxy card, including the election of a Board. As a result of the Meeting, the Company’s board of directors now consists of Kamal Pharran, Saleh Mohamed Yammout, Rasool Alameri, Tony Boutros, and Siavosh Hossein; effective from September 04,2024, the board of directors has appointed Mr. Siavosh as the Chairman of the Board. Following the EGM, the previous sole director, Alexander Lawson, resigned as a director of the Company. On September 4, 2024, the Board of Directors updated the composition of its Audit Committee.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report (including information incorporated by reference herein) contains forward-looking statements as defined in Section 27A of the Securities Act, and Section 21E of the Exchange Act that involve significant risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These forward-looking statements include information about our possible or assumed future results of operations or our performance. Words such as “expects,” “intends,” “plans,” “believes,” “anticipates,” “estimates,” and variations of such words and similar expressions are intended to identify some, but not all, forward-looking statements. The risk factors and cautionary language referred to or incorporated by reference in this Report provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described in or implied by our forward-looking statements, including among other things, the items identified in “Item 3.D Risk Factors”.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. Although we believe that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements contained in this Report, or the documents to which we refer readers in this Report, to reflect any change in our expectations with respect to such statements or any change in events, conditions or circumstances upon which any statement is based.
INDUSTRY AND MARKET DATA
In this Report, the Company relies on and refers to industry data, information and statistics regarding the markets in which it competes from research as well as from publicly available information, industry and general publications and research and studies conducted by third parties. The Company has supplemented this information where necessary with its own internal estimates and information obtained from discussions with its customers, taking into account publicly available information about other industry participants and Company management’s best view as to information that is not publicly available. The Company has taken such care as it considers reasonable in the extraction and reproduction of information from such data from third-party sources.
Industry publications, research, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this Report. These forecasts and forward-looking information are subject to uncertainty and risk due to a variety of factors, including those described under “Item 3.D Risk Factors”. These and other factors could cause results to differ materially from those expressed in the forecasts or estimates from independent third parties and us.
FREQUENTLY USED TERMS
“$,” “USD,” “US$” and “US dollar” each refer to the United States dollar.
“AED,” refers to the Arab Emirate Dirham, the official currency of the United Arab Emirates.
“Amended and Restated Memorandum and Articles of Association” means the amended and restated memorandum and articles of association of Brooge Energy Limited.
“ASMA Capital” means ASMA Capital Partners B.S.C.(c).
“Atlantis” means Atlantis Commodities Trading HK Limited
“Audex” means Audex Fujairah LL FZC.
”b/d” means barrels per day.
“Bond Financing Facility” means five-year senior secured bonds issued by BPGIC pursuant to Bond Terms dated September 22, 2020 and amended October 23, 2020 and April 27, 2022 by and between BPGIC and the Bond Trustee, with maximum issue size of $250 million and initial issuance of $200 million.
“Bond Trustee” means Nordic Trustee AS, as bond trustee under the Bond Financing Facility.
“BPGIC” means Brooge Petroleum and Gas Investment Company FZE.
“BPGIC III” means Brooge Petroleum and Gas Investment Company Phase III FZE, a company formed under the laws of the Fujairah Free Zone, United Arab Emirates.
“BPGIC Management” means Brooge Petroleum and Gas Management Company Ltd.
“BPGIC PLC” means Brooge Petroleum and Gas Investment Company (BPGIC) PLC, a company formed under the laws of England and Wales.
“BPGIC Terminal” means the terminal that the Company is developing on two plots of land located in close proximity to the Port of Fujairah’s berth connection points.
“BRE” means Brooge Renewable Energy Limited.
“Business Combination” means the transactions whereby (a) Twelve Seas merged with and into Merger Sub, with Twelve Seas continuing as the surviving entity with the name BPGIC International, and as a wholly-owned subsidiary of the Company and with holders of the Twelve Seas’ securities receiving substantially equivalent securities of the Company, and (b) the Company acquired all of the issued and outstanding ordinary shares of BPGIC from BPGIC Holdings in exchange for Ordinary Shares of the Company, subject to the withholding of the escrow shares being deposited in the escrow account in accordance with the terms and conditions of the Business Combination Agreement and the escrow agreement, and with BPGIC becoming a wholly-owned subsidiary of the Company, and other transactions contemplated by the Business Combination Agreement.
“Business Combination Agreement” means the Business Combination Agreement, dated as of April 15, 2019, as amended, by and among the Company, BPGIC, Twelve Seas, Merger Sub, and BPGIC Holdings pursuant to which the Business Combination was consummated.
“CenGeo” means CenGeo New Energy FZ-LLC
“Closing” means the closing of the Business Combination on December 20, 2019.
“Commercial Storage Agreements” means, collectively, the Avis Storage Agreements dated May 10 2022, the Sahra Storage Agreements dated November 21 2022, the Cengeo Storage Agreements dated July 01, 2022, August 04, 2022, September 09, 2022 and December 13, 2022; the Aachim Storage Agreement dated July 15, 2022, the Actirays Storage Agreement dated August 19, 2022; the Atlantis Storage Agreement dated February, 01 2023; the Valens DMCC Storage Agreement dated June 15, 2023; the 1Energin DMCC Storage Agreement dated 23 June 2023; and the Turkiz Fuel Trading LLC Storage Agreement dated 07 July 2023.
“Companies Law” means the Companies Law (2020 Revision) of the Cayman Islands.
“Construction Funding Account” means the account with Offshore Account Bank with $85 million on deposit from the Bond Financing Facility to be set aside for payment of Phase II construction, with $45 million to be paid at the time of disbursement and $5 million payable monthly for eight months.
“Continental” means Continental Stock Transfer & Trust Company.
“Debt Service Retention Account” means the account with Offshore Account Bank into which one-sixth of the amortization and interest payment payable on the next interest payment date of Bond Financing Facility shall be transferred monthly.
“Early Bird Capital” means EarlyBirdCapital, Inc.
“EIBOR” means the Emirates Interbank Offered Rate.
“1Energin” means 1Energin DMCC.
“EPC” means engineering, procurement and construction.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FAB” means First Abu Dhabi Bank PJSC.
“Financing Facilities” means, collectively, the Phase I Financing Facilities and the Phase II Financing Facility, and Commercial Bank of Dubai Financing Facility for office.
“FOIZ” means the Fujairah Oil Industry Zone.
“Fujairah Municipality” means the local government organization in Fujairah, UAE specializing in municipal urban and rural municipal affairs.
“Green Hydrogen and Green Ammonia Project” means the project to be located in Abu Dhabi, led by BRE which aims to produce renewable, carbon-free fuel using solar power.
“Group” means the Company and each of its subsidiary undertakings.
“IFRS” refers to International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).
“JOBS Act” means the Jumpstart Our Business Startups Act of 2012.
“June 15 Phase I Construction Facilities Amendment” means the agreement entered into by BPGIC and FAB on June 15, 2020, to amend the Phase I Construction Facilities.
“Land Leases” means, collectively, the Phase I & II Land Lease and the Phase III Land Lease.
“Liquidity Account” means the bank account established by BPGIC as part of Bond Financing Facility with the Offshore Account Bank to maintain $8,500,000, which amount is equal to the interest payment due on the first interest payment date.
“MENA” means Middle East and North Africa.
“Merger Sub” means Brooge Merger Sub Limited, a Cayman Islands exempted company.
“Modular Refinery” means a refinery with a capacity of 25,000 b/d to be installed at the BPGIC Terminal.
“MUC” means MUC Oil & Gas Engineering Consultancy, LLC.
“NASDAQ” means the NASDAQ Stock Market LLC.
“Offshore Account Bank” means HSBC Bank Plc.
“Ordinary Resolution” means a resolution passed by the affirmative vote of a simple majority of the shareholders of the Company as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a meeting.
“Ordinary Shares” means the ordinary shares, par value $0.0001 per share, of Brooge Energy Limited, unless otherwise specified.
“Orit” means Orit Pte. Ltd.
“Phase I” means the first phase of the BPGIC Terminal consisting of 14 oil storage tanks with an aggregate geometric oil storage capacity of approximately 0.399 million m3 and related infrastructure located on the Phase I & II Land.
“Phase I & II Land” means the plot of land of approximately 153,917 m2 in the Port of Fujairah where BPGIC has located its Phase I facility and is locating its Phase II facility.
“Phase I & II Land Lease” means the land lease dated as of March 10, 2013, by and between Fujairah Municipality and BPGIC, as amended by the novation agreement, dated September 1, 2014, by and among Fujairah Municipality, BPGIC and FOIZ pursuant to which BPGIC leases the Phase I & II Land.
“Phase I Admin Building Facility” means the secured Shari’a compliant financing arrangement of $11.1 million entered into by BPGIC with FAB to fund a portion of the construction costs of Phase I.
“Phase I Construction Facilities” means, collectively, the Phase I Admin Building Facility and the Phase I Construction Facility.
“Phase I Construction Facility” means the secured Shari’a compliant financing arrangement of $84.6 million entered into by BPGIC with FAB to fund a portion of the construction costs of Phase I.
“Phase I Financing Facilities” means, collectively, the Phase I Admin Building Facility, the Phase I Construction Facility and the Phase I Short Term Financing Facility.
“Phase I Internal Manifold” means the internal manifold that connects the 14 oil storage tanks of Phase I.
“Phase I Short Term Financing Facility” means the Shari’a compliant financing arrangement of $3.5 million entered into by BPGIC with FAB to settle certain amounts due under the Phase I Construction Facilities.
“Phase II” means the second phase of the BPGIC Terminal which consists of eight oil storage tanks with an aggregate geometric oil storage capacity of approximately 0.601 million m3 and related infrastructure located on the Phase I & II Land.
“Phase II Financing Facility” means the secured Shari’a compliant financing arrangement of $95.3 million entered into by BPGIC with FAB to fund a portion of the capital expenditures in respect of Phase II.
“Phase II Internal Manifold” means the internal manifold that will connect the eight oil storage tanks of Phase II.
“Phase III” means the third phase of the Company’s development in the Port of Fujairah to the located on the Phase III Land.
“Phase III Land” means the plot of land of approximately 455,369 m2 in the Port of Fujairah near the Phase I & II Land where the Company expects to locate its Phase III facilities.
“Phase III Land Lease” means the land lease agreement, dated as of February 2, 2020, by and between BPGIC and FOIZ, which was novated by BPGIC to BPGIC III on October 1, 2020, whereby BPGIC III leases the Phase III Land.
“Port of Fujairah” or “Port” means the port of Fujairah.
“SAA” means S A A Trading Refined Oil Products Abroad.
”Sahra” means Sahra Oil FZE
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Senior Management” and “Senior Managers” refer to those persons named as officers in “Item 6.A Directors, Senior Management and Employees — Directors and Executive Officers”.
“Special Resolution” means a resolution passed by the affirmative vote of a majority of at least two-thirds of the shareholders of the Company as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a meeting, of which notice specifying the intention to propose the resolution as a “special resolution” has been duly given.
“Storage Customers” means, collectively, any customer who has executed a Commercial Storage Agreements with BPGC during the year of 2023, including: Cengeo New Energy FZ-LLC, Avis Trading Crude Oil Abroad L.L.C, Sahra Oil FZE, Aachim Energy FZE, Actirays Middle East Trading FZE, Atlantis Commodities Trading HK Limited; Valens DMCC; 1Energin DMCC; and Turkiz Fuel Trading LLC.
“Strait of Hormuz” means the strait of Hormuz.
“Twelve Seas” means Twelve Seas Investment Company (now known as BPGIC International), a Cayman Islands exempted company.
“Twelve Seas Sponsor” means Twelve Seas Sponsors I LLC, a Delaware limited liability company.
“US,” “U.S.” or “United States” means the United States of America.
“U.S. GAAP” means United States generally accepted accounting principles.
“UAE” means the United Arab Emirates.
“Valens” means Valens DMCC
“Valor” means Valor International FZC.
“VLCC” means very large crude carrier.
“Warrants” means the warrants to purchase one Ordinary Share of the Company at an exercise price of $11.50 per Ordinary Share.
“Warrant Agreement” means the agreement signed on June 19, 2018 and the amended agreement signed on December 20, 2019.
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable.
ITEM 3. KEY INFORMATION
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
An investment in our Company involves a high degree of risk. Before deciding whether to invest in our Company, you should consider carefully the risks described below, together with all of the other information set forth in this Report, including the information set forth under the heading “Item 5. Operating and Financial Review and Prospects,” and our consolidated financial statements and related notes. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be materially and adversely affected, which could cause the trading price of our securities to decline, resulting in a loss of all or part of your investment. The risks described below and elsewhere in this Report are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business. You should only consider investing in our Company if you can bear the risk of loss of your entire investment.
Summary of Risk Factors
The following is a summary of the principal risks that could adversely affect our business, financial condition, results of operations and cash flow.
Risks Related to our Transaction with GulfNav
Risks Related to BPGIC
| ● | BPGIC is the subject of a Judicial Guardianship in the UAE. BPGIC has a limited operating history. |
| ● | BPGIC is currently reliant on the Company’s storage customers of Phase I and Phase II for the majority of its revenues. |
| ● | The Phase I and Phase II users’ usage of our ancillary services has an impact on our profitability. |
| ● | In the event that the Commercial Storage Agreements expire or otherwise terminate, we may have difficulty locating replacements due to competition. |
| ● | The scarcity of available land in the Fujairah oil zone region could limit our ability to expand our facilities in Fujairah beyond Phase III. |
| ● | Accidents involving the handling of oil products at the BPGIC Terminal could disrupt our business operations and/or subject us to environmental and other liabilities. |
| ● | The Modular Refinery will face operating hazards, which could expose us to potentially significant liability costs. |
| ● | When the Modular Refinery is completed, our financial results will be affected by volatile refining margins. |
| ● | Our competitive position and prospects depend on the expertise and experience of our Senior Management. |
| ● | The Green Hydrogen and Green Ammonia Project may face operating hazards, which could expose us to potentially significant liability costs. |
| ● |
In connection with the preparation of our financial statements, two material weaknesses in our internal control over financial reporting were identified.
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| ● | No adequate documentation is obtained regarding the other payable under liabilities on the balance sheet. | |
| ● | We are subject to a wide variety of regulations. |
| ● | Any material reduction in the quality or availability of the Port of Fujairah’s facilities could have a material adverse effect on us. |
| ● | BPGIC is subject to restrictive covenants in the Bond Financing Facility. |
| ● | The fixed cost nature of our operations could result in lower profit margins if certain costs were to increase and we are unable to offset such costs. |
| ● | We are dependent on our IT and operational systems, which may fail or be subject to disruption. |
| ● | Beyond Phase II, expansion of our business may require substantial capital investment. |
Risks Related to the Company’s Structure and Capitalization
| ● | We do not expect to pay cash dividends for the foreseeable future. |
| ● | The escrow release provisions of the Escrow Agreement may affect management decisions and incentives. |
| ● | We may issue additional Ordinary Shares or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our Ordinary Shares. |
| ● | Fluctuation of the exercise price of our Warrants could result in material dilution of our then existing shareholders. |
| ● | Because we are a Cayman Islands exempted company, you could have less protection of your shareholder rights than you would under U.S. law. |
| ● | Provisions of our Amended and Restated Memorandum and Articles of Association may inhibit a takeover of the Company. |
| ● | As a “foreign private issuer”, we are subject to certain reduced reporting requirements and other exemptions, which limits the information you might otherwise receive and could make our Ordinary Shares less attractive to investors. |
| ● | Our controlling shareholder has substantial influence over us. |
Risks Related to Doing Business in Countries in Which the Group Operates
| ● | We are subject to political and economic conditions in Fujairah, the UAE, and the region in which we operate. |
| ● | Our business operations could be adversely affected by terrorist attacks, natural disasters or other catastrophic events beyond our control. |
| ● | Climate change-related legislation or regulations could result in increased operating and capital costs and reduced demand for our storage services. |
| ● | We may incur significant costs to maintain compliance with, or address liabilities under, environmental, health and safety regulation applicable to our business. |
| ● | We could be adversely affected by violations of anti-corruption laws or economic sanctions programs. |
| ● | Tax liabilities associated with indirect taxes on the oil products we service could result in losses. |
| ● | Changes to VAT law in the UAE may have an adverse effect on us. |
| ● | Our business may be adversely affected if the US dollar/UAE dirham-tied exchange rate were to be removed or adjusted. |
| ● | Our business may be materially adversely affected by unlawful or arbitrary governmental action. |
| ● | Legal and regulatory systems may create an uncertain environment for investment and business activities. |
| ● | The grant and future exercise of registration rights, or sales of a substantial number of our securities in the public market, could adversely affect the market price of our Ordinary Shares. |
| ● | NASDAQ may delist our securities. |
General Risk Factors
| ● | Fluctuations in our operating results, quarter-to-quarter earnings and other factors, may result in significant decreases in the price of our securities. |
| ● | The market for our securities may not be sustained, which would adversely affect the liquidity and price of our securities. |
| ● | The price of our Ordinary Shares may be volatile. |
| ● | Reports published by analysts could adversely affect the price and trading volume of our Ordinary Shares. |
Risks Related to our Transaction with GulfNav
The Company is currently evaluating a potential sale of its operating subsidiaries in the UAE (the “GulfNav Transaction”) that could significantly impact our operations, financial condition, and strategic direction. While we believe that this merger could provide opportunities for growth and enhanced market position for the operating subsidiaries in the UAE, there are inherent risks associated with the merger process that could adversely affect the business of the subsidiaries.
The evaluation and negotiation phases of such a transaction can be complex and time-consuming, and there is no guarantee that the GulfNav Transaction will be completed on favorable terms or at all. If the GulfNav Transaction does not proceed as planned, we may incur substantial costs related to the due diligence process, legal fees, and other expenses without realizing any benefits.
Additionally, if the GulfNav Transaction is completed, GulfNav and the operating subsidiaries will face challenges in integrating their operations, cultures, and systems of both entities, which could disrupt the business and lead to operational inefficiencies and impact any anticipated synergies.
Furthermore, the GulfNav Transaction may attract scrutiny from regulatory authorities, which could lead to delays, additional costs, or conditions that could limit operational flexibility. Market reactions to the announcement of the final terms of the GulfNav Transaction could also affect our stock price.
As a result, investors should carefully consider these risks associated with the GulfNav Transaction when evaluating their investment in our company.
Risks Related to BPGIC
In the event that we do not complete the GulfNav Transaction, we will continue to be exposed to risks associated with BPGIC.
BPGIC is the subject of a Judicial Guardianship in the UAE
The Company conducts substantially all of its activities through its subsidiary BPGIC. On December 27, 2023, BPGIC was served with a court order from a court in the UAE under which the court appointed a Judicial Guardian (“JG”) over BPGIC. In the UAE, judicial guardianship over a company typically refers to a legal arrangement where a court appoints a guardian to oversee and manage the affairs of a company. This usually happens when the company is facing significant financial difficulties or other serious issues that threaten its viability. The guardian, often a legal or financial expert, is responsible for making decisions to stabilize and potentially turn around the company’s operations. This process is governed by UAE’s commercial laws and is intended to protect the interests of creditors, shareholders, and other stakeholders by ensuring that the company is managed effectively during a period of crisis. The JG has the authority to make critical decisions, including restructuring the company’s debts, managing its assets, and possibly even selling parts of the business to ensure its survival. Consequently, the Company has lost, or may lose, the ability to directly influence BPGIC’s decisions. Although the JG normally acts in the best interests of the parties, the JG could take actions that are harmful to the Company and the Company’s shareholders, including selling assets that are otherwise necessary to either complete the GulfNav Transaction or continue with the Company’s strategy, or selling shares in BPGIC to raise capital but dilute the Company’s stake and make it impossible to complete the GulfNav Transaction.
BPGIC has a limited operating history, which makes it particularly difficult for a potential investor to evaluate the Company’s financial performance and predict its future prospects.
BPGIC commenced operations of Phase I in late Fourth Quarter 2017 and began operating it at full capacity on April 1, 2018, and Phase II in September 2021 and began operating it at full capacity from January 2022. As a result, although the Company’s Senior Management and site teams have relevant international and industry experience, the Company has only limited operating results to demonstrate its ability to operate its business on which a potential investor may rely to evaluate the Company’s business and prospects. Accordingly, the financial information included in this Report may be of limited use in assessing the Company’s business. The Company is also subject to the business risks and uncertainties associated with any new business, including the risk that it will not achieve its operating objectives and business strategy. BPGIC’s limited operating history increases the risks and uncertainties that potential investors face in making an investment in our securities and the lack of historic information may make it particularly difficult for a potential investor to evaluate the Company’s financial performance and forecast reliable long-term trends.
BPGIC is currently reliant on its storage customers of Phase I and Phase II for the majority of its revenues and any material non-payment or non-performance by its storage customers would have a material adverse effect on the Company’s business, financial condition and results of operations.
Phase I of the BPGIC Terminal consists of 14 oil storage tanks with an aggregate geometric oil storage capacity of approximately 0.399 million m3 and related infrastructure. Phase II of the BPGIC Terminal consists of 8 oil storage tanks with an aggregate geometric oil storage capacity of approximately 0.601 million m3 and related infrastructure.
A majority of the BPGIC’s revenues for the immediate future are expected to consist of the fees it receives from storage customers.
BPGIC is susceptible to general economic conditions, natural catastrophic events and public health crises, which could adversely affect our operating results.
BPGIC’s results of operations could be adversely affected by general conditions in the global economy, including conditions that are outside of our control, such as the impact of health and safety concerns from any potential future outbreaks of COVID-19. Governments in affected countries, including the UAE, have in the past imposed travel bans, quarantines and other emergency public health measures. Those measures, though temporary in nature, may happen again depending on developments of new strains of the COVID-19’s virus. Though neither our oil storage and services operations nor the activities of our executives and corporate staff was significantly impacted by the COVID-19 pandemic, some of the vendors and professionals with whom we work have experienced disruptions which resulted in the delay of the construction and commencement of operations of Phase II. Our executives and corporate staff have been, and may continue to be, focused on mitigating potential future effects of COVID-19, which may delay other value-add initiatives.
In addition, the COVID-19 pandemic significantly increased economic uncertainty. Such adverse impact on the global economy may negatively impact the availability of debt and equity financing on commercially reasonable terms, which, in turn, may adversely affect our ability to successfully execute our business strategies and initiatives, such as the funding of capital expenditures.
The extent, if any, to which the coronavirus impacts our results will depend on future developments, which will include emerging information concerning the severity of the coronavirus and the actions taken by governments and private businesses to attempt to contain the coronavirus.
The ongoing Ukrainian Russian conflict has had a significant impact on the oil industry, with increased volatility in oil prices and disruptions to logistics and supply chains. Heightened geopolitical tensions due to the current conflict involving Israel, could result in regulatory changes, restrictions on trade, or sanctions that may directly affect our operations in the UAE. Such developments could also lead to a decline in investor confidence, impacting our stock price and overall market valuation. BPGIC’s operations could be adversely affected by these two conflicts, as changes in oil prices and logistics could impact demand for its storage services and increase its operating costs. BPGIC has implemented measures to manage these risks, such as maintaining flexible logistics arrangements, and having long-term contracts. However, the Company cannot guarantee that these measures will be effective in mitigating the potential impacts of the Ukrainian Russian conflict on its business, financial condition, and results of operations.
The Phase I and Phase II users’ usage of BPGIC’s ancillary services has an impact on BPGIC’s profitability. The demand for such ancillary services can be influenced by a number of factors including current or expected prices and market demand for refined petroleum products, each of which can be volatile.
With respect to the Commercial Storage Agreements currently in effect, the total monthly storage fees are fixed and the total monthly fees for BPGIC’s ancillary services are subject to variation based on the customers’ usage of BPGIC’s ancillary services. The Company expects BPGIC’s revenue from the ancillary services offered in Phase I and Phase II to vary based on the orders received from the Storage Customers. The needs of the Storage Customers tend to vary based on a number of factors including current or expected refined petroleum product prices and trading activity. Factors that could lead to a decrease in the demand for BPGIC’s ancillary services include:
| ● | changes in expectations for future prices of refined petroleum products; | |
| ● | the level of worldwide oil and gas production and any disruption of those supplies; | |
| ● | a decline in global trade volumes, economic growth, or access to markets; | |
| ● | higher fuel taxes or other governmental or regulatory actions that increase, directly or indirectly, the cost of gasoline and diesel; and |
| ● | New sanctions or changes of laws. |
Any of the factors referred to above, either alone or in combination, may result in the Storage Customers’ reduced usage of BPGIC’s ancillary services, which would ultimately have a material adverse effect on the Company’s business, financial condition and results of operations.
In the event that the Commercial Storage Agreements expire or otherwise terminate, BPGIC may have difficulty locating replacements due to competition with other oil storage companies in the Port of Fujairah and at other ports.
The Commercial Storage Agreements currently in effect have terms ranging from one to three years, subject to renewals. There can be no assurance that any of the Commercial Storage Agreements currently in effect will be renewed or that any of such agreements will not be terminated prior to expiration of its term or that we will find adequate replacements upon non-renewal or earlier termination of such agreements.
BPGIC may have to compete with other oil storage companies in the Port of Fujairah to secure a third party to contract for BPGIC’s services in the event that any of the Commercial Storage Agreements currently in effect expire or otherwise terminate. Such third parties may not only consider competitors in the Port of Fujairah but may also consider companies located at other ports. Although the Company believes that BPGIC has a best-in-class technically designed terminal in Fujairah and there is a scarcity of land in Fujairah available for expansion by competitors, BPGIC’s ability to compete could be harmed by factors it cannot control, including:
| ● | BPGIC’s competitors’ construction of new assets or conversion of existing terminals in a manner that would result in more intense competition in the Port of Fujairah; | |
| ● | BPGIC’s competitors, which currently provide services to their own businesses (i.e., captive storage), seeking to provide their services to third parties, including third-party oil companies and oil traders; | |
| ● | BPGIC’s competitors making significant investments to upgrade or convert their facilities in a manner that, while limiting their capacity in the short term, would eventually enable them to meet or exceed BPGIC’s capabilities; | |
| ● | the perception that another company or port may provide better service; and | |
| ● | the availability of alternative heating and blending facilities located closer to users’ operations. |
Any combination of these factors could result in third parties entering into long-term contracts to utilize the services of BPGIC’s competitors instead of BPGIC’s services, or BPGIC being required to lower its prices or decrease its costs to attract such parties or retain its existing customers, either of which could adversely affect the Company’s business, financial condition and results of operations.
BPGIC is anticipated to become reliant on revenue from the Modular Refinery, and the delay in the construction of the Modular Refinery would have a material adverse effect on the Company’s business, financial condition and results of operations.
Upon completion of the Modular Refinery, BPGIC would become reliant on the Modular Refinery for another portion of its revenues. BPGIC may incur substantial cost if it suffers delays in locating a third party or if modifications or installation of a new refinery are required. The occurrence of any one or more of these events could have a material adverse effect on the Company’s business, financial condition and results of operations.
The scarcity of available land in the Fujairah oil zone region could subject BPGIC to competition for additional land, unfavorable lease terms for that land and limit BPGIC’s ability to expand its facilities in Fujairah beyond Phase III.
BPGIC entered into the Phase III Land Lease, a land lease agreement, dated as of February 2, 2020, by and between BPGIC and FOIZ, to lease the Phase III Land, for an additional plot of land that has a total area of approximately 450,000 m2. On October 1, 2020, BPGIC, FOIZ and BPGIC III, entered into a novation agreement, whereby BPGIC novated the Phase III Land Lease to BPGIC III. BPGIC intends to use the relevant land to expand its storage, service and refinery capacity.
However, all land in the Fujairah oil zone region is owned and controlled by FOIZ. The Fujairah oil zone region currently has limited available land to lease. As a result, BPGIC’s ability to further expand its facilities if it wishes to expand in Fujairah beyond Phase III is limited. This could subject BPGIC to enhanced competition both in terms of price and lease terms for any land that becomes available to lease.
If BPGIC is able to lease additional land, there can be no assurance that it would be able to do so on terms that are as favorable as or more favorable than the terms of the Phase I & II Land Lease or the Phase III Land Lease, or that would allow BPGIC to use the land as intended. BPGIC’s inability to secure new land from FOIZ in the Fujairah oil zone region could substantially impair BPGIC’s regional growth prospects in Fujairah beyond Phase III, leading to fewer remaining options for its expansion in Fujairah, other than the acquisition of an existing third-party owned oil storage terminal in Fujairah.
BPGIC is bearing development cost for Phase III and there is no assurance that it can eventually materialize due to unforeseen changes in the investment and commercial environment.
Accidents involving the handling of oil products at the BPGIC Terminal could disrupt BPGIC’s business operations and/or subject it to environmental and other liabilities.
Accidents in the handling of oil products (hazardous or otherwise) at the BPGIC Terminal could disrupt BPGIC’s business operations during any repair or clean-up period, which could negatively affect its business operations. The BPGIC Terminal was designed to minimize the risk of oil leakage and has state-of-the-art control facilities. In addition, pursuant to the Fujairah Municipality environmental regulations, BPGIC installed impermeable lining over the ground soil throughout its tank farm area in the Phase I & II Land and any other area where oil leakage could occur and potentially reach the ground soil. Further, BPGIC has in place Physical Loss or Damage and Business Interruption Insurances to minimize any risk of business disruption. BPGIC intends to take similar steps to minimize the risk of oil leakage in connection with Phase III. Nevertheless, there is a risk that oil leakages or fires could occur at the terminal and, in the event of an oil leakage, there can be no assurance that the installed lining will prevent any oil products from reaching the ground soil. Although the Company believes that BPGIC has adequate insurance in place to insure against the occurrence of any of the foregoing events, any such leakages or fires could disrupt terminal operations and result in material remediation costs. Any such damage or contamination could reduce gross throughput and/or subject BPGIC to liability in connection with environmental damage, any or all of which could have a material adverse effect on the Company’s business, financial condition and results of operations.
The Modular Refinery, once completed, will face operating hazards, and the potential limits on insurance coverage could expose BPGIC to potentially significant liability costs.
Once completed, the Modular Refinery will be subject to certain operating hazards, and BPGIC’s cash flow from its operations could decline if it experiences a major accident, pipeline rupture or spill, explosion or fire, or if it is damaged by severe weather or other natural disaster, or otherwise is forced to curtail its operations or shut down. These operating hazards could result in substantial losses due to personal injury and/or loss of life, severe damage to and destruction of property and equipment and pollution or other environmental damage and may result in significant curtailment or suspension of BPGIC’s related operations.
Although we intend to maintain insurance policies, including personal and property damage and business interruption insurance for each of our facilities, we cannot assure you that this insurance will be adequate to protect us from all material expenses related to potential future claims for personal and property damage or significant interruption of operations.
When the Modular Refinery is completed, our financial results will be affected by volatile refining margins, which are dependent upon factors beyond our control, including the price of crude oil, to the extent such volatility reduces customer demand of ancillary services.
When the Modular Refinery is operational, our financial results will be affected by the relationship, or margin, between refined petroleum product prices and the prices for crude oil and other feedstocks to the extent decreases in refining margins reduce the use of the Modular Refinery and BPGIC’s ancillary services. Historically, refining margins have been volatile, and we believe they will continue to be volatile in the future. The costs to acquire feedstocks and the price at which BPGIC can ultimately sell refined petroleum products depend upon several factors beyond BPGIC’s control, including regional and global supply of and demand for crude oil, gasoline, diesel, and other feedstocks and refined petroleum products. These in turn depend on, among other things, the availability and quantity of imports, production levels, levels of refined petroleum product inventories, productivity and growth (or the lack thereof) of global economies, international relations, political affairs, and the extent of governmental regulation. Some of these factors can vary by region and may change quickly, adding to market volatility, while others may have longer-term effects. The longer-term effects of these and other factors on refining and marketing margins are uncertain. Decreased refining margins could have a significant effect on the extent to which BPGIC use the Modular Refinery and its ancillary services which, in turn, could have a significant effect on our financial results.
The Green Hydrogen and Green Ammonia Project, once completed, will face operating hazards, and the potential limits on insurance coverage could expose BPGIC to potentially significant liability costs.
Once completed, the Green Hydrogen and Green Ammonia Project will be subject to certain operating hazards, and BPGIC’s cash flow from its operations could decline if it experiences a major accident, pipeline rupture, explosion or fire, or if it is damaged by severe weather or other natural disaster, or otherwise is forced to curtail its operations or shut down. These operating hazards could result in substantial losses due to personal injury and/or loss of life, severe damage to and destruction of property and equipment or other environmental damage and may result in significant curtailment or suspension of BPGIC’s related operations.
Although we intend to maintain insurance policies, including personal and property damage and business interruption insurance for each instance of this project, we cannot assure you that this insurance will be adequate to protect us from all material expenses related to potential future claims for personal and property damage or significant interruption of operations.
BPGIC’s competitive position and prospects depend on the expertise and experience of Senior Management and our ability to continue to attract, retain and motivate qualified personnel.
Our business is dependent on retaining the services of, or in due course promptly obtaining equally qualified replacements for Senior Management. Competition in the UAE for personnel with relevant expertise is intense and it could lead to challenges in locating qualified individuals with suitable practical experience in the oil storage industry. Although the Company has employment agreements with all of the members of Senior Management, the retention of their services cannot be guaranteed. Should they decide to leave the Company, it may be difficult to replace them promptly with other managers of sufficient expertise and experience or at all. To mitigate this risk, the Company intends to enter into long-term incentive plans with members of Senior Management in due course. In the event of any increase in the levels of competition in the oil storage industry or general price levels in the Fujairah region, the Company may experience challenges in retaining members of the Senior Management team or recruiting replacements with the appropriate skills. Should the Company lose any of the members of Senior Management without prompt and equivalent replacement or if the Company is otherwise unable to attract or retain such qualified personnel for BPGIC’s requirements, this could have an adverse effect on the Company’s business, financial condition and results of operations. For more information regarding Senior Management, see “Item 6.A Directors, Senior Management and Employees — Directors and Executive Officers”.
In connection with the preparation of the Company’s consolidated financial statements as of and for the years ended December 31, 2019, 2020, 2021 and 2022, the Company and its independent registered public accounting firm identified two material weaknesses in the Company’s internal control over financial reporting, one related to lack of sufficient skilled personnel and one related to lack of sufficient entity level and financial reporting policies and procedures.
Prior to the consummation of the Business Combination, the Company was neither a publicly listed company, nor an affiliate or a consolidated subsidiary of, a publicly listed company, and it has had limited accounting personnel and other resources with which to address its internal controls and procedures. Effective internal control over financial reporting is necessary for the Company to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud.
In connection with the preparation and external audit of the Company’s financial statements as of and for the years ended December 31, 2019, 2020, 2021 and 2022, the Company and our auditors, noted material weaknesses in the Company’s internal control over financial reporting. The SEC defines a material weakness as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s financial statements will not be prevented or detected on a timely basis.
The material weaknesses identified were (i) a lack of sufficient skilled personnel with requisite IFRS and SEC reporting knowledge and experience and (ii) a lack of sufficient entity level and financial reporting policies and procedures that are commensurate with IFRS and SEC reporting requirements. During the years 2020, 2021, and 2022, the Company took the steps below to minimize the effects of both these material weaknesses:
| ● | The Company appointed a new chief financial officer and other finance personnel with relevant public reporting experience and also plan conducting trainings for new employees with respect to IFRS and SEC reporting requirements; and |
| ● | The Company appointed a third party consultant to prepare the processes of financial reporting and help the Company to implement them. |
In this regard, the Company has, and is continuing to, dedicate internal resources, training their personnel with public reporting experience, and ensure that outside consultants adopted a detailed work plan to assess and document the adequacy of its internal control over financial reporting. This has, and may continue to, include taking steps to improve control processes as appropriate, validating that controls are functioning as documented and implementing a continuous reporting and improvement process for internal control over financial reporting.
If in subsequent years the Company is unable to assert that the Company’s internal control over financial reporting is effective, or if the Company’s auditors express an opinion that the Company’s internal control over financial reporting is ineffective, the Company could lose investor confidence in the accuracy and completeness of its financial reports, which could have an adverse effect on the price of the Company’s securities.
For more information regarding our controls and procedures, see “Item 15. Controls and Procedures”.
The Company has hired new management personnel and has implemented a number of corporate governance and financial reporting procedures and other policies, processes, systems and controls which have a limited operating history. The effectiveness of these policies, processes systems and controls might be impaired by weaknesses related to lack of sufficient skilled personnel and lack of sufficient entity level and financial reporting policies and procedures.
The Company started hiring new management personnel subsequent to the listing of the Company, including a new chief financial officer, and implemented a number of corporate governance and financial reporting procedures and other policies, processes, systems and controls to comply with the requirements for a foreign private issuer on NASDAQ. The Company does not have a long track record on which it can assess the performance and effectiveness of these policies, processes, systems and controls or the analysis of their outputs.
The Company and its independent registered public accounting firm have identified two material weaknesses in internal control over financial reporting related to lack of sufficient skilled personnel and lack of sufficient entity level and financial reporting policies and procedures in 2022. Any material inadequacies, weaknesses or failures in the Company’s policies, processes, systems and controls could have a material adverse effect on the Company’s business, financial condition and results of operations.
The Company has implemented measures to address the material weaknesses, including (i) hiring personnel with relevant public reporting experience, (ii) conducting training for Company personnel with respect to IFRS and SEC financial reporting requirements and (iii) engaging a third party to prepare standard operating procedures for the Company. In this regard, the Company has, and will need to continue to, dedicate internal resources, train personnel with public reporting experience, ensuring outside consultant adopted a detailed work plan to assess and document the adequacy of their internal control over financial reporting. This has, and may continue to, include taking steps to improve control processes as appropriate, validating that controls are functioning as documented and implementing a continuous reporting and improvement process for internal control over financial reporting.
If the Company is unable to make acquisitions on economically acceptable terms, its future growth would be limited, and any acquisitions it makes could adversely affect its business, financial condition and results of operations.
As discussed further in “Item 4.B Business Overview — Strategy”, one of the Company’s medium to long-term strategies is to potentially grow its business through the acquisition and development of oil storage terminals globally. The Company’s strategy to grow its business is dependent on its ability to make acquisitions that improve its financial condition. If the Company is unable to make acquisitions from third parties because it is unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts, it is unable to obtain financing for these acquisitions on economically acceptable terms or it is outbid by competitors, its future growth will be limited. Furthermore, even if the Company consummates acquisitions that it believes will be accretive, they may in fact harm its business, financial condition and results of operations. Any acquisition involves potential risks, some of which are beyond the Company’s control, including, among other things:
| ● | inaccurate assumptions about revenues and costs, including synergies; | |
| ● | an inability to successfully integrate the various business functions of the businesses the Company acquires; | |
| ● | an inability to hire, train or retain qualified personnel to manage and operate the Company’s business and newly acquired assets; | |
| ● | an inability to comply with current or future applicable regulatory requirements; | |
| ● | the assumption of unknown liabilities; | |
| ● | limitations on rights to indemnity from the seller; | |
| ● | inaccurate assumptions about the overall costs of equity or debt; | |
| ● | the diversion of management’s attention from other business concerns; | |
| ● | unforeseen difficulties operating in new product areas or new geographic areas; and | |
| ● | customer or key employee losses at the acquired businesses. |
If the Company consummates any future acquisitions, its business, financial condition and results of operations may change significantly, and holders of the Company’s securities may not have the opportunity to evaluate the economic, financial and other relevant information that the Company will consider in making such acquisitions.
BPGIC is subject to a wide variety of regulations and may face substantial liability if it fails to comply with existing or future regulations applicable to its businesses or obtain necessary permits and licenses pursuant to such regulations.
BPGIC’s operations are subject to extensive international, national and local laws and regulations governing, among other things, the loading, unloading and storage of hazardous materials, environmental protection and health and safety. BPGIC’s ability to operate its business is contingent on its ability to comply with these laws and regulations and to obtain, maintain and renew as necessary related approvals, permits and licenses from governmental agencies and authorities in Fujairah and the UAE. Because of the complexities involved in ensuring compliance with different regulatory regimes, BPGIC’s failure to comply with all applicable regulations and obtain and maintain requisite certifications, approvals, permits and licenses, whether intentional or unintentional, could lead to substantial penalties, including criminal or administrative penalties or other punitive measures, result in revocation of its licenses and/or increased regulatory scrutiny, impair its reputation, subject it to liability for damages, or invalidate or increase the cost of the insurance that it maintains for its business. Additionally, BPGIC’s failure to comply with regulations that affect its staff, such as health and safety regulations, could affect its ability to attract and retain staff. BPGIC could also incur civil liabilities such as abatement and compensation for loss in amounts in excess of, or that are not covered by, its insurance. For the most serious violations, BPGIC could also be forced to suspend operations until it obtains such approvals, certifications, permits or licenses or otherwise brings its operations into compliance.
In addition, changes to existing regulations or tariffs or the introduction of new regulations or licensing requirements are beyond BPGIC’s control and may be influenced by political or commercial considerations not aligned with BPGIC’s interests. Any such changes to regulations, tariffs or licensing requirements could adversely affect BPGIC’s business by reducing its revenue, increasing its operating costs or both.
Finally, any expansion of the scope of the regulations governing BPGIC’s environmental obligations, in particular, would likely involve substantial additional costs, including costs relating to maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of BPGIC’s ability to address environmental incidents or external threats. If BPGIC is unable to control the costs involved in complying with these and other laws and regulations, or pass the impact of these costs on to users through pricing, the Company’s business, financial condition and results of operations could be adversely affected.
Any material reduction in the quality or availability of the Port of Fujairah’s facilities could have a material adverse effect on the Company’s business, financial condition and results of operations.
BPGIC is dependent on the Port of Fujairah to operate and maintain the Port’s facilities at an appropriate standard and BPGIC is dependent on such facilities, including the berths, the VLCC jetty and the associated pipelines, to operate its business. Any interruptions or reduction in the capabilities or availability of these facilities would result in reduced volumes being transported through the BPGIC Terminal. Reductions of this nature are beyond BPGIC’s control. If the utilization or the costs to BPGIC or users to deliver oil products through these facilities were to significantly increase, BPGIC’s profitability could be reduced. The Port of Fujairah’s facilities are subject to deterioration or damage, due to potential declines in the physical condition of its facilities and ship collisions, among other things. Any failure of the Port of Fujairah to carry out necessary repairs, maintenance and expansions of its facilities and any resulting interruptions for access to its facilities could adversely affect BPGIC’s business volumes, cause delays in the arrival and departure of oil tankers or disruptions to BPGIC’s operations, in part or in whole, may subject BPGIC to liability or impact its brand and reputation and may otherwise hinder the normal operation of the BPGIC Terminal, which could have a material adverse effect on the Company’s business, financial condition and results of operations.
BPGIC is subject to restrictive covenants in the Bond Financing Facility that may limit its operating flexibility and, if it defaults under its covenants, it may not be able to meet its payment obligations.
BPGIC entered into the Bond Financing Facility of $200.00 million to repay the Phase I Financing Facilities, fund capital projects for Phase II, repay the promissory note payable to Early Bird Capital, pre-fund the Liquidity Account and for general corporate purposes. The proceeds of the bonds were drawn down during November 2020 and outstanding term loans were fully settled. The Bond Financing Facility contains covenants limiting BPGIC’s ability to incur indebtedness, grant liens, engage in transactions with affiliates and make distributions on or redeem or repurchase ordinary shares.
The Bond Financing Facility contains covenants which were amended under Amendment Agreements dated October 23, 2020 and April 27, 2022, requiring BPGIC (including its subsidiaries) and the Company to maintain the following covenants:
1. Financial Covenants
| i. | Minimum Liquidity: Maintain $8.5 million in the Liquidity Account. | |
| ii. |
Leverage Ratio: Not to exceed: (A) 3.5x at December 31, 2022 (for the 12-month period from and including 1 January 2022 to December 31, 2022 and so that no testing shall be made thereof until December 31, 2022); and (B) 3.0x anytime thereafter. |
|
| iii. | Working Capital: Maintain a positive working capital except for the period from 31 December 2021 to and including December 30, 2022 and during which period no such requirement shall apply. | |
| iv. | Brooge Energy Limited to maintain a minimum equity ratio of 25%. |
2. Account Maintenance Covenants
| i. | BPGIC to maintain a Construction Funding Account. | |
| ii. | BPGIC to maintain Debt Service Retention Account. | |
| iii. | BPGIC to maintain Liquidity Account. |
3. Other Covenants
| i. | BPGIC is subject to the following restrictions on distributions: | ||
| a. | no distributions for one year from the Phase II facility completion date. | ||
| b. | distributions cannot exceed in the aggregate 50% of BPGIC’s net profit after tax based on the audited annual financial statements for the previous financial year. | ||
| c. | any distribution shall only be released out of BPGIC and its subsidiaries in the form of a group company loan to the Phase III company. | ||
| d. | BPGIC must be in compliance with the financial covenants (on the last reporting date). | ||
| e. | no event of default is continuing or would arise from such distribution. | ||
| ii. | BPGIC (including its subsidiaries) cannot invest and/or undertake any capital expenditure obligation that exceeds an aggregate of $10.0 million during the term of the Bond Financing Facility, except for the remaining capital expenditure obligation under the construction contract for Phase II, any maintenance capital expenditure and/or enhancements relating to Phase I and/or Phase II in its ordinary course of business. | ||
BPGIC’s ability to comply with these restrictions and covenants may be affected by events beyond its control, including prevailing economic, financial and industry conditions.
Due in part to the delayed ramp up of the Phase II storage facility, resulting primarily from logistical challenges associated with the COVID 19 pandemic, BPGIC was in technical breach with leverage ratio and working capital financial covenant requirements under the Bond Financing Facility document. In March 2022, the Group entered into an agreement with its lender to waive off the requirement for the Group to comply with leverage ratio and working capital financial covenant for December 31, 2021 and June 30, 2022. See “Item 10.C Material Contracts— Bond Waiver” for additional information regarding the waiver.
If BPGIC is unable to comply with these restrictions and covenants following such date, or is unable to comply with the restrictions and covenants as specified in the waiver approved by the Bondholders, a significant portion of the indebtedness under the Bond Financing Facility may become immediately due and payable. BPGIC might not have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, BPGIC’s obligations under the Bond Financing Facility are secured by substantially all of BPGIC’s assets, and if BPGIC is unable to repay the indebtedness under the Bond Financing Facility, the Bond Trustee, on behalf of the bondholders, could seek to foreclose on such assets, which would adversely affect BPGIC’s business, financial condition and results of operations. The Bond Financing Facility also has cross-default provisions that apply to any other material indebtedness that BPGIC may have. For more information regarding the Bond Financing Facility, see “— Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Debt Sources of Liquidity”.
The fixed cost nature of BPGIC’s operations could result in lower profit margins if certain costs were to increase and BPGIC was not able to offset such costs with sufficient increases in its storage or ancillary service fees or its customers’ utilization of BPGIC’s ancillary services.
BPGIC’s fixed costs for Phase I, Phase II and the Modular Refinery are, or will be, paid for with the fixed storage fees it receives or will receive, as the case may be, from BPGIC’s existing and future storage customers. The Company expects that a large portion of BPGIC’s future expenses related to the operation of the BPGIC Terminal will be relatively fixed because the costs for full-time employees, rent in connection with the Land Leases, maintenance, depreciation, utilities and insurance generally do not vary significantly with changes in users’ needs. However, the Company expects that BPGIC’s profit margins could change if its costs change.
In particular, if wages in the region’s oil storage industry were to increase, BPGIC may need to increase the levels of its employee compensation more rapidly than in the past to remain competitive or keep up with increases in general price levels or inflation in the UAE and in Fujairah. If wage costs were to increase at a greater rate than our customers’ utilization of BPGIC’s ancillary services, then such increased wage costs may reduce BPGIC’s profit margins.
The Commercial Storage Agreements with the Storage Customers allow BPGIC to review its storage and ancillary service upon each renewal. As such, if wages were to increase, BPGIC may yield lower margins for a period of time before it is able to review and amend its storage and ancillary service fees.
BPGIC III expects that its fixed costs for Phase III will be paid for with the fixed storage fees it will receive from the Phase III customer(s). BPGIC III expects that a large portion of its future expenses related to the operation of Phase III will be relatively fixed because the costs for full-time employees, rent in connection with the Phase III Land Lease, maintenance, depreciation, utilities and insurance generally do not vary significantly with changes in users’ needs.
BRE expects that its fixed costs for the Green Hydrogen and Green Ammonia Project will be paid for with the fixed storage fees it will receive from the Ammonia offtake agreements. However, as with its fixed costs for Phase I and Phase II, BPGIC III and BRE expect that their profit margins could change if their costs, in particular wage costs, change.
If any of BPGIC, BPGIC III and BRE are unable to maintain their margins, it could have a material adverse effect on the Company’s business, financial condition and results of operations.
BPGIC is dependent on its IT and operational systems, which may fail or be subject to disruption.
BPGIC relies on the proper functioning of its information technology, including the information technology systems in BPGIC’s operation control room, databases, computer systems, telecommunication networks and other infrastructure in its day-to-day operations. BPGIC’s business continuity procedures and measures may not anticipate, prevent or mitigate a network failure or disruption and may not protect against an incident in the limited event that there is no alternative system or backed-up data in place. The nature of BPGIC’s operations and the variety of systems in place to support its business can also present challenges to the efficiency of its information technology networks. BPGIC’s systems are vulnerable to interruptions or damage from a number of factors, including power loss, network and telecommunications failures, data corruption, computer viruses, security breaches, natural disasters, theft, vandalism or other acts, although the BPGIC Terminal’s operational system has limited vulnerability to computer viruses or security breaches because the systems are fully isolated. BPGIC is reliant on third party vendors to supply and maintain much of its information technology. In particular, as is the case for many of BPGIC’s competitors, a significant percentage of its core operations currently use information and technology systems provided by ABB Group, Emerson and Intelex Technologies, Inc., which BPGIC relies on for related support and upgrades. BPGIC may experience delay or failure in finding a suitable replacement in the event that one or more of the third-party vendors ceases operations or becomes otherwise unable or unwilling to meet BPGIC’s needs.
There have been an increasing number of cybersecurity incidents affecting companies around the world, which have caused operational failures or compromised sensitive or confidential corporate data. Although we do not believe our systems are at a greater risk of cybersecurity incidents than other similar organizations, such cybersecurity incidents may result in the loss or compromise of customer, financial, or operational data; loss of assets; disruption of billing, collections, or normal operating activities; disruption of electronic monitoring and control of operational systems; and delays in financial reporting and other management functions. Possible impacts associated with cybersecurity incidents (which generally are increasing in both frequency and sophistication) may include, among others, remediation costs related to lost, stolen, or compromised data; repairs to data processing systems; increased cybersecurity protection costs; reputational damage; lawsuits seeking damages; regulatory actions; and adverse effects on our compliance with applicable privacy and other laws and regulations. Such occurrences could have an adverse effect on our business, operating results, and financial condition.
Although the BPGIC Terminal, based on the nature of BPGIC’s business, is configured to keep its systems operational under abnormal conditions, including with respect to business processes and procedures, any failure or breakdown in these systems could interrupt BPGIC’s normal business operations and result in a significant slowdown in operational and management efficiency for the duration of such failure or breakdown. Any virus attack, e-mails scams or prolonged failure or breakdown could dramatically affect BPGIC’s ability to offer services to users, which could have a material adverse effect on the Company’s business, financial condition and results of operations.
Beyond Phase II, expansion of the Company’s business may require substantial capital investment, and the Company may not have sufficient capital to make future capital expenditures and other investments as it deems necessary or desirable.
The Company operates in a capital-intensive industry that requires a substantial amount of capital and other long-term expenditures, including those relating to the expansion of existing terminal facilities and the development and acquisition of new terminal facilities. The Company has several plans for expansion beyond Phase II, including Phase III and the Green Hydrogen and Green Ammonia Project that may require significant capital investment. For example, the Company plans to establish an external connection to the local power grid in due course, which would provide the BPGIC Terminal with an additional source of power if necessary.
In addition, as discussed further in “Item 4B Business Overview — Strategy”, in 2020, BPGIC entered into the Phase III Land Lease to lease the Phase III Land on which it would build a new oil storage facility, and novated the Phase III Land Lease to BPGIC III. The Company has engaged MUC, the same advisor that designed the BPGIC Terminal, to create several proposals for the design of Phase III. If the Company decides to construct a new facility, it would require substantial capital investment, and the Company may not have sufficient capital to make the capital expenditures and other investments as it deems necessary or desirable.
To meet the financing requirements for such capital investments, the Company may have to utilize a combination of internally generated cash and external borrowings, including banking and capital markets transactions. The Company may also seek, in the event that further material expansion opportunities arise in the future, to obtain additional funding from the capital markets to further enhance its funding position. The Company’s ability to arrange external financing and the cost of such financing is dependent on numerous factors, including its future financial condition, the terms of any restrictive covenants under then existing credit facilities, general economic and capital market conditions, interest rates, credit availability from banks or other lenders, investor confidence in the Company, applicable provisions of tax and securities laws and political and economic conditions in any relevant jurisdiction. Moreover, the decline in global credit markets and reduced liquidity may affect the Company’s ability to secure financing on commercially reasonable terms, if at all. The Company cannot provide any assurance that it will be able to arrange any such external financing on commercially reasonable terms, and it may be required to secure any such financing with a lien over its assets or agree to contractual limitations on its business. If the Company is unable to generate or obtain funds sufficient to make necessary or desirable capital expenditure and other investments, it may be unable to grow its business, which may have a material adverse effect on its business, financial condition and results of operations.
Beyond Phase II, the aforementioned projects and the projects described herein, the Company may consider additional projects in the future, which would be subject to the same risks mentioned above.
Risks Related to the Company’s Structure and Capitalization
The Company’s only significant asset is its ownership of BPGIC and BPGIC III, which it has entered into a term sheet agreeing to sell pursuant to the GulfNav Transaction, and even if it retains such ownership, such ownership may not be sufficient to pay dividends or make distributions or obtain loans to enable the Company to pay any dividends on its Ordinary Shares or satisfy other financial obligations.
The Company is a holding company and does not directly own any operating assets other than its ownership of interests in BPGIC and BPGIC III. The Company depends on BPGIC and BPGIC III for distributions, loans and other payments to generate the funds necessary to meet its financial obligations, including its expenses as a publicly traded company and to pay any dividends. The earnings from, or other available assets of, BPGIC and BPGIC III may not be sufficient to make distributions or pay dividends, pay expenses or satisfy the Company’s other financial obligations.
The Company incurs higher costs as a result of being a public company.
The Company has and will continue to incur significant additional legal, accounting, insurance and other expenses, including costs associated with public company reporting requirements. The Company will incur higher costs associated with complying with the requirements of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and related rules implemented by the SEC and NASDAQ. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. These laws and regulations increase the Company’s legal and financial compliance costs and render some activities more time-consuming and costly. The Company may need to hire more employees or engage outside consultants to comply with these requirements, which will increase its costs and expenses. These laws and regulations could make it more difficult or costly for the Company to obtain certain types of insurance, and the Company may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on the Company’s board of directors, board committees or as executive officers. Furthermore, if the Company is unable to satisfy its obligations as a public company, it could be subject to delisting of its Ordinary Shares and/or Warrants, fines, sanctions and other regulatory action and potentially civil litigation.
The escrow release provisions of the Escrow Agreement may affect management decisions and incentives.
Under an Escrow Agreement dated as of May 10, 2019, by and among the Company, Continental, as escrow agent, and BPGIC Holdings (as amended, the “Seller Escrow Agreement”), up to 20,000,000 additional Ordinary Shares that were placed in escrow at Closing will be released to BPGIC Holdings in the event that the Company meets certain Annualized EBITDA (as defined in the Seller Escrow Agreement) or share price targets during the period commencing from the Closing until the end of the 20th fiscal quarter after the commencement date of the first full fiscal quarter beginning after the Closing (the “Seller Escrow Period”). As a result, the Company’s management may focus on increasing the Annualized EBITDA of the Company and its subsidiaries for quarters within the Seller Escrow Period rather than on increasing net income during such quarters. Additionally, the share price target can be achieved at any time during the Seller Escrow Period, and the share price targets could be achieved early in the Seller Escrow Period which would trigger release of the escrow shares even if the share price fell later in the Seller Escrow Period. See “Item 10.C Material Contracts – Seller Escrow Agreement”.
The Company does not expect to pay cash dividends for the foreseeable future.
Although the Company announced in the Fourth Quarter of 2019 that it intends to pay a $0.25 quarterly dividend to its public shareholders beginning in the First Quarter of 2020, the Company has not paid such dividend. Given the circumstances it currently faces, it is unlikely to ever be able to pay dividends.
Litigation and other disputes and regulatory investigations could have a material adverse effect on our business.
From time to time, the Company may be involved in litigation and other disputes or regulatory investigations that arise in and outside the ordinary course of business. An adverse determination may result in liability to the Company for the claim and may also result in the imposition of penalties and/or fines.
As a public company, the Company may also be subject to securities class action and shareholder derivative lawsuits. From time to time, the Company may also be reviewed or investigated by U.S. federal, state, or local regulators or regulators in the foreign jurisdictions in which the Company’s subsidiaries operate. Although the Company carries general liability insurance coverage, the Company’s insurance may not cover all potential claims to which it is exposed, whether as a result of a dispute, litigation or governmental investigation, and it may not adequately indemnify the Company for all liability that may be imposed.
Any claims against the Company or investigation into its business and activities, whether meritorious or not, could be time consuming, result in significant legal and other expenses, require significant amounts of management time and result in the diversion of significant operational resources. Class action lawsuits can often be particularly burdensome given the breadth of claims, large potential damages and significant costs of defense. Legal or regulatory matters involving the Company’s directors, officers or employees in their individual capacities can also create exposure for the Company because the Company may be obligated or may choose to indemnify the affected individuals against liabilities and expenses they incur in connection with such matters. Regulatory investigations can also lead to enforcement actions, fines and penalties, the loss of a license or permit or the assertion of private litigation claims. Risks associated with these liabilities are often difficult to assess or quantify and their existence and magnitude can remain unknown for significant periods of time, making the amount of any legal reserves related to these legal liabilities difficult to determine and, if a reserve is established, subject to future revision. Future results of operations could be adversely affected if any reserve that the Company establishes for a legal liability is increased or the underlying legal proceeding, investigation or other contingency is resolved for an amount in excess of established reserves. Because litigation and other disputes and regulatory investigations are inherently unpredictable, the results of any of these matters may have a material adverse effect on our business, financial condition and results of operations.
On December 22, 2023, without admitting or denying any violation or wrongdoing, the Company reached a settlement with the U.S. Securities and Exchange Commission (the “SEC”) related to alleged fraudulent accounting and offering conduct by the Company and two of its former officers. Pursuant to the SEC administrative order, and which centers on financial statements that have since been restated by the Company, the Company paid a civil money penalty in the amount of $5,000,000. The Company also agreed to cease and desist from committing or causing any violations and any future violations of certain provisions under the Securities Act of 1933 and the Securities Exchange Act of 1934. Two of the Company’s former officers resolved related SEC charges without admitting or denying the SEC’s findings.
BPGIC is currently subject to a judgment in respect of amounts purportedly owed by BPGIC to Al Brooge International Advisory – Sole Proprietorship LLC (“BIA”). On March 5, 2024, the Federal Supreme Court (equivalent of the Court of Cassation) in the United Arab Emirates rejected the appeals filed by representatives of BPGIC relating to the claim and demand for payment from BIA. The appeals were rejected notwithstanding one of the principal arguments raised in one of the appeals being that BIA lacked capacity to bring the claim given that its trade license had been canceled pursuant to a liquidation process. As a result of the court’s decision, the order for BPGIC to pay $130 million, plus four percent interest per annum from December 26, 2023 until the date of payment to BIA, is now final. BIA may proceed to enforce the judgment against BPGIC’s assets. The enforcement of such judgment would likely have a material adverse effect on the Company’s business, financial condition, results of operations and prospects.
On February 5, 2024, a class action complaint was filed in the United States District Court for the Central District of California encaptioned Eric White v. Brooge Energy Limited F/K/A Brooge Holdings Limited F/K/A Twelve Seas Investment Company, Nicolaas L. Paardenkooper, Saleh Yammout, Syed Masood Ali, Burgese Viraf Parekh, Lina Saheb, Dimitri Elkin, Neil Richardson, Stephen N. Cannon, and Paul Ditchburn. The class action complaint contains allegations concerning the recognition of revenue similar to those addressed in the Order Instituting Cease and Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, And Imposing Cease-And-Desist Orders entered by the United States Securities and Exchange Commission on December 22, 2023 In The Matter of Brooge Energy Limited, Nicolaas Lammert Paardenkooper and Lina Saheb. An adverse judgment or resolution in this matter may result in an adverse effect on the Company’s business, financial condition, results of operations and prospects.
The Company may issue additional Ordinary Shares or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of the Company’s Ordinary Shares.
The Company may issue additional Ordinary Shares or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions, repayment of outstanding indebtedness or our equity incentive plan, without shareholder approval, in a number of circumstances.
The Company’s issuance of additional Ordinary Shares or other equity securities of equal or senior rank would have the following effects:
| ● | the Company’s existing shareholders’ proportionate ownership interest in the Company will decrease; | |
| ● | the amount of cash available per share, including for payment of dividends in the future, may decrease; | |
| ● | the relative voting strength of each previously outstanding Ordinary share may be diminished; and | |
| ● | the market price of the Company’s Ordinary Shares may decline. |
The exercise price of the Company’s Warrants can fluctuate under certain circumstances which, if triggered, can result in potentially material dilution of the Company’s then existing shareholders.
Currently, there are outstanding a total of 21,228,900 Warrants each to purchase one Ordinary Share at an exercise price of $11.50. The price at which such Ordinary Shares may be purchased upon exercise of the Warrants may be adjusted in certain circumstances, including, but not limited to, when (i) the Company undertakes certain share capitalizations, share sub-divisions, rights offerings or other similar events, or (ii) the Company pays certain dividends or makes certain distributions in cash, securities or other assets to the holders of Ordinary Shares on account of such Ordinary Shares. These adjustments are intended to provide the investors in the Company’s Warrants with partial protection from the effects of actions that dilute their interests in the Company on a fully-exercised basis. In addition, the Company may, in its sole discretion, temporarily lower the exercise price of the Company’s Warrants provided it lowers the price for not less than 20 business days, provides at least 20 days prior notice to the registered holders of such Warrants and applies such decrease consistently to all Warrants. These provisions could result in substantial dilution to investors in the Company’s Ordinary Shares.
The Company is a Cayman Islands exempted company and, because judicial precedent regarding the rights of shareholders is different under Cayman Islands law than under U.S. law, you could have less protection of your shareholder rights than you would under U.S. law.
The Company’s corporate affairs are governed by its Amended and Restated Memorandum and Articles of Association, the Companies Law, and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by non-controlling shareholders and the fiduciary responsibilities of the Company’s directors to the Company under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. Your rights as a shareholder and the fiduciary responsibilities of the Company’s directors under Cayman Islands law are different from under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws from the United States and may provide significantly less protection to investors. In addition, some U.S. states, such as Delaware, have different bodies of corporate law than the Cayman Islands.
The Company has been advised by its Cayman Islands legal counsel that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against the Company judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or any U.S. State and (ii) in original actions brought in the Cayman Islands, to impose liabilities against the Company predicated upon the civil liability provisions of the securities laws of the United States or any U.S. State, so far as the liabilities imposed by those provisions are penal in nature.
Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and/or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
The laws of the Cayman Islands specifically provide powers to the Cayman courts to recognize and assist foreign bankruptcies. The Cayman courts have no jurisdiction to directly apply provisions of foreign insolvency law. However there is jurisdiction to apply Cayman Islands insolvency law (for example transaction avoidance provisions) in aid of a foreign insolvency proceeding. This is an area of law that may be open to further development.
You have limited ability to bring an action against the Company or against its directors and officers, or to enforce a judgment against the Company or them, because the Company is incorporated in the Cayman Islands, because the Company conducts all of its operations in the UAE and because all of the Company’s directors and officers reside outside the United States.
The Company is incorporated in the Cayman Islands and currently conducts all of its operations through its subsidiary, BPGIC, and once Phase III and the Green Hydrogen and Green Ammonia Project are ready, will conduct all of its operations through its subsidiaries, BPGIC, BPGIC III and BRE. All of the Company’s assets are located outside the United States. The Company’s officers and directors reside outside the United States and a substantial portion of the assets of those persons are located outside of the United States. As a result, it could be difficult or impossible for you to bring an action against the Company or against these individuals in the United States in the event that you believe that your rights have been infringed under the applicable securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the UAE could render you unable to enforce a judgment against the Company’s assets or the assets of the Company’s directors and officers.
Shareholders of Cayman Islands exempted companies such as the Company have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders of these companies. The Company’s directors have discretion under Cayman Islands law to determine whether or not, and under what conditions, the Company’s corporate records could be inspected by the Company’s shareholders, but are not obliged to make them available to the Company’s shareholders. This could make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
As a result of all of the above, the Company’s shareholders might have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company.
Provisions in the Company’s Amended and Restated Memorandum and Articles of Association may inhibit a takeover of the Company, which could limit the price investors might be willing to pay in the future for the Company’s securities and could entrench management.
The Company’s Amended and Restated Memorandum and Articles of Association contain provisions that may discourage unsolicited takeover proposals that shareholders of the Company may consider to be in their best interests. Among other provisions, the ability of the Company’s board of directors to issue preferred shares with preferences and voting rights determined by the board without shareholder approval may make it more difficult for the Company’s shareholders to remove incumbent management and accordingly discourage transactions that otherwise could involve payment of a premium over prevailing market prices for the Company’s securities. Other anti-takeover provisions in the Company’s Amended and Restated Memorandum and Articles of Association include the indemnification of the Company’s officers and directors, the requirement that directors may only be removed from the Company’s board of directors for cause and the requirement for a Special Resolution to amend provisions therein that affect shareholder rights. These provisions could also make it difficult for the Company’s shareholders to take certain actions and limit the price investors might be willing to pay for the Company’s securities.
As a “foreign private issuer” under the rules and regulations of the SEC, the Company is permitted to, does, and will, file less or different information with the SEC than a company incorporated in the United States or otherwise subject to these rules, and will follow certain home-country corporate governance practices in lieu of certain NASDAQ requirements applicable to U.S. issuers.
The Company is considered a “foreign private issuer” under the Exchange Act and is therefore exempt from certain rules under the Exchange Act, including the proxy rules, which impose certain disclosure and procedural requirements for proxy solicitations for U.S. and other issuers. Moreover, the Company is not required to file periodic reports and financial statements with the SEC as frequently or within the same time frames as U.S. companies with securities registered under the Exchange Act. The Company currently prepares its financial statements in accordance with IFRS. The Company will not be required to file financial statements prepared in accordance with or reconciled to U.S. GAAP so long as its financial statements are prepared in accordance with IFRS. The Company is not required to comply with Regulation FD, which imposes restrictions on the selective disclosure of material information to shareholders. In addition, the Company’s officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act and the rules promulgated thereunder with respect to their purchases and sales of the Company’s shares.
In addition, as a “foreign private issuer” whose securities are listed on NASDAQ, the Company is permitted to follow certain home-country corporate governance practices in lieu of certain NASDAQ requirements, except for certain matters including the composition and responsibilities of the audit committee and the independence of its members. A foreign private issuer must disclose in its annual reports filed with the SEC each NASDAQ requirement with which it does not comply followed by a description of its applicable home country practice. The Company currently follows some, but not all of the corporate governance requirements of NASDAQ. With respect to the corporate governance requirements of NASDAQ that the Company follows, the Company cannot make any assurances that it will continue to follow such corporate governance requirements in the future, and may therefore in the future, rely on available NASDAQ exemptions that would allow the Company to follow its home country practice.
The Company follows home country practice in lieu of NASDAQ corporate governance requirements with respect to the following NASDAQ requirements:
| ● | Executive Sessions. We are not required to and, in reliance on home country practice, we may not, comply with certain NASDAQ rules requiring the Company’s independent directors to meet in regularly scheduled executive sessions at which only independent directors are present. The Company follows Cayman Islands practice which does not require independent directors to meet regularly in executive sessions separate from the full board of directors. |
| ● | Nomination of Directors. The Company’s director nominees may not be selected or recommended for the board of director’s selection by either (i) independent directors constituting a majority of the board’s independent directors in a vote in which only independent directors participate, or (ii) a nominations committee comprised solely of independent directors, as required under NASDAQ rules. The Company follows Cayman Islands practice which does not require director nominations to be made or recommended solely by independent directors. Further, the Company does not have a formal written charter or board resolution addressing the director nominations process. The Company follows Cayman Islands practice which does not require the Company to have a formal written charter or board resolution addressing the director nominations process. | |
| ● | Proxy Statements. Even though we are not required to and, in reliance on home country practice, we may not, comply with certain NASDAQ rules regarding the provision of proxy statements for general meetings of shareholders, the Company provides proxy statements for its annual general meeting. The Cayman Islands practice does not impose a regulatory regime for the solicitation of proxies. | |
| ● | Shareholder Approval. The Company is not required to and, in reliance on home country practice, it does not intend to, comply with certain NASDAQ rules regarding shareholder approval for certain issuances of securities under NASDAQ Rule 5635. In accordance with the provisions of the Company’s Amended and Restated Memorandum and Articles of Association, the Company’s board of directors is authorized to issue securities, including Ordinary Shares, preferred shares, warrants and convertible notes, without shareholder approval. |
Such Cayman Islands home country practices may afford less protection to holders of the Company’s securities.
The Company would lose its status as a “foreign private issuer” under current SEC rules and regulations if more than 50% of the Company’s outstanding voting securities become directly or indirectly held of record by U.S. holders and one of the following is true: (i) the majority of the Company’s directors or executive officers are U.S. citizens or residents; (ii) more than 50% of the Company’s assets are located in the United States; or (iii) the Company’s business is administered principally in the United States. If the Company loses its status as a foreign private issuer in the future, it will no longer be exempt from the rules described above and, among other things, will be required to file periodic reports and annual and quarterly financial statements as if it were a company incorporated in the United States. If this were to happen, the Company would likely incur substantial costs in fulfilling these additional regulatory requirements and members of the Company’s management would likely have to divert time and resources from other responsibilities to ensuring these additional regulatory requirements are fulfilled.
The Company’s controlling shareholder has substantial influence over the Company, its interests may not be aligned with the interests of the Company’s other shareholders, and it is in official liquidation in the Cayman Islands.
BPGIC Holdings holds approximately 85.6% of the Company’s voting equity. Following a winding up order made on November 20, 2023 by the Grand Court of the Cayman Islands, BPGIC Holdings was placed into official liquidation and Messrs. Alexander Lawson and Guy Wall were appointed by the Court as joint official liquidators of BPGIC Holdings. The joint official liquidators now control BPGIC Holdings and their primary function is to collect in the assets of BPGIC Holdings in order to pay its creditors. Once the costs of the official liquidation and all creditors have been paid in full, any surplus assets remaining will be returned to the sole shareholder of BPGIC Holdings, namely BPGIC PLC.
BPGIC Holdings, acting through its joint official liquidators, has substantial influence over our business, including decisions regarding mergers, consolidations, the sale of all or substantially all of our assets, election of directors, declaration of dividends and other significant corporate actions. As the controlling shareholder, BPGIC Holdings may take actions that are not in the best interests of the Company’s other shareholders. These actions may be taken in many cases even if they are opposed by the Company’s other shareholders. In addition, this concentration of ownership may discourage, delay or prevent a change in control which could deprive you of an opportunity to receive a premium for your Ordinary Shares as part of any sale of the Company.
Risks Related to Doing Business in Countries in Which the Group Operates
The Group is subject to political and economic conditions in Fujairah and the UAE.
All of the Group’s operations are located in the UAE. The Group’s operations in Fujairah are located near an area of strategic economic and military importance for the entire region. As such, the Group’s future business may be affected by the financial, political and general economic conditions prevailing from time to time in the region and the UAE.
Despite the UAE being viewed as being less vulnerable than some of its Gulf Cooperation Council (“GCC”) neighbors, due to the growth in the non-oil sector and the sizeable wealth of the government of Abu Dhabi, fluctuations in energy prices have an important bearing on economic growth. To the extent that economic growth or performance in the UAE subsequently declines, the Group’s business, financial condition and results of operations may be adversely affected. In addition, the implementation by the governments of the UAE of restrictive fiscal or monetary policies or regulations, including in respect of interest rates, or new legal interpretations of existing regulations and the introduction of taxation or exchange controls could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.
While the UAE enjoys domestic political stability and generally healthy international relations, since early 2011 there has been political unrest in a range of countries in the MENA region. This unrest has ranged from public demonstrations to, in extreme cases, armed conflict and civil war and has given rise to a number of regime changes and increased political uncertainty across the region. The MENA region is currently subject to a number of armed conflicts.
It is not possible to predict the occurrence of events or circumstances such as terrorism, war or hostilities, or more generally the financial, political and economic conditions prevailing from time to time, or the impact of such occurrences or conditions, and no assurance can be given that the Group would be able to sustain its current profit levels if adverse financial, political or economic events or circumstances were to occur. A general downturn or instability in certain sectors of the UAE or the regional economy, or political upheaval therein, could have an adverse effect on the Company’s business, results of operations and financial condition. Investors should also note that the Group’s business and financial performance could be adversely affected by political, economic or related developments both within and outside the MENA region because of interrelationships within the global financial markets.
In the past, political conflicts have resulted in attacks on vessels, mining of waterways and other efforts to disrupt shipping. Despite its location outside the Strait of Hormuz, continuing conflicts, instability and other recent developments in the Middle East and elsewhere, including relatively recent attacks involving vessels and vessel seizures in the Strait of Hormuz, and the presence of U.S. or other armed forces in the region, may lead to additional acts of terrorism or armed conflict around the world, and our customer’s vessels may face higher risks of being attacked or detained. The Group’s business and financial performance would be adversely affected by any reduction in use of the Port of Fujairah as a result of such tensions or conflict.
Prospective investors should also be aware that investments in emerging markets, such as the UAE, are subject to greater risks than those in more developed markets. The economy of the UAE, like those of many emerging markets, has been characterized by significant government involvement through direct ownership of enterprises and extensive regulation of market conditions, including foreign investment, foreign trade and financial services. While the policies of the local and central governments of the UAE generally resulted in improved economic performance in previous years, there can be no assurance that these levels of performance can be sustained.
Relatively recent geopolitical developments have increased the risk that the region in which the Group operates could be involved in an escalating conflict that could have a material adverse effect on our business, financial condition and results of operations.
Rising tensions in the region could significantly place the extraction, production and delivery of oil produced in the region at risk and should rising tension in the region cause a conflict, the ports, pipelines and terminal facilities of the UAE could be at risk and the Group’s operations could be materially and adversely affected.
The Group’s business operations could be adversely affected by terrorist attacks, natural disasters or other catastrophic events beyond its control.
The Group’s business operations could be adversely affected or disrupted by terrorist attacks, natural disasters (such as floods, fires, earthquakes or significant storms) or other catastrophic or otherwise disruptive events, including changes to predominant natural weather, sea and climatic patterns, piracy, sabotage, insurrection, military conflict or war, riots or civil disturbance, radioactive or other material environmental contamination, an outbreak of a contagious disease, or changes to sea levels, which may adversely affect global or regional trade volumes or user demand for oil products transported to or from affected areas, and denial of the use of any railway, port, airport, shipping service or other means of transport and disrupt users’ logistics chains. In addition, the Group may be exposed to extreme weather conditions such as severe heat, flooding, rain or wind conditions, which could disrupt activities at the BPGIC Terminal and the Port of Fujairah. Several of the Group’s competitors in the Fujairah oil zone region have experienced issues with flooding in the past due to the region’s close proximity to the Al Hajar mountainous region, where floods sometimes occur when a significant amount of rain mixes with the dirt from the mountains and subsequently clogs the region’s drainage system. Although the BPGIC Terminal has been designed with sufficient drainage capabilities to handle certain flooding scenarios and the Phase I and II oil storage tanks have been constructed to withstand high levels of radiation and fire in accordance with National Fire Protection Association (“NFPA”) standards, if the flooding, radiation or fire is significantly severe, there can be no assurance the Group’s business operations would be unaffected by it.
The occurrence of any of these events at the BPGIC Terminal or in Fujairah may reduce the Group’s business volumes, cause delays in the arrival and departure of oil tankers or disruptions to its operations, in part or in whole, may increase the costs associated with storage, heating or blending activities, may subject the Group to liability or impact its brand and reputation and may otherwise hinder the normal operation of the BPGIC Terminal, which could substantially impair the Group’s growth prospects and could have a material adverse effect on its business, financial condition and results of operations. Although the Group has insurance in place to cover certain of these events if they occur at the BPGIC Terminal, including sabotage and terrorism and business interruption insurance, there can be no assurance that such insurance will be sufficient to cover all costs and lost business volumes associated with such events.
Climate change legislation or regulations restricting emissions of greenhouse gases could result in increased operating and capital costs and reduced demand for the Group’s storage services.
There is a growing belief that emissions of greenhouse gases (“GHGs”), such as carbon dioxide and methane, may be linked to climate change. Climate change and the costs that may be associated with its impacts and the regulation of GHGs have the potential to affect the Group’s business and the businesses of users in many ways, including negatively impacting the costs the Group incurs in providing its services and the demand for its services (due to change in both costs and weather patterns).
In February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change, or the Kyoto Protocol, entered into force. The UAE ratified the Kyoto Protocol in 2005. The first commitment period of the Kyoto Protocol ended in 2012, but it was nominally extended past its expiration date with a requirement for a new legal construct to be put into place by 2015. To that end, in December 2015, over 190 countries, including the UAE, reached an agreement to reduce global greenhouse gas emissions. From the time the Group completed construction of Phase I on November 19, 2017, its facilities have been in full compliance with the latest requirements. The Paris Agreement requires governments to take legislative and regulatory measures to reduce emissions that are thought to be contributing to climate change. While the Group has already taken certain measures to reduce emissions of volatile organic compounds, additional measures might become necessary, which could increase operating costs. Moreover, the Group’s business might be impacted by changes in demand of the oil products that it stores to the extent users are impacted by such regulations.
Although it is not possible at this time to accurately estimate how potential future laws or regulations addressing GHG emissions would impact the Group’s business, any future local, national, international or federal laws or implementing regulations that may be adopted to address GHG emissions could possibly require the Group to incur increased operating costs and could adversely affect demand for the oil or oil products it stores. The potential increase in the costs of the Group’s operations resulting from any legislation or regulation to restrict emissions of GHGs could include new or increased costs to operate and maintain its facilities, install new emission controls on its facilities, acquire allowances to authorize its greenhouse gas emissions, pay any taxes related to its GHG emissions and administer and manage a GHG emissions program. Moreover, incentives to conserve energy or use alternative energy sources could reduce demand for the Group’s services. The Group cannot predict with any certainty at this time how these possibilities may affect its operations. Many scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate change that could have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events; if such effects were to occur, they could have an adverse effect on the Group’s business, financial condition and results of operations.
Currently, the Group is exposed to physical risks associated with climate change, including extreme weather events such as hurricanes and flooding that could damage or disrupt its facilities and operations. The Group has implemented measures to mitigate these risks, such as investing in resilient infrastructure and insurance coverage. The Group is also exposed to transition risks related to climate change, including changes in market demand for oil products and the shift towards renewable energy sources. The Group has developed strategies to manage these risks, such as diversifying its business to provide services that support the energy transition including the planned modular refinery to produce IMO 2020 compliant LSFO and the planned Green Hydrogen and Green Ammonia Project. The potential impacts of climate change on the transportation of oil products include disruptions and delays due to extreme weather events, rising sea levels, changes in ocean currents, and stricter regulations, which could increase the cost of transportation and impact the Group’s supply chain.
The Group may incur significant costs to maintain compliance with, or address liabilities under, environmental, health and safety regulations applicable to its business.
The Group’s business operations are subject to UAE, national, state and local environmental laws and regulations concerning, among other things, the management of hazardous substances, the storage and handling of hazardous waste, the control of the emission of vapor into the air and water discharges, the remediation of contaminated sites and employee health and safety. These laws and regulations are complex and subject to change. The Group could incur unexpected costs, penalties and other civil and criminal liability if it fails to comply or if it incur any breach with applicable environmental or health and safety laws. Although the Grouphas installed impermeable lining over the ground soil throughout the Phase I & II Land’s tank farm area and any other area where oil leakage could occur and potentially reach the ground soil, and intends to take similar preventative measures for the Green Hydrogen and Green Ammonia Project land and for the Phase III Land, there can be no assurance in the event of an accidental leak, release or spill of oil products or other products, that the Group will not experience operational disruptions or incur costs related to cleaning and disposing waste and oil products, remediating ground soil or groundwater contamination, paying for government penalties, addressing natural resource damage, compensating for human exposure or property damage, or a combination of these measures. Although the Group believes it has adequate insurance in place to insure against the occurrence of any of the foregoing events, there can be no assurance that the Group’s insurance would be sufficient to cover all potential costs. Therefore, the occurrence of any of the foregoing events could have a material adverse effect on the Group’s business, financial condition and results of operations.
Furthermore, although the Group monitors the exposure of its employees, neighbors and others to risks connected with its operations, future health claims of its employees or other such persons, caused by past, present or future exposure cannot be excluded. The Group could be subject to claims by government authorities, individuals and other third parties seeking damages for alleged personal injury or property damage resulting from hazardous substance contamination or exposure caused by its operations, facilities or products, and the Group’s insurance may not be sufficient to cover these claims.
In addition, compliance with future environmental or health and safety laws and regulations may require significant capital or operational expenditures or changes to the Group’s operations.
The Group could be adversely affected by violations of anti-corruption laws or economic sanctions programs.
Currently, all of the Group’s operations are conducted in the UAE. The Group is committed to doing business in accordance with all applicable laws and its own code of ethics. The Group is subject, however, to the risk that customers, end users, the Company, its subsidiaries or their respective officers, directors, employees and agents may take actions determined to be in violation of anti-corruption laws. In addition, the Company is subject to the U.S. Foreign Corrupt Practices Act. Any violations of applicable anti-corruption laws could result in substantial civil and criminal penalties, and could have a damaging effect on the Company’s reputation and business relationships. Furthermore, the Group is subject to economic sanctions programs, including those administered by the United Nations Security Council, the UAE and the United States. Although the Group has policies and procedures designed to ensure compliance with applicable sanctions programs, there can be no assurance that such policies and procedures are or will be sufficient or that customers, users, the Company, its subsidiaries or their respective officers, directors, employees and agents will not take actions in violation of the Group’s policies and procedures (or otherwise in violation of the relevant sanctions regulations) for which the Company may ultimately be held responsible.
Tax liabilities associated with indirect taxes on the oil products the Group services could result in losses to it.
In Fujairah, the oil products that the Group stores and blends for the Storage Customers in the Phase I and II facilities are subject to taxes that are not based on income, sometimes referred to as “indirect taxes”, including import duties, excise duties, environmental levies and value-added taxes. Once the Green Hydrogen and Green Ammonia Project and the Modular Refinery become operational, the products that the Group will handle in connection with the Green Hydrogen and Green Ammonia Project and with the Modular Refinery will be subject to similar “indirect taxes”. Under the terms and conditions of the respective customer agreements, the Group is, or expects to be, entitled to pass on such indirect taxes to its customers.
However, changes to existing regulations for indirect taxes or the introduction of new regulations are beyond the Group’s control and may be influenced by political or commercial considerations not aligned with its interests. Any such regulations could adversely affect the Group’s business by increasing its costs to the extent it is unable to pass on such indirect taxes to the Storage Customers, and as a result, adversely affect its business, financial condition and results of operations.
Changes to VAT law in the UAE may have an adverse effect on the Group’s business, financial condition and results of operations.
On August 23, 2017, the government of the UAE published Federal Decree-Law No. 8 of 2017 (the “VAT Law”) on value added tax (“VAT”) which came into effect on January 1, 2018. Cabinet Decision No. 52 of 2017 on the executive regulations of the VAT Law, issued on November 26, 2017, and Cabinet Decision No. 59 of 2017 on designated zones for the purposes of the VAT Law, issued on December 28, 2017, provide that certain designated zones in the UAE are subject to special VAT treatment. Subject to it continuing to meet the conditions set out in the executive regulations to the VAT Law, the area in which the Group operates is a designated zone for the purposes of the VAT Law and therefore the Group benefits from certain exemptions under the VAT Law. There is no guarantee that the free zone in which the Company operates will remain a designated zone in the future. If the area in which the Group operates loses its designation as a designated zone or any change is made to the applicable rate on the supply of services for the area in which the Group operates, the Group’s business, financial condition and results of operations may be adversely affected.
The new UAE Corporate Tax Law may have an adverse effect on the Group’s business and financial condition
On December 9, 2022, the UAE Ministry of Finance published the full text of the law Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. This means businesses will be subject to UAE Corporate Tax from the beginning of their first financial year that starts on or after June 1, 2023. Per the Cabinet of Ministers Decision No. 116 published on January 16, 2023, a standard rate of 9% will apply to taxable income exceeding a threshold of AED 375,000, and a rate of 0% will apply to taxable income not exceeding that threshold.
As the Group’s accounting year ends on December 31, accordingly the effective implementation date for the Group will start from January 1, 2024, to December 31, 2024, with the first return to be filed on or before September 30, 2025.
The Group’s business may be materially adversely affected if the US dollar/UAE dirham-tied exchange rate were to be removed or adjusted.
All of the Company’s current revenues are based in US dollars and all of its operating costs are incurred in UAE dirhams. All of the Company’s current revenues and operating costs derive from its operations in the UAE. Although the US dollar/UAE dirham exchange rate is currently fixed, there can be no assurance that the government of the UAE will not de-peg the UAE dirham from the US dollar in the future. Alternatively, the existing fixed rate may be adjusted in a manner that increases the costs of certain equipment used in the Group’s business or decreases the Group’s receipt of payments from users. Any adjustment of the fixed rate or de-pegging of the UAE dirham from the US dollar in the future could cause the Group’s operations and reported results of operations and financial condition to fluctuate due to currency translation effects, which could have a material adverse effect on its business, financial condition and results of operations.
The Group’s business may be materially adversely affected by unlawful or arbitrary governmental action.
Governmental authorities in the UAE have a high degree of discretion. Such governmental action could include, among other things, the expropriation of property without adequate compensation or the forcing of business acquisitions, combinations or sales. Any such action taken may have a material adverse effect on the Group’s business, financial condition and results of operations.
Legal and regulatory systems may create an uncertain environment for investment and business activities.
The UAE’s institutions and legal and regulatory systems are not yet as fully matured and as established as those of Western Europe and the United States. Existing laws and regulations may be applied inconsistently with variances in their interpretation or implementation. Such variances could affect the Group’s ability to enforce its rights under its contracts or to defend its business against claims by others. Changes in the UAE legal and regulatory environment, including in relation to foreign ownership restrictions, labor, welfare or benefit policies or in tax regulations could have a material impact on the Group’s business, financial condition and results of operations.
The grant and future exercise of registration rights may adversely affect the market price of Ordinary Shares of the Company.
Pursuant to the existing registration rights agreement with Twelve Seas Sponsor and the registration rights agreement entered into in connection with the Business Combination and which are described elsewhere in this Report, Twelve Seas’ Sponsor and BPGIC Holdings can demand that the Company register their registrable securities under certain circumstances and will also have piggyback registration rights for these securities in connection with certain registrations of securities that the Company undertakes.
The registration of these securities will permit the public resale of such securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of the Company’s Ordinary Shares.
Sales of a substantial number of the Company’s securities in the public market could adversely affect the market price of its Ordinary Shares.
As of the closing of the Business Combination, Twelve Seas Sponsor and certain officers and directors of Twelve Seas (the “Initial Twelve Seas Shareholders”) held 4,721,900 Ordinary Shares and 529,000 Warrants. 2,587,500 of such Ordinary Shares were subject to a one year lock up restriction following the Closing. On December 20, 2020, such shares were released from their lock up restriction and, except with respect to 1,552,500 of such shares currently held in escrow, are eligible for sale in the public market. The 1,552,500 Ordinary Shares held in escrow are subject to release and forfeiture on the terms and conditions of the Initial Shareholder Escrow Agreement (defined below). As and if the milestones in the Initial Shareholder Escrow Agreement are satisfied, portions of such escrowed shares will be released to the Twelve Seas Sponsor and will become eligible for future sale in the public market. Sales of a significant number of these Ordinary Shares of the Company in the public market, or the perception that such sales could occur, could reduce the market price of Ordinary Shares of the Company.
NASDAQ may delist the Company’s securities on its exchange, and delisting could limit investors’ ability to make transactions in the Company’s securities and subject the Company to additional trading restrictions.
The Company’s securities are currently listed on NASDAQ. The Company may be unable to maintain the listing of its securities in the future. If the Company is unable to maintain the listing of its securities on NASDAQ, the Company could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for its securities; |
| ● | a less liquid market for its securities; | |
| ● | a limited amount of news and analyst coverage for the Company; and | |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
General Risk Factors
Fluctuations in operating results, quarter-to-quarter earnings and other factors, including incidents involving customers and negative media coverage, may result in significant decreases in the price of the Company’s securities.
The stock markets experience volatility that is often unrelated to operating performance. These broad market fluctuations may adversely affect the trading price of the Company’s securities and, as a result, there may be significant volatility in the market price of the Company’s securities. If the Company is unable to operate profitably as investors expect, the market price of the Company’s securities will likely decline when it becomes apparent that the market expectations may not be realized. In addition to operating results, many economic and seasonal factors outside of the Company’s control could have an adverse effect on the price of the Company’s securities and increase fluctuations in its periodic earnings. These factors include certain of the risks discussed herein, operating results of other companies in the same industry, changes in financial estimates or recommendations of securities analysts, speculation in the press or investment community, negative media coverage or risk of proceedings or government investigation, the possible effects of war, terrorist and other hostilities, pandemics, adverse weather conditions, changes in general conditions in the economy or the financial markets or other developments affecting the oil and gas storage industry.
The price of the Company’s Ordinary Shares may be volatile.
The price of the Company’s Ordinary Shares may fluctuate due to a variety of factors, including but not limited to:
| ● | the continuing negotiation of the GulfNav Transaction/continuing process to closing the GulfNav Transaction; | |
| ● | the ongoing official liquidation of BPGIC Holdings and the court appointed Judicial Guardianship over BPGIC; | |
| ● | actual or anticipated fluctuations in our financial results and those of other public companies in the industry; | |
| ● | mergers and strategic alliances in the oil and gas industries; |
| ● | market prices and conditions in the oil and gas markets; | |
| ● | changes in government regulation; | |
| ● | potential or actual military conflicts or acts of terrorism; | |
| ● | existing or future global or regional health crises; | |
| ● | the failure of securities analysts to publish research about us, or shortfalls in our operating results compared to levels forecast by securities analysts; | |
| ● | announcements concerning us or our competitors; and | |
| ● | the general state of the securities markets. |
These market and industry factors may materially reduce the market price of our Ordinary Shares, regardless of our operating performance. Volatility in the price of our Ordinary Shares may increase volatility in the price of our Warrants.
Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our Ordinary Shares.
We currently expect that securities research analysts will establish and publish, or will continue to publish, their own periodic projections for our business. These projections may vary widely and may not accurately predict the results we actually achieve. Our share price may decline if our actual results do not match the projections of these securities research analysts. Similarly, if one or more of the analysts who write reports on us downgrades our shares or publishes inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our share price or trading volume could decline. While we expect continued research analyst coverage, if no analysts cover us, the trading price and volume for our Ordinary Shares could be adversely affected.
ITEM 4. INFORMATION ON THE COMPANY
A. History and development of the Company
The Company’s legal and commercial name is Brooge Energy Limited. Until April 7, 2020, the Company’s legal and commercial name was Brooge Holdings Limited. The Company was incorporated for the purpose of effectuating the Business Combination and to hold BPGIC. The Company was incorporated under the laws of the Cayman Islands as an exempted company on April 12, 2019. Prior to the Business Combination, the Company owned no material assets and did not operate any business. During the year 2023, the name and mailing address of the Company’s agent and registered office was Maples Corporate Services Limited, P.O. Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands. Its principal executive office is that of BPGIC, located at P.O. Box 50170, Fujairah, United Arab Emirates and its telephone number is +971 9 201 6666. The Company’s agent for service of process in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711.
In accordance with the terms and conditions of the Business Combination Agreement, on December 20, 2019, (i) Twelve Seas merged with Merger Sub with Twelve Seas continued as the surviving entity and a wholly-owned subsidiary of the Company under the name BPGIC International, with holders of Twelve Seas securities receiving substantially similar securities of the Company, and (i) the Company acquired all of the issued and outstanding ordinary shares of BPGIC from BPGIC Holdings in exchange for Ordinary Shares of the Company and BPGIC became a wholly-owned subsidiary of the Company. Upon consummation of the Business Combination, the Company’s Ordinary Shares and Warrants became listed on the Nasdaq Capital Market.
All of the Company’s operations are currently conducted through BPGIC and once the Green Hydrogen and Green Ammonia Project and the Phase III Project are ready, through BPGIC, BPGIC III and BRE.
History and Development
The following timeline sets forth BPGIC’s major milestones.
BPGIC was incorporated in 2013 in the Fujairah Free Zone, UAE, to provide oil storage, heating and blending services. On February 10, 2013, the Fujairah Free Zone Authority provided BPGIC with a license to engage in the following activities: (i) trading and storing all varieties of oil products and gas, including crude and fuel oils; (ii) building, managing and investing in refineries and all other types of investments; and (iii) exploring and extracting crude oil and gas in both onshore and offshore fields.
On March 10, 2013, BPGIC entered into the 60-year Phase I & II Land Lease with the Fujairah Municipality, a local government organization specializing in municipal urban and rural municipal affairs, for a parcel of land to build and operate the BPGIC Terminal, which is in the Port of Fujairah. On September 1, 2014, the Phase I & II Land Lease was novated from the Fujairah Municipality to FOIZ.
After several years of planning and design, BPGIC finalized plans for phase 1 during the first Quarter of 2015. On March 31, 2016, BPGIC entered into a Port Facilities Agreement with the Port of Fujairah. BPGIC signed an EPC agreement for Phase I (the “Phase I EPC Agreement”) on April 2, 2015 with Audex and commenced work in accordance with the Phase I EPC Agreement. Audex completed Phase I construction on November 19, 2017 and between 2014 and 2017, BPGIC incurred a total cost of $170 million in connection with its construction. BPGIC began testing operations on December 20, 2017 and commenced limited operations on January 18, 2018. From the time BPGIC began its operations on December 20, 2017 to February 28, 2018, BPGIC limited the availability of its Phase I storage capacity to 40 percent, allowing its management team to test all systems and make any necessary adjustments. BPGIC increased the availability of its Phase I storage capacity to approximately 70 percent on March 1, 2018 and to 100 percent on April 1, 2018.
As Phase I neared completion, BPGIC finalized plans for Phase II in the Third Quarter of 2017. In February 2017, BPGIC finalized and issued a front-end engineering document, which sets out the qualifications, specifications, drawings and designs of Phase II, to Audex. Phase II work commenced in September 2018. On September 3, 2018, BPGIC signed the Phase II Project Management Agreement with MUC to engage MUC to manage the construction plan of Phase II. In September 2021, the Company commenced the Phase II testing operations.
On October 15, 2018, BPGIC entered into the Phase II Financing Facility, which was a $95.3 million secured Shari’a compliant Istisna’ financing arrangement coordinated by FAB, to fund a portion of the capital expenditure in respect of Phase II.
As part of Phase II, the Company followed a similar approach to Phase I by investing in high-grade, long-life materials for the construction and development of its facilities. Phase II construction is completed with a total cost of $185.9 million, which includes the cost of construction, consultancy costs, borrowing costs and other miscellaneous cost.
As of December 31, 2019, the Company had funded the construction of Phase I, Phase II and all of its other cash requirements with funds from the Phase I Financing Facilities, and net equity contributions (other than share capital) since 2014 of $71.01 million from shareholders.
In August 2020, the Company commenced hydrotesting of the Phase II facility.
During September 2020, as part of the Bond Financing Facility, BPGIC issued bonds of $200 million to private investors with a face value of $1 and an issue price of $0.95. The issuance has a maximum size of $250.00 million, which includes the option for a tap issue of an additional $50.00 million subject to certain conditions. The proceeds of the Bond Financing Facility were used to repay Phase I Financing Facilities, fund capital project for Phase II, repay the promissory note payable to Early Bird Capital, pre-fund the Liquidity Account and for general corporate purposes. The proceeds of the bonds were drawn down during November 2020 and outstanding term loans were fully settled. The principal repayment of the Bond Financing Facility will be semi-annual payments of $7 million starting in September 2021 until March 2025, and one bullet repayment of $144 million in September 2025. The bonds bear interest at 8.5% per annum, payable semi-annually along with the principal installments.
In September 2021, the Company commenced operations of its Phase II.
The Company is in the early stages of Phase III, a major expansion in the Port of Fujairah and has commenced early preparation works. The Company has signed contract for $31.5 million for terminal connectivity and early preparation works for Phase 1, 2 and 3A. In addition to these capital expenditures the Company incurred the cost of a FEED study for storage capacity of up to 3,500,000 m3 or a combination of 1,660,000 m3 and a refinery with a capacity of up to 180,000 b/d.
Where to Find Additional Information
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which is accessible at http://www.sec.gov. Since we are a “foreign private issuer,” we are exempt from the rules and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act, with respect to their purchase and sale of our shares. In addition, we are not required to file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we are required to file with the SEC an Annual Report on Form 20-F containing financial statements audited by an independent accounting firm. The Company’s website is https://www.broogeenergy.com/. The information contained in, or accessible through, our website is not a part of this Report.
B. Business Overview
In this section, references to the “Company,”, “Group”, “we,” “us,” and “our” are intended to refer to Brooge Energy Limited and its subsidiaries, unless the context clearly indicates otherwise.
This section contains forward-looking statements about the business and operations of the Company. The actual results of the Company may differ materially from those currently anticipated as a result of many factors, including those described under “Item 3.D Risk Factors” and elsewhere in this Report. See “Cautionary Note Regarding Forward-Looking Statements”.
Overview
BPGIC is an oil storage and service provider strategically located in the Port of Fujairah in the emirate of Fujairah in the UAE. BPGIC’s vision is to develop an oil storage business that differentiates itself from competitors by providing its customers with fast order processing times, excellent customer service and high accuracy blending services with low oil losses. BPGIC has a 60-year lease of land, consisting of an initial 30-year lease and a 30-year renewal lease, for its operations located in close proximity to the Port of Fujairah’s berth connection points. BPGIC developed its terminal’s storage capacity in two phases, Phase I and Phase II, both of which are already operational. Phase I commenced operations in December 2017, Phase II commenced operations in September 2021, and Phase III FEED, EIA and Soil Investigation Reports have been received and are underway for further update and development.
On December 5, 2022, BPGIC and BPGIC III signed a land preparation work contract with Audex Fujairah LL FZE for Phase III, for the design and execution of the early preparation works for the Phase III land and for the terminal connectivity.
The Port of Fujairah is the main bunkering location in the MENA region and the second largest bunkering hub in the world. The Port of Fujairah has witnessed increased growth in port traffic in recent years with oil and oil product volumes increasing at a compound annual growth rate of 15 percent over the eight-year period from 2010 (34 million MT) to 2017 (90 million MT). Located just outside the Strait of Hormuz, the Port of Fujairah allows ships transporting oil and oil products to bypass the Strait of Hormuz, one of world’s most vulnerable chokepoints given that approximately 35 percent of the world’s seaborne oil and oil products passes through it each year. There is an increasing preference among companies to avoid sending their vessels through the Strait of Hormuz due to geopolitical risk, higher transportation costs due to increased insurance costs as well as congestion and queuing times at ports inside the Arabian Gulf. The Port of Fujairah’s geographic position outside the Strait of Hormuz allows vessels transporting oil and oil products to bypass the Strait of Hormuz and avoid incurring such additional costs and delays.
On March 10, 2013, we entered into the 60-year Phase I & II Land Lease for a parcel of land to build and operate the Phase I and Phase II facilities, which is in the Port of Fujairah.
Phase I comprises 14 oil storage tanks with an aggregate geometric oil storage capacity of approximately 0.399 million m3 and related infrastructure. The operations of Phase I are focused primarily on the storage, heating and blending of fuel oil and clean petroleum products. BPGIC designed Phase I to focus its operations on servicing such products after assessing the historical and expected demand for such services in the Port of Fujairah region and the evolution and availability of associated infrastructure. As described below, BPGIC designed Phase I with several key features that enable it to provide users with high accuracy blending services with low oil losses. In addition, due to the relatively long term of the Phase I & II Land Lease when compared to similar land leases for oil storage terminals located in the Port of Fujairah, BPGIC constructed Phase I with materials, including pumps, valves and steel structures, that have longer expected life spans than comparable materials utilized by other oil storage terminals.
The key features of Phase I include:
| ● | all 14 oil storage tanks are inter-connected via the Phase I Internal Manifold, the fully segregated internal manifold that connects the 14 oil storage tanks of Phase I (the “Phase I Internal Manifold”); | |
| ● | the pumping and stripping systems of the Phase I Internal Manifold are equipped with a fine stripping system, minimizing energy costs, lowering loss ratios and permitting a high degree of stripping to be achieved; | |
| ● | the ability to more efficiently perform required maintenance activities and prepare pipelines for oil transfers; | |
| ● | lower loss ratios and contamination risks; | |
| ● | recirculation of oil products to assist with the blending process; | |
| ● | the ability to simultaneously perform various operations including: tank-to-tank transfers, recirculation’s, blending, heating, loading and discharging, permitting the Company to service multiple user orders during the same time period; | |
| ● | all 14 oil storage tanks have been designed to permit conversions from storing one clean petroleum product to another and from storing fuel oil to gas oil at a speed which is favorable compared to that of competitors in the UAE region, allowing the Company to adjust its services to meet changing market demands; | |
| ● | high oil transfer flow rates; and |
| ● | an indirect connection to all the Port of Fujairah berths, including certain underutilized berths that are in close proximity to the BPGIC Terminal, to allow users to benefit from lower contamination risks and faster vessel turnaround times and permitting greater access to the BPGIC Terminal. |
Since it began operations, BPGIC has won five awards and been shortlisted for several others. In 2023, BPGIC won the “Best Specialist Liquid Bulk Terminal of the Year” and the “Safe and Secure Terminal of the Year” awards by Global Ports Forum as well as “Most Innovative Terminal Operator (Oil & Gas) - UAE 2023” at The Global Economics Awards 2023. In 2021, BPGIC won the “Terminal of the year 2021” award by Global Ports and Terminal Industry. In 2020, BPGIC won the “Emerging Port / Terminal of the year 2020” award by Global Ports and Terminal Industry. In 2019, BPGIC was named the winner of the “Outstanding Port/Terminal Design of the Year 2019” award by The Global Ports Forum, the “Excellence in Terminal Optimisation Award” by Tank Storage Magazine’s Global Tank Storage Awards, and the “Logistics Service Provider of the Year Award 2019” by Energy Middle East. In March 2018, BPGIC was short-listed by Tank Storage magazine, despite its relatively short track record, for the “Most Efficient Storage Terminal” global award for best throughput rates and most effective operations. In March 2019, BPGIC was once again, short-listed by Tank Storage magazine for the “Most Efficient Storage Terminal” global award, as well as the “Safety Excellence in Bulk Liquid Storage” and “Biggest Commitment to Environmental Protection” global awards.
Phase II focus its operations primarily on the storage and blending of crude oil and clean petroleum products. Phase II involves eight additional oil storage tanks with an aggregate geometric oil storage capacity of approximately 0.601 million m3, which increased the Company’s aggregate geometric oil storage capacity to approximately 1 million m3. As part of Phase II, BPGIC has followed a similar approach to Phase I by investing in high-grade, long-life materials for the construction and development of its facilities. Phase II commenced operations in September 2021.
The key features of Phase II include:
| ● | all eight oil storage tanks are inter-connected via the Phase II Internal Manifold for crude oil operations and Phase I manifold for white oil operations; | |
| ● | the pumping and stripping systems of the Phase II Internal Manifold is equipped with fine stripping systems to minimize energy costs and lower loss ratios; | |
| ● | the cranes of the Phase II Internal Manifold allow the Company to more efficiently perform required maintenance activities and prepare pipelines for oil transfers; | |
| ● | each of the two piggable crude oil jetty pipelines are directly connected between the Phase II Internal Manifold and Matrix Manifold 2, lowering loss ratios and contamination risks; | |
| ● | Phase II facility is designed to perform various operations simultaneously, including tank-to-tank transfers, recirculations, blending, loading and discharging, which would permit the Company to service multiple user orders during the same time period; and | |
| ● | All the Phase II oil storage tanks permit conversion between crude oil and white oil products, allowing the Company to adjust its services to meet changing market demands. |
The Company is in the early stages of Phase III, a further major expansion in the Port of Fujairah. In February 2020, BPGIC entered into the Phase III Land Lease to secure the Phase III Land, a new plot of land of approximately 450,000 m2 near its existing Phase I and Phase II facilities. On October 1, 2020, BPGIC novated the Phase III Land Lease to BPGIC III. The Company believes that the Phase III Land can house additional storage capacity of up to 3,500,000 m3 or a storage capacity of 1,660,000 m3 combined with a refinery with a capacity of 180,000 b/d. A FEED study, a Soil Investigation and an Environmental Impact Assessment (EIA) for the Phase III Land are being updated and discussions are going on with potential EPC contractors. Currently, the Company plans to use the Phase III Land to further increase its crude oil storage and refinery services capacity. On December 5, 2022, BPGIC and BPGIC III signed a land preparation work contract with Audex Fujairah LL FZE for Phase III, for the design and execution of the early preparation works for the Phase III land and for the terminal connectivity.
For the year ended December 31, 2023, the Company generated revenue from operations of $105.7 million, a loss and total comprehensive loss of $48.3 million and an Adjusted EBITDA of $79.7 million. As at December 31, 2023, the Company had total assets of $486.0 million. For more information regarding the Company’s financial condition and results of operations, see “Item 5. Operating and Financial Review and Prospects”.
Competitive Strengths
Strategic location of the BPGIC Terminal.
The BPGIC Terminal is strategically located in the Port of Fujairah, which is the main bunkering location in the MENA region and the second largest bunkering hub in the world. The Port of Fujairah has witnessed increased growth in port traffic in recent years with oil and oil product volumes increasing at a compound annual growth rate of 15 percent over the eight-year period from 2010 (34 million MT) to 2017 (90 million MT). Located just outside the Port of Fujairah, the Strait of Hormuz is one of world’s most vulnerable chokepoints for the transportation of oil and oil products as approximately 35 percent of the world’s yearly average seaborne oil and oil products passes through it each year. There is an increasing preference among companies to avoid sending their vessels through the Strait of Hormuz due to the continued geopolitical uncertainty and the higher transportation costs due to increased insurance costs as well as congestion and queuing times at ports inside the Arabian Gulf. The Port of Fujairah’s geographic position outside the Strait of Hormuz allows vessels transporting oil and oil products to bypass the Strait of Hormuz and avoid incurring such additional costs and delays.
In addition, the BPGIC Terminal is strategically positioned in a prime location within the Port of Fujairah. BPGIC benefits from the BPGIC Terminal’s close proximately to berths 8 and 9 due to the shorter travel distances required for oil product transfers, which in effect lowers contamination risks and leads to faster vessel turnaround times.
Best-in-class facility with low costs.
BPGIC operates the BPGIC Terminal under two 60-year leases, which has allowed, and will continue to allow, BPGIC to design and build a terminal for long term use by using materials that have longer expected life spans than comparable materials utilized by other oil storage terminals in the MENA region, which the Company believes enabled it to build a best-in-class facility.
Phase I was constructed by Audex, a third-party independent EPC contractor that has a strong track record in building terminals and over 20 years of experience in the industry. All 14 oil storage tanks in Phase I have been designed to permit conversions from storing one clean petroleum product to another at an average speed of 48 hours and from storing fuel oil to gas oil at an average speed of 30 days, which the Company believes compares favorably to BPGIC’s competitors in the UAE region, allowing BPGIC to adjust its services to meet changing market demands. BPGIC can perform various simultaneous operations in Phase I, including tank-to-tank transfers, recirculation, blending, heating, loading, and discharging, permitting BPGIC to service multiple user orders during the same time period. Phase I has a fully segregated internal manifold, high oil transfer flow rates and an indirect connection to all the Port of Fujairah berths, including certain underutilized berths that are in close proximity to the BPGIC Terminal, to allow users to benefit from lower contamination risks and faster vessel turnaround times while permitting greater access to the BPGIC Terminal. A fine stripping system has been installed, to minimize energy costs, lowering loss ratios and enabling a higher degree of stripping.
Stable and predictable revenue stream for storage services.
BPGIC generates stable and predictable cash flows for its storage services by providing fee-based, take-or-pay storage services to the existing Storage Customers.
BPGIC entered into the Commercial Storage Agreements, pursuant to which the Storage Customers pay a monthly fixed storage fee to lease the respective storage capacity.
Suite of ancillary services, which provide additional revenue streams.
Under the existing Commercial Storage Agreements, BPGIC is able to supplement its revenue by providing the existing Storage Customers, ancillary services including throughput, blending, heating and inter-tank transfers. To provide these ancillary services, BPGIC charges a fee, that varies by service, equal to a contractual rate per m3 or by hour. As a result, BPGIC earns additional revenue in accordance with the type and quantity of ancillary services used by the existing Storage Customers. BPGIC’s ability to provide ancillary services is enhanced due to the design of Phase I, which was designed, among other things, to provide high accuracy blending services with low oil losses, high oil transfer flow rates and the ability to perform up to 11 simultaneous operations, which contributes to Phase I’s attractiveness as a one-stop location for extensive product customization. BPGIC’s monthly revenue for ancillary services will depend on the extent to which the existing Storage Customers and any future storage customers, utilize the ancillary services.
Experienced senior management team.
The Company is led by the members of Senior Management, who have several years of experience collectively in the oil storage terminal, infrastructure sectors and related markets. As a result, members of Senior Management will be able to leverage their significant experience while implementing and executing the Company’s business plan and to achieve certain growth milestones. Members of Senior Management also have experience with overseeing the construction of oil storage terminals as a result of the Phase I and Phase II construction process, which is expected to facilitate their management and execution of the Phase III construction process and other future projects.
Strategy for BPGIC
The Company’s vision is to develop an oil storage business that differentiates itself from competitors by providing its customers with fast order processing times, excellent customer service and high accuracy blending services with low oil losses. In this pursuit, the key components of the Company’s business strategy are as follows:
Expand the scale of existing operations by operating a Modular Refinery.
The Company plans to leverage its experience from building and operating Phase I and Phase II. Phase II increased the Company’s aggregate geometric oil storage capacity to approximately 1.0 million m3. This has led to the BPGIC Terminal becoming one of the largest oil storage terminals by storage capacity in the Port of Fujairah. On September 3, 2018, BPGIC signed an EPC agreement for Phase II (the “Phase II EPC Agreement”) with Audex. Phase II work commenced in September 2018 and operations commenced in September 2021.
The Modular Refinery is intended to produce high-in-demand, IMO 2020 compliant, very low sulphur fuel oil as a step towards more environmentally friendly energy transition solutions.
Growth through Expansion of BPGIC’s Facilities and Geography
The Company intends to leverage Senior Management’s long-standing industry expertise in the oil and gas and storage sector, initially within the Gulf region and, ultimately more broadly geographically, to ensure the Company continues to enhance its competitiveness, expand its solution offerings to customers and increase shareholder value. As a result, the Company is continuously looking at numerous expansion opportunities such as its Phase III Project and its Green Hydrogen and Green Ammonia Project. Our ordinary course of business includes discussions with various potential parties, regarding different types of business opportunities, and in a variety of different geographic markets. None of these ongoing various discussions have yet reached the stage of definitive agreements and there can be no assurance that they ever will.
The business opportunities available vary widely from traditional customer contracts with global industry participants to various partnerships, ranging from operating or acquiring existing facilities to building new facilities and investing on the Green Energy Sector. The Company carefully evaluates all growth opportunities to ensure its business remains focused on its high-end market positioning and value creation for existing shareholders.
For instance, within the Fujairah market, the Company has already completed the FEED study, the Soil Investigation and the Environmental Impact Assessment (EIA) for the Phase III and is even developing a new update to include enhanced versions of the designs. In February 2020, BPGIC executed the Phase III Land Lease, and on October 1 2020, novated the Phase III Land Lease to BPGIC III. The Company currently intends to use such land to further increase its capacity for crude oil storage and services. We expect that Phase III alone could be three-and-a-half (3.5) times the size of the Company’s projected operations post-Phase II. Concurrently, the Company is in discussions with top global oil majors, which have expressed interest in securing portions of the capacity of a Phase III facility.
Within the Green Energy Sector, the Company has established BRE as its wholly owned subsidiary, to focus on green energy related infrastructures activities. During the year of 2022, BRE has signed a preliminary land lease agreement for its planned Green Hydrogen and Green Ammonia Project, which aims to produce up to 700,000 MT of green ammonia per annum once fully completed, has engaged Ernst & Young to provide consulting services with respect to the same project and has engaged Thyssenkrupp Uhde to undertake the technical study. In February 2023, during the World Government Summit 2023, BRE and Siemens Energy announced a partnership to build a PV solar farm to supply BRE’s Green Hydrogen and Green Ammonia Project. The Green Hydrogen and Green Ammonia Project is one of the first privately owned company green ammonia projects in the United Arab Emirates, led by BRE, which aims to produce renewable, carbon-free fuel using solar power. This project aims to have a positive impact on the UAE economy by promoting the growth of the renewable energy sector, creating new job opportunities, and reducing the country’s reliance on fossil fuels.
Continue to build relationships with potential customers.
The Company is focused on diversifying its potential customer base over the medium to long-term. Due to Phase I’s strong performance track record to date, and the Company’s reputation and business development efforts, including through inspections from potential users, the Company believes that it has developed strong relationships with several oil traders that could potentially utilize the services of Phase I and II. The familiarity that potential users have gained through their inspections and that oil traders have developed through their experience with the Company’s Phase I and Phase II facility represent a valuable marketing opportunity for the Company. Given the nature of the industry, positive word-of-mouth feedback by these groups can help to establish the Company’s industry reputation and thereby help drive potential customer business in the future. Moreover, by continuing to build upon the Company’s performance track record during Phase II and business developments efforts, the Company is able to expand its base of potential customers for future contracts for oil storage or ancillary services. Similarly, the Modular Refinery and the Green Hydrogen and Green Ammonia Project, once operational, will expand the scope of services that the Company can offer, diversifying the types of industry participants that it can service.
Phase I
Phase I went into operation in December 2017 and between 2014 and 2017, BPGIC incurred a total cost of $170 million in connection with its construction. BPGIC began development of the BPGIC Terminal after several years of planning and discussions with industry participants. BPGIC’s aim in developing the BPGIC Terminal was to create a new standard for oil storage tank terminals by designing a terminal that would reduce user oil losses and achieve better blending results than existing oil storage tank terminals. As described below, BPGIC designed Phase I with several key features that enable it to provide users with high accuracy blending services with low oil losses. In addition, due to the relatively long term of the Phase I & II Land Lease, when compared to comparable land leases for oil storage terminals located in the Port of Fujairah, BPGIC constructed Phase I with materials that have longer expected life spans than comparable materials utilized by other oil storage terminals in the area. As a result, the Company believes Phase I will benefit from annual maintenance costs over the period of the Phase I & II Land Lease that are lower than average for comparable oil storage terminals.
The key features of Phase I include:
| ● | all 14 oil storage tanks are inter-connected via the Phase I Internal Manifold; |
| ● | the pumping and stripping systems of the Phase I Internal Manifold are equipped with a fine stripping system, minimizing energy costs, lowering loss ratios and permitting a high degree of stripping to be achieved; |
| ● | the ability to more efficiently perform required maintenance activities and prepare pipelines for oil transfers; |
| ● | lower loss ratios and contamination risks; |
| ● | recirculation of oil products to assist with the blending process; |
| ● | the ability to simultaneously perform several Phase I operations, permitting BPGIC to service multiple user orders during the same time period; and |
| ● | all 14 oil storage tanks have been designed to permit conversions from storing one clean petroleum product to another and from storing fuel oil to gas oil at a speed which is favorable compared to that of competitors in the UAE region, allowing BPGIC to adjust its services to meet changing market demands. |
Tanks
Phase I has 14 oil storage tanks, which are capable of storing Class I/II/III White Oil (WO) products such as gas oil, naphtha ( all grades), kerosene, gasoline ( all grades), condensate, pygas, raffinate etc and TK-101 – 104 are capable of storing Fuel Oil. Each of the oil storage tanks has been designed to allow fast and efficient cleaning, which permits efficient conversions from storing one product to another. The 14 oil storage tanks are also equipped with the following features:
| ● | accurate product level measurements: a real-time electronic measuring system that monitors product levels in each oil storage tank; |
| ● | an efficient, high-quality blending system which improves the quality and speed of blends; |
| ● | effective drainage systems leading to lower product contamination risks and allowing for a faster product change process; | |
| ● | automated fire-fighting systems: an automated fire system that activates automatically in the event of a fire; | |
| ● | a well-designed pipeline connection: a pipeline connection to the Phase I Internal Manifold that allows any oil storage tank to be connected to the stripping systems and to any other oil storage tank or berth in the Port of Fujairah connected to Matrix Manifold 1 or Matrix Manifold 2; and | |
| ● | heating services: eight of the oil storage tanks have heating coils installed. Currently, only four of the oil storage tanks are connected to the heating system. |
The following table displays the key attributes of the 14 oil storage tanks of Phase I:
| Tank No. | Capable of Servicing(1) |
Diameter (m) x Height (m) |
Blending Capability |
Roof Type(2) | Tank Heating Capability |
Geometric Capacity (m3) |
Max Capacity (m3) |
|||||||
| 101 | GO/ FO | 42 x 30 | Yes | AGDR | Yes | 41,563 | 40,207 | |||||||
| 102 | WO/ FO | 42 x 30 | Yes | AGDR with IFR | Yes | 41,563 | 40,207 | |||||||
| 103 | GO/ FO | 42 x 30 | Yes | AGDR | Yes | 41,563 | 40,207 | |||||||
| 104 | WO/ FO | 42 x 30 | Yes | AGDR with IFR | Yes | 41,563 | 40,207 | |||||||
| 105 | WO | 36 x 30 | Yes | AGDR with IFR | Yes, but not currently enabled | 30,536 | 29,031 | |||||||
| 106 | WO | 36 x 30 | Yes | AGDR with IFR | Yes, but not currently enabled | 30,536 | 29,031 | |||||||
| 107 | WO | 36 x 30 | Yes | AGDR with IFR | Yes, but not currently enabled | 30,536 | 29,031 | |||||||
| 108 | WO | 36 x 30 | Yes | AGDR with IFR | Yes, but not currently enabled | 30,536 | 29,031 | |||||||
| 109 | WO | 36 x 30 | Yes | AGDR with IFR | No | 30,536 | 29,031 | |||||||
| 110 | WO | 36 x 30 | Yes | AGDR with IFR | No | 30,536 | 29,031 | |||||||
| 111 | WO | 23 x 30 | Yes | AGDR | No | 12,464 | 11,850 | |||||||
| 112 | WO | 23 x 30 | Yes | AGDR | No | 12,464 | 11,850 | |||||||
| 113 | WO | 23 x 30 | Yes | AGDR with IFR | No | 12,464 | 11,850 | |||||||
| 114 | WO | 23 x 30 | Yes | AGDR with IFR | No | 12,464 | 11,850 | |||||||
| Total Storage Capacity (m3) | 399,324 | 382,400 | ||||||||||||
| (1) | All the oil storage tanks are convertible and can be cleaned and converted to service other oil products; “WO” means White Oil ,”GO” means Gas Oil; “FO” means Fuel Oil; |
| (2) | “AGDR” means Aluminium Geodesic Dome Roof; “AGDR with IFR” means Aluminium Geodesic Dome Roof with Internal Floating Roof. |
BPGIC transports oil products from the BPGIC Terminal to the Port of Fujairah’s berths through the use of pumps and four piggable jetty pipelines. The pumps facilitate on-loading operations from the Phase I Internal Manifold by pumping oil products through one or more of the four piggable jetty pipelines to Matrix Manifold 2, and then through the Port of Fujairah’s pipelines, to ships located at berths 8 and 9 or to ships located at berths 2-7 via Matrix Manifold 1. BPGIC has nine pumps that it can use to on-load oil products to Matrix Manifold 2. Four of the pumps are capable of transporting white oil at an individual flow rate of 1,250 m3/hr and at a combined flow rate of 5,000 m3/hr. Three of the pumps are capable of transporting fuel oil at an individual flow rate of 1,500 m3/hr and at a combined flow rate of 4,500 m3/hr. BPGIC also utilizes these pumps to facilitate inter-tank transfers, blending and other transfers throughout the BPGIC Terminal.
The users utilize their ship pumps to transport oil products from the relevant berths in the Port of Fujairah via Matrix Manifold 2 to the Phase I Internal Manifold and following the construction and commencement of operations of Phase II, to the proposed internal manifold connected to the eight oil storage tanks of Phase II (the “Phase II Internal Manifold”).
The Phase I Internal Manifold is equipped with a general stripping system that removes any excess oil products left in the pipelines following any oil product transfers and adds it back to appropriate batches, and a fine stripping system that removes any excess oil products left in the general stripping system and adds it back to appropriate batches. The two levels of stripping permit a high degree of stripping to be achieved. All oil products transferred from any oil storage tank to the stripping systems flows downhill, minimizing energy costs. The Phase I Internal Manifold is also equipped with cranes to perform required maintenance activities and prepare pipelines for oil transfers.
Blending
BPGIC believes that Phase I benefits from state-of-the-art blending capabilities, allowing high levels of accuracy in meeting customer blending specifications. BPGIC’s blending services are designed to accommodate a variety of mixing specifications and to prevent any evaporation or leakage. The stripping systems and oil storage tanks are designed to prevent losses, contamination and residue accumulation, enabling BPGIC to produce blends that precisely meet customer specifications and the volume/mass requested.
Heating
As part of Phase I, BPGIC constructed a heating system, comprised of a boiler and direct pipeline connections to certain oil storage tanks that have heating coils installed. Generally, in connection with a heating request, BPGIC heats special purpose heating oil in the boiler and then circulates the heating oil via a pipeline connection to the heating coils located at the bottom of an applicable oil storage tank. The heating oil is then recirculated between the boiler and through the heating coils of the applicable oil storage tank until the oil product in the oil storage tank reaches the specified temperature.
Customer Ordering Process
BPGIC is committed to providing excellent customer service. BPGIC has allocated a customer service officer (a “CSO”) to its customers and tested an online ordering system which was rolled out in the Third Quarter of 2020, which enables the existing Storage Customers to place storage, heating and blending orders and track order statuses in real-time. As an alternative, customers can also place service orders by submitting their nomination to CSO.
Phase II
Scope
Phase II is adjacent to Phase I on the remaining land available under the Phase I & II Land Lease. BPGIC had a soil investigation report completed for the land, which determined that the land was adequate for the purposes of construction and the operation of the facilities. Phase II involved the construction of (i) four crude oil / condensate / gas oil storage tanks with a projected aggregate geometric storage capacity of 0.431 million m3; (ii) four crude/fuel oil/clean petroleum products storage tanks with a projected aggregate geometric storage capacity of 0.171 million m3; (iii) the Phase II Internal Manifold to service only crude oil; and (iv) the associated infrastructure and facilities, including two new crude oil pipelines and four new pumps to carry crude oil between the Phase II Internal Manifold and Matrix Manifold 2. Portions of the infrastructure to support the two new crude oil pipelines and the Phase II Internal Manifold were developed during Phase I. Each of the four crude/fuel oil/clean petroleum products storage tanks is able to store crude, fuel oils and clean petroleum products. BPGIC considered Phase II when developing its plan for Phase I, and constructed infrastructure to accommodate the needs of Phase II, therefore, it was not required to substantially reconfigure its facilities or install additional utility systems in order to construct and operate the proposed facilities.
Capital Expenditure
Phase II construction is completed with a total cost of $185.9 million, which includes the cost of construction, consultancy costs, borrowing costs and other miscellaneous cost.
Key Features and Components
The key features of Phase II include:
| ● | all eight oil storage tanks are inter-connected via the Phase II Internal Manifold for crude oil operations and Phase I manifold for white oil operations; | |
| ● | the pumping and stripping systems of the Phase II Internal Manifold are equipped with fine stripping systems to minimize energy costs and lower loss ratios; | |
| ● | the cranes of the Phase II Internal Manifold allow BPGIC to more efficiently perform required maintenance activities and prepare pipelines for oil transfers; | |
| ● | each of the two piggable crude oil jetty pipelines are directly connected between the Phase II Internal Manifold and Matrix Manifold 2, lowering loss ratios and contamination risks; | |
| ● | Phase II facility is designed to perform various operations simultaneously, including tank-to-tank transfers, recirculations, blending, loading and discharging, which would permit BPGIC to service multiple user orders during the same time period; and |
| ● | All the Phase II oil storage tanks permit conversion between crude oil and white oil products, allowing BPGIC to adjust its services to meet changing market demands. |
Tanks
As part of Phase II, BPGIC constructed eight oil storage tanks. The oil storage tanks are equipped with the following features:
| ● | accurate product level measurements: a real-time electronic measuring system that will monitor product levels in each oil storage tank; |
| ● | effective drainage systems leading to lower product contamination risks and higher cleanliness levels; |
| ● | automated fire-fighting systems that will activate automatically in the event of a fire; |
| ● | a well-designed pipeline connection: a pipeline connection to the Phase II Internal Manifold and a fine stripping system. |
The following table displays the key attributes of the eight oil storage tanks of Phase II:
| Tank No. | Service | Diameter (m) x Height (m) |
Blending Capability |
Roof Type(1) | Tank Heating | Geometric Capacity (m3) |
Max Capacity (m3) |
|||||||
| 201 | Crude Oil/ Condensate / Gas Oil | 70 x 28 | Yes | EFRT | No | 107,757 | 101,900 | |||||||
| 202 | Crude Oil/ Condensate / Gas Oil | 70 x 28 | Yes | EFRT | No | 107,757 | 101,900 | |||||||
| 203 | Crude Oil/ Condensate / Gas Oil | 70 x 28 | Yes | EFRT | No | 107,757 | 101,900 | |||||||
| 204 | Crude Oil/ Condensate / Gas Oil | 70 x 28 | Yes | EFRT | No | 107,757 | 101,900 | |||||||
| 205 | Crude Oil/Fuel Oil /WO | 42 x 30 | Yes | AGDR/ With CS IFR | Yes | 42,759 | 40,600 | |||||||
| 206 | Crude Oil/Fuel Oil/WO | 42 x 30 | Yes | AGDR/ With CS IFR | Yes | 42,759 | 40,600 | |||||||
| 207 | Crude Oil/Fuel Oil/WO | 42 x 30 | Yes | AGDR/ With CS IFR | Yes | 42,759 | 40,600 | |||||||
| 208 | Crude Oil/Fuel Oil/WO | 42 x 30 | Yes | AGDR/ With CS IFR | Yes | 42,759 | 40,600 | |||||||
| Total Storage Capacity (m3) | 602,064 | 570,000 | ||||||||||||
| (1) | “EFRT” means External Floating Roof Tank; “AGDR/ With CS IFR” means Aluminium Geodesic Dome Roof with Carbon Steel Internal Floating Roof. “WO” means Class I/II/III White Oil products. |
Phase II Internal Manifold
As a part of the construction of the Phase II Internal Manifold, BPGIC installed two piggable jetty pipelines and four bulk loading pumps to transport crude oil from the BPGIC Terminal to the Port of Fujairah’s berths. The infrastructure to support the pipelines was built during Phase I. The four pumps facilitate on-loading operations from the Phase II Internal Manifold by pumping crude oil through one or more of the two proposed piggable crude oil jetty pipelines to Matrix Manifold 2. Each of the four pumps is capable of transporting product at a flow rate of 4,000 m3/hr and at a combined flow rate of 16,000 m3/hr.
Blending
Phase II Fuel / WO tanks equipped with state-of-the-art blending capabilities, similar to Phase I, which allows it to achieve high levels of accuracy in meeting customer blending specifications.
In an effort to de-risk the construction of Phase II, BPGIC entered the Phase II EPC Agreement with Audex for the construction of Phase II (including all its component parts and associated infrastructure) on a fixed price lump sum basis. The Phase II EPC Agreement also included a clause for liquidated damages if the contractor fails to complete the work within the schedule in the Phase II EPC Agreement. BPGIC also entered into the Phase II Project Management Agreement with MUC, the same advisor that designed the facilities for the Port of Fujairah and the BPGIC Terminal, so that MUC could manage the construction plan of Phase II. Phase II operations commenced from September 2021.
Proposed Phase III
The Company is in the advanced stages of planning Phase III, a further major expansion in the Port of Fujairah. In February 2020, BPGIC entered into the Phase III Land Lease to secure the Phase III Land, a new plot of land of approximately 450,000 m2 near its existing facilities. On October 1 2020, BPGIC, FOIZ and BPGIC III, entered into a novation agreement, whereby BPGIC novated the Phase III Land Lease to BPGIC III. The Company believes that the Phase III Land can house additional storage capacity of up to 3,500,000 m3 or a storage capacity of 1,660,000 m3 combined with a refinery with a capacity of 180,000 b/d. On December 5, 2022, BPGIC and BPGIC III signed a land preparation work contract with Audex Fujairah LL FZE for Phase III, for the design and execution of the early preparation works for the Phase III land and for the terminal connectivity.
Green Hydrogen and Green Ammonia Project
The Company is also in the advanced stages of planning the Green Hydrogen and Green Ammonia Project, which aims to produce up to 700,000 MT of green ammonia per annum once fully completed. In 2022, BRE entered into a preliminary land lease agreement, engaged Ernst & Young to provide consulting services and has engaged Thyssenkrupp Uhde to undertake the technical study. In 2023, BRE and Siemens Energy announced a partnership to build a PV solar farm to supply BRE’s Green Hydrogen and Green Ammonia Project. The Green Hydrogen and Green Ammonia Project is one of the first privately owned company green ammonia projects in the United Arab Emirates, led by BRE, which aims to produce renewable, carbon-free fuel using solar power.
Modular Refinery
BPGIC intends to build a Modular Refinery at its Terminal with a capacity of 25,000 barrels per day to produce high-in-demand, IMO 2020 compliant, very low sulphur fuel oil as a step towards environmentally friendly energy transition solutions. The Modular Refinery will capitalize on the access to the Brooge land and storage infrastructure, which are critical advantages for the project. The refinery operation will have no commodity risk exposure due to the tolling fee business model.
Security and Business Resilience
The BPGIC Terminal has a high degree of security. It has security cameras in various strategic locations inside and outside of the terminal. Fire alarm and detection systems are installed in all facilities and oil storage tanks. The terminal has firefighters on-site and conducts a fire drill every three months. The lighting system covers all areas of the facility on a 24-hour, seven day a week basis. The majority of the lights are solar powered and thus, reducing energy costs. The BPGIC Terminal is operational 24 hours a day and there are also multiple levels of clearance for employees and contractors.
The Company is committed to improving its security on an ongoing basis, while assuring quality service and continued customer satisfaction. The Company’s corporate security policy is designed to protect the Company’s personnel, assets, reputation and customers’ interests by employing the highest corporate, ethical and operational standards to meet the Company’s vision of excellence.
The Company’s security and business resilience objectives are met through the implementation of a planned set of security standards initiatives and internal programs. These are consistent with the relevant international security legislation and appropriately recognized and accredited quality management systems. All Phase I & II oil storage tanks are certified to the relevant NFPA, American Petroleum Industry and international standards.
Regulations of the Group
The Group’s operations are subject to various laws, standards and regulations relating to the oil and gas industry. The Group’s operations are extensively regulated by national and local authorities in the UAE, including with respect to labor, health, safety, environment, and licensing requirements. Additional requirements may also be imposed on the Group in connection with new or existing operations, including as a result of different or more stringent interpretation or enforcement of existing laws and regulations or a change in the laws and regulations. These additional requirements may not be anticipated by us. As a consequence, the Group may need to adjust its operations or incur extra costs in order to comply with such requirements. Compliance with any additional environmental requirements may be costly and time-consuming. In addition, violations of any new or existing requirements could result in fines or liabilities; delays in securing, or the inability to secure and maintain, permits, authorizations or licenses necessary for the Group’s business; injunctions; reputational damage; and other negative consequences, which may result in lost revenue and reputational damage.
The Group is subject to laws and regulations relating to the protection of the environment and natural resources including, among other things, the management of hazardous substances, the storage and handling of hazardous waste, the control of air emissions and water discharges and the remediation of contaminated sites. Non-compliance with environmental regulations could result in fines, additional costs, and suspension or permanent shut down of activities. The Group’s operations are subject to the environmental risks inherent in the oil and gas sector. The Group’s operations are or may become subject to laws and regulations, including applicable international conventions, controlling the discharge of materials into the environment, pollution, contamination and hazardous waste disposal or otherwise relating to the protection of the environment.
Specifically, the Group is subject to environmental laws and regulations in the UAE. Environmental laws and regulations applicable to the Group’s business activities, or which may become applicable, could impose additional liability on the Group for damages, clean-up costs, fines and penalties in the event of oil spills or similar discharges of pollutants or contaminants into the environment or improper disposal of hazardous waste generated in the course of operations. To date, such laws and regulations have not had a material adverse effect on the Group’s operating results, and the Group has not experienced an accident that has exposed it to material liability arising out of or relating to discharges of pollutants into the environment. However, there can be no assurance that such accidents will not occur in the future. Legislative, judicial and regulatory responses to such an incident could increase the Group’s and/or the Group’s clients’ liabilities. In addition to potential increased liabilities, such legislative, judicial or regulatory action could impose financial, insurance or other requirements that may adversely impact the entire oil industry.
The legal frameworks in the UAE for environmental protection are under continual development and, in time, relevant legislative bodies may impose stricter environmental regulations or apply existing regulations more strictly, including regulations regarding discharges into air and water, the handling and disposal of solid and hazardous waste, land use and reclamation and remediation of contamination. Compliance with environmental laws, regulations and standards, where applicable, may require the Group to make additional capital expenditures, such as the installation of extra equipment or operational changes. These costs could have a material adverse effect on the Group’s business, financial position, results of operation and prospects. Any failure to comply with applicable laws and regulations may result in reputational damage to us, administrative and civil penalties, criminal sanctions or the suspension or termination of the Group’s operations. Failure to comply with these statutes and regulations may subject the Group to civil or criminal enforcement action, which may not be covered by contractual indemnification or insurance and could have a material adverse effect on the Group’s financial position, operating results and cash flows. New laws and government regulations or changes to existing laws and government regulations may add to costs, limit the Group’s operations or reduce demand for the Group’s services.
Environmental, Health and Safety, and Maintenance Matters
The Group is subject to laws and regulations relating to the protection of the environment and natural resources including, among other things, the management of hazardous substances, the storage and handling of hazardous waste, the control of air emissions and water discharges and the remediation of contaminated sites. The Group is also subject to health and safety regulations in the UAE, including, among other things, noise, workplace health and safety and regulations governing the handling, transport and packing of hazardous materials. Compliance with these laws and regulations may require the attainment of permits to conduct regulated activities; restrict the type, quantities and concentration of pollutants that may be emitted or discharged into or onto to the land, air and water; restrict the handling and disposal of solid and hazardous wastes; apply specific health and safety criteria addressing worker protection; and require remedial measures to mitigate pollution from former and on-going operations. These laws and regulations are subject to change by regulatory authorities, and continued or future compliance with such laws and regulations, or changes in the interpretation of such laws and regulations, may require the Group to incur expenditures. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations, and the issuance of injunctions that may limit or prohibit some or all of the Group’s operations. These impacts could directly and indirectly affect the Group’s business, and have an adverse impact on its financial position, results of operations and liquidity.
The Group’s facilities are in substantial compliance with applicable environmental and other laws and regulations, including security and safety at work laws. However, these laws and regulations are subject to change by regulatory authorities, and continued or future compliance with such laws and regulations, or changes in the interpretation of such laws and regulations, may require the Group to incur expenditures. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations, and the issuance of injunctions that may limit or prohibit some or all of the Group’s operations. Additionally, a discharge of hazardous waste into the environment could, to the extent that the event is not fully insured, subject the Group to substantial expenses, including costs to comply with applicable laws and regulations and to resolve claims made by third parties for personal injury and property damage. These impacts could directly and indirectly affect the Group’s business, and have an adverse impact on its financial position, results of operations and liquidity.
The Group has a corporate health and safety program to govern the way it conducts its operations at its facilities. Each of its employees and consultants is required to understand and follow the health and safety plan and have the necessary training for certain tasks performed at the facilities. BPGIC performs preventive and normal maintenance on all of its oil storage tanks and systems and makes repairs and replacements when necessary or appropriate. BPGIC also conducts routine and required inspections of such assets in accordance with applicable regulation. Most of the oil storage tanks are equipped with internal floating roofs in accordance with industry requirements to minimize regulated emissions and prevent potentially flammable vapor accumulation. The terminal was engineered in an innovative approach to reduce the terminal waste, achieving one of the lowest waste in the industry, furthermore it has the majority of its lights solar powered, and the soil surrounding the oil storage tanks is capable of resisting oil penetration and has an oil leakage detection system in place, which is intended to minimize the effects of any oil leakage and potential oil pollution. The terminal facilities also have response plans, spill prevention and control plans, and other programs in place to respond to emergencies.
Information Technology and Operating Systems
The BPGIC Terminal’s IT systems, including the IT systems in BPGIC’s operational control room, are configured to remain in operation, including under abnormal conditions. Appropriate manual backup procedures and automatic processes have been devised to support the terminal’s operations in case of any unexpected system downtime or failure. The terminal’s four physical servers have redundant power supply sources and hard drive in RAID configuration to avoid data loss. The majority of BPGIC’s IT automation systems have been provided by the ABB Group.
In order to prevent both a disruption of BPGIC’s operations as well as to safeguard users’ data, automatic and manual data back-up procedures and recovery plans are in place to save and restore data and systems. System data and network device configurations are saved on network drives an offsite copy and external hard-disk drives. Additional recovery copy is saved on a secure cloud drive. The IT operations are maintained on a 24/7 basis, with automatic monitoring of all systems, emergency and standby duties, and third-party support and maintenance agreements in place where needed. The network infrastructure is periodically tested to ensure compliance with applicable security and performance requirements and appropriate tests are performed to ensure system security and performance are not compromised in connection with any updates to the IT infrastructure.
Any system interruptions caused by telecommunications failures, computer viruses, software errors, third party services, cloud computing providers, cyberattack or other attempts to harm our systems can result in the unavailability or slowdown of our IT systems.
In order to ensure a high degree of IT security, the Group has procedures in place to prevent external threats to the IT systems. All files and emails exchanged over the Group’s network are scanned. A web filtering policy in the firewall prevents access to websites with vulnerabilities. Intrusion prevention system is configured on Group’s firewall to monitor and block malicious attempts. A centrally managed anti-virus software with daily reporting of threats and vulnerabilities is installed in all user machines and servers at the BPGIC Terminal. In addition, the network is logically segmented between users, employees and network guests and provides different levels of access to different users.
BPGIC installed an online ordering system, which will enable users to place storage, heating and blending orders and track order statuses in real-time.
Insurance
BPGIC’s operations and assets are insured under an insurance program administered by Lockton Insurance Brokers — Dubai, an insurance broker. The program covers the Phase I and Phase II facilities and related assets, and the liabilities of the Phase I and Phase II operations and BPGIC. The major elements of this program are property damage, business interruption, terrorism and political violence, worker’s compensation, environmental liability, employer liability, directors’ and officers’ liability insurance, personal injury and third-party liability, including that of terminal operators. The Company additionally maintains local insurance, including healthcare and other insurance required by the Company’s jurisdiction.
Premiums are allocated based on the insured values, history of claims and type of risk. The Company believes that the amount of coverage provided is comprehensive and appropriate for its business.
Legal Proceedings
From time to time, the Company may be involved in litigation and other disputes or regulatory investigations that arise in and outside the ordinary course of business. An adverse determination may result in liability to the Company for the claim and may also result in the imposition of penalties and/or fines.
As a public company, the Company may also be subject to securities class action and shareholder derivative lawsuits. From time to time, the Company may also be reviewed or investigated by U.S. federal, state, or local regulators or regulators in the foreign jurisdictions in which the Group operates. Although the Company carries general liability insurance coverage, the Company’s insurance may not cover all potential claims to which it is exposed, whether as a result of a dispute, litigation or governmental investigation, and it may not adequately indemnify the Company for all liability that may be imposed.
Any claims against the Company or investigation into its business and activities, whether meritorious or not, could be time consuming, result in significant legal and other expenses, require significant amounts of management time and result in the diversion of significant operational resources. Class action lawsuits can often be particularly burdensome given the breadth of claims, large potential damages and significant costs of defense. Legal or regulatory matters involving the Company’s directors, officers or employees in their individual capacities can also create exposure for the Company because the Company may be obligated or may choose to indemnify the affected individuals against liabilities and expenses they incur in connection with such matters. Regulatory investigations can also lead to enforcement actions, fines and penalties, the loss of a license or permit or the assertion of private litigation claims. Risks associated with these liabilities are often difficult to assess or quantify and their existence and magnitude can remain unknown for significant periods of time, making the amount of any legal reserves related to these legal liabilities difficult to determine and, if a reserve is established, subject to future revision. Future results of operations could be adversely affected if any reserve that the Company establishes for a legal liability is increased or the underlying legal proceeding, investigation or other contingency is resolved for an amount in excess of established reserves. Because litigation and other disputes and regulatory investigations are inherently unpredictable, the results of any of these matters may have a material adverse effect on our business, financial condition and results of operations.
On December 22, 2023, without admitting or denying any violation or wrongdoing, the Company reached a settlement with the U.S. Securities and Exchange Commission (the “SEC”) related to alleged fraudulent accounting and offering conduct by the Company and two of its former officers. Pursuant to the SEC administrative order, and which centers on financial statements that have since been restated by the Company, the Company paid a civil money penalty in the amount of $5,000,000. The Company also agreed to cease and desist from committing or causing any violations and any future violations of certain provisions under the Securities Act of 1933 and the Securities Exchange Act of 1934. Two of the Company’s former officers resolved related SEC charges without admitting or denying the SEC’s findings.
BPGIC is currently subject to a judgment in respect of amounts purportedly owed by BPGIC to Al Brooge International Advisory – Sole Proprietorship LLC (“BIA”). On March 5, 2024, the Federal Supreme Court (equivalent of the Court of Cassation) in the United Arab Emirates rejected the appeals filed by representatives of BPGIC relating to the claim and demand for payment from BIA. The appeals were rejected notwithstanding one of the principal arguments raised in one of the appeals being that BIA lacked capacity to bring the claim given that its trade license had been canceled pursuant to a liquidation process. As a result of the court’s decision, the order for BPGIC to pay $130 million, plus four percent interest per annum from December 26, 2023 until the date of payment to BIA, is now final. BIA may proceed to enforce the judgment against BPGIC’s assets. The enforcement of such judgment would likely have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.
On February 5, 2024, a class action complaint was filed in the United States District Court for the Central District of California encaptioned Eric White v. Brooge Energy Limited F/K/A Brooge Holdings Limited F/K/A Twelve Seas Investment Company, Nicolaas L. Paardenkooper, Saleh Yammout, Syed Masood Ali, Burgese Viraf Parekh, Lina Saheb, Dimitri Elkin, Neil Richardson, Stephen N. Cannon, and Paul Ditchburn. The class action complaint contains allegations concerning the recognition of revenue similar to those addressed in the Order Instituting Cease and Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, And Imposing Cease-And-Desist Orders entered by the United States Securities and Exchange Commission on December 22, 2023 In The Matter of Brooge Energy Limited, Nicolaas Lammert Paardenkooper and Lina Saheb. An adverse judgment or resolution in this matter may result in an adverse effect on the Group’s business, financial condition, results of operations and prospects.
C. Organizational structure
Brooge Energy Limited is a holding company with six direct and indirect wholly-owned subsidiaries:
| ● | Brooge Petroleum and Gas Investment Company FZE, incorporated in 2013 in the Fujairah Free Zone, UAE, to provide oil storage, heating and blending services; |
| ● | BPGIC International (f/k/a Twelve Seas Investment Company), a Cayman Islands exempted company, a former special purpose acquisition company, incorporated in 2017 in the Cayman Islands; |
| ● | Brooge Petroleum and Gas Investment Company Phase III FZE, incorporated in 2020 in the Fujairah Free Zone, UAE to provide oil storage, heating and blending services; |
| ● | BPGIC Phase 3 Limited, an offshore company incorporated in 2020 in Jebel Ali Free Zone Authority; |
| ● | Brooge Petroleum and Gas Investment Company FZE - Branch of Abu Dhabi 1 incorporated in 2018 in the Abu Dhabi, UAE and |
| ● | Brooge Renewable Energy Limited, incorporated in 2021 in the Cayman Islands. |
The Company’s current organizational chart is set forth below.
All of the Company’s business is currently conducted through BPGIC and once Phase III and the Green Hydrogen and Green Ammonia Project are ready through BPGIC, BPGIC III and BRE.
D. Property, plant and equipment
The Group has its headquarters in Dubai, United Arab Emirates. The table below summarizes its facilities as of December 31, 2023.
| Gross Area (square |
Lease period | |||||||||
| Country | Location | meter) | Use | Start | End | |||||
| UAE | Port of Fujairah | 153,916.93 | Site of oil storage tanks and administrative building | On or around 3/10/2013 | On or around 3/11/2073(1) | |||||
| UAE | Port of Fujairah | 455,368.60 | Intended site of additional oil storage tanks and refinery | On or around 2/2/2020 | On or around 2/2/2080(2) | |||||
| (1) | The lease ends on or around 3/11/2073 after giving effect to an automatic 30-year extension after the initial 30 year term ends on or around 3/11/2043. |
| (2) | The lease ends on or around 2/2/2080 after giving effect to an automatic 30-year extension after the initial 30 year term ends on or around 2/2/2050. |
The BPGIC Terminal
BPGIC began development of the BPGIC Terminal after several years of planning and discussions with industry participants. During this time, BPGIC engaged an industry consultant to conduct a market assessment of the oil storage industry in the Port of Fujairah region and to identify and assess business opportunities and strategies. BPGIC also engaged MUC, the same advisor that designed the facilities for the Port of Fujairah, to design the BPGIC Terminal. During the design stage, BPGIC assessed various challenges faced by other oil storage terminals, including preventing oil losses and precisely meeting customer blending requirements, and incorporated solutions to such challenges into the design of the terminal. BPGIC’s aim in developing the BPGIC Terminal was to create a new standard for oil storage tank terminals by designing a terminal that would reduce oil losses and achieve better blending results than existing oil storage tank terminals. As described below, BPGIC designed the BPGIC Terminal with several key features that enable it to provide users with high-accuracy blending services with low oil losses. In addition, due to the relatively long-term period of the Phase I & II Land Lease when compared to similar land leases for oil storage terminals located in the Port of Fujairah, BPGIC constructed Phase I and Phase II with materials, including pumps, valves and steel structures, that have longer expected life spans than comparable materials utilized by other oil storage terminals. As a result, BPGIC believes Phase I and Phase II will benefit from annual maintenance costs over the period of the Phase I & II Land Lease that are lower than the average for comparable oil storage terminals. As part of Phase II, BPGIC followed a similar approach as that followed in Phase I by investing in high-grade, long-life materials for the construction and development of its facilities.
Location
The BPGIC Terminal is located in the Port of Fujairah in the emirate of Fujairah in the UAE, just outside the Strait of Hormuz. The Port of Fujairah is a gateway between the Indian Ocean and the Arabian Gulf, and is strategically situated in one of the world’s major oil markets for fuel oil, crude oil and refined oil products. In addition to the Port of Fujairah’s close access to major markets in the Middle East, it also serves as an outlet to East Africa and South Asia and serves as a consolidation point for fuel oil outlets and the regional fuel oil markets, reducing the need for ships to cross through the Strait of Hormuz.
The Strait of Hormuz has been a strategic geographic chokepoint for many years, and as such, it has often been a site of international military conflict and military exercises. Such events have caused safety concerns and travel delays for ships crossing through the Strait of Hormuz.
The Port of Fujairah is the largest multi-purpose port on the Eastern seaboard of the UAE, approximately 70 nautical miles from the Strait of Hormuz. Initial construction of the Port of Fujairah started in 1978 as part of the economic development of the UAE. Full operations commenced in 1983. Since then, the Port of Fujairah has embarked on a continuing process of enhancement to both its facilities and its comprehensive range of functions.
The Port of Fujairah imposes certain requirements on the companies and oil tankers utilizing its port, including requirements for flow rate capacity and ground soil lining. The current minimum average required flow rates vary based on berth location and vessel and parcel size and range between 460 m3/hr and 3,900 m3/hr for black products and 380 m3/hr to 2463 m3/hr for white products, and although the Port of Fujairah has already increased the flow rate requirements in the past, it is possible that the Port of Fujairah could increase them again in the future. BPGIC is well positioned to satisfy any future increases for minimum required flow rates. The Port of Fujairah also requires each oil storage terminal to install impermeable lining throughout its tank farm area and any other area where oil leakage could occur and potentially reach the ground soil. In connection with the construction of Phase I, BPGIC installed the required lining at the Phase I & II Land and is one of only a few oil storage terminals that has been able to satisfy this requirement.
The Port of Fujairah requires oil tankers to use the Port’s reservation system to reserve berths and imposes certain charges on such users, including fees, marine and administrative charges.
Phase I & II Land Lease
On March 10, 2013, BPGIC entered into the Phase I & II Land Lease, as amended by the Novation Agreement dated September 1, 2014. The amended agreement binds BPGIC and FOIZ for a total term of 60 years. The Phase I & II Land has a total area of 153,916.93 m2. BPGIC used this land to build Phase I and Phase II. Upon mutual agreement of the parties, the term of the Phase I & II Land Lease can be renewed or extended for a further period, the term of which is unspecified and therefore subject to agreement between the parties.
BPGIC began paying rent under the Phase I & II Land Lease in 2014. The rent for 2021 was $2.4 million which increases by 2 percent per annum, in 2022 was $2.45 million and in 2023 was $2.5 million. Payments are required to be made in advance (the time period of which is unspecified) in instalments. BPGIC is required to pay all taxes imposed by the federal government of the UAE or FOIZ; however, the leased premises are in a free zone and BPGIC is entitled to all benefits applying to free zone entities, including benefits in respect of taxes.
The Phase I & II Land Lease required BPGIC to enter into the Port Facilities Agreement, which grants it certain usage and access rights in connection with the Port’s facilities. The initial term of the Port Facilities Agreement, which BPGIC entered into on March 31, 2016, is 25 years and it automatically renews for another 25 years at the end of its initial term. The Port Facilities Agreement requires BPGIC to pay certain fees in connection with the use of the Port of Fujairah’s facilities; however, the existing Commercial Storage Agreements provide that any fees charged by the Port of Fujairah in respect of services provided to the existing Storage Customers, including transportation, loading, unloading, use of berths, marine charges, administration charges, penalties and/or use of any of the Port of Fujairah’s facilities, shall be paid by the existing Storage Customers, respectively. Currently, the existing Storage Customers deliver any such amounts to be paid to BPGIC, and BPGIC then sends such amounts to the Port. Pursuant to the Port Facilities Agreement, BPGIC is required to pay such amounts and is responsible for such amounts.
BPGIC is required to obtain the FOIZ’s prior permission in order to use the leased premises for any purpose other than in connection with Phase I and Phase II, or the Modular Refinery. The Phase I & II Land Lease contains representations and warranties, dispute resolution and indemnification clauses that are customary for the UAE and the oil storage industry. FOIZ can cancel the agreement if BPGIC fails to make certain required rental payments or fails to perform or meet in any material respect any material term, condition, covenant, agreement or obligation under the agreement.
BPGIC Terminal Office Building
In connection with Phase I, BPGIC built a five-story office building with an area of 3,388 m2 (the “BPGIC Terminal Office Building”) adjacent to the 14 oil storage tanks. Audex completed construction for the BPGIC Terminal Office Building in November 2017 and BPGIC incurred a total cost of $28.0 million in connection with its construction. BPGIC partially funded the construction of the BPGIC Terminal Office Building with funds obtained from the Phase I Construction Facilities. BPGIC owns the BPGIC Terminal Office Building.
BPGIC Dubai Office
During 2022, the Group acquired corporate office space in Business Bay, Dubai for $2.5 million.
Phase III
Phase III Land Lease
On February 2, 2020, BPGIC entered into the Phase III Land Lease to secure the Phase III Land, a new plot of land of approximately 450,000 m2 near its existing facilities. On October 1, 2020, BPGIC, FOIZ and BPGIC III, entered into a novation agreement, whereby BPGIC novated the Phase III Land Lease to BPGIC III. The agreement provides for an initial 30 year term with an automatic 30 year renewal. Upon mutual agreement of the parties, the term of the Phase III Land Lease can be renewed or extended for a further period, the term of which is unspecified and therefore subject to agreement between the parties. In 2021, BPGIC entered into an agreement with the FOIZ for an additional one-year rent free period in respect of the Phase III. The initial annual rent is $6,126,800 and rent increases by 2 percent per annum. All amounts in respect of rent for each quarter shall be invoiced by and paid to FOIZ in AED by immediately available funds due net 30 days after receipt of invoice. BPGIC is required to pay all taxes imposed by the federal government of the UAE or FOIZ; however, the leased premises are in a free zone and BPGIC is entitled to all benefits applying to free zone entities, including benefits in respect of taxes.
The description of the Phase III Land Lease does not purport to summarize all of the provisions of the agreement and is qualified in its entirety by reference to the full text of the agreement, a copy of which is attached hereto and incorporated by reference herein as Exhibit [4.84] and the novation agreement relating thereto, a copy of which is attached hereto and incorporated by reference herein as Exhibit [4.95].
The Company believes the Phase III Land can house additional storage capacity of up to 3,500,000 m3 or a combination of 1,660,000 m3 and a refinery with a capacity of up to 180,000 b/d. A FEED study, a Soil Investigation and the Environmental Impact Assessment (EIA) for Phase III have already been completed and the Company is now developing a new update to include enhanced versions of the designs. Currently, the Company plans to use the Phase III Land to further increase its storage and refinery services capacity.
Scope
The Company believes that the Phase III Land can house additional storage capacity of up to 3,500,000 m3 or a combination of 1,660,000 m3 and a refinery with a capacity of up to 180,000 b/d. The Company had an initial technical design with different layout options completed for the Phase III Land.
Capital Expenditure
As the Company is in the preconstruction stages of Phase III, it is not possible to reliably estimate the total related capital expenditures. However, the Company anticipates the cost per m3 of Phase III to be approximately equal to the cost per m3 of Phase I and Phase II. As of the date of this Report, the Company has commenced early preparation works in connection with Phase III, in addition to the costs of the completed FEED studies and the preconstruction cost, being the soil investigation and Environmental Impact Assessment activities.
Design
A FEED study for the Phase III Land was completed and the Company is now developing a new update to include enhanced versions of the designs. The FEED study, in parallel with prospective end-user discussions, will enable the Company to determine the optimal layout and product mix. Currently, the Company plans to use Phase III Land to further increase its storage and services and refinery capacity.
Note: Illustrative Phase III plan may vary.
The Company engaged MUC for the FEED process, the same advisor that designed the facilities for the Port of Fujairah, Phase I and Phase II.
Modular Refinery
The Modular Refinery is intended to produce high-in-demand, IMO 2020 compliant, very low sulphur fuel oil as a step towards more environmentally friendly energy transition solutions. The Modular Refinery is to be built and operated by BPGIC on a tolling fee base.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion together with our financial statements and the related notes included elsewhere in this Report. This discussion contains forward-looking statements about our business and operations. Our actual results may differ materially from those we currently anticipate as a result of many factors, including those described under “Item 3.D Risk Factors” and elsewhere in this Report. See “Cautionary Note Regarding Forward-Looking Statements”.
[In this section, references to the “Company,” “we,” “us,” and “our” are intended to refer to Brooge Energy Limited and its consolidated subsidiaries, unless the context clearly indicates otherwise. Unless otherwise indicated, for the purposes of this Item 5. Operating and Financial Review and Prospects, we collectively evaluate the business as “group” business consisting of the Company, Twelve Seas and BPGIC (the “Group”).]
OVERVIEW
The Company is an independent oil storage and service provider, through its wholly-owned subsidiary, BPGIC.
The Group’s vision is to develop an oil storage business that differentiates itself from competitors by providing its customers with fast order processing times, excellent customer service and high accuracy blending services with low oil losses. BPGIC has a 60-year lease of land for its operations located in close proximity to the Port of Fujairah’s berth connection points. The Group developed the BPGIC Terminal’s storage capacity in two phases, Phase I and Phase II, which are already operational, and is working on developing the Phase III and the Green Hydrogen and Green Ammonia Project. Phase I commenced operations in December 2017 and Phase II commenced operations in September 2021.
Tank storage facilities play a vital role in the business of refined petroleum products, crude oil and liquid chemicals. They serve as a critical logistical midstream link between the upstream (exploration and production) and the downstream (refining) segments of the refined petroleum product and crude oil industry. They are used to store primary, intermediate and end products and facilitate a continuous supply of the required feedstock to refineries and chemical plants in the processing industry on the one hand and absorb fluctuations in sales volumes on the other.
KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS
The following factors can affect the results of our operations:
Customer Charges
Currently, the Group’s monthly revenue is primarily driven by the fixed take or pay storage fees for the period of the contract that it charges Storage Customers to use the Phase I and Phase II storage capacity. This storage revenue is highly dependent on the agreed storage fee with the Customers, the contracted storage percentage of the terminal and the duration of the contracts. The storage fee, which is billed monthly in advance, represents the lease of storage capacity and the service provided to the customer for handling an agreed level of throughput of fuel oil, crude oil and clean products. The Group’s monthly revenue is also impacted by the monthly variable ancillary service fees it charges, which varies each month based on usage of the following ancillary services by the existing Storage Customers: throughput, circulation, heating and inter-tank transfers. BPGIC’s monthly revenue ultimately varies based on the existing Storage Customers’ usage of the terminal storage capacity and the level of the ancillary services.
Group’s Cost Structure and Margins
The Group’s cost structure and margins are derived from the Group’s revenues which currently come, and are expected to continue to come, from two types of fees, fees for storage and variable fees for ancillary services. Once the Modular Refinery and the Green Hydrogen and Green Ammonia Project are operational, the Group’s revenues are expected to come from different types of fees, refinery operations fees, green ammonia pricing, fees for storage and variable fees for ancillary services. The mix of these fees affects revenues, operating margins and net income. In particular, the relatively high fixed price nature of the Group’s operations could result in lower profit margins if certain costs were to increase and the Group was not able to offset the increase in costs with sufficient increases in its storage or ancillary service fees or the end users’ utilization of BPGIC’s ancillary services.
The Group’s direct costs, which are comprised principally of employee costs with related benefits and depreciation generally remain stable across broad ranges of activity levels at the terminal and, as discussed above, its storage fee revenues are dependent on terminal utilization, agreed storage fee and the duration of the contracts pursuant to the existing Commercial Storage Agreements. Accordingly, changes in the Group’s operating margins are largely driven by terminal utilization, agreed storage fee and the amount of ancillary services provided and the fees the group earns for such services.
With the start of operations of Phase II and once the Phase III and the Green Hydrogen and Green Ammonia Project are operational, our mix of relatively storage revenue and ancillary revenue will also depend on use and service requirements respectively.
National and International Expansion
The Group’s future revenue growth and results of operations will depend on its ability to secure additional land and develop additional facilities or acquire existing facilities on commercially favorable terms both in the UAE and outside the UAE. The Group operates in a capital-intensive industry that requires a substantial amount of capital and other long-term expenditures, including those relating to the expansion of existing terminal facilities and the development and acquisition of new terminal facilities. Accordingly, the Group’s successful expansion also depends on its ability to generate or obtain funds sufficient to make significant capital expenditures.
Oil Market Pricing Structure
Increases or decreases in the price of crude oil has some impact on end-user demand for our ancillary services, unlike demand for storage which is fully contractually committed at fixed rates. For instance, when the expected future price for an oil product is believed to be higher than the current market price for that product, it is said to be in a “contango market”. In such a market, oil traders are more likely to store the product and put a hold on processing the product via ancillary services, until there is an upward revision in prices. Vice versa if the expected future price for an oil product is believed to be lower than the current market price for that product, it is said to be in a “backwardation market”. In such a market, oil traders are more likely to process the product via ancillary services in order to sell at the current market price, rather than store the product when future prices are expected to be lower.
Phase III & Refinery
The Group is in the early stages of pursuing a major expansion near its existing facilities, which it refers to as Phase III. Phase III alone could be three times the size of the Company’s combined Phase I and II operations. As of the date of this Report, the group has commenced early preparation works for Phase III. The recognized Phase III expenses include land rental which, as per the agreement, is AED 50 per m2 per annum with 2% annual increase.
In addition to Phase III, the Group will continue to pursue additional projects within the Fujairah market, either through joint cooperation with parties who have land leases or through efforts to secure additional land itself in Fujairah. The Group already has in place contracts with existing customers and is working towards enhancing the relationship for additional ancillary and other services.
Green Hydrogen and Green Ammonia Project
The Group is in the advanced stages of planning a Green Hydrogen and Green Ammonia Project in the United Arab Emirates, which aims to produce up to 700,000 MT of green ammonia per annum once fully completed. During 2022, BRE entered into a preliminary land lease agreement, engaged Ernst & Young to provide consulting services and has engaged Thyssenkrupp Uhde to undertake the technical study. In February 2023, BRE and Siemens Energy announced a partnership to build a PV solar farm to supply BRE’s Green Hydrogen and Green Ammonia Project. The Green Hydrogen and Green Ammonia Project is one of the first privately owned company green ammonia projects in the United Arab Emirates, led by BRE, which aims to produce renewable, carbon-free fuel using solar power.
BUSINESS COMBINATION AND NASDAQ LISTING TRANSACTIONS
On December 20, 2019, pursuant to the Business Combination Agreement, among other things:
| (i) | Twelve Seas merged with and into Merger Sub, with Twelve Seas continuing as the surviving entity and a wholly-owned subsidiary of the Company (under the name BPGIC International), with the holders of Twelve Seas’ securities receiving substantially equivalent securities of the Company (the “Merger”); and |
| (ii) | the Company acquired all of the issued and outstanding ordinary shares of BPGIC (the “Purchased Shares”) from BPGIC Holdings in exchange for Ordinary Shares of the Company, with BPGIC becoming a wholly-owned subsidiary of the Company (the “Acquisition”). |
Twelve Seas was incorporated under the laws of the Cayman Islands on November 30, 2017. It was listed on the Nasdaq Capital Market and was a blank check company formed in order to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities.
Merger Sub was incorporated in April 2019 solely to effectuate the Business Combination. From its formation through the Closing, Merger Sub owned no material assets and did not operate any business. Upon Closing, Merger Sub merged with and into Twelve Seas and ceased to exist as a separate entity.
The Merger and the Acquisition occurred simultaneously and their execution is interconnected, that is, the Acquisition could not occur without the Merger and vice versa, we consider the Merger and the Acquisition as one transaction.
Pursuant to the Business Combination Agreement:
| (i) | each outstanding ordinary share of Twelve Seas was exchanged for one Ordinary Share of Brooge Energy Limited; |
| (ii) | each outstanding warrant of Twelve Seas was exchanged for one warrant of Brooge Energy Limited; |
| (iii) | each outstanding right of Twelve Seas was converted into one-tenth of an Ordinary Share of Brooge Energy Limited, rounded down to the nearest whole share per shareholder; and |
| (iv) | each outstanding unit of Twelve Seas was separated into its component parts and then exchanged for one Ordinary Share of Brooge Energy Limited, one warrant of Brooge Energy Limited and one-tenth of an Ordinary Share of Brooge Energy Limited. |
Pursuant to the Business Combination Agreement, BPGIC Holdings had the right, at the sole election of BPGIC (the “Cash Election”), to receive a portion of the consideration for the Purchased Shares at the Closing as cash in lieu of receiving Brooge Energy Limited Ordinary Shares in an amount not to exceed 40% of the Closing Net Cash (with the “Closing Net Cash” being the aggregate cash and cash equivalents of Twelve Seas and Brooge Energy Limited as of the Closing, including remaining funds in the Twelve Seas’ trust account after giving effect to the redemption and the proceeds of any potential private placement financing, less unpaid expenses and liabilities of Twelve Seas and the Company as of the Closing, prior to giving effect to any Cash Election).
In connection with the closing of the Business Combination, holders of 16,997,181 ordinary shares of Twelve Seas sold in Twelve Sea’s initial public offering (“IPO”) exercised their right to redeem such shares at a price of $10.31684239 per share, for an aggregate redemption amount of approximately $175.36 million. In addition, 1,035,000 ordinary shares of Twelve Seas were forfeited by certain pre-IPO shareholders. Effective December 23, 2019, Twelve Sea’s ordinary shares, warrants, rights and units ceased trading, and were replaced by Brooge Energy Limited’s Ordinary Shares and Warrants on the Nasdaq Capital Market under the symbols “BROG” and “BROGW,” respectively.
The total consideration paid by the Company to BPGIC Holdings for the purchased shares was 98,718,035 Ordinary Shares and cash in the amount of $13,225,827.22. 20,000,000 of the Company’s Ordinary Shares otherwise issuable to BPGIC Holdings at the Closing (together with any equity securities paid as dividends or distributions with respect to such shares or into which such shares are exchanged or converted, the “Seller Escrow Shares”) were instead issued to BPGIC Holdings in escrow, and are held by Continental, as escrow agent for the benefit of BPGIC Holdings, to be held and controlled, along with any other Escrow Property (as defined in the Seller Escrow Agreement and together with the Seller Escrow Shares, the “Seller Escrow Property”) by Continental in a separate segregated escrow account (the “Seller Escrow Account”), and released in accordance with the Seller Escrow Agreement.
The Seller Escrow Property will only become vested and not subject to forfeiture, and released to BPGIC Holdings, in the event that the Company meets the following performance or milestone requirements during the Seller Escrow Period, the period commencing from the Closing until the end of the twentieth fiscal quarter after the commencement date of the first full fiscal quarter beginning after the Closing:
| (i) | One-half of the Seller Escrow Property shall become vested and no longer subject to forfeiture, and be released to BPGIC Holdings, in the event that either: (a) the Annualized EBITDA (as defined in the Seller Escrow Agreement) for any full fiscal quarter during the Seller Escrow Period (beginning with the first full fiscal quarter beginning after the Closing) (an “Seller Escrow Quarter”) equals or exceeds $175,000,000 or (b) at any time during the Seller Escrow Period, the closing price of the Company Ordinary Shares equals or exceeds $12.50 per share (subject to equitable adjustment) for any ten Trading Days (as defined in the Seller Escrow Agreement) within any twenty Trading Day period during the Seller Escrow Period. |
| (ii) | All Seller Escrow Property remaining in the Seller Escrow Account shall become vested and no longer subject to forfeiture, and be released to BPGIC Holdings, in the event that either: (a) the Annualized EBITDA for any Seller Escrow Quarter equals or exceeds $250,000,000 or (b) at any time during the Seller Escrow Period, the closing price of the Company Ordinary Shares equals or exceeds $14.00 per share (subject to equitable adjustment) for any ten Trading Days within any twenty Trading Day period during the Seller Escrow Period. |
While the Seller Escrow Property is held in the Seller Escrow Account, BPGIC Holdings shall have all voting, consent and other rights (other than the rights to dividends, distributions or other income paid or accruing to the Seller Escrow Property). The Seller Escrow Agreement provides, however, that after the Closing, BPGIC Holdings shall be permitted to (i) pledge or otherwise encumber the Seller Escrow Property as collateral security for documented loans entered into by BPGIC Holdings, the Company or its subsidiaries, including BPGIC, after the Closing or (ii) transfer its rights to the Seller Escrow Property to a third party, provided, that (a) in each case of clauses (i) and (ii), that the lender’s or transferee’s rights to any such pledged or transferred Seller Escrow Property shall be subject to the provisions of the Seller Escrow Agreement and the sections of the Business Combination Agreement pertaining to the escrow, including the forfeiture provisions contained therein, and (b) in the event of a pledge or encumbrance of the Seller Escrow Property under clause (i) above, BPGIC Holdings may transfer the Seller Escrow Property to another escrow agent selected by BPGIC Holdings and reasonably acceptable to the Company.
Twelve Seas’ Initial Shareholders beneficially owned and were entitled to vote an aggregate of 5,175,000 ordinary shares that were issued prior to Twelve Seas’ IPO. Simultaneously with the execution of the Business Combination Agreement, the Initial Twelve Seas Shareholders entered into a letter agreement with Twelve Seas, the Company and BPGIC (the “Founder Share Letter”), pursuant to which the Initial Twelve Seas Shareholders agreed, effective upon the Closing, on a pro-rata basis among the Initial Twelve Seas Shareholders based on the number of Founder Shares owned by each of them, to (i) forfeit 20% of the Founder Shares owned by the Initial Twelve Seas Shareholders at the Closing and (ii) subject 30% of the Founder Shares owned by the Initial Twelve Seas Shareholders at the Closing (including any Ordinary Shares issued in exchange therefor in the Merger) to escrow and vesting and potential forfeiture obligations that are substantially identical to those that apply to the Seller Escrow Property as described above.
A. OPERATING RESULTS
Description of Operations
We conduct our operations through a dedicated operation team at the BPGIC Terminal. Our operations are categorized into two reported business services: Storage and Ancillary services.
Storage. We own terminal and storage facilities in the UAE in the emirate of Fujairah, initially Phase 1 with 399,324 m3 storage capacity for storage of clean oil and fuel oil and subsequently Phase II expanding the BPGIC Terminal to a total capacity of approximately 1,001,388 m3 with the capability to store crude oil too. Phase III is projected to have a storage capacity of approximately 3,500,000 m3.
Ancillary Services. Ancillary services are further classified into four sub streams, Throughput, Blending & Circulation, Heating, and Inter tank Transfer. BPGIC began offering ancillary services in April 2018 after initial tests of the facility had been satisfactorily completed.
BPGIC charges the existing Storage Customers variable fees based on usage for the following ancillary services:
| ● | Throughput Fees. Pursuant to the existing Commercial Storage Agreements, the Storage Customers, are required to pay BPGIC a monthly fee based upon the total volume of oil products delivered from the BPGIC Terminal to the Port of Fujairah’s berths or from the berths to the BPGIC Terminal during an applicable month at the contracted rate per m3. Each month the existing Storage Customers are each allocated a certain amount of throughput volume at no charge. The Storage Customers are required to pay BPGIC throughput fees on throughput volume to the extent the aggregate amount of throughput volume provided by BPGIC exceeds such initial amount. The revenue BPGIC generates from such service fees varies based upon, among other factors, the volume of oil products entering and exiting the BPGIC Terminal. As existing Storage Customers utilize the ancillary services, which involves sending and receiving oil products to and from the BPGIC Terminal, it will lead to corresponding increases in the throughput volumes delivered to the extent BPGIC sends oil products to the Port of Fujairah’s berths. |
| ● | Blending & Circulation Fees. Pursuant to the existing Commercial Storage Agreements, the existing Storage Customers, are required to pay BPGIC a monthly fee based upon the total volume of oil products blended during the blending processes performed during an applicable month at the contracted rate per hour. The existing Storage Customers are responsible for providing BPGIC with blend specifications, the component oil products and any additives in connection with any blend request. The revenue BPGIC generates from such service fees varies based upon the activity levels of the existing Storage Customers. |
| ● | Heating Fees. Pursuant to the existing Commercial Storage Agreements, the existing Storage Customers are required to pay BPGIC a monthly fee based upon the total volume of oil products heated during an applicable month at the contracted rate per hour. The revenue BPGIC generates from such service fees varies based upon the activity levels. |
| ● | Inter-Tank Transfer Fees. Pursuant to the existing Commercial Storage Agreements, the existing Storage Customers are required to pay BPGIC a monthly fee based upon the total volume of oil products that they transferred between oil storage tanks during an applicable month at the contracted rate per m3. The revenue BPGIC generates from such service fees varies based upon the activity levels of the existing Storage Customers. |
Summary Financial Results
| in $ | 2023 | 2022 | 2021 | |||||||||
| Storage rental income | 102,045,523 | 77,577,633 | 37,467,396 | |||||||||
| Reimbursable port charges | 2,027,106 | 2,039,396 | 1,681,878 | |||||||||
| Ancillary services | 1,623,019 | 1,923,747 | 2,612,341 | |||||||||
| TOTAL REVENUE | 105,695,648 | 81,540,776 | 41,761,615 | |||||||||
| Direct costs | (23,755,056 | ) | (24,691,442 | ) | (14,984,022 | ) | ||||||
| GROSS PROFIT | 81,940,592 | 56,849,334 | 26,777,593 | |||||||||
| Other income | 189,857 | 180,345 | 6,237,620 | |||||||||
| Changes in estimated fair value of derivative warrant liabilities | 3,931,592 | 7,430,035 | 1,486,023 | |||||||||
| General and administrative expenses | (54,075,686 | ) | (15,652,819 | ) | (7,422,870 | ) | ||||||
| Finance costs | (20,915,219 | ) | (25,417,989 | ) | (6,810,718 | ) | ||||||
| Litigation settlement | (55,746,035 | ) | - | - | ||||||||
| Changes in fair value of derivative financial instruments | (3,653,296 | ) | 3,840,379 | 5,422,917 | ||||||||
| PROFIT(LOSS) FOR THE YEAR | (48,328,195 | ) | 27,229,285 | 25,690,565 | ||||||||
In 2023, the Group reported a net loss of $48.3 million as compared to a net profit of $27.2 million in 2022. The Group’s gross profit increased to $81.9 million in 2023, an increase of 44% from $56.8 million in 2022 mainly due to an increase in the average annual storage rates. However, the net loss of $48.3 million in 2023 was mainly due to litigation settlement of $55.7 million, expected credit loss of $18.2 million and write-off of advances to contractor of $15 million.
In 2022, the Group reported total revenue of $81.5 million, a significant increase of 95% from 2021. This increase is primarily attributable to Fujairah terminal storage capacity of Phase 1 & 2 being operational during the year which also resulted in the increase in 2022 direct costs of $24.7 million, a 65% increase from 2021. There was also an increase in general and administrative expenses from $7.4 million in 2021 to $15.7 million in 2022 primarily due to legal and professional fees, sales and marketing expenses. Finance costs also increased from $6.8 million in 2021 to $25.4 million in 2022, but this was primarily due to $15.9 million finance cost being capitalized in 2021 as Phase II was still under construction and in 2022 there was no capitalization as Phase 2 construction was complete. Also, in 2022, there was a one-off payment of $3.7 million paid to Bondholders related to a waiver of Bond financial covenants. The resulting 2022 profit was $27.2 million, a 6% increase from 2021.
Revenue
| Revenue $ for | 2023 | 2022 | 2021 | |||||||||
| Storage rental income | 102,045,523 | 77,577,633 | 37,467,396 | |||||||||
| Reimbursable port charges | 2,027,106 | 2,039,396 | 1,681,878 | |||||||||
| Ancillary services | 1,623,019 | 1,923,747 | 2,612,341 | |||||||||
| Total Revenue | 105,695,648 | 81,540,776 | 41,761,615 | |||||||||
Year ended December 31, 2023 Compared to Year ended December 31, 2022
During the year 2023, there was an increase in revenues of $24.2 million to $105.7 million, up from $81.5 million in 2022. This revenue increase was due to higher average storage rates. In 2023, the Group recognised revenue from nine customers consisting of major oil producers and traders in the region which represented $102.0 million in storage revenues. Whereas in 2022, the Group had fourteen customers which represented $77.6 million in storage revenues.
Year ended December 31, 2022 Compared to Year ended December 31, 2021
During the year 2022, there was an increase in revenues of $39.7 million to $81.5 million, up from $41.8 million in 2021 primarily due to the availability of Phase II storage capacity and operations for a full year with higher storage rates. In 2021, the Group had eleven customers consisting of major oil producers and traders in the region which represented $37.5 million in storage revenues with all direct customers except for one. Whereas in 2022, the Group had fourteen customers which represented $77.6 million in storage revenues, and all were direct customers.
Direct Costs
The consolidated entities direct costs pertain only to BPGIC because there is no revenue generated at the Brooge Energy Limited level. Direct costs are comprised principally of employee costs and related benefits, depreciation and, to a lesser extent, insurance, and certain other miscellaneous operating costs.
Employee costs and related benefits consist of compensation to employees who provide customer support and services and external contractor costs.
Depreciation expenses consist of depreciation on Phase I’s and Phase II’s oil storage tanks, administrative buildings, and installations. The Company depreciates these assets using the straight-line depreciation method assuming an average useful life of 50 years for the tanks and 20 to 25 years for the buildings and installations.
| Direct Costs $ for | 2023 | 2022 | 2021 | |||||||||
| Depreciation on property, plant and equipment | 12,656,056 | 12,615,658 | 6,806,198 | |||||||||
| Employees’ costs | 4,528,323 | 4,232,980 | 3,891,969 | |||||||||
| Reimbursable port charges | 2,027,106 | 2,039,396 | 1,681,878 | |||||||||
| Maintenance charges | 1,635,693 | 2,741,780 | 332,658 | |||||||||
| Spare parts and consumables used | 1,140,063 | 1,460,979 | 938,386 | |||||||||
| Insurance charges | 1,050,188 | 955,977 | 782,357 | |||||||||
| Others | 717,627 | 644,672 | 550,576 | |||||||||
| Total Direct Costs | 23,755,056 | 24,691,442 | 14,984,022 | |||||||||
Year ended December 31, 2023 Compared to Year ended December 31, 2022
There was a decrease of total direct costs by $0.9 million from $24.7 million in 2022 to $23.8 million in 2023, representing a decrease of 4% in comparison to 2022. The major reason for the decrease is a payment of $1.9 million to the Port of Fujairah for Piperack 3 concession fees in 2022.
Year ended December 31, 2022 Compared to Year ended December 31, 2021
There was an increase of total direct costs by $9.7 million from $15.0 million in 2021 to $24.7 million in 2022, representing an increase of 65% in comparison to 2021. The major reasons for the increase are:
| 1. | $5.8 million increase in plant, property and equipment depreciation primarily attributable to the depreciation of Phase II for the full year of 2022 as Phase II was capitalized in November 2021 when the storage capacity was fully operational. |
| 2. | $2.4 million increase in maintenance costs primarily due to a payment of $1.9 million to the Port of Fujairah for Piperack 3 concession fees. |
| 3. | $0.5 million increase in spares parts and consumables due to Phase II operations which commenced in September 2021. |
Gross Profit
Year ended December 31, 2023 Compared to Year ended December 31, 2022
The Company’s gross profit increased to $81.9 million in 2023, up from $56.8 million in 2022. This was mainly due to the higher average storage rates.
Year ended December 31, 2022 Compared to Year ended December 31, 2021
The Company’s gross profit increased to $56.8 million in 2022, up from $26.8 million in 2021. This was mainly due to the availability of Phase II storage and operations for the 2022 year and higher average storage rates also contributed.
Change in estimated fair value of derivative warrant liabilities
Year ended December 31, 2023 Compared to Year ended December 31, 2022
The gain of $3.9 million results from the change in fair value of warrants issued by the Company on December 20, 2019. The fair value of the warrants on December 31, 2022 was $0.20, which is further decreased on December 31, 2023 to $0.01, which resulted in a gain of $3.9 million on 21,228,900 warrants.
Year ended December 31, 2022 Compared to Year ended December 31, 2021
The gain of $7.4 million results from the change in the fair value of warrants issued by the Company on December 20, 2019. The fair value of the warrants on December 31, 2021 was $0.55, which is further decreased on December 31, 2022 to $0.20, which resulted in a gain of $7.4 million on 21,228,900 warrants.
General and Administrative Expenses
The Company’s general and administrative expenses include costs not directly attributable to the operations of the BPGIC Terminal and consist primarily of compensation costs for its executive, financial, human resources, and administrative functions. Other significant expenses include outside legal counsel, independent auditors and other outside consultants, recruiting, travel, rent and advertising.
| General & Administrative Expenses $ for | 2023 | 2022 | 2021 | |||||||||
| Expected credit loss on trade accounts receivables | 18,202,132 | - | - | |||||||||
| Write-off of advances to contractor | 15,006,262 | - | - | |||||||||
| Legal and professional | 6,795,869 | 7,383,335 | 2,877,264 | |||||||||
| SEC settlement charges | 5,000,000 | - | - | |||||||||
| Sales and marketing | 3,855,029 | 3,026,399 | 60,389 | |||||||||
| Employees’ cost | 2,741,321 | 3,292,361 | 2,486,933 | |||||||||
| Write-off of trade accounts receivables | 927,519 | - | - | |||||||||
| Insurance | 895,157 | 949,784 | 937,329 | |||||||||
| Board fees and expenses | 392,448 | 356,493 | 518,278 | |||||||||
| Office expenses | 203,098 | 409,544 | 393,187 | |||||||||
| Rent | 2,836 | 166,894 | 112,306 | |||||||||
| Other Expenses | 54,015 | 68,009 | 37,184 | |||||||||
| Total G&A Expenses | 54,075,686 | 15,652,819 | 7,422,870 | |||||||||
Year ended December 31, 2023 Compared to Year ended December 31, 2022
General and administrative expenses increased by $38.4 million from $15.7 million in 2022 to $54.1 million in 2023. The major reasons for this increase are:
| 1. | $18.2 million of expected credit loss on trade accounts receivables from two customers based on the ongoing negotiations with the customer, the expected recoverability and the failure of a debtor to engage in a repayment plan with the Group. |
| 2. | $15.0 million of write-off of advances to contractor after reconciling the books of accounts with the long-standing EPC partner Audex. |
| 3. | $5.0 million of SEC settlement charges under the U.S. Securities and Exchange Commission (“SEC”) related to alleged fraudulent accounting and offering conduct by the Group in prior periods. Pursuant to the SEC administrative order, which was entered on December 22, 2023, and which centers on the consolidated financial statements that have since been restated by the Group, Brooge Energy Limited fined to pay a civil money penalty of $5.0 million. |
| 4. | $0.9 million of write-off of trade accounts receivables from two customers as there was no reasonable expectation of recovery. |
| 5. | $0.8 million increase in sales and marketing expenses related to obtaining new storage customers for the terminal. |
Year ended December 31, 2022 Compared to Year ended December 31, 2021
General and administrative expenses increased by $8.3 million from $7.4 million in 2021 to $15.7 million in 2022. The major reasons for this increase are:
| 1. | $4.5 million increase in legal and professional fees primarily due to legal and auditor costs associated with the SEC examination. |
| 2. | $3.0 million increase in sales and marketing expenses related to obtaining new storage customers for the terminal. |
| 3. | $0.8 million increase in salaries mainly due to new hiring’s during the year and full-year expense of previous joiners in 2021. |
Finance Costs
The Company’s finance costs consist of amortization of lease liability interest and interest expense under the Company’s Financing Facilities.
The Phase I & II Land Lease entered into in March 2013 has an initial term of 30 years, which is extendable for another 30 years. The Company has concluded that it has the right to use of the land and, accordingly, recorded a lease liability in accordance with IFRS 16. Given the Company’s use of the land, it is reasonably certain that it will continue to lease the land until the end of lease period (i.e. 60 years) and, accordingly, the lease rental amounts cover a period up to 60 years and are discounted at the rate of 9.5% as the incremental borrowing rate of the Company over 60 years.
The Phase III Land Lease entered into in February 2020 has an initial term of 30 years, which is extendable for another 30 years. The Company has concluded that it has the right to use of the land and, accordingly, recorded a lease liability in accordance with IFRS 16. Given the Company’s use of the land, it is reasonably certain that it will continue to lease the land until the end of lease period (i.e. 60 years) and, accordingly, the lease rental amounts cover a period up to 60 years and are discounted at the rate of 13% as the incremental borrowing rate of the Company over 60 years.
| Finance Cost $ for | 2023 | 2022 | 2021 | |||||||||
| Interest on borrowings | 17,606,995 | 22,177,769 | 4,966,876 | |||||||||
| Interest on lease liabilities | 3,086,680 | 3,043,214 | 1,685,010 | |||||||||
| Bank charges | 133,220 | 119,347 | 89,587 | |||||||||
| Asset retirement obligation - accretion expenses | 68,040 | 65,859 | 28,252 | |||||||||
| Exchange loss | 20,284 | 11,800 | 40,993 | |||||||||
| Total Finance Cost | 20,915,219 | 25,417,989 | 6,810,718 | |||||||||
Year ended December 31, 2023 Compared to Year ended December 31, 2022
During the year 2023, there was an 18% decrease in finance costs to $20.9 million, down from $25.4 million in 2022. The main reasons for the decrease in finance cost is a one-off payment of $3.7 million paid to Bond holders related to the waiver of Bond financial covenants in 2022 and lower interest expense on borrowings resulted from repayments of borrowings.
Year ended December 31, 2022 Compared to Year ended December 31, 2021
During the year 2022, there was an increase in finance cost by 273% in 2022 as compared to 2021 from $6.8 million in 2021 to $25.4 million in 2022. The main reasons for the increase in finance cost are:
| 1. | $17.2 million increase in interest expense on term loans primarily due to $15.9 million of finance cost being capitalized during construction of Phase 2 in 2021 and there was a one-off payment of $ 3.7 million paid to Bond holders related to the waiver of Bond financial covenants. |
| 2. | $1.4 million increase in interest on lease liability due to Phase III Land Lease rental payment commencing post completion of rental free period up until August 2022. |
Litigation settlement
On December 27, 2023, the Group was served with the UAE court order following a case brought forward by Brooge International Advisory LLC (BIA). As a precautionary measure, the court appointed a Judicial Guardian over the Group.
On March 5, 2024, the Federal Supreme Court (equivalent of the Court of Cassation) in the United Arab Emirates rejected the appeals filed by the legal team of the Group, relating to the claim and demand for payment from BIA. As a result of the Court’s decision dated March 5, 2024, the Group was ordered to pay USD 130 million, plus four percent interest per annum from December 26, 2023, until the date of payment to BIA. Accordingly, additional provision of $55.7 was recognized in these consolidated financial statements as an adjusting event under IAS 10. USD 74.3 million of the total amount corresponds to liability already recognized in prior periods, while USD 55.7 million corresponds to additional obligations imposed by the Court.
Net Profit (Loss)
Year ended December 31, 2023 Compared to Year ended December 31, 2022
During the year 2023, the Group resulted a net loss of $48.3 million, as compared to a net profit of $27.2 million in 2022.
Year ended December 31, 2022 Compared to Year ended December 31, 2021
During the year 2022, the Group generated a net profit of $27.2 million, as compared to a net profit of $25.7 million in 2021.
Non-IFRS Financial Measures
Adjusted EBITDA
We define Adjusted EBITDA as profit (loss) before interests, income tax expense (currently not applicable in the UAE but included here for reference purposes), depreciation, amortization, impairments, expected credit losses, write-offs, changes in fair values, other non-cash, extraordinary and one-off items. We have selected items for adjustment to EBITDA which management feels decreases the comparability of our results among periods. These items are identified as those which are generally outside of the results of day-to-day operations of the business, non-recurring, infrequent or unusual, but do erode comparability among periods in which they occur with periods in which they do not occur or occur to a greater or lesser degree.
Discussion and Reconciliation
The Group’s Adjusted EBITDA increased by $25.8 million in 2023 when compared to 2022 from $53.9 million (66% of revenue) for the year ended December 31, 2022 to $79.7 million (75% of revenue) for the year ended December 31, 2023. The main reasons for increase of Adjusted EBITDA in 2023 are:
| 1. | There was an increase in revenue of $24.2 million in 2023 due primarily to higher storage rates. |
| 2. | Also, as explained in direct costs there is a payment of $1.9 million to the Port of Fujairah for Piperack 3 concession fees in 2022. |
The Group’s Adjusted EBITDA increased by $27.7 million in 2022 when compared to 2021 from $26.1 million (63% of revenue) for the year ended December 31, 2021 to $53.9 million (66% of revenue) for the year ended December 31, 2022. The main reasons for increase of Adjusted EBITDA in 2022 are:
| 1. | There was a net increase in revenue of $39.8 million in 2022 due primarily to higher storage rates and the full year of Phase II operations. |
| 2. | Also, as explained in direct costs and general and administrative sections above, there is an increase of total direct costs by $9.7 million from $15.0 million in 2021 to $24.7 million in 2022, a 65% over the previous year 2021 attributed to the increased costs associated with Phase II being operational for a full year. Also, general and administrative expenses increased by 111% or $8.2 million from $7.4 million in 2021 to $15.7 million in 2022. |
| 3. | This increase in revenue by $39.8 million and increase in expenses by $17.9 million contributed to the increase in Adjusted EBITDA. |
Adjusted EBITDA is not a financial measure presented in accordance with IFRS. Adjusted EBITDA should not be considered in isolation or as a substitute for or superior to analysis of our results, including net income, prepared in accordance with IFRS. Because Adjusted EBITDA is a non-IFRS measure, it may be defined differently by other companies in our industry. Our definition of this Non-IFRS financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing the utility. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.
We present Adjusted EBITDA as a supplemental performance measure because we believe that the presentation of this non-IFRS financial measure will provide useful information to investors in assessing our financial condition and results of operations. Profit (loss) is the IFRS measure most directly comparable to Adjusted EBITDA. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income. Some limitations of Adjusted EBITDA are:
| ● | Adjusted EBITDA does reflect finance costs of, or the cash requirements necessary to service interest on our debts; and |
| ● | Adjusted EBITDA excludes depreciation and although these are non-cash charges, the assets being depreciated may have to be replaced in the future. |
Management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable IFRS measure, understanding the difference between Adjusted EBITDA and profit (loss) and incorporating this knowledge into its decision-making processes. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating our operating results.
The following table presents a reconciliation of net income to Adjusted EBITDA, the most directly comparable IFRS financial measure for the indicated periods:
| Adjusted EBITDA $ for | 2023 | 2022 | 2021 | |||||||||
| Profit (loss) for the year | (48,328,195 | ) | 27,229,285 | 25,690,565 | ||||||||
| Adjustments for: | ||||||||||||
| Depreciation of property, plant and equipment | 12,656,056 | 12,615,658 | 6,806,198 | |||||||||
| Interest on borrowings | 17,606,995 | 22,177,769 | 4,966,876 | |||||||||
| Interest on lease liabilities | 3,086,680 | 3,043,214 | 1,685,010 | |||||||||
| Changes in fair value of derivative financial instruments | 3,653,296 | (3,840,379 | ) | (5,422,917 | ) | |||||||
| Asset retirement obligation - accretion expense | 68,040 | 65,859 | 28,252 | |||||||||
| Litigation settlement | 55,746,035 | - | - | |||||||||
| Expected credit losses of trade accounts receivables | 18,202,132 | - | - | |||||||||
| Write-off of advances to contractor | 15,006,262 | - | - | |||||||||
| SEC settlement charges | 5,000,000 | - | - | |||||||||
| Write-off of trade accounts receivables | 927,519 | - | - | |||||||||
| Change in estimated fair value of derivative warrant liability | (3,931,592 | ) | (7,430,035 | ) | (1,486,023 | ) | ||||||
| Rent waiver | - | - | (6,126,800 | ) | ||||||||
| Adjusted EBITDA | 79,693,228 | 53,861,371 | 26,141,161 | |||||||||
| Revenues | 105,695,648 | 81,540,776 | 41,761,615 | |||||||||
| Adjusted EBITDA % of Revenues | 75 | % | 66 | % | 63 | % | ||||||
Inflation
Inflation in the UAE has not materially affected our results of operations in recent years. Although we have not been affected by inflation in the past, we may be affected if any of the countries in which we do business now, or in the future, experience high rates of inflation.
B. LIQUIDITY AND CAPITAL RESOURCES
Overview
Our capital requirements have primarily been for capital expenditures related to the development of Phase I and Phase II, debt service, operating expenses, and shareholder distributions. Historically, we have funded our capital requirements through the Financing Facilities and equity contributions. We anticipate funding our future capital requirements and debt service payments with cash generated from our operations, funds received through equity raises and future borrowings. To the extent we choose to seek additional financing in the future (whether for development, acquisition opportunities as they arise or the refinancing of the Bond Financing Facility when due at more favorable terms), we expect to fund such activities through cash generated from operations and through securing further debt financing from banks and the capital markets.
On December 31, 2023 the Group had a restricted bank balances, cash and cash equivalents of $28.4 million, on December 31, 2022 the Group had a restricted bank balances, cash and cash equivalents of $16.8 million and on December 31, 2021 the Group had a restricted bank balances, cash and cash equivalents of $15.9 million.
During the year 2020, the Company received proceeds of $187 million (net of issuance discount and arranger fees) in connection with the Bond Financing Facility. The Company used an aggregate of $87.1 million to repay in full outstanding amounts owed on the Phase I Financing Facility, Phase I Admin Building Facility (including the hedging facility), $85.00 million allocated for Phase II construction in construction funding account, $1.50 million to repay a promissory note to Early Bird Capital, $8.5 million to fund the Liquidity Account and the remaining balance was used for general corporate purposes.
During the year 2021, the Company obtained a new term loan facility from a commercial bank in the UAE amounting to $2.4 million to partially finance the purchase of corporate office for the Company in Dubai. The new facility carries interest at 3 months EIBOR + 4% margin (minimum 6.5% per annum) and is repayable in 24 quarterly instalments commencing 6 months after the date of disbursement.
As of December 31, 2023, the Company has a Bond Financing Facility for an aggregate $160.1 million and a Term Loan for $1.8 million.
Cash Flows for the Years Ended
The following table summarizes our cash flows provided by (used in) operating, investing, and financing activities in $.
| 2023 | 2022 | 2021 | ||||||||||
| Operating Activities | 58,569,270 | 58,049,261 | 22,946,486 | |||||||||
| Investing Activities | (17,977,150 | ) | (20,761,691 | ) | (15,362,174 | ) | ||||||
| Financing Activities | (33,636,394 | ) | (37,976,957 | ) | (27,121,966 | ) | ||||||
| Net Increase (Decrease) in Cash | 6,955,726 | (689,387 | ) | (19,537,654 | ) | |||||||
Operating Activities
Net cash generated from operating activities for the year ended December 31, 2023 was $58.6 million, which is primarily due to an increase in revenues.
Net cash generated from operating activities for the year ended December 31, 2022, was $58.0 million, a $35.1 million increase compared to 2021 which is primarily due to an increase in revenues.
Investing Activities
Net cash used in investing activities for the year ended December 31, 2023 was $18.0 million pertaining mainly to construction of the Phase II and Phase III of $13.2 million. $5.0 million was transferred to the restricted bank account as per the SEC order and $0.3 million transferred from the restricted bank account as per the bond terms.
Net cash used in investing activities for the year ended December 31, 2022 was $20.8 million mainly pertaining to projects of the Phase II and Phase III. $1.6 million was transferred to the restricted bank account as per the bond and loan terms.
Financing Activities
Net cash used in financing activities for the year ended December 31, 2023 was $33.6 million as compared to $38.0 million for the year ended December 31, 2022. This use of cash was primarily for the repayment of interest and principals of the Bond Financing Facility and the payment of lease liabilities.
Net cash used in financing activities for the year ended December 31, 2022 was $38.0 million as compared to $27.1 million for the year ended December 31, 2021. This use of cash was primarily for the repayment of interest and principals of the Bond Financing Facility and the payment of lease liabilities.
Working Capital
As of December 31, 2023, the Group had negative working capital of $320.4 million, compared to negative working capital of $265.4 million as of December 31, 2022 compared to negative working capital of $283.3 million as of December 31, 2021.
As of December 31, 2023, the Group had a restricted bank balances, cash and cash equivalents of $28.4 million. Management forecasts that the Group’s existing cash balance, as well as cash generated from the Group’s ongoing operations, will provide sufficient liquidity for the Group to continue operations for the foreseeable future.
Capital Expenditures
During the year 2023, the Group’s incurred net expenditure towards capital expenses amounted to $13.3 million ($19.2 million in 2022).
During the year 2022, the Group’s incurred net expenditure towards capital expenses amounted to $19.2 million ($27.8 million in 2021).
Debt Sources of Liquidity
| Current ($) | Terms | Maturity | Dec-23 | Dec-22 | Dec-21 | |||||||||||
| (Restated) | ||||||||||||||||
| Bond Financing Facility | 8.5% per annum | On demand | 160,100,000 | 171,300,000 | 182,781,617 | |||||||||||
| Term Loan | 3 months EIBOR + 4% (min. 6.5% per annum) | 2024 | 396,134 | 396,134 | - | |||||||||||
| Non-Current ($) | ||||||||||||||||
| Bond Financing Facility | 8.5% per annum | Sep-25 | - | - | - | |||||||||||
| Term Loan | 3 months EIBOR + 4% (min. 6.5% per annum) | 2028 | 1,386,469 | 1,782,603 | - | |||||||||||
| Total Borrowings as on | 161,882,603 | 173,478,737 | 182,781,617 | |||||||||||||
Bond Financing Facility
During September 2020, as part of the Bond Financing Facility, BPGIC issued bonds of $200 million to private investors with a face value of $1 and an issue price of $0.95. The issuance has a maximum size of $250.00 million, which includes the option for a tap issue of an additional $50.00 million subject to certain conditions. The proceeds of the Bond Financing Facility were used to repay the Phase I Financing Facilities, fund capital project for Phase II, repay the promissory note payable to Early Bird Capital, pre-fund the Liquidity Account and for general corporate purposes.
The principal repayment of the Bond Financing Facility will be semi-annual payments of $7 million starting in September 2021 until March 2025, and one bullet repayment of $144 million in September 2025. The bonds bear interest at 8.5% per annum, payable along with the principal installments.
The financial covenants stipulated by the Bond Financing Facility documents are as follows:
| (i) | Minimum Liquidity of $8,500,000 in the Liquidity Account at BPGIC FZE level. |
| (ii) |
Leverage Ratio: Not to exceed: (A) 3.5x at December 31, 2022 (for the 12-month period from and including 1 January 2022 to December 31, 2022 and so that no testing shall be made thereof until December 31, 2022); and (B) 3.0x anytime thereafter at BPGIC FZE level. |
| (iii) | Positive Working Capital except for the period from 31 December 2021 to and including 30 December 2022 and during which period no such requirement shall apply at BPGIC FZE level. |
| (iv) | Minimum Equity Ratio of 25% at Group level. |
As of December 31, 2023, the Group continued to be in technical breach of the requirements to comply with certain covenants as per Bond Terms. Even though the lenders did not declare an event of default under the bond agreement, these breaches constituted events of default and could have resulted in the lender requiring immediate repayment of the bonds. Accordingly, the Group has continued to classify the respective bonds as a current liability as of December 31, 2023.
In April 2022, the Group entered into an agreement with its lender to waive off the requirement to comply with leverage ratio and working capital financial covenant for December 31, 2021, and June 30, 2022, which covers the Group up until December 30, 2022. See “Item 10.C Material Contracts— Bond Waiver” for additional information regarding the waiver.
Furthermore, for the year ending December 31, 2023, the Group is in the process of requesting further waivers or modification to the Bond terms from Bondholders including the following Clauses: 12.1 (a) and (b), 13.3, 13.13(a)(iii), Clause 13.13(b) and 1.1(d).
Although the Group is in technical breach of certain Covenants under the Bond Terms, Management believes the future cash inflows are sufficient to meet its payment obligations to the Bondholders. Since the Bond issuance, the Group has not defaulted on any payments.
Term loan facility
During the year 2021, the Company obtained a new term loan facility from a commercial bank in the UAE amounting to $2,395,862 (AED 8,800,000) to partially finance the purchase of corporate office for the Group in Dubai. The new facility carries interest at 3 months EIBOR + 4% margin (minimum 6.5% per annum) and is repayable in 24 quarterly instalments commencing 6 months after the date of disbursement. Subsequent to the year end on February 28, 2022, the Company has made a drawdown of $2,376,804 (AED 8,730,000) on from the term loan facility.
The term loan facility was secured by:
| i. | Corporate guarantee from Brooge Energy Limited. |
| ii. | BPGIC Phase 3 Limited grants in favor of the commercial bank a First Rank Degree Mortgage for a total mortgage of AED 13,000,000 of the corporate office. |
| iii. | Rental income generated by the corporate office to be automatically assigned to the commercial bank unless the parties agree otherwise in writing. |
| iv. | Authority to debit account of BPGIC FZE. |
| v. | Promissory note for the secured loan. |
| vi. | Security cheque covering the total facility limit drawn by the Group. |
Note on Going Concern
Year Ended December 31, 2023
During the year ended December 31, 2023, the Group incurred a loss of $48,328,195 but generated positive operating cash flows of $58,569,270. Furthermore, the Group is required to make a single bullet repayment of $144,000,000 in September 2025, as stipulated in the terms of the Bond.
As of December 31, 2023, the Group was in breach of certain covenant requirements as per the Bond Terms and these breaches do not constitute payment defaults as the Group has always met the coupon and instalment payments as per the Bond Terms. Even though the lender did not declare an event of default under the bond agreement, these breaches constituted events of default and could have resulted in the lender requiring immediate repayment of the bonds. Accordingly, the Group has classified its debt balance of $160,100,000 as a current liability. Further, as of the year end the Group’s current liabilities exceeded its current assets by $320,389,925. All of the above represents uncertainty that casts doubt upon the Group’s ability to continue as a going concern, however if the Group is able to obtain a waiver for its noncompliance under the Bond Terms and a waiver for other payables in current liabilities the Group is expected to have a significant reduction in its current liabilities which would mitigate the doubt on the Group’s ability to continue as a going concern. The Group is actively collaborating with GulfNav and its advisors to finalize the definitive sale and purchase agreement. The consideration for the shares will consist of a mix of cash and shares, including mandatory convertible bonds that will convert into shares. The Group is confident that future cash inflows will be adequate to meet its bond repayment obligations.
These consolidated financial statements are prepared on a going concern basis and in compliance with IFRS issued by IASB. The validity of this assumption depends upon the continued financial support to the Group by its Shareholders. The consolidated financial statements do not include any adjustment that should result from a failure to obtain the financial support. The Management has no intention to discontinue the operations of the Group. The assets and liabilities are recorded on the basis that the Group will be able to realise its assets and discharge its liabilities in the normal course of business. This position does not impair the financial position of the Group.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
[Not Applicable].
D. TREND INFORMATION
Stability of Revenue and Margins
The Company began operation of the Phase I facility in December 2017 at reduced capacity while management undertook tests of the facility. As a result, the Phase I facility did not begin operating at full capacity or performing ancillary services until April 2018. Since the Phase I facility became fully operational, the Company’s revenue, and revenue split between storage fees and ancillary services fees, have been relatively stable. This stability is largely attributable to the fixed storage fees, and relatively stable usage history we have experienced. As a result, since commencing full operations from April 2018 through December 2021, the Company has operated at fairly stable margins, averaging around 40% net margin in absence of one-time non-cash listing expenses.
The Company commenced its operation of Phase II in September 2021 with a reduced capacity while management undertook tests of the facility. Phase II became fully operational from January 2022. The Company’s revenue from Phase II comprises of storage fees and ancillary services fees.
Management expects the Company’s operating margins to remain stable until the commencement of operations of new projects such as Phase III or the Green Ammonia and Green Hydrogen project.
Phase III
The Group is in the early stages of pursuing a further major expansion near its existing facilities, which it refers to as Phase III. Phase III alone could be three times the size of the Company’s projected operations post-Phase II. Concurrently, the Group is in discussions with traders and top global oil majors, which have expressed interest in securing portions of the capacity of the Phase III facility.
Environmental, Health and Safety
The Group’s operations are subject to extensive international, federal, state and local environmental laws and regulations, in the UAE, including those relating to the discharge of materials into the environment, waste management, remediation, the characteristics and composition of fuels, climate change and greenhouse gases. The Group’s operations are also subject to extensive health, safety and security laws and regulations, including those relating to worker and pipeline safety, pipeline and storage tank integrity and operations security. The Group did not have any exposure to environmental matters as of and for the years ended December 31, 2023, 2022, 2021, 2020, 2019 and 2018. However, because more stringent environmental and safety laws and regulations are continuously being enacted or proposed, the Group expects the level of expenditures required for environmental, health and safety matters to increase in the future.
E. CRITICAL ACCOUNTING ESTIMATES
Significant Accounting Estimates and Judgements
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
Estimation and Assumptions
The key assumptions concerning the future, and other key sources of estimation uncertainty at the date of statement of financial position, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:
Useful Life and Depreciation of Property, Plant and Equipment
The Group’s management determines the estimated useful lives of its property, plant and equipment for calculating depreciation. This estimate is determined after considering the expected usage of the asset or physical wear and tear and the impact of expected residual value. Management reviews the useful lives annually and the future depreciation charge would be adjusted where management believes that the useful lives differ from previous estimates. The depreciation period of the right-of-use asset has been determined to be over the lease term on the basis that the land is expected to be used for the whole period of the lease considering the existing assets and future expansion on the land.
Asset Retirement Obligation
As part of the land lease agreement between Fujairah Municipality and the Group, the Group has a legal obligation to remove the plant at the end of its lease term. The Group initially records a provision for asset retirement obligations at the best estimate of the present value of the expenditure required to settle the obligation at the time a legal (or constructive) obligation is incurred, if the liability can be reliably estimated. When the provision is initially recorded, the carrying amount of the related asset is increased by the amount of the liability. Provisions are adjusted at each balance sheet date to reflect the current best estimate. The unwinding of the discount is recognised as finance cost. The Group’s operating assets generally consist of storage tanks and related facilities. These assets can be used for an extended period of time as long as they are properly maintained and/or upgraded. It is the Group’s current intent to maintain its assets and continue making improvements to those assets based on technological advances.
The calculation of provision related to asset retirement obligation is most sensitive to following judgements and assumptions:
| ● | Discount rate of 3.24% based on inflation-adjusted long-term risk-free rate; and |
| ● | Inflation rate of 0.8% used to extrapolate cash flows. |
As of December 31, 2023, there was no significant construction in Phase III land, which may create material restoration obligation costs in future. Management believes the amount of provision related to site restoration provision was not material.
Recoverability of Long-Term Assets
The Group assesses assets or cash generating unit (“CGU”) for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs to sell and value in use. These assessments require the use of estimates and assumptions that are subject to risk and uncertainty. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset / CGU is considered to be impaired and is written down to its recoverable amount. In assessing recoverable amount the estimated future cash flows are adjusted for the risks specific to the asset group and are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs to sell is identified as the price that would be received to sell the asset in an orderly transaction between market participants and does not reflect the effects of factors that may be specific to the entity and not applicable to entities in general.
For the purpose of impairment testing assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Phase 1 & 2 assets are technologically connected with single processing plant and the Group considers them as one CGU.
No indications of impairment were identified.
Impairment of Trade Receivables
The Group uses the simplified approach under IFRS 9 to assess impairment of its trade receivables and calculates expected credit losses (ECLs) based on lifetime expected credit losses. The Group calculates the ECL based on Group historical credit loss experience, adjusted for forward-looking factors specific to the customer and the economic environment.
Judgements
In the process of applying the Group’s accounting policies, management has made the following judgements which have the most significant effect on the amounts recognised in the consolidated financial statements:
Operating lease commitments – Group as a lessee
The Group has entered into a land lease agreement (the “Phase III Land Lease Agreement”), dated as of 2 February 2020 (the “lease inception date”), by and between the Group and the Fujairah Oil Industry Zone (“FOIZ”) to lease an additional plot of land that has a total area of approximately 450,000 square meters (the “Phase III Land”) for a rent of UAE Dirhams 50 (USD 13.61) per square meter per annum with an escalation of 2% per annum. Rental payments commence from the beginning of the eighteenth month of the lease inception date. The Group intends to use the Phase III Land to expand its crude oil storage and service and refinery capacity (“Phase III”). Management has exercised judgment in assessing the lease commencement date in the initial cancellable period of the lease and recognized the lease on the consolidated statement of financial position from 1 December 2020.
Classification of warrants
In connection with the completion of the business combination on 20 December 2019 as described in notes the Group issued warrants. The warrants agreement require the Group to issue a fixed number of shares for a fixed amount of cash, however it contains a clause that allows for cashless exercise (in the event that no effective registration is maintained), which may lead to the issuance of a variable number of shares. Management assessed that the maintenance of an effective registration statement is a matter not wholly within the control of the Group and as such classified the warrants as a financial liability at fair value through profit or loss.
Please refer to Note 3 and 5 to our Consolidated Financial Statements for a discussion of material accounting policies, recent accounting pronouncements and their anticipated impact.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Executive Officers
As of December 11, 2023 the board of directors of the Company was comprised of five directors. Unless otherwise noted, the business address of each director and executive officer is c/o Brooge Petroleum and Gas Investment Company FZE, P.O. Box 50170, Fujairah, United Arab Emirates.
The Company’s Amended and Restated Memorandum and Articles of Association provide that persons standing for election as directors at a duly constituted general meeting with requisite quorum shall be elected by an Ordinary Resolution as a matter of Cayman Islands law.
The following sets forth certain information concerning the persons who serve as the Company’s directors December 11, 2023:
| Directors and Executive Officers | Age | Position/Title | ||||
| Dr. Yousef Al Aassaf | 62 | Chairman and Director | ||||
| Saleh Mohamed Yammout | 34 | Director | ||||
| Tony Boutros | 55 | Director | ||||
| Nariman N. Karbhari | 74 | Director | ||||
| Firoze N. Kapadia | 57 | Director | ||||
Biographical information concerning the directors and executive officers listed above is set forth below.
As noted above, following a winding up order made on November 20, 2023 by the Grand Court of the Cayman Islands, the majority shareholder of the Company, BPGIC Holdings, was placed into official liquidation and Messrs. Alexander Lawson and Guy Wall were appointed by the Court as joint official liquidators of BPGIC Holdings.
Following a request from the JOLs, on December 14, 2023, the Board of Directors of the Company appointed the JOLs as directors of the Company.
During the Company’s 2023 Annual General Meeting that took place on December 15, 2023, the JOLs attended the meeting in person and cast their votes on behalf of BPGIC Holdings, voting against the reelection of the previous directors and declaring themselves the only two directors of the Company, with effect from December 15, 2023.
Following the 2023 AGM, the two new directors were supposed to appoint new independent board members and to constitute the audit and compensation committees accordingly.
On March 12, 2024, Mr. Guy Wall resigned from his position as director of the Company and Mr. Alexander Lawson became the sole director of the Company.
On September 2, 2024, the Company held an extraordinary general meeting of shareholders. At the 2024 EGM, holders of ordinary shares of the Company were asked to consider and vote upon the proposals set forth on the proxy card, including the election of a Board. As a result of the Meeting, the Company’s board of directors now consists of Kamal Pharran, Saleh Mohamed Yammout, Rasool Alameri, Tony Boutros, and Siavosh Hossein; effective from September 04,2024, the board of directors has appointed Mr. Siavosh as the Chairman of the Board. Following the EGM, the previous sole director, Alexander Lawson, resigned as a director of the Company.
Dr. Yousef Al Assaf
Dr. Yousef Al Assaf is the Chairman of our board of directors and a member of the audit committee. Dr. Al Assaf joined the parent company of BPGIC in October 2018. Dr. Al Assaf is also the President of the Rochester Institute of Technology (Dubai). Prior to this, Dr. Al Assaf held a range of other academic positions over the last 30 years, most recently as the Dean of the College of Engineering at the American University of Sharjah (from 2006 to 2013), which he joined as an Associate Professor in 1991. Dr. Al Assaf started his academic career as a Research and Teaching Assistant at Oxford University from 1985 to 1987. Dr. Al Assaf holds a BSc from Sussex University in Electrical Engineering, a PhD from Oxford University and completed the Executive Leadership Certificate Program from Cornell University in 2008.
Saleh Yammout
Saleh Yammout is a former Chief Financial Officer of BPGIC and the Company. Mr. Yammout joined BPGIC in October 2018. Mr. Yammout serves as the Vice President (Finance & Administration) at the Rochester Institute of Technology (Dubai), having joined in 2014. Prior to this, he was a Senior Consultant at PwC from 2012 to 2014, and an Analyst at Al Hilal Bank from 2011 to 2012. Mr. Yammout holds a BSc in Economics with a concentration on International Relations from the Rochester Institute of Technology in New York.
Tony Boutros
Tony Boutros is the Chairman of the audit committee, member of the compensation committee and a Director of the Company. Mr. Boutros was the Managing Partner of Boutros, Cordahi & Associates (BCA) prior to joining the Company. BCA is a Professional Civil Company providing audit, tax and advisory practice including financial due diligence, feasibility studies and valuations. BCA is the Lebanese Member Firm of Ecovis International. From May 2013 – May 2019 he served as Managing Partner of Boutros, Saghir and Associates “BSA”, a Professional Civil Company. Prior to that he worked as an audit and advisory contractor at Usamah Tabbarah & Co – Nexia International (UTCNEXIA) from April 2012 – January 2013. Mr. Boutros worked at KPMG Lebanon from 2002 – 2012, including as the Lead Audit Partner, and at PricewaterhouseCoopers Lebanon from 1998 – 2002. Mr. Boutros is a Lebanese Certified Accountant and has a Master of Business Administration from the Lebanese American University.
Nariman Karbhari
Nariman Karbhari is the Chairman of the compensation committee, a member of the audit committee and a Director of the Company. Mr. Karbhari worked as the Managing Director and CEO of Spenta Advisory FZE from 2015 through 2021 where he was responsible for arranging banking facilities for clients. From 2013 – 2015 he was Head of Corporate and Commercial Banking, Finance House PJSC, and from 2009 – 2013 he was Head of Investments and Treasury, Al Jaber Group, where he was responsible for arranging syndications, raising other banking facilities and managing investment portfolios in excess of AED 2.5 billion to 3 billion. He was also Head of Corporate, National Bank of Dubai, Abu Dhabi Region from 2005 – 2009 and Deputy Head of Corporate Banking, National Bank of Abu Dhabi, from 1994 – 2008. Prior to that, he worked as a relationship manager at the National Bank of Fujairah and the Commercial Bank of Dubai and as an accountant at Al Abbas Trading Co., Dubai.
Firoze Kapadia
Firoze Kapadia is a member of the audit committee and a Director of the Company. Mr. Kapadia qualified in June 1994 as a Chartered Certified Accountant in the U.K. and has accumulated a diverse career experience of approximately 27 years in the field of accounting, finance and management as well as in taxation. He is currently the Chief Financial Officer at the Al Sayegh Group where he oversees the preparation of consolidated financial statements and appropriate accounting policies and procedures at a group level. Mr. Kapadia is also responsible for ensuring staff technical training for the finance department.
Siavosh Hosseini
Mr. Siavosh Hosseini was appointed as Non-executive Chairman, Chairman of Compensation Committee and member of Audit Committee in September 2024. Mr. Hosseini has extensive international experience in the Oil and Gas industry in senior management positions with executive responsibility for P&L, Business Strategy, Business Development, Project Development, EPC Project Management as Project Finance. He brings more than 30 years of insight to BPGIC’s business strategy, and operations, having held variety of leadership roles within the Engineering and Construction companies in the Oil and Gas industry in the Middle East, the Netherlands and Canada. Mr. Hosseini has an MBA from Manchester Business School and a BSc. In Mechanical Engineering.
Rasool Alameri
Mr. Rasool Alameri was appointed as a Non-executive Director of Brooge Energy Limited in September 2024. Mr. Alameri is a highly accomplished legal professional with a diverse background in international law. He holds a bachelor’s degree in Common Law from the American University in Cyprus, which was evaluated at San Diego University. He further enhanced his expertise by earning a master’s degree in U.S. Law from George Mason University in Virginia, where he graduated among the top five students in his class. With extensive experience as legal counsel in Turkey, the UAE, and the USA, Mr. Alameri has worked with renowned law firms, including Oncel Law Firm in Turkey and Kanaan Law Firm and Hogan Lovells in the UAE. Since 2017, he has served as a freelance legal advisor in the United States, providing strategic legal counsel across various sectors. As a director of Brooge Energy Limited, Mr. Alameri brings a wealth of knowledge and a unique international perspective to the team, ensuring that the company navigates the complex legal landscape with confidence and integrity. His commitment to excellence and a strong understanding of diverse legal systems makes him an invaluable asset to the Board
Kamal Pharran
Mr. Kamal Pharran is an independent, Non- executive Director of Brooge Energy Limited. Mr. Pharran is a Co-Founder & CEO TAKEEF District Cooling Company, Kingdom of Saudi Arabia. Mr. Pharran has over 30 years of experience most notably in Public Private Partnerships (PPP) with a successful track record, working experience and maintaining close relationships at all levels with good understanding and knowledge of the structure, policies and procedures of ARAMCO, SABIC, SEC, SWCC, RC and KJO, NCP, PIF, MoF and all vision 2030 initiatives and agencies. Mr. Pharran has led the growth of Saudi Tabreed as CEO for the past 10 years where he executed five DC concessions under PPP frameworks with financial closes worth in excess of SAR 6 Billion and has secured backlogs under PPP frameworks in excess of SAR 3 Billion. Mr.Pharran holds a Bachelor’s of Science in Electrical Engineering, from Florida Institute of Technology and also completed the Thunderbird Executive Management Development Program at Thunderbird School of Global Management in France
Family Relationships
There are no family relationships between any of our executive officers and directors.
Independence of Directors
The Company adheres to the rules of NASDAQ in determining whether a director is independent. The board of directors of the Company has consulted, and will consult, with its counsel to ensure that the board’s determinations are consistent with those rules and all relevant securities and other laws and regulations regarding the independence of directors. The NASDAQ listing standards define an “independent director” as a person, other than an executive officer of a company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
As of December 11, 2023 the Company’s board of directors had five members, including four independent directors.
B. Compensation
BPGIC Executive Officer and Director Compensation
In the year ended December 31, 2023, was paid as remuneration to the Senior Managers in their capacity as executive officers.
| Fees/Basic Salary |
Bonus | Benefits | Total | |||||||||||||||
| Name | Role | ($) | ($) | ($) | ($) | |||||||||||||
| Executive Officers | ||||||||||||||||||
| Lina Saheb 1 | Interim CEO, Deputy CEO & Executive Director | 229,495 | - | 7,914 | 237,408 | |||||||||||||
| Paul Ditchburn | CFO, CEO Office | 242,555 | - | 19,032 | 261,586 | |||||||||||||
| Faisal Selim | Chief Marketing Officer | 212,360 | - | 1,903 | 214,263 | |||||||||||||
| Saif Alhazaimeh | Director, CEO Office | 78,455 | - | 140 | 78,595 | |||||||||||||
| Total Executive Remuneration | 762,865 | - | 791,853 | |||||||||||||||
| 1. | Lina Saheb was the Interim CEO up until August 8, 2023. |
In the year ended December 31, 2023, was paid as remuneration to members of the board of directors in their capacity as directors.
| Fees/Basic Salary |
Bonus | Benefits | Total | |||||||||||||||
| Name | Role | ($) | ($) | ($) | ($) | |||||||||||||
| Board of Directors | ||||||||||||||||||
| Dr. Yousef Al Assaf | Chairman & Independent Director | 83,635 | - | - | 83,635 | |||||||||||||
| Saleh Yammout | Non-Independent Director | 58,572 | - | - | 58,572 | |||||||||||||
| Nariman Karbhari | Independent Director | 84,605 | - | - | 84,605 | |||||||||||||
| Tony Boutros | Independent Director & Audit Committee Chair | 84,605 | - | - | 84,605 | |||||||||||||
| Firoze Kapadia | Independent Director & Compensation Committee Chair | 65,081 | - | - | 65,081 | |||||||||||||
| Total Board of Directors Remuneration | 376,498 | - | 376,498 | |||||||||||||||
| 1. | Executive Directors do not receive separate compensation for serving as Directors. |
Other than end of service gratuity amounts required to be set aside pursuant to UAE labor laws, at December 31, 2023 for senior managers, no amounts were set aside or accrued by the Company to provide pension, retirement or similar benefits to the directors or the senior managers.
Executive Officer and Director Compensation
The policies of the Company with respect to the compensation of its executive officers are administered by the Company’s board of directors in consultation with its compensation committee. The compensation policies followed by the Company are intended to provide for compensation that is sufficient to attract, motivate and retain executives of the Company and its subsidiaries as well as potential other individuals and to establish an appropriate relationship between executive compensation and the creation of shareholder value. To meet these goals, the compensation committee is charged with recommending executive compensation packages to the Company’s board of directors.
It is anticipated that performance-based and equity-based compensation will be an important foundation in executive compensation packages as the Company believes it is important to maintain a strong link between executive incentives and the creation of shareholder value. The Company believes that performance and equity-based compensation can be an important component of the total executive compensation package for maximizing shareholder value while, at the same time, attracting, motivating and retaining high-quality executives. The Company plans to adopt a long-term incentive plan which will reflect what the Company believes is a focus on performance and equity-based compensation. The Company has not yet adopted any formal guidelines for allocating total compensation between equity compensation and cash compensation for executives hired in the future.
The Company intends to be competitive with other similarly situated companies in its industry.
The compensation decisions regarding the Company’s executives will be based on the Company’s need to attract individuals with the skills necessary for the Company to achieve its business plan, to reward those individuals fairly over time, and to retain those individuals who continue to perform at or above the Company’s expectations.
The Company has not yet adopted any formal or informal policies or guidelines for allocating compensation between long-term and currently paid out compensation, between cash and non-cash compensation, or among different forms of compensation.
In addition to the guidance provided by its compensation committee, the Company has utilized and may continue to utilize the services of third parties from time to time in connection with the hiring and the compensation awarded to executive employees. This could include subscriptions to executive compensation surveys and other databases. In particular, to ensure that the Company’s intended compensation is in line with the compensation offered by other similarly situated companies in its industry, the Company hired Tuscan Middle East, who conducted a comprehensive study on compensation levels. The compensation committee, and then the board of directors, have discussed the results of the study in detail.
The Company’s compensation committee is charged with performing an annual review of the Company’s executive officers’ cash compensation and equity holdings to determine whether they provide adequate incentives and motivation to executive officers and whether they adequately compensate the executive officers relative to comparable officers in other companies.
Compensation Components
Base Salary. The Company intends to preserve the cash compensation of its executive officers, until the compensation committee has adequate opportunity to fully assess its executive’s compensation. The Company will seek to maintain base salary amounts at or near the industry norms, while avoiding paying amounts in excess of what it believes is necessary to motivate executives to meet corporate goals. It is anticipated that base salaries will generally be reviewed annually, subject to terms of employment agreements, and that the compensation committee and board of directors will seek to adjust base salary amounts to realign such salaries with industry norms after taking into account individual responsibilities, performance and experience.
Annual Bonuses. The Company intends to utilize cash incentive bonuses for executives to focus them on achieving key operational and financial objectives within a yearly time horizon. Near the beginning of each year, the board of directors, upon the recommendation of the compensation committee and subject to any applicable employment agreements, will determine performance parameters for appropriate executives. At the end of each year, the board of directors and compensation committee will determine the level of achievement for each corporate goal.
Equity Awards. The Company intends to establish an equity incentive plan to incentivize its employees.
Severance Benefit. The Company currently has no severance benefits plan. The Company may consider the adoption of a severance plan for executive officers and other employees in the future.
Director Compensation. The Company has a compensation plan for its directors. The Company, working with the compensation committee, has set director compensation at a level comparable with those directors with similar positions at comparable companies. Each non-executive director receives an annual cash retainer of £45,000. The Chairman of the board of directors receives an additional £15,000 per year, each director that serves as the chairman of a committee receives an additional £10,000 per year and each other member of a committee receives an additional £5,000 per year per committee.
Clawback Policy
On June 9, 2023, the SEC approved Nasdaq’s proposed clawback listing standards that implement the SEC’s clawback rule, which was adopted under Rule 10D-1 under the Exchange Act. The SEC’s final rule directed U.S. stock exchanges, including Nasdaq, to adopt listing standards requiring all listed companies, including foreign private issuers, such as the Company, to adopt and comply with a written clawback policy, to disclose the policy and to file the policy as an exhibit to its annual report, as well as to include other disclosures in the event a clawback is triggered under the policy. The Company has adopted a clawback policy (the “Clawback Policy”), to recover any excess incentive-based compensation from current and former officers after an accounting restatement. Under the Clawback Policy, in the event that the Company is required to prepare an accounting restatement due to its material noncompliance with any financial reporting requirement under U.S. federal securities law, the policy provides that the Company will recoup compensation from each current or former executive officer who, during the three-year period preceding the date on which an accounting restatement is required, received incentive compensation based on the erroneous financial data that exceeds the amount of incentive-based compensation the executive would have received based on the restatement. The Clawback Policy is filed as Exhibit 97.1 hereto.
C. Board Practices
Board Leadership Structure and Role in Risk Oversight
The Company has determined that a structure, with separate Chairman and CEO roles, is in the best interests of the Company. A number of factors support this leadership structure, including, among others:
| ● | The separation of the Chairman and CEO roles allows the CEO to focus time and energy on operating and managing the Company and its subsidiaries and to leverage the experience and perspectives of the Chairman. | |
| ● | The Chairman serves as a liaison between the board and senior management but having an independent Chairman also enables non-management directors to raise issues and concerns for board consideration without immediately involving the management. | |
| ● | The Chairman sets the agenda for, and presides over, board meetings and coordinates the work of the committees of the board of directors, providing independent oversight and streamlining the CEO’s duties. |
The Company also believes in the importance of independent oversight. The Company looks to ensure that this oversight is truly independent and effective through a variety of means.
Terms of Office
Each director shall serve until he or she resigns or is removed. The Company intends to have its directors stand for re-election each year.
Directors’ Service Contracts
Each director who is not an employee of the Company or its subsidiaries provides their services pursuant to a Non-Executive Director Appointment Letter. Pursuant to each appointment letter, each non-executive director receives an annual cash retainer of £45,000. The Chairman receives an additional £15,000 per year, each director that serves as the chairman of a committee receives an additional £10,000 per year and each other member of a committee receives an additional £5,000 per year per committee. The terms of our directors’ appointment letters do not provide our directors with benefits upon termination.
Meetings and Committees of the Board of Directors
The Company has established separately a standing audit committee and a compensation committee.
Audit Committee Information
As of December 11, 2023, the audit committee consisted of Mr. Tony Boutros, Mr. Nariman N. Karbhari, Dr. Yousef Al Assaf and Mr. Firoze Kapadia. Each of the members of the audit committee is independent under the applicable NASDAQ listing standards. The audit committee has a written charter. The purpose of the audit committee is, among other things, to appoint, retain, set compensation of, and supervise the Company’s independent accountants, review the results and scope of the audit and other accounting related services and review the Company’s accounting practices and systems of internal accounting and disclosure controls. The chairman of the audit committee was Mr. Tony Boutros.
From December 14, 2023 (when the Board was replaced) until September 4, 2024, there was no Audit Committee. Beginning from September 4, 2024 to date the Audit Committee consists of: Mr. Tony Boutros, Mr. Saleh Mohamed Yammout and Mr. Siavosh Hossein, each of whom are “independent directors” as defined for audit committee members under NASDAQ listing standards and the rules and regulations of the Securities and Exchange Commission and meet the financial literacy requirements of NASDAQ’s listing standards. Mr. Boutros serves as Chairman of the audit committee. Mr. Boutros also qualifies as an “audit committee financial expert,” as that term is defined in the instruction to paragraph (a) of Item16A of Form 20-F under the Exchange Act and as a financially sophisticated audit committee member under NASDAQ listing rule5605(c)(2)(A).
Financial Experts on Audit Committee
The audit committee will at all times be, composed exclusively of “independent directors,” as defined for audit committee members under the NASDAQ listing standards and the rules and regulations of the SEC, who are “financially literate,” as defined under NASDAQ listing standards. NASDAQ listing standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement. In addition, the Company is required to certify to NASDAQ that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication.
Mr. Tony Boutros served as a financial expert on the audit committee prior to his removal. Following his removal on December 15, 2023, there was no financial expert on the audit committee. Since September 4, 2024, when the Audit Committee was re-established under the new board, Mr. Tony Boutros serves as the “audit committee financial expert”.
Compensation Committee Information
As of December 11, 2023, the compensation committee consisted of two independent directors, being Mr. Tony Boutros and Mr. Nariman N. Karbhari. The chairman of the compensation committee was Mr. Karbhari. From December 14, 2023 (when the Board was replaced) until September 4, 2024, there was no Compensation Committee. Since September 4, 2024, the compensation committee consists of Mr. Tony Boutros and Mr. Siavosh Hossein, each of whom are “independent directors” as defined for compensation committee members under NASDAQ listing standards and the rules and regulations of the Securities and Exchange Commission. Mr. Siavosh serves as Chairman of the compensation committee.
The purpose of the compensation committee is to review and approve compensation paid to the Company’s officers and directors and to administer the Company’s incentive compensation plans, including authority to make and modify awards under such plans.
The compensation committee assists the board of directors in determining its responsibilities in relation to remuneration, including, among other matters, making recommendations to the board of directors on the Company’s policy on executive compensation, determining the individual remuneration and benefits package of each of the executive directors and recommending and monitoring the remuneration of senior management below board level.
D. Employees
The following table sets out the number of employees and contractors employed by the Company from December 31, 2021 to December 31, 2023:
| Employees | 2023 | 2022 | 2021 | |||||||||
| Fujairah Employees | 6 | 8 | 6 | |||||||||
| Fujairah Contractors | 68 | 65 | 64 | |||||||||
| Dubai Employees | 12 | 15 | 18 | |||||||||
| Total | 86 | 88 | 88 | |||||||||
As of December 31, 2023, 68 contractors were engaged under third-party outsourcing contracts and 18 employees were engaged under individual employment contracts. All of the contractors are contracted through Flowi Facility Management LLC (“Flowi”). The contractors serve in various roles in several of BPGIC’s departments, including operations, information technology and health and safety.
The Company believes that the material terms of its third-party sourcing contracts and employment agreements are customary for the UAE and the oil storage industry and that it has a good relationship with its employees and contractors.
E. Share Ownership
Ownership of the Company’s shares by its executive officers and directors as of December 31, 2023 is set forth in Item 7.A of this Report.
F. Disclosure of action to recover erroneously awarded compensation
Not applicable
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
The following table sets forth information regarding the beneficial ownership, as of December 31, 2023, of our Ordinary Shares by:
| ● | each person known by us to be the beneficial owner of more than 5% of our outstanding Ordinary Shares; | |
| ● | each of our officers and directors; and | |
| ● | all our officers and directors as a group. |
The percentage of shares beneficially owned is based on 109,587,853 Ordinary Shares outstanding on December 31, 2023.
Except as indicated in the footnotes below, we believe that the persons named below have shared voting and dispositive power with respect to all shares that they beneficially own. The shares owned by the persons named below do not have voting rights different from the shares owned by other holders. We believe that none of the persons named below own shares of record in the United States of America.
| Name of Beneficial Owner | Number of Shares Beneficially Owned |
% of Class(16) |
||||||
| Directors and Executive Officers of the Company | ||||||||
| Dr. Yousef Al Assaf | — | — | ||||||
| Nariman Karbhari | — | — | ||||||
| Saleh Yammout | — | — | ||||||
| Firoze Kapadia | — | — | ||||||
| Tony Boutros | — | — | ||||||
| Faisal Selim | — | — | ||||||
| Paul Ditchburn | — | — | ||||||
| All executive officers and directors as a group ([ ] individuals) | 93,834,357 | 85.6 | % | |||||
| Five Percent Holders | ||||||||
| BPGIC Holdings Limited(1) | 93,834,357 | 85.6 | % | |||||
| Brooge Petroleum and Gas Investment Company (BPGIC) PLC(2) | 93,834,357 | 85.6 | % | |||||
| SBD International LP(3) | 49,497,947 | 45.2 | % | |||||
| SD Holding Limited(4) | 49,497,947 | 45.2 | % | |||||
| Salman Dawood Salman Al-Ameri(5) | 59,122,314 | 53.9 | % | |||||
| HBS Investments LP(6) | 9,624,367 | 8.8 | % | |||||
| O2 Investments Limited(7) | 9,624,367 | 8.8 | % | |||||
| H Capital International LP(8) | 8,991,043 | 8.2 | % | |||||
| Gyan Investments Limited(9) | 8,991,043 | 8.2 | % | |||||
| Hind Mohammed Muktar Ahmed(10) | 8,991,043 | 8.2 | % | |||||
| His Highness Sheikh Mohammad bin Khalifa bin Zayed Al Nahyan(11) | 25,721,000 | 23.5 | % | |||||
| MENA Energy Services Holdings Limited(12) | 8,333,333 | 7.6 | % | |||||
| IDB Infrastructure Fund II B.S.C(c)(13) | 8,333,333 | 7.6 | % | |||||
| ASMA Capital Partners B.S.C.(c). (14) | 8,333,333 | 7.6 | % | |||||
| (1) | 20,000,000 Ordinary Shares beneficially owned by BPGIC Holdings are held in escrow and subject to forfeiture until the Company satisfies certain milestones. MENA Energy holds convertible securities in BPGIC Holdings that entitle it to convert its securities in BPGIC Holdings into 8,333,333 of the Ordinary Shares of the Company owned by BPGIC Holdings. Accordingly, BPGIC Holdings has placed 8,333,333 Ordinary Shares into escrow for release to MENA Energy in the event it converts its securities in BPGIC Holdings. 1,500,000 Ordinary Shares beneficially owned by BPGIC Holdings have been placed in escrow as collateral for a guaranty by one of its shareholders, HBS Investments LP. |
| (2) | Represents the shares held by BPGIC Holdings. Brooge Petroleum and Gas Investment Company (BPGIC) PLC is the sole shareholder of BPGIC Holdings, consequently, it may be deemed to be the beneficial owner of 100% of the shares held by BPGIC Holdings. MENA Energy holds convertible securities in BPGIC Holdings that entitle it to convert its securities in BPGIC Holdings into 8,333,333 of the Ordinary Shares of the Company owned by BPGIC Holdings. Accordingly, BPGIC Holdings has placed 8,333,333 Ordinary Shares into escrow for release to MENA Energy in the event it converts its securities in BPGIC Holdings. 1,500,000 Ordinary Shares beneficially owned by BPGIC Holdings have been placed in escrow as collateral for a guaranty by one of its shareholders, HBS Investments LP. Brooge Petroleum and Gas Investment Company (BPGIC) PLC disclaims beneficial ownership of any Ordinary Shares other than to the extent it may have a pecuniary interest therein. |
| (3) | SBD International LP holds a controlling interest in Brooge Petroleum and Gas Investment Company (BPGIC) PLC which is the sole shareholder of BPGIC Holdings. Its beneficial ownership of the Company’s Ordinary Shares held by BPGIC Holdings is 49,497,947 Ordinary Shares. SBD International LP’s pro rata portion of the Ordinary Shares held in escrow and subject to forfeiture until the Company satisfies certain milestones is 58.9%. SBD International LP disclaims beneficial ownership of any Ordinary Shares other than to the extent it may have a pecuniary interest therein. |
| (4) | Represents the interests of SBD International LP, as a shareholder of Brooge Petroleum and Gas Investment Company (BPGIC) PLC, in the Ordinary Shares held by BPGIC Holdings. SD Holding Limited is the general partner of SBD International LP, consequently, it may be deemed the beneficial owner of 49,497,947 Ordinary Shares held by BPGIC Holdings Limited. SD Holding Limited disclaims beneficial ownership of any Ordinary Shares other than to the extent it may have a pecuniary interest therein. |
| (5) | Represents the interest of SBD International LP and HBS Investments LP, as shareholders of Brooge Petroleum and Gas Investment Company (BPGIC) PLC, in the Ordinary Shares held by BPGIC Holdings. Salman Dawood Salman Al-Ameri is the sole shareholder of SD Holding Limited (the general partner of SBD International LP) and the sole shareholder of O2 Investments Limited (the general partner of HBS Investments LP). Consequently, Mr. Al-Ameri may be deemed the beneficial owner of 59,122,314 of the Ordinary Shares held by BPGIC Holdings. Mr. Al-Ameri disclaims beneficial ownership of any Ordinary Shares other than to the extent he may have a pecuniary interest therein. 1,500,000 Ordinary Shares that may be deemed to be beneficially owned by Mr. Al-Ameri as the sole shareholder of O2 Investments Limited (the general partner of HBS Investments LP) have been placed in escrow as collateral for a guaranty by HBS Investments LP. |
| (6) | Represents the interests of HBS Investments LP, as a shareholder of Brooge Petroleum and Gas Investment Company (BPGIC) PLC, in the Ordinary Shares held by BPGIC Holdings. HBS Investments LP’s pro rata portion of the Ordinary Shares held in escrow is 9.8%. HBS Investments LP disclaims beneficial ownership of any Ordinary Shares other than to the extent it may have a pecuniary interest therein. 1,500,000 Ordinary Shares that may be deemed to be beneficially owned by HBS Investments LP have been placed in escrow as collateral for a guaranty by HBS Investments LP. |
| (7) | Represents the interests of HBS Investments LP, as a shareholder of Brooge Petroleum and Gas Investment Company (BPGIC) PLC, in the Ordinary Shares held by BPGIC Holdings. O2 Investments Limited is the general partner of HBS Investments LP, consequently, it may be deemed the beneficial owner of 9,624,367 of the Ordinary Shares held by BPGIC Holdings. O2 Investments Limited disclaims beneficial ownership of any Ordinary Shares other than to the extent it may have a pecuniary interest therein. 1,500,000 Ordinary Shares that may be deemed to be beneficially owned by O2 Investments Limited as the general partner of HBS Investments LP have been placed in escrow as collateral for a guaranty by HBS Investments LP. |
| (8) | Represents the interests of H Capital International LP, as a shareholder of Brooge Petroleum and Gas Investment Company (BPGIC) PLC, in the Ordinary Shares held by BPGIC Holdings. H Capital International LP’s pro rata portion of the Ordinary Shares held in escrow is 9.1%. H Capital International LP disclaims beneficial ownership of any Ordinary Shares other than to the extent it may have a pecuniary interest therein. |
| (9) | Represents the interests of H Capital International LP, as a shareholder of Brooge Petroleum and Gas Investment Company (BPGIC) PLC, in the Ordinary Shares held by BPGIC Holdings. Gyan Investments Limited is the general partner of H Capital International LP, consequently, it may be deemed the beneficial owner of 8,991,043, of the Ordinary Shares held by BPGIC Holdings. Gyan Investments Limited disclaims beneficial ownership of any Ordinary Shares other than to the extent it may have a pecuniary interest therein. |
| (10) | Represents the interest of H Capital International LP, as a shareholder of Brooge Petroleum and Gas Investment Company (BPGIC) PLC, in the shares held by BPGIC Holdings. Mrs. Hind Mohammed Muktar Ahmed is the sole shareholder of Gyan Holdings Limited, the general partner of H Capital International LP, consequently, she may be deemed the beneficial owner of 8,991,043 of the Ordinary Shares held by BPGIC Holdings. Mrs. Hind Mohammed Muktar Ahmed disclaims beneficial ownership of any Ordinary Shares other than to the extent she may have a pecuniary interest therein. |
| (11) | Represents the interests of Mohammad Bin Khalifa bin Zayed Al Nahyan, as a shareholder of Brooge Petroleum and Gas Investment Company (BPGIC) PLC, in the Ordinary Shares held by BPGIC Holdings. Mohammad bin Khalifa bin Zayed Al Nahyan’s pro rata portion of the Ordinary Shares held in escrow is 22.2%. |
| (12) | MENA Energy holds convertible securities in BPGIC Holdings that entitle it to convert its securities in BPGIC Holdings into 8,333,333 of the Ordinary Shares of the Company owned by BPGIC Holdings. MENA Energy disclaims beneficial ownership of any Ordinary Shares other than to the extent it may have a pecuniary interest therein. |
| (13) | Represents the interest of MENA Energy in the Ordinary Shares held by BPGIC Holdings. IDB Infrastructure Fund II B.S.C(c) is the sole shareholder of MENA Energy, consequently it may be deemed the beneficial owner of the 8,333,333 Ordinary Shares of the Company that MENA Energy would receive upon conversion of its securities in BPGIC Holdings. IDB Infrastructure Fund II B.S.C(c) disclaims beneficial ownership of any Ordinary Shares other than to the extent it may have a pecuniary interest therein. |
| (14) | Represents the interest of MENA Energy in the Ordinary Shares held by BPGIC Holdings. ASMA Capital holds 99% of the equity of IDB Infrastructure Fund II B.S.C(c), the sole shareholder of MENA Energy, consequently it may be deemed the beneficial owner of the 8,333,333 Ordinary Shares of the Company that MENA Energy would receive upon conversion of its securities in BPGIC Holdings. ASMA Capital disclaims beneficial ownership of any Ordinary Shares other than to the extent it may have a pecuniary interest therein. |
| (15) | Based on 109,587,854 Ordinary Shares outstanding as of December 31, 2023. Does not reflect the 21,228,900 Ordinary Shares issuable upon exercise of the outstanding Warrants issued in exchange for Twelve Seas warrants. |
Pursuant to certain letters from SBD International LP to nine individuals, BPGIC Holdings transferred an aggregate of 4,833,678 Ordinary Shares to such individuals in consideration of the valuable contributions they have made to the success of BPGIC.
As set forth above, BPGIC Holdings is the majority shareholder of the Company and holds 93,834,357 Ordinary Shares which is approximately 85.6% of the outstanding Ordinary Shares of the Company. BPGIC Holdings is wholly-owned by Brooge Petroleum and Gas Investment Company (BPGIC) PLC. SBD International LP is the majority owner of Brooge Petroleum and Gas Investment Company (BPGIC) PLC.
B. Related Party Transactions
BPGIC Related Party Transactions and Policies
Related Party Transactions
During the year ended December 31, 2019, the shareholders of the Company transferred their ownership in the Company to BPGIC PLC, which is owned by the same shareholders that previously owned the Company and in the same ownership proportion. Upon the change of ownership, the Company changed its name from Brooge Petroleum and Gas Investment Company FZC to Brooge Petroleum and Gas Investment Company FZE. As a result of the above, BPGIC PLC became the parent of the Company.
Subsequently, as part of a reorganization, BPGIC PLC transferred 100% of the issued and outstanding ordinary shares of BPGIC to BPGIC Holdings. As a result, BPGIC Holdings became the parent of the Company.
See Note 21 to our Consolidated Financial Statements for related party transactions disclosure.
BIA
In order to determine whether there exists a related party relationship with BIA in accordance to Paragraph (9) of International Accounting Standards (IAS 24). The Group considered the following:
| ● | Clause 3.4(v) of the Audit Committee (the “Committee”) Charter requires that the Committee review and approve all related-party transactions, defined as those transactions required to be disclosed under Item 7(b) of Form 20-F and NASDAQ Corporate Governance Rule 5630. |
| ● | Clause 3 of the Related Party Transactions Policy of the Company states that, it is the responsibility of the Audit Committee to administer the Related Party Transactions Policy. |
| ● | Commercial license of BIA with issue date of February 11, 2019, which mentions Mrs. Muktar (considered as one of the UBO for the Company) as a Partner in BIA. |
| ● | Commercial license of BIA with issue date of February 10, 2020, which reflects the change in ownership of BIA, with Mrs. Muktar now being removed as a Partner in BIA. |
| ● | Commercial license of BIA with issue date of April 12, 2021, which does not mention Mrs. Muktar as a Partner for BIA. |
| ● | The Company announcement on November 20, 2019 (Form F4 Filed with the SEC) on the planned sale of Mrs. Muktar’s shares in BIA, Al Brooge International Advisory LLC will no longer be a related party. |
It is noted that Mrs. Hind has left BIA in her capacity as a shareholder somewhere between November 2019 and February 2020.
The Committee has decided to be conservative on the BIA relationship and hence has considered BIA to be a related party throughout the years until further supporting documentation is obtained to prove otherwise.
Related Party Transaction Policies
Our board of directors has adopted a code of ethics and business conduct that requires the Company’s directors, officers and employees to avoid conflicts of interest, such as related party transactions, unless specifically authorized. Our board of directors also adopted a related party transaction policy to govern the procedures for evaluation and authorization of related party transactions. Related party transactions, which require approval of the audit committee, are defined as any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which (i) the Group is or will be a participant, (ii) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year, and (iii) any related party has or will have a direct or indirect interest. This also includes any material amendment or modification to an existing related party transaction.
The audit committee is responsible for reviewing and approving related party transactions to the extent the Company contemplates engaging in such a transaction. The audit committee will review all of the relevant facts and circumstances of all related party transactions that require its approval and either approve or disapprove of the entry into the related party transaction. The audit committee will approve the related party transaction only if it determines in good faith that, under all the circumstances, the transaction is in the best interests of the Company and its shareholders. The audit committee, in its sole discretion, will impose such conditions as it deems appropriate on the Company or the related party in connection with the approval of the related party transaction. No director will be permitted to participate in the discussions or approval of a transaction in which he or she is a related party, but that director will be required to provide all material information concerning the related party transaction to the audit committee.
C. Interests of Experts and Counsel
Not Applicable.
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
See Item 18 of this Report.
B. Significant Changes
None.
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
Our Ordinary Shares and Warrants are listed on the Nasdaq Capital Market under the symbols “BROG” and “BROGW,” respectively. Holders of our Ordinary Shares and Warrants should obtain current market quotations for their securities.
B. Plan of Distribution
Not applicable.
C. Markets
Our Ordinary Shares and Warrants are listed on the Nasdaq Capital Market under the symbols “BROG” and “BROGW,” respectively.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not Applicable
B. Memorandum and Articles of Association
The Company was incorporated under the laws of the Cayman Islands as an exempted company. The Company’s objects are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the laws of the Cayman Islands. The Company’s objects can be found in paragraph number 3 of the Amended and Restated Memorandum of Association of the Company.
A director is free to vote in respect of any contract or transaction in which he or she is interested provided that the nature of the interest of such director in any such contract or transaction shall be disclosed by him or her at or prior to its consideration and any vote thereon. A director may give a general notice that he or she is a shareholder, director, officer or employee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company. Such general notice is sufficient disclosure for the purposes of voting on a resolution in respect of a contract or transaction in which such director has an interest, and after such general notice, such director does not need to give special notice relating to any particular transaction. The directors’ power to vote compensation to be paid to themselves or any members of their body in the absence of an independent quorum is not restricted. The directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof and to issue debentures, debenture shares, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the Company or of any third party. Such borrowing powers can be varied by an amendment to the Articles of Association. There is no age at which directors are required to retire. A person is not required to hold shares of the Company to serve as a director.
Ordinary shares
The holders of Ordinary Shares are entitled to one vote for each Ordinary Share held of record on all matters to be voted on by shareholders. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors. Holders of the Company’s Ordinary Shares do not have any conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the Ordinary Shares.
Preferred Shares
The Amended and Restated Memorandum and Articles of Association of the Company authorize the issuance of up to 50,000,000 blank check preferred shares with such designations, rights and preferences as may be determined from time to time by the Company’s board of directors. Accordingly, the Company’s board of directors is empowered, without shareholder approval, to issue preferred shares with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of Ordinary Shares. In addition, the preferred shares could be utilized as a method of discouraging, delaying or preventing a change in control of the Company.
Variation of Rights of Shareholders
If at any time the share capital of the Company is divided into different classes of shares, all or any of the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be varied without the consent of the holders of the issued shares of that class where such variation is considered by the directors not to have a material adverse effect upon such rights. In all other cases, variations shall be made only with the consent in writing of the holders of not less than two thirds of the issued shares of that class, or with the approval of a resolution passed by a majority of not less than two thirds of the votes cast at a separate meeting of the holders of the shares of that class. For the purposes of a separate class meeting, the directors may treat two or more or all the classes of shares as forming one class of shares if the directors consider that such class of shares would be affected in the same way by the proposals under consideration. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.
Meetings of Shareholders
The Company may, but shall not (unless required by Cayman Islands law) be obliged to, in each year hold a general meeting as its annual general meeting, and shall specify the meeting as such in the notices calling it. Any annual general meeting shall be held at such time and place as the directors shall appoint. At these meetings the report of the directors (if any) shall be presented. The directors may call general meetings. The directors are required to convene an extraordinary general meeting upon a requisition deposited by not less than twenty percent of par value of the issued shares which at that date carry the right to vote at general meetings. The requisition must state the objects of the meeting and must be signed by the depositing shareholders. Shareholders seeking to bring business before the annual general meeting or to nominate candidates for election as directors at the annual general meeting must deliver notice to the principal executive offices of the Company not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the scheduled date of the annual general meeting.
At least five clear days’ notice shall be given of any general meeting. Every notice shall specify the place, the day and the hour of the meeting and the general nature of the business to be conducted at the general meeting and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the required notice has been given and whether or not the provisions of the Amended and Restated Memorandum and Articles of Association regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed: (i) in the case of an annual general meeting, by all of the shareholders entitled to attend and vote thereat; and (ii) in the case of an extraordinary general meeting, by a majority in number of the shareholders having a right to attend and vote at the meeting, together holding not less than ninety-five per cent in par value of the shares giving that right. The accidental omission to give notice of a general meeting to, or the non-receipt of notice of a general meeting by, any person entitled to receive such notice shall not invalidate the proceedings of that general meeting.
No business shall be transacted at any general meeting unless a quorum is present. The holders of a majority of the shares being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorized representative or proxy shall be a quorum. A person may participate at a general meeting by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting. If a quorum is not present within half an hour from the time appointed for the meeting to commence or if during such a meeting a quorum ceases to be present, the meeting, if convened upon a shareholders’ requisition, shall be dissolved and in any other case it shall stand adjourned to the same day in the next week at the same time and/or place or to such other day, time and/or place as the directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting to commence, the shareholders present shall be a quorum.
The chairman of the meeting may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a general meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Otherwise it shall not be necessary to give any such notice of an adjourned meeting.
A resolution put to the vote of the meeting shall be decided on a poll. A poll shall be taken as the chairman of the meeting directs, and the result of the poll shall be deemed to be the resolution of the general meeting at which the poll was demanded. A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such date, time and place as the chairman of the general meeting directs, and any business other than that upon which a poll has been demanded or is contingent thereon may proceed pending the taking of the poll. In the case of an equality of votes the chairman shall be entitled to a second or casting vote.
Limitations on Rights to Own Securities
There are no limitations on the rights to own securities in the Company.
Anti-Takeover Provisions
Certain provisions in the Amended and Restated Memorandum and Articles of Association of the Company, such as the super majority voting requirements for amendments thereto, may discourage unsolicited takeover proposals that the Company’s shareholders may consider to be in their best interest and may make the removal of the Company’s incumbent management more difficult. Other anti-takeover provisions under the Amended and Restated Memorandum and Articles of Association of the Company include:
| ● | Undesignated Preferred Shares. The Company’s board of directors has the ability to designate and issue preferred shares with voting or other rights or preferences that could deter hostile takeovers or delay changes in its control or management. |
| ● | Directors Removed Only for Cause. The Company’s Amended and Restated Memorandum and Articles of Association provides that shareholders may remove directors only for cause. |
For discussions on risks associated with the above anti-takeover provisions, please see “Item 3.D Risk Factors — Provisions in the Company’s amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for the Company’s securities and could entrench management”.
Bylaw Provision regarding Ownership Disclosure
There is no bylaw provision requiring shareholder ownership to be disclosed above a certain threshold.
Certain Differences of Cayman Islands Law
The Company’s corporate affairs are governed by its Amended and Restated Memorandum and Articles of Association, the Companies Law, and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by non-controlling shareholders and the fiduciary responsibilities of the Company’s directors to the Company under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. Your rights as a shareholders and the fiduciary responsibilities of the Company’s directors under Cayman Islands law are different from under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws from the United States and may provide significantly less protection to investors. In addition, some U.S. states, such as Delaware, have different bodies of corporate law than the Cayman Islands.
The Company has been advised by its Cayman Islands previous legal counsel, Maples and Calder, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against the Company judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or any State and (ii) in original actions brought in the Cayman Islands, to impose liabilities against the Company predicated upon the civil liability provisions of the securities laws of the United States or any State, so far as the liabilities imposed by those provisions are penal in nature. Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and/or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere. The laws of the Cayman Islands specifically provide powers to the Cayman courts to recognize and assist foreign bankruptcies. The Cayman courts have no jurisdiction to directly apply provisions of foreign insolvency law. However, there is jurisdiction to apply Cayman Islands insolvency law (for example transaction avoidance provisions) in aid of a foreign insolvency proceeding. This is an area of law that may be open to further development.
The Company is incorporated in the Cayman Islands and all of its operations are currently conducted through its subsidiary, BPGIC, and once phase III is ready, will be conducted through the Company’s subsidiaries, BPGIC and BPGIC III, in the UAE. All of the Company’s assets are located outside the United States. The Company’s officers and directors reside outside the United States and a substantial portion of the assets of those persons are located outside of the United States. As a result, it could be difficult or impossible for you to bring an action against the Company or against these individuals in the United States in the event that you believe that your rights have been infringed under the applicable securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the UAE could render you unable to enforce a judgment against the Company’s assets or the assets of the Company’s directors and officers.
Shareholders of Cayman Islands exempted companies such as the Company have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders of these companies. The Company’s directors have discretion under Cayman Islands law to determine whether or not, and under what conditions, the Company’s corporate records could be inspected by the Company’s shareholders, but are not obliged to make them available to the Company’s shareholders. This could make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
As a result of all of the above, the Company shareholders might have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. Company.
C. Material Contracts
Commercial Storage Agreements
As of December 2023, the Company had entered into several go forward commercial storage agreements for its Phase I and II Facility with certain storage customers. These agreements are spread tank wise within reputed customers providing diversification of storage revenue. The descriptions of the commercial storage agreements do not purport to summarize all of the provisions of the agreements.
The storage agreements are compromised of the key commercial terms and the general terms and conditions. The services provided under the storage agreements compromise any operation carried out in respect of the product stored, including but not limited to providing storage space, storing, manipulating, moving, treating, processing, and delivering the product stored. For the services provided BPGIC invoice the customers rental and handling charges, throughput charges, tank cleaning charges, circulation charges, inter tank transfer charges and port tariffs.
As of December 2023, the BPGIC has signed several commercial storage agreements, including: the Avis Storage Agreements dated May 10 2022, the Sahra Storage Agreements dated November 21 2022, the Cengeo Storage Agreements dated July 01, 2022, August 04, 2022, September 09, 2022 and December 13, 2022; the Aachim Storage Agreement dated July 15, 2022; the Actirays Storage Agreement dated August 19, 2022; the Atlantis Storage Agreement dated February, 01 2023; the Valens DMCC Storage Agreement dated June 15, 2023; the 1Energin DMCC Storage Agreement dated 23 June 2023; and the Turkiz Fuel Trading LLC Storage Agreement dated 07 July 2023.
On May 10, 2022, BPGIC entered into two Commercial Storage Agreements with Avis, pursuant to which BPGIC leased certain storage capacity of Phase I facility to Avis for a period of twelve months, subject to renewal for an additional twelve month period with the mutual agreement of the parties.
On November 21, 2022, BPGIC entered into another Commercial Storage Agreement with Sahra, pursuant to which BPGIC leased certain storage capacity of Phase I and II facility to Sahra for a period of thirteen months, subject to renewal for an additional period with the mutual agreement of the parties.
On July 01, August 04, September 09 and December 13, 2022, BPGIC entered into three Commercial Storage Agreements with Cengeo, pursuant to which BPGIC leased certain storage capacity of Phase I and II facility to Cengeo for a period of one, subject to renewal for an additional period with the mutual agreement of the parties. On February 2023, Cengeo novated the agreements entered with BPGIC to Atlantis.
On July 15, 2022, BPGIC entered into a Commercial Storage Agreement with Aachim, pursuant to which BPGIC leased certain storage capacity of Phase II facility to Aachim for a period of twelve months, subject to renewal for an additional period with the mutual agreement of the parties.
On August 19, 2022, BPGIC entered into a Commercial Storage Agreement with Actirays, pursuant to which BPGIC leased certain storage capacity of Phase II facility to Actirays for a period of twelve months, subject to renewal for an additional period with the mutual agreement of the parties.
On February 01, 2023, BPGIC entered into a Commercial Storage Agreement with Atlantis, pursuant to which BPGIC leased certain storage capacity of Phase I facility to Atlantis for a period of twelve months, subject to renewal for an additional period with the mutual agreement of the parties.
On June 15, 2023, BPGIC entered into a Commercial Storage Agreement with Valens, pursuant to which BPGIC leased certain storage capacity of Phase I facility to Valens for a period of six months, subject to renewal for an additional period with the mutual agreement of the parties.
On June 23, 2023, BPGIC entered into a Commercial Storage Agreement with Energin, pursuant to which BPGIC leased certain storage capacity of Phase I facility to Energin for a period of six months, subject to renewal for an additional period with the mutual agreement of the parties.
On July 07, 2023, BPGIC entered into a Commercial Storage Agreement with Turkiz, pursuant to which BPGIC leased certain storage capacity of Phase II facility to Turkiz for a period of two months, subject to renewal for an additional period with the mutual agreement of the parties.
Storage Fee
For the years ended December 31, 2023, 2022 and 2021, BPGIC generated, respectively, 97 percent, 95 percent and 90 percent of its total Phase I and Phase II revenue from monthly fees for storage services.
Ancillary Services
BPGIC charges all customers variable fees based on usage for the following ancillary services:
| ● | Throughput Fees. Pursuant to the existing Commercial Storage Agreements, the Storage Customers, are required to pay BPGIC a monthly fee based upon the total volume of oil products delivered from the BPGIC Terminal to the Port of Fujairah’s berths or from the berths to the BPGIC Terminal during an applicable month at the contracted rate per m3. Each month the existing Storage Customers are each allocated a certain amount of throughput volume at no charge. The Storage Customers are required to pay BPGIC throughput fees on throughput volume to the extent the aggregate amount of throughput volume provided by BPGIC exceeds such initial amount. The revenue BPGIC generates from such service fees varies based upon, among other factors, the volume of oil products exiting the BPGIC Terminal. As existing Storage Customers utilize the ancillary services, which involves sending and receiving oil products to and from the BPGIC Terminal, it will lead to corresponding increases in the throughput volumes delivered to the extent BPGIC sends oil products to the Port of Fujairah’s berths. | |
| ● | Blending & Circulation Fees. Pursuant to the existing Commercial Storage Agreements, the existing Storage Customers, are required to pay BPGIC a monthly fee based upon the total volume of oil products blended during the blending processes performed during an applicable month at the contracted rate per hour. The existing Storage Customers are responsible for providing BPGIC with blend specifications, the component oil products and any additives in connection with any blend request. The revenue BPGIC generates from such service fees varies based upon the activity levels of the existing Storage Customers. | |
| ● | Heating Fees. Pursuant to the existing Commercial Storage Agreements, the existing Storage Customers are required to pay BPGIC a monthly fee based upon the total volume of oil products heated during an applicable month at the contracted rate per hour. The revenue BPGIC generates from such service fees varies based upon the activity levels. | |
| ● | Inter-Tank Transfer Fees. Pursuant to the existing Commercial Storage Agreements, the existing Storage Customers are required to pay BPGIC a monthly fee based upon the total volume of oil products that they transferred between oil storage tanks during an applicable month at the contracted rate per m3. The revenue BPGIC generates from such service fees varies based upon the activity levels of the existing Storage Customers. |
The existing Commercial Storage Agreements provide that any fees charged by the Port of Fujairah in respect of the existing Storage Customers, as applicable, including transportation, loading, unloading, use of berths, marine charges, administration charges, penalties and/or use of any of the Port of Fujairah’s facilities, shall be paid by the existing Storage Customers, as applicable.
Business Combination Agreement
On April 15, 2019, the Company entered into the Business Combination Agreement.
On December 20, 2019, pursuant to a Business Combination Agreement, among other matters:
| (i) | Twelve Seas merged with and into Merger Sub, with Twelve Seas continuing as the surviving entity and a wholly-owned subsidiary of the Company (under the name BPGIC International), with the holders of Twelve Seas’ securities receiving substantially equivalent securities of the Company; and |
| (ii) | the Company acquired all of the issued and outstanding ordinary shares of BPGIC from BPGIC Holdings in exchange for 98,718,035 Ordinary Shares of the Company and cash in the amount of $13,225,827.22, with BPGIC becoming a wholly-owned subsidiary of the Company. |
Upon consummation of the Business Combination, the Company’s Ordinary Shares and warrants to purchase Ordinary Shares became listed on the Nasdaq Capital Market.
The description of the Business Combination Agreement does not purport to summarize all of the provisions of the agreement.
Amended Founders’ Share Escrow Agreement
On June 19, 2018, Twelve Seas entered into a Share Escrow Agreement, by and among Twelve Seas, the Initial Twelve Seas Shareholders and Continental, as escrow agent (the “Founders’ Share Escrow Agreement”). On December 20, 2019, the Company entered into the Share Escrow Agreement Amendment, by and among the Company, Twelve Seas, the Initial Twelve Seas Shareholders and Continental, as escrow agent (the Founders’ Share Escrow Agreement as amended by the Share Escrow Agreement Amendment, the “Amended Founders’ Share Escrow Agreement”).
The Amended Founders’ Share Escrow Agreement provided that 2,587,500 shares held by Twelve Seas Sponsor, (the “Founders’ Lock-Up Shares”) were be held in escrow, to be released one year after the date of the Closing, provided that 50% such Founders’ Lock-Up Shares were subject to earlier release upon certain milestones being met prior to one year after the date of the Closing. On December 20, 2020, the Founders’ Lock-Up Shares were released from their lock up restriction.
The description of the Amended Founders’ Share Escrow Agreement does not purport to summarize all of the provisions of the agreement and is qualified in its entirety by reference to both the full text of such agreement, a copy of which was filed by Twelve Seas as Exhibit 10.3 to the Current Report on Form 8-K, filed by Twelve Seas with the SEC on June 25, 2018 and is incorporated by reference herein as Exhibit 4.9, and by reference to the full text of the amendment to such agreement, a copy of which is attached hereto and incorporated by reference herein as Exhibit 4.74.
A&R Founders’ Registration Rights Agreement
The Company entered into the Amended and Restated Founders’ Registration Rights Agreement (the “A&R Founders’ Registration Rights Agreement”), dated as of December 20, 2019, by and among the Company, Twelve Seas, Early Bird Capital and the Initial Twelve Seas Shareholders (the Initial Twelve Seas Shareholders and Early Bird Capital, collectively, the “Twelve Seas Insiders” and the securities held by the Twelve Seas Insiders the “Twelve Seas Insider Securities”).
Pursuant to the A&R Founders’ Registration Rights Agreement, the holders of a majority-in-interest of the Twelve Seas Insider Securities are entitled to make demands that the Company register such securities, however the Company is not obligated to effect more than an aggregate of two such demand registrations. With respect to such Twelve Seas Insider Securities which were subject to escrow under the Amended Founders’ Share Escrow Agreement, the holders of the majority-in-interest of the Twelve Seas Insider Securities were entitled to elect to exercise their registration rights at any time commencing two months prior to the date on which such securities were to be released from escrow. With respect to such Twelve Seas Insider Securities which are subject to escrow under the Initial Shareholder Escrow Agreement, the holders of the majority-in-interest of the Twelve Seas Insider Securities can elect to exercise their registration rights when such securities are released from escrow under the Initial Shareholder Escrow Agreement. With respect to such Twelve Seas Insider Securities which are not subject to any escrow, the registration rights may be exercised at any time on or after the date of Closing. Subject to certain exceptions, if the Company proposes to file a registration statement under the Securities Act with respect to the registration of or an offering of equity securities, under the A&R Founders’ Registration Rights Agreement, the Company must give notice to the Twelve Seas Insiders and all other holders of Registrable Securities (as defined in the A&R Founders’ Registration Rights Agreement) as to the proposed filing and offer them an opportunity to register the sale of such number of Registrable Securities as requested by the holders in writing, subject to customary cut-backs. In addition, the A&R Founders’ Registration Rights Agreement provides that subject to certain exceptions, the holders of Registrable Securities shall be entitled to request in writing that the Company register the resale of any or all of such Registrable Securities on Form F-3 or S-3 and any similar short-form registration that may be available at such time. Under the A&R Founders’ Registration Rights Agreement, the Company agreed to indemnify the holders of Registrable Securities and certain persons or entities related to them against any losses or damages resulting from any untrue statement of a material fact or omission of a material fact in any registration statement or prospectus pursuant to which they sell such Registrable Securities, unless such liability arose from the Company’s reliance upon and conformity with information furnished in writing by such holder (or certain persons or entities related to them), for use in such documents. The holders of Registrable Securities will indemnify the Company and certain persons or entities related to the Company, against any losses that arise out of or are based upon such untrue statement of a material fact or omission to state a material fact, in any registration statement or prospectus pursuant to which they sell their Registrable Securities, where they were made (or not made) by the Company in reliance upon and in conformity with information furnished in writing to it by such holder.
The description of the A&R Founders’ Registration Rights Agreement does not purport to summarize all of the provisions of the agreement.
Seller Escrow Agreement
As contemplated by the Business Combination Agreement, at the Closing, the Seller Escrow Shares were instead issued to BPGIC Holdings in escrow, and are held by Continental, as escrow agent for the benefit of BPGIC Holdings, to be held and controlled, along with any other Seller Escrow Property by Continental in a separate segregated escrow account (the “Seller Escrow Account”), and released in accordance with the Seller Escrow Agreement.
While the Seller Escrow Property is held in the Seller Escrow Account, BPGIC Holdings shall have all voting, consent and other rights (other than the rights to dividends, distributions or other income paid or accruing to the Seller Escrow Property). The Seller Escrow Agreement provides, however, that after the Closing, BPGIC Holdings shall be permitted to (i) pledge or otherwise encumber the Seller Escrow Property as collateral security for documented loans entered into by BPGIC Holdings, the Company or its subsidiaries, including BPGIC, after the Closing or (ii) transfer its rights to the Seller Escrow Property to a third party, provided, that (a) in each case of clauses (i) and (ii), that the lender’s or transferee’s rights to any such pledged or transferred Seller Escrow Property shall be subject to the provisions of the Seller Escrow Agreement and the sections of the Business Combination Agreement pertaining to the escrow, including the forfeiture provisions contained therein, and (b) in the event of a pledge or encumbrance of the Seller Escrow Property under clause (i) above, BPGIC Holdings may transfer the Seller Escrow Property to another escrow agent selected by BPGIC Holdings and reasonably acceptable to the Company.
The Seller Escrow Property will only become vested and not subject to forfeiture, and released to BPGIC Holdings, in the event that the Company meets the following performance or milestone requirements during the Seller Escrow Period, the period commencing from the Closing until the end of the 20th fiscal quarter after the commencement date of the first full fiscal quarter beginning after the Closing:
| (i) | One-half (½) of the Seller Escrow Property shall become vested and no longer subject to forfeiture, and be released to BPGIC Holdings, in the event that either: (a) the Annualized EBITDA (as defined in the Seller Escrow Agreement) for any full fiscal quarter during the Seller Escrow Period beginning with the first Seller Escrow Quarter equals or exceeds $175,000,000 or (b) at any time during the Seller Escrow Period, the closing price of the Company Ordinary Shares equals or exceeds $12.50 per share (subject to equitable adjustment) for any 10 Trading Days (as defined in the Seller Escrow Agreement) within any 20 Trading Day period during the Seller Escrow Period. |
| (ii) | All Seller Escrow Property remaining in the Seller Escrow Account shall become vested and no longer subject to forfeiture, and be released to BPGIC Holdings, in the event that either: (a) the Annualized EBITDA for any Seller Escrow Quarter equals or exceeds $250,000,000 or (b) at any time during the Seller Escrow Period, the closing price of the Company Ordinary Shares equals or exceeds $14.00 per share (subject to equitable adjustment) for any 10 Trading Days within any 20 Trading Day period during the Seller Escrow Period. |
The Annualized EBITDA for each fiscal quarter is equal to four times the earnings before interest, income taxes, depreciation and amortization of the Company and its subsidiaries, on a consolidated basis, for such fiscal quarter, as determined in accordance with IFRS, consistently applied, but subject to certain adjustments set forth in the Seller Escrow Agreement.
At the end of the Seller Escrow Period, if there is any Seller Escrow Property which has not vested and that BPGIC Holdings is not entitled to receive in accordance with the Seller Escrow Agreement and the Business Combination Agreement, such Seller Escrow Property will be forfeited and automatically surrendered by BPGIC Holdings and distributed to the Company from the Seller Escrow Account, for cancellation by the Company. All actions or determinations on behalf of the Company under the Seller Escrow Agreement after the Closing (other than certain reports to be delivered by the Company’s chief financial officer) will be exclusively made and determined by a majority of the independent directors then serving on the Company’s board of directors that are disinterested in the Seller Escrow Property.
The description of the Seller Escrow Agreement does not purport to summarize all of the provisions of the agreement and is qualified in its entirety by reference to both the full text of such agreement, a copy of which was filed by Twelve Seas as Exhibit 10.1 to the Current Report on Form 8-K, filed by Twelve Seas with the SEC on May 13, 2019 and is incorporated by reference herein as Exhibit 4.62, and by reference to the full text of the First Amendment to such agreement, a copy of which is attached hereto and incorporated by reference herein as Exhibit 4.71.
Initial Shareholder Escrow Agreement
As contemplated by the Business Combination Agreement, at the Closing, 1,552,500 of the Company’s Ordinary Shares otherwise issuable to the Initial Twelve Seas Shareholders at the Closing (together with any equity securities paid as dividends or distributions with respect to such Ordinary Shares or into which such Ordinary Shares are exchanged or converted, the “Founders’ Earn-Out Escrow Shares” and together with the Founders’ Lock-Up Shares, the “Founders’ Shares”) were instead issued to the Initial Twelve Seas Shareholders in escrow and are held by Continental, as escrow agent for the benefit of the Initial Twelve Seas Shareholders to be held and controlled, along with any other Founder Escrow Property (as defined in the Initial Shareholder Earn-Out Escrow Agreement and together with the Founders’ Earn-Out Escrow Shares, the “Founders’ Earn-Out Escrow Property”) by Continental in a separate segregated escrow account (the “Founders’ Earn-Out Escrow Account”), and released in accordance with the Escrow Agreement, dated December 20, 2019 by and among the Initial Twelve Seas Shareholders, Continental and the Company (the “Initial Shareholder Escrow Agreement”).
While the Founders’ Earn-Out Escrow Property is held in the Founders’ Earn-Out Escrow Account, the Initial Twelve Seas Shareholders shall have all voting, consent and other rights (other than the rights to dividends, distributions or other income paid or accruing to the Founders’ Earn-Out Escrow Property). The Initial Shareholder Escrow Agreement provides, however, that each Initial Twelve Seas Shareholder shall be permitted to (i) pledge or otherwise encumber such Initial Twelve Seas Shareholder’s portion of the Founders’ Earn-Out Escrow Property as collateral security for documented loans entered into by such Initial Twelve Seas Shareholder, the Company or its subsidiaries, including BPGIC, after the Closing or (ii) transfer its rights to the Founders’ Earn-Out Escrow Property to a third party, provided, that (a) in each case of clauses (i) and (ii), that the lender’s or transferee’s rights to any such pledged or transferred Founders’ Earn-Out Escrow Property shall be subject to the provisions of the Initial Shareholder Escrow Agreement, the Voting Agreement (as applicable) and the Founder Share Letter (as defined in the Initial Shareholder Escrow Agreement), including the forfeiture provisions contained therein, and (b) in the event of a pledge or encumbrance of the Founders’ Earn-Out Escrow Property under clause (i) above, such Initial Twelve Seas Shareholder may transfer such Initial Twelve Seas Shareholder’s portion of the Founders’ Earn-Out Escrow Property to another escrow agent selected by such Initial Twelve Seas Shareholder and reasonably acceptable to the Company.
The Founders’ Earn-Out Escrow Property will only become vested and not subject to forfeiture, and released to the Initial Twelve Seas Shareholders (on the same proportional basis) upon the same events and milestones triggering, and at the same time as, the release of the Seller Escrow Property.
At the end of the Seller Escrow Period, if there is any Founders’ Earn-Out Escrow Property which has not vested and that the Initial Twelve Seas Shareholders are not entitled to receive in accordance with the Founder Share Letter and the Initial Shareholder Escrow Agreement (which will occur upon a determination being made under the Seller Escrow Agreement and the Business Combination Agreement that forfeitures shall be made with respect to the Seller Escrow Property), such Founders’ Earn-Out Escrow Property will be forfeited and automatically surrendered by the Initial Twelve Seas Shareholders and distributed to the Company from the Founders’ Earn-Out Escrow Account, for cancellation by the Company.
In connection with an agreement between Twelve Seas Sponsor and Magnetar Financial LLC and certain of its affiliates (collectively, “Magnetar”) whereby Twelve Seas Sponsor pledged, among other things, its Founders’ Earn-Out Escrow Shares to Magnetar as collateral, the Company agreed that, if the other pledged collateral is not sufficient to cover Twelve Seas Sponsor’s obligations to Magnetar, the Company will waive the escrow release conditions and release up to 100% of Twelve Seas Sponsor’s Founders’ Earn-Out Escrow Shares, as necessary, to cover the remainder of Twelve Seas’ Sponsor’s obligations to Magnetar (such agreement the “Limited Waiver”).
The description of the Initial Shareholder Escrow Agreement does not purport to summarize all of the provisions of the agreement and is qualified in its entirety by reference to both the full text of such agreement, a copy of which is attached hereto and incorporated by reference herein as Exhibit 4.76 and the Limited Waiver of such agreement, a copy of which is attached hereto and incorporated by reference herein as Exhibit 4.82.
The description of the Limited Waiver does not purport to summarize all of the provisions of the Limited Waiver and is qualified in its entirety by reference to the full text thereof, a copy of which is attached hereto and incorporated by reference herein as Exhibit 4.82.
Seller Registration Rights Agreement
Pursuant to the Business Combination Agreement, the Company and BPGIC Holdings entered into a registration rights agreement, dated December 20, 2019 (the “Seller Registration Rights Agreement”), with respect to the Ordinary Shares of the Company received by BPGIC Holdings at the Closing (the “Seller Shares”). Under the Seller Registration Rights Agreement, BPGIC Holdings has registration rights that obligate the Company to register for resale under the Securities Act all or any portion of the Seller Shares (together with any securities issued as a dividend or distribution with respect thereto or in exchange therefor, the “Seller Registrable Securities”), except that the Company is not obligated to register Seller Registrable Securities subject to the Seller Escrow Agreement until they are released from the Seller Escrow Account. The holders of a majority-in-interest of the Seller Registrable Securities are entitled under the Seller Registration Rights Agreement to make written demands for registration under the Securities Act of all or part of their Seller Registrable Securities (provided, however, that the Company is not obligated to effect more than four of such written demands), and the other holders of Seller Registrable Securities will be entitled to join in such demand registration. Subject to certain exceptions, if the Company proposes to file a registration statement under the Securities Act with respect to the registration of or an offering of equity securities, under the Seller Registration Rights Agreement, the Company must give notice to BPGIC Holdings and all other holders of Seller Registrable Securities as to the proposed filing and offer them an opportunity to register the sale of such number of Registrable Securities as requested by the holders in writing, subject to customary cut-backs. In addition, the Seller Registration Rights Agreement provides that subject to certain exceptions, the holders of Seller Registrable Securities shall be entitled under the Seller Registration Rights Agreement to request in writing that the Company register the resale of any or all of such Seller Registrable Securities on Form F-3 or S-3 and any similar short-form registration that may be available at such time. Under the Seller Registration Rights Agreement, the Company agreed to indemnify the holders of Seller Registrable Securities and certain persons or entities related to them, such as their officers, directors, employees, agents and representatives, against any losses or damages resulting from any untrue statement of a material fact or omission of a material fact in any registration statement or prospectus pursuant to which they sell Seller Registrable Securities, unless such liability arose from the Company’s reliance upon and conformity with information furnished in writing by such holder (or certain persons or entities related to them), for use in such documents. The holders of Seller Registrable Securities will indemnify the Company and certain persons or entities related to the Company, such as its officers and directors and underwriters, against any losses that arise out of or are based upon such untrue statement of a material fact or omission to state to material fact, in any registration statement or prospectus pursuant to which they sell their Seller Registrable Securities, where they were made (or not made) by the Company in reliance upon and in conformity with information furnished in writing to it by such holder.
In connection with a number of transfers of Ordinary Shares by BPGIC Holdings to certain individual shareholders from July 2020 to September 2020, the Company entered into Joinders to the Seller Registration Rights Agreement with such transferees. As a result, such transferees hold Seller Registrable Securities and have the same rights, and are subject to the same obligations as BPGIC Holdings.
The description of the Seller Registration Rights Agreement does not purport to summarize all of the provisions of the agreement and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached hereto and incorporated by reference herein as Exhibit 4.75.
The description of the Joinders to Seller Registration Rights Agreement does not purport to summarize all of the provisions of the agreement and is qualified in its entirety by reference to the full text of such agreement, a copy of the form of which is attached hereto and incorporated by reference herein as Exhibit 4.1.
Amendment to Warrant Agreement and Rights Agreement
On June 19, 2018, Twelve Seas entered into both the Warrant Agreement and the Rights Agreement with Continental, pursuant to which Continental agreed to act as Twelve Seas’ warrant agent with respect to the issuance, registration, transfer, exchange, redemption and exercise of Twelve Seas’ warrants, and to act as Twelve Seas’ rights agent with respect to the issuance, registration, transfer and exchange of Twelve Seas’ rights.
On December 20, 2019, the Company, Twelve Seas and Continental entered into the Amendment to Warrant Agreement and Rights Agreement pursuant to which the Company became party to each of the Warrant Agreement and the Rights Agreement and the parties revised the terms of such agreements in order to, among other things, reflect the conversion of each Twelve Seas warrant into a Warrant of the Company having substantially the same terms and conditions as such original Twelve Seas warrant, and each Twelve Seas right converted into 1/10th of one Ordinary Share of the Company.
The description of the Amendment to Warrant Agreement and Rights Agreement does not purport to summarize all of the provisions of the agreements and is qualified in its entirety by reference to the full text of (i) the Warrant Agreement, a copy of which was filed by Twelve Seas as Exhibit 4.1 to the Current Report on Form 8-K, filed by Twelve Seas with the SEC on June 25, 2018 and is incorporated by reference herein as Exhibit 2.3, (ii) the Rights Agreement, a copy of which was filed by Twelve Seas as Exhibit 4.2 to the Current Report on Form 8-K, filed by Twelve Seas with the SEC on June 25, 2018 and is incorporated by reference herein as Exhibit 2.4, and (iii) the Amendment to Warrant Agreement and Rights Agreement, a copy of which is attached hereto and incorporated by reference herein as Exhibit 2.5.
Business Combination Marketing Agreement Fee Amendment
Twelve Seas engaged Early Bird Capital to assist it in connection with Twelve Seas’ initial business combination. Pursuant to this arrangement, Early Bird Capital assisted Twelve Seas in holding meetings with Twelve Seas shareholders to discuss the Business Combination and BPGIC’s business attributes, introduced Twelve Seas to potential investors that may have been interested in purchasing Twelve Seas’ securities in connection with the Business Combination, assisted Twelve Seas in obtaining shareholder approval for the Business Combination and assisted Twelve Seas with its press releases and certain public filings in connection with the Business Combination. Pursuant to the original agreement, Twelve Seas agreed to pay Early Bird Capital a cash fee equal to 3.5% of the gross proceeds received in its initial public offering for such services upon the consummation of its initial business combination (exclusive of any applicable finders’ fees which might become payable); provided that up to 1.0% of the gross proceeds of initial public offering could be allocated at Twelve Seas’ sole discretion to one or more advisors that assisted Twelve Seas in identifying and consummating an initial business combination. Twelve Seas also agreed to reimburse Early Bird Capital for up to $20,000 of its reasonable costs and expenses incurred by it (including reasonable fees and disbursements of counsel) in connection with the performance of its services pursuant to the agreement; provided, however, all expenses in excess of $5,000 in the aggregate required Twelve Seas’ prior written approval, which approval would not be unreasonably withheld.
Pursuant to the Business Combination Agreement, on December 20, 2019, Twelve Seas, Early Bird Capital, and the Company entered into the Business Combination Marketing Agreement Fee Amendment (the “BCMA Fee Amendment”) whereby the Company became party to the Business Combination Marketing Agreement solely with respect to the provision relating to Early Bird Capital’s fees and Early Bird Capital’s fees were amended. Pursuant to the Business Combination Marketing Agreement, as amended by the BCMA Fee Amendment, Early Bird Capital received as full payment for any and all fees under the Business Combination Marketing Agreement, a cash fee equal to $3 million and a $1.5 million non-interest bearing promissory note of the Company due and payable on the earlier of (i) the first anniversary of the Closing and (ii) the consummation by the Company of a follow-on securities offering. After an event of default, the promissory note was to bear interest at the rate of 10% per annum.
The promissory note was repaid with proceeds from the Bond Financing Facility.
The description of the BCMA Fee Amendment does not purport to summarize all of the provisions of the agreement and is qualified in its entirety by reference to the full text of (i) the Business Combination Marketing Agreement, a copy of the form of which was filed by Twelve Seas as Exhibit 1.2 to the Registration Statement on Form S-1/A (File No. 001-225352), filed with the SEC on June 14, 2018 and is incorporated by reference herein as Exhibit 4.15, (ii) the BCMA Fee Amendment, a copy of which is attached hereto and incorporated by reference herein as Exhibit 4.77, and (iii) the $1,500,000 Promissory Note issued to Early Bird Capital, a copy of which is attached hereto and incorporated by reference herein as Exhibit 4.78.
Voting Agreement
Pursuant to the Business Combination Agreement, BPGIC Holdings and the Initial Twelve Seas Shareholders entered into the Voting Agreement, dated December 20, 2019 in favor of BPGIC Holdings (the “Voting Agreement”). The Voting Agreement applies to the Ordinary Shares and other voting securities of the Company issued to the Initial Twelve Seas Shareholders upon the consummation of the Business Combination (including upon the conversion, exercise, exchange of their securities in Twelve Seas) as well as other securities the Initial Twelve Seas Shareholders acquired or agreed to acquire up to and including the time of Closing (collectively, the “Subject Shares”). The Voting Agreement provides that from and after the Closing until the Voting Agreement terminates with respect to each Initial Twelve Seas Shareholder, at each meeting of the shareholders of the Company and in each written consent or resolutions of the Company shareholders in which an Initial Twelve Seas Shareholder is entitled to vote, consent or approve, such Initial Twelve Seas Shareholder unconditionally and irrevocably agrees to be present for such meeting and vote its Subject Shares (in person or by proxy), as directed by BPGIC Holdings, or consent to any action by written consent or resolution with respect to all such matters, as directed by BPGIC Holdings. The Voting Agreement terminates upon the earlier to occur of (i) the mutual written consent of BPGIC Holdings and the Initial Twelve Seas Shareholders and (ii) with respect to any Initial Twelve Seas Shareholder, automatically on the date such Initial Twelve Seas Shareholder no longer holds any Subject Shares.
The description of the Voting Agreement does not purport to summarize all of the provisions of the agreement and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached hereto and incorporated by reference herein as Exhibit 4.72.
Transferee Voting Agreement
BPGIC Holdings is party to a voting agreement with certain persons (each, an “Individual Transferee”) in favor of BPGIC Holdings (each a “Transferee Voting Agreement” and collectively, the “Transferee Voting Agreements”). The Transferee Voting Agreements apply to certain Ordinary Shares transferred to the Individual Transferees (collectively, the “Transferee Subject Shares”). Each Transferee Voting Agreement provides until such Transferee Voting Agreement terminates, at each meeting of the shareholders of the Company and in each written consent or resolutions of the Company’s shareholders in which an Individual Transferee is entitled to vote, consent or approve, such Individual Transferee unconditionally and irrevocably agrees to be present for such meeting and vote its Transferee Subject Shares (in person or by proxy), as directed by BPGIC Holdings, or consent to any action by written consent or resolution with respect to all such matters, as directed by BPGIC Holdings. Each Transferee Voting Agreement terminates upon the earlier to occur of (i) the mutual written consent of BPGIC Holdings and the subject Individual Transferee and (ii) with respect to an Individual Transferee, automatically on the date such Individual Transferee no longer holds any Transferee Subject Shares.
The description of the Transferee Voting Agreements does not purport to summarize all of the provisions of the agreement and is qualified in its entirety by reference to the full text of such agreement, a copy of the form of which is attached hereto and incorporated by reference herein as Exhibit 4.2.
Dividend Waivers
Prior to the Closing, BPGIC Holdings, MENA Energy, the Twelve Seas Insiders and certain assignees of Early Bird Capital (collectively the “Waiving Holders”) executed dividend waivers pursuant to which such Waiving Holders waived, for a period of two years from the date of Closing (the “Waiver Term”), their rights to any dividends with respect to (i) the Ordinary Shares received by BPGIC Holdings in exchange for the outstanding equity of BPGIC, (ii) the Founders’ Shares, and (iii) the ordinary shares issued to Early Bird Capital and its affiliates in connection with Twelve Seas’ initial public offering. Each dividend waiver terminates upon the earliest to occur of (i) the expiration of the Waiver Term, and (ii) with respect to the Twelve Seas Insiders and Early Bird Capital, if the Company and/or BPGIC Holdings or MENA Energy modify their waiver of their rights to dividends in any way.
The description of the Dividend Waiver does not purport to summarize all of the provisions thereof and is qualified in its entirety by reference to the full text of such waiver, a copy of the form of which is attached hereto and incorporated by reference herein as Exhibit 4.79.
Bond Offering Documents
In 2020, as part of the Bond Financing Facility, BPGIC issued bonds of $200 million to private investors with a face value of $1 and an issue price of $0.95. The issuance has a maximum size of $250.00 million, which includes the option for a tap issue of an additional $50.00 million subject to certain conditions. The proceeds of the Bond Financing Facility were used to repay the Phase I Financing Facilities, fund capital project for Phase II, repay the promissory note payable to Early Bird Capital, pre-fund the Liquidity Account and for general corporate purposes. The proceeds of the bonds were drawn down during November 2020 and outstanding term loans were fully settled.
The principal repayment of the Bond Financing Facility will be semi-annual payments of $7 million starting in September 2021 until March 2025, and one bullet repayment of $144 million in September 2025. The bonds bear interest at 8.5% per annum, payable along with the principal installments.
The description of the Bond Financing Facility does not purport to summarize all of the provisions of the Bond Financing Facility and is qualified in its entirety by reference to the full text of the Bond Terms dated September 22, 2020, Amendment No. 1 to the Bond Terms dated October 23, 2020 and Amendment No. 2 to the Bond Terms dated April 27, 2022, copies of which are attached hereto and incorporated by reference herein as Exhibits 2.7 and 2.8.
Bond Waiver letter
On April 27, 2022, the Group entered into an agreement with the Bondholders to implement following amendments to the Bond Financing Facility, effective immediately:
| (a) | Waiver of the Events of Defaults that are triggered by the technical breaches of the Leverage Ratio and positive Working Capital covenants until December 31, 2022. |
| (b) | The requirement to maintain a Leverage Ratio to not exceed certain thresholds is suspended (waived) for the results period from December 31, 2021 to and including December 30, 2022, and shall be tested again for the 12 months results period from (and including) January 1, 2022 to December 31, 2022 (inclusive) at 3.5x, stepping down to 3.0x anytime thereafter (as per the original terms of the Bond Financing Facility). For the avoidance of doubt, the costs associated with the amendments shall not be taken into consideration in EBITDA when calculating Leverage Ratio. |
| (c) | The requirement to maintain a positive Working Capital is suspended (waived) for the period from December 31, 2021 to and including December 30, 2022, and shall be tested again starting from and including December 31, 2022. |
| (d) | Permitted Distribution: |
| (i) | No Permitted Distribution shall be made before BPGIC is in compliance with financial covenant requirements under the original terms of the Bond Facility Financing. |
| (ii) | Furthermore, BPGIC shall provide to the Bond Trustee a written statement signed by its chief executive officer and chief financial officer within three business days prior to any permitted distribution under the terms of the Bond Financing Facility that (A) states the amount being distributed as a permitted distribution, (B) confirms the conditions with respect to such distribution are satisfied, and (C) declares such distribution will not lead to an Event of Default on the next testing date. |
Furthermore, for the year ending December 31, 2023 the Group is in the process of requesting further waivers or modification to the Bond terms from Bondholders including the following Clauses: 12.1 (a) and (b), 13.3, 13.13(a)(iii), Clause 13.13(b) and 1.1(d).
Although the Group is in technical breach of the Covenants under the Bond Terms, Management believes the future cash inflows are sufficient to meet its payment obligations to the Bondholders. Since the Bond issuance the Group has not defaulted on any payments.
Phase III Land Lease
On February 2, 2020, BPGIC entered into the Phase III Land Lease to secure the Phase III Land. On October 1, 2020, BPGIC, FOIZ and BPGIC III, entered into a novation agreement, whereby BPGIC novated the Phase III Land Lease to BPGIC III. The agreement provides for an initial 30 year term with an automatic 30 year renewal. Upon mutual agreement of the parties, the term of the Phase III Land Lease can be renewed or extended for a further period, the term of which is unspecified and therefore subject to agreement between the parties. All amounts in respect of rent for each quarter shall be invoiced by and paid to FOIZ in Dirhams by immediately available funds due net 30 days after receipt of invoice. BPGIC is required to pay all taxes imposed by the federal government of the UAE or FOIZ; however, the leased premises are in a free zone and BPGIC is entitled to all benefits applying to free zone entities, including benefits in respect of taxes.
The description of the Phase III Land Lease does not purport to summarize all of the provisions of the agreement and is qualified in its entirety by reference to the full text of the agreement, a copy of which is attached hereto and incorporated by reference herein as Exhibit 4.84 and the novation agreement relating thereto, a copy of which is attached hereto and incorporated by reference herein as Exhibit 4.95.
Term Loan
During the year 2021, the Company obtained a new term loan facility from a commercial bank in the UAE amounting to approximately $2.4 million to partially finance the purchase of a corporate office for the Company in Dubai. The new facility carries interest at 3 months EIBOR + 4% margin (minimum 6.5% per annum) and is repayable in 24 quarterly instalments commencing 6 months after the date of disbursement. Subsequent to the year end on February 28, 2022, the Company has made a drawdown from the term loan facility.
The description of the Term Loan Facility does not purport to summarize all of the provisions of the Term Loan Facility and is qualified in its entirety by reference to the full text of the Terms dated October 6, 2021, copy of which are attached hereto and incorporated by reference herein as Exhibits [2.7] and [2.8].
D. Exchange Controls and Other Limitations Affecting Security Holders
Under the laws of the Cayman Islands, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to nonresident holders of our Ordinary Shares.
E. Taxation
The following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership and disposition of our securities. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.
Corporate Tax in the UAE
On December 9, 2022, the UAE Ministry of Finance published the full text of the law Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. This means businesses will be subject to UAE Corporate Tax from the beginning of their first financial year that starts on or after June 1, 2023. Per the Cabinet of Ministers Decision No. 116 published on January 16, 2023, a standard rate of 9% will apply to taxable income exceeding a threshold of AED 375,000, and a rate of 0% will apply to taxable income not exceeding that threshold.
As the Group’s accounting year ends on December 31, accordingly the effective implementation date for the Group will start from January 1, 2024, to December 31, 2024, with the first return to be filed on or before September 30, 2025. The Group is currently assessing the impact of this tax.
United States of America
This section is addressed to U.S. Holders of ordinary shares of the Company. Unless otherwise indicated, “ordinary shares” refers to ordinary shares of the Company.
Taxation of Dividends and Other Distributions on Ordinary Shares
Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by the Company to you with respect to its ordinary shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of the Company’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). With respect to corporate U.S. Holders, the dividends will generally not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.
With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) our ordinary shares are readily tradable on an established securities market in the United States, or the Company is eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (2) the Company is not a passive foreign investment company (as discussed below) for either the taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to the Company’s ordinary shares.
To the extent that the amount of the distribution exceeds the Company’s current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your ordinary shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate the Company’s earnings and profits under U.S. federal income tax principles.
Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.
Taxation of Dispositions of the Company’s Ordinary Shares
Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a Company ordinary share equal to the difference between the amount realized (in US dollars) for the ordinary share and your tax basis (in US dollars) in the ordinary share. The gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the ordinary shares for more than one year, you may be eligible for reduced tax rates on any such capital gains. The deductibility of capital losses is subject to limitations.
Passive Foreign Investment Company
A foreign (i.e., non-U.S.) corporation will be a PFIC for U.S. tax purposes if at least 75% of its gross income in a taxable year of such foreign corporation, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable year, ordinarily determined based on fair market value and averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than certain rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. In determining the value and composition of its assets for purposes of the PFIC asset test, (1) the cash the Company owns at any time will generally be considered to be held for the production of passive income and (2) the value of the Company’s assets must be determined based on the market value of its ordinary shares from time to time, which could cause the value of its non-passive assets to be less than 50% of the value of all of its assets (including cash) on any particular quarterly testing date for purposes of the asset test.
A determination as to whether the Company is a PFIC with respect to any particular tax year will be made following the end of such tax year. If the Company is a PFIC for any year during which you hold the Company’s ordinary shares, it will continue to be treated as a PFIC for all succeeding years during which you hold ordinary shares. However, if the Company ceases to be a PFIC and you did not previously make a timely “mark-to-market” election as described below, you may avoid some of the adverse effects of the PFIC regime by making a “purging election” (as described below) with respect to the ordinary shares.
If the Company is determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of the Company securities and, in the case of the ordinary shares, the U.S. Holder did not make a timely “mark-to-market” election, as described below, such holder generally will be subject to special rules for regular U.S. federal income tax purposes with respect to:
| ● | any gain recognized by the U.S. Holder on the sale or other disposition of the Company securities; and |
| ● | any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the Company securities during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for such securities). |
Under these rules,
| ● | the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for such securities; |
| ● | the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of the Company’s first taxable year in which it is a PFIC, will be taxed as ordinary income; |
| ● | the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and |
| ● | the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year(s) of the U.S. Holder. |
If a U.S. Holder, at the close of its taxable year, owns (or is deemed to own) shares in a PFIC that are treated as marketable shares, the U.S. Holder may make a “mark-to-market” election with respect to such shares for such taxable year. If the U.S. Holder makes a valid mark-to-market election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) Company ordinary shares and for which the Company is determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect to its ordinary shares as long as such shares continue to be treated as marketable shares. Instead, in general, the U.S. Holder will include as ordinary income each year that the Company is treated as a PFIC the excess, if any, of the fair market value of such U.S. Holder’s ordinary shares at the end of its taxable year over the adjusted basis in its ordinary shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its Ordinary Shares over the fair market value of such shares at the end of the U.S. Holder’s taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s adjusted tax basis in its ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the shares in a taxable year in which the Company is treated as a PFIC will be treated as ordinary income. Special tax rules may also apply if a U.S. Holder makes a mark-to-market election for a taxable year after the first taxable year in which the U.S. Holder holds (or is deemed to hold) ordinary shares and for which the Company is treated as a PFIC.
The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission, including the Nasdaq Capital Market, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to the Company’s ordinary shares under their particular circumstances.
Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder’s pro rata share of the corporation’s earnings and profits for the taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. The Company does not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold ordinary shares in any taxable year in which the Company is a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 in each such year and provide certain annual information regarding such ordinary shares, including regarding distributions received on the ordinary shares and any gain realized on the disposition of the ordinary shares.
If you do not make a timely “mark-to-market” election (as described above), and if the Company were a PFIC at any time during the period you hold its ordinary shares, then such ordinary shares will continue to be treated as stock of a PFIC with respect to you even if the Company ceases to be a PFIC in a future year, unless you make a “purging election” for the year we cease to be a PFIC. A “purging election” creates a deemed sale of such ordinary shares at their fair market value on the last day of the last year in which the Company is treated as a PFIC. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, you will have a new basis (equal to the fair market value of the ordinary shares on the last day of the last year in which the Company is treated as a PFIC) and holding period (which new holding period will begin the day after such last day) in your ordinary shares for tax purposes.
The rules dealing with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above. Accordingly, you are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in the Company’s ordinary shares and the elections discussed above.
Information Reporting and Backup Withholding
Certain U.S. Holders are required to report information to the IRS relating to an interest in “specified foreign financial assets,” including shares issued by a non-U.S. corporation, for any year in which the aggregate value of all specified foreign financial assets exceeds US$50,000 (or a higher dollar amount prescribed by the IRS), subject to certain exceptions (including an exception for shares held in custodial accounts maintained with a United States financial institution). These rules also impose penalties if a U.S. Holder is required to submit such information to the IRS and fails to do so.
Dividend payments with respect to the Company’s ordinary shares and proceeds from the sale, exchange or redemption of the Company’s ordinary shares may be subject to information reporting to the IRS and possible U.S. backup withholding at a current rate of 24%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on IRS Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and timely furnishing any required information. Transactions effected through certain brokers or other intermediaries may be subject to withholding taxes (including backup withholding), and such brokers or intermediaries may be required by law to withhold such taxes.
F. Dividends and Paying Agents
Not Applicable
G. Statement by Experts
Not Applicable.
H. Documents on Display
We are subject to certain of the informational filing requirements of the Exchange Act. Since we are a “foreign private issuer,” we are exempt from the rules and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act, with respect to their purchase and sale of our shares. In addition, we are not required to file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we are required to file with the SEC an Annual Report on Form 20-F containing financial statements audited by an independent accounting firm. The SEC also maintains a website at http://www.sec.gov that contains reports and other information that we file with or furnish electronically with the SEC. You may read and copy any report or document we file, including the exhibits, at the SEC’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.
I. Subsidiary Information
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A. Market Risk Disclosures
The main risks arising from the Group’s financial instruments are price risk, capital risk, interest rate risk, credit risk, currency risk and liquidity risk. The Senior Management team reviews and agrees on policies for managing each of these risks, which are summarized below. The Group’s instruments are entered into for purposes other than trading purposes.
B. Price Risk
The Group’s activities expose it to the financial risks of changes in interest rates and price risk of the Warrants. As the Warrants are recognised at fair value on the consolidated statement of financial position of the Group, the Group’s exposure to market risks results from the volatility of the Warrants price. The Warrants are publicly traded on the Nasdaq Capital Market.
C. Capital Risk
The Group’s objective when managing capital is to safeguard its ability to continue as a going concern in order to provide returns for holders of Ordinary Shares and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust future distribution policy to shareholders, issue new shares or shareholders’ contributions.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, the lease liabilities, borrowings, and accrued interest, less restricted bank balances, cash and cash equivalents. Equity includes share capital, statutory reserve, retained earnings / accumulated losses and shareholders’ accounts. See Note 24 to our Consolidated Financial Statements for additional details.
D. Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Group’s Bonds are issued at a fixed rate of interest. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s secured loan with floating interest rates.
See Note 24 to our Consolidated Financial Statements for additional details.
E. Credit Risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Group is exposed to credit risk on bank balances and receivables as reflected in the consolidated statement of financial position, with a maximum exposure equal to the carrying amount of these instruments. Credit quality of the customer is assessed as part of contract negotiations. Outstanding trade and other receivables are regularly monitored.
At each reporting date, the Group assesses whether financial assets not carried at fair value through profit or loss are credit impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
F. Currency Risk
The Group does not have any significant exposure to currency risk as most of its contracts, cash activities and financing arrangements are denominated in US dollars or AED, which is the currency of the UAE and pegged to the US dollar.
G. Liquidity Risk
The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers projected financing requirements of the Group during the construction phase and cash projections from operations with outstanding bank facilities and outstanding bank commitments as defined under the finance documents.
The Group manages its liquidity risk in relation to financial liabilities to ensure compliance with all covenants.
See Note 24 to our Consolidated Financial Statements for additional details.
H. Operations Risk
BPGIC’s operations and assets are insured under an insurance program administered by Lockton Insurance Brokers - Dubai, an insurance broker. The program covers the Phase I and Phase II facilities and related assets, and the liabilities of the Phase I and Phase II operations and BPGIC. The major elements of this program are property damage, business interruption, terrorism and political violence, worker’s compensation, environmental liability, employer liability, directors’ and officers’ liability insurance, personal injury and third-party liability, including that of terminal operators. The Group additionally maintains local insurance, including healthcare and other insurance required by the Group’s jurisdiction.
Premiums are allocated based on the insured values, history of claims and type of risk. Management believes that the amount of coverage provided is comprehensive and appropriate for the Group’s type of business and meets the standard requirements to comply with all statutory requirements.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
As of December 31, 2023, the Group continued to be in technical breach of the requirements to comply with certain covenants as per Bond Terms. Even though the lenders did not declare an event of default under the bond agreement, these breaches constituted events of default and could have resulted in the lender requiring immediate repayment of the bonds. Accordingly, the Group has continued to classify the respective bonds as a current liability as of December 31, 2023.
Furthermore, for the year ending December 31, 2023 the Group is in the process of requesting further waivers or modification to the Bond terms from Bondholders including the following Clauses: 12.1 (a) and (b), 13.3, 13.13(a)(iii), Clause 13.13(b) and 1.1(d).
Although the Group is in technical breach of the Covenants under the Bond Terms, Management believes the future cash inflows are sufficient to meet its payment obligations to the Bondholders. Since the Bond issuance, the Group has not defaulted on any payments.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None
ITEM 15. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
We seek to maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, with a company have been detected.
Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) under the Exchange Act), were not effective to provide reasonable assurance described above as of December 31, 2023 due to the material weaknesses in our internal control over financial reporting described below in Management’s annual report on internal control over financial reporting.
(b) Management’s annual report on internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act, is a process designed by, or under the supervision of, our Interim Chief Executive Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:
| ● | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
| ● | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our board of directors; and |
| ● | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting can also be circumvented by collusion or improper override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
There are material weaknesses in the Company’s internal control over financial reporting as of December 31, 2023. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified included:
| (1) | the lack of sufficient controls over the financial reporting process. |
| (2) | the lack of an audit committee, for the reasons described elsewhere, and the inability to file financial updates until this filing on Form 20-F. |
These material weaknesses could allow errors to go undetected and resulted in corrected and uncorrected audit misstatements.
Remediation Activities
In order to address the material weaknesses in internal control over financial reporting described above, management has taken steps for mitigation, e.g. hired an external adviser to audit internal the controls. In addition, the Audit Committee is now in place.
The material weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
(c) Attestation report of the registered public accounting firm.
Not applicable, as the Company is not an accelerated filer or a large accelerated filer for purposes of this annual report.
(d) Changes in internal control over financial reporting
Except as for the period from December 15, 2023 to September 04, 2024 with respect to the Audit Committee, in 2023, there were no material changes in our internal control over financial reporting that occurred during the period covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
In 2023 and 2024, the Group appointed a new management team who are overseeing the upgrading and improving of internal controls over financial reporting.
ITEM 16 [RESERVED]
Not applicable.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that Tony Boutros qualifies as an “audit committee financial expert,” as that term is defined in Item 16A of Form 20-F and is independent. See “Item 6.A Directors, Senior Management and Employees—Directors and Executive Officers” for Mr. Boutros’s experience and qualifications.
ITEM 16B. CODE OF ETHICS
The Group has a Code of Ethics and Business Conduct, which establishes the practices that apply to all of our executive officers, directors and employees. The Code of Ethics and Business Conduct codifies the business and ethical principles that will govern all aspects of the Group’s business. A copy of the Group’s Code of Ethics and Business Conduct is filed herewith as an exhibit.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our audit committee has reviewed and discussed with management the audited financial statements for the year ended December 31, 2023. Our audit committee also discussed all the matters required by professional auditing standards to be discussed with our independent registered public accounting firm, Bansal & Co. LLP, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC. In addition, the audit committee has received from our independent registered public accounting firm written disclosure required by the Public Company Accounting Oversight Board Ethics and Independence Rule 3526, and has discussed with our independent registered public accounting firm its independence from the Company and its management. Based on its review and discussions, including discussions without management or members of the independent registered public accounting firm present, our audit committee recommended to our board of directors, and our board of directors has approved, that the audited financial statements be included in our Annual Report on Form 20-F for the year ended December 31, 2023.
The following table shows total fees for services rendered to the Group by its independent registered public accounting firms for the years ended December 31.
| Year Ended December 31 | ||||||||||||
| $ | 2023 | 2022 | 2021 | |||||||||
| Audit Fees | 361,711 | 507,800 | 701,518 | |||||||||
| Audit-Related Fees | - | - | - | |||||||||
| Tax Fees | - | - | - | |||||||||
| All Other Fees | - | - | - | |||||||||
| Total | 361,711 | 507,800 | 701,518 | |||||||||
Pre-approval Policy
To safeguard the continued independence of the Company’s independent registered public accounting firm, our audit committee has established a policy which requires all audit and non-audit services, subject to a de minimis exception pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X, to be performed by the Company’s independent registered public accounting firm, to be pre-approved by the audit committee prior to such services being performed. The policy also prohibits the Company’s independent registered public accounting firm from providing any services which would impair the accounting firm’s independence. The audit committee does not delegate to management its responsibilities to pre-approve services.
All audit services performed by the Company’s independent registered public accounting firm during the year ended December 31, 2023 were approved by our board of directors following recommendation of such approval by the audit committee.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
During the period when the Company did not have a Board of Directors or Audit Committee and its primary subsidiary was under the sole directorship arising from the appointment of a joint official liquidator by the Cayman court for BPGIC Holdings, that sole director on April 4, 2024 appointed an audit firm, Pipara & Co. LLP (“Pipara”) to audit the Company’s consolidated accounts for the year ended December 31, 2023. The audit firm that completed the Company’s 2022 audit, Affiniax A A Syed Auditors (formerly known as Affiniax A A S Auditors) (“Affiniax”), had notified the Company that it was unable to continue to audit the Company’s consolidated accounts as Affiniax was in the process of resigning its PCAOB registration. The reports of Affiniax with respect to the audit of the Company’s financial statements for the years ended December 31, 2021 and 2022, did not contain an adverse opinion or a disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principles. During the two-year period in which Affiniax audited the Company’s consolidated accounts there were no disagreements with Affiniax on any unresolved matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, nor any “reportable events” as set forth in Item 16F(a)(v) of Form 20-F.
The newly constituted Audit Committee has recently determined after management’s discussions with Pipara that given the accelerated timeline to complete the audit and file the Company’s overdue Form 20-F, Pipara would be unable to meet such timeline. Pipara has not yet completed any substantive work due to limited data sharing from the previous Board and has not previously issued any audit report on the Company’s financial statements. On September 30, 2024, the Company sent a letter to Pipara terminating their engagement as the Company’s independent accountant. During the period in which Pipara was appointed as the Company’s independent accountant, there were no disagreements with Pipara on any unresolved matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, nor any “reportable events” as set forth in Item 16F(a)(v) of Form 20-F.
After evaluating several PCAOB accredited firms, the newly formed Audit Committee and the newly constituted Board of Directors resolved on September 20, 2024 to appoint Bansal & Co LLP (“Bansal”) as the external auditor responsible for the audit of the Company’s consolidated accounts for the fiscal year 2023, and Bansal was formally appointed on September 20, 2024 as the Company’s independent accountant. Bansal, established in 1973, brings five decades of global experience and operates in 120 countries through its affiliation with Praxity Global. Their expertise in Nasdaq and SEC filings, coupled with their knowledge in PCAOB audits and the oil and gas sector, makes them well-suited to handle the Company’s audit requirements.
We have provided Affiniax and Pipara with a copy of this Item 16.F prior to its filing with the Securities and Exchange Commission. Affiniax has provided a letter to us, dated November 4, 2024 and addressed to the Securities and Exchange Commission, which is attached hereto as Exhibit 15.3. Pipara has provided a letter to us, dated November 4, 2024 and addressed to the Securities and Exchange Commission, which is attached hereto as Exhibit 15.4.
ITEM 16G. CORPORATE GOVERNANCE
As a foreign private issuer, the Company may generally follow home country practice with respect to certain matters of corporate governance in lieu of the comparable governance provisions of the NASDAQ Listing Rules, except for certain matters including the composition and responsibilities of the audit committee and the independence of its members within the meaning of the rules and regulations of the SEC.
The Company follows home country practice in lieu of NASDAQ corporate governance requirements with respect to the following NASDAQ requirements:
| ● | Executive Sessions. We are not required to and, in reliance on home country practice, we may not, comply with certain NASDAQ rules requiring the Company’s independent directors to meet in regularly scheduled executive sessions at which only independent directors are present. The Company follows Cayman Islands practice which does not require independent directors to meet regularly in executive sessions separate from the full board of directors. |
| ● | Nomination of Directors. The Company’s director nominees may not be selected or recommended for the board of director’s selection by either (i) independent directors constituting a majority of the board’s independent directors in a vote in which only independent directors participate, or (ii) a nominations committee comprised solely of independent directors, as required under NASDAQ rules. The Company follows Cayman Islands practice which does not require director nominations to be made or recommended solely by independent directors. Further, the Company does not have a formal written charter or board resolution addressing the director nominations process. The Company follows Cayman Islands practice which does not require the Company to have a formal written charter or board resolution addressing the director nominations process. |
| ● | Proxy Statements. We are not required to and, in reliance on home country practice, we may not, comply with certain NASDAQ rules regarding the provision of proxy statements for general meetings of shareholders. The Company will follow Cayman Islands practice which does not impose a regulatory regime for the solicitation of proxies. |
| ● | Shareholder Approval. The Company is not required to and, in reliance on home country practice, it does not intend to, comply with certain NASDAQ rules regarding shareholder approval for certain issuances of securities under NASDAQ Rule 5635. In accordance with the provisions of the Company’s Amended and Restated Memorandum and Articles of Association, the Company’s board of directors is authorized to issue securities, including Ordinary Shares, warrants and convertible notes. |
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE ABOUT FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable
.
ITEM 16J. INSIDER TRADING POLICIES
The Company has adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of the registrant’s securities by directors, senior management, and employees. They are designed to promote compliance with applicable insider trading laws, rules and regulations. The insider trading policy has been filed as Exhibit 11.2 hereto.
ITEM 16K. CYBERSECURITY
We prioritize cybersecurity risks with the same diligence as other critical business risks and conduct regular reviews to ensure they align with our strategic objectives. Our leadership team is actively engaged in the oversight and management of these risks, ensuring they are informed and prepared to respond to any incidents that may arise.
To strengthen our cybersecurity posture, we plan to engage independent experts to conduct comprehensive assessments of our systems through security testing and audits. These evaluations are instrumental in identifying vulnerabilities and ensuring compliance with industry standards. We actively incorporate the recommendations provided by these experts to enhance our cybersecurity measures continuously.
We rigorously assess the cybersecurity practices of all third-party service providers with whom we collaborate. Regular reviews and monitoring are conducted to ensure that these vendors adhere to established security standards. This proactive approach mitigates risks associated with third-party services, including cloud providers and outsourced operations.
To date, we have not experienced any significant cybersecurity incidents. However, we remain vigilant in monitoring emerging threats and have implemented a robust incident response plan designed to protect our operations and maintain customer trust in the event of an incident. Given the dynamic nature of cybersecurity risks, we continually adapt our strategies to safeguard against potential disruptions to our business operations and financial performance, in compliance with applicable regulatory requirements.
PART III
ITEM 17. FINANCIAL STATEMENTS
See Item 18.
ITEM 18. FINANCIAL STATEMENTS
The consolidated financial statements of the Company, together with the report of the independent registered public accounting firm are included as the “F” pages to this Report.
ITEM 19. EXHIBITS
EXHIBIT INDEX
| * | Certain information has been redacted from this exhibit pursuant to Item 4 of the Instructions as to Exhibits of Form 20-F because it is both not material and is the type that the registrant treats as private or confidential. The registrant hereby agrees to furnish an unredacted copy of the exhibit and its materiality and privacy or confidentiality analyses to the SEC upon request. |
| ** | To be filed by Amendment |
| † | Schedules to this exhibit have been omitted pursuant to the Instructions as to Exhibits of Form 20-F. The registrant hereby agrees to furnish a copy of any omitted schedules to the SEC upon request. |
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| BROOGE ENERGY LIMITED | |||
| 10 November, 2024 | By: | /s/ Siavosh Hossein | |
| Name: | Siavosh Hossein | ||
| Title: | Director | ||
Brooge Energy Limited
Consolidated Financial Statements
for the year ended December 31, 2023
Brooge Energy Limited
Index to the Consolidated Financial Statements
As at December 31, 2023
F-
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board
of Directors of
Brooge Energy Limited
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of financial position of Brooge Energy Limited (the “Company”) and its subsidiaries (the “Group”) as of December 31, 2023, the related consolidated statement of comprehensive income and, changes in equity and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the years ended, in conformity with International Financial Reporting Standards.
Basis for Opinion
These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S federal securities laws and the applicable rules and regulations of the U.S Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
F-
Emphasis of Matters
We draw attention on the following matters:
a) Refer Note 11 (a) to the consolidated financial statements in respect of recording of revenue of USD 14.89 million, the company has provided for USD 14.89 million with respect of the Trade Receivables against such revenue, as the management is not confident of recovery of such amount as explained in the same note. This is in view of significant uncertainty that exists with recovery of this amount.
b) As stated in Note 18 the group has reached a settlement with Securities and Exchange Commission (SEC) relating to alleged fraudulent accounting and offering conducted by group in earlier years. Accordingly, the Financial Statements for December 31, 2022 were restated by the group. SEC has imposed a civil money penalty of USD 5,000,000. The group has paid the settlement amount as stated in Note 28 on January 3, 2024.
c) As stated in Note No. 14, an amount of USD 15 million paid to a contractor for construction of the terminal (fixed asset) in earlier years has been written off in the books of account after assessment by the management and reconciliation with the books of account with such contractor.
d) We draw attention to Note 18 in the consolidated financial statements, which describes the court award issued in favor of BIA of USD 130 million. The Union Supreme Court of the UAE has issued a binding order mandating payment of this Award. As stated in the Note, after reviewing the litigation settlement documents, it is discussed that an opening balance of USD 74.253 million payable to BIA. As the result of the above order litigation settlement amounting to USD 55.746 have been recorded as litigation settlement in the statement of comprehensive income.
e) The current liabilities of the group exceed current assets by USD 320.389 million. Further the bonds amounting to USD 160 Million are repayable in a period less than 1 year from the date of issuance of our report. Further, there is substantial litigation going on in the US court in respect of a Class Action Suit against the company.
The management is of the view as stated in Note 2 of the Notes to the Basis of Preparation of Consolidated Financial Statement that sufficient mitigation plan exists as detailed in the note stated above.
Our Audit report is not modified in respect of above matters.
F-
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
a. Contingencies for investigations, lawsuits, and other legal proceedings
| Critical audit matter description | As discussed in Note-22 to the consolidated financial statements, there is an ongoing class action suit against the group for various financial irregularities observed. |
| How we addressed the matter in our audit | We enquired with management and Audit Committee of the Board of Directors of the Company about the facts of the case. We checked the amount mentioned in contingent liability is correctly disclosed. |
Bansal & Co LLP
We have served as the Group’s auditor from the current year.
New Delhi, India
Date- November 10th 2024
F-
Brooge Energy Limited
Consolidated Statement of Comprehensive Income
For the year ended December 31, 2023
(Figures in USD)
| Note | 2023 | 2022 | ||||||||
| Revenue | 6 | 105,695,648 | 81,540,776 | |||||||
| Direct costs | 7 | (23,755,056 | ) | (24,691,442 | ) | |||||
| Gross profit | 81,940,592 | 56,849,334 | ||||||||
| Other income | 189,857 | 180,345 | ||||||||
| Change in estimated fair value of derivative warrant liability | 19 | 3,931,592 | 7,430,035 | |||||||
| General and administration expenses | 8 | (54,075,686 | ) | (15,652,819 | ) | |||||
| Finance costs | 9 | (20,915,219 | ) | (25,417,989 | ) | |||||
| Litigation settlement | 18 | (55,746,035 | ) | Nil | ||||||
| Changes in fair value of derivative financial instruments | 13 | (3,653,296 | ) | 3,840,379 | ||||||
| (Loss) / profit for the year | (48,328,195 | ) | 27,229,285 | |||||||
| Other comprehensive income | Nil | Nil | ||||||||
| Total comprehensive (loss) / income for the year | (48,328,195 | ) | 27,229,285 | |||||||
| Basic and diluted (loss) / earnings per share | 23 | (0.55 | ) | 0.31 | ||||||
| Adjusted EBITDA | 24 | 79,693,228 | 53,861,371 | |||||||
The accompanying notes form an integral part of these consolidated financial statements.
F-
Brooge Energy Limited
Consolidated Statement of Financial Position
As at December 31, 2023
(Figures in USD)
| Note | 2023 | 2022 | ||||||||
| ASSETS | ||||||||||
| Current Assets | ||||||||||
| Cash and cash equivalents | 10 | 7,718,655 | 762,929 | |||||||
| Restricted bank balance | 10 | 12,195,847 | 7,497,052 | |||||||
| Trade accounts receivable | 11 | 41,592 | 5,275,047 | |||||||
| Inventories | 412,743 | 315,576 | ||||||||
| Other receivable and prepayments | 1,847,968 | 724,093 | ||||||||
| Total Current Assets | 22,216,805 | 14,574,697 | ||||||||
| Non-Current Assets | ||||||||||
| Restricted bank balance | 10 | 8,500,000 | 8,500,000 | |||||||
| Property, plant and equipment | 12 | 449,453,242 | 426,040,639 | |||||||
| Derivative financial instrument | 13 | 5,610,000 | 9,263,296 | |||||||
| Advances to contractor | 14 | 204,000 | 15,223,215 | |||||||
| Total Non-Current Assets | 463,767,242 | 459,027,150 | ||||||||
| Total Assets | 485,984,047 | 473,601,847 | ||||||||
| LIABILITIES AND EQUITY | ||||||||||
| Current Liabilities | ||||||||||
| Borrowings | 15 | 160,496,134 | 171,696,134 | |||||||
| Trade and accounts payables | 16 | 40,253,609 | 17,242,748 | |||||||
| Lease liabilities | 17 | 9,003,395 | 6,316,342 | |||||||
| Derivative warrant liability | 19 | 314,188 | 4,245,780 | |||||||
| Contract liabilities | 11 | 2,539,404 | 6,222,055 | |||||||
| Other payable | 18 | 130,000,000 | 74,253,965 | |||||||
| Total Current Liabilities | 342,606,730 | 279,977,024 | ||||||||
| Non-Current Liabilities | ||||||||||
| Borrowings | 15 | 1,386,469 | 1,782,603 | |||||||
| Lease liabilities | 17 | 82,987,919 | 84,557,069 | |||||||
| Employees' end of service benefits | 112,133 | 134,200 | ||||||||
| Asset retirement obligation | 2,124,299 | 2,056,259 | ||||||||
| Total Non-Current Liabilities | 86,610,820 | 88,530,131 | ||||||||
| Equity | ||||||||||
| Share capital | 20 | 8,804 | 8,804 | |||||||
| Share premium | 20 | 101,777,058 | 101,777,058 | |||||||
| Statutory reserve | 20 | 680,643 | 680,643 | |||||||
| (Accumulated losses) / Retained earnings | (116,091,795 | ) | (67,763,600 | ) | ||||||
| Shareholder's account | 21 | 70,391,787 | 70,391,787 | |||||||
| Total Equity Attributable to the Shareholders | 56,766,497 | 105,094,692 | ||||||||
| Total Liabilities and Equity | 485,984,047 | 473,601,847 | ||||||||
The accompanying notes form an integral part of these consolidated financial statements.
F-
Brooge Energy Limited
Consolidated Statement of Changes in Equity
For the year ended December 31, 2023
(Figures in USD)
| Share Capital |
Share premium |
Statutory Reserve |
(Accumulated losses) / Retained earnings |
Shareholder's Account |
Total | |||||||||||||||||||
| As at January 1, 2022 | 8,804 | 101,777,058 | 680,643 | (94,992,885 | ) | 71,017,816 | 78,491,436 | |||||||||||||||||
| Profit for the year | Nil | Nil | Nil | 27,229,285 | Nil | 27,229,285 | ||||||||||||||||||
| Movements during the year | Nil | Nil | Nil | Nil | (626,029 | ) | (626,029 | ) | ||||||||||||||||
| As at December 31, 2022 | 8,804 | 101,777,058 | 680,643 | (67,763,600 | ) | 70,391,787 | 105,094,692 | |||||||||||||||||
| Loss for the year | Nil | Nil | Nil | (48,328,195 | ) | Nil | (48,328,195 | ) | ||||||||||||||||
| As at December 31, 2023 | 8,804 | 101,777,058 | 680,643 | (116,091,795 | ) | 70,391,787 | 56,766,497 | |||||||||||||||||
The accompanying notes form an integral part of these consolidated financial statements.
F-
Brooge Energy Limited
Consolidated Statement of Cash Flows
For the year ended December 31, 2023
(Figures in USD)
| Note | 2023 | 2022 | ||||||||
| Cash Flows from Operating Activities | ||||||||||
| (Loss) / profit for the year | (48,328,195 | ) | 27,229,285 | |||||||
| Adjustments for: | ||||||||||
| Depreciation of property, plant and equipment | 7 | 12,656,056 | 12,615,658 | |||||||
| Interest on borrowings | 9 | 17,606,995 | 22,177,769 | |||||||
| Interest on lease liabilities | 9 | 3,086,680 | 3,043,214 | |||||||
| Provision for employees’ end of services benefits | 245,882 | 256,890 | ||||||||
| Changes in fair value of derivative financial instruments | 13 | 3,653,296 | (3,840,379 | ) | ||||||
| Asset retirement obligation – accretion expense | 9 | 68,040 | 65,859 | |||||||
| Litigation settlement | 18 | 55,746,035 | Nil | |||||||
| Expected credit losses of trade accounts receivables | 8 | 18,202,132 | Nil | |||||||
| Write-off of advances to contractor | 8, 14 | 15,006,262 | Nil | |||||||
| SEC settlement charges | 8 | 5,000,000 | Nil | |||||||
| Change in estimated fair value of derivative warrant liability | 19 | (3,931,592 | ) | (7,430,035 | ) | |||||
| Write-off of trade accounts receivables | 8 | 927,519 | Nil | |||||||
| Changes in operating assets and liabilities | ||||||||||
| Increase in trade accounts receivables, other receivable and prepayments | (15,020,071 | ) | (1,095,780 | ) | ||||||
| Increase in inventories | (97,167 | ) | (65,216 | ) | ||||||
| (Decrease) / increase in trade and accounts payables | (2,302,002 | ) | 1,471,211 | |||||||
| (Decrease) / increase in contract liabilities | (3,682,651 | ) | 3,804,099 | |||||||
| Payment of employees’ end of services benefits | (267,949 | ) | (183,314 | ) | ||||||
| Net cash flows from operating activities | 58,569,270 | 58,049,261 | ||||||||
| Cash Flows from Investing Activities | ||||||||||
| Amount deposited in restricted bank account | (4,698,795 | ) | (1,568,377 | ) | ||||||
| Purchase of property, plant and equipment | (13,278,355 | ) | (19,193,314 | ) | ||||||
| Net cash flows used in investing activities | (17,977,150 | ) | (20,761,691 | ) | ||||||
| Cash Flows from Financing Activities | ||||||||||
| Proceeds from borrowings | Nil | 3,105,092 | ||||||||
| Repayment of borrowings | (14,396,134 | ) | (14,926,355 | ) | ||||||
| Interest paid on borrowings | (15,102,898 | ) | (16,223,888 | ) | ||||||
| Payment of lease liabilities | 17 | (4,137,362 | ) | (9,305,777 | ) | |||||
| Movement in shareholder's account | 21 | Nil | (626,029 | ) | ||||||
| Net cash flows used in financing activities | (33,636,394 | ) | (37,976,957 | ) | ||||||
| Net change in cash and cash equivalents | 6,955,726 | (689,387 | ) | |||||||
| Cash and cash equivalents at January 1 | 762,929 | 1,452,316 | ||||||||
| Cash and cash equivalents at December 31 | 7,718,655 | 762,929 | ||||||||
The accompanying notes form an integral part of these consolidated financial statements.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 1 | Legal Status, Management and Business Activity |
The consolidated financial statements comprise of the financial statements of Brooge Energy Limited (“Company”) and its subsidiaries on a line-by-line basis. The Company and its subsidiaries are collectively referred to as the “Group”.
The details of the Group are as follows:
a. Brooge Energy Limited (“Company”)
The Company, is a Company with limited liability registered as an exempted company in the Cayman Islands.
The registered office of the Company is at P.O Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The Company’s principal executive office is located at P.O Box 50170, Al-Sodah, Khorr Fakkan Road, Fujairah, United Arab Emirates (“UAE”).
The Company changed its name from Brooge Holdings Limited to Brooge Energy Limited on April 7, 2020.
The subsidiaries of the Company are as follows:
i. Brooge Petroleum and Gas Investment Company FZE (“BPGIC FZE”)
BPGIC FZE is a Free Zone Establishment formed and registered in the Fujairah Free Zone Authority under registration number 13-FZE-1117.
BPGIC FZE is a 100% subsidiary of the Company.
BPGIC FZE had a one subsidiary Brooge Petroleum and Gas Management Company Limited (“BPGMC Limited”). BPGMC Limited was a company with limited liability registered in Dubai International Financial Centre (DIFC) with commercial license number CL3852.
As of December 21, 2022, BPGMC Limited had been officially dissolved (voluntary winding up) and ceased to exist as a DIFC entity.
ii. Brooge Petroleum and Gas Investment Company Phase III FZE (“BPGIC Phase III FZE”)
BPGIC Phase III FZE is a Free Zone Establishment formed and registered in the Fujairah Free Zone Authority under registration number 20-FZE-1972.
BPGIC Phase III FZE is a 100% subsidiary of the Company.
BPGIC Phase III FZE has a one subsidiary BPGIC Phase 3 Limited (“BPGIC Phase III Ltd”). BPGIC Phase 3 Limited is a Free Zone Company with limited liability formed in accordance with the provisions of Jebel Ali Free Zone Authority Offshore Companies Regulations 2018. The registration number of BPGIC Phase 3 Limited is 226933.
iii. BPGIC International
BPGIC International formerly known as Twelve Seas, is a company with limited liability registered as an exempted company in the Cayman Islands.
BPGIC International is a 100% subsidiary of the Company.
iv. Brooge Renewable Energy Limited
Brooge Renewable Energy Limited is a company with limited liability registered as an exempted company in the Cayman Islands and registered on July 1, 2021. The registered office of the Company is at P.O Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
Brooge Renewable Energy Limited is a 100% subsidiary of the Company.
The service provided by the Group is oil storage and related services at the Port of Fujairah in the Emirate of Fujairah, UAE. The Group currently operates phase I and phase II, comprising 22 tanks with a total capacity of 1,001,388 cubic meters (“cbm”), fully operational for provision of storage and other ancillary processes of crude and clean oil. The Group has commenced early preparation work for its phase III project where it intends to construct additional storage and refinery facilities.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 1 | Legal Status, Management and Business Activity (Continued) |
The Company was incorporated on April 12, 2019, for the sole purpose of consummating the business combination described further below.
On April 15, 2019, BPGIC FZE entered into a business combination agreement with Twelve Seas Investment Company (“Twelve Seas”), a company listed on National Association of Securities Dealers Automated Quotations (“NASDAQ”), the Company and BPGIC FZE’s shareholders. On May 10, 2019, BPGIC PLC became party to the business combination agreement by execution of a joinder thereto.
The business combination was accounted for as a reverse acquisition in accordance with the International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”).
Under this method of accounting, Brooge Energy and Twelve Seas are treated as the “acquired” company. This determination was primarily based on BPGIC FZE comprising the ongoing operations of the combined company, BPGIC FZE’s senior management comprising the senior management of the combined company, and BPGIC FZE’s stockholders having a majority of the voting power of the combined company. For accounting purposes, BPGIC FZE is deemed to be the accounting acquirer in the transaction and, consequently, the transaction is treated as a recapitalization of BPGIC FZE. Accordingly, the consolidated assets, liabilities and results of operations of BPGIC FZE are the historical financial statements of the combined company, and Brooge Energy and Twelve Sea’s assets, liabilities and results of operations are consolidated with BPGIC FZE beginning on the acquisition date.
As a result of the above transaction, the Company became the ultimate parent of BPGIC FZE and Twelve Seas on December 20, 2019, being the acquisition date. The Company’s common stock and warrants are traded on the NASDAQ Capital Market under the ticker symbols BROG and BROGW, respectively. Upon the closing of business combination, Twelve Seas changed its name to “BPGIC International”.
The consolidated financial statements are prepared as a continuation of the financial statements of BPGIC FZE, the acquirer, and retroactively adjusted to reflect the legal capital of the legal parent/acquiree (Brooge Energy Limited).
The Company’s majority shareholder is BPGIC Holdings Limited (“Shareholder”). The ultimate controlling party of the Company is a group of individuals consisting of Mr. Salman Al Ameri, His Highness Sheikh Mohammad Bin Khalifa Bin Zayed Al Nahyan, and Ms. Hind Mohammed Muktar Ahmed.
The audited consolidated financial statements were authorised for issue by the Board of Directors.
| 2 | Basis of Preparation of Consolidated Financial Statements |
These consolidated financial statements are prepared on a going concern basis and in compliance with International Financial Reporting Standards (IFRS) issued by International Accounting Standards Board (IASB).
The consolidated financial statements have been prepared under the historical cost basis.
These consolidated financial statements are presented in United States Dollars ("USD") which is the functional and presentation currency of the Group. All financial information presented in USD has been rounded to the whole number, unless otherwise stated.
The consolidated financial statements are prepared under the historical cost convention, except for re-measurement at fair value of derivative financial instruments.
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at December 31, 2023. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:
| ● | Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee) |
| ● | Exposure, or rights, to variable returns from its involvement with the investee |
| ● | The ability to use its power over the investee to affect its returns |
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 2 | Basis of Preparation of Consolidated Financial Statements (Continued) |
Basis of Consolidation (Continued)
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
| ● | The contractual arrangement(s) with the other vote holders of the investee |
| ● | Rights arising from other contractual arrangements |
| ● | The Group’s voting rights and potential voting rights |
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in consolidated statement of comprehensive income. Any investment retained is recognised at fair value.
Going Concern
During the year ended December 31, 2023, the Group incurred a loss of USD 48,328,195 but generated positive operating cash flows of USD 58,569,270. Furthermore, the Group is required to make a single bullet repayment of USD 144,000,000 in September 2025, as stipulated in the terms of the Bond (Note 15).
As of December 31, 2023, the Group was in breach of certain covenant requirements as per the Bond Terms and these breaches do not constitute payment defaults as the Group has always met the coupon and instalment payments as per the Bond Terms. Even though the lender did not declare an event of default under the bond agreement, these breaches constituted events of default and could have resulted in the lender requiring immediate repayment of the bonds. Accordingly, the Group has classified its debt balance of USD 160,100,000 as a current liability. Further, as of the year end the Group’s current liabilities exceeded its current assets by USD 320,389,925. All of the above represents uncertainty that casts doubt upon the Group’s ability to continue as a going concern, however if the Group is able to obtain a waiver for its noncompliance under the Bond Terms and a waiver for other payables in current liabilities the Group is expected to have a significant reduction in its current liabilities which would mitigate the doubt on the Group’s ability to continue as a going concern. The Group is actively collaborating with GulfNav and its advisors to finalize the definitive sale and purchase agreement. The consideration for the shares will consist of a mix of cash and shares, including mandatory convertible bonds that will convert into shares. The Group is confident that future cash inflows will be adequate to meet its bond repayment obligations.
These consolidated financial statements are prepared on a going concern basis and in compliance with IFRS issued by IASB. The validity of this assumption depends upon the continued financial support to the Group by its Shareholders. The consolidated financial statements do not include any adjustment that should result from a failure to obtain the financial support. The Management has no intention to discontinue the operations of the Group. The assets and liabilities are recorded on the basis that the Group will be able to realise its assets and discharge its liabilities in the normal course of business. This position does not impair the financial position of the Group.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 3 | Changes in Accounting Policies and Disclosures |
New and Amended Standards and Interpretations
The Group applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after January 1, 2023. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
| ● | IFRS 17 - Insurance Contracts; |
| ● | Amendments to IAS 8 - Definition of Accounting Estimates; |
| ● | Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies; |
| ● | Amendments to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction; |
| ● | Amendments to IAS 12 - International Tax Reform. |
The adoption of above standards and amendments did not have any significant impact on the consolidated financial statements of the Group.
New Standards and Interpretations Not Yet Effective
The Group intends to adopt the following standards, if applicable, which are effective on or after January 1, 2024:
| ● | Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback; |
| ● | Amendments to IAS 1 - Classification of Liabilities as Current or Non-current; |
| ● | Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements. |
The Group does not expect these new standards, interpretations and amendments to have any significant impact on the consolidated financial statements.
| 4 | Significant Accounting Judgements, Estimates and Assumptions |
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date.
However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
Useful Life and Depreciation of Property, Plant and Equipment
The Group's management determines the estimated useful lives of its property, plant and equipment for calculating depreciation. This estimate is determined after considering the expected usage of the asset or physical wear and tear and the impact of expected residual value. Management reviews the useful lives annually and the future depreciation charge would be adjusted where management believes that the useful lives differ from previous estimates. The depreciation period of the right-of-use asset has been determined to be over the lease term on the basis that the land is expected to be used for the whole period of the lease considering the existing assets and future expansion on the land.
Asset Retirement Obligation
As part of the land lease agreement between Fujairah Municipality (Fujairah Oil Industry Zone) and the Group, the Group has a legal obligation to remove the plant at the end of its lease term. The Group initially records a provision for asset retirement obligations at the best estimate of the present value of the expenditure required to settle the obligation at the time a legal (or constructive) obligation is incurred, if the liability can be reliably estimated. When the provision is initially recorded, the carrying amount of the related asset is increased by the amount of the liability. Provisions are adjusted at each balance sheet date to reflect the current best estimate. The unwinding of the discount is recognised as finance cost. The Group’s operating assets generally consist of storage tanks and related facilities. These assets can be used for an extended period of time as long as they are properly maintained and / or upgraded. It is the Group’s current intent to maintain its assets and continue making improvements to those assets based on technological advances.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 4 | Significant Accounting Judgements, Estimates and Assumptions (Continued) |
Asset Retirement Obligation (Continued)
The calculation of provision related to asset retirement obligation is most sensitive to following judgements and assumptions:
| ● | Discount rate of 3% based on inflation-adjusted long-term risk-free rate; and |
| ● | Inflation rate of 0.8% used to extrapolate cash flows. |
As of December 31, 2023, there was no significant construction in Phase III land, which may create material restoration obligation costs in future. Management believes the amount of provision related to site restoration provision was not material.
Recoverability of Long-Term Assets
The Group assesses assets or cash generating unit (“CGU”) for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs to sell and value in use. These assessments require the use of estimates and assumptions that are subject to risk and uncertainty. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset / CGU is considered to be impaired and is written down to its recoverable amount. In assessing recoverable amount the estimated future cash flows are adjusted for the risks specific to the asset group and are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less costs to sell is identified as the price that would be received to sell the asset in an orderly transaction between market participants and does not reflect the effects of factors that may be specific to the entity and not applicable to entities in general.
For the purpose of impairment testing assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Phase 1 & 2 assets are technologically connected with single processing plant and the Group considers them as one CGU.
No indications of impairment were identified.
Classification of Warrants
In connection with the completion of the business combination on December 20, 2019, as described in Note 1 and Note 19 the Group issued warrants. The warrants agreement requires the Group to issue a fixed number of shares for a fixed amount of cash, however it contains a clause that allows for cashless exercise (in the event that no effective registration is maintained), which may lead to the issuance of a variable number of shares. Management assessed that the maintenance of an effective registration statement is a matter not wholly within the control of the Group and as such classified the warrants as a financial liability at fair value through profit or loss.
| 5 | Summary of Material Accounting Policies |
Revenue Recognition
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those services or goods. Revenue is net of discounts, credit notes and value added taxes. Monthly storage rates and prices for other services are contractually agreed before the services are rendered and do not contain material variable components. When it is probable that the future economic benefits will flow to the Group, the recognition in the statement of income is in proportion to the stage of the rendered performance as at the end of the reporting period. The Group has a right to a consideration from a customer in an amount that corresponds directly with the value to the customer of the entity's services completed to date.
Tank storage rentals, including minimum guaranteed throughputs, are recognized on a straight-line basis over the contractual period during which the services are rendered. Revenues from excess throughputs, heating / cooling, homogenization, product movements and other services are recognized when these services are rendered. Customers simultaneously consume and benefit from the services at the moment that these are rendered, resulting in a situation where revenue is recognized over time. The Group is acting as a principle in its contracts.
Storage fees are invoiced upfront in the month preceding the month to which the storage fees relate. Handling and other services are invoiced afterwards, based on the actual usage.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 5 | Summary of Material Accounting Policies (Continued) |
Contract Liabilities
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).
The Group changed the presentation of its consolidated statement of financial position as at December 31, 2023 by renaming Advances from customer to Contract liabilities. Also, the Group presented ‘restricted bank balance’ and ‘contract liabilities’ separately in the consolidated statement of financial position. These reclassifications did not have any impact on the consolidated financial statements of the Group. The management believes that such presentation is more transparent as they reflect the nature of such amounts.
Expenses
Expenses are recognised as incurred and reported in the consolidated statement of comprehensive income in the period to which they relate on an accrual basis.
Current and Non-Current Classification
The Group presents assets and liabilities in the consolidated statement of financial position based on current / non-current classification.
An asset is current when it is:
| ● | Expected to be realized or intended to be sold or consumed in the normal operating cycle |
| ● | Held primarily for the purpose of trading |
| ● | Expected to be realised within twelve months after the reporting period |
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
| ● | It is expected to be settled in the normal operating cycle |
| ● | It is held primarily for the purpose of trading |
| ● | It is due to be settled within twelve months after the reporting period |
| ● | There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period |
The Group classifies all other liabilities as non-current.
Property, Plant and Equipment
Property, plant and equipment, is stated at historical costs less accumulated depreciation and any accumulated impairment losses. Historical costs includes expenditure that is directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the Management.
The cost of replacing or addition to an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of day-to-day servicing of property, plant and equipment are recognised in the profit or loss as incurred. Capital work under progress is stated at cost and subsequently transferred to assets when it is available for use.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 5 | Summary of Material Accounting Policies (Continued) |
Property, Plant and Equipment (Continued)
Depreciation is charged to write off the cost of assets using the straight-line method as follows:
| Groups | Years | |||
| Buildings | 25 | |||
| Tanks | 50 | |||
| Installations | 20-25 | |||
| Other Equipment | 5 | |||
| Right of use asset - Land | 60 | |||
The useful lives and depreciation method are reviewed periodically to ensure that the year and method of depreciation are consistent with the pattern of economic benefits expected to flow to the Group through the use of items of property, plant and equipment.
The carrying amounts are reviewed at each reporting date to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount, being the higher of their fair value less costs to sell and their value in use.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised as profit or loss in the consolidated statement of comprehensive income.
Capital Work in Progress
Capital work in progress is stated at cost, which represents costs for the design, development, procurement, construction and commissioning of the asset under development. Cost includes borrowing cost capitalised and depreciation of the right of use asset during the construction phase. When the asset is in the location and condition necessary to operate in the manner intended by management, capital work in progress is transferred to the appropriate property, plant and equipment category and depreciated in accordance with the Group’s policies.
Impairment of Non-Financial Assets
The Group assesses at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 5 | Summary of Material Accounting Policies (Continued) |
Inventories
Inventories are valued at the lower of cost, determined on the basis of weighted average cost, and net realizable value. Costs are those expenses incurred in bringing each item to its present location and condition. Net realisable value is valued at selling prices net of selling costs.
Inventories comprise of spare parts and consumables.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs include interest and other costs that the Group incurs in connection with the borrowing of funds.
Leases
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
For a contract that is, or contains, a lease, the Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract.
The Group determines the lease term as the non-cancellable period of a lease, together with both:
a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and
b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.
In assessing whether a lessee is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, the Group considers all relevant facts and circumstances that create an economic incentive for the lessee to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Group revises the lease term if there is a change in the non-cancellable period of a lease.
Company as a lessor
Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Company as a lessee
For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.
The relative stand-alone price of lease and non-lease components is determined on the basis of the price the lessor, or a similar supplier, would charge an entity for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Group estimates the stand-alone price, maximising the use of observable information.
For determination of the lease term, the Group reassesses whether it is reasonably certain to exercise an extension option, or not to exercise a termination option, upon the occurrence of either a significant event or a significant change in circumstances that:
a) is within the control of the Group; and
b) affects whether the Group is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term.
At the commencement date, the Group recognises a right-of-use asset classified within property, plant and equipment and a lease liability classified separately on the consolidated statement of financial position.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 5 | Summary of Material Accounting Policies (Continued) |
Leases (Continued)
Short-term leases and leases of low-value assets
The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease of 12 months or less and leases of low-value assets when new. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Right-of-use assets
The right-of-use asset is initially recognised at cost comprising of:
a) the amount of the initial measurement of the lease liability;
b) any lease payments made at or before the commencement date, less any lease incentives received;
c) any initial direct costs incurred by the Group; and
d) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. These costs are recognised as part of the cost of the right-of-use asset when the Group incurs an obligation for these costs. The obligation for these costs is incurred either at the commencement date or as a consequence of having used the underlying asset during a particular period.
After initial recognition, the Group amortises the right-of-use asset over the term of the lease. In addition the right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
Lease liability
The lease liability is initially recognised at the present value of the lease payments that are not paid at the commencement date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate.
After initial recognition, the lease liability is measured by (a) increasing the carrying amount to reflect interest on the lease liability; (b) reducing the carrying amount to reflect the lease payments made; and (c) remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.
Where, (a) there is a change in the lease term as a result of the reassessment of certainty to exercise an option, or not to exercise a termination option as discussed above; or (b) there is a change in the assessment of an option to purchase the underlying asset, assessed considering the events and circumstances in the context of a purchase option, the Group remeasures the lease liabilities to reflect changes to lease payments by discounting the revised lease payments using a revised discount rate. The Group determines the revised discount rate as the interest rate implicit in the lease for the remainder of the lease term, if that rate can be readily determined, or its incremental borrowing rate at the date of reassessment, if the interest rate implicit in the lease cannot be readily determined.
Where, (a) there is a change in the amounts expected to be payable under a residual value guarantee; or (b) there is a change in future lease payments resulting from a change in an index or a rate used to determine those payments, including a change to reflect changes in market rental rates following a market rent review, the Group remeasures the lease liabilities by discounting the revised lease payments using an unchanged discount rate, unless the change in lease payments results from a change in floating interest rates. In such case, the Group uses a revised discount rate that reflects changes in the interest rate.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 5 | Summary of Material Accounting Policies (Continued) |
Leases (Continued)
The Group accounts for a lease modification as a separate lease if both:
a) the modification increases the scope of the lease by adding the right to use one or more underlying assets and
b) the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.
Financial Instruments
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Financial Assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Financial assets of the Group include cash, cash equivalents, restricted bank balance, trade accounts receivable and other receivable.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
| ● | Financial assets measured at amortised cost; |
| ● | Financial assets at fair value through OCI with recycling of cumulative gains and losses; |
| ● | Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition; |
| ● | Financial assets at fair value through profit or loss. |
Financial assets measured at amortised cost
Financial assets are carried at amortised cost if both of the following conditions are met:
| ● | The asset is held within a business model with the objective to hold assets in order to collect contractual cash flows; and |
| ● | The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding |
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 5 | Summary of Material Accounting Policies (Continued) |
Financial Assets (Continued)
Derecognition
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised from the consolidated statement of financial position where:
| ● | The rights to receive cash flows from the asset have expired; |
| ● | The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. |
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original current amount of the asset and the maximum amount of consideration that the Group could be required to repay.
Impairment of financial assets
The Group recognises an allowance for expected credit loss (ECL) for all financial assets not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive. The shortfall is then discounted at an approximation to the asset’s original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
For trade and other receivables, the Group has applied the standard’s simplified approach and has calculated ECLs based on lifetime expected credit losses. The Group calculates the ECL based on the Group’s historical credit loss experience, adjusted for forward-looking factors specific to the customer and the economic environment.
Write-off of financial assets
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 5 | Summary of Material Accounting Policies (Continued) |
Financial Liabilities (Continued)
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified in two categories:
| ● | Financial liabilities at fair value through profit or loss; |
| ● | Financial liabilities measured at amortised cost. |
The Group has no financial liabilities at fair value through profit or loss.
Trade and accounts payables
Liabilities for trade and accounts payables are recognised at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group.
Borrowings
All borrowings are initially recognized at the fair values less directly attributable transaction costs. After initial recognition, borrowings are subsequently measured at amortized cost using the effective interest method. Gains and losses are recognized in the consolidated statement of comprehensive income when liabilities are derecognized.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the consolidated statement of comprehensive income or loss.
Derivative Financial Instruments
The Group uses derivative financial instruments, interest rate swaps, to hedge its interest risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to the consolidated statement of comprehensive income (within profit and loss) as the Group has not designated derivative financial instruments under hedging arrangements.
Cash and Cash Equivalents
Cash and cash equivalents comprise of cash on hand, balances in bank accounts and short term highly liquid deposits with a maturity date of three months or less that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset, and the net amount presented in the consolidated statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group comprising of share capital and shareholders’ accounts are recorded at the proceeds received, net of direct issue costs.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 5 | Summary of Material Accounting Policies (Continued) |
Statutory Reserve
As required by the Articles of Association of the BPGIC FZE, 10% of the profit for the year must be transferred to the Statutory reserve. The statutory reserve is not available for distribution to the shareholders. The Group has discontinued the annual transfers of 10% of the net profits of the Group as the reserve totals 50% of its paid up share capital.
Fair Values of Financial Instruments
The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.
The fair value of financial instruments not traded on an active market is determined by using appropriate valuation techniques. Such techniques may include the use of recent commercial transactions in the market; reference to the current fair value of another instrument, which is practically the same; analysis of discounted cash flows or other valuation techniques.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
| ● | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; |
| ● | Level 2 inputs, other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and |
| ● | Level 3 inputs are unobservable inputs for the asset or liability. |
Taxes
Value Added Tax:
Expenses and assets are recognized net of the amount of input tax, except:
| ● | When the input tax is incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the input tax is recognized as part of the cost of acquisition of the asset or as part of the expense item, as applicable; |
| ● | The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the consolidated statement of financial position, as applicable. |
Input VAT and Output VAT
Input VAT is recognized when the goods or services are supplied to the Group and the tax on which is paid / due to be paid by the Group to the Supplier.
Output VAT is recognized in respect of taxable supply of goods / services rendered by the Group on which tax is charged and due to be paid to the UAE Federal Tax Authority.
Corporate Tax in the UAE
On December 9, 2022, the UAE Ministry of Finance published the full text of the law Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. This means businesses will be subject to UAE Corporate Tax from the beginning of their first financial year that starts on or after June 1, 2023. Per the Cabinet of Ministers Decision No. 116 published on January 16, 2023, a standard rate of 9% will apply to taxable income exceeding a threshold of AED 375,000, and a rate of 0% will apply to taxable income not exceeding that threshold.
As the Group’s accounting year ends on December 31, accordingly the effective implementation date for the Group will start from January 1, 2024, to December 31, 2024, with the first return to be filed on or before September 30, 2025. The Group is currently assessing the impact of this tax.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 6 | Revenue |
| 2023 | 2022 | |||||||
| Storage rental income | 102,045,523 | 77,577,633 | ||||||
| Reimbursable port charges (Note 7) | 2,027,106 | 2,039,396 | ||||||
| Ancillary services | 1,623,019 | 1,923,747 | ||||||
| 105,695,648 | 81,540,776 | |||||||
The revenues of the Group mainly comprise of fixed fees for storage and related services and variable fees for ancillary services provided under a contract with its customers. Accordingly, there is no cyclicality in the Group's operations.
The commercial contracts with customers have been assigned as security against the borrowings obtained in 2020.
Reimbursable port charges of USD 2,027,106 (2022: USD 2,039,396) are paid by the Group to the port authority and recharged to the customers.
| 7 | Direct Costs |
| 2023 | 2022 | |||||||
| Depreciation on property, plant and equipment | 12,656,056 | 12,615,658 | ||||||
| Employees' costs | 4,528,323 | 4,232,980 | ||||||
| Reimbursable port charges (Note 6) | 2,027,106 | 2,039,396 | ||||||
| Maintenance charges | 1,635,693 | 2,741,780 | ||||||
| Spare parts and consumables used | 1,140,063 | 1,460,979 | ||||||
| Insurance charges | 1,050,188 | 955,977 | ||||||
| Others | 717,627 | 644,672 | ||||||
| 23,755,056 | 24,691,442 | |||||||
| 8 | General and Administration Expenses |
| 2023 | 2022 | |||||||
| Expected credit loss on trade accounts receivables (Note 11) | 18,202,132 | Nil | ||||||
| Write-off of advances to contractor (Note 14) | 15,006,262 | Nil | ||||||
| Legal and professional | 6,795,869 | 7,383,335 | ||||||
| SEC settlement charges (Note 16) | 5,000,000 | Nil | ||||||
| Sales and marketing | 3,855,029 | 3,026,399 | ||||||
| Employees' cost | 2,741,321 | 3,292,361 | ||||||
| Write-off of trade accounts receivables (Note 11) | 927,519 | Nil | ||||||
| Insurance | 895,157 | 949,784 | ||||||
| Board fees and expenses | 392,448 | 356,493 | ||||||
| Office expenses | 203,098 | 409,544 | ||||||
| Rent | 2,836 | 166,894 | ||||||
| Others | 54,015 | 68,009 | ||||||
| 54,075,686 | 15,652,819 | |||||||
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 9 | Finance Costs |
| 2023 | 2022 | |||||||
| Interest on borrowings | 17,606,995 | 22,177,769 | ||||||
| Interest on lease liabilities | 3,086,680 | 3,043,214 | ||||||
| Bank charges | 133,220 | 119,347 | ||||||
| Asset retirement obligation - accretion expenses | 68,040 | 65,859 | ||||||
| Exchange loss | 20,284 | 11,800 | ||||||
| 20,915,219 | 25,417,989 | |||||||
| 10 | Restricted Bank Balance, Cash and Cash Equivalents |
| 2023 | 2022 | |||||||
| Cash in hand | 15,065 | 18,839 | ||||||
| Balances in current accounts | 28,399,437 | 16,741,142 | ||||||
| 28,414,502 | 16,759,981 | |||||||
| The above consist of the following: | ||||||||
| Non-current | ||||||||
| Restricted bank balance (Note 15) | 8,500,000 | 8,500,000 | ||||||
| 8,500,000 | 8,500,000 | |||||||
| Current | ||||||||
| Cash and cash equivalents | 7,718,655 | 940,925 | ||||||
| Restricted bank balance | 12,195,847 | 7,319,056 | ||||||
| 19,914,502 | 8,259,981 | |||||||
As of December 31, 2023, restricted bank balances include USD 8,500,000 (2022: USD 8,500,000) held in the Liquidity account, USD 7,195,790 (2022: USD 7,319,056) held in the Debt Service Retention account, USD 5,000,057 (2022: nil) is held in the Escrow account. The amount in the Escrow account purposed to pay the SEC settlement charge (Note 18).
In December 2023, two former directors of the Group transferred USD 200,000 (USD 100,000 each) to the Escrow account from their personal account to pay the SEC settlement charge. These balances are not available for use by the Group and was not recognized as asset.
A first priority pledge over the balances in the Earnings account, Liquidity account, and Debt Service Retention account is held as security under the Bond Terms.
Significant non-cash transactions
The Group recorded trade and accounts payables of USD 21,416,246 due to property, plant and equipment suppliers as at December 31, 2023 for additions of capital work in progress during the year.
| 11 | Trade Accounts Receivables and Contract Liabilities |
| 2023 | 2022 | |||||||
| Trade accounts receivables | 19,171,243 | 5,275,047 | ||||||
| Less: Expected credit losses | (18,202,132 | ) | Nil | |||||
| Less: Write-off | (927,519 | ) | Nil | |||||
| 41,592 | 5,275,047 | |||||||
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 11 | Trade Accounts Receivables and Contract Liabilities (Continued) |
The age analysis of trade accounts receivables as at the end of the reporting period was as follows:
| Gross carrying amount | Expected credit loss | Expected credit loss rate | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Current | 3,566,177 | 623,068 | (3,524,585 | ) | Nil | 99 | % | Nil | ||||||||||||||||
| More than 30 days past due | 1,114,733 | 2,889 | (1,114,733 | ) | Nil | 100 | % | Nil | ||||||||||||||||
| More than 60 days past due | 2,228,819 | Nil | (2,228,819 | ) | Nil | 100 | % | Nil | ||||||||||||||||
| More than 120 days past due | 1,652,053 | 1,753 | (1,652,053 | ) | Nil | 100 | % | Nil | ||||||||||||||||
| More than 150 days past due | 9,681,942 | 4,647,337 | (9,681,942 | ) | Nil | 100 | % | Nil | ||||||||||||||||
| 18,243,724 | 5,275,047 | (18,202,132 | ) | Nil | ||||||||||||||||||||
| a) | ECL of USD 14,888,594 due from a single international customer, net of credit notes issued for tanks novated back by BPGIC FZE due to the default in payment within the same year. In order to ascertain an event of potential credit loss from this customer, the Management performed an assessment of any circumstances of which the Group are aware regarding this customer's inability to meet its financial obligations including: |
| ● | ongoing negotiations with the customer and the expected recoverability. and |
| ● | the failure of a debtor to engage in a repayment plan with the Group. |
| b) | ECL of USD 3,313,538 due from a UAE based customer against which the management has filed a court case and received verdict in its favor as per DIAC court verdict received in July 2024, however, since the receivable is still subject to enforcement activities and given no recovery is made until October 2024, ECL provision has been created on the same (Note 28). |
Based on the above-mentioned factors, the management provisioned an expected credit loss on trade accounts receivables amounting to USD 18,202,132 and expensed to the consolidated statement of comprehensive income (Note 8).
| c) | Also, during the year the management decided to write-off trade accounts receivables amounting USD 927,519 as there was no reasonable expectation of recovery (2022: nil). |
| d) | For explanation on the Group credit risk management process, refer Note 24. |
| e) | Trade receivables are non-interest bearing. |
Contract Liabilities
At December 31, 2023, the Group had a contract liabilities of USD 2,539,404 related to storage services (2022: USD 6,222,055). The decrease in 2023 was due to the expiration of some contracts, which were replaced by new contracts.
Revenue recognized during the year from the amount included in contract liabilities at the beginning of the period.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 12 | Property, Plant and Equipment |
| Buildings | Installations | Other Equipments |
Tanks | Capital Work in Progress |
Right of use Assets |
Total | ||||||||||||||||||||||
| Cost: | ||||||||||||||||||||||||||||
| As at January 1, 2023 | 30,813,692 | 179,367,406 | 1,223,689 | 154,532,494 | 17,209,735 | 84,989,427 | 468,136,443 | |||||||||||||||||||||
| Additions | Nil | 21,455 | 26,845 | 868,035 | 36,062,968 | Nil | 36,979,303 | |||||||||||||||||||||
| Reclassified during the year | Nil | Nil | 359,331 | (359,331 | ) | Nil | Nil | Nil | ||||||||||||||||||||
| Transfers from capital work in progress | 152,911 | 148,000 | Nil | Nil | (300,911 | ) | Nil | Nil | ||||||||||||||||||||
| As at December 31, 2023 | 30,966,603 | 179,536,861 | 1,609,865 | 155,041,198 | 52,971,792 | 84,989,427 | 505,115,746 | |||||||||||||||||||||
| Accumulated Depreciation: | ||||||||||||||||||||||||||||
| As at January 1, 2023 | 5,829,153 | 19,845,924 | 371,454 | 9,845,886 | Nil | 6,203,387 | 42,095,804 | |||||||||||||||||||||
| Reclassified during the year | Nil | Nil | 297,144 | (297,144 | ) | Nil | Nil | Nil | ||||||||||||||||||||
| Charge for the year | 1,238,129 | 7,598,278 | 226,183 | 3,105,239 | Nil | 1,398,871 | 13,566,700 | |||||||||||||||||||||
| As at December 31, 2023 | 7,067,282 | 27,444,202 | 894,781 | 12,653,981 | Nil | 7,602,258 | 55,662,504 | |||||||||||||||||||||
| Net Book Value: | ||||||||||||||||||||||||||||
| As at December 31, 2023 | 23,899,321 | 152,092,659 | 715,084 | 142,387,217 | 52,971,792 | 77,387,169 | 449,453,242 | |||||||||||||||||||||
| As at December 31, 2022 | 24,984,539 | 159,521,482 | 852,235 | 144,686,608 | 17,209,735 | 78,786,040 | 426,040,639 | |||||||||||||||||||||
Capital work in progress as of December 31, 2023, mostly relates to the Group's cost pertaining to the Early Preparation Works and Terminal Connectivity under development. The construction project is expected to be completed in 2027 (Phase I) and in 2028 (Phase II).
Land lease agreement and the moveable assets of the Group are pledged as security against borrowings obtained in 2020 (Note 15).
Total amount of borrowing costs capitalised during the year ended December 31, 2023, was USD 7,820,010 (December 31, 2022: USD 8,307,692). It includes an amount of USD 6,909,366 related to finance charge of lease liabilities and an amount of USD 910,644 related to depreciation charge on right-of-use asset capitalised. The rate used to determine the amount of borrowing costs eligible for capitalisation was 13%.
The depreciation charge for the year is allocated to the consolidated statement of comprehensive income (within profit and loss) and capital work in progress as follows:
| 2023 | 2022 | |||||||
| Direct costs (Note 7) | 12,656,056 | 12,615,658 | ||||||
| CWIP | 910,644 | 926,099 | ||||||
| 13,566,700 | 13,541,757 | |||||||
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 13 | Derivative Financial Instruments |
| 2023 | 2022 | |||||||
| Call option | 5,610,000 | 9,263,296 | ||||||
| 5,610,000 | 9,263,296 | |||||||
On September 24, 2020, the Group issued long term fixed interest rate senior secured bonds of USD 200,000,000 to private investors with a face value of USD 1 at an issue price of USD 0.95 (Note 15). The Group has the option to redeem the bonds in full or in part any time after September 24, 2023 (the “call option”). The call option represents an embedded derivative that has been separated from the host contract and separately valued.
In 2023 management assessed the value of the call option and classified of USD 3,653,296 (2022: USD 3,840,379) as change in fair value of derivative financial instrument in the consolidated statement of comprehensive income.
| 14 | Advances to Contractor |
| 2023 | 2022 | |||||||
| Advances to contractor | 15,210,262 | 15,223,215 | ||||||
| Write-off (Note 8) | (15,006,262 | ) | Nil | |||||
| 204,000 | 15,223,215 | |||||||
The above amount represents payments made to Audex Fujairah LL FZE and Audex Pte Ltd, Singapore (together “Audex”) for the construction of the Group’s Fujairah Terminal, which were assessed and written-off in 2023 after reconciling the books of accounts with the long-standing EPC partner Audex.
| 15 | Borrowings |
| Maturity | 2023 | 2022 | ||||||||
| Current borrowings | ||||||||||
| Current portion of Bonds | On demand | 160,100,000 | 171,300,000 | |||||||
| Current portion of Term loan | 396,134 | 396,134 | ||||||||
| 160,496,134 | 171,696,134 | |||||||||
| Non-current borrowings | ||||||||||
| Non-current portion of Term loan | 2028 | 1,386,469 | 1,782,603 | |||||||
| 1,386,469 | 1,782,603 | |||||||||
| Total borrowings | 161,882,603 | 173,478,737 | ||||||||
Bonds
As at December 31, 2023, the bonds are classified as current as the Group is in technical breach of certain covenants under the Bond Terms. These breaches do not constitute payment defaults as the Group has always met the coupon and instalment payments as per the Bond Terms.
| Bonds | Coupon rate % |
Effective interest rate % |
Maturity date | 2023 | 2022 | |||||||||||||
| USD 200,000,000 bond net of transaction costs | 8.50 | % | 10.57 | % | Refer note below | 160,100,000 | 171,300,000 | |||||||||||
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 15 | Borrowings (Continued) |
Bonds (Continued)
On September 24, 2020, BPGIC FZE issued long term fixed interest rate senior secured bonds of USD 200,000,000 to private investors with a face value of USD 1 at an issue price of USD 0.95. The Group can issue further bonds of up to USD 50,000,000 under identical terms except issue price that can be above or below the nominal amount, subject to certain conditions. The proceeds of the bonds of USD 186,000,000 net of USD 4,000,000 of transaction costs were drawn down during November 2020. In accordance with the terms of the bonds, the proceeds were used to settle the existing term loans and promissory notes. The amount of USD 85,000,000 were transferred to a Construction account to be used solely to fund the remaining phase 2 construction costs. The balance proceeds were used for general corporate purposes.
The bonds will be repaid in semi-annual payments of USD 7,000,000 starting September 2021 until March 2025, and one bullet repayment of USD 144,000,000 in September 2025. Interest will accrue at a coupon rate of 8.5% and will be payable semi-annually in March and September each year. The Group has the option to redeem the bonds in full or in part any time after September 24, 2023 (the “call option”). The call option represents an embedded derivative that has been separated from the host contract and separately valued. On December 31, 2023, the management assessed the value of the call option of USD 5,610,000 (December 31, 2022: USD 9,263,296) (Note 13).
The bonds are secured by:
| (i) | Pledge over all the existing and future shares of BPGIC FZE; |
| (ii) | Assignment of rights and pledge over the balance in the Earnings account; |
| (iii) | Pledge over the balance in the Liquidity account, the Debt Service Retention account and the Construction Funding account; |
| (iv) | Pledge over moveable assets of BPGIC FZE and its subsidiaries; |
| (v) | Security assignment of commercial contracts related to phase I and phase II, land lease agreement, port facilities agreement and EPC construction contract; |
| (vi) | Security assignment over insurance contracts for phase I terminal, phase II terminal and admin building; |
| (vii) | Security assignment over group and intercompany loans; and |
| (viii) | Corporate guarantee from Brooge Energy Limited. |
The bond agreement also restricts BPGIC FZE from making any distributions other than in the form of an inter-company loan for phase III construction.
Under the bond agreement, BPGIC FZE is subject to the following financial covenants during the term of the bonds:
| (i) | Minimum Liquidity: BPGIC FZE to maintain USD 8.5 million in the Liquidity account; |
| (ii) | Leverage Ratio: BPGIC FZE and its subsidiaries’ leverage ratio not to exceed: |
(A) 5.5x at December 31, 2020;
(B) 3.5x at December 31, 2021; and
(C) 3.0x anytime thereafter; and
| (iii) | Working Capital: BPGIC FZE and its subsidiaries to maintain a positive working capital. |
The bond agreement requires the Brooge Energy Limited to comply with the following financial covenant:
| (i) | Maintain a minimum equity ratio of 25%. |
As of December 31, 2023, the Group continued to be in technical breach of the requirements to comply with certain covenants as per Bond Terms. Even though the lenders did not declare an event of default under the bond agreement, these breaches constituted events of default and could have resulted in the lender requiring immediate repayment of the bonds. Accordingly, the Group has continued to classify the respective bonds as a current liability as of December 31, 2023. The Group is in ongoing discussions with certain significant bondholders for waiver of these certain breaches as per the Bond Terms.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 15 | Borrowings (Continued) |
Bonds (Continued)
Bond Waiver letter
On April 27, 2022, the Group entered into an agreement with the Bondholders to implement following amendments to the Bond Financing Facility, effective immediately:
| (a) | Waiver of the Events of Defaults that are triggered by the technical breaches of the Leverage Ratio and positive Working Capital covenants until December 31, 2022. |
| (b) | The requirement to maintain a Leverage Ratio to not exceed certain thresholds is suspended (waived) for the results period from December 31, 2021 to and including December 30, 2022, and shall be tested again for the 12 months results period from (and including) January 1, 2022 to December 31, 2022 (inclusive) at 3.5x, stepping down to 3.0x anytime thereafter (as per the original terms of the Bond Financing Facility). For the avoidance of doubt, the costs associated with the amendments shall not be taken into consideration in EBITDA when calculating Leverage Ratio. |
| (c) | The requirement to maintain a positive Working Capital is suspended (waived) for the period from December 31, 2021, to and including December 30, 2022, and shall be tested again starting from and including December 31, 2022. |
| (d) | Permitted Distribution: |
| (i) | No Permitted Distribution shall be made before the Group is in compliance with financial covenant requirements under the original terms of the Bond Facility Financing. |
| (ii) | Furthermore, the Group shall provide to the Bond Trustee a written statement signed by its chief executive officer and chief financial officer within three business days prior to any permitted distribution under the terms of the Bond Financing Facility that (A) states the amount being distributed as a permitted distribution, (B) confirms the conditions with respect to such distribution are satisfied, and (C) declares such distribution will not lead to an Event of Default on the next testing date. |
Term loan
During 2022, the Group obtained a loan facility from a commercial bank in UAE amounting to AED 8,730,000 (equivalent to USD 2,376,804) to partially finance the purchase of corporate office for the Group in Dubai. The new facility carries interest at 3 months EIBOR + 4% margin (minimum 6.5% per annum) and is repayable in 24 quarterly instalments commencing 6 months after the date of disbursement. The loan is secured by:
i. Corporate guarantee from Brooge Energy Limited.
ii. BPGIC Phase 3 Limited grants in favour of the commercial bank a First Rank Degree Mortgage for a total mortgage of AED 13,000,000 of the corporate office.
iii. Rental income generated by the corporate office to be automatically assigned to the commercial bank unless the parties agree otherwise in writing.
iv. Authority to debit account of BPGIC FZE.
v. Promissory note for the secured loan.
vi. Security cheque covering the total facility limit drawn by the Group.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 16 | Trade and Accounts Payables |
| 2023 | 2022 | |||||||
| Trade accounts payable | 24,266,237 | 9,853,157 | ||||||
| Capital accruals | 5,615,601 | Nil | ||||||
| SEC settlement obligation (Note 18) | 5,000,000 | Nil | ||||||
| Accrued interest on borrowings | 3,519,648 | 3,815,551 | ||||||
| Accrued expenses | 1,512,726 | 3,076,957 | ||||||
| VAT payable | 339,397 | 497,083 | ||||||
| 40,253,609 | 17,242,748 | |||||||
Trade and accounts payables (excluding accrued interest on borrowings) are non-interest bearing and are normally settled on 90-day terms.
| 17 | Lease liabilities |
| 2023 | 2022 | |||||||
| As at January 1 | 90,873,411 | 89,781,180 | ||||||
| Interest on lease liabilities | 9,996,046 | 10,398,008 | ||||||
| Land rentals | (8,878,143 | ) | (9,305,777 | ) | ||||
| As at December 31 | 91,991,314 | 90,873,411 | ||||||
| Current portion of lease liabilities | 9,003,395 | 6,316,342 | ||||||
| Non-current portion of lease liabilities | 82,987,919 | 84,557,069 | ||||||
During 2013, the Group entered into a land lease agreement with the Municipality of Fujairah (Fujairah Oil Industry Zone) for a period of 30 years, extendable for another 30 years at the option of the Group. The Group has concluded that they have the right-to-use of the asset and accordingly, recorded a lease liability as per the requirements of IFRS 16. Given the use of the land, it is reasonably certain that the Group will continue to lease the land till the end of the lease period (i.e. 60 years) and accordingly the below lease rentals cover a period up to 60 years discounted at the rate of 9.5% as an incremental borrowing rate for the Group. Annual lease rental is increased by 2% on an annual basis as per the agreement.
During 2020, the Group entered into a land lease agreement in respect of its Phase III project with Fujairah Oil Industry Zone for a period of 30 years, extendable for another 30 years. Given the use of the land, it is reasonably certain that the Group will continue to lease the land till the end of the lease period (i.e. 60 years) and accordingly the lease rentals cover a period up to 60 years discounted at the rate of 13% as an incremental borrowing rate for the Group. The annual lease rental is increased by 2% on an annual basis and there is an initial rent-free period of 18 months from the contract date.
| 18 | Other Payable |
| 2023 | 2022 | |||||||
| Brooge International Advisory LLC (BIA) | 130,000,000 | 74,253,965 | ||||||
| 130,000,000 | 74,253,965 | |||||||
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 18 | Other Payable (Continued) |
On April 26, 2023, the Group filed the Super Form 20-F for the financial years 2018 to 2022 and regained compliance with Nasdaq rules and regulations. However, as disclosed on May 27, 2022, the Group had not been able to file the 2021 Form 20-F due to an ongoing nonpublic examination being conducted by the U.S. SEC regarding the consolidated financial statements of the Group. Subsequently, the Audit Committee of the Board of Directors (the “Audit Committee”), engaged independent counsel to conduct under its supervision, an internal examination into the Group’s revenue recognition practices and related matters. As a result of the findings from this internal examination, on August 12, 2022, the Audit Committee, in consultation with the Group’s management, concluded that the previously issued audited consolidated financial statements as of and for the periods ending December 31, 2020, 2019 and 2018, and the previously issued unaudited consolidated financial statements for interim periods therein and the six months ended June 30, 2021, should no longer be relied upon.
In connection with the internal examination, the Group conducted a comprehensive review of the accounting policies, procedures, and internal controls related to revenue recognition. All available customer contracts were assessed based on IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases. This review identified that the funds received from a related party viz. M/s Al Brooge International Advisory LLC ("BIA") do not qualify to be recognised as revenue. Due to the qualitative nature of the matters identified in the Group’s internal examination, including the number of years over which the nonqualified revenue was recognized the Group determined that it would be appropriate to rectify the misstatements in the previously issued consolidated financial statements by restating such consolidated financial statements. Accordingly, the amount of USD 74,253,965 which represents funds received from BIA, was reversed from revenue, and re-classified as Other payable under Liabilities for the financial years from 2018 to 2020.
The above changes pertaining to reversal of Revenue and recognition of such amount under Other payable were accounted retrospectively in accordance with IAS 8.
Pending its potential receipt of confirmation or adequate supporting documentation from the party, the Group had taken a conservative approach to recognise this as a liability as at reporting periods.
Also, the Committee has decided to be conservative on the BIA relationship and hence has considered BIA to be a related party throughout the years. Please refer to Note 21.
On December 22, 2023, the Group has reached a settlement with the U.S. Securities and Exchange Commission (“SEC”) related to alleged fraudulent accounting and offering conduct by the Group. Pursuant to the SEC administrative order, which was entered on December 22, 2023, and which centers on the consolidated financial statements that have since been restated by the Group, Brooge Energy Limited fined to pay a civil money penalty of USD 5,000,000. The Group has taken the view that presenting the penalty in its consolidated financial statements reflects the substance of those transactions, which were related to the Group. Subsequently, the Group fully paid the penalty imposed (Note 28).
The administrative order resolves the SEC’s proceedings related to the Group.
Litigation settlement
On December 27, 2023, the Group was served with the UAE court order following a case brought forward by BIA. As a precautionary measure, the Court ordered the imposition of precautionary hold on the movable and immovable funds and also appointed a Judicial Guardian over the Group.
On March 5, 2024, the Federal Supreme Court (equivalent of the Court of Cassation) in the United Arab Emirates rejected the appeals filed by legal team of the Group, relating to the claim and demand for payment from BIA. As a result of the Court’s decision dated March 5, 2024, the Group was ordered to pay USD 130 million, plus four percent interest per annum from December 26, 2023, until the date of payment to BIA. Accordingly, additional provision of USD 55,746,035 was recognized in these consolidated financial statements. USD 74.3 million of the total amount corresponds to liability already recognised in prior periods, while USD 55.7 million corresponds to additional obligations imposed by the Court.
The legal team of the Group is negotiating with BIA on the execution of payment details and continues to seek alternative ways to discharge this liability by exchange or modification of liability or the recognition of a liability as equity contribution. Pending final outcome of such negotiations the amount due to BIA continues to be disclosed as other payable as per the order of Federal Supreme Court and will be reclassified in accordance with the agreement as and when it is executed.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 19 | Derivative Warrant Liability |
| 2023 | 2022 | |||||||
| Issuance of 21,228,900 warrants in connection with merger | 4,245,780 | 11,675,815 | ||||||
| Fair value remeasurement of derivative warrant liability | (3,931,592 | ) | (7,430,035 | ) | ||||
| 314,188 | 4,245,780 | |||||||
In accordance with IAS 32, a contract to issue a variable number of shares fails to meet the definition of equity and must instead be classified as a derivative liability and measured at fair value with changes in fair value recognized in the consolidated statement of comprehensive income at each reporting date. The derivative liabilities will ultimately be converted into the Group’s equity (ordinary shares) when the warrants are exercised or will be extinguished on the expiry of the outstanding warrants and will not result in the outlay of any cash by the Group.
In connection with the completion of the business combination on December 20, 2019, each of Twelve Sea’s 21,229,000 outstanding warrants were converted into the Group’s warrants at 1:1 ratio. The warrants allow the holder to subscribe for the ordinary shares of the Company at 1:1 basis at an exercise price of USD 11.50. The warrants shall lapse and expire after five years from the closing of the business combination. The holders of the warrants issued pursuant to the business combination may elect, if the Group does not have an effective registration statement or the prospectus contained therein is not available for the issuance of the warrant shares to the holder, in lieu of exercising the warrants for cash, a cashless exercise option to receive a variable number of common shares.
At initial recognition on December 20, 2019, the Group recorded a derivative warrant liability of USD 16,983,200 based on the quoted price on December 20, 2019, of USD 0.8 per warrant and then revalued at USD 0.74 at December 31, 2019 resulting in a fair value gain of USD 1,273,740 and a warrant derivative liability of USD 15,709,460. These warrants were accounted for as part of the consideration transferred under IFRS 2.
On May 14, 2020, holders of 100 warrants have exercised their rights through cash exercise and converted the warrants into ordinary shares.
At December 31, 2023, the Group recorded a derivative warrant liability of USD 314,188 (December 31, 2022: USD 4,245,780) which resulted in a gain on revaluation of derivative warrant liability for the year ended December 31, 2023 of USD 3,931,592 (December 31, 2022: USD 7,430,035).
| 20 | Share Capital, Share Premium and Statutory Reserve |
| No. of Shares | USD | |||||||
| Authorized | ||||||||
| Ordinary shares | 450,000,000 | 450,000,000 | ||||||
| Share Capital | ||||||||
| As at December 31, 2023 | 88,035,353 | 8,804 | ||||||
| As at December 31, 2022 | 88,035,353 | 8,804 | ||||||
Ordinary shares held in escrow (20,000,000 shares held by BPGIC PLC and 1,552,500 shares held by the original founders of Twelve Seas) have been excluded from the share capital in the table above. These shares will be released upon the satisfaction of certain financial milestones and share price targets below the release or forfeiture of these shares in the future will not have an effect on the equity of the Group.
One-half (½) of the Escrow Property shall become vested and no longer subject to forfeiture, and be released to the seller, in the event that either: (a) the Annualized EBITDA (as defined in the Escrow Agreement) for any full fiscal quarter during the Escrow Period (beginning with the first full fiscal quarter beginning after the Closing) (an “Escrow Quarter”) equals or exceeds USD 175,000,000 or (b) at any time during the Escrow Period, the closing price of the Brooge Energy Limited ordinary shares equals or exceeds USD 12.50 per share (subject to equitable adjustment) for any ten (10) Trading Days (as defined in the Escrow Agreement) within any twenty (20) Trading Day period during the Escrow Period.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 20 | Share Capital, Share Premium and Statutory Reserve (Continued) |
All Escrow Property remaining in the Escrow Account shall become vested and no longer subject to forfeiture, and be released to the seller, in the event that either: (a) the Annualized EBITDA for any Escrow Quarter equals or exceeds USD 250,000,000 or (b) at any time during the Escrow Period, the closing price of the Brooge Energy Limited ordinary shares equals or exceeds USD 14.00 per share (subject to equitable adjustment) for any ten (10) Trading Days within any twenty (20) Trading Day period during the Escrow Period. The Escrow Period represents the period commencing from the closing until the end of the twentieth (20th) fiscal quarter after the commencement date of the first full fiscal quarter beginning after the closing.
| Share Premium | 2023 | 2022 | ||||||
| As at January 1 | 101,777,058 | 101,777,058 | ||||||
| As at December 31 | 101,777,058 | 101,777,058 | ||||||
As required by the Articles of Association of BPGIC FZE, 10% of the profit for the year must be transferred to the statutory reserve. As at December 31, 2023, the statutory reserve equals to USD 680,643 (2022: USD 680,643).
| 21 | Transactions with Related Parties |
Related parties represent associated companies, shareholders, directors and key management personnel of the Group, and entities controlled, jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Group’s audit committee.
Transactions with shareholder
Shareholder’s account is repayable at the discretion of the Board of Directors of the Group and are interest free, therefore classified as part of equity. Movement in shareholder’s account represent net of contributions by the shareholder and distributions to shareholder.
| 2023 | 2022 | |||||||
| Transactions in shareholder’s account: | ||||||||
| Repayments on behalf of the shareholder | Nil | (626,029 | ) | |||||
| Changes in shareholders’ account is as follows: | ||||||||
| As at January 1 | 70,391,787 | 71,017,816 | ||||||
| Net movements during the year | Nil | (626,029 | ) | |||||
| As at December 31 | 70,391,787 | 70,391,787 | ||||||
Transactions with other related parties
| 2023 | 2022 | |||||||
| Key management personnel remuneration | 1,007,761 | 1,229,114 | ||||||
| End of service benefits expense for key management | 202,295 | 61,862 | ||||||
Related party balances as at the year-end are classified as under:
|
Related Party |
Classification | 2023 | 2022 | |||||||
| Shareholder | Shareholder’s account (Equity) | 70,391,787 | 70,391,787 | |||||||
| BPGIC Holdings Limited | Due from related parties (shareholder) | 210,322 | 34,136 | |||||||
| HBS Investments LP | Due from related parties (shareholder) | 11,430 | 10,381 | |||||||
| H Capital International LP | Due from related parties (shareholder) | 11,043 | 9,983 | |||||||
| O2 Investments Limited as GP | Due from related parties (shareholder) | 10,851 | 9,272 | |||||||
| SBD International LP | Due from related parties (shareholder) | 51,067 | 50,014 | |||||||
| SD Holding Limited as GP | Due from related parties (shareholder) | 22,118 | 21,842 | |||||||
| Gyan Investments Ltd | Due from related parties (shareholder) | 10,606 | 9,010 | |||||||
| End of service benefits for key management personnel | Employees’ end of service benefits | 46,234 | 42,204 | |||||||
| Salary payables for key management personnel | Trade and accounts payables | 150,814 | Nil | |||||||
| Brooge International Advisory LLC | Other payable (other related parties) | 130,000,000 | 74,253,965 | |||||||
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 21 | Transactions with Related Parties (Continued) |
BIA
In order to determine whether there exists a related party relationship with BIA in accordance to Paragraph (9) of International Accounting Standards (IAS 24). The Group considered the following:
| ● | Clause 3.4(v) of the Audit Committee (the “Committee”) Charter requires that the Committee review and approve all related-party transactions, defined as those transactions required to be disclosed under Item 7(b) of Form 20-F and NASDAQ Corporate Governance Rule 5630. |
| ● | Clause 3 of the Related Party Transactions Policy of the Company states that, it is the responsibility of the Audit Committee to administer the Related Party Transactions Policy. |
| ● | Commercial license of BIA with issue date of February 11, 2019, which mentions Mrs. Muktar (considered as one of the UBO for the Company) as a Partner in BIA. |
| ● | Commercial license of BIA with issue date of February 10, 2020, which reflects the change in ownership of BIA, with Mrs. Muktar now being removed as a Partner in BIA. |
| ● | Commercial license of BIA with issue date of April 12, 2021, which does not mention Mrs. Muktar as a Partner for BIA. |
| ● | The Company announcement on November 20, 2019, (Form F4 Filed with the SEC) on the planned sale of Mrs. Muktar’s shares in BIA, Al Brooge International Advisory LLC will no longer be a related party. |
It is noted that Mrs. Hind has left BIA in her capacity as a shareholder somewhere between November 2019 and February 2020.
The Committee has decided to be conservative on the BIA relationship and hence has considered BIA to be a related party throughout the years until further supporting documentation is obtained to prove otherwise.
| 22 | Commitments and Contingencies |
| 2023 | 2022 | |||||||
| Bond waiver fees* | 4,300,000 | Nil | ||||||
| Capital commitments within one year** | 2,964,000 | 53,500,000 | ||||||
| 7,264,000 | 53,500,000 | |||||||
| * | As explained in Note 15, the Group is in technical breach of certain covenants under the Bond Terms and is in discussion with certain significant bondholders for a waiver and expects to incur waiver fees. Further it should be noted that these Breaches do not constitute payment defaults as the Group has always met the Coupon and Instalment payments as per the Bond Terms. |
| ** | Capital commitments relate to construction project relating to interconnection of pipelines between the Group’s existing facilities and the Group’s project Phase III early preparation works in Fujairah. |
Class Action Lawsuit
On February 5, 2024, a class action complaint was filed in the United States District Court for the Central District of California by Eric White against Brooge Energy Limited. The class action complaint contains substantial allegations concerning the materially false and misleading statements issued during the class period similar to those addressed in the Order Instituting Cease and Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, And Imposing Cease-And-Desist Orders entered by the United States Securities and Exchange Commission on December 22, 2023 In The Matter of Brooge Energy Limited.
The Management believes that the Group’s exposure to this lawsuit is not material. Accordingly, no provisions have been made related to this lawsuit in these consolidated financial statements.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 23 | Earnings Per Share |
Basic EPS is calculated by dividing the profit / (loss) for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit / (loss) attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The following table reflects the income and share data used in the basic and diluted EPS calculations:
| 2023 | 2022 | |||||||
| (Loss) / profit attributable to ordinary equity holders of the parent | (48,328,195 | ) | 27,229,285 | |||||
| Weighted average number of ordinary shares | 88,035,353 | 88,035,353 | ||||||
| Basic and diluted (loss) / earnings per share | (0.55 | ) | 0.31 | |||||
As part of the business combination warrants and ordinary shares subjected to escrow have been issued. In the calculation of diluted earnings per shares, the warrants have been excluded as the average market price of ordinary shares during the period exceeded the exercise price of the warrants i.e. they are not in the money.
The number of contingently issuable shares (21,552,000 escrow shares) to be included in the diluted earnings per shares calculation is based on the number of shares that would be issuable if the end of the period were the end of the Escrow Period. No ordinary shares would have been issuable on December 31, 2023, as the conditions attached to the escrow shares have not been met at reporting date. As a result, the escrow shares have been excluded from the calculation of diluted earnings per share for December 31, 2023, and the weighted average number of ordinary shares for basic earnings per share and diluted earnings per shares are the same.
| 24 | Financial Risk Management and Policies |
The main risks arising from the Group's financial instruments are interest rate risk, market risk, credit risk, currency risk and liquidity risk. Management reviews and agrees policies for managing each of these risks which are summarized below.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s Bonds are issued at a fixed rate of interest. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s secured loan with floating interest rates.
The following table demonstrates the sensitivity to a reasonably possible change in 3 months EIBOR, with all other variables held constant:
Increase/ (decrease)
|
Effect on profit for the year |
|||||||
| 2023 | +1 | % | 71,304 | |||||
| -1 | % | (71,304 | ) | |||||
| 2022 | +1 | % | 87,622 | |||||
| -1 | % | (87,622 | ) | |||||
Market Risk
The Group’s activities expose it to the financial risks of changes in interest rates and price risk of the warrants. As the warrants are recognised at fair value on the consolidated statement of financial position of the Group, the Group’s exposure to market risks results from the volatility of the warrants price. The Warrants are publicly traded at the NASDAQ Stock Exchange.
At the reporting date, the exposure to derivative warrant liability at fair value listed on the NASDAQ was USD 314,188 (2022: 4,245,780). The Group has determined that an increase/(decrease) of 30% on the NASDAQ could have an impact of approximately USD 94,256 increase/(decrease) on the income and equity attributable to the Group.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 24 | Financial Risk Management and Policies (Continued) |
Currency Risk
The Group does not have any significant exposure to currency risk as most of its assets and liabilities are denominated in USD or AED (UAE Dirham) and AED is pegged to the USD.
Credit Risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Group is exposed to credit risk on bank balances and receivables as reflected in the consolidated statement of financial position, with a maximum exposure equal to the carrying amount of these instruments. Credit quality of the customer is assessed as part of contract negotiations. Outstanding trade and other receivables are regularly monitored.
At each reporting date, the Group assesses whether financial assets not carried at fair value through profit or loss are credit impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities and obligations as and when they fall due without having to face any losses which may adversely effect the Group's financial position and reputation.
The Group manages its liquidity risk in relation to financial liabilities to ensure compliance with all covenants.
The table below summarizes the maturity profile of the Group's financial liabilities at December 31 based on contractual undiscounted payments:
| On demand | Less than 3 months |
3 to 12 months |
1-5 years | > 5 years | Total | |||||||||||||||||||
| As at December 31, 2023 | ||||||||||||||||||||||||
| Borrowings (including accrued interest) | 163,606,250 | 127,882 | 373,983 | 1,550,206 | Nil | 165,658,321 | ||||||||||||||||||
| Other payables | 130,000,000 | Nil | Nil | Nil | Nil | 130,000,000 | ||||||||||||||||||
| Lease liabilities | Nil | 2,760,377 | 6,118,649 | 46,895,151 | 824,315,184 | 880,089,361 | ||||||||||||||||||
| Trade and accounts payables (excluding accrued interest) | Nil | 36,733,961 | Nil | Nil | Nil | 36,733,961 | ||||||||||||||||||
| 293,606,250 | 39,622,220 | 6,492,632 | 48,445,357 | 824,315,184 | 1,212,481,643 | |||||||||||||||||||
| As at December 31, 2022 | ||||||||||||||||||||||||
| Borrowings (including accrued interest) | 175,103,750 | 134,152 | 393,712 | 1,850,189 | 201,882 | 177,683,685 | ||||||||||||||||||
| Lease liabilities | Nil | 2,506,062 | 6,249,336 | 36,808,047 | 846,079,216 | 891,642,661 | ||||||||||||||||||
| Trade and accounts payables (excluding accrued interest) | Nil | 13,427,197 | Nil | Nil | Nil | 13,427,197 | ||||||||||||||||||
| 175,103,750 | 16,067,411 | 6,643,048 | 38,658,236 | 846,281,098 | 1,082,753,543 | |||||||||||||||||||
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 24 | Financial Risk Management and Policies (Continued) |
Changes In Liabilities Arising From Financing Activities
Below is the movement of liabilities arising from financing activities of the Group for the years ended December 31:
| As at January 1 |
Cash inflow |
Cash outflow |
Interest paid |
Others* | As at December 31 |
|||||||||||||||||||
| 2023 | ||||||||||||||||||||||||
| Borrowings (including accrued interest) | 177,294,288 | Nil | (14,396,134 | ) | (15,102,898 | ) | 17,606,995 | 165,402,251 | ||||||||||||||||
| Lease liabilities | 90,873,411 | Nil | (4,137,362 | ) | Nil | 5,255,265 | 91,991,314 | |||||||||||||||||
| 2022 | ||||||||||||||||||||||||
| Borrowings (including accrued interest) | 182,781,617 | 3,105,092 | (14,926,355 | ) | (16,223,888 | ) | 22,557,822 | 177,294,288 | ||||||||||||||||
| Lease liabilities | 89,781,180 | Nil | (9,305,777 | ) | Nil | 10,398,008 | 90,873,411 | |||||||||||||||||
| * | The “Others” column mainly represents interest accrued, amortizations and costs associated with the organization of borrowings. |
Capital Management
The primary objective of the Group's capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximize shareholder’s value and to meet its loan covenants.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust future distribution policy to shareholders, issue new shares or shareholders’ contributions.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, the lease liabilities, borrowings, and accrued interest, less restricted bank balances, cash and cash equivalents. Equity includes share capital, statutory reserve, retained earnings / accumulated losses and shareholders’ accounts.
| 2023 | 2022 | |||||||
| Borrowings (including accrued interest) | 165,402,251 | 177,294,288 | ||||||
| Lease liabilities | 91,991,314 | 90,873,411 | ||||||
| Less: restricted bank balances, cash and cash equivalents | (28,414,502 | ) | (16,759,981 | ) | ||||
| Net debt | 228,979,063 | 251,407,718 | ||||||
| Total equity | 56,766,497 | 105,094,692 | ||||||
| Total equity and net debt | 285,745,560 | 356,502,410 | ||||||
| Gearing ratio | 80 | % | 71 | % | ||||
Adjusted Earnings Before Interest, Tax, Depreciation and Amortisation (Adjusted EBITDA)
Management has presented the performance measure adjusted EBITDA because it monitors this performance measure at a consolidated level and it believes that this measure is relevant to an understanding of the Group’s and the Group’s financial performance. Adjusted EBITDA is calculated by adjusting net profit or loss to exclude the impact of taxation, interests, depreciation, amortisation, impairments, expected credit losses, write-offs, changes in fair values, other non-cash, extraordinary and one-off items.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 24 | Financial Risk Management and Policies (Continued) |
Adjusted Earnings Before Interest, Tax, Depreciation and Amortisation (Adjusted EBITDA) (Continued)
Adjusted EBITDA is not a defined performance measure in IFRS Accounting Standards. The Group’s definition of adjusted EBITDA may not be comparable with similarly titled performance measures and disclosures by other entities.
Reconciliation of adjusted EBITDA to profit or loss
| 2023 | 2022 | |||||||||
| (Loss) / profit for the year | (48,328,195 | ) | 27,229,285 | |||||||
| Adjustments for: | ||||||||||
| Depreciation of property, plant and equipment | 7 | 12,656,056 | 12,615,658 | |||||||
| Interest on borrowings | 9 | 17,606,995 | 22,177,769 | |||||||
| Interest on lease liabilities | 9 | 3,086,680 | 3,043,214 | |||||||
| Changes in fair value of derivative financial instruments | 13 | 3,653,296 | (3,840,379 | ) | ||||||
| Asset retirement obligation - accretion expense | 9 | 68,040 | 65,859 | |||||||
| Litigation settlement | 18 | 55,746,035 | Nil | |||||||
| Expected credit losses of trade accounts receivables | 8 | 18,202,132 | Nil | |||||||
| Write-off of advances to contractor | 8, 14 | 15,006,262 | Nil | |||||||
| SEC settlement charges | 8 | 5,000,000 | Nil | |||||||
| Write-off of trade accounts receivables | 8 | 927,519 | Nil | |||||||
| Change in estimated fair value of derivative warrant liability | (3,931,592 | ) | (7,430,035 | ) | ||||||
| Adjusted EBITDA | 79,693,228 | 53,861,371 | ||||||||
| 25 | Segment Reporting |
The Group determines its operating segments based on the nature of their operations. The performance of the operating segments is assessed by management on a regular basis.
At the reporting dates, the Group has only one reportable segment - oil storage and related services.
The remaining operating segments (investment properties and renewable energy) have been aggregated and presented as other operating segment due to their insignificance.
Substantially all of the Group’s operations and assets are located in the United Arab Emirates.
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 25 | Segment Reporting (Continued) |
The following table represents information about revenues and net profit / (loss), assets and liabilities of operating segments of the Group for the years ended December 31, 2023, and 2022:
| Oil storage and related services |
Other operating segment |
Adjustments and eliminations |
Consoli-dated | Oil storage and related services |
Other operating segment |
Adjustments and eliminations |
Consoli-dated | |||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||
| External customers | 105,695,648 | Nil | Nil | 105,695,648 | 81,540,776 | Nil | Nil | 81,540,776 | ||||||||||||||||||||||||
| Inter-segment | Nil | 884,835 | (884,835 | ) | Nil | 612,578 | (612,578 | ) | Nil | |||||||||||||||||||||||
| Total Revenue | 105,695,648 | 884,835 | (884,835 | ) | 105,695,648 | 81,540,776 | 612,578 | (612,578 | ) | 81,540,776 | ||||||||||||||||||||||
| Depreciation of property, plant and equipment | (13,289,473 | ) | (111,032 | ) | 744,449 | (12,656,056 | ) | (12,523,131 | ) | (92,527 | ) | Nil | (12,615,658 | ) | ||||||||||||||||||
| Interest on borrowings | (17,424,761 | ) | (182,234 | ) | (17,606,995 | ) | (22,048,383 | ) | (129,386 | ) | Nil | (22,177,769 | ) | |||||||||||||||||||
| Interest on lease liabilities | (3,392,118 | ) | Nil | 305,438 | (3,086,680 | ) | (3,043,214 | ) | Nil | Nil | (3,043,214 | ) | ||||||||||||||||||||
| Changes in fair value of derivative financial instruments | (3,653,296 | ) | Nil | Nil | (3,653,296 | ) | 3,840,379 | Nil | Nil | 3,840,379 | ||||||||||||||||||||||
| Asset retirement obligation - accretion expense | (68,040 | ) | Nil | Nil | (68,040 | ) | (65,859 | ) | Nil | Nil | (65,859 | ) | ||||||||||||||||||||
| Litigation settlement | (55,746,035 | ) | Nil | Nil | (55,746,035 | ) | Nil | Nil | Nil | Nil | ||||||||||||||||||||||
| Expected credit losses of trade accounts receivables | (18,202,132 | ) | Nil | Nil | (18,202,132 | ) | Nil | Nil | Nil | Nil | ||||||||||||||||||||||
| Write-off of advances to contractor | (15,006,262 | ) | Nil | Nil | (15,006,262 | ) | Nil | Nil | Nil | Nil | ||||||||||||||||||||||
| Write-off of trade accounts receivables | (927,519 | ) | Nil | Nil | (927,519 | ) | Nil | Nil | Nil | Nil | ||||||||||||||||||||||
| Change in estimated fair value of derivative warrant liability | 3,931,592 | Nil | Nil | 3,931,592 | 7,430,035 | Nil | Nil | 7,430,035 | ||||||||||||||||||||||||
| (Loss) / profit for the year | (48,626,082 | ) | 65,830 | 232,057 | (48,328,195 | ) | 27,230,804 | (1,519 | ) | Nil | 27,229,285 | |||||||||||||||||||||
| Assets of the segment | 559,911,354 | 3,371,209 | (77,298,516 | ) | 485,984,047 | 549,054,357 | 3,185,417 | (78,637,927 | ) | 473,601,847 | ||||||||||||||||||||||
| Liabilities of the segment | 430,135,412 | 1,846,198 | (2,764,060 | ) | 429,217,550 | 366,384,681 | 2,190,538 | (68,064 | ) | 368,507,155 | ||||||||||||||||||||||
| Other disclosures | ||||||||||||||||||||||||||||||||
| Capital expenditures | 13,278,355 | Nil | Nil | 13,278,355 | 19,193,314 | Nil | Nil | 19,193,314 | ||||||||||||||||||||||||
Inter-segment revenues are eliminated upon consolidation and reflected in the ‘adjustments and eliminations’ column.
In 2023, the Group generated 80% of its revenues from five major customers (2022: 59%).
F-
Brooge Energy Limited
Notes to the Consolidated Financial Statements
As at December 31, 2023
(Figures in USD)
| 26 | Fair Value of Financial Instruments |
Management considers that the fair value of all financial assets and financial liabilities in the consolidated financial statements approximate their carrying amounts at the reporting date.
Derivative warrant liability is allocated to Level 1 in the fair value hierarchy. The fair value has been determined in accordance with quoted price. Borrowings are allocated to Level 2 in the fair value hierarchy. The fair value has been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis. All other financial instruments of the Group are allocated to Level 3 in the fair value hierarchy.
There were no transfers between levels.
| 27 | Comparative Figures |
Certain of the prior year figures have been regrouped to conform with the presentation of the current period. The Group changed the presentation of its consolidated financial statements as new presentation provides information that is more relevant to users of the consolidated financial statements. Mainly, the Group presented ‘restricted bank balance’ and ‘contract liabilities’ separately in the consolidated statement of financial position. These reclassifications did not have any impact on the consolidated financial statements of the Group. The management believes that such presentation is more transparent as they reflect the nature of such amounts.
| 28 | Subsequent Events |
On January 3, 2024, the Group paid a liability of USD 5,000,000 related to SEC settlement obligation (Note 16).
On February 4, 2022, the Group filed a court case against its customer for recovery of USD 3,313,538 and associated costs and received verdict in its favor. On July 17, 2024, the UAE court of appeal made a final decision in the Group’s favor and retained the initial decision without change.
On September 2, 2024, the Group held an extraordinary general meeting of shareholders. As a result of the meeting, the Group’s new board of directors appointed.
On October 3, 2023, Brooge Energy Limited announced receiving a formal proposal submitted by Gulf Navigation Holdings PJSC (GulfNav), the Dubai Financial Market listed maritime and shipping company, to acquire fully all of the businesses and assets from Brooge Energy Limited. On September 20, 2024, Brooge Energy Limited executed a term sheet that reflects the principal terms of the acquisition. The term sheet outlines the foundational elements of a potential sale and purchase agreement.
F-
Exhibit 4.85
Exhibit 4.86
Exhibit 4.87
Exhibit 4.88
D4’FEn 0 1” Ju 2022 BROOGE PETROLEUM Auo GAS INVESTMENT COMPANY' FZE AS OPERATOR - and — CsuGco New ENERGY FZ - LLC s CUSTOMER COMMERCIAL STORAGE AGREEMENT Hogan Lovells llogon LoycM (fJldJlc East) LLf - ' \ U' Fl0or. /tI Faltan Cu/rixt«y”lower, 0ph:d lrremational fiIn»nc nl Co» \ n. I ι O Rna. S0$6o2, Oubsi. UAE - 1 - The parlJes listed below› agfce, in this Commercial Storage Agre ƒ meat (l ^• "^s reenJef1t") datetl as uf 01'' July 2022.
and cxecuted in 0///›ai, USE, the following: KEY Cof/Ifi1ERCI/ \ L TERhtS 1 Operator ”2. CuStOITIOr ” "3". Agreement to provide Services 4. Agreement Brooge Investment Petroleum ancl "“Gas Company FZE, a company incorporated in Fujnimli Fr 0 o Zoite, having regislralion number / 3 - F - ZC - 1117 and registered PO Box SOJ 70 Fujainah United Drab Eiiiirates (the "Operator" or "BPGIC") . ConGeo New Ener FZ - LLC ai (the "Customer"). The Operator agrees to pro'zirle Ihe S ƒ rv . ces in rclaticn to lhe l*roducl a : the Terminal, and lhe Customer wishes to store ill ƒ - Pfod‹ict at the Terminal and desires to purchase storage related hanclting services frcm the Opeialor on (lie terms and conditions set out in this Agreement . This Agreement comprises theso Key Commercla› Terms and the General Teiins and Conclifions ("GTCs") which ate altac'hed to this Agreeinenl and are hereby incarpor‹nIed by reference in this Agreement as if It \ ey were set out in full ai›d shall apply to the provis . ons of this Agreement, sub)ec \ to Glause 1 . 4 of 1 he GTCs . In this Agreement . capitalised \ 'zords and expressions have lha meani • 9 s set out for them (whether by incorporation, cross - reference or othe visc) in the GTCs, unless olherv›ise defined in this Agre ƒ . ment or the context other, • /ise iequifes . In addition, 1 .
"Circulation Charges"means the charges described in Box 16 of these Key Commercial Terms ; 2. "Clause(s)" means the provision(s) and stipuIa \ ion(s) of the GTCs ; 3. "Commencement Date" means 15 ” July 202 Z ; "EXcess Throughput Charges" means the charges described in Box 14 oftheseKey Commercial Terms : "Fee" means, in respect of each month an amount equal to the aggregate of the Renlal and Handling Charges, the Excess Throughput Charges, the Tank Cleaning Charges, the Circulation Charges, the Tank Headng Charges, the Inter - Tank Transfer Charges, and the TopSide Facility Charges for such month ; 6. "Flnance Party" means any person providing debt financing to the Operator in connecdon with the Teminal (excludlng any shareholder of the Operator or any Affiliate of any shareholder) ; 7. "Floor Prlco" has the meaning given to it in Box 13 of these Xey Commercial Tems ; 8. "Guarantee" no \ used; 9. "Guarantor" not used; 10. "GTCa" has the meaning given to it in Box 4 of these Key Commercial Terms ; 11. "Inter - Tank Transfer Charges" means the charges descñbed In Box 18 of lhese Key Commercial Tems : 12. "Key Commercial Tams" means the provisions of Box 1 to 22 ; 43 . "Market Price" has the meaning given to it in Box 13 of these Key Comrr›ercial Terms : 14 , "POF" has the meanlng given to it In Box 9 of these Key Commercial Tems ; - — 15.
"Product" has the meaning given to it in Box 8 of these Key Commercial Tems ; 16. “Rental and Handling Charges” means the charges described in Box 13 of theseKey Commercial Terms ; 17. "Services" has the meaning glven to it in Box 1 a of these Key Commercial Terms ; 18. "Storaga Facilities" means eny storage space with pipelines, pumps . component parts and equipment and appliances belonging thereto, whlch are within Ihe Terminal, to be made available to or to be used by the Operator for the purpose of carrying out lhe Services pursuant to the Agreement ; t 9 . "Tank Cleaning Charges" means the charges described in Box 15 of thase Key Commercial Terms ; 20 . ‘Bank Heating Gharges" means the charges described in Box 17 of these Key Commercial Tems ; 2t Vanh Turn" means a volume of Product equal to the Volume Commitment ; "Term" has the meaning given to it in Box 7 of these Key Commercial Terms ; 23. "Seminal" means the patroleum c‹ude and product 24. storage Seminal described in Box 9 of these Key Commercial Terms ; ’ 7 opSide Facility Charges" means the charges descñbed in Box 19 of ltiese Key Commercial Terms ; and 25. "Volume Commitment" has the meaning given to it in Box 11 of thase Key Commefcial Tems .; and 26. "Port Dues" was the meaning given to itin Box 20 of these Key Commercial Terms .
27 . Vharfage Facility Charges" has the meaning given to it in Box 20 at tfiese Key Commercial Term Not used. Guarantee 6. The obligations undar this Agreement (including the obligation of the Operator to provide the Services and of the Customer to pay the Fee) shall begin on !he Commencement Date, and shall, subject to the terms of this Agreement, continue for a period of 1 yaar+ 2 years, i . e . (the "Tarm") . The Agreement can be renewed based on mutual agreement, with to be definad conditions . The partlos should start negotiations 30 (thirty) days prior to tha expiry of the Terry . Period of Agreement 7. The Product shall comprise white petroleum products (naphtha and gasoll) delivered by the Customer to tha Operator for the purposes of carrying out the Services . as described in the Port Rules for Topslde Facllity Operations (the top Sldo Rulesg and the type and specifications of which shall be pre - agreed by the Parties p ior to delivery . Product B. Terminal means lhe 399 , 324 cubic metre capacity fuel oil and product storage teminal developed by BPGIC In the Emirate of Fujairah, and more specifically, located near the Port of Fujairah ("POF"), United Arab Emirates and any other premises, office . buiMing, Storage Facilities (as defined in the GTCs), tank, and pipeline at whlch or in which Sarvices are provided to fhe Customer in accordance with this Agreement by the Operator or any third party appointed by the Operator . In case a third party is appointed by the Operator . Temlnal 9. ”' The Services shall comprise any or all operations carried out or to be carried out by the Operator In respect of the Product aL outside or through the Terminal, inclusive of but not reskicted Services 10.
11. Volume Commltment for Storage 42. Payment - 5 - 1. "” maklng storage spaæ available in respect of the Volume Commitment ; 3. storing . manipulating (which shall be deemed to include the through - pumping of Ote Product between tbe matrix manifold and the Teminal) . moving . treating, processing and delivering : and 3. administrative handling of the Product (including preparing shipping documentation for . dealing with mandatory government reporting and/or other admlniskative activities related to the Product) . For the avoidance of doubt the Operator is entided to sub - conkad all or part of the Services to a sub - contractor or third - party operator ai its sole discretion . The Customer çommi ren † ng a storage capaôty of bm at the Teminal (the Volume Commltment"), subject to the terms of this AgfeemenL The Operator shall invoice, and the Cuslomer shall pay in accordance with this Agreement the aggregate for each month during the Tern an amount equal to the aggregate of : 1. the Rental and Handllng Charges: Ihe Excess Throughput Charges; the Tank Cleaning Charges: the Circulation Charges; the Inter - Tank Transfer Charges; and the Poft of Fujairan tariffs lncluding but not limited to Wharfage Faclllty Chages ; and the TopSide Facilité Charges, 2. 3 4. 6. for such month, which will be accepted by Customer only as per actual invoica from Portol Fujairah 13.
Rontal and Handling Charges 14. Excess Throughput Charges “ 15. Tank Cleaning Charges - 6 - For each month . durlng the Term . the Renlal and Handling Charges shall be determined as the Volume Commllment multiplied by : USS er cbm per month ("Floor Prlce”), The Customer shall have at no extra cost a throughput allowance equal tank turn of m’ per month.Tank turn means a volume of product equal to the Volume Commitment. If theCustomer exceeds this allowance, the Customer shall pay to the Operator. the Excess Throughput Charges in respect of the excess above the Volume Commitment delivered or redeiivered al a rate of US5 per cbrn of the volume of the Product handled per eachimport/export Excess Throughput Charges wi \ I be reviewed t and may be adjusted annually by the ‘ Operator. Unused kee throughput cannot be carried forward to subsequent months. If lhe Cusomer requires a tanx allocat to it to be cleaned as a result of th Customer requesting a change in th Product stored in that tank, or In Iheeven of the expiration/termination of th Agreement, the Customer shall pay a amount equal to Ihe actual dokumen cosls incurred by the Operator ‹ managing and procuring the cleaning o the tank or tanks. A third - party surveyo engaged by the Customer shall ins and lest lhe tank/tanks for cleanliness. Customer shall receive the tank In suitable conditén and will be inspect by Customer nominated inspectio company, which shall comply with th terms agreed hetein, and Customer wil handover and 16.
ClrculàtÏon Charges 17. Tank Heatlng ” 18. Intar - Tank Transfère 19. TopSide Facillty Charges - 7 - dellver if back to“the Operator on the same basis. “20. Port Dues and Wharfaga Facilité Charges " TheCustomer shall pay to the Operator circulation charges Charges") at a USÇ "Circulation per hour In case such a service is requested by tha Customer. Not applicable forthe required products. If the Customer requests, and the Operator consents to, the transfer of Ihe Customer's Product from one tank to another . 1 he Customer shall pay Inter - Tank Transfer Charges to the Operatoi at the amount of USS per cbm of Product Pansferred between any tanks at the same Terminal and measured at ambient temperature during the transfer per month . The custody transfer volume will be based on Ihe issuing tanr leval gauge computation . The Customer will pay tho Operator on a pass - through basis the TopSide Facility charges as charged by the POF as further set out In Clause 11 of the GTCs, and as per actual Port of Fujalrah invoices . Port dues and any other changes (indudin 9 Wharfage Facility Charges) imposed by the POF on the Customer's vessels as defined In the p‹x 1 of Fujairah Port Tariff (affective from 1 May 2008 as amended from lime to time) or any othet applicable chaiges shall be borne directly by the Customer and are not applicable to this Agreement . To the extent lhese amounts are invoiced directly la the Operator rather than the Customer, the Customer shall repay the Operaar ail such amounts upon receipt of an invoke in respect of swh charges from 21.
Change In law IN WITNESS WHEREoF the Parties herelo above written. .8 - the Operator in acco dance 'with the ' provisions of tlause 11 . Any dulies o - taxes levied by any competent authority ›'zilI be ƒ payable by the Customcr as further set out in Clause 3 . 10 oi fhe GTCs . Any material increase in costs reasonably insured oi to be incurred and properly e'vIdenced and satisfactorily documented by BPGIC in performing ils obligations under this Agreement . Including any material increase that aises as a direct result of a change in Ia'v (including a change in interpretation Of an existing Is \ v), regulation (including a change in interpretatlon of an exis : ing regulation) or tax, will be boif 1 e by the Cr stomer, based on muta 0 l agreement . ona pro rata basis . thai is pro rata to the propoflion 'which its Volume Commitment kears to be total sforago Ca ; ›acity of the Tefminzl . by means of an adjustment to the appropriate element(s) of the Fee . Slgne0 O'/ @ - Afco/uoo L. Paaifiotihoopor for and on behalf of Brooge Potrofaum and Gas /nvostmont Company - 2G In the presence ol: Name: . Signature: for and en behall ol cenGeo New Energy FZ - LLC - ... " “ In lho presence of: Name: Signa Aareemenl on lhe nay anti year first DATED 2022 - 9 - GENERAL TERf8S ANo CONDITIONS FOR TANK STORAGE ANO HANDLING OF PRODUCTS Eogan LovePs 1s' Flcor, /u roltm Currency I o'z/ei.
Dusnl Inmmafional Firlanclcl Ccnt/o. I ι O Box S06502. fhibcl. U/ \ E CLAUSE 2.
Ai•euc4Bicirr or GTCs 3 3. PRODUCTS 4. STORAGE FACIMTJES 7 5. OPERATION AND I \ MAINTENANCE OF STORAGE FACIMTIES 7 6. DELIVERY AND REDELIVERY 8 7. DELIVERY AND REDELIVERY REQUIREMENTS s 8. HANDLING OF VESSELS 10 9. DETERMINATION OF QUANTITIES 11 10. ACCES6 TO TERMINAL 11 11. CONDl7lONs OF PAYMENT 13 12. THIRD PARTY CHARGES AND SUMS ON PRODUCTS 13 13. RlGms or LIEN AND RETMTtON 14 14. TeAN9FER OF OWNERSHIP 14 15. REPRESENTATION9 AND WARRAMTIES 14 16. TERMINATION 1s 17. AFTER TERMINATION 1s 18. FORCE MAJEURE 19 19. LixeiuzY 22 20. INSURANCE 23 21. CONFIDENTIAMTY 23 22. CuBULATNE RiGHTS AND REMEDIES 23. CouPuxuce wrrri STxTuTzs 24. NOTICES 2g 25. ASSIGNMENT 25 26. CONSENT OR WAIVER 26 27. SEVERABILITY 28. APPLICABLE LAW 25 29. NOTICE Or DIsPLfTE 25 30. ARBITRATION 26 31. THi9o PAnTY RisHTs CONTENTS PAGE Hogan Loveib DEFINITIONS AND INTERPRETATION 1.
1.1 oeflnitlons In thls Agreement: "Additional Documents" has the meaning as ascribed to it in Clause 3.2. "Affiliate" means a Party or person Controlling, Controlled by or under common Control with another Party. "Agreement" means this Agreement comprised Of the Key Commercial Tems and the GTCs or any agreement made in writing behveen the Customer and the Operator for the carrying out the Services . "Applicable Laws" means any federal, emirate, munlcipal or aulhorily statute, ordinance, regulation, guldellne . rule, code, direction or any licence, consent, permit, authorisation or other approval, including any condlfions allached thereto, of the Unlted Arab Emirates . the Emirate of Fujairah or any publlc body or authoñty, local or federal agency, department, Inspector, m inistry . official or public at statutory person which has appropriate jurisdiction . "Business Day" means any day excluding Saturday and Sunday and any day which shall be a legal holiday or a day on which banklng institutions are authorised or required by law or other governmental action to be closed in the United Arab Emirates : "Control" in relation to a body corporate maans the abllity of a parson to ensure Ihat the activities and business of that body corporate are conducted in accordance with lhe wishes of tha( person and a person shall be deemed to have Control of a body corporate if that person possesses the majority of the issued share capital or the voting rights in that body corporate or the right to appoint or remove directors of that body corporate holding a majority of the voting rights at meetings otthe board of directors (or equivalent management organ) on all, or substantially all, matters, and except as expressly provided in this Agreement cognates of the term Control shall be construed accordingly . "Customer" means the Customer as specified in the Key Commercial "terms. "Dispute" has the meaning given to it in Clause 28. "Energy InstlNte" means the professional body for the energy industry, based n lhe UK. "Failure to Pay Notice" has fhe meaning given to it in Clause 13.2. "Force Majeure" has the meaning given to It in Clause 18.1. "LIBOR" means the London interbank offered ‹ate adm 1 nista ed by ICE Benchmark Administration Limited (or any other person which lakss over the adminlstration of that rate) for USo and period of one monlh displayed on pagas LIBOR 01 or LIBOR 02 of the Thomson Reuters screen or any benchmark fate which is locally dasignated, nominated or recommended as the replacement for LIBOR . "Loss" means any loss, damage, cost and expense suffered by the claimant due to the loss, destruction or damage of any property (Including the propeily of the claimant) or from any damage to the environment or ftom the death or injury of any person (including the clalmant) . "Maintenance Works" means checking, maintenance, repair and alteration work to the Teminal as per Clause 5 . 1 .
I logan Lovms "OT 1 " and ”OT 2 " means all permanent existing and planned oil tanker berths at Oil Tanker Terminal 1 and Oil Tanker Terminal 2 within the Porl of Fujairah . along with the installations related thereto . ”Party" and "Parties” means the Customer and the Operator individually and cotleclively as the context may requlre . “Port Regulations” means any rulas, regulations, ordinances, procedures, directives, requirements, policies, standards or information of any kind, whether currently in force or introduced from time to tlme . produced by the POF in connection with POF and with which users of POF are required to comply . including the Port Guidelines, the Port Ordinance 1982 , and the Top Side Rules, as may be amended from time to time . "Reasonable and Prudent Operator" means a person seeking in good faith to perform ils contractual obligations and in so doing and in the general conduct of its undertaking exercising that degree of skill, diligence, prudence and foreslght which would reasonably and ordinarily be expected from a skilled and experienced operator complying wi \ h the Port Regulations and all Applicable Laws and engaged in the same type of undertaking under the same or similar circumstances and condltions as contemplated by this Agreement "Rules" has the meaning given to it in Clause 30 . 1 . "Security Trustee“ ha 6 the meaning given to It in Clause 16 . 3 . “Standards of a Roaaonable and Prudent Operator" means the standards, prac \ ices, methods and procedures expected from a Reasonable and Prudent Operator . ”Termlnation Sum" means an amount equal to the aggregate amount What would have become due !n respect of Ihe Renlal and Handling Charge (fixed at the higher of lhe FIoOf Price or lhe latest Market Price) under lhis Agreement until the date on which this Agreement would have expired In accordance with ID terms . "Vesael" means any boat, ship or tanker delivering Product to Me Teminal via the OT 1 , OT 2 or any future jetties or any single buoy mooring system . 1.2 Words importing the singular only also include the plural and vice versa where the context requires ; words and expressions importing the masculine gender include the feminine ; reference to person includes any public body and any body of persons incorporate or unincorporate . Headings Clause headings shall be deemed not to be part of the Agreement and shall not be taken into account In the interpretation thereof. Prevalence The provisions of the hey Commercial Tems and the Clauses of the GTCs are to be read as mutually explanatory one of another, but in casa of conflict, discrepancy in or divergence between the provisions of the Key Commercial Tems and the Clauses of this Agreement, the provisions of the Key Commercial Term 9 shall prevail . 1.3 APPLICABILITY OF GTC3 All Services shall be provided and carried out pursuant to this Agreement unless otherwise agreed in wrlHng by the Pañies.
PAooucTs 3.1 Oescription For each cargo of Product to be delivered to the Temlnal, the Customer shall, when required by the Operator in accordance with the Operator's nomal operatlng procedures, furnish to \ ha Operator a correct and full written description of the Products as may be reasonably requested by Itie Operator and shall include : lhelr nature, type . quality, composltion, temperature, weight, volume, value, source . origin, hazard classification, their pressure and in addibon thereto all physical/chemical properties including but not restricted to : boiling point, flash point, vapour pressure, toxicity, melting point, coagulation p 0 int, viscosity, degradableness in water, stability, corrosiveness, acidity, statlc loadlng, smell level, MAC/PEL value and all particulars, knowledge of which Is materlal to the Operator for the provision of the Services or alternatively, which is of such natura that the Agreement would not have been entered into or not on fhe same conditions, if the Operator had had knowledge of those particulars . Such description shall be provided by the Customer in the form specified by the Operator . 3.2 Additional Documents The Customer agrees to execute in its name, pay for . and furnish to the Operator tlmely before the receipt of the Products all infomalion, documents, permits, approvals and olher materials and data ("Additional Documents") which may be equired by any Applicable Law including statutes . ordinances, rules, or regulations of any public authority relating la the descrlption, receipt, storing, handling (loading/unloading), blending, shipping, or disposal of the Products or lhelr waste or wasfe product, to or from the Terminal, together with detailed written instructions as to their uso and disposition . 3.3 NO(lflCd()Ofi The Customer shall as soon as practically possible notify the Operator in writing of new da \ a wi \ h regard to the Products failing under the Agreement lhalbecome known durlng the duration of the Agreement No Cognizance 0.4 The Operator shall not be deemed to have knowledge of the description of the Products, if Ifie descriptions referred to in Clause 3 . 1 and/or the Additional Documents as per Clause 3 . 2 are not materially complete or correct . True Operator may accept delivery of the Products nolwithsfanding the Operators knowledge of any incorrect or Incomplete descriplJon of me Product and/or incorrect or Incomplete Addilional Documents (having notified the Customer of such), and If the Operator shall choose to take dalivary of the Products : (a) the Customer shall bear the risk and expense of any necessary measures carried out by the Operator in respect of the Products arising from such incorrect or incomplete description and/or such incorrect or incomplete Additional Documents and shall Indemnify the Operator against all Loss arising kom such measures ; and (b) the Operator shall not be liable for any Loss arislng from such laking of delivery of the Products, save In each case to the extent such Loss arises from the gross n egligenceor wilful misconduct of the Operator.
3,5 lnspectlon of Products (a) The Operator is not bound to check the Products or their quality . conditions and conformity with their description and/or, as the casa maybe, the completeness or correctness of the Addi \ ional Documents . VVithout prejudice to Clause 3 . 4 , the Operator shall, however . be enticed, on or before taking delivery of any Products, to measure, test or examine the Products and check the Additional Documants for lhe purposes of inspection or verification if the Operator suspects that the contents have been incompletely or incorrectly described and/ar Incomplete or incorrect Additional Documents have been furnished la the Operator . The Customer shall bear Iha reasonable and aocumented cost of the Operator's inspealon and verification . (b) The Customer may appoint, at its own cost and expense . an independent inspector(s), the Idenlty of which shall be approved by the Operator, to ascenain the quality of the Products at the Terminal . The decision of such Inspector(s), if appointed, shall be treated and accepted by lhe Customer and the Operator as conclusNe and shall be final and binding upon the Operator and the Customer, save In the case of fraud or manifest error, as to the quality of the Products so loaded or unloaded . If no inspector is appointed, then in such an event the qualities ascertained by the Operator shall be binding for both Parties . 3.6 Delivery of Products (c) (a) Any taklng of delivery of the Products by tile Operator shall not constitute proof that the Products were delivered in a good and undamaged condition . (b) The Operator shall, as soon as possible, notify the Customer of any damage or defect of the Products and/or incompleteness or incorrectness of the description of fhe Products or the Additional Documents, which is apparent at ihe time of delivery thereof but the Customer shall not make any claim against the Operator by reason of the fact that it has not been so notified . The Operator shall be entitled, at the expense of the Customer, to do all thlngs necessary to prevent or reduce further deterbration In the condition of the Products and b arrange for a report fo be made on the condition of the Products or, as the ase may be, arrange for the conection or completeness of the Additional Documents, without being liable for any Loss arising from doing such things and the Customer shall indemnify the Operator against such Loss save where such Loss arises from the gross negligence or wilkl misconduct of the Operator . 7. ReNsal of Products Notwithstanding other provisions of the Agreement, the Operator shall be entitled fo refuse to take delivery of the Product ar to carry out any Services if the acceptance of Product or carrylng out of Services may in the reasonable opinion of the Operator result in : (a) the Products delivered purportedly as the Products do not confom with lhe description thereof provided by the Customer as per Clause 3 . 1 and/or are not furnished with complete or correct Additional DocumanD as per Clause 3 . 2 ; (b) danger or damage either to persons, goods. the Teminal Or property genarally; (c) any environmental damage: or {d) a violation of the Poa Regulations or Applicable Laws .
3.JO 3.11 The Customer warrants that the Products : (a) will cause no damage to the Storage Facilities and/or ancillary equipment of lhe Teminal. (b) will not render, after cleaning, the Storage Facilities unfit for fhe proper storage of water white chemicals; and (c} may lawfully be stored at the Teninai . The Customer shall be responsible for all Losses . fines, penalties and damages directly resulting from ltie storage of the Products at lhe Teminal . Provided . however . Ifie Customer shall not be responsible for such fines, penalties and damages arising from the Operator's failure to use reasonable care In safekeeplng and handllng of the Products or \ he proper \ y of the Customer pursuant to Its obliga 5 ons under the Agreement or any damage caused by the gross negligence or wilful misconduct of the Operator, or from any manufacturing defects in the materids or the manufacture of the tanks, interconnecting pipes, manifolds, the Storage Facilities and/or anciilary equipment of theTeminal . 3.12 Titlo and risk Except to lhe extent inconsistent with Clause 13 . 3 and Clause 17 . 5 , title and rlsk in relation to the Product shall remain with the Customer at all times under the terms of this Agreement . 8. If the Products are at the Terminal and, in the r easonableopinion of the Operator, do not conform with Ifie descrlption thereof provided by the Customer as per Clause 3 . 1 and/or are not Mrnished wilh complete or correc( Additional Documents as per Clause 3 . 2 , the Operator shall be entitled to remove Itie Products forthwith a \ the rlsk and expense of Ihe Customer . 9. Admission to Teminai If lhe Operator gives ID consent to admit to the Terminal tha Products . whose quality deviates from the description referred to in clause 3 . 1 and/or, as the cass may be, the Additional Documents are incomplete or incorrect as per Clause 3 . 2 , all the necessary exba operations, of any nature whatsoever, which are carried oul in relation to those Products and all further consequences shall be for the account of the Customer . Duties, Taxes and Charges If the Products are or may be subject to duties, taxation or other charges under the Applicable Law, the Cusbmer shall reasonably in advance and on demand furnish to the Operatar, all information and documents required by the Operalor to enable the Operator to make the appropriate declarations to such authorities for such purposes or to faciliate the Operator's dealings with such authorities . The Customer shall be liable for and shall indemnify the Operator against any Loss, penalties, taxes or duties paid or payable by the Operator as well as any declarations made to lfie aulfiorities by the Operator based on the documents and infomation prov 1 ded to the Operator by the Customer in connection v lth the duties, taxation and other charges which the Products are or may be subject to . 4.
STORAGE FACILfFIES 4.1 Use of Storage Facilities The Customer shall Only use the Storage Facilities for the purposes specified in the Agfeemant unless otharwise sublet to another customer, for which in such case the Customer will effect a mutually agreed sublease contract to be annexed to this Commercial Storage Agreement . 4,2 Solectlon of Storage Facllities (a) Unless expressly provided otherwise in lhe Agreement, the Operator shall, at its absolute discretion, in consultation with the Customer, selecl the Storage Facilities suitable for receipt and storage of the Products and shall be entitled to move the Products from one part of fhe Storage Facilities to another from time to time with the approval of the Customer (not to be unreasonably withheld or delayed) at no cost to the Customer . (b) Subject to obtaining the consent of the Customer to 9 *^ f * i t th 6 Customer's sole discretion and other relevant customers (which consent shall not be required in the event af an emergency) . the Operator may receive and store the Products at any of the Storage Facilitles at the Teminal in common wllh Products of the same average quality and of the same grade as ihe Products . (c) The Customer shall not be en 5 tled to claim that Products, which the Operator shall subsequently deliver to the Customar out of such common place purportedly as tne Producls, are not in fact the Products, which Ihe Cusbmer had earller delivered to the Operator for carrying out the Services . (d) The Operator shall as soon as possible, nodfy ihe Customer of any movement of the Products but the Customer shall not make any claim agalnst the Operator by reason of the fact that it has not been so noticed . 3. Sultabllity of Storaga FacilltiBe The Customer (or a third - parly surveyor engaged by the Gustomer) shall be entitled to inspect the Storage Facllltias to ensure their cleanliness, suitability and good condition prlor to the delivery of the Products to the Operator . The rights to inspect shall be exercised at reasonable times and with prlor written notlce, provided the relevant representative of the Cus \ omar (or a third - party sun/ayor engaged by the Cuslomei) shall comply with all on - site health and safety and other regulations . If the Customer (or a l?iird party surveyor engaged by the Customer) shall not mate such inspection or shall not have objected in writing to the cleanliness, suitability or condition of the Storaga Facilities wlthin 7 days following such inspection, the Storage Facilities shall be deemed to have been in a dean, suitable and good condition upon the delivery of the Products thereto and the Operator shall not be Ilabie in any way whatsoever for any Loss arising out of any lack of cleanliness or the state or condition of the Storage Facill \ ies . The decision of any third party surveyor engaged by the Customer as to the cleanliness or otherwise of lhe Storage Facilities shall, except in the case of fraud or manifest error . be final . 4. Substitute Storage Facilitles If at any flme during the (erm of ltte Agreement, the Operator finds it necessary to provide substitute storage faciliaes to the Customer, the Operator may do so provided such use will not result In the mixing of the Product with the product of any o!hercustomer . any additional costs involved in the transfer of Products is at the expense of the Operator and Ihe Operator has obtained the Customer's prior approval (not to be unreasonably wilhbetdor delayed) . Any such substlute storage facllizies . while in use under this Agreement, shallbe deemed to be the Storaga Facilities referred to in thls AgreemenL The Operator shall compensate the Customer for the cost of any Product lost as a resuk of the use of such substitute Storaga Faciliées which Is only beyond the tolerance rule of 0 . 5 9 L plus or minus and fhal is caused by gross negligence of the Operator .
4.S Maximum Contants Unless explicitly pemitted otherwise in writing by the Operator, the maximum allowable weight . which may be stored in any Storage Facility shall be equivalent to the weight of the volume of water at a temperature of 4 oC, with which the capacity of the Storage Facility in quastion can be filled . No reduction in the storage rates and charges payable as per Box 12 of the Key Commercial Terms shall be allowed on the ground that any part of such Storage Facilities shall not have been used . OPERATION AND MAIMTENANCE OI= STORAGE F CIMTIES 5. 5.1 Operation and Maintenance The Operator at all times during the term of the Agreement shall operate and maintain Ihe Terminal and related equipment provided hereunder in good and serviceable condition to the Standards of a Reasonabla and Prudent Operator . Provided that the Operator promplly and reasonably in advance notifies lrie Customer, the Operator shall be entitled, at any time and from time to time, to carry out Maintenance Works to the Terminal or to have these carried out . and furthemoreto effect alterations or to have these effected or alternatively to fit additional or special equipment to lria Teminal or to have these fitted, whenever the Operator deems it necessary or prudent to do so or if Ihe Operator is obliged to do so pursuant to Applicable Law . 5.2 5.4 Moving of Products Subject to ob \ ainIng the Customer's consent (which consent shall not be unreasonably withheld or delayed and shall not be required in ihe event of an emergency), the Operator shall be entided to move the Products from the Teminal to other parts of the Temlnal if the Operator shall deem such movement to be necessary for the Operator to carry out such Maintenance Works and in such event the Operator shall as soon as possible notify the Customer of such movement of the Products . The Operator shall compensate the Custamer for any Product lost as a resull of the movement of Products . 5.3 Liability The Customer shall not be enlilled b make any daim that has either directly or indirectly arisen from Maintenance Works or from the deprivation of the use of the Terminal for any duration as a result of such Maintenance Works provided that the Operator has notified the Customer as soon as practicable after becoming aware of such works and, axcapt In the casa of an emergency . has consulted with the Customer in respect to such works . Nothing in this Clause 5 . 3 shall prevent the Customer from bringlng a dai/n which has arisen from lhe gross negligence or wilful misconduct ol lhe Operator . Payment during Maintenance Su#|ect to the provisions of this Clause 5 . 4 , the Operator shall be entitled to payment by the Customer of all the rates and charges or olher sums payable by the Customer under the Agreement in respect of the use of the Teminal even during arty period that the Customer may be deprived of the use of lhe Terminal during such Maintenance Works . DEMVERY ANo ReoELNERY 6. 6.1 Delivery The Products shall be deemed to have been delivered by or on behalf of the Custonar to the Operator at the Tem1nal:
(a) if the Products are delivered from a Vessel, immediately upon the Product passing the connecting flange of the pipeline at tha Terminal connected to ltie manifold of the Vessel ; or (b) If the Products are delivered through a pipeline of any other person, Immedlately upon the Products passing the valve placed between that pipeline and the pipeline at the Terminal . 2. Redellvery The Products shall be deemed to have been re - delivered by the Operator to the Customer from the Teminal: (a) if the Products are re - delivered to a Vessel, Immediately ager the Products have passed the connecting flange of the pipeline at the Teminal connected to the manifold of the Vessel ; or (b) If the Products are re - delivered through a pipeline of any olher person, immediately after the Products have passed the valve placed between Itie pipeline at the Teminal and the first mentloned pipeline . 7. DELIVERY AND REOELIVSRY REQUIREMENTS 1. Requirements The Operator shah receive from or re - deliver to the Customer ths Products : (a) if so instructed by the Customer, (b) against the presentation of a receipt in a fbrm approved by the Operator and duly signed and stamped by the Customer, provided that the Customer shall have performed and observed the material tems and conditions of \ he Agreement and of any other agreement made be \ ween the Operator and the Customer in respect of other Product at the Terminal, up to the date of such re - delivery . 2. No Obligation Prior to the re - delivery of the Product by the Opefalor ta the Customer, the Customer shall advise the Operator in writing of the person(s) aulhorlsed to take re - delivery of such Product The Operator shall be entlged and shall endeavour but not obliged to : (a) demand from any person purporting to be smiled or authorised to take re - delivery of the Products, satisfactory proof of the person's Identity and of such entitlement and authority ; and (b) satisfy itself that the signature and stamp appearing on the instructions and receipts are correct and valid as at the date of re - delivery . The Operator may at its sde disaetion accept and act or reject on any request or instruction given by any person who appears or purports to be authorised by the Customer lo deal with or take redelivery of lhe Products without being required to verify the same with the Customer, and in the event that the Operator acb in reliance on any such request or instniction, the same shall be deemed to have been made or given by the Customer . The Operator shall not be liable for any Loss añsing as a result of the Operator accepting and acting on or rejecting any such request or instrucfion save in the case of gross negligence orwilMl misconduct or fraud of the Operator provided the Operator has immediately notified the Customer of such action .
HANDLING OF Vs99ELS 8. 1. POF The Customer acknowledges and agrees tkat all Vessels must be acceptable to the POF and it is the responsibility of the Customer to ensure that its nominated Vessels at all tlmes maet and comply wifh the requirements of the POF . Ihe Port Regulations, Applicable Laws and any other requirements and the Operator shall have no Ilablllly in this regard . The Customer further agrees that it shall comply with the Port Regulations and Applicable Laws and any orders or directions issued by the POF or the harbour master, including with respect to Vessel scheduling, loading, discharge and pilotage . 2. Ordor of Arrival Subject to Clause 8 . 1 and except whare raquired otherwise by the competent authorities or where deemed necessary by the Operator to facilitate other operations at the Terminal, the Operator shall lake delivery of Product from, and redollver Product to, a Vessel beMed at OT 1 or OT 2 on a first - come - first - served basls In accordance with the notices given to the Operator by such means and within such time as shall have been agreed between the Operator and the Customer . 8.4 In the event of any delay caused to fne Vessel or any delay, interruption or departure from the sequence of handing of Ihe handling of the Vessel due to any cause whatsoever (including the non - availability of a berth or ancillary facilities), the Operator shall not be liable la the Customer or any other person for any Loss arising from any such delay or interruption or departure, including any daim for any demurrage or other compensation for any temporary or pemanent loss of use of the Vessel . Handling Instructions If the loading or unloading of the Products shall be undertaken by the Operator as part of the Services . Ihe Customer shall ensure that the Operator shall receive reasonably adequate direcbons which is usual in the case of such delivery In sufficient lime regarding fhe proper manner of such loadlng or unloading . 8.5 Inadequate Instructions (a) If the Operator shall not have received any or any reasonably adequate directbns as descn 6 ed in Clause B . 4 or shall not have received such directions within sullicient time, fhe Operator shall be entided to refuse to take delivery of or to re - deliver the Products and at the risk and expense of the Customer, to reiziove the Vessel to any place chosen by the Operator at its absolute discretion : and (b) the Customer shall pay to the Operator all losses, cosls and expenses (induding demurrage and consequendal losses) arising from such non - receipt, refusal and removal and shall be llable for any Loss arlslng from such failure and shall indemnify the Operator against such Loss .
8.6 Handling The Customer shall ensure that, when fhe Vessel has berthed or landed alongside a delivery or re - delivery point at the Teminal designated by the Operator and the Operator has declared itself to be ready fbr such delivery or re - delivery, such laading from or unloading onto the Vessel (including fhe connection and disconnection of hoses and the taking and analysis of samples of the Product) shall commence immediately and proceed diligently on a 24 - hour basis daily (Including Sundays and public holidays) without interrupfion or delay until the completion of such loading or unloading . 7. Pumping Capacity Without prejudice to the generality of Clause 8 . 5 , the Customer shall ensure that : (a) the Products shall be unloaded ftom a Vessel at the maximum pumping capacity whlch is usual in the case of a vessel of a similar size and tonnage unless directed otherwise by the Operator, taking into account the receiving capacity of the Terminal and the requirements of safety ; and (b) the Products shall unless directed othenvise by ihe Operator, be pumped at such temperature, pressure and condition as wlll not delay or impede such pumping . If the Operator and the Customer shall differ on lhe questiOn Of sUch maximum pumping capacity, temperature, pressure or condition, Clause 30 shall apply . 8. Departure The Customer shall ensure that the Vessel shall be removed from the Teminal promptly upon completion of such loading or unloading or, sooner if necessary for compliance with fhe requirements of the competent authorities or where deemed necessary by the Operalor to facilitate other operations at the Teminal . 9. Failure (a) the Products shall not be unloaded from or loaded onto the Vessel, as the case may be, at the times and the speed described in Clause 8 . 7 due to any reason whatsoever : or (0) the Vessel shall not be removed from the Terminal at the time described in Clause 8.8 due to any reason whaBoever (including the arrest or seizure of the Vessel by a third party). and the Operator shall hava requested the Customer or the maslerof the Vessel to increase the speed of such discharge or to remove the Vessel, as the case may be, and the Customer or Ihe master shall fail to comply with such request dua to any reason whatsoever Ifie Customershall pay lathe Operator all losses, costs and expenses (including demurrage and consequential losses) arising from such failure and removal and shall be liable for any Loss arising directly from such failure and shall indemnify the Operator against such claims . 9. 9.1 DETERMINATION OF QUAMTIT)ES Quantities loaded la or unloaded from a Vessel will be ascertained by the Operator's aulomalic tank level gauging system before and after eaah loadlng/unloading event and shall take Into account quantities of Product stored in the Temlnal's pipelines . All deteminations or quantities shall be in accordance with ASTM International Standards . 9.2 Surveyor The Customer may appoint an Independent inspector(s), the identity of which shall be approved by lhe Operator, to witness the loading/unloading of the Products for delivery to, or redellvery from, the Temlnal . The decision of such Inspectors, if appointed .
shall be beatad and accepted by the Customer and Ihe Operator as concluslve and shall be linal and binding upon the Opora!or and the Customer, save for fraud or manifest error, as to lhe quantity of the Products so loaded or unloaded . If no inspector is appoin \ ed, then in such an evenI the quantities ascertained by the Operator shall be final and binding for both Parties . ACCESS TO T SRMINAL 10. 10.1 Authorised Access The Operator shall grant the Customer and persons authorised in writing by the Customer, access to the Storage Facilities only for the purposes of the Agreement subject to lheir compliance wilh the requirement of the Operator and the competent authorities . Operator should prepare the required cargo shipping documents requested by Customer . Operator is having the needed Infrastructure to transfer the Product through the matrix manifold of the Fuja[rah Oil Tanker Terminal . 10.2 NO CIaIM The Operator shall not be liab|e for any Loss due to any cause whaboever arising from the entry to or presence of the Customer or such authorised persons on the Terminal and the Customer shall indemnify the Operator against such Loss except for Loss which arises due to the gross negligence or wllful misconduct of the Operator . 11. CONDITIONS OF PAYMENT 11.1 Invoicing and Payment (a) In Consideration to Box 13 of Commercial Storage Agreement, the Customer will pay fha Operator the Rental and Handling Charges (as may be revised fiom Ome to time pursuant the tems of this Agreement) covering the Volume Commitment . over the period of twelve months, on accounL and In advance . The fimt month to be paid in a current - aated cheque to be daled with the date of this Agreement, and tha remaining eleven months period to be pald with eleven post - dated cheques . in advance . dated 15 days prior the beginning of each storage month covering the rest of the Term . (b) Not later than 10 days aRer the end of each monfh, the Operator shall submit to the Customer an invoice for the Fee incurred (excluding the Rental and Handling Charges) in respect of fhe immediately preceding month . The Customer shall pay such invoice within 10 days of its bein 9 issued . (c) All sums of whatever nature due from the Customer to the Operator under the Agreement shall be payable without demand and set - oP, or counter clalm and wI \ hout deduction . (d) All amounts payable to the Operator undef thls Agreement ara exclusive of any Value Added Tax or other applicable sales tax or duty of any kind . For the avoidance of doubt, charges related to fhe Port of Fujairah will be charged to the Customer as per actual Port of Fujairah invoice which is indusive of Valua Added Tax (e) If any deduction or withholding for or on account of tax Is required by the laws of any jurisdiction to ba made by the Customer kom any payment, the Customer shall pay to the Operator such additional amount as will (after such deduction or withholding has baen made) leave the Operator with an amount equal to the paymant which would have been due if no deduction or withhdding for or on account of tax had been requlred .
2. Immediate Payment f 2 otwilhstanding the period for payment stipulated in Clause 11 . 1 : (a) if legal proceedings shall be commenced by any third party for the bankruptcy or liquidation or winding up of the Customer, unless the Customer can provide evidence satisfactory to the Operator that such proceedings are frivolous or vexatious and can be dismissed withln 15 days : (b) if the Customer shall make any offer of composition to ils creditors (except in the case of a voluntary reorganisation not including the insolvency of the Customer) ; (c) if any oraer of distress or allachment or similar order shah be made against any property of the Customer and remains undischarged for 14 days . (d) if lhe Customer shall cease to carry on the business in which it was engaged at the commencement of effoct of the Agreement ; or (e) if the Customer shall fail to perform or observe any material tern or condition of the Agreement, all sums due from the Customer to the Operator shall become immediately due and payable . 3. interest If due to any reason whatsoever (except the default of the Operator), the Customer shall not pay any sum payable to the Operator under the Agreement within 15 days after the date of the Operator's invoice then : (a) the Operator shall be entitled to engage the services of any person to recover such sum from the Customer . in whlch event the Customer shall also be liable fbr all aerial costs incurred by the Operator for such services (includlng the legal costs) ; and (b) regardless of whether or not tha Operator shall have enga 9 ed the services of any parson as described In Clause 11 . 3 (a) the Customer shall in addition to all sums payable under the Agreement and the cosD described in Clause 11 . 3 (a) (if any) . pay to the Operator interest on such sums and Ihe costs at 5 ƒ 4 above the then current LIBOR rate, which interest shall be payable on a day to day basis ffom the date immediately aRer the due date for payment to the date of actual payment of such sums, the costs and interest thereon or to the date of expiry or sooner temination of the Agreement . whlchever Is earlier . 4. 9ueponslon If the Customer fails to pay any amounl within 10 days after the due date under thls Agreement, the Operator may suspend the provision of Services under this Agreement until such non - payment is remedied . The Operator shall notify the Customer of any imminent suspenslon of the provision of Services, not less than 5 days prior to the date on which the Operator shall effact such suspension . Failure by the Opeiatoi to provida notification to the Customer of any suspension of Ihe Services shall not limit . diminish or invalldala in any way the Operator's right to suspend the provision of the Servlces in accordance with lhls Clause 11 . 4 . During the period of suspension . the Rental and Handling Charges shall continue to be payable .
11.5 Basls For the avoidance of doubt, it is hereby agreed and declared that: (d) (a) where the Products shall be delivered or taken re - delivery of by a vessel . such sums have been charged on the basis Ihat the Products shall be deliVered or re - delivered at the flange of the pipeline which is connected to the manifold of the Vessel : (b) unless expressly agreed otherwise, such sums shall be payable for the whole periad during which the Storage Facilltles are available for the Customer's use pursuant to the Agreement regardlas of whether or not the Customer shall have actually used the same ; unless expressly agreed otherwise. such sums shall be payable on a monthly basis. Payment for a part only of a monlh should be on a pro rata basis; and the Operator shall not be obllged to recover from third parties any sums which may be due from third parties to the Cus \ omer in respect of the Products. 12. TH)RDPARvyCHARGE@A DSuu9O PRO0UCT4 1. Customer's Liability The Customer shall pay la Ihe Operabr the amount of any propeñy invoiced charges or sums due or paid by the Operator to third parties (including any frelght, port charges, taxes, duties . contributions, fines and any other costs) in respect of the Customer's Productand/or the provision of Services la the Customer save for any charges which are specified in the ffeyCommercial Terms to be borne by the Operator and shall indemnify the Operator against any Loss arising in respect of such unpaid charges and sums regardless of whether or not the Praducts shall then be present at the Teminal . 13. Roi - iTs or LIEN AND RETENTION 1. The Operator shall have a right of lien and retention over the Products and all sums (including any insured sums collected by the Operator for ihe Customer), documents and valuables which the Operator shall now or hereafter hold of or on behalf of the Customer or which is now or hereaRer due to the Customer, to secure the performance of all of the dufies, undertakings and obligatlons of the Customer under Itie Agreement or under any other agreement made between tha Oparator and the Custamer in respect of other Products at the Teminal . 2. The Operator shall exercise iD righB under Clause 13 . 1 by delivering a notice to the Custamer setting out the amount of the sums due under the Agreement and any other agreement between the Operator and the Customer in respect of othar Products at the Terminal (a “Failure to Pay Notice”) . The Failure to Pay Notice shall also set out a due aate for payment of such sums, such date to fall at least 7 days after the date of Issuance of the Failure to Pay Notice . 3. Tha Customer acknowledges and agrees that if the Customer has not paid the amounts due by the due date set out in the Failure lo Pay Notice, then the Operator shall be enMed to make an application to any relevant court, to allow the Operator to sell a quantity of Product that will satisfy the amounts due under the Failure to Pay Notice .
14. TRANSFER OF OWNERSHIP The Customer may Sansfer the to Product stored in the Storage Facilities to any person who has contractual rlghts to the necessary storage capacity in the Taminal . Any sucti kansfer of title shall be promptly notified to Operator . 15. REPRESENTATIONS AN0 WARRANTIES Each Paty hereby represents and warrants to the other Party that: (a) it is a company duly incorporated and validly existing under the laws of the jurisdiction referred to in Box 2 of the Key Commercial Tems; (b) it has the power and authority required to enter into this Agreement and perfolTn fully its obligations under this Agreement in accordance with ils tems; (c) subject to any general principles of law, assumptions or qualifications referred lo in any legal opinion required in relation to this Agreement, this Agreement is legal, valia and binding on hand is enforceable In accordance wlth its terms : the execution and delivery of this Agreement and the performance of its obligationsunder this Agraemant have been duly authorised by all the necessary corporate acbons on the part of such Party ; ana (d) neither the entry Into this Agreement nor the implementation of the transactions contemplated by it will resuit in: (i} a violation or breach of any provision of its stalutes, by - laws or other constitutional documents ; a breach of, or give rise to a default under, any contact or other agreement to which it is a party or by which it is bound : or a violation or breach of any applicable laws or regulations or of any order, decree or judgment of any court, governmental agency or regulatory authority applicable to it or any of its assets, (iii) and in case of breach of any such rapresenation and warranty, the Customer agrees to indemnify and keep IndemniFad the Operator against any such breach . 16. TERMINATION 1. Early Temination by Operator Notwithstanding the other provisions of the Agreement, the Operator may at any tlme after fhe occurrence of an Event of Default by Ihe Customer whiM is continuing terminate the Agreement, by giving written nofice of such temination to the Customer . 2.
Event of Default Each of tha folbwing is an Event of Default by the Customer (a) if the Customer shall fail to observe or perlbm any of its material obligations under the Agreement and shall not remedy its failure to so observe or perfom such material obligations within 30 days' time after the Operator has notified the Customer of such failure ; (b) if the Customer shall fail to pay any sum due under lflis Agreement and shall not remedy its failure to pay within 15 days' time after the Operator has nolilied the Customer of such failure to pay . (c) if the Operator shall be of the reasonable opinion that !tie Products have become subject to changes or deteriorated or may become subject to changes or deteriorate and the Operator Is of the reasonable opinion that fhe Customer has failed to give proper or full instructions to Ihe Operator for tha prevention or reduction of such changes or deterioration : (d) if the Product stored at the Teminal are nol in compliance with UAE Laws and the Port of Fujalrah Laws : (e) if fhe Customer or any of its shareholders, group company . parent company . subsidiaries, or, to the Customer's knowledge, any director, officer, amployee, agent, aftllate or representative of the Customer or any of its subsidiaries, is an individual or entity ("Person") that is, or is owned or controlled by a Person that is subject to any sanctions administered or enforced by the U . S . Department of Treasury's Office of Foreign Assek Control, lhe United Nations Security Council, the Council of the European Union, Her Majesty's Treasury, or other relevant sanctions authority [collectively, ’Sanctions") . (q if the Customer conducts businesses with any parent company, subsidiary . joint venture partner or other Person that faciliates any actlvlties or business with any Person lhat, at the time of such facilitation, is Ifie subject of Sanctions . (g) if the Customer shall have a receiver appointed over all or any substantial pait of ils asset and in tho case of an appointment by a creditor, such appointment is not dismissed within 30 days ; {h) if the Customer shall make any composition with iD creditors (except in the casa of voluntary reorganisation not involving insolvency of the Customer) ; or (i) if lhe Customer shall go into liquidation whe \ her voluntary or compulsory {otherwise than for the purposes of amalgamation or reconstruction). 3.
Early Termination by Customer Notwithstanding the other provisions of ltie Agreement and the required nofice periods therein, the Customer may teminate Ihe Agreement forthwith at any time without claim or charge by the Operator, by giving notice to Ihe Operator if any of the fbllowing has occurred and Is continuing : (a) if the Operator shall have a receiver, bankruptcy trustee or analogous person appointed over or to administer and manage all or any substantial part of its assets and such appointment is not dismissed or withdrawn within 30 days ; or (b) If the Operator shall make any composition wifh Ils creditors (except in the case of voluntary reorganisation not invoking insolvency of the Operator) ; or if the Operator shall go into liquidation whether voluntary or compulsory (otherwise than fof tha purpose of amalgamation or recons \ suction), provided that for as long as any amount owed to any secured Flnance Party, or any agent or trustee acting on its behalf (a "Security Trustee"), by the Operator is outstanding, the Customer shall not be pemitted to terminate this Agreamant upon the occurrence of any of the evenls or circumstances specified in Clauses 16 . 3 (a) to 16 . 3 (c) (inclusive) and shall instead, subject to the required notice period thereln, only ba permitted to terminate this Agreement : {i) in the event or circumstance set out in Clause 16.3(a) occurs; or (A) a receiver wilh a power of sale has been appointed by any securea Finance Party or the Security Trustee: (B) a bankruptcy trustee has been appointed by a court in the United Arab Emirates on the application of any secured Finance Party or the Security Trustee ; or (C) any analogous parson is appointed by or on the app|ication of any secured Finance Party or the Security Trustee, in each case over or lo administer and manage: (D) all or sny substantial part of the Operator's assets; or (E) the shares in the Operator that have been charged to the secured Finance Party, or the Security Trustee (as the case may be). (ÏV) and any appointment referred to in paragraph (A), (B) or (C) is not dismissed or withdrawn within 30 days ; or any secured Finance Party or Security Trustee (as the case may be) has been awarded a favourable judgment of a court in the United Arab Emirates substantiating the secured Finance Party's, or Security Trustee's (as lhe case may be) debt claim and enabling it to sell (X) tha Operator's business and/or assets Ihat have been charged to the secured Finance Paily, or the Security Trustee (as the case may be) by the Operator or (Y) the shares in the Operator that have been charged to the secured Finance Party, or the Security Trustee (as tha case may be) ; ar a court In the United Arab Emirates has issued a judgment of liquidation or otherwise authorising (or permitting) the dissolution of the Operator fbllowing a judgment of bankruptcy, or any similar or comparable avents under any new legislation applicable to the Operator . (iii) 17. AFTER TERMINA7ION 1. Temlnatlon Payment on Early Teminatlon by Operator The Customer shall pay to the Operator fortriwilti on any temination pursuant to Clause 16 . 1 , other than In the case of a termination pursuant to Clause 16 .
2 (i) due to an act or omission of tha Operator or Force Majeure, an amount equal to the aggregate ot (a) any amounts then due or payable but unpaid by the Customer under this Agreement; (b) any amount to be due and to be Invoiced under thls Agreement but unpaid by the Customer, equal to the aggregate of the due and owing Rental and Handling Charges, lhe Excess Throughput Charges . the Circulation Charges, \ he Inter Tank Transfer Charges, the Port of Fujairah Tariffs and the Cleaning Charges if cleaning of lhe Storage Facilities is necessary in the opinion of the Operator ; any Rental and Handling Charges under this Agreement for the remainder of the Agreement period till expiry to fall Immediately due for payment to the Operator ; (d) by way of agreed compensation, the Termination Sum calculatad as at the date of that termination . 2. No llabillty following early termlnatlon by Customer \ Mthout prejudice to any accrued rights up to termination, the Operator shall have no liability under this Agreement or otherwise in connection with or as a result of any termination of thls Agreement pursuant to Clause 16 . 3 (Ea‹ly Termination by Customer) . 3. Removal of Products The Customer shall completely remove the Products from the Storage Facilities not later than the date of expiry or the day falling 30 days aRer termination of the Agreement pursuant to Clause 16 . 4. Return of Storage Facilities If cleaning of the Storage Facilities is, in the opinion of the Operator, necessary, upon expiry or temination of the Agreement, or due to a change in the nature of the Product stored or to be stored therein, during the term hereof, or both, the Customer agrees to remove or cause to remove any Products and waste to parmit cleaning in a safe and lagal way and to reimburse the Operator for said claaning, removal and disposal . 5. Rght of Disposal If the Customer falls to remove lfia Products due to any reason whatsoever upon the expiry or termination of the Agreement in accordance with Clause 17 . 3 , the Operator shall be entitled, by notice to the Customer, to remove the Products from tha Storage Facilities to any place whether in or outside ltie Terminal and dispose of or destroy the Products in such manner as the Operator deems fit and at the risk and expense of the Customer and by rendering any surplus to the Customer to an account as notlFud by Ihe Customer . 17.6 If the Operatof Shah decide to dispose of the Products under Clause 17 . 5 by sale by private treaty or public auction any proceeds of the sale shall be applied by the Operator in the following manner : (a) firstly .
in payment of all sums due from the Customer to the Operator under the Agreement or under any other agreement made between the Operator and the Customer ; (b) secondly, in payment of the expenses of ihe removal and disposal and any storage of the Products In the period between such removal and disposal ; and tcl thirdly, in paymentofany sums due from the Customer to the compelentaulhorities ; (d) fourthly, in payment of other clalms or llens of which n0tica has been given by third parges to the Operator, and by rendering any surplus to the Customer to an account as notified by lhe Customer . 7. lnsufflcient Procaeds If the proceeds of any sale of the Products by Ihe Operator pursuant to Clause 17 . 5 shall be insufficient to satisfy in full any claim of Ihe Operator under the Agreement and under any other agreement made between the Operator and the Customer . the Operator shall be entilled to recover the same from the Customer as a debt in any court of competent jurisdiction . Any sale of the Products by ths Operator pursuant to Clause 17 . 5 shall be free kom any encumbrances . 8. No Liability The Operator shall not be liable for any claim arlslng from the ‹emoval, disposal, destruction and Intermediate storage of the Products under this Article 17 , and Ihe Customer shall indemnify the Operator against such claims . 18. FORCE MAJEURE 1. Scope of Force MaJeuro Any delays in or failure of perfomance by either Party shall no \ constitute default hereunder or give liability for any claims if and to the extent such delays in or failures of performance are, without I : he fault or negllgence on the part of the affacted Party, caused by Force Majeure . "Force Majeure" shall mean any event or circumstances, which is not within the reasonable control of the Party (actlng as a Reasonable and Prudent Operator) affected by the cause and which, by the exercise of diligence, such Party (acting as a Reasonable and Prudent Operator) is unable to foresee or prevent and may Include, but shall not be limited (a) war, hosôlities, revolution, riots, insurrection or other civil commotion, acD of terrorise or sabo 9 e; (b) nuclear explosion, radioactive, biological or chemical contamination, lonizing radiation, or the discovery of such contamination or radiabon; {c) strikes and/or lookouts except any such action by employees or subcontractors or agenls of the Party claiming Force Majeure; (d) any effect of the natural elements, including lightning. fire, earthquake, sandslorm. flood, stom, tsunami, cyclone, typhoon or tornado; (e) explosion (olher than nuclear explosion or an expbsion resuI \ ing from an act or war); (f} epidemic or plague ; (g) inabîlily to obtain necessary equipment or mateñals due to btockade, embargo or sanctions; and (h) any act of omission of any oompelent authority including any refusal to issue, wiltidrawal, non<enawal or non - extenslon of a license, pemit or approval. 18J f4OtÎfÎGAtlOfi If either Party is prevented from or delayed in perfoming any of its obligations under the Agreement by Force Majeure, Such Party Shall immediately notify the other Party in wñting of lhe occurrence of the circumstances constituting Force Majeure .
Forthwith upon the t8.5 Force Majeure ceasing lo have effect . the Parly relying upon it shall give written notice thereof to the other Party . 3. General Limitations The affected Party shall nol be entitled to suspend performance under this Agreement for any greater scope or longer duration than is required by the Force Majeure or the delay occasioned thereby . Obligations of lho Parties that were required to be completely performed prior to the occurrence of Force Majeure shall not be excused as a result of such occurrence . The Customer 9 hall be able to claim Force Majeure only in respect ofa vessel that is loading or unloading at the Terminal, or whose scheduled loading and unloading at the Terminal was been notified b the Operator . The failure or inabillty of either Party to satisfy a payment obligation that has arisen under this Agreement shall not ba excused by Force Majeure . 4. No Braach Neither Party shall be deemed to be In breach of the Agreament or be liable to the otner for any delay in performance or non - performance of its obligations under the Agreement to the extent that such delay or non - perfomance is due to Force Majeure . of which it has notified the other Party . The Party claiming Force Majeure shall perfom and observe its obligations under the Agreement insofar as the performance and observance triereofare not preventad by Force Majeure . To the exten( that the Operator is unable to provide the Services as a result of Force Majeure affecting the Operator, tha Customer shall not be obliged to pay the Rental and Handing Charges . Use of Storago Facilities If Force Majeure is being claimed by the Cusk›mer, and as a result of such Force Majeure, the Customer is not using Itie Storage Facilities, the Operator may allow the use of Itie Storage Facilities to other customers for so long as the Force Majeure continues . 6. EffoM The Party claiming Force Majeure shall use reasonable effoM to promptly cure lhe ePect of Force Ulajeure . 7. Temina!ion Where an evant of Force Majeure affecting Operator or Customer extends for more than 60 consecutive days, ea : h Parly shall have the right to teiminate Ihis Agreement by giving 30 days' wrihen notica to that effect . 19. LiABILlTY 1. Operator's Liability (a) The Customer shall indemnify and hold the Operator hamless from and against all claims, cosD, losses, liabilities . injury to person and/or damage to property, caused by or resulting from' (i) Any gross negligence, misconduct, and/or any intentional wrongful acD oromissions on lhe part of the Customer, its employees, agents, contractors or any other persons acting under its authority (indudlng but not limited to, any contractors transporting product to or from the temlnal) in the performance of this Agreement .
and (ii) To the extent not caused by the negligence, misconduct, wrongful acts or omissions of the Operator . ifs employees, agenls or contractors, any losses incurred directly as a result of the physical or chemical characteristics of the Product . (b) Far the avoidance of doubt, the Operator shall not be liable to the Customer for any claims, costs, losses. damages, liabilities, injury to person and/or damage to property incurred by the Customer to the extent that such claims, losses, damages, Ilabilities, injury io person and/or damage to properly are caused (whether directly or indireclty) by the Operator In tha perfomance of its obligations under Ihis agreement in accordanca with its terms. The Operator shall carry out the Services with reasonable care and to the Standards of a Reasonable and Prudent Operator . Without prejudice to the Parties ' rights under the other provisions of the Agreement, this Clausa 19 . 1 shall not impose on Use Operator any liability for claims arising from : (c) Force Majeure; or (d) any delay in the delivery of the Products to lhe Operator 2. Event of Claim Notwithstanding anything to the conkary in this Agreement, in lhe event of any claim against the Operator (a) the Operator shall not be liable for any forms of consequential losses (including loss or profits, indirect loss or damage or other forms of puraly economic losses): (b) the Operator shall not be liable for any claim arising before delivery of the Products to the Operator or afler re - delivery of the Products to the C«stomer. (c) the clalm will be void if the Customer shall not have notified the Operator thereof wlthin 120 days aRer Ihe occurrence of the event giving rise to the claim or within 120 days after the re - delivery of the Products to the Customer, whichever is earlier ; and (d) if tha claim shall have been notified to the Operator in accordance wifh Clause 19 . 2 (d), the dam shall become void if the Customer shall not commence legal proceedings in respect thereof wlltiin the period of 120 days after Ihe date of such notice . 3. Componsadon If any claim shall be made against tre Operator by more than one person and tha Operator shall decide to pay compensation in respect of the claim, the Operator shall be entitled to apportion such compensation among such persons according to the extenl of proven loss or damaga suffered by each of them .
19.4 Customar's indemnities The Customer shall indemnify, defend and hold harmless the Operator, its respective officers, employees and agents against : (a) any and all claims for Loss, damage and expense of whatever kind and nalure, including all related casts and expenses, in respect of personal injury to or death of any person employed by the Customer and (b) any and all claims for Loss, damage ai›d expense of whatever klnd or nature, Including all related costs and expenses, brought by third parties against the Operator or its officers, employees or agents in connection with any act or omlsslon of the Customer or lb officers, employees or agents . 5. Operator's indemnities The Operator shall indemnify, defend and hold hamlass the Customer . its respective officers, employees and agents against any and all claims for Loss . damage and expense of whatever kind and nature, including all related costs and expenses, in respect of personal injUfy to or death of any peison employed by the Operator . 6. Indemnity Process (a) Each of the Operator and the Customer undeAakes and agrees, when asserting its rigrit to indemnifica \ ion from the other Party for the negligence or misconduct or wrongful acB or omissions of any of such other Party's contractors : (I) To first seek recourse against any such contractor (including, where applicable, recourse against tne Owners, Insurers or P and I Clubs of the responsible barge or marine vessel) ; To use commercially reasonable ePorts to obtaln from such Owners, Insurer or P and I Clubs sufficient security to cover said contractors liability ; To claim under this indemnity only if and to the extent such contractor (including, where applicable, recourse against the Owners, Insurers or P and I ClubS ofti›e responsible barge or marine vessel) is llable and is unable within a feasonable time under the circumstances to meet and discharge ib liabilities in full ; and That it will exercise commercially reasonable efforts to assist the olher in obtaining recourse and recompense horn of on behalf of third pañies for losses incufred . (ii) (iii) (iv) lb) In the event that any loss in caused in whole or in partly by the concurrent negligence or Intentional wrongful acts or omissions of the Operator, ils employees, agents, contractors or any other persons acting under its authority on the one hand and the Customer its empbyees, agents, conkaclors or any other persons acting under its authority on the other hand, then this obligation to indemnify shall be comparative and eack Party shall Indemnify the other to the extent that such Party's negligence or intentional wrongful acts or omissions were Ihe cause of such loss .
20. INSURANCE 1. Insurance and Liability The Operator shall maintain throughout lhe course of the Agreement the following insurance requirements : A) Worker's Compensation and Employar's Liability insurance, as prescribed by applicable law B) Commerclal General Liability Insurance wlth an adequate maximum llmit per occurrence and in the aggragate per year for bodily injury, properly damages, and conkactual liability coverage not exceeding the legal liability . 2. No Insurance of Products by Operator Unless it has been exdicltly agreed in writing with the Customer, lhe Operator shall not be obliged to Insure the Products of tha Customer or any other property of the Customer or any third party . 3. Insurance of Products by Customer The Customer must maintain adequate insurance for the Product of the Customer in the Terminal . The terms and conditions of such insurance shall includa : (a) Ihat the Operator be a co - insured in respect of such policy: (b) the insurers waive any rlghts of subrogation against the Operator: and (c) such olher tems as the Operator shall reasonably specify. 20.4 Redellvery In the event of the re - delivery of part of the Products, the Customer shall notify the Operator of the insurable value of the remaining part of the Produc \ s failing which lhe Operator may reduce the insured sum In respect of the Products in the same proportion as the Products shall have been reduced in number, weight, measurement or content Operator's Assistance If lhe Customer shall request the assistance of the Operator to determine the extent and value of any loss, damage or destruction of the Products, the Operator may, but shall not be obliged to, render such assistance subject to : (a) the Cusbmar's payment of the costs of such assistance (including the fee of lhe Operator) and (b) if the Operator so stipulates . the Customer's prior payment in cash of all sums due, rom the Customer to the Operator under the Agreement or under any other agreement made between the Operator and the Customer . 20.6 Insurance of Protection and Indamnity Cover by Customer The Customer shall procure and maintain (or, in Ihe case of Vessels it has chartered, cause to be procured and maintained), in teladon to ib Product, activities and the activities of its Vessels at \ he Terminal, comprehensive prolechon arid Indemnity insurance includlng average for injury/loss of lives . full cdlision liability, damage to property including fixed floating objects or Port of Fujairah property, crew, cargo, pollution liabili \ y, spillage and wreck removal, towage, war risks and fines, in accordance with good industry practice in addition to any requirements imposed by the Port Regulations.
21. CONFIDENTIALITY 1. Confidential Information (a) Subject to Clause 21 . 1 (b), each Parly agrpes to and shall cause its respactive agents, representatives, affiliates, employees, officers and directors, to treat and hold as confidential (and not disclose or provide access to any person), all confidential infamation received by it relating to the olher Party, infomation relating to the provisions of and negotiations leading to Ihis Agreement, and all other confidential or proprietary Infomation wlth respect to the Terminal . (b) A Party may disclose information which would otherwise be confidential without the consent of the other Party, if and to the extent : (i) (iii} (iv (vil) (ii) (vi) (ix) required by the rules of any stock exchange or any governmental, regulatory or supervisory body or court of competent jurisdiction to whlch the Party making \ he disclosure is subject, required by any stock exchange or any governmental, regu 1 atory or supervisory body of lhe Operator's parent company, which for the avoidance of doubt, Is listed on the Nasdaq Stock Exchange, New York . required by the law of any relevant Jurisdicgon ; required by leaders in connection with debt financing arran 9 ements for the Terminal : (v) required by any competent authority to register security in favoür of any lender (howsoaver described) in connection with debí financing arrangemenB (or the Temlnal ; disclosure is made to lhe affiliates, professional advisers, auditors and bankers of that Party : disclosure is made to bona flde potential purchasers of shares In that Party and tha professional advisers of such bona fide potential purchasers : the infomatlon bas come into the public domain through no fault of that Party ; or the other Party has given prior written approval to Ihe disclosure . (c) This Clause 21 and such Clauses of this Agreement as ara necessary to permit the enforcement of this Clause 21 sha 8 continue to apply for two ( 2 ) years following the expiry or terminaéon of this Agreement . 22. CUMULATIVE RlsmS AND REMEDIES The rights and remedies given to the Parties under this Agreement shall be cumulative remedies and shall not prejudice any other rights or remedies of the Parties contained in the Agreement or at law or the right of actton or other remedy of the Panias for the recovery of any sums due to it from any other Party or in respect of any antecedent breach of the Agreement by that Party .
23. C0h'Pl.IANCE›viTH S 4 \ uTEs The Par tic 9 shall comply \ ‘/iltJ lhe provisions of all stalules affecliny the ProduEls, trle Services nn d li› c Agreement (incl uding, without limitation, tho»c spo cified in Box 20 cf IIiu Key Comm ercinl TeriT›s) * . nd shall giva all necessary notices and the Customer shall obtain all requisite permission . approvals and consenfr . ’M e Customer shall indem icily Ihe Operator against any finch, penallies, Ioss«s, costs or expenses inkurrecl fry life Opuratui . n respect o f af y non - compliance \ 'zith the provisions of such statutes save for • '/Iiere such liras, penalties, losses, costs or expenses ›'zere caused by the gross negligence or . '/iIful mlsconducf of the Operator . 24. NOTICES 1. Unless otherwise provided for herein, all no 5 ces to be given or mad ƒ . in connection ' 77 ith the matters contemplate ¢ l cy p is Agreement shall be ii› 'writing and shall be deli • /ered personally oi sclJt by prepaid mail . In li e case of fhc Operator to l3rooge i'eiroIeum and Gas lnveslmenl Ccmpa/jy FZE Address: P. O. Box 5S17o, r«jairah, use ivr. Nicolaes PaardenkcopP.r C/lie f Executive Olliner and shall be deemed ie have been duly given or made served as foIIo \ • /s : (a) if personally £leliveied, upon delivery al the adclress of the relevant Parly; (h) if sent by mail. 2 Business Days after the date of posting; and provided that if, in accoraance with tha above provision . any such notice, demand or other communication ‹'would othera/ise be deemed to be given or made on a non - Business Day afler 5 . 00 p . m . at the legation of the incipient . such nclice, demanc or clher communication shall be deemed to be given or made at 9 . 00 a m . on lhe next Business Oay at the Io‹ : ation of the recipient . Unlcss the contrary be proven, proo( of posfago or delivery shall be proof of service .
2. A Parly may nobly the other Party of a change to its name, relevant addressee, address or fax number for the purposes of Clause 24 . 1 provided that such notification shall only be effective : (a) on the dale specified in the notification as the date on which the change is to take place ; or (b) if no data is specified or the date specified is less Ihan 10 days after Ihe date on which notice is given, the date falling 10 days after noflce of any such change has been given . 26. ASSIGNMENT/5UBLEASE 1. The Operator may at any time assign/sublease or otherwise transfer all or any part of iis rights under thls Agreement . 2. The Customer shall not asslgn or olhefwise transfer all or any part of its rights under this Agreement without the prior consent of the Operator (which may be grantaa or withheld in its absolute discretion and may be granted subject to any conditions as the Operator deems necessary in the circumstances) . Ths Customer shall also be entitled to sublease part or all the Commltted Volume to another well reputed third party subject to having the Operator's prior wriken approval (not to be unreasonably withheld) . 26. CONSENT OR WAIVER No consent or expressed or implied waiver by a Party to or of any breach of any covenant, condition or duty of the other Party shall be constructed as a consent or waiver by that Party to or of any other breach of the name or any other covenant condition or duty by that Parly and shall not prejudice in any way the righls powers and remedies of that Party contained in the Agreement . 27. Should any part, term or provision of the Agreement ba judged illegal or in congict with any law, by a courl ol competent jurisdiction, the validity of the remaining portions or provisions shall not be affected thereby . 28. The Agreement and any dispute, difference, conlfoversy or claim arlslng out of or ralating to this Agreement Indudlng the negotiation, existence, validity, invalidity, enfotceabllity, breach or temi/iation thereof regardless of whether the same shall be regarded as contractual or not (a &iaputa”), shall be governed by the federal laws of the United Arab Emirates and the laws of the Emirate of Fujalrah . 29. NOTICE OF DISPUTE Any Party intending to commence proceedings In relation to any Oispule shall give at least 10 Business Days' prior notice in writing to the other Parties of ils inlention to do so, explaining the nature of the Dispute and lfie intended proceedings . 30. ARBITRATION 1. Any Dispute shall be referred to and finally resolved by arbitration under the LCIAArI : ñtration Centre Rules (the "Rule’) which (save as modified by this Clause 30 ) are deemed to ba incorporated by reference into Ihis Clause 30 . Caplfalised tems used in this Clause 30 and not o \ herwise defined in this Agreement have the meanings given to them In the Raes .
30.2 The seal, or legal place, of arbitration snail be the Dubai lnternaticnal Financinl Centre, Dubai, United Arab Emirates. B 03 The number of arbitrators aIJaIl Lo tlir«c . Tt›u claimant ‹or, if m»ie lhan one claimant . the daimants jointly) shall nominoto one arbitrator and the respondent (or, if mole than one ƒ fespondenl . the respondents jointly) shall nominate ono arbitrator, in eoch case ill accordance Vvith the Rules . Tilt ll›irtl arbitrator . who will act as cñairpcrssn of the arbitral (tibunal, shall be nominated jolntly by the tv/o co - arbitrators, provided that if Idle third arbitrator has not been so num . named '//it#in 30 Business Days of the line - timit for service of use response, the third arbitra \ or shall ke appointed by the LCIA Court 30.4 ** ƒ - !••s••s lobe used in lhe arbit ai proceedings shall be English. 31. THIRD PARTY RlsHzs Seve as expressly provided in this .ñgr«emonl. a pelsun, who or whlcil is not a party to the Agreement, has no right to enforco or enjoy the benefit of any lcr›n of the Agreeinei \ t. IHF7ITNESS VJHEREOr the Panies hereto have entered into this Agreenz«i›tand accepted the General ”rerros and Conditions on fhe day and year first Signed by: ter. tliool - ans Pdot0onyooper for and on Medau or Broepe Petroleum and Ch as Investment Company rZ6
Exhibit 4.89
DATED 04! h AUGUST 2022 BROOGE PeTnOLEUM AND GPS INVESTMENT COMPANY FZE AS OPERATOR - and — CENGEO NEW ENERGY FZ - LLC ns CUSTOMER CoMMERCIAL STORACE AGREEMMT Hogan Love3s Hopan *l• t MIddIeEast) LLP 10" Floor, AI Fattan Cunancy Tower, Dubai Intematbnal Fhandal Centre, PO Box S06602, Dubai, uAE - 1 - The parties listed below agree, in this Commercial Storage Agreement (ths "Agreement") dated as of 04!" August 2022 and executed in Dubai, UAE, the following: KEY COMMERCIAL TERMS Operator Agreement to provide Services Agreement Definitions Brooge Petroleum nd Investment Company FZE, company incorporated in Fujairah Free Zone, having registration number 13 - FZC - 1117 and registered PO Box 50170 Fujairah United Arab Emirates (the "Operator" or "BPGIC") . CenGeo New Energy FZ - LLC, an (the "Customer“). The Operator agrees to provide the Services in relation to the Product at the Terminal, and the Customer wishes to store the Product at the Terminal and desires to purchase storage related handling services from the Operator on the terms and conditions set out in this Agreement . This Agreement comprises these Key Commercial Terms and the General Tams and Conditions ("GTCs") which are attached to Ihis Agreement and are hereby incorporated by reference in this Agreement as if thay were set out in full and *hall apply to the provisions of fhls P • sement, subject to Clause 1 . 4 of the GTCs . In this Agreement, capitalised words and expressions have the meanings set out for them (whether by incorporation, cross - reference or othenvise) in the GTCs, unless otherwise defined in this Agreement or Idle context otherwise requires . In addition, "Circulation Gharges" means the charges described In Box 16 of these Key Commercial Terms ; - 2 - 2.
’Clausa(s)" means the provision(s) and stipulation(s) of the GTCs : "Commencement Date" means 15 * August 2022 ; 3. 4. "Excess Throughput Charges" means the charges describad in Box 14 of thesaKey Commercial Terms ; 5. 6. 7. "Fae" means, in respect of each month an amount equal to the aggregate of the Rental and Handling Charges, the Excess Throughput Charges, the Tank Cleaning Charges, the Circulation Charges, the Tank Heating Charges, the Inter - Tanl‹ Transfer Charges, and the TopSida Facility Charges for such month ; "Finance Party" means any person provldlng debt financlng to the Operator In connection with the Teminal (excluding any shareholder of the Operator or any Affiliate of any shareholder) ; ƒ FIoor Price has the meaning given to it In Box 13 of these Key Commercial Tems ; 8. "Guarantee" not used; 9. "Guarantor" not used; 10. "GTCs" has the maaning given to It In Box 4 of these Key Commercial Tems ; 11. "Intar - Tank Transfer Charges" means the charges described in Box 18 of thase Key Commercial Tams ; 12. "Key Commercial Terms" means the provisions of Box 1 to 22 ; 13. "Market Price" has the meaning given to it in Box 13 of these Key Commercial TeiTns ; 14.
"POF" has the meanlng given to it in Box 9 of these Key Commercial Tams ; 15 . "Product" has the meaning given to it in Box 8 of these Key Commercial Terms ; 16. "Rental and Handling Charges" means the charges described In Box 13 of theseKey Commercial Tems ; 17. "Services" has the maaning givan to it in Box 10 of thesa Key Commercial Tems ; 18. "Storage Facilities" means any storage space with pipelines, pumps, component parts and equipment and appliances belonglng thereto, whioh are within the Teminal, to be made avallable to or to be used by the Operator for the purpose of carrying out the Services pursuant to the Agreement ; 19. "Tank Cleaning Charges" means the charges described In Box 15 of these Key Commercial Terms ; 2 Q . Bank Heating Charges" means the charges described In Box 17 of these Key Commercial Terms ; 21. "Tank Turn" means a volume of Product equal to the Volume Commitment ; 22. Mem’ has the meaning given to it in Box 7 of these Key Commercial Tems ; 23. ’Terminal’ means the pePoleum crude and product 25. storage terminal described In Box 9 of these Key Commerclal Terms ; 24 . ' 7 opSlde Facility Charges" means the charges descrlbed In Box 19 of these Key Commercial Terms ; and Volume Commitment" has the meaning given to it in Box 11 of these Key Commercial Tems .; and 26 . "Port Dues" has the meaning given to It In Box 20 of thsse Key Commerdal Tems .
6. Guarantee 7. Parlod of Agreement 8. Product 9. Teminal 10. Services 4 - 27 . "Wharfage Facility Charges" has tha meaning given to It in Box 20 of thasa Key Commercial Tems . Not used. The obllgatlons under this Agreement (including the obligation of the Operator to provide the Services and of the Customer to pay the Fee) shall begin on the Commencement Date, and shall, subject to the tems of this Agreement, continue for a perlod of 1 year + 2 years, i . a . (the ’Term") . Tha Agreement can be renewed based on mutual agreement, with to be defined conditions . The parties should start negotiations 30 (thirty) days prior to the expiry of the Tern . The Product shall comprise white petrolaum products (naphtha and gasoll) delivered by the Customer to the Operator for the purposes of carrying out the Services, as described in the Port Rules for Topside Facility Operations (the ‘Top Side Rules") and fha type and speciflcadons of whlch shall be pre - agreed by the Parties prior to del 1 very . Teminal means the 399,324 cubic metre capacity fuel oil and product storage teminal developed by BPGIC in the Emirata of Fujalrah, and more specifically, located near the Port of Fujalrah ("POF"), United Amb Emirates and any other premises, offioe, building, Storage Faclllaes (as defined in the GTCs), tank, and plpellne at whlch or In which Services are provided to the Customer In accordance with thls Agreement by the Operator or any third party appointed by the Operator . In case a third party is appointed by the Operator . The Services shall comprise any or all operations carried out or to be carried out by the Operator in respect of the Product at, outside or through tha Terminal, inclusive of but not rastricte to:
11. Volume Commitment for Storage 12. Payment 1. mal‹lng storage space available in respect of the Volume Commitment ; 2. storing, manipulating (which shall be deemed to indude the through - pumping of the Product beMeen the matrix manifold and the Termlnal), moving, treabng, processing and delivering ; and administrative handling of tha Product (including preparing shipping documentation for, dealing with mandatory government reporting and/or other administrative activities related to the Product) . 3. For the avoidance of doubt, the Operator is entitled to sub - contract all or part of the Senrlces to a sub - contractor or third - party operator at its sole discretion . The Customer oo ” storage capadty of renting a cbm at the Teminal (the Volume Commitment"), subject to the tems of this Agreement. The Operator shall invoice, and the Customer shall pay In accordance with this Agreement the aggregate for each month during the Tarm an amount equal to the aggregate of : 1. the Rental and Handling Charges; the Excess Throughput Charges; the Tank Cleaning Charges: 4. 5. the Circulation Charges; the Inter - Tank Transfer Charges; and 6. ths Port of F - ujairah tariffs induding but not limited to Wharfage Facility Charges ; and the TopSide Facility Charges, for such month, which will be accepted by Customer only as per actual invoice from Port of Fujairah 13.
Rental and Handling Charges 14. Excess Throughput Chargas 15. Tank Cleaning Charges For each month, during tha Tern, the Rental and Handling Charges shall be determined as the Volume Commitment multiplied by : US$ er cbm par month ("Floor Price”). The Customar shall have at no extra cost a throughput allowance equal too Bank turn ohm* per month . Tank turn means a vdume of product equal to the Volume Commitment . If the Customer exceeds this allowance, the Customer shall pay to the Operator, the Excess Throughput Charges in respect of tha excess above the Volume Commitment dellvered or redeliverad at a rate of US $ per cbrn of the volume of the Product handled per each import/export . Excess Throughput Charges will be reviewed and may be adjusted annually by the Operator. Unused free throughput cannot be carriad forward to subsequent months. If the Customer requlras a tank allocated to it to be cleaned as a result of th Customar raquasting a change in th Product stored In that tank, or In theaven of the expira8on/termlnatlon of fh Agreement; the Customer shall pay a amount equal to the actual documented costs incurred by the O{wrator in managlng and procuring the cleaning a the tank or tanks. A third - party surveyo engaged by the Customer shall inspec and test the tsnManks for cleanliness. Customer shall receive the tank In suiBble condition and will be insps by Customer nominated inspectlo company, which shall comply with th terms agreed hereln, and Customer will handover and 16.
Circulation Charges 17. Tank Heating 18. Inter•Tank Transfers 19. TopSlde Facility Charges - 7 - deliver it back to the Operator on the same basis. 20. Port Dues and Wharfage Facility Charges The Customer shall pay to the Operator circulation charges ^CircuIatlon Charges ƒ ) at a US $ per hour in ca 5 e such a service is requested by the Customer . Not applicable for the required products. If the Customer raquests, and the Oparator consents to, the transfar of the Customer's Product from one tank to another, the Customer shall pay Inter - Tank Transfer Charges to the Operator at the amount of USS r cbm of Product transferred between any tanks at the same Terminal and measured at ambiant temperature during the bansfar per month . The custody transfer volume will be based on the Issuing tank level gauge computation . The Customer will pay the Operator on a pass - through basis the TopSlde Facility charges as charged by the POF as further set out in Clause 11 of the GTCS, and a 9 par actual Port of Fujairah Involces . Port duas and any other charges (including Wharfage Facility Charges) imposed by the POF on the Customer's vessels as defined in the port of Fujalrah Port TariP (elective flom 1 May 2008 as amended from time to time) or any other appliable charges shall be borne directly by the Customer and are not applicable to this Agreament .
To the extent these amounts are invoiced directly to the Operator rather than lhe Customer, the Customer shall repay the Operator all such amounts upon receipt of an involve in respect of such charges from the Operator in accordance with the provisions of Clause 11 . Any duties or taxes levied by any competent authority will be payable by the ñ‹intnmer ns further nrt nut in Clause 3 . 10 of the GTCs . Any material Increase ƒ in costs reasonably incurred or to be incurred and properly evidenced and satisfactorily documented by BPGIC in performing l*a obligations under this Agreemant, including any material increase that arises as a direct result of a chcngo in 'aw (including a chango in interpratation of an existing law), regulation (ncluding a change in interpratation of an existing regulation) or tax, will be borne by the Customer, based on mutual agreement, ona pro rata basis, that is pro rata to the proportion which its Volume Commitment bears to the total storage capacity of lhe Terminal, by means of an adjustm ƒ nt to the appropriate element(s) of the Fee . Change In law 21. - 0 - IN WITNESS WFiEREOF tho Partios hereto havo entered into this Agreement on the day and year ñrsl abova written. Signed by Mr. / \ Pico/aas L. Paardenkooper for and on bahalf of Brooge Pefro/e/zm and Gas / In the presence of: Narrle: ................................. Signature: S“ ned b for and on betialol CenGeo New Ene? In the Nama: Signature: FZE DATED Z022 - 9 - GENERAL TERM6 AND CONDITIONS FOR TANK STORAOE AND HANDLING OF PRODUCTS Hogan Love£s Hogan Lovells (Mlddle East) LLP 19a Floor.
AI Fattan Currency Tov/ar, Dubai IntemalJonai nnanaai c•ur•. PO Box 506602, Dubal, UAE CONTENTS PAGE CLAUSE z APPLICABILITY OF GTCs 2.
3 PRODUCTS 3. 5 STOWGE FACILITIES 4. OPERATION AND MAINTENANCE OF STORAGE FACILITIES 5. DELIVERY AND REDELIVERY 6. DELIVERY ANo REDELIVERY REQUIREMENTS 7. 9 HANDLiNG OF VESSELS 8. 10 DETERMINATION OF QUANTITIES 9. 11 ACCESS TO TERMINAL 10. 11 CONDITIONS OF PAYMENT 11. 13 THIRD PARTY CHARGES AND SUMS ON PRODUCTS 12. 13 RIGHTS OF LIEN AND RETENTION 13. 14 TRANSFER OF OwNERSHIP 14. 14 REPRESENTATIONS AND WARRANTIES 15. 14 TERMINATION 16. 16 AFTER TERMINATION 17. 18 FORCE MAJEURE 18. 19 LIABILITY 19. 22 INSURANCE 20. 23 CONFIDENTIALITY 21. 23 CUNIULATIVE RiGHTS AND REMEDIES 22. 24 COMPLIANCE WITH STATUTES 23. 24 NOTICEs 24. 25 ASSIGNMENT 25. 25 CONSENT OR WAIVER 26. 25 SEVERABlLiTY 27. 25 APPLICABLE LAW 28. 25 NOTiCE OF DIsPUTE 29. 25 30. 26 THIRD PARTY RIGHTS 31.
Hogan Love \ is 1. DEFINITIONS AND INTERPRETATION 1.1 Definitions In this Agreement: "Additional Documents" has the meanlng as ascrlbad to It in Clause 3.2. "Affiliate" means a Party or pemon Controlling, Controlled by or under common Control with another Party . "Agreement" means this Agreement comprised of the Key Commercial Terms and the GTCs or any agreement made in writing between the Customer and the Operator for the carrying out the Services . ’Applicable Laws“ means any federal, emirate, municipal or authority statute, ordinance, regulation, guideline, rule, code, dlrectlon or any licence, consent, permit, authorlsatlon or otfier approval, including any conditions attachad thereto, of the United Arab Emirates, the Emirate of Fujairah or any publlc body or authority, local or federal agency, department . inspector, ministry, official or public or statutory person which has approprIate]urisdIction . "Business Day" means any day excluding Saturday and Sunday and any day which shall be a legal holiday or a day on which banking Institutions are authorised or required by law or other governmental action to be closed In the United Arab Emirates ; "Control ƒ In relation to a body corporate means the ability of a parson to ensure that the activities and business of that body corporate are conductad in accordance with the wishes of that person and a person shall be deemed to have Control of a body corporate if that person possessas the majority of the issued shara capital or the voting rights In that body corporate or the right to appolnt or remove directors of that body corporate holding a majority of the voting rights at meetings of the board of directors (or equivalent management organ) on all, or substantially all, matters, and except as expressly provided in this Agreement cognates of the tarm Control shall be construed accordingly . "Customer" means the Customer as specified in the Key Commercial Terms. "Dispute" has the meaning given to it in Clause 28. "Energy Institute" means the professional body for the energy industry, based in the UK. "Failure to Pay Notice" has the meaning given to it in Clause 13.2. 'Force Majeure" has the meanlng given to It In Clause 18.1. ‘LIBOR’ means the London interbank offered rate adminlstered by ICE Benchmark Admlnistrafton Limited (or any other parson whlch takes over the administration of that rate) for USD and pariod of one month dlsplaysd on pages LIBOR 01 or LIBOR 02 of the Thomson Reuters screen or any benchmark rata which is formally designated, nominated or recommended as the replacement for LIBOR . ’Loss" means any loss, damage, cost and expense suffered by the daimant due to the loss, destruction or damage of any property (includlng the property of the claimant) or from any damage to the environment or from the daath or injury of any person (Induding the claimant) . 'Maintenance Works" means checklng, maintenance, repair and alteratlon work to the Temlnal as per Clause 5 . 1 .
Hogan Lovells "OT 1 " and "OT 2 " means all permanent existing and planned oil tanker berths at Oil Tanksr Terminal 1 and Oil Tanker Teminal 2 within the Port of Fujairah, along with the installations related thereto . "Party" and ’Parties" means the Customer and the Operator Individually and collectively as tha context may require . "Port Regulations" means any rules, regulations, ordinances, procedures, dlrectlves, requirements, policies, standards or Infomation of any kind, whether currently In force or introduced from time to time, producad by the POF In connectlon with POF and with which users of POF are required to comply, including the Port Guidalines, the Port Ordinance 1982 , and the Top Side Rules, as may be amended from tlme to time . "Reasonable and Prudent Operator" means a person seeking in good faith to perform Its contractual obligations and in so doing and in the general conduct of its undertaking exercising that degree of skill, diligance, prudence and foresight which would reasonably and ordinarily be expected from a skillad and experienced operator complying with the Port Regulations and all Applicable Laws and engaged in the same type of undertaking under the same or similar circumstances and conditions as contemplated by this Agreement . "Rulas" has the meaning given to It in Clause 30 . 1 . "Security Trustee" has the meaning given to It in Clause 16 . 3 . "Standards of a Reasonable and Prudent Operator" means ltie standards, practices, methods and procedures expected from a Reasonable and Prudent Operator . "Tamlnatlon Sum" means an amount equal to the aggregate amount that would have become due in respect of the Rental and Handllng Charge (fixed at the higher of the Floor Price or the latest Market Price) under this Agreement until the data on which this Agraament would have expirad in accordance with IB terms . Vessel" means any boat, ship or tanker delivering Product to the Terminal via the OT 1 , OT 2 or any future Jettles or any single buoy mooring system . 1.2 interpratatlon Words importing the singular only also include the plural and vice versa where the context requires ; words and expressions importing the masculina gender include the feminine ; refarance to person includes any public body and any body of persons Incorporate or unincorporate . 1.3 Clause headings shall be deemed not to be part of the Agreament and shall not be taken Into account in the Interpratatlon thereof . Prevalence The provisions of tha Key Commercial Tems and the Clauses of the GTCs are to be read as mutually axplanalo/y one of another, bul in case of conflict, discrepancy in or divergence between the provislons of the Key Commercial Tems and the Clauses of this Agreement, the provisions of the Key Commercial Tems shall prevall . 2. @PPMCABIMTY OF GTCs AJI Services shall be provided and carried out pursuant to this Agreement, unless otherwise agraed in writing by the Parties.
3. PRODUCTS 3.1 Description For each cargo of Product to be delivered to the Terminal, the Customer shall, when required by the Operator in accordance with the Operator's normal operating procedures, furnish to the Oparator a correct and kll written description of the Products as may be reasonably æquested by the Operator and shall Include : thalr nature, type, quality, composition, temperature, weight, volume, value, source, origin, hazard classifiœtion, their pressure and in addition thereto all physical/chemical propertles Including but not restricted to : boiling point, flash point, vapour pæ 9 sure, toxicity, melting point, coagulation point, viscosity, degradableness in watar, stability, corrosiveness, acidity, static loading, smell level, MAC/PEL value and all particulars, knowledge of which is material to the Operator for the provislon of the Servicas or altemathely, which Is of such nature that lhe Agreement would not have been entered into or not on the same conditions, If the Operator had had knowledge of those particulars . Such description shall be provided by the Customer in the fom specified by the Opeætor . 32 Addltlonal Documents The Customer agrees to execute in its name, pay for, and furnish to the Operator timely before the receipt of the Products all infonTlahon, documents, pemits, approvals and other materials and data ("Additional Documents') which may be required by any Applicable Law including statutes, ordinances, rules, or regulations of any public autho ty relating to the desc ption, raceipt, storing, handling (loading/unloading), blending, shipping, or disposal of the Products or their waste or waste products, to or from the Terminal, together with detailed written Instructions ae la their use and disposition . 3. Notłflcatlon The Customer shall as soon as practically possible notify the Operator in wri 5 ng of new data with regard to the Products falling under the Agreement that become known du ng the duraóon of the Agreement 4. No Cognlzance The Operator shall not be deemed to have knowledge of the description of the Products, if the descripëons referred to in Clauæ 3 . 1 and/or the Additional Documenłs as per Clause 3 . 2 are not materially complete or correct . The Operator may accept delivery of the Products notwithstanding the Operator's knowledge of any inœrrect or Incomplete desc phon of the Products and/or incorrect or Incomplete AddiDonal Documents (having nobfied the Customer of such), and if the Operator shall choose to taka delivery of the Products : (a) the Customer shall bear the risk and expense of any necessary measures carried out by the Operator In æspect of the Products arlslng from such incorrect or incomplete dascripšon and/or such Incorrect or Inœmplete Additional Documents and shall indemnify the Operator against all Loss arising from such measures ; and (b) the Oparator shall not be liable for any Loss aûsing from such taking of delivery of the Products, save in each case to the extent such Loss arises from the gross negligence or wilful mlsconduct of the Operator .
5. Inspection of Products (a) The Operator is not bound to check the Product or their quality, conditions and confomity with their descrlption andlor, as the case maybe, the completeness or correctness of the Additional Documents . Without prajudice to Clause 3 . 4 , the Operator shall, however, be entitlad, on or before taking delivery of any Products, to measure, test or examine the Products and check the Additional Documents for the purposes of inspection or verification if the Operator suspects that the contents have been incompletely or incorrectly describad and/or Incomplete or incorrect Additlonal Documents have been furnished to the Operator . The Customer shall bear the reasonable and documented cost of the Operator's inspection and verifiatlon . (b) The Customer may appoint, at its own cost and expense, an Independent inspector(s), the identity of which shall be approved by the Operator, to ascertain the quality of the Products at the Terminal . The decision of such inspector(s), If appointed, shall be traated and accepted by the Customer and the Oparator as conclusive and shall be final and binding upon the Operator and Ihe Customer, save In the case of fraud or manifest error, as to the quality of the Products so loaded or unloaded . If no inspector Is appointed, then in such an event lhe qualities ascertained by the Operator shall be binding for both Parties . 6. Delivery of Products (a) Any taking of delivery of the Product by the Operator shall not constitute proof that the Products were delivered in a good and undamaged condition . (b) The Operator shall, as soon as possible, notlfy the Customer of any damage or defect of the Products and/or lncompleteness or Incorrectness of the description of the Products or the Additional Documents, which is apparent at the time of delivery thereof but the Customer shall not make any claim agalnst the Operator by reason of the fact that it has not been so notified . (c) The Operator shall be entitled, at the expense of the Customer, to do all things necessary to prevent or reduce further deterioration in the condltlon of the Products and to arrange for a report to be made on the condition of the Products or, as the case may be, anange for the sorrection or completeness of the Addltional Documents, without being liable for any Loss arising from doing such things and the Customer shall indemnify the Operator against such Loss save where such Loss arises from the gross negllgence or wilful misconduct of the Operator . 7. Refusal of Products NoMithstanding other provisions of the Agreement, the Operator shall be entitled to refuse to take delivery of the Products or to carry out any Services if the acceptance of Product or carrying out of Sarvlces may in the reasonable opinlon of the Operator result In : (a) the Products delivered purportedly as the Products do not confom with the description thereof provided by the Customer as per Clause 3 . 1 and/or are not furnished with complete or correct Additional Documents as per Clause 3 . 2 ; (b) danger or damage either to persons, goods, the Terminal or property generally; (c) any environmental damage; or (d) a violation of the Port Regulations or Applicable Laws.
3.8 If the Products are at the Teminal and, in the reasonable opinion of the Operator, do not conform with the description thereof provided by the Customer as per Clause 3 . 1 and/or are not furnished with complete or correct Additional Documents as per Clause 3 . 2 , the Operator shall be enticed to remove the Products forthwith at the risk and expense of the Customer . 3.9 Admission to Terminal If the Operator gives its consent to admit to the Terminal the Product 9 , whose quality deviates from the description referred to in Clause 3 . 1 and/or, as the case may be, the Additional Documents are Incomplete or incorrect as per Clause 3 . 2 , all the necessary exba operations, of any nature whaboevar, which are arried out in relation to those Products and all further consequences shall be for the account of the Customer . 10. Dutles, Taxes and Chargas If the Products are or may be subject to duties, taxation or other charges under the Applicable Law, the Customer shall reasonably In advance and on demand furnish to the Operator, all infomation and documents required by the Operator to enable the Operator to make the appropriate declarations to such authoritles for such purposes or to facilitate the Oparator's deallngs with such authorities . The Customer shall be liable for and shall indemnify the Operator against any Loss, penaltles, taxes or duties paid or payable by the Operator as well as any declarations made to lha authorities by the Operator basad on the documents and infomation provided to the Operator by tha Customer in connection wlth the dutles, taxation and other charges which the Products are or may be subject to . 11. Warranty The Customer warrants that the Products : (a) will ause no damage to the Storage Facilities and/or ancillary equipment of the Tamlnal; (b) will not render, after cleaning, the Storage Facilities unfit for the proper storage of water white chemicals; and (c) may IawfuIIy be stored at the Teminal. The Customer shall be responsible for all Lossas, finas, panaltias and damages diract 1 y resulting from the storaga of the Products at the Teminal . Provided, however, the Customer shall not be responsible for such fines, penalties and damages arising from the Opeætor's failure to use reasonable caæ in safekeeplng and handllng of the Products or the property of the Customer pursuant to lts obllgabon 9 under the Agreemerit or any damage œused by the gross negllgence or wilful misaonduct of the Operator, or from any manufacturlng defecls in the mateûals or the manufacture of the tanks, interœnnecting plpes, manlfolds, the Storage Facllities and/or ancillary equlpment of theTerminal . 12. Title and rlsk Except to the extent inconsistent with Clause 13 . 3 and Clause 17 . 5 , title and risk in relation to the Product shall remain with the Customer at all times under the tema of this Agreement . 4. STORAGE FAclLliizs 1.
Us6 Of toTdg6 FacilNes The Customer shall only use the Starage Fadlitles for the purposes specified in the Agreement unless otherwise sublet (o another customer, for which in such case the Customer will aPect a mutually agreed sublease contract to be annexed to thls Commercial Storage Agreement . 2. Selection of Storage Facilities (a) Unless expressly provided otherwise in the Agreement, the Operator shall, at its absolute dlsaretion, in consultation with the Customer, salect the Storage Facilities suitable for receipt and storage of the Products and shall be enti 5 ed to move the Products from one part of the Storage Facllitles to another from tlme to time with the approval of the Customer (not to be unreasonably withheld or delayed) at no cost to the Customer . (b) Subject to obtaining the consent of the Customer to be given at the Customer's sole discretion and other relevant customers (which consent shall not be required In the event of an emergency), the Operator may receive and store the Products at any of the Storage Facilities at the Teminal in common with Products of the sama average quallty and of the same grade as the Products . (c) The Customer shall not be entitled to claim that Products, which the Operator shall subsequently dallvar to the Customer out of such common place purportedly as the Products, are not in fact the Products, which the Customer had earlier delivered to the Operator for carrying out the Services . (d) The Operator shall as soon as possible, notify the Customer of any movement of the Products but the Customer shall not make any clalm agalnst the Operator by reason of the fact that it has not been so notifled . 3. Suitability of Storage Facilities The Customer (or a third - party surveyor engaged by the Customer) shall be entitled to inspect the Storage Facilities to ansure their cleanliness, suitability and good condition prior to the delivery of the Products to the Operator . The rights to inspect shall be exercised at reasonable dmes and with prior written notice, provided the relevant representatlve of the Customer (or a third - party surveyor engaged by the Customer) shall comply with all on - site health and safety and other regulations . If the Customer (or a third party surveyor engaged by the Customer) shall not make such inspection or shall not have objected In wrltlng to tha cleanliness, suitabillty or condition of the Storage Fadlltles wlthln 7 days following such inspection, the Storage Facilities shall be deemed to have been in a clean, suitable and good condition upon the delivery of the Products thereto and the Operator shall not be liable in any way whatsoever for any Loss arising out of any lack of cleanliness or the state or condition of the Storage Faclllties . The decision of any third party surveyor engaged by the Customer as to the cleanliness or otherwise of the Storage Facilities shall, except In the case of fraud or manifest error, be final . 4. Substitute Storage Facllkles If at any time during the term of the Agreement, the Oparator finds It naceasary to provide substitute storage facilities to the Customer, the Operator may do so provlded such use will not result in the mixing of the Product with the product of any other customer, any additional costs involved In the transfer of Products is at the expense of the Operator and tha Operator has obtained the Customer's prior approval (not to be unreasonably wilhheldor delayed) . Any such substitute storage facilities, while In use under lhis Agreement, shallbe deemed to be the Storage Faclllties refsnad to in this Agreement . The Operator shall compansate the Customer for the cost of any Product lost as a result of the use of such substituta Storage Facilities which Is only beyond the tolerance rule of 0 . 5 ƒ /» plus or minus and that is caused by gross negligence of the Operator .
6. 8.1 4.5 Maximum Contents Unlass explicitly permitted otherwise in writing by the Operator, the maximum allowable weight, which may be stored in any Storage Facility shall be equivalent to the weight of the volume of water at a temperature of 4 oC, with which the capacity of the Storage Facility in question can be filled . No reduction in the storage rates and charges payable as per Box 12 of the Kay Commerclal Terms shall be allowed on the ground that any part of such Storage Facilities shall not have been used . 5. OPERATION AND MAINTENANCE OF STORAGE FACILITIES 1. Operation and Maintenance The Operator at all times during the term of the Agreement shall operate and maintain tha Terminal and related equipment provided hereunder in good and serviceable condition to the Standards ofa Reasonable and Prudent Operator . Provided that the Operator promptly and reasonably in advance notlRes the Customer, the Operator shall be entitled, at any time and from time to time, to carry out Maintenanca Works to the Terminal or to hava these carried out, and furthermoreto effect alterations or to have these elected or altarnatively to fit additional or special equipment to the Terminal or to have these fitted, whenever the Operator deems It necessary or prudent to do so or if the Operator is obliged to do so pursuant to Applicable Law . 2. Moving of Products Subject to obtainlng the Customer's consent (which consent shall not be unreasonably withheld or delayed and shall not be required in the event of an emergency), the Operator shall be entitled to move the Products from the Terminal to other parts of the Teminal if the Operator shall deem such movement to be necessary for the Operator to carry out such Maintenance Works and In such event the Operator shall as soon as possible notify the Customer of such movemant of the Products . The Operator shall compensate the Customer for any Product lost as a result of lhe movement of Products . 3. Liability The Customer shall not be entided to make any claim that has elther dlractly or Indlractly arlsen from Malntenance Works or from the deprlvatlon of the use of the Terminal for any duration as a result of such Maintenance Works provided that the Operator has notified the Customer as soon as practicable after becoming aware of such works and, except in the case of an emergency, has consulted with the Customer In respect to such works . Nothing in this Clause 5 . 3 shall prevent the Customer from bringing a claim which has arisan from the gross negligence or wilful misconduct of the Operator . 4. Payment during Maintenance Subject to the provlsions of this Clause 5 . 4 , the Operator shall be entided to payment by the Customer of all the rates and charges or other sums payable by the Customer under the Agreement in respect of the use of the TeminBl even during any period that the Customer may be deprived of the use of the Teminal during such Maintenance Works . DEMVERY AND REDELIVERY The Products shall be deemed to have been delivered by or on behalf of the Customer to the Operator at the Terminal:
(a) if the Products are delivered from a Vessel, immediately upon the Products passing the connecting flange of the pipeline at the Terminal connected to the manifold of the Vessel ; or (b) if the Products are delivered through a pipeline of any other person, immediately upon the Products passing the valve placad between that pipeline and the pipeline at the Terminal . 2. Redellvery The Products shall be deemed to have been re - delivsred by the Operator to the Customer from the Terminal: (a) If the Products are re - dellvered to a Vessel, Immediately after the Products have passed the connecting flange of the pipeline at the Terminal connected to Ihe manifold of the Vessel ; or (b) If the Products are re 6 ellvered through a pipeline of any other person, immediately after the Products have passed the valve placad baMeen the pipeline at the Terminal and the first mentioned pipeline . 7. DzLlvEnY xao REDELIVERY REQUIREMENTS 1. Requirements The Operator shall receive from or re - deliver to the Customer the Products: (a) if so instructed by the Customer; (b) against the presentakan of a receipt in a form approved by the Operator and duly signed and stamped by the Customer, provided that the Customer shall have perfomed and observed the material terms and conditions of the Agreement and of any other agreement made between the Operator and Ihe Customer in respect of other Products at the Terminal, up to the date of such re • deIivery . 2. No Obligation Prior to the re - delivery of the Product by the Operator to the Customer, the Customer shall advise the Operator in writing of the person(s) authoñsed to take ra - delivery of such Product . The Operator shall be entitled and shall endeavour but not obliged to : (a) demand from any person purpoñing to be entitled or authorised to take re - dellvery of the Products, satisfactory proof of the person's identity and of such antitiement and authority ; and (b) sadsfy Itself that the signature and stamp appearing on the instructions and receipts are correct and valid as at the date of re - delivery . Tha Opeætor may d its sde zfsaeôxi accept and act or reject on any request or instruction given by any person who appears or purports to be authorised by the Customer to deal wiM or take redelivery of the Products without being requiæd to veñfy the same with the Customer, and In the event that the Operator acts in reliance on any such request or Instruction, the same shall be deemed to have been made or given by the Customer . The Operator shall not be llable for any Loss arislng as a æsult of the Operator accepting and acting on or rejecting any such request or Instruction save in the case of gross nagllgence or wilful mlsœnduct or fraud ofthe Operator provlded the Opeætor has Immedlately nogfied the Customer ofsuch action .
HANOLING Or VESSELS 8. 8.1 POF The Customer acknowledges and agrees that all Vessels must be acceptable to the POF and it is the responsibility of the Customer to ensure that its nominated Vessels at all times meet and comply with the requirement of the POF, the Port Regulations, Applicable Laws and any other requirements and the Operator shall have no llablllty In thls regard . Tha Customer further agrees that It shall comply with the Port Regulations and Appllcable Laws and any orders or directions Issued by the POF or the harbour master, Including with respect to Vessel scheduling, loading, discharge and pilotage . Ordar of Arrival 8J Subject to Clause 8 . 1 and except whera required otherwise by the competent authorities or where deemed necessary by the Operator to facilitate other operations at the Terminal, the Operator shall take delivery of Product from, and redellver Product to, a Vessel berthed at OT 1 or OT 2 on a first - come - flrst - servad basis In accordance wkh the notices glven to the Operator by such means and within such tlma as shall have been agreed between the Oparator and the Customer . 3. Delayed Arrival In the event of any delay caused to the Vessel or any delay, interruption or depaMre from the sequence of handing of the handling of the Vessel due to any cause whatsoever (including the non - availabllity of a berth or anclllary facilities), the Operator shall not be Ilable to the Customer or any olher person for any Loss arising from any such delay or interruption or departure, Induding any daim for any demurrage or other compensation for any temporary or permanent loss of use of the Vessel . 4. Handling Instructions If the loading or unloading of the Products shall be undertaken by the Operator as part of the Services, the Customer shall ensure that the Operator shall receive /easaxbIyadequate directions whlch 1 s usual In the case of such delivery in sufficient time regarding the proper manner of such loading or unloadlng . Inadequate Instructions (a) If the Operator shall not have received any or any reasonably adequate dlrectlons as described in Clause 8 . 4 or shall not have received such directions within sufficient time, the Operator shall be entitled to refuse to take delivery of or to re - deliver the Products and at the risk and expense of the Customer, to remove the Vessal to any place chosen by the Operator at Its absolute discretion ; and (b) the Customer shall pay to the Operator all losses, costs and expenses (including demurrage and consaquendal losses) arising from such non - receipt, refusal and removal and shall be liable for any Loss arising from such failure and shall Indemnify the Operator agalnst such Loss .
8.6 Handling The Customer shBll ensure that, when the Vessel has berthed or landed alongside a delivery or re - delivery point at the Termlnal deslgnated by the Operator and the Operator has declared itsalf to be ready for such delivery or re - delivery, such loadlng from or unloading onlo the Vessel (including the connection and disconnection of hoses and the taklng and analysis of samples of lhe Products) shall commence immediately and procaed diligently on a 24 - hour basis daily (Including Sundays and public holidays) without interruption or delay until the completion of such loading or unloading . 7. Pumping Capacity Without prejudlce to the generality of Clause 8 . 5 , the Customer shall ensure that : (a) the Products shall be unloaded from a Vessel at the maximum pumping capacity which Is usual in the case of a vessel of a similar size and tonnage unless dlrected otherwise by the Operator, taking into account the receiving capacity of the Taminal and the requirements of safety ; and (b) the Products shall unless dlrected otherwise by the Operator, be pumped at such temperature, pressure and condltlon as will not delay or impede such pumping . If the Operator and the Customer shall differ on the question of such maximum pumping capacity, temperature, pressure or condi#on, Clause 30 shall apply . 8.8 The Customer shall ensure that the Vessel shall be removed from the Temlnal promptly upon completion of such loadlng or unloading or, sooner if necessary for compliance with the requirements of the competent authorities or where deemed necessary by the Operator to facilitate other operations at the Teminal . 8. 9.1 (a) the Products shall not be unloaded from or loaded onto the Veasel, as the case may be, at the times and the speed described in Clause 8 . 7 due to any reason whatsoever ; or (b) the Vessel shall not be removed from the Tenzlinal at the time described in Clause 8.8 due to any reason whatsoever (including the arrest or seizure of the Vessel by a third party), and the Operator shall have requested the Customer or the master of the Vessel to Increase the speed of such discharge or to remove the Vessel, as the case may be, and the Customer or the master shall fail to comply with such request dua to any reason whatsoever the Customer shall pay to the Operator all losses, costs and expenses(lndudlngdemurrage and consequential losses) arising from such failure and removal and shall be liable for any Loss arising directly from such fallure and shall indemnify the Operator against such claims . DETERMINATION OF QUANTITIES Quantities loadad to or unloaded from a Vessel will be ascertained by tha Operator's automatic tank level gauging system bafore and after each loading/unloading event and shall take Into account quandtles of Product stored In tha Terminal's pipelines . All deteminations or quantities shall be in accordance with ASTM International Standards . Surveyor The Customer may appoint an independent inspector(s), the identity of which shall be approvad by tha Operator, to witness the loading/unloading of the Products for delivery to, or redelivary from, the Terminal .
The decision of such inspectors, if appointed, shall be treatad and accepted by the Customer and the Operator as conclusive and shall be final and binding upon the Operator and the Customer, save for fraud or manifest arror, as to the quantity of the Products so loaded or unloaded . If no inspector is appointed, then in such an event the quantities ascertained by the Operator shall be final and binding for both Parties . 1g. ACCESS TO TERMINAL 10.1 Authorised Access The Operator shall grant the Customer and pemons authorised in writing by the Customer, access to the Storage Facilities only for ths purposes of the Agreament subject to their compliance with the requirements of the Operator and the competent authorities . Operator should prepare the required cargo shipping documents requested by Customer . Operator is having the needed infrastructure to transfer the Product through the matrix manlfold of the FuJalrah OII Tanker Temlnal . No Claim 10.2 The Operator shall not be liable for any Loss due to any cause whatsoever arising from the entry to or presence of the Customer or such authorised persons on the Teminal and the Customer shall indemnify the Operator against such Loss except for Loss which arises due to the gross negligence or wilful misconduct of the Operator . 11. CONDITIONS OF PAYMENT 1. Invoicing and Payment (a) In Consideration to Box 13 of Commercial Storage Agreement, tha Customer will pay the Operator the Rental and Handling Chargas (as may be revised from time to tlme pursuant the tems of this Agreement) covartng the Volume Commitment, over the period of twelve months, on account, and in advance . The first month to be paid in a currant - dated cheque to be dated with the date of this Agreement, and the remaining eleven months period to be paid with eleven post - dated cheques, in advance, dated 15 days prior the beginning of each storage month covering the rest of the Term . (c ‹e› (b) Not later than 10 days after the end of each month, the Operator shall submit to the Customer an Invoice for the Fee Incurred (excluding the Rental and Handling Charges) in respect of the Immediately precedlng month . The Customer shall pay such invoice within 10 days of its being issued . All sums of whatever nature due from the Customer to the Operator undar the Agreement shall be payable without demand and set - oP, or counter claim and without deductlon . (d) All amounts payable to the Operator under this Agreement are exclusive of any Value Added Tax or other applicable sales tax or duty of any klnd . For the avoldance of doubt, charges related to the Port of Fujairah will be charged to the Customer as per actual Port of Fujairah Invoice which is Inclusive of Value Added Tax . If any deducgon or withholding for or on account of tax is requlred by the laws of any jurisdiction to be made by the Customer from any paymant, the Customer shall pay to the Operator such additional amount as will (after such deduction or withholding has been made) leave the Operator with an amount equal to the payment which would have been due if no deductlon or withholding for or on account of tax had been required .
2. Immediate Paymant NoMithstanding the period for payment stipulated in Clause 11 . 1 : (a) if legal proceedings shall be commenced by any third party for the bankruptcy or liquidation or winding up of the Customer, unless the Customer can provide evidence satisfactory to the Operator that such proaaedlngs are frivolous or vexatious and can be dlsmissed within 15 days ; (b) if tha Customer shall make any offer of composldon to Its creditors (except In the case of a voluntary reorganisation not including the insolvency of the Customer) ; (c) if any order of distress or attachment or similar order shall be mada against any property of the Customer and remains undischarged for 14 days ; (d) if the Customer shall coase to carry on the business in which it was engaged at the commencement of effact of the Agreement ; or (e) if the Customer shall fail to perform or observe any material term or condition of the Agreement, all sums due from the Customer to the Operator shall become immediately due and payable . 3. Interest If due to any reason whatsoever (except the default of the Operator), the Customer shall not pay any sum payable to the Operator under the Agreement wlthln 15 days after the date of the Oparator's invoice them (a) the Operator shall be entitled to engage the services of any pemon to recover such sum from the Customer, in which event the Customer shall also be liable for all actual costs incurred by the Operator for such services (including the legal costs) ; and (b) regardless of whether or not the Operator shall have engaged the services of any person as described in Clause 11 . 3 (a) the Customer shall in addition to all sums payable under the Agreement and Ihe costs described in Clause 11 . 3 (a) (If any), pay to tha Operator interest on such sums and the costs at 5 ƒ A above the then current LIBOR rate, which interest shall be payable on a day to day basis from the date immediately aftsr the due date for payment to the date of actual payment of such sums, the costs and interest thereon or to the date of expiry or sooner termination of the Agreement, whichever Is earller . Suspension If the Customer fails to pay any amount within 10 days after the due date under this Agreement, the Operator may suspend the provision of Services under this Agreement until such non - payment is ramediad . The Operator shall notify the Customer of any imminent suspension of the provision of Services, not less than 5 days prior to the date on which the Operator shall effect such suspension . Failure by the Operator to provide notification to the Customer of any suspension of the Services shall not limit, dimlnlsh or invalidate in any way the Operator's right to suspend the provision of the Services In accordance wlth thls Clause 11 . 4 . During the period of suspension, the Rental and Handling Charges shall continue to be payable .
11.4 11.5 Basis For the avoidance of doubt, It is hereby agreed and declared that: ( › ‹c› where the Products shall be delivered or taken re - delivery of by a Vessel, such sums have been charged on the basis that the Products shall be delivered or re - delivered at the flange of the pipeline which is connected to the manifold of the Vessel ; (d) (b) unlass expressly agreed otherwise, such sums shall be payable for the whole perlod during which the Storage Facilities are available for the Customer's use pursuant to the Agreement regardless of whether or not the Customar shall have actually used the same ; unless expressly agreed otherwise, such sums shall be payable on a monthly basis. Payment for a part only of a month should be on a pro rata basis; and the Operator shall not be obliged to recovar from thlrd parties any sums which may be due from thlrd parties to the Customer in respect of the Products. 12. TniRo PARTY CHAROES A D Suus oN PRODUczs 1. Customer's Liability The Customer shall pay to the Operator the amount of any properly invoiced charges or sums due or pald by the Operator to third parties (Including any freight, port charges, taxes, duties, conMbutlons, fines and any other costs) in respect of the Customer's Product and/or the provision of Serdces to the Customer save for any charges which are specified In the KeyCommsrcial Terms to be borne by tha Operator and shall Indemnify the Operator against any Loss arising in respect of such unpaid charges and sums regardless of whether or not the Products shall then be present at the Teminal . 13. RiGHTS OF LIEN AND RzTENTION 1. The Operator shall have a right of lien and retention ovar the Products and all sums (including any insured sums collected by the Operator for the Customer), documents and valuables which the Operator shall now or hereafter hold of or on behalf of the Customer or whlch 1 s now or hereafter due to the Customer, to secure the perfomance of all of the duties, undertakings and obligations of the Customer under the Agreement or under any other agreement made between the Operator and the Customer in respect of other Products at the Temlnal . 2. The Operator shall axarcise Its rights under Clause 13 . 1 by delivering a notice to the Customer seking out the amount of the sums due under the Agreement and any other agreement beMeen the Operator and the Customer In respect of other Products at the Tarmlnal (a "Failure to Pay Notice") . The Failure to Pay Notice shall also set out a due date for payment of such sums, such date to fall at laast 7 days after the date of Issuance of the Failure to Pay Notica . 3. The Customer acknowledges and agrees that if the Customar has not paid the amounts due by the due date set out In the Failure to Pay Noti ¢ e, then the Operator shall be antltled to make an application to any relevant court, to allow the Operator to sell a quantity of Product that will satisfy the amounts due under the Failure to Pay Notice .
14. TpANSFER OF OWNERSHIP The Customer may transfer title to Product stored in the Storage Facilities to any person who has contractual rights to the necessary storage capacity in the Teminal . Any such transfer of title shall be promptly notified to Operator . 15. REPRESENTATIONS AND WARRANTIES Each Party hereby represents and warrants to the other Party that: (a) it Is a company duly incorporated and validly existing under the laws of the jurisdiction referred to in Box 2 of the Key Commercial Tems; (b} it has the power and authority required to enter Into this Agreement and perform fully its obligations under thls Agreement in accordance with its tems; (c) subject to any general principles of law, assumptions or qualifications referred to In any lagal opinion required in relation to this Agreement, thls Agreement is legal, valid and binding on It and Is enforceable in accordance with its tems ; the execution and delivary of this Agreement and the performance of its obligat/onsunder this Agreement have been duly authorised by all the necessary corporate actions on the part of such Party ; and (d) neither the entry into this Agreement nor the implemantatlon of the transactions contemplated by It will result In: (i) a violation or breach of any provision of its statutes, by - laws or other constitutional documents; (11) a breach of, or give rise to a default under, any contract or other agreement to which it is a party or by which it Is bound; or (ii) a violation or breach of any applicable laws or regulations or of any ordar, decree or judgment of any court, governmental agency or ragulatory authority applicable to it or any of its assets, and in case of breach of any such representation and warranty, the Customer agrees to lndemnlfy and keep Indemnlflad the Operator agalnst any such breach . 16. TERMINATION 1. Early Teminatlon by Operator Notwithstanding the other provisions of the Agreement, the Operator may at any time after the occurrence of an Event of Default by the Customer which is continuing termlnate the Agreement, by giving written notice of such termination to the Customer . 2.
Event of Default Each of the following is an Event of Default by the Customer : (a) If the Customer shall fail to observe or perfom any of ib material obligations under the Agreement and shall not remedy ils failure to so observe or perform such material obligations within 30 days' time after the Operator has notified the Customer of such failure ; (f} (b) if the Customer shall fall to pay any sum due under this Agreement and shall not remedy its failure to pay within 15 days' time after the Operator has notified the Customer of such failure to pay ; (c) if the Operator shall be of the reasonable opinion that the Products have become subject to changes or deteriorated or may become subject to changes or deteriorate and the Operator Is of the raasonable oplnlon that the Customer has failed to give proper or full instructions to the Operator for the prevention or reduction of such changes or deterioration ; (d) if the Products stored at the Teminal are not In compliance with UAE Laws and the Port of Fujairah Laws ; (I) (e) If the Customer or any of its shareholders, group company, parant company, subsidiarles, or, to the Customer's knowledge, any director, officer, employee, agent, afAllate or representative of the Customer or any of its subsidiaries, is an Indlvldual or entity (“Person") that Is, or is owned or controlled by a Person that Is subject to any sanctions admlnlstered or enforced by the U . S . Department of Treasury's Office of Foreign Assets Control, the United Nations Security Council, the Council of the European Union, Her Ma}esty’sTreasury, or other relevant sancdons authority (collectively, ƒ Sancbons*) . if the Customer conducts businesses with any parent company, subsldlary, joint venture paMer or other Person that facilitates any actlvitles or business with any Person that, at the time of such facllitation, is the subject of Sanctlons . (g) if the Customer shall have a racaiver appointed over all or any substandal part of its asset and In the case of an appointment by a creditor, such appointment is not dlsmlssed within 30 days ; (h) If the Customer shall make any composition wlth Its creditors (except in the casa of voluntary reorganisation not invoIvi • s insolvency of the Customer) ; or if the Customer shall go Into llquldatlon whether voluntary or compulsory (otherwise than for the purposes of amalgamation or reconstruction) .
16.3 Early Temlnatlon by Customer Notwithstanding the other provlsions of the Agreement and the required notice periods therein, the Customer may terminate the Agreement forthwith at any time without claim or charge by the Operator, by giving notlce to the Operator if any of the following has occurrad and is continuing : (c (a) if the Operator shall have a receiver, bankruptcy trustea or analogous person appolnted over or to administer and manage all or any substantial part of its assets and such appolntment Is not dismissed or wlthdrawn within 30 days ; or (b) if the Operator shall make any composition wlth its creditors (excapt In the case of voluntary reorganisation not involving insolvency of the Operator) ; or if the Operator shall go into liquidation whether voluntary or compulsory (otherwise than for the purpose of amalgamation or reconstruction), provided that for as long as any amount owed to any secured Finance Party, or any agent or trustee acting on its behalf (a "Security Trustee"), by the Operator is outstanding, tha Customer shall not be Remitted to teminate this Agreement upon tha occurrence of any of the events or circumstances specified in Clauses 16 . 3 (a) to 16 . 3 (c) (Inclusive) and shall instead, subject to the requlred notice perlod thereln, only be permitted to teminate this Agreement : in the event or circumstance set out in Clausa 16 . 3 (a) occurs ; or if : (A) a receiver wlth a power of sale has been appointed by any secured Flnanca Party or the Security Trustee ; (B) a bankruptcy trustee has been appointed by a court in the United Arab Emlrates on the application of any secured Finance Party or the Security Trustee ; or (C) any analogous person is appolnted by or on the application of any secured Finance Party or the Security Trustee, in each case over or to administer and manage : (D) all or any substantial part of the Oparator's assets; or (E) the shares in the Operator that have baen charged to the secured Flnance Party, or the Security Trustee (as the case may be), and any appointment referred to in paragraph (A), (B) or (C) is not dismissed or withdrawn within 30 days ; or any secured Finance Party or Security Trustee (as the case may be) has been awarded a favourable judgment ofa court in the United Arab Emirates substantiating ma secured Finance Party's, or Security TnJstea's (as the case may be) debt clalm and enabllng It to 9 elI (X) the Operator's business and/or assets that have been charged to the secured Finance Party, or the Security Trustee (as the case may be) by the Operator or (Y) the shares in the Operator that have been charged to the secured Finance Party, or the Secuñty Trustee (as the cass may be) ; or a court in the United Arab Emirates has issued a judgment of liquidation or otherwise authorising (or permitting) the dissolution of ths Operator following a judgment of bankruptcy, or any similar or comparable events under any new legislation applicable to the Operator . (ii) (iv) 47. AFTER TERMINATION 1. Tamlnatlon Payment on Early Temilnation by Operator The Customer shall pay to lhe Operator forthwith on any termlnation pursuant to Clause 16 . 1 , other than in the csse of a termlnatlon pursuant to Clause 16 . 2 (i) due to an act or omission of the Operator or Force Majeure, an amount aqual to the aggregate of : (a) any amounts then due or payable but unpaid by tha Customer undsr this Agreement; (b) any amount to be dua and to be Invoiced under thls Agreement but unpaid by the Customer, equal to the aggregate of the due and owing Rental and Handling Charges, the Excess Throughput Charges, the Circulation Charges, the Inter Tank Transfer Charges, the Portal Fujairah Tariffs and the Claanlng Charges if cleaning of the Storage Facilities is necessary in the opinion of the Oparator ; (c) any Rental and Handling Charges under this Agreement for the remainder of the Agreement period till expiry to fall immediately dua for payment to the Operator; (d) by way of agreed compensation, the Termlnatlon Sum calculated as at the date of that termination.
2. No liability following early termination by Customer Without prejudice to any accrued rights up to temination, the Operator shall have no liability under this Agreement or otherwise in connection with or as a result of any termination of this Agreement pursuant to Clause 16 . 3 (Early Termination by Customer) . 3. Removal of Products The Customer shall completely remove the Products from the Storage Facllltles not later than the date of explry or the day falling 30 days after termination of the Agreement pursuant to Clause 16 . 4. Return of Sterage facilities If cleaning of the Storage Facilitles Is, in the opinion of the Operator, necessary, upon expiry or termination of the Agreement, or due to a change in the nature of the Products stored or to be stored therein, during the term hereof, or both, the Customer agrees to remove or cause to remove any Products and waste to pemit cleanlng In a safe and legal way and to reimburse the Operator for said cleaning, removal and disposal . 5. Rlght of Disposal If the Customer falls to remove the Products due to any reason whatsoever upon the expiry or temination of the Agreement in accordance with Clause 17 . 3 , the Operator shall be entitled, by notice to the Customer, to remove the Products from the Storage Facilities to any place whether In or outside the Teminal and dispose of or destroy the Products in such manner as the Operator deems fit and at the risk and expense of the Customer and by rendering any surplus to the Customer to an account as notified by the Customer . 6. Proceeds If the Operator shall decide to dispose of the Products under Clause 17 . 5 by sale by private traaty or publlc auction any proceeds of the sale shall be applied by the Operator in the following manner .
(a) firstly, in payment of all sums due from the Customer to the Operator under the Agreement or under any other agreement made between the Operator and the Customer, (b) secondly, In payment of the expenses of the removal and disposal and any storage of the Product In the period between such removal and disposal ; and (c) thirdly, in paymant of any sums due from the Customer to the competent authorities; (d) fourthly, In payment of other claims or liens of which notlce has been given by thlrd parties to the Operator, and by rendering any surplus to the Customer to an account as notified by the Customer . 7. Insufficient Procaeds If the proceeds of any sale of the Products by the Operator pursuant to Clause 17 . 5 shall be Insufficient to satisfy In full any claim of the Operator under the Agreement and under any other agreement made between the Operator and the Customer, the Operator shall be entided to recovar the same from the Customer as a debt in any court of compatant jurisdiction . Any sale of the Products by the Operator purauant to Clause 17 . 5 shall be free from any encumbrances . 8. No Liabllity The Operator shall not be liable for any claim arising from the removal, disposal, destruction and intamediate storage of the Products under this Article 17 , and the Customer shall indemnify the Operator against such claims . 18. FORCE MAJEURE 1. Scope of Force Majeure Any dalays in or failure of perfomance by either Party shall not constitute default hereunder or give liability for any claims if and to the extent such delays in or failures of performance are, without the fault or negligence on the part of the affected Party, caused by Force Majeure . "Force Majeure" shall mean any event or clrcumstances, which is not withln the reasonable control of the Party (acting as a Reasonable and Prudent Operatar) affected by the cause and which, by the exercise of diligence, such Party (acting as a Reasonable and Prudent Operator) is unable to foresee or prevent and may indude, but shall not be llmitad to : (a) war, hostilities, ravolution, riots, insurrection or othar civil commotion, acts of terrorise or sabotage; (b) nuclear explosion, radioactive, biological or chemlal contamination, ionlzlng radiation, or the dlscovery of such contamination or radiation; (c) strikes and/or lockouts axcept any such actlon by employaes or subœntractors or agents ofthe Party claimlng Force Majeure; (d) any affect of the natural elements, including lightning, fire, earthquake, sandstorm, flood, storm, tsunaml, cyclone, typhoon or tornado; (e) explosion (other than nudear explosion or an explosion resulting from an act or war); (f} epldemlc or plagua ; (g) Inability to obtain necessary equipment or materials due to blockade, embargo or sanctlons; and (h) any act of omission of any competent authority including any refusal to issue, withdrawal, non - renewal or non - extension of a license, permit or approval. 18.2 Notification If either Party is prevented from or delayed in perfomlng any of Its obllgations under the Agreement by Force Majeure, such Party shall immedlately nogfy the other Party in writing of the occurrence of the circumstances constitudng Force Majeure .
Forthwith upon the Force Majeure ceasing to have effect, the Party relylng upon It shall give wrltten notlce thereof to the olher Parly . 3. General Limitations The affected Party shall not be entitled to suspend performance under this Agreement for any greater scope or longer duration than is required by the Forca Majeure or the delay occasioned thereby . Obligations of the Parties that were required to be completely performed prior to the occurrence of Force Majeure shall not be excused as a result of such occurrence . The Customer shall be able to clalm Force Majeure only in respect ofa vessel that is loading or unloading at the Teminal, or whose scheduled loading and unloading at the Terminal has been notified to the Operator . The failure or Inability of either Party to satisfy a payment obligation that has arisen undar this Agreement shall not be excused by Force Majeure . 4. No Breach Neither Party shall be deemed to be in breach of the Agreement or be liable to tha other for any delay in performance or non - performance of its obligations undar the Agreement to the extent that such delay or non • peiformance is due to Porce Majeure, of whlch it has notified the other Party . The Party claiming Force Majeure shall perform and observe its obligatlons under the Agreement insofar as the perfomance and observance thereof are not prevented by Force Majeure . To the extant that the Operator Is unable to provide the Servicas as a result of Force Majeure affecting the Operator, the Customer shall not be obliged to pay the Rental and Handing Charges . 18.5 Use of Storage Facilities If Force Majeure is being claimed by the Customer, and as a result of such Force Majeure, the Customer Is not using the Storage Facilities, the Operator may allow the use of the Storage Facilitles to other customers for so long as the Force Majeure continues . 18.5 Efforts The Party claiming Force Majeure shall use reasonable efforts to promptty cure the effect of Force Majeure . 18.7 Temlnation Where an event of Force Majeure affecting Operator or Customer extands for more than 90 consecutive days, ea : ii Party shall have the right to temlnate this Agreement by giving 30 days' written notice to that effect . 19. LIABILITY 1.
Operator's Liabllky (a) The Customer shall indemnify and hold the Operator hamless from and against all daims, costs, losses, liabilities, injury to person and/or damage to property, causad by or resuldng from : (i) Any gross negligence, misconduct, and/or any intentional wrongful acts oromissions on the part of the Customer, its employees, agena, contractors or any other persons actlng under ik authority (including but not limited to, any contractors transporting product to or from the terminal) in the performance of this Agreement ; and (ii) To the extent not caused by the negligence, misconduct, wrongful acts or omissions of the Operator, its employees, agents or contractors, any losses incurred directly as a result of the physical or chemical charactaristics of the Product . (b) For the avoldance of doubt, the Operator shall not be liable to the Customer for any claims, costs, losses, damages, Ilabilitles, Injury to person and/or damage to property incurred by the Customer to tha extent that such daims, losses, damages, lIablIltIe9, Injury to p8rson and/or damage to property are caussd (whether dlrectly or indirectly) by the Operator in the perfomance of ils obligations under lhis agreement In accordance with its terms. The Operator shall carry out the Services with reasonable care and to the Standards of a Reasonable and Prudent Operator . Without prejudice to the Parties ' rlghts under the other provisions of the Agreement, this Clause 19 . 1 shall not impose on ths Operator any liability for claims arising from : (c) Force Majeure; or (d) any delay in the delivery of the Products to the Operator 2. Event of Claim Notwlthstandlng anything to the contrary in this Agreement, in lhe event of any claim against the Operator : (a) the Operator shall not be liable for any forms of consequential losses (Including loss or profits, indirect loss or damage or other foms of purely economic losses); (b) the Operator shall not be liable for any clalm arising before dellvery of the Products to the Operator or after re - delivery oftha Products to tha Customer; (c) the claim will be vold if the Customer shall not have notified the Operator thereof within 120 days after the occurrence of the event giving rise to the claim or within 120 days after the re - delivery of the Products to the Customer, whichever is earlier ; and (d) if the claim shall have baen notified to the Operator in accordance wlth Clause 19 . 2 (d), the claim shall become vold if the Customer shall not commence legal proceedings In respect thareof withln the period of 120 days after the date of such notice . 3. Compensation If any claim shall be made against the Operator by more than one person and the Operator shall decide to pay compensation in respect of the clalm, the Operator shall be entitled to apportion such compensation among such persons according to the extent of proven loss or damage suffered by each of them .
t9.4 Customer's indemnlttes The Customer shall indsmnlfy, defend and hold harmless the Operator, its respective officer, employees and agents against : (a) any and all claims for Loss, damage and expense of whatevar kind and nature, Includlng all related costs and expenses, in respect of personal Injury to or death of any person employed by the Customer ; and (b) any and all claims for Loss, damage and expense of whatevar kind or nature, including all related cosb and expenses, brought by third parties against the Operator or lls officers, employees or agents in connection wlth any act or omission of the Customer or Its officers, employees or agents . 19.5 Operator's indemnities The Operator shall indemnify, defend and hold hamless the Customer, its raspectiva officers, employees and agents against any and all claims for Loss, damage and expense of whatevar klnd and natura, Including all related costs and expenses, in respect of personal injury to or death of any person employed by the Operator . 18.6 lndemnlty Procass (a) Each of the Operator and the Customer undertakes and agrees, whan asserting its right to indemnification from the other Party for the negligence or mlsconduct or wrongful acts or omissions of any of such other Party's contractors : (i) To first seek recourse agalnst any such contractor (including, where applicable, recourse against the Owners, insurers or P and I Clubs of the responsibla barge or marine vessel) ; To use commercially reasonable afforts to obtain from such Ownem, Insurer or P and I Clubs sufficient security to cover said contractor liability ; To claim under this indamnlty only If and to the extent such contractor (Including, where applicable, recourse agalnst tha Owners, Insurars or P and I Clubs of the responsible barge or marine vessel) Is liable and Is unable within a reasonable tlme under the c 1 rcumstances to meet and discharge Its liabiliées in full ; and That it will exercise commercially reasonable efforts to assist the other in obtaining recourse and recompense from or on behalf of thlrd parties for losses incurred . (ii) (lii) (b) In the event that any loss in œused In whale or In partly by the concurrent negligenæ or intentlonal wrongful acts or omlsslons ofthe Oparator, its employees, agents, contractors or any other parsons acting under Ils authority on the one hand and the Customer its employees, agents, contractom or any dher persons acting under its authonty on the other hand, then this obligation to indemnify shall be comparative and each Party shall indemnify the other to the extsnt that such Party's negllgenœ or lntendonal wrongful acts or omissions weæ the œuse of such loss .
20. 1. Insurance and Liability The Operator shall maintain throughout the course of the Agreemsnt the following insurance requirements : A) Worker's Compensation and Employer's Liability insurance, as prescribed by applicable law B) Commercial General Liability Insurance with an adequate maximum limit per occurrence and in the aggregate per year for bodily injury, property damages, and contractual liability coverage not exceeding the legal liability . 2. No Insurance of Products by Operator Unless it has been explicitly agreed in writing with the Customer, the Operator shall not be obliged to insure the Products of the Customer or any other property of the Customer or any third party . 3. Insurance of Products by Customer The Customer must maintain adequate insurance for the Products of the Customer in the Terminal . The terms and conditions of such Insurance shall Include : (a) that the Operator ba a co - insured in respect of such policy; (b) the Insurers waive any rlghts of subrogation against the Operator; and (c) such other tems as the Operator shall reasonably specify. 4. Radellvery In the event of the re - delivery of part of the Products, the Customer shall notify the Operator of the insurable value of the remainlng part of the Products failing which the Operator may reduce the insured sum in respect of the Products in the same proportion as the Products shall have been reduced In number, weight, measurement or content . 5. Operator's Assistance If the Customer shall request the assistance of the Operator to determine lhe extent and value of any loss, damage or destruction of the Products, the Operator may, but shall not be obliged to, render such assistance subjeat to : (a) the Customer's payment of the costs of such assistance (includlng the fee of the Oparator) and (b) If the Operator so stipulates, the Customer's prior payment in cash of all sums due, from the Customer to the Operator under the Agreement or under any other agreement mada between the Operator and the Customer . 6. Insurance of Protectlon and Indamnlty Cover by Customer The Customer shall produce and maintain (or, in the case of Vessels it has chartered, cause to be procured and maintained), in relation to Its Products, activities and the activities of Its Vessels at the Terminal, comprehensive protection and Indemnity insurance Including coverage for injuryñoss of lives, full collision liability, damage to property including fixed floating objects or Port of Fujalrah property, crew, cargo, pollution liability, spillage and wreck removal, towaga, war risks and fines, in accordance wlth good industry practlce in addition to any requirements imposed by the Port Regulations.
21. CONFIDENTIALITY 1. Confidential Information (a) Subject to Clause 21 . 1 (b), each Party agraes to and shall cause its respective agents, representatives, affiliates, employees, officars and dlractors, to Feat and hold as confidential (and not disclose or provide access to any person), all confidential infomation received by it relating to the other Party, infomatlon relating to the provisions of and negotiations leading to this Agreement, and all other confidential or proprletary infomation with respect to the Teminal . (b) A Party may disclose information which would otherwise be confidential without the consent of the othar Party, if and to the extent : (I) requlred by the rules of any stock exchange or any governmental, regulatory or supervisory body or court of competent jurisdiction to whlch the Party making the dlsclosure is subject ; (iii) (lv (ii) requlred by any stock exchange or any governmental, regulatory or supervisory body of the Operator's parent company, which for the avoidance of doubt, Is listed on the Nasdaq Stock Exchange, New York . requlred by the law of any relevant jurisdiction; requlred by lenders in connection with debt financing arrangements for the Terminal; (v) required by any competent authority to register security in favour of any lendar (howsoever described) in connection with debt financing arrangements for the Teminal ; (vi) disclosure is made to the amilates, professional advisers, auditor and bankers of that Party; (vii) disclosure is made to bona fide potential purchasers of shares In that Party and the professional advisers of such bona fide potential purchasers; the Infomatlon has come into the public domaln through no fault of that Party; or (ix) the other Party has given prior written approval to the disclosure. (c) Thls Clause 21 and such Clauses of this Agreement as are necessary to pemit the anforcement of this Clause 21 shall continue to apply for Mo ( 2 ) years following the expiry or termlnation of thls Agreament . 22. CUMULATIVE RloHTS AND REMEDIE9 The rights and remedles given to the Pañies under this Agreement shall be cumulative remedies and shall not prejudice any other rights or remedies of the Parties contained In the Agreement or at law or the right of action or othsr remedy oftha Parties for the recovery of any sums due to it from any other Party or in respect of any antecedent breach of the Agreement by that Party .
23. COMPUANCE WITH STAT \ ITES The Pañies shall comply with the provisions of all statutes affecting the Products, the Services and the Agreement (including, without limitation, those specified in Box 20 of the Key Commercial Terms) and shall give all necessary notices and the Customar shall obtain all requisite permission, approvals and consents . The Customer shall indemnify the Opamtor against any fines . penalties, losses, costs or expenses incurred by the Operator in respect of any non - compliance with the provisions of such statutes save for where such fines, penalties, losses, costs or expenses ware caused by the gross negligence or wilful misconduct of the Operator . 24. NOTICES 1. Unless otherwise provided for herein, all notices to be given or made In connection with the matters contemplated by this Agreement shall be in writing and shall be delivered personally or sent by prepaid mail : In the case of the Operator to : Brooge Petroleum and Gas Investment Company FZE Address: P.O. Box 50170, Fujairah, UAE Akention: Mr. Nlcoleas Paardenkooper Chief Executive O/ifcer 6mai/: nico.paardenkoope/jtgbpoIc.com In the case of the Customer to : andsha#bedeemedtohaveMenduygvenormadexwedasM#ows: (a) if personally delivered, upon delivery at the address of the relevant Party; (b) If sent by mail, 2 Business Days aftar the data of posting; and provided that if, in accordance with the above provision, any sush notice, demand or other caYimunication would otherwise be deemed to be given or mada on a non - Business Day after 5 . 00 p . m . at the location of the reciplent, such notice, demand or other communication shall be deemed to be glven or made at 9 . 00 a . m . on the next Business Day at the location of the recipient . Unless the contrary be proven, proof of postage or delivery shall be proof of service .
2. A Party may notify the othar Party ofa change to its nama, relevant addressee, address or fax number for the purposes of Clause 24 . 1 provided that such notification shall only be effective : (a) on the date specified In the notificatlon as the date on which the change is to take placa ; or (b) if no date is specified or the date specified 1 s lass than 10 days after the date on which notlce is given, the date falllng 10 days after notice of any such change has baen givan . 25. AS9IGNMENT/EUBLEASE 1. The Operator may at any time assign/sublease or otherwise transfer all or any part of iD righb under thls Agreement . 2. The Customer shall not assign or otherwise transfer all or any part of Its rights under this Agreement without tha prior consent of the Operator (which may be granted or withheld in its absolute discretion and may be granted subject to any conditions as the Operator deems necessary in the circumstances) . The Customer shall also be entltled to sublease part or all the Committed Volume to another well reputed thlrd party subject to hav 1 ng the Operator's prior written approval (not to be unreasonably withheld) . 26. CONSENT OR WAIVER No consent or expressed or ImpIIed waiver by a Party to or of any breach of any covanant, condition or duty ofthe other Party shall be œnstructed as a consent or waiver by that Party to or of any other breach of the name or any other covenant condition or duty by that Party and shail not prejudice in any way the rights powers and æmedies of that Party contained in the Agreement . 27. ÑEVERABILITY Should any part, term or provision of the Agreement be judged illegal or in conflict wlth any law, by a court of competent jurisdiction, the validity of the remaining potions or provisions shall not be affected thereby . 28. APPLICABLE LAW The Agreement and any dispute, difference, controversy or claim arising out of or relating to thls Agreement including the negotiation, existence, validity, Invalldlty, enforceability, breach or teminatlon thereof regardless of whether the same shall be regarded as cantractual or not (a "Dispute"), shall be governed by the federal laws of the United Arab Emirates and the laws of the Emirate of Fujalrah . 29. NOTICE OF DI6PUTE Any Party intending to commence proceedings in relation to any Dispute shall give at least 10 Business Days' prior notice in writing to the other Parties of its intention la do so, explaining the nature of the Dispute and the Intended proceedings . 30. 30 . 1 AnyDispute shall be referred to and finally resolved by arbitration under the LCIA Arbitration Centre Rules (the "Rutes") which (save as modified by thls Clause 30 ) are deemed to be incorporated by reference Into thls Clause 30 . Capkalised terms used in thls Clause 30 and not otherwise defined In thls Agreement have the meanings given to them In the Rules .
'30.4 31. 30.2 the scat, or logal placo, of arbitration shall be the Dubai International Financial Centre, Dubai, United Arab Emirates. 30 . 3 The number of arbitrators shall be three . The claimant (or, if more than one claimant, the claimants jointly) shall nominate or . e arbitrator and the respondent (or, if more lhan one respondent, the respondent jointly) shall nominate one arbitrator, in each casa in accorrJanra with thn Rules . The . third arbitrator, who w!ll act as chairperson of the arbitral tribunal, shall be nominated jointly by the lwo co - arbitrators, provided that if the third arbitrator has not been so nominatea within 30 Business Days cf the tima - limit for service of the response, the third arbitrator shall be appolnted by the LCIA Court . The language to be usad in lhe arbitral proceedings shall be Engish . THlRoPARTYRiGxTS Save as exprassly provicled In this Agreement, a parson, who or'ahIch is not a party to the Agrean en(, has no right to enforce or enjoy the hetiefit of at›y t«im of the Agreanient. INWFTNESS WHEREOr the Parlies hereto have entered into thls Agreemert and accepted the General Terms and Condillons on the day and year fir Slgned by: Mr. Nicolaas L. Paaraenkooper for and on behalf of 8rooga Petro/otim and Gas Investment G ›’ In the presence ol: Name: ......................................................... Signature: or an on eh CenGeo New Energy’ In the Signature.” umi
Exhibit 4.90
DATED 21 st NOVEMBER 2022 BROOGE PETROLEUM AND SAS INVESTMENT COMPANY FZE AS OPERATOR - and — JAHRA OIL FZE AS CuSTOMER COMMERCIAL STORAGE AGREEMENT Hogan Lovefls Hogan Lovel s (Mlddle East) LLP 1g’ Floor, Al Fatlan Currency Tower, Dubal International Financial Centre, PO Box 506602, Dubai, UAE - 1 - The parties listed below agree, in this Commercial Storage Agreement (the "Agreement") dated as of 21^ November 2022 and executed in Oubai, UAE, the following: Kw COMMERCIAL TERMS 1.
Operator 2. Customer 3. Agreement to provide Services 4. Agreement 5. Definitions Brooge Petroleum and Gas Investment Company FZE, a company incorporated in Fujaireh Free Zone, having registration number 13 - FZC - 1117 and registered PO Box 50170 Fujairah United Arab Emirates (the "Operator" or "BPGIC") . Sahra Oil PZE an establishment The Operator agrees to provide the Services in relation to the Product at the Terminal, and the Customer wishes to store the Product at the Terminal and desires to purchase storage related handling services from the Operator on the terms and conditions set out in this Agreement . This Agreement comprises these Key Commercial Terms and the General Terms and Conditions ("GTCs") which are attached to this Agreement and are hereby incorporated by reference in this Agreement as if they were set out in full and shall apply to the provisions of this Agreement, subject to Clause 1 . 4 of the GTCs . In this Agreement, capitalised words and expressions have the meanings set out for them (whether by incorporation, cross - reference or otherwise) in the GTCs, unless otherwise defined in this Agreement or the context otherwise requires . In addition, 1 . "Cimulation Charges"means the charges described in Box 16 of these Key Commercial Terms ; - 2 - 2.
"Clause(s)" means the provision(s) and stipulation(s) of the GTCs ; "Commencement Date" éans 1 ƒ ’ December 2022; "Excess Throughput Charges" means the charges described in Box 14 of theseKey Commercial Terms ; 5. "Fee" means, in respect of each month an amount equal to the aggregate of the Rental and Handling Charges, the Excess Throughput Charges, the Tank Cleaning Charges, the Girculation Charges, the Tank Heating Charges, the Inter - Tank Transfer Charges, and the TopSide Facility Charges for such month ; 6. "Finance Party" means any person providing debt financing to the Operator in connection with the Terminal (excluding any shareholder of the Operator or any Affiliate of any shareholder) ; 7. "Floor Price" has the meaning given to it in Box 13 of these Key Commercial Terms ; 8. "Guarantee" not used; 9. "Guarantor" not used; 10. "GTCs" has the meaning given to it in Box 4 of these Key Commercial Terms ; 11. "Inter - Tank Transfer Charges" means the charges described in Box 18 of these Key Commercial Terms ; 12. "Key Commercial Terms" means the provisions of Box 1 to 22 ; 13. "Market Price" not used; 14.
"POF" has the meaning given to it in Box 9 of these Key Commercial Terms ; - 3 - 15 . "Product" has the meaning given to it in Box 8 of these Key Commercial Terms ; 16. "Rental and Handling Charges" means the charges described in Box 13 of theseKey Commercial Terms ; 17. "Services" has the meaning given to it in Box 10 of these Key Commercial Terms ; 18. "Storage Facilities" means any storage space with pipelines, pumps, component parts and equipment and appliances belonging thereto, which are within the Terminal, to be made available to or to be used by the Operator for the purpose of carrying out the Services pursuant to the Agreement ; 19. "Tank Cleaning Charges" means the charges described in Box 15 of these Key Commercial Terms ; 20. "Tanl‹ Heating Charges" means the charges described in Box 17 of these Key Commercial Terms ; 21. "Tank Turn" means a volume of Product equal to the Volume Commitment ; "Tarm" has the meaning given to it in Box 7 of these Key Commercial Terms ; 22. 23. ’terminal" means the petroleum crude and product storage terminal described in Box 9 of these Key Commercial Terms ; 24. "TopSide Facility Charges" means the charges described in Box 19 of these Key Commercial Terms ; and 25. "Volume Commitment" has the meaning given to it in Box 11 of these Key Commercial Terms .; and 26. "Port Dues" has the meaning given to it in Box 20 of these Key Commercial Terms .
27. "g \ /harfage Facility Charges" has the meaning given to it in Box 20 of these Key Commercial Terms . Not used. 6. Guarantee The obligations under this Agreement (including the obligation of the Operator to provide the Services and of the Customer to pay the Fee) shall begin on the Commencement Date, and shall, subject to the terms of this Agreement, continue until 31 December 2023 , i . e . (the 'Term") . The Agreement can be renewed based on mutual agreement, with to be defined conditions . The parties should start negotiations 30 (thirty) days prior to the expiry of the Term . 7. Period of Agreement The Product shall comprise white petroleum products (Gasoline and Blending Components) delivered by the Customer to the Operator for the purposes of carrying out the Services, as described in the Port Rules for Topside Facility Operations (the "Top Side Rules") and the type and specifications of which shall be pre - agreed by the Parties prior to delivery . 8. Product Terminal means the 1 , 001 , 388 cubic metre capacity crude oil, fuel oil and product storage terminal developed by BPGIC in the Emirate of Fujairah, and more specifically, located near the Port of Fujairah ("POF"), United Arab Emiratesand any other premises, office, buiIding,Storage Facilities (as defined in the GTCs), tank, and pipeline at which or inwhich Services are provided to the Customer in accordance with this Agreement by the Operator or any third party appointed by the Operator . In case a third party is appointed by the Operator . The Services shall comprise any or all operations carried out or to be carried out by the Operator in respect of the Product at, outside or through the Terminal, inclusive of but not restricted to : Terminal 10. - 4 -11.
Volume Commitment for Storage 12. Payment - 5 - 1. 2. 3. making storage space available in respect of the Volume Commitment ; storing, manipulating (which shall be deemed to include the through - pumping of the Product between the matrix manifold and the Terminal), moving, treating, processing and delivering ; and administrative handling of the Product (including preparing shipping documentation for, dealing with mandatory government reporting and/or other administrative activities related to the Product) . For the avoidance of doubt, the Operator is entitled to sub - contract all or part of the Services to a sub - contractor or third - party operator at its sole discretion . The Customer commits to renting a storage capacity of cbm at the Terminal (lhe "Volume Commitment"), subject to the terms of this Agreement . The Operator shall invoice, and the Customer shall pay in accordance with this Agreecenf lhe aggregate for each month during the Term an amount equal to the aggregate of : 1. the Rental and Handling Charges; the Excess Throughput Charges; the Tank Cleaning Charges; the Circulation Charges; Ihe Inter - Tank Transfer Charges; and the Port of Fujairah tariffs induding but not limited to Wharfage Facility C . harges ; and the TopSide Facility Charges, 2. 3. 4. 5. 6. for such rronth, which will be accepted by Customer only as per actual invoice from Port of Fujairah 13.
Rental and Handling Charges 14. Excess Throughput Charges 15. Tank Cleaning Charges - 6 - For each month, during the Term, the Rental and Handling Charges shall be determined as the Volume Commitment multiplied by the higher of : US$ per cbm per month. (“Floor Price"), and The Customer shall have at no extra cost a throughput allowance equal too stank lurn of m’ per month . Tank turn means a volume of product equal to the Volume Commitment . If the Customer exceeds this allowance, the Customer shall pay to the Operator, Excess Throughput Charges in respect of the excess above the Volume Commitment delivered or redelivered at a rate in US $ per cbm of the volume of Ihe Product handled per each import/expart . Excess Throughput Charges will be reviewed and may be adjusted annually by the Operator. Unused free throughput cannot be carried forward to subsequent months. If the Customer requires a tank allocated to it to be cleaned as a result of the Customer requesting a change in the Product stored in that tank, or in the event of the expiration/termination ofthe Agreement ; the Customer shall payan amount equal to the costs incurred by the Operator in managing andprocuring the cleanirg of the tank or tanks . Athird - party surveyor engaged by lhe Customer shall inspect and test the tank for cleanliness . Customer shall receive the tank in a suitable condition and will be inspected by Customer nominated inspection company, which shall comply wth the lerms agreed herein, and Customer will handover and deliver it back to the Operator on thesame Iæsis.
The Customer shall pay to the Operator circulation charges "Clrculation Charges") at a US $ per hour In case such a service is requested by the Customer . 16. Circulation Charges Not applicable for the required products. 17. Tank Heating If the Customer requests, and the Operator œnsents to, the transfer ofthe Customer's Product from one tank to another, the Customer shall pay Inter - Tank Transfer Charges to the Operator at the amount of US $ per cbm of Product transferred beMeen any tanks at the sarre Terminal and measured at ambient temperature during the transfer per month . The custody transfervolume will be based on the issuing tanklevel gauga cornputation . 18. Inter - Tank Transfers The Customer will pay the Operator on a pass - throu 9 * basis the TopSide Facility charges as charged by the POF as further set out in Glause 11 of the GTCs,and as per actual Port of Fujairah invoices . 19. TopSide F - acility Charges Port dues and any other charges (including Wharfage Facility Charges) imposed by the POF on the Customer's vessels as defined in the port ofFujairah Port Tariff (effective from 1 May 2008 ) as amended from time to time or any other applicable charges shall be borne directly by the Customer and are not applicable to this A 0 reement . To the extent these amounts are invoiced dlrectly to the Operator rathar than the Customer . theCustomer shall repay the Operator all such amounts upon receipt of an invoice in respect of such charges from 20.
Port Dues and Wharfage Facilité Charges - 7 -the Operator in accordance with the provisions of Clause 11 . Any duties or taxes levied by any competent authority will be payable by the Customer as further sew out in Clause 3 . 10 of the GTCs . Any material increase in costs reasonably incurred or to be incurred and properly evidenced and satisfactorily documented by BPGIC in performing ils obligations under this Agreement, including any material increase that arises as a direct result of a change in law (including a change in interpretation of an existing law), regulation (including a change in interpretation of an existing regulation) or tax, will be borne by the Customer on a pro rata basis, that is pro rata to the proportion which its Volume Commitment bears to the total storage capacity of the Terminal, by means of an adjustment to the appropriate element(s) of the Fee . Change in law Z1. IN MTNESS Wi1EREOr the Partles hereto have entered In1o lhls Agreement on the ay and year above written. Signed by Mr. /Viro/aas L. Paardenkooper for and on behalf of Brooge Pefro/eom a ri d Gas Investment Company FTE In the presence of: Name Signature: Si ned for and on behalf of In the presence of: u*z DATED - 9 - GENERAL TERMS AND CONDITIONS TANKSTORAGEANDMANDLHGOFPRODUCTS Hogan Lovells 2022 Hogan Lovells (Mlddle East) LLP 19” Floor.
AI Fallen Currency Tower. Dubai International Financial Centre, PO Box 5tB602, Dubai, UAE CONTENTS PAGE CLAUSE 2 APPLICABILITY OF GTCs 2.
3 PRODUCTS 3. 5 STORAGE FACILITIES 4. 7 OPERATION AND MAINTENANCE OF STORAGE FACILITIES 5. 7 DELIVERY AND REDELIVERY 6. 9 DELIVERY AND REDELIVERY REQUIREMENTS 7. 9 HANDLING OF VESSELS s. 10 DETERMINATION OF QUANTITIES 9. 11 ACCESS TO TERMINAL 10. 11 CONDITIONS OF PAYMENT 11. 13 THIRD PARTY GHARGES AND SUMS ON PRODUCTS 12. 13 RIGHTS OF LIEN AND RETENTION 13. 14 TRnNsFER OF OWNERSHIP 14. 14 REPRESENTATIONS AND WARRANTIES 15. 14 TERMINATION 16. 16 AFTER TERMINATION 17. 18 FORCE MAJEURE 18. 19 LiABILITY 19. 22 INSURANCE 20. 23 CONFIDENTIALITY 21. 23 CUMULATIVE RIGHTS AND REMEDIES 22. 24 COMPLIANCE WITH STATUTES 23. 24 NOTICES 24. 25 AsSIGNMENT 25. 25 CONSENT OR \ f \ fAIVER 26. 25 SEVERABILITY 27. 25 APPLICABLE LAW 28. 25 NOTICE OF DISPUTE 29. 25 ARBITRATION 30. 26 THIRD PARTY RIGHTS 31.
DEFINITIONS AND INTERPRETATION 1.1 Definitions In this Agreement: "Additional Documents" has the meaning as ascribed to it in Clause 3.2. "Affiliate" means a Party or person Controlling, Controlled by or under common Control with another Party. "Agreement" means this Agreement comprised of the Key Commercial Terms and the GTCs or any agreement made in writing between the Customer and the Operator for the carrying out the Services . "Applicable Laws" means any federal, emirate, municipal or authority statute, ordinance, regulation, guideline, rule, code, direction or any licence, consent, permit, authorisation or other approval, including any conditions attached thereto, of the United Arab Emirates, the Emirate of Fujairah or any public body or authority, local or federal agency, department, inspector, ministry, official or public or statutory person which has appropriate jurisdiction . "Business Day" means any day excluding Saturday and Sunday and any day which shall be a legal holiday or a day on which banking institutions are authorised or required by law or other governmental action to be closed in the United Arab Emirates ; "Control" in relation to a body corporate means the ability of a person to ensure that the activities and business of that body corporate are conducted in accordance with the wishes of that person and a person shall be deemed to have Control of a body corporate if that person possesses the majority of the issued share capital or the voting rights in that body corporate or the right to appoint or remove directors of that body corporate holding a majority of the voting rights at meetings of the board of directors (or equivalent management organ) on all, or substantially all, matters, and except as expressly provided in this Agreement cognates of the term Control shall be construed accordingly . "Customer" means the Customer as specified in the Ke \ • Corrimercial Terms. "Dispute" has the meaning given to it in Clause 28. "Energy Institute" means the professional body for the energy industry, based in the UK. "Failure to Pay Notice" has the meaning given to it in Clause 13.2. "Force Majeure" has the meaning given to it in Clause 18.1. "LIBOR" means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for USD and period of one month displayed on pages LIBOR 01 or LIBOR 02 of the Thomson Reuters screen or any benchmark rate which is formally designated, nominated or recommended as the replacement for LIBOR . "Loss" means any loss, damage, cost and expense suhered by the claimant due to the loss, destruction or damage of any property (including the property of the claimant) or from any damage to the environment or from the death or injury of any person (including the claimant) . "Maintenance Works" means checking, maintenance, repair and alteration work to the Terminal as per Clause 5 . 1 .
t,2 "OT 1 " and "OT 2 " means all permanent existing and planned oil tanker berths at Oil Tanker Terminal 1 and Oil Tanker Terminal 2 within the Port of Fujairah, along with the installations related thereto . "Party" and "Parties" means the Customer and the Operator individually and collectively as the context may require. "Port Regulations" means any rules, regulations, ordinances, procedures, directives, requirements, policies, standards or information of any kind, whether currently in force or introduced from time to time, produced by the POF in connection with POF and with which users of POF are required to comply, including the Port Guidelines, the Port Ordinance 1982 , and the Top Side Rules, as may be amended from time lo time . "Reasonable and Prudent Operator" means a person seeking in good faith to perform its contractual obligations and in so doing and in the general conduct of its undertaking exercising that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced operator complying with the Port Regulations and all Applicable Laws and engaged in the same type of undertaking under the same or similar circumstances and conditions as contemplated by this Agreement . "Rules" has the meaning given to it in Clause 30.1. "Security Trustee" has the meaning given to it in Clause 16.3. "Standards of a Reasonable and Prudent Operator" means the standards, practices, methods and procedures expected from a Reasonable and Prudent Operator. "Termination Sum" means an amount equal to the aggregate amount that would have become due in respect of the Rental and Handling Charge (fixed at the higher of the Floor Price or the latest Market Price) under this Agreement until the date on which this Agreement would have expired in accordance with its terms . "Vessel" means any boat, ship or tanker delivering Product to the Terminal via the OT1, OT2 or any future jetties or any single buoy mooring system. Interpretation Words importing the singular only also include the plural and vice versa where the context requires ; words and expressions importing the masculine gender include the feminine ; reference to person includes any public body and any body of persons incorporate or unincorporate . 1.3 Headings Glause headings shall be deemed not to be part of the Agreement and shall not be taken into account in the interpretation thereof . 1.4 Prevalence The provisions of the Key Commercial Terms and the Clauses of the GTCs are to be read as mutually explanatory one of another, but in case of conflict . discrepancy in or divergence between the provisions of the Key Commercial Terms and the Clauses of this Agreement, the provisions of the Key Commercial Terms shall prevail . 2. APPMCABILITY oF GTCs All Services shall be provided and carried out pursuant to this Agreement, unless otherwise agreed in writing by the Parties.
PRODUCTS 3. 3.1 Description For each cargo of Product to be delivered to the Terminal, the Customer shall, when required by the Operator in accordance with the Operator's normal operating procedures, furnish to the Operator a correct and full written description of the Products as may be reasonably requested by the Operator and shall include : their nature, type, quality, composition, temperature, weight, volume, value, source, origin, hazard classification, their pressure and in addition thereto all physical/chemical properties including but not restricted to : boiling point, flash point, vapour pressure, toxicity, melting point, coagulation point, viscosity, degradableness in water, stability, corrosiveness, acidity, static loading, smell level, MAC/PEL value and all particulars, knowledge of which is material to the Operator for the provision of the Services or alternatively, which is of such nature that the Agreement would not have been entered into or not on the same conditions, if the Operator had had knowledge of those particulars . Such description shall be provided by the Customer in the form specified by the Operator . 2. Additional Documents The Customer agrees to execute in its name, pay for, and furnish to the Operator timely before the receipt of the Products all information, documents, permits, approvals and other materials and data ("Additional Documents") which may be required by any Applicable Law including statutes, ordinances, rules, or regulatlons of any public authority relating to the description, receipt, storing, handling (loading/unloading), blending, shipping, or disposal of the Products or their waste or waste products, to or from the Terminal, together with detailed written instructions as to their use and disposition . 3. Notification The Customer shall as soon as practically possible notify the Operator in writing of new data with regard to the Products falling under the Agreement that become known during the duration of the Agreement . 4. No Cognizance The Operator shall not be deemed to have knowledge of the description of the Products, if the descriptions referred to in Clause 3 . 1 and/or the Additional Documents as per Clause 3 . 2 are not materially complete or correct . The Operator may accept delivery of the Products notwithstanding the Operator's hnowledge of any incorrect or incomplete description of the Products and/or incorrect or incomplete Additional Documents (having notified the Customer of such), and if the Operator shall choose to take delivery of the Products : (a) the Customer shall bear the risk and expense of any necessary measures carried out by the Operator in respect of the Products arising from such incorrect or incomplete description and/or such incorrect or incomplete Additional Documents and shall indemnify the Operator against all Loss arising from such measures ; and (b) the Operator shall not be liable for any Loss arising from such taking of delivery of the Products, save in each case to the extent such Loss arises from the gross negligence or wilful misconduct of the Operator .
3.5 Inspection of Products (a) The Operator is not bound to check the Products or their quality, conditions and conformity with their description and/or, as the case maybe, the completeness or correctness of the Additional Documents . Without prejudice to Clause 3 . 4 , the Operator shall, however, . be entitled, on or before taking delivery of any Products, to measure, test or examine the Products and check the Additional Documents for the purposes of inspection or verification if the Operator suspects that the contents have been incompletely or incorrectly described andlor incomplete or incorrect Additional Oocuments have been furnished to the Operator . The Customer shall bear the cost of the Operator's inspection and verification . (b) The Customer may appoint, at its own cost and expense, an independent inspector(s), the identity of which shall be approved by the Operator, to ascertain the quality of the Products at the Terminal . The decision of such inspector(s), if appointed, shall be treated and accepted by the Customer and the Operator as conclusive and shall be final and binding upon the Operator and the Customer, save in the case of fraud or manifest error, as to the quality of the Products so loaded or unloaded . If no inspector is appointed, then in such an event the qualities ascertained by the Operator shall be binding for both Parties . 3.6 Delivery of Products (a) Any taking of delivery of the Products by the Operator shall not constitute proof that the Products were delivered in a good and undamaged condition. (h) The Operator shall, as soon as possible, notify the Customer of any damage or defect of the Products andlor incompleteness or incorrectness of the description of the Products or the Additional Documents, which is apparent at the time of delivery thereof but the Customer shall not make any claim against the Operator by reason of the fact that it has not been so notified . .(c) The Operator shall be entitled, at the expense of the Customer, to do all things necessary to prevent or reduce further deterioration in the condition of the Products and to arrange for a report to be made on the condition of the Products or, as the case may be, arrange for the correction or completeness of the Additional Documents, without being liable for any Loss arising from doing such things and the Customer shall indemnify the Operator against such Loss save where such Loss arises from the gross negligence or wilful misconduct of the Operator . 3.7 Refusal of Products Notwithstanding other provisions of the Agreement, the Operator shall be entitled to refuse to take delivery of the Products or to carry out any Services if the acceptance of Product or carrying out of Services may in the reasonable opinion of the Operator result in : (a) the Products delivered purportedly as the Products do not conform with the description thereof provided by the Customer as per Clause 3 . 1 and/or are not furnished with complete or correct Additional Documents as per Clause 3 . 2 ; (b) danger or damage either to persons, goods, the Terminal or property generally; (c) any environmental damage; or (d) a violation of the Port Regulations or Applicable Laws.
8. If the Products are at the Terminal and, in the reasonable opinion of the Operator, do not conform with the description thereof provided by the Customer as per Clause 3 . 1 and/or are not furnished with complete or correct Additional Documents as per Clause 3 . 2 , the Operator shall be entitled to remove the Products forthwith at the risk and expense of the Customer if the carrying out of the Services may lead to a claim . 9. Admission to Terminal If the Operator gives its consent to admit to the Terminal the Products, whose quality deviates from the description referred to in Clause 3 . 1 and/or, as the case may be, the Additional Documents are incomplete or incorrect as per Clause 3 . 2 , all the necessary extra operations, of any nature whatsoever, which are carried out in relation to those Products and all further consequences shall be for the account of the Customer . 3.10 Duties, Taxes and Charges If the Products are or may be subject to duties, taxation or other charges by the competent authorities, the Customer shall reasonably in advance furnish to the Operator, all information and documents required by the Operator to enable the Operator to make the appropriate declarations to such authorities for such purposes or to facilitate the Operator's dealings with such authorities . The Customer shall be liable for and shall indemnify the Operator against any Loss, penalties, taxes or duties paid or payable by the Operator in connection with the Product . 3.11 Warranty The Customer warrants that the Products : (a) will cause no damage to the Storage Facilities and/or ancillary equipment of the Terminal; (b) will not render, after cleaning, the Storage Facilities unfit for the proper storage of water white chemicals; and (c) may lawfully be stored at the Terminal. The Customer shatl be responsible for all Losses, fines, penalties and damages directly resulting from the storage ofthe Products at the Terminal . Provided, however, the Customer shall not be responsible for sUEh fines, penalties and damages arising from the Operator's failure to use reasonable care in safekeeping and handling of the Products or the property of the Customer pursuant to its obligations under the Agreement or any damage caused by the gross negligence or wilful misconduct of the Operator . 3.12 Title and risk Except to the extent inconsistent with Clause 13 . 3 and Clause 17 . 5 , title and risk in relation to the Product shall remain with the Customer at all times under the terms of thisAgreement . 4.
STORAGE FACILITIES 4.1 Use of Storage Facilities The Customer shall only use the Storage Facilities for the purposes specified in the Agreement unless otherwise sublet to another customer, for which in sush case the Customer will effect a mutually agreed sublease contract to be annexed to this Commercial Storage Agreement . 2. Selection of Storage Facilities (a) Unless expressly provided otherwise in the Agreement, the Operator shall, at its absolute discretion, in consultation with the Customer, select the Storage Facilities suitable for receipt and storage of the Products and shall be entitled to move the Products from one part of the Storage Facilities to another from time to time with the approval of the Customer (not to be unreasonably withheld or delayed) . (b) Subject to obtaining the consent of the Customer and other relevant customers (which consent shall not be required in the event of an emergency), the Operator may receive and store the Products at any of the Storage Facilities at the Terminal in common with Products of the same average quality and of the same grade as the Products . (c) The Customer shall not be entitled to claim that Products, which the Operator shall subsequently deliver to the Customer out of such common place purportedly as the Products, are not in fact the Products, which the Customer had earlier delivered to the Operator for carrying out the Services . (d) The Operator shall as soon as possible, notify the Customer of any movement of the Products but the Customer shall not make any claim against the Operator by reason of the fact that it has not been so notified . 3. Suitability of Storage Facilities The Customer (or a third - party surveyor engaged by the Customer) shall be entitled to inspect the Storage Facilities to ensure their cleanliness, suitability and good condition prior to the delivery of the Products to the Operator . The rights to inspect shall be exercised at reasonable times and with prior written notice, provided the relevant representative of the Customer (or a third - party surveyor engaged by the Customer) shall comply with all on - site health and safety and other regulations . If the Customer (or a third party surveyor engaged by the Customer) shall not make such inspection or shall not have objected in writing to the cleanliness, suitability or condition of the Storage Facilities within 7 days following such inspection, the Storage Facilities shall be deemed to have been in a clean, suitable and good condition upon the delivery of the Products thereto and the Operator shall not be liable in any way whatsoever for any Loss arising out of any lack of cleanliness or the state or condition of the Storage Facilities . The decision of any third party surveyor engaged by the Customer as to the cleanliness or otherwise of the Storage Facilities shall, except in the case of fraud or manifest error, be final . 4. Substitute Storage Facilities If at any time during the term of the Agreement, the Operator finds it necessary to provide substitute storage facilities to the Customer, the Operator may do so provided any additional costs involved in the transfer of Products is at the expense of the Operator and the Operator has obtained the Customer's prior approval (not to be unreasonably withheld or delayed) . Any such substitute storage facilities, while in use under this Agreement, shall be Storage Facilities referred to in this Agreement . The Operator shall compensate the Customer for the cost of any Product lost as a result of the use of such substitute Storage Facilities which is only beyond the tolerance rule of 0 . 5 % plus or minus and that is caused by gross negligence of the Operator .
4.5 Maximum Contents Unless explicitly permitted otherwise in writing by the Operator, the maximum allowable weight, which may be stored in any Storage Facility shall be equivalent to the weight of the volume of water at a temperature of 4 oC, with which the capacity of the Storage Facility in question can be filled . No reduction in the storage rates and charges payable as per Box 12 of the Key Commercial Terms shall be allowed on the ground that any part of such Storage Facilities shall not have been used . OPERATION AND M»lNTENAl'tCE OF STORAGE FACILITIES 5. 1. Operation and Maintenance The Operator at all times during the term of the Agreement shall operate and maintain the Terminal and related equipment provided hereunder in good and serviceable condition to the Standards of a Reasonable and Prudent Operator . Provided that the Operator promptly notifies the Customer the Operator shall be entitled, at any time and from time to time, to carry out Maintenance Works to the Terminal or to have these carried out, and furthermore to effect alterations or to have these effected or alternatively to fit additional or special equipment to the Terminal or to have these fitted, whenever the Operator deems it necessary or prudent to do so or if the Operator is obliged to do so pursuant to Applicable Law . 2. Moving of Products Subject to obtaining the Customer's consent (which consent shall not be unreasonably withheld or delayed and shall not be required in the event of an emergency), the Operator shall be entitled to move the Products from the Terminal to other parts of the Terminal if the Operator shall deem such movement to be necessary for the Operator to carry out such Maintenance Works and in such event the Operator shall as soon as possible notify the Customer of such movement of the Products . The Operator shall compensate the Customer for any Product lost as a result of the movement of Products . 3. Liability *the Customer shall not be entitled to make any claim that has either directly or indirectly arisen from Maintenance Works or from the deprivation of the use of the Terminal for any duration as a result of such Maintenance Works provided that the Operator has notified the Customer as soon as practicable after becoming aware of such works and, except in the case of an emergency, has consulted with the Customer in respect to such works . Nothing in this Clause 5 . 3 shall prevent the Customer bringing a claim which has arisen from the gross negligence or wilful misconduct of the Operator . 4. Payment during Maintenance Subject to the provisions of this Clause 5 . 4 , the Operator shall be entitled to payment by the Customer of all the rates and charges or other sums payable by the Customer under the Agreement in respect of the use of the Terminal even during any period that the Customer may be deprived of the use of the Terminal during such Maintenance Works . DELIVERY AND REOELIVERY s. 6.1 Delivery The Products shall be deemed to have been delivered by or on behalf of the Customer to the Operator at the Terminal:
(a) if the Products are delivered from a Vessel, immediately upon the Products passing the connecting flange of the pipeline at the Terminal connected to the manifold of the Vessel ; or (b) if the Products are delivered through a pipeline of any other person, immediately upon the Products passing the valve placed between that pipeline and the pipeline at the Terminal . 2. Redelivery The Products shall be deemed to have been re - delivered by the Operator to the Customer from the Terminal: (a) if the Products are re — delivered to a Vessel, immediately after the Products have passed the connecting flange of the pipeline at the Terminal connected to the manifold of the Vessel ; or (b) if the Products are re - delivered through a pipeline of any other person, immediately after the Products have passed the valve placed between the pipeline at the Terminal and the first mentioned pipeline . DELIVERY AND REDELIVERY REQUIREMENTS 7. 7.1 Requirements The Operator shall receive from or re - deliver to the Customer the Products : (a) if so instructed by the Customer; (b) against the presentation of a receipt in a form approved by the Operator and duly signed and stamped by the Customer, provided that the Customer shall have performed and observed the material terms and conditions of the Agreement and of any other agreement made between the Operator and the Customer in respect of other Products at the Terminal, up to the date of such re - delivery . 2. No Obligation Prior to re - delivery of the Product by the Operator to the Customer, the Customer shall advise the Operator in writing of the person(s) authorised to take re - delivery of such Product . The Operator shall be entitled and shall endeavour but not obliged to : (a) demand from any person purporting to be entitled or authorised to take re - delivery of the Products, satisfactory proof of the person's identity and of such entitlement and authority ; and (b) satisfy itself that the signature and stamp appearing on the instructions and receipts are correct and valid as at the date of re - delivery . The Operator may at ib sde disaetion accept and act or reject on any request or instruction given by any person who appears or purports to be authorised by the Customer to deal with or take redelivery of the Products without being required to verify the same with the Customer, and in the event that the Operator acts in reliance on any such request or instruction, the same shall be deemed to have been made or given by the Customer . The Operator shall not be liable for any Loss arising as a result of the Operator accepting and acting on or rejecting any such request or instruction save in the case of gross negligence or wilful misconduct or fraud of the Operator .
1. POF The Customer acknowledges and agrees that all Vessels must be acceptable to the POF and it is the responsibility of the Customer to ensure that its nominated Vessels at all times meet and comply with the requirements of the POF, the Port Regulations, Applicable Laws and any other requirements and the Operator shall have no liability in this regard . The Customer further agrees that it shall comply with the Port Regulations and Applicable Laws and any orders or directions issued by the POF or the harbour master, including with respect to Vessel scheduling, loading, discharge and pilotage . 2. Order of Arrival Subject to Clause 8 . 1 and except where required otherwise by the competent authorities or where deemed necessary by the Operator to facilitate other operations at the Terminal, the Operator shall take delivery of Product from, and redeliver Product to, a Vessel berthed at OT 1 or OT 2 on a first - come - first - served basis in accordance with the notices given to the Operator by such means and within such time as shall have been agreed between the Operator and the Customer . 3. Delayed Arrival In the event of any delay caused to the Vessel or any delay, interruption or departure from the sequence of handing of the handling of the Vessel due to any cause whatsoever (including the non - availability of a berth or ancillary facilities), the Operator shall not be liable to the Customer or any other person for any Loss arising from any such delay or interruption or departure, including any claim for any demurrage or other compensation for any temporary or permanent loss of use of the Vessel . 4. Handling Instructions If the loading or unloading of the Products shall be undertaken by the Operator as part of the Services, the Customer shall ensure that the Operator shall receive adequate directions in sufficient time regarding the proper manner of such loading or unloading . 5. Inadequate Instructions 8. HANDLING OF VESSELS (a) If the Operator shall not have received any or any adequate directions as described in Clause 8 . 4 or shall not have received such directions within sufficient time, the Operator shall be entitled to refuse to take delivery of or to re - deliver the Products and at the risk and expense of the Customer, to remove the Vessel to any place chosen by the Operator at its absolute discretion ; and (b) the Customer shall pay to the Operator all losses, costs and expenses (including demurrage and consequential losses) arising from such non - receipt, refusal and removal and shall be liable for any Loss arising from such failure and shall indemnify the Operator against such Loss . 8.6 Handling The Customer shall ensure that, when the Vessel has berthed or landed alongside a delivery or re - delivery point at the Terminal designated by the Operator and the Operator has declared itself to be ready for such delivery or re - delivery, such loading from or unloading onto the Vessel (including the connection and disconnection of hoses and the talking and analysis of samples of the Products) shall commence immediately and proceed diligently on a 24 - hour basis daily (including Sundays and public holidays) without interruption or delay until the completion of such loading or unloading.
8.7 Pumping Capacity Without prejudice to the generality of Clause 8.5, the Customer shall ensure that: (b) (a) the Products shall be unloaded from a Vessel at the maximum pumping capacity which is usual in the case of a vessel of a similar size and tonnage unless directed otherwise by the Operator, taking into account the receiving capacity of the Terminal and the requirements of safety ; and the Products shall unless directed otherwise by the Operator, be pumped at such temperature, pressure and condition as will not delay or impede such pumping. If there is any unpumpable product in the tank due to the nature of the product, the Customer shall blend the unpumpable product with suitable product, in an appropriate blend ratio, to normalize the product before the next loading operation . If the Operator and the Customer shall differ on the question of such maximum pumping capacity, temperature, pressure or condition, Clause 30 shall apply . 8. Departure The Customer shall ensure that the Vessel shall be removed from the Terminal promptly upon completion of such loading or unloading or, sooner if necessary for compliance with the requirements of the competent authorities or where deemed necessary by the Operator to facilitate other operations at the Terminal . 9. Failure If : (a) the Products shall not be unloaded from or loaded onto the Vessel, as the case may be, at the times and the speed described in Clause 8 . 7 due to any reason whatsoever ; or (b) the Vessel shall not be removed from the Terminal at the time described in Clause 8.8 due to any reason whatsoever (including the arrest or seizure of the Vessel by a third party), and the Operator shall have requested the Customer or the masler of the Vessel to increase the speed of such discharge or to remove the Vessel, as the case may be, and the Customer or the master shall fail to comply with such request due to any reason whatsoever the Customer shall pay to the Operator all losses, costs and expenses (including demurrageand consequential losses) arising from such failure and removal and shall be liable for anyLoss arising from such failure and shall indemnify the Operator against such claims . 9. DETERMINATION OF QUANTITIES 9.1 Vessels Quantities loaded to or unloaded from a Vessel will be ascertained by the Operator's automatic tank level gauging system before and after each loading/unloading event and shall take into account quantities of Product stored in the Terminal's pipelines . All determinations or quantities shall be in accordance with ASTM International Standards . 9.2 Surveyor The Customer may appoint independent inspector(s), the identity of which shall be approved by the Operator, to witness the loading/unloading of the Products for delivery to, or redelivery from, the Terminal .
The decision of such inspectors, if appointed, shall be treated and accepted by the Customer and the Operator as conclusive and shall be final and binding upon the Operator and the Customer, save for fraud or manifest error, as to the quantity of the Products so loaded or unloaded . If no inspector is appointed, then in such an event the quantities ascertained by the Operator shall be binding for both Parties . 10. ACCESS TO TERMINAL 1. Authorised Access The Operator shall grant the Customer and persons authorised in writing by the Customer, access to the Storage Facilities only for the purposes of the Agreement subject to their compliance with the requirements of the Operator and the competent authorities . Operator should prepare the required cargo shipping documents requested by Customer . Operator is having the needed infrastructure to transfer the Product through the matrix manifold of the Fujairah Oil Tanker Terminal . 2. No Claim The Operator shall not be liable for any Loss due to any cause whatsoever arising from the entry to or presence of the Customer or such authorised persons on the Terminal and the Customer shall indemnify the Operator against such Loss except for Loss which arises due to the gross negligence or wilful misconduct of the Operator . 11. GONDIT1OI'4S OF PAYNIENT 11.1 Invoicing and Payment (c) (a) In Consideration to Box 13 of Commercial Storage Agreement, the Customer will pay the Operator the Rental and Handling Charges (as may be revised from time to time pursuant the terms of this Agreement) covering the Volume Commitment, over the period of six months, on account, and in advance . The first month to be paid in a current - dated cheque to be dated with the date of this Agreement, and the remaining twelve months period to be paid with five post - dated cheques, in advance, dated 15 days prior the beginning of each storage month covering the rest of the Term . (b) Not later than 10 days after the end of each month, the Operator shall submit to the Customer an invoice for the Fee incurred (excluding the Rental and Handling Charges) in respect of the immediately preceding month . The Customer shall pay such invoice within 10 days of its being issued . All sums of whatever nature due from the Customer to the Operator under the Agreement shall be payable without demand and set - off, or counter claim and without deduction . (d) All amounts payable to the Operator under this Agreement are exclusive of any Value Added Tax or other applicable sales tax or duty of any kind . For the avoidance of doubt, charges related to the Port of Fujairah will be charged to the Customer as per actual Port of Fujairah invoice which is inclusive of Value Added Tax . (e) If any deduction or withholding for or on account of tax is required by the laws of any jurisdiction to be made by the Customer from any payment, the Customer shall pay to the Operator such additional amount as will (after such deduction or withholding has been made) leave the Operator with an amount equal to the payment which would have been due if no deduction or withholding for or on account of tax had been required .
11.2 Immediate Payment Notwithstanding the period for payment stipulated in Clause 11.1: (c) (a) if legal proceedings shall be commenced by any third party for the bankruptcy or liquidation or winding up of the Customer, unless the Customer can provide evidence satisfactory to the Operator that such proceedings are frivolous or vexatious and can be dismissed within 15 days ; (b) if the Customer shall make any offer of composition to its creditors (except in the case of a voluntary reorganisation not including the insolvency of the Customer) ; if any order of distress or attachment or similar order shall be made against any property of the Customer and remains undischarged for 14 days; (d) if the Customer shall cease to carry on the business in which it was engaged at the commencement of effect of the Agreement ; or (e) if the Customer shall fail to perform or observe any material term or condition of the Agreement, including but not limited to delays on settling outstanding amounts, all sums due from the Customer to the Operator shall become immediately due and payable . 3. Interest If due to any reason whatsoever (except the default of the Operator), the Customer shall not pay any sum payable to the Operator under the Agreement within 15 days after the date of the Operator's invoice then : (a) the Operator shall be entitled to engage the services of any person to recover such sum from the Customer, in which event the Customer shall also be liable for all actual costs incurred by the Operator for such services (including the legal costs) ; and (b) regardless of whether or not the Operator shall have engaged the services of any person as described in Clause 11 . 3 (a) the Customer shall in addition to all sums payable under the Agreement and the costs described in Clause 11 . 3 (a) (if any), pay to the Operator interest on such sums and the costs at 5 % above the then current LIBOR rate, which interest shall be payable on a day to day basis from the date immediately after the due date for payment to the date of actual payment of such sums, the costs and interest thereon or to the date of expiry or sooner termination of the Agreement, whichever is earlier . 4. Suspension If the Customer fails to pay any amount within 10 days after the due date under this Agreement, the Operator may suspend the provision of Services under this Agreement until such non - payment is remedied . The Operator shall notify the Customer of any imminent suspension of the provision of Services, not less than 5 days prior to the date on which the Operator shall effect such suspension . Failure by the Operator to provide notification to the Customer of any suspension of the Services shall not limit, diminish or invalidate in any way the Operator's right to suspend the provision of the Services in accordance with this Clause 11 . 4 . During the period of suspension, the Rental and Handling Charges shall continue to be payable .
11.5 Basis For the avoidance of doubt, it is hereby agreed and declared that: (a) where the Products shall be delivered or taken re - delivery of by a Vessel, such sums have been charged on the basis that the Products shall be delivered or re - delivered at the flange of the pipeline which is connected to the manifold of the Vessel ; (b) unless expressly agreed otherwise, such sums shall be payable for the whole period during which the Storage Facilities are available for the Customer's use pursuant to the Agreement regardless of whether or not the Customer shall have actually used the same ; (c) unless expressly agreed otherwise, such sums shall be payable on a monthly basis. Payment for a part only of a month should be on a pro rata basis; and (d) the Operator shall not be obliged to recover from third parties any sums which may be due from third parties to the Customer in respect of the Products. 12. THIRD PARTY CHARGES AND SUMS ON PRODUCTS 12.1 Customer's Liability The Customer shall pay to the Operator the amount of any properly invoiced charges or sums due or paid to third parties (including any freight, port charges, taxes, duties, contributions, fines and any other costs) in respect of the Customer's Product and/or the provision of Services to the Customer save for any charges which are specified in the Key Commercial Terms to be borne by the Operator and shall indemnify the Operator against any Loss arising in respect of such unpaid charges and sums regardless of whether or not the Products shall then be present at the Terminal . 13. RIGHTS OF LIEN AND RETENTION 13.1 The Operator shall have a right of lien and retention over the Products and all sums (including any insured sums collected by the Operator for the Customer), documents and valuables which the Operator shall now or hereafter hold of or on behalf of the Customer or which is now or hereafter due to the Customer, to secure the performance of all of the duties, undertakings and obligations of the Customer under the Agreement or under any other agreement made between the Operator and the Customer in respect of other Products at the Terminal . 13.2 The Operator shall exercise its rights under Clause 13 . 1 by delivering a notice to the Customer seking out the amount of the sums due under the Agreement and any other agreement between the Operator and the Customer in respect of other Products at the Terminal (a "Failure to Pay Notice") . The Failure to Pay Notice shall also set out a due date for payment of such sums, such date to fall at least 7 days after the date of issuance of the Failure to Pay Notice . 13 . 3 The Customer acknowledges and agrees that if the Customer has not paid the amounts due by the due date set out in the Failure to Pay Notice, then the Operator shall be entitled to make an application to any relevant court, to allow the Operator to sell a quantity of Product that will satisfy the amounts due under the Failure to Pay Notice .
14. TRnNSFER OF OWNERSHIP The Customer may transfer title to Product stored in the Storage Facilities to any person who has contractual rights to the necessary storage capacity in the Terminal . Any such transfer of title shall be promptly notified to Operator . 15. REPRESENTATIONS AND WARRANTIES The Parties hereby represents and warrants that: (a) it is a company duly incorporated and validly existing under the laws of the jurisdiction referred to in Box 2 of the Key Commercial Terms; (b) it has the power and authority required to enter into this Agreement and perform fully its obligations under this Agreement in accordance with its terms; (c) subject to any general principles of law, assumptions or qualifications referred to in any legal opinion required in relation to this Agreement, this Agreement is legal, valid and binding on it and is enforceable in accordance with its terms ; (d) the execution and delivery of this Agreement and the performance of its obligations under this Agreement have been duly authorised by all the necessary corporate actions on the part of such Party ; and (e) neither the entry into this Agreement nor the implementation of the transactions contemplated by it will result in: (i) a violation or breach of any provision of its statutes, by - laws or other constitutional documents; (ii) a breach of, or give rise to a default under, any contract or other agreement to which it is a party or by which it is bound; or (iii) a violation or breach of any applicable laws or regulations or of any order, decree or judgment of any court, governmental agency or regulatory authority applicable to it or any of its assets, and in case of breach of any such representation and warranty, the Customer agrees to indemnify and keep indemnified the Operator against any such breach. 16. TERMINATION 1. Early Termination by Operator Notwithstanding the other provisions of the Agreement, the Operator may at any time after the occurrence of an Event of Default by the Customer which is continuing terminate the Agreement, by giving written notice of such termination to the Customer . 2. Event of Default Each of the following is an Event of Default by the Customer : (a) if the Customer shall fail to observe or perform any of its material obligations under the Agreement and shall not remedy its failure to so observe or perform such material obligations within 30 days' time after the Operator has notified the Customer of such failure ; (Q if the Customer shall make any compcsliion w1th its creditors (except in the case of voluntary reorganisation not involving insolvency of the Customer); (i if the Customer shall go into liquidation whether voluntary or compulsory (otherwise than for the purposes of amalgamation or reconstruction).
16.3 Early Termination by Customer Notwithstanding the other provisions of the Agreement and the required notice periods therein, the Customer may terminate the Agreement forthwith at any time without claim or charge by the Operator, by giving notice to the Operator if any of the following has occurred and is continuing : (b) if the Customer shall fail to pay any sum due under this Agreement and shall not remedy its failure to pay within 15 days' time after the Operator has notified the Customer of such failure to pay ; (c) if the Operator shall be of the reasonable opinion that the Products have become subject to changes or deteriorated or may become subject to changes or deteriorate and the Operator is of the reasonable opinion that the Customer has failed to give proper or full instructions to the Operator for the prevention or reduction of such changes or deterioration ; (d) if the Products stored at the Terminal are not in compliance with UAE Laws and the Port of Fujairah Laws; (e) if the Customer or any of its shareholders, group company, parent company, subsidiaries, or, to the Customer's knowledge, any director, officer, employee, agent, affiliate or representative of the Customer or any of its subsidiaries, is an individual or entity ("Person") that is, or is owned or controlled by a Person that is : (i) the subject of any sanctions administered or enforced by the U . S . Department of Treasury's Office of Foreign Assets Control, the United Nations Security Council, the Council of the European Union, Her Majesty's Treasury, or other relevant sanctions authority (collec(ively, “Sanctions”), or (ii) located, organized or resident in a country or territory that is the subject of Sanctions. if the Customer conducts businesses to any parent company, subsidiary, joint venture partner or other Person that facilitates any activities or business with any Person or with any country or territory that, at the time of such facilitation, is the subject of Sanctions . (g) if the Customer shall have a receiver appointed over all or any substantial part of its asset and in the case of an appointment by a r . reditor, such appointment is not dismissed within 30 days ; (a) if the Operator shall have a receiver .
bankruptcy trustee or analogous person appointed over or to administer and manage all or any substantial part of its assets and such appointment is not dismissed or withdrawn within 30 days ; or (b) if the Operator shall maka any composition with its creditors (except in the case of voluntary reorganisation not involving insolvency of the Operator); or (c) if the Operator shall go into liquidation whether voluntary or compulsory (otherwise than for the purpose of amalgamation or reconstruction), provided that for as long as any amount owed to any secured Finance Party, or any agent or trustee acting on its behalf (a "Security Trustee"), by the Operator is outstanding, the Customer shall not be permitted to terminate this Agreement upon the occurrence of any of the events or circumstances specified in Clauses 16 . 3 (a) to 16 . 3 (c) (inclusive) and shall instead, subject to the required notice period therein, only be permitted to terminate this Agreement : (i) in the event or circumstance set out in Clause 16.3(a) occurs; or (A) a receiver with a power of sale has been appointed by any secured Finance Party or the Security Trustee ; (B) a bankruptcy trustee has been appointed by a court in the United Arab Emirates on the application of any secured Finance Party or the Security Trustee ; or (C) any analogous person is appointed by or on the application of any secured Finance Party or the Security Trustee, in each case over or to administer and manage: (D) all or any substantial part of the Operator's assets; or (E) the shares in the Operator that have been charged to the secured Finance Party, or the Security Trustee (as the case may be), and any appointment referred to in paragraph (A), (B) or (C) is not dismissed or withdrawn within 30 days; or (iii) any secured Finance Party or Security Trustee (as the case may be) has been awarded a favourable judgment of a court in the United Arab Emirates substantiating the secured Finance Party's, or Security Trustee's (as the case may be) debt claim and enabling it to sell (X) the Operator's business and/or assets that have been charged to the secured Finance Party, or the Security Trustee (as the case may be) by the Operator or (Y) the shares in the Operator that have been charged to the secured Finance Party, or the Security Trustee (as the case may be) ; or (iv) a court in the United Arab Emirates has issued a judgment of liquidation or otherwise authorising (or permitting) the dissolution of the Operator following a judgment of bankruptcy, or any similar or comparable events under any new legislation applicable to the Operator . 17. AFTER TERMINATION 17.1 Termination Payment on Early Termination by Operator The Customer shall pay to the Operator forthwith on any termination pursuant to Clause 16 . 1 , other than in the case of a termination pursuant to Clause 16 . 2 (i) due to an act or omission of the Operator or Force Majeure, an amount equal to the aggregate of : (a) any amounts then due or payable but unpaid by the Customer under this Agreement; (b) any amount to be due and to be invoiced under this Agreement but unpaid by the Customer, equal to the aggregate of the Rental and Handling Charges, the Excess Throughput Charges, the Circulation Charges, the Inter Tank Transfer Charges, the Poñ of Fujairah Tariffs and the Cleaning Charges if leaning ofthe Storage Facilities is necessary in the opinion of the Operator ; (c) any Rental and Handling Charges under this Agreement for the remainder of the Agreement period till expiry to fall immediately due for payment to the Operator; (d) by way of agreed compensation, the Termination Sum calculated as at the date of that termination.
2. No liability following early termination by Customer Without prejudice to any accrued rights up to termination, the Operator shall have no liability under this Agreement or otherwise in connection with or as a result of any termination of Ihis Agreement pursuant to Clause 16 . 3 (Early Termination by Customer) . 3. Removal of Products The Customer shall completely remove the Products from the Storage Facilities not later than the date of expiry or the day falling 30 days after termination of the Agreement pursuant to Clause 16 . Unless mutually agreed by the parties in advance, in case the Customer fails to remove its products on the expiry date of this Agreement an additional fee of USS 5 per cbm will be charged on top of the Rental and Handling Charges, on prorated basis, from the due date till the date on which the tank/s are completed vacated along with any additional charges which the Operator may incur as a consequence of the delay caused by the Customer in removing its products on the expiry date . 4. Return of Storage Facilities If cleaning of the Storage Facilities is, in the opinion of the Operator, necessary, upon expiry or termination of the Agreement, or due to a change in the nature of the Products stored or to be stored therein, during the term hereof, or both, the Customer agrees to remove or cause to remove any Products and waste to permit cleaning in a safe and legal way and to reimburse the Operator for said cleaning, removal and disposal . 5. Right of Disposal If the Customer fails to remove the Products due to any reason whatsoever upon the expiry or termination of the Agreement in accordance with Clause 17 . 3 , the Operator shall be entitled, by notice to the Customer, to remove the Products from the Storage Facilities to any place whether in or outside the Terminal and dispose of or destroy the Products in such manner as the Operator deems fit and at the risk and expense of the Customer and by rendering any surplus to the Customer to an account as notified by the Customer . 17.6 Proceeds If the Operator shall decide to dispose of the Products under Clause 17 .
5 by sale by private treaty or public auction any proceeds of the sale shall be applied by the Operator in the following manner : (a) firstly, in payment of all sums due from the Customer to the Operator under the Agreement or under any other agreement made between the Operator and the Customer ; (b) secondly, in payment of the expenses of the removal and disposal and any storage of the Products in the period between such removal and disposal; (c) thirdly, in payment of any sums due from the Customer to the competent autho and (d) fourthly, in payment of other claims or liens of which notice has been given by third parties to the Operator, and by rendering any surplus to the Customer to an account as notified by the Customer . 7. Insufficient Proceeds If the proceeds of any sale of the Products by the Operator pursuant to Clause 17 . 5 shall be insufficient to satisfy in full any claim of the Operator under the Agreement and under any other agreement made beMeen the Operator and the Customer, the Operator shall be entitled to recover the same from the Customer as a debt in any court of competent jurisdiction . Any sale of the Products by the Operator pursuant to Clause 17 . 5 shall be free from any encumbrances . 8. No Liability The Operator shall not be liable for any claim arising from lhe removal, disposal, destruction and intermediate storage of the Products and the Customer shall indemnify the Operator against such claims . 18. FORCE MAJEURE 18.1 Scope of Force Majeure Any delays in or failure of performance by either Party shall not constitute default hereunder or give liability for any claims if and to the extent such delays in or failures of performance are, without the fault or negligence on the part of the affected Party, caused by Force Majeure . "Force Majeure" shall mean any event or circumstances, which is not within the reasonable control of the Party (acting as a Reasonable and Prudent Operator) affected by the cause and which, by the exercise of diligence, such Party (acting as a Reasonable and Prudent Operator) is unable to foresee or prevent and may include, but shall not be limited to : strikes and/or lockouts except any such action by employees or subcontractors or agents of the Party claiming Force Majeure; (d) any effect of the natural elements, including lightning, fire, earthquake, sandstorm, flood, storm, tsunami, cyclone, typhoon or tornado; (e) explosion (other than nuclear explosion or an explosion resulting from an act or war); (Q epidemic or plague; (g) inability to obtain necessary equipment or materials due to blockade, embargo or sanctions; and (h) any act of omission of any competent authority including any refusal to issue, withdrawal, non - renewal or non - extension of a license, permit or approval.
Notification If either Party is prevented from or delayed in performing any of its obligations under tf Agreement by Force Majeure, such Party shall immediately notify the other Party in writir (b) (a) war, hostilities, revolution, riots, insurrection or other civil commotion, acts of terrorism or sabotage; nuclear explosion, radioactive, biological or chemical contamination, ionizing radiation, or the discovery of such contamination or radiation; of the occurrence of the circumstances constituting Force Majeure . Forthwith upon the Force Majeure ceasing to have effect, the Party relying upon it shall give written notice thereof to the other Party . 3. General Limitations The affected I?arty shall not be entitled to suspend performance under this Agreement for any greater scope or longer duration than is required by the Force Majeure or the delay occasioned thereby . Obligations of the Parties that were required to be completely performed prior to the oEcurrence of Force Majeure shall not be excused as a result of such occurrence . The Customer shall be able to claim Force Majeure only in respect of a vessel that is loading or unloading at the Terminal, or whose scheduled loading and unloading at the Terminal has been notified to the Operator . The failure or inability of either Party to satisfy a payment obligation that has arisen under this Agreement shall not be excused by Force Majeure . 4. No Breach Neither Party shall be deemed to be in breach of the Agreement or be liable to the other for any delay in performance or non - performance of its obligations under the Agreement to the extent that such delay or non - performance is due to Force Majeure, of which it has notified the other Party . The Party claiming Force Majeure shall perform and observe its obligations under the Agreement insofar as the performance and observance thereof are not prevented by Force Majeure . To the extent that the Operator is unable to provide the Services as a result of Force Majeure affecting the Operator, the Customer shall not be obliged to pay the Rental and Handing Charges . 5. Use of Storage Facilities If Force Majeure is being claimed by the Customer, and as a result of such Force Majeure, the Customer is not using the Storage Facilities, the Operator may allow the use of the Storage Facilities to other customers for so long as the Force Majeure continues . 6. Efforts The Party claiming Force Majeure shall use reasonable efforts to promptly cure the effect of Force Majeure . 7. Termination Where an event of Force Majeure affecting Operator or Customer extends for more than 90 consecutive days, the Operator shall have the right to terminate this Agreement by giving 30 days' written notice to the Customer to that effecl . 19. LiABILITY 1. Operator's Liability (a) The Customer shall indemnify and hold the Operator harmless from and against all claims, costs, losses .
liabilities, injury to person and/or damage to property, caused by or resulting from : (i) Any negligence, misconduct, and/or any intentional wrongful acts or omissions on the part of the Customer, its employees, agents, contractors or any other persons acting under its authority (including but not limited to, any contractors transporting product to or from the terminal) in the performance of this Agreement ; and (ii) Any breach of this Agreement by the Customer; (iii) To the extent not caused by the negligence, misconduct of the wrongful acts or omissions of the Operator, its employees, agents or contractors, any losses incurred directly as a result of the physical or chemical characteristics of the Product . (b) For the avoidance of doubt, the Operator shall not be liable to the Customer for any claims, costs, losses, damages, liabilities, injury to person and/or dsmage to property incurred by the Customer to the extent that such claims, losses, damages, liabilities, injury to person and/or damage to property are caused (whether directly or indirectly) by the Operator in the performance of its obligations under this agreement in accordance with its terms. The Operator shall carry out the Services with reasonable care and to the Standards of a Reasonable and Prudent Operator . Without prejudice to the Parties ' rights under the other provisions of the Agreement, this Clause 19 . 1 shall not impose on the Operator any liability for claims arising from : (c) Force Majeure; (d) any delay in the delivery of the Products to the Operator (e) any other cause unless it is first proven by the Customer that such claim has arisen from the gross negligence or wilful misconduct of the Operator or if it concerns claims due to injury to life, body or health . 19.2 Event of Claim Notwithstanding anything to the contrary in this Agreement, in the event of any claim against the Operator: (a) the Operator shall not be liable for any forms of consequential losses (including loss or profits, indirect loss or damage or other forms of purely economic losses); (b) the Operator shall not be liable for any claim arising before delivery of the Products to the Operator or after re - delivery of the Products to the Customer; (c) the claim will be void if the Customer shall not have notified the Operator thereof within 30 days after the occurrence of the event giving rise to the claim or within 30 days after the re - delivery of the Products to the Customer, whichever is earlier ; and (d) if the claim shall have been notified to the Operator in accordance with Clause 19 . 2 (d), the claim shall become void if the Customer shall not commence legal proceedings in respect thereof within the period of 90 days after the date of such notice . 19.3 Compensation If any claim shall be made against the Operator by more than one person and the Operator shall decide to pay compensation in respect of the claim, the Operator shall be entitled to apportion such compensation among such persons according to the extent of proven loss or damage suffered by each of them .
19.4 Customer's indemnities The Customer shall indemnify, defend and hold harmless the Operator, its respective officers, employees and agents against: (a) any and all claims for Loss, damage and expense of whatever kind and nature, including all related costs and expenses, in respect of personal injury to or death of any person employed by the Customer ; and (b) any and all claims for Loss, damage and expense of whatever kind or nature, including all related costs and expenses, brought by third parties against the Operator or its officers, employees or agents in connection with any act or omission of the Customer or its officers, employees or agents . 5. Operator's indemnities The Operator shall indemnify, defend and hold harmless the Customer, its respective officers, employees and agents against any and all claims for Loss, damage and expense of whatever kind and nature, including all related costs and expenses, in respect of personal injury to or death of any person employed by the Operator . 6. Indemnity Process (a) Each of the Operator and the Customer undertakes and agrees, when asserting its right to indemnification from the other Party for the negligence or misconduct or wrongful acts or omissions of any of such other Party's contractors : (i) To first seek recourse against any such contractor (including, where applicable, recourse against the Owners, Insurers or P and I Clubs of the responsible barge or marine vessel) ; (ii) To use commercially reasonable efforts to obtain from such Owners, Insurer or P and I Clubs sufficient security to cover said contractors liability: (iii) To claim under this indemnity only if and to the extent such contractor (including, where applicable, recourse against the Owners, Insurers or P and I Clubs of the responsible barge or marine vessel) is liable and is unable within a reasonable time under the circumstances to meet and discharge its liabilities in full ; and (iv) That it will exercise commercially reasonable efforts to assist the other in obtaining recourse and recompense from or on behalf of third parties for losses incurred . (b) in the event that any loss in caused in whole or in partly by the concurrent negligence or intentional wrongful acts or omissions of the Operator, its employees, agents, contractors or any other persons acting under its authority on the one hand and the Customer its employees, agents, contractors or any other persons acting under its authority on the other hand, then this obligation to Indemnify shall be comparative and each Party shall indemnify the other to the extent that such Party's negligence or intentional wrongful acts or omissions were the cause of such loss .
20. INSURANCE 20.1 Insurance and Liability The Operator shall maintain throughout the insurance requirements: of the Agreement the following A) Worker's Compensation and Employer's Liability insurance, as prescribed by applicable law B) Commercial General Liability Insurance with an adequate maximum limit per occurrence and in the aggregate per year for bodily injury, property damages, and contractual liability coverage not exceeding the legal liability . 20.2 No Insurance of Products by Operator Unless it has been explicitly agreed in writing with the Customer, the Operator shall not be obliged to insure the Products of the Customer or any other property of the Customer or any third party . 20.3 Insurance of Products by Customer The Customer must maintain adequate insurance for the Products of the Customer in the Terminal . The terms and conditions of such insurance shall include : (a) that the Operator be a co - insured in respect of such policy; (b) the insurers waive any rights of subrogation against the Operator; and (c) such other terms as the Operator shall specify. 4. Redelivery In the event of the re - delivery of part of the Products, the Customer shall notify the Operator of the insurable value of the remaining part of the Products failing which the Operator may reduce the insured sum in respect of the Products in the same proportion as the Products shall have been reduced in number, weight, measurement or content . 5. Operator's Assistance If the Customer shall request the assistance of the Operator to determine the extent and value of any loss, damage or destruction of the Products, the Operator may, but shall not be obliged to, render such assistance subject to : (a) the Customer's payment of the costs of such assistance (including the fee of the Operator) and (b) if the Operator so stipulates, the Customer's prior payment in cash of all sums due, from the Customer to the Operator under the Agreement or urdei z y c› - War agreement made between the Operator and the Custo/rier . 20.6 Insurance of Protection and Indemnity Cover by Customer The Customer shall procure and maintain (or, in the case of Vessels it has chartered, cause to be procured and maintained), in relation to its Products, activities and the activities of its Vessels at the Terminal, comprehensive protection and indemnity insurance including coverage for injury/loss of lives, full collision liability, damage to property including fixed floating objects or Port of Fujairah property, crew, cargo, pollution liability, spillage and wreck removal, towage, war risks and fines, in accordance with good industry practice in addition to any requirements imposed by the Port Regulations.
21. CONFIDENTIALITY 21.1 Confidential Information (a) Subject to Clause 21 . 1 (b), each Party agrees to and shall cause its respective agents, representatives, affiliates, employees, officers and directors, to treat and hold as confidential (and not disclose or provide access to any person), all confidential information received by it relating to the other Party, information relating to the provisions of and negotiations leading to this Agreement, and all other confidential or proprietary information with respect to the Terminal . (b) A Party may disclose information which would otherwise be confidential without the consent of the other Party, if and to the extent: (I) required by the rulas of any stock exchange or any governmental, regulatory or supervisory body or court of competent jurisdiction to which the Party making the disclosure is subject ; (ii) required by any stock exchange or any governmental, regulatory or supervisory body of the Operator's parent company, which for the avoidance of doubt, is listed on the Nasdaq Stock Exchange, New York . (iii) required by the law of any relevant jurisdiction; (iv) required by lenders in connection with debt financing arrangements for the Terminal; (v) required by any competent authority to register security in favour of any lender (howsoever described) in connection with debt financing arrangements for the Terminal ; (vi) disclosure is made to the affiliates, professional advisers, auditors and bankers of that Party; (vii) disclosure is made to bona fide potential purchasers of shares in that Party and the professional advisers of such bona fide potential purchasers; the information has come into the public domain through no fault of that Party; or (ix) the other Party has given prior written approval to the disclosure. This Clause 21 and such Clauses of this Agreement as are necessary to permit the enforcement of this Clause 21 shall continue to apply for two ( 2 ) years following the expiry or termination of this Agreement . (c) 22. CUMULATIVE RisHTS AND REMEDIES The rights and remedies given to the Parties under this Agreement shall be cumulative remedies and shall not prejudice any other rights or remedies of the Parties contained in the Agreement or at law or the right of action or other remedy of the Parties for the recovery of any sums due to it from any other Party or in respect of any antecedent breach of the Agreement by that Party .
23. CoMnuAHcE wiTH STATUTES The Parties shall comply with the provisions of all statutes affecting the Products, the Services and the Agreement (including, without limitation, those specified in Box 20 of the Key Commercial Terms) and shall give all necessary notices and the Customer shall obtain all requisite permission, approvals and consents . The Customer shall indemnify the Operator against any fines, penalties, losses, costs or expenses incurred by the Operator in respect of any non - compliance with the provisions of such statutes save for where such fines, penalties, losses, costs or expenses were caused by the grass negligence or wilful misconduct of the Operator . 24. NoTlCE5 24 . 1 Unless otherwise provided for herein, all notices to be given or made in connection with the matters contemplated by this Agreement shall be in writing and shall be delivered personally or sent by courier or e - mail : In the case of the Operator to: Brooge Petroleum and Gas Investment Company FZE Address: P.O. Box 50170, Fujairah, UAE Attention: Mr. Nicolaas Paard8nkooper Chief Executive Officer In the case of the Customer to: and shall be deemed to have been duly given or made served as follows : (a) if personally delivered or sent by courier, upon delivery at the address of the relevant Party; (b) if sent by e - mail, when such e - mail is marked as sent, provided that if, in accordance with the above provision, any such notice, demand or other communication would otherwise be deemed to be given or made on a non - Business Day after 5 . 00 p . m . at the location of the recipient, such notice, demand or other communication shall be deemed to be given or made at 9 . 00 a . m . on the next Business Day at the location of the recipient . Unless the contrary be proven, proof of postage or delivery shall be proof of service .
24 . 2 A Party may notify the other Party of a change to its name, relevant addressee, address or fax number for the purposes of Clause 24 . 1 provided that such notification shall only be effective : (a) on the date specified in the notification as the date on which the change is to take place; or (b) if no date is specified or the date specified is less than 10 days after the date on which notice is given, the date falling 10 days after notice of any such change has been given . 25. ASSIGNMENT/JUBLEASE 25.1 The Operator may at any time assign/sublease or otherwise transfer all or any part of its rights under this Agreement. 25.2 The Customer shall not assign or otherwise transfer all or any part of its rights under this Agreement without the prior consent of the Operator (which may be granted or withheld in its absolute discretion and may be granted subject to any conditions as the Operator deems necessary in the circumstances) . The Customer shall also be entitled to sublease part or all the Committed Volume to another well reputed third party subject to having the Operator's prior written approval (not to be unreasonably withheld) . 26. CONSENT OR WAIVER No consent or expressed or implied waiver by a Party to or of any breach of any covenant, condition or duty of the other Party shall be constructed as a consent or waiver by that Party to or of any other breach of the name or any other covenant condition or duty by that Party and shall not prejudice in any way the rights powers and remedies of that Party contained in the Agreement . 27. SEVERABILITY Should any part, term or provision of the Agreement be judged illegal or in conflict with any law, by a court of competent jurisdiction, the validity of the remaining portions or provisions shall not be affected thereby . APPLICABLE LAW The Agreement and any dispute, difference, controversy or claim arising out of or relating to this Agreement Including the negotiation, existence, validity, invalidity, enforceability, breach or termination thereof regardless of whether the same shall be regarded as contractual or not (a "Dispute"), shall be governed by the federal laws of the United Arab Emirates and the laws of the Emirate of Fujairah . 29. NOTICE OF DISPUTE Any Party intending to commence proceedings in relation to any Dispute shall give at least 10 Business Days' prior notice in writing to the other Parties of its intention to do so, explaining the nature of the Dispute and the intended proceedings . 30. ARBITRATION 1. Any Dispute shall be referred to and finally resolved by arbitration under the LCIA Arbitration Centre Rules (the "Rules") which (save as modified by this Clause 30 ) are deemed to be incorporated by reference into this Clause 30 . Capitalised terms used in this Clause 30 and not otherwise defined in this Agreement have the meanings given to them in the Rules .
30.2 The seat, or legal place, of arbitration shall be the Dubai International Financial Centre, Dubai, United Arab Emirates. 30 . 3 The number of arbitrators shall be three . The claimant (or, if more than one claimant, the claimants jointly) shall nominate one arbitrator and the respondent (or, if more than one respondent, the respondents joinlly) shall nominate one arbitrator, in each case In accordance wilh the Rules . The third arbitrator, who will acl as cl›airperaun uf the arbitral tribunal, shall be nominated jointly by the lwo co - arbitrators, provided thai if tlJe third arbitrator nas nol been so nominated within 30 Business Days of the lime - limit for service of life response, the lhird arbitrator shall be appointed by the LCIA Court . 30.4 The language Io be used in the arbitral proceedings shall be English. 31. THIRD PARTY Riorrrs Save as expressly provided in this Agreement, a person, who or which is not a party to the Agreement, has no righl to enforce or enjoy the be.nefit of any term of the Agreement. IN WlTNES5WNEREOr the Parties hereto have entered into this Agreem em and accepted lhe General Terms and Conaltlons on the day and year first above written. Signed by: Mr. Nicolaes L. Paardenkooper for and on behalf of Brooge Pe tr oleum and Gas investment Company FTE Name Signature Signed b! or and on Sahra Oil PZE In the presence of: Name: Signature:
Exhibit 4.91
BROOœ PETROLEAUu fj o DATED 0 @ - 1 - The parties listed balow agree, in this Commercial Storage Agreement (the "Agreement*} da*ad as of 0@’ Ssptomber 2022 and executed in Dubai, UAE, Iha folbwlng: Terminal . and the Customer wishes to store the Product at the Terminal and desires to purchase stomge relate This Agreement comprises the 6 e ñ •.
y Commercial Terms and the General TenTis and Conditions (’GTCs") which are attached to thls Agreement and ae "Clrcutatton Charges maans the charges described in Box 16 of these Key Commercial Ta+rris ; 2. "Clause(s)" means lhe provision(s) and stipulation(s) of the GYCs Commencement Date ƒ means 15’ September 2022; 4. "Excess Throughput Charges ƒ means the charges 6. described inBox14 of theseKey Commercial Terms, ”Fae* means, in respscl of each month an amoMnt equal to the aggregate of the Renta and Handling Charges, the Excess Thfoughput Charges, the Tank eanng Charges the Circulatlon Charges, the Tank Heating Charges, the nter Tank Transfer Charges, and the TopSide Facility Charges for such month; "Finance Party" maans any person providing debt financing to the Operator in connection with the Terminal (excluding any shareholder of the Operator or any Affliate of any 7. "Floor Pdce" has the maaning ven to n Box13ofthese Kay Commercial Tems; "Guarantee" not used; 10. "GTCs’ has the meaning givan to it in Box 4 of these Key Commercial Terms ; "Inter - Tank Transfer Charges" means the charges descrlbed in Box 18 of these Key Commercial Terms ; ’Key Commercial Terma" means the provllons of Bax 1 mean ng g ven a 1 n Box 13 of these Key Commercial Terms ; ’POF" has the meaning given to Commarcial Tarrrls ; - 3 - 15.
"Product’ has the meaning 9 ven to itin Box 8 of these Key Commercial Terms; 18. "Rental and Handling Charges" means the charges described In Box 13 of theseKoy Commercial Terms ; ’Services" has the meaning given toItInBox 10 of these Key Commercial Tefzns ; "Storage Facllltles" means any storage spaca wI \ h pipellnes, pumps, component pans arld equipment and sppliances belanging thereto . wh 1 ch are within lhe Teminal, to be made available to or to be used by the Operator for the purpose of carrying out the Services pursuant to the Agreement . ’Tank Cleaning Charges" means the charges described In Bok 15 of these Kay Commercial Terms ; 17. 48. 19. 20. ’Tank Heating Charges" means the chargas described In Box 17 of thasa Key Commerdal Terms ; *Tank Turn" means a volume of Product equal to the VUlume Commitment ; 'T • n hasWemeaninggen t> it in Box 7 o{ these Key CommemalTwms 21. 2J. WeiwilnaF‘ means the petroleum crude and product storage t 6 rmlnal descrlbed in e»x g o bese Key Commerdal Tems ; ”YopGide Facility Charges' means the charges described in Box 49 of thesa Key Commercial Terms ; and Volume Commltment^ has the meaning given toitin Box 11 of these Key Commercial Terms .; and "Port Dues" has the meaning given fa it inBox 20 of these Commercisl Tems. 24. 25. 26.
7. Period of Agreement 8. Product 9. Teminał 10. Serviœs 27 . W \ /harfage Facility Charges" has the meaning giyen to il in Box 20 of these Key CommerCİBl Terms . Not used. The obligations under this Agreement (including tha obligagon of the Operate to provóe the Services and of the Customer Ø pay łhe Fee) Shall begin pn the Commencement ßate, and shall, subject to the terms of this Agæemenł, œntinus for a porìod of 3 years * 3 years, i . e . (the “Term") . The Agreement can be ranewad based on mutual agreamant, włth to be defined conditions . The parties should start negotiations 30 (thirty) days prlor to the expiry of the Term . The Product shall comprise Gasoil delivered by the Customer to the Ogeœ to r for the purposes of carrying . out the î 3 ervices, æ dascñbed in the Port Rules for Topside Facility Operations (the *’Top Side Rulas“) and the type and specifiœtions of which shall be pre - agreed by the Partles prior to delivery . TerïyinaJ means the Phase II Tank Farm with 602,fł64 cubicmetre capadty crude all, fuel oil and product storage terminal developed by BPGIC in the , Emirate cf Fujalrah, arid m0re speÒfłcally, located near the Port of Fujairah ("POF"), United Arab Emlratœ and any other premises. dfice, building, Storage Facitities (ss defined in the GTCs), tank, and plpallne at which or In which Sarvices are provided to the Customer In accordance with this Agreement by the Operator or any third party appointed by the Operator. In caæ a third party is appointed by the Operator. Tha Ser'rlces shall compi \ se any or all operations carried out or to be œrriad out by the Operator in respect of the Product aĘ outskłe or through tha Terminal, inclusive of but not æslrloed 'sa6ieqg 8u¡uee¡g ąueg aiț \
16. Circulation Charges 17. Tank Heating 18. )nter - Tank Transfers 19. TopSlde Facility Charges 20. Port Duos and Wharfage Facll)ty Charges I deliver it back the same basis. e Ope r The Customer shall pay fo Iha Operator circulation charge "Circulation Charges") at a USS er hour in case such a service is requested by the Customer. Not applicable for the required products. If the Customer requests, and the Operator consents to, the transfer of the Customer's Product from one tank to another, the Customer shall pay Inter - Tank Transfer Chargss to the Operator at the amount of US $ her cbm oi Product transferred between any tank 6 al the same Teminal and measured at i ambient temperature during tbe transfer per month . The custody transfer volume willbebased on be Issuing lank levelgaugecompusfon . The Customer will pay the Operator as a pass - thfough basis tha TopSide Faclll(y charges as charged by the POF as further sal oil in Clause 11 of the GTCs, and asper actual Port ofFujalrah invoices . Port dues and any other charges [including Wharfage Facility Charges) impaled by lhe POF on tha Customers vessels as defined In the port of Fujairah Port Tatiff (effective from 1 May 2008 as amended from time to time) or any other applicable chargos shall be borne directly by the Customer and are nol appI . cabls to this Agreement To the extent these arriounts are invoiced diractJy to the Operator rather than the Customer, the Customer ahall repay the Oparator all such amounts upon recaipt of an Invoice in respact of such charges Tram 21.
Change in law INMTJESS WHEREor the Pales hereto hav above written. Signed by Mr. lcofaas L Paardeiikooper for and on behalf of Broage Pelmieum aztd Gas InvesLznent Signature: for and on behalf of CenGeo Naw End In thepres_g matur e - 8 - the Operator in accordance with the pro \ IsI 0 ns of Glause 11 . Any duties or loxcs Io \ ; ed by any compotont authority will be payoblc by tha Customer as further set out in Glausa 3 . 10 of tha fiTCs . Any material increase In costs reasonably Incurred of to be incurred and property evidencad and satisfactorily documented by BPGIC in performing Ils obligations urder this Agreement, induding any material increase that arbes as a direct result of a change in law (induding a change in interpretation of an existing aw) rog 0 lallon (Ir,cltlding a change in interpretation of an edstlng regulation) or tax, v/ill b e tx›rize by tie Guslomer, based o n mulual agresmant, ona pro rata basis, tkat la pro rata to the proporton which Its Vouma Cornmilillent bears to the total storage capacity of the Taminal, by means of an adjustment la the appropriate elementfs) of the Fee . Agreement on the day and year first GEMSR A L TERus n tj D O
GLAUSE 9. 10. 11. 12. 13. 14. 15. 18. 17. 18 . 19. 29. Coxomo s or Payustrr THIAo PA}7IY CHAftGES AND SUM6 ON PRODUCTS RIGHTS OF MEN AND RETENTION Tiz4ksFER OF OwNER5HIP Rc9nsszlwamHs aNo Wanxnxnes TzxM/NATION AFTER 7z«uIMATlON FORCE MAJEURE LiAeiuw fNsuRANCE CONTMTS 2. 3. 4. 5. 6. 7. APPlJcABlMTY or GTCs PRODUCTS STORAGE FACILITIES OPERATiOft ANO {}/fAtHTENANCE OF S1ORAsE FAclLfTfES DELIVERY AND REDEMVERY DELIVERY AND REDELIVERY EQUlREféENTS HA/JoLltis or VEsSELS DeTGRMlMATION OF QUANTfTtE8 22. 23. Z4. CUBULATNS RGHTS AI¥D REMEDfE6 CO4IPMANCE'MTt4 GTAJUTES NOT{CE6 A88IGNBEI¥T CON9EI6T DR WAIVER SZVERASIMTY APPLICABLE LAw NOTICE OF DISPUTE ARBITRATION TH)RD PARTY ftiGl3TS 26. 37. 28. 31.
PAGE 2 3 5 7 7 9 10 11 11 13 13 14 14 14 16 18 1 9 Z 2 24 1. 1.1 OEFINITION8 AND bJTERPRETATîON Definitions In this Agreaiyant: "Additional documents" has the meaning a9 ascribed to k in Clause 3.2. "Afflliate’ mea . ns a Party or person Controlling, Conirolled by or under comman Control with another Party . "Agreement ƒ means this Agreement comprised of the Key Commercial Tarms and the GTCs or any agreement made in writing between the Customer and the Operator for the carrying out the Servlces . “Applicable Laws' means any federal, emirale, munlclpal or au!horlty statute, ordinanco, regulation, guideline, rule, code, direction or any licence, consent, permit authorisation or other approval, including any conditions attached thereto, of the Unlted Arab Emirates, the Emlrate of Fujairah or any public body or authority, local or federal agency, department, Inspector, ministry, official or publlc of statutory person which has appropriate jurisdlctlon . "Business Day" means any day exc 1 udlng Saturday and Sunday and any day which shall be a lagal holiday or a day on which banking instiMions are authorised or required by law or other governmental action fa be dosed|n the Unlted Arab Emirates ; "Contrat" in relaèön to a body corporata means ihe abllity of a person to ensure that the actlvities anü business ofthat body œrporate are conductad in accordanœ w 1 th the wishes of that parsan and a person shall be dœmed to hava Control of a body corporate if that peman possesses the majority of the issued share capital or the voting rights in fhat body corporate or the rlght to appoint or remove dlrectors of that body corporate holdlhg a majority ofthe yoting rlghts atmeetings ofthe board of dlrectors (or equlvalentmanagement organ) on all, or substantially all, matters, and except as expressly provîded in this Agreement cognates of tha term Control shall be consbusd accordingly . ƒ Customer" means the Customer as spaclfled In the key Commercial Terms. "Dispute’ has the mean1ng given to it in Clause 28. "Energy inatltute" means bia professional body for the enorgy industry, based in tha UIC "Failure to Pay Notice" has the meahlng given to it in Clausa 13a. ’1 ƒ orce Majeure* has the meanlng given to it in Clause 18.1. "MBOR" means the London” interbank offered rate administered by ICE Banchmark Administration Limited (or any other person which takes over the administrationof thatrate) for USD andperiod of one month displayed onpages LIBOR 01 orLIBOR 02 of the Thomson Reuters screen or any benchmark rate which is formally designated, nominated or recommended as the replacement for LIBOR . "Loss" means any loss, damage, cost and expense suffered by tho dalmant dae to the loss, destnJctlon or damBge of any property {Including the property of the claimant) or from any damaga to the environment or from the death or injury of any porson (indudlng the claimant) . "Maintenance Worts" means checl‹lng, maintanance, repair ard alteration work to the Terminal as per Clause 5 . 1 .
Hogan Lovelb ].2 "OT 1 " and "OT 2 " means all permanent existing and pbnned oil tanker berths at OII Tanker Terminal 1 and Oil Tsnker Teminal 2 wi!hin the Portal Fujairah, along with the installations related thereto . ’Party” ated "Parties" means the Customer and the Operator Individually and collectively as the context may raquiro . ’Port Regulations’ maana any rules, regulations, ordihancas, procaduras, directives, requirements, polldes, standards or information of any kind, whether currently in force or Introduced from time to time, produced by the POF In connection with POF and with which users of POF are required to comply, including the Port Guldellnes, tt›e Port Ordinance 1982 , and the Top Side Rules, as may be ao›ended from time to time . ƒ Rea 6 onable and Prudent Operator" means a person seeking in good faith to perfom ils contractual obligations and in so doing and in the general conduct of its undartaNng axarcising tflat degree of sMll, diligence, prudence and fore 6 ight whlch would reasonably and ordinarily be expected from a skilled and experienced operator complying with the Port Regulations and all Applicable Laws and engaged in the sama typa of undertaldrig under tha same or similar circumstances and conditions as contemplated by this Agreement "Rules" has the meaning given to it in Clause 30.1, ”Security Trustee’ has the meaning given to it in Clausa 16,3. "Standards of a Reasonable and Prudent Operator means the standards, practices, mothada and procedures expected from a Raasonabla and Prudent Operator . 'Temlnadon Sum’ means an amount equal to the aggregate amount that would have bacome due in respect of the Rental and Hand|lng Charge (flxed at the hlgher of the Floor Prlce or the latest Market Price) under lhls Agreement unfil the date on which tMs Agreement would have explred In accordance with its tems . ”Vessel ƒ means any boat, ship or tanker delivering Product to tha Temlinal vla the OT 1 . OT 2 or any future jetties or any single buoy mooring system . Interpretation Words importing Ihs singular only also Include the plural and vice versa where tha context requires ; words and expressions importing the masculine gander include the feminine ; reference to son indudos any pubjlc body and any body of persons incorporate or unincorporata . Headings Clause headings shall be deemed not to be part of II \ e Agreemef t and shall not be taken into account in the Interpretation thereof . Prevalence The provisions of the Key Commarclal Terms and lhe Clauses of the GTCs are to be read as mutually explanalqry one of another, but in case of conflict, discrepancy in or divergence botwsen the provisions of the Key Commercisl Terms and the Clauses of thls Agreement, theprovisions of the Key Commercial Terms shallprevail . APPLlCABitJTY oF GTCs 1.3 N.4 2. All Services shall be provided aod carried ovt pursuant to this Agreement unless otherwise agreed in writing by the Parties.
Z A 3. 3.1 PRODUCT9 Desmiption For each cargo of Product la be dellvered to the Terminal, tha Customer shall, when required by the Operator In accordance wilh the Operator's normal operatlng procedures, furnish to the Operator a correct and full written descrlption of the Products as may be reasonably reques 1 ed by the Operator and shall include : lheir natUre, type, quality, composition, temperature, weight, volume, value, source, origin, hazard dassification, thair prassura and In addition thereto all physical/chemical properties IncJuding but not restricted to : bolllng point, flash point, vapour prasgure, toxicity, mel 8 ng point, coagulation point, visc 0 sity, dogradableness In water, stabllity, corrosiveness, acidity, static loading, smell level, MAC/PEL velue and all partlrulars, kriowladge of which Is material to the Operator for the provision of tke Services or a|ternatHeIy, whlch is of such naturs that the Agraemant would not have been entered Into or not on the same conditions, if the Operator had had Mowledge of those particulars . Such description shall be provided by the Customer in ths form specified by the Operator . Additlonal Documente Tha Customer agrees to execute in its name, pay for, and furnish to the Dpera \ or timely before tha receipt of the Products sllinformation, documents, permits, approvals and other materials and dala ( ƒ AddltlonaI Documenta’) whlch may be required by any Applicable Law including slatutos, ordinances, rules . or regulations of any public authority relating to tha description, receipt, storing, handling (loading/unloading), blendl»g, shipping, or disposal of theProducts or their waste or waste products, to or from the Teminal, together with detailed written instructions as to their use and disposition . Notification The Customer shall as soon as practically possible notlfy the Operator in writing of new data with regard to the Products falling under the Agreement that become known during tha duration of the Agreement . 3.2 3.3 The Operator shall not ba deemed to have knowledge of the description of the Products, if the descriptions referred to In Clause 3.1 and/or the Additional Documants as par Clause 3.Z are not materially complete orcorrect. The Operator may accept dellvery of theProducts notwithstanding tha Operator's knowledge of any Incorrect or incomplete description of the Products and/or lncof/ect or incomplete Additional Documanls (having notified tf›e Customer of such), and if the Operator shall choose to take delivery of the Products: (a) the Customer shall bear the risk and expense of any necessary measures carried out by the Operator In respect of the Products arising from such incorrect or Incomplete description and/or such incorred or incomplete Additional Documents and shall indemnify the Operator against all Loss arising from such measures ; and the Operator shall not be liabls for any Loss arislng from such taklng of dellvery of the Products, (b) save in each case to the extent such Loss arisas from thg gross negligence or wilful misconduct of the Operator.
3.s Inspection of Products (a) The Operator is not bound to chsd‹ the Products or their quality, conditions and conformity with their dsscriptlon and/or, as lhe œse maybe, tha completeness or œrrectness of the Additional Oocumenb . \ Nthout pæjudlce to Clause 3 . 4 , the Operator shall, however, be enütłed, on or before taking delivery of any Products, to meæure, tast or axamlne the Products and check thø AddRlonal Documents for the purposes of Inspection or verification if the Operator suspects that the contents have been incon ploteły of incorrectly described aud/at incomplete or ‘incorrect Additional Documents have bean furnishœł to łhe Operator . The Customer shall bear the reasonable and documented cost of the Operator's inspection and VBftÎÏCôt0F \ . The Customer may appoint, at It 6 own cost and expense, an independent lnspector{s), the Ider \ tity af which shall be approved by the Operator, tõ asœrtain the quality of lhe Products at the Terminal . The decision of such inspector{s), if appoirlted, shall be moated and accepted by tha Customer and the Operator as conclusive and shall be final and b 1 nding upon the Operator and the Customer, save in the case of fraud or manlfest error, as to the qualiły of the Products so loaded or unloaded . If no inspector is appolnted, then In such an evont the qualities asœrtained by tbe Operator shall be binding for both Parties . (b) 3.6 Deliveey of Produats (a) Any taking of delivery of tho Products by tha Operator shall not constitute proof that the Products weæ dęliveied in a good and undamaged condltion, The Operałor shall, as soon as possibla, noiify the Customer of any damaga or daíect of the Products and/or incompletpness or incorrectriess of the dascrlptlon of the Products or the Additional Document, which is apparent at the tima of delivery theæof bul the Customer shag not make any claim against the Operator by reason of tha fact that it has not been so notified, The Operator shsll be entitled, at the expenæ of the Customer, to do all things necessary to pravent orreduce further deterloraüon in the condltłon of the Pæducts and to arrange for a report to be made on the condklon of the Products or, as the casa may be, arrange for łhe correction or completeness of the Additional Documents, without being gable for any Loss arising from dofng such things and the Customer shall indemniły the Operator against such Loss save where such Loss arisas from the gross nagllgence or wilful mlscondud of the O perator . (b) (c) 3.7 Refusal of Products Notwlłhstanding other provisions of the Agreement, ße Operator shall be entlded to æfuso to take dełiyary of the Products or to cøny out any Services if the acceptance of Product or canying out oł Services may in the reæonable opinion of the Operator result in : (a) the Products dallvered purportedly as the Products do not conform with ttie description thereof provided by the Customs as per G 1 ause 3 , 1 and/or are not furnished wlth complete or correct Additional Documents as per Clause 3 . 2 ; danger or damage eithar to persons, goods, the Terminal or property generally; any environmental damage; or a violation of the Port Regulations or Appliœble Laws. (b) (c) (d)
3.8 If the Products are at the Teminal and, In the feasonable oplnlon of the Operator, do not conform with the descrfptlon thereof provided by the Customer as per Clause 3 . 1 and/or are not fumishad with completa or conect Additlonal Documents as par Clause 3 . 2 , the Operator shall be entided to remove the Products forth' th at the risk and expense of the Mstomer . AdmlssontoTermlnal If the Operator givas its consent to admit to the Terminal the Products, whosB quality deviates from the descrlptlon referred to in Clause 3 . 1 and/or, as the case may be, the Additional Documents are incomplete or incorrect asper Clausa 3 . 2 , all the nacassary extra operations, of any nature whatsoever, which are canied out In relatlon to those Products and all further consequences shall be for the account of the Customer . 3.s 3.10 Dutles, Taxes and Charles If the Products ars or may be subjed to dulies, taxation or other charges under the Applicable Law, the Customer shall reasonably In advance and on damand furnish to the Operator, all information and aocuments required by the Operator to enable the Operator tomake the appropriate declarations to such authorities forsuchpurposes or to facilitate the Oparator's dealings with such authorities . The Customer shall be liable for and shall Indemnify the Operator against any Loss, penalties, taxes or duties paid or payable by the Operator a 9 well as any declarations made to the au \ horiées by the Operator based on the documents and Information provided to the Operator by the Customer In connection wlth the duties, taxation and other charges which the Products are or may be subject to . Warranty The Customer warrants that the Products: 4.11 (a) will cause no damaga to the Storage Facilities and/or ancillary equipment of the Torminal; will not render, altar cleaning, tha Storage Facilitias unfit for the proper storage of water whlte chemlcals; and may lawfully be stored at the Terminal, (b) (c) The Customer shall ba rasponsÍble for all Lossas . flnes, penalúes and damages directly resulfing from the storage of the Products at the Terminal . Provided, however, the Customer shsll not be responsible for such fines, penalties and dsmsges arising from the Operador's failure to use reasonable care in safekeeplng and handling of the Products or the pfopetty of the Customer pursuant to ks obllgatloris under the Agreement or any damags caused by the gross negligerica or wilful miscondud ofthe Operador, or from any manufacturlng defecto in the matarlals or the manufacture of the tanks, Interconnscting pipes, rnanifólds, the Storage Faólities and/O 7 BfTÓllary equipment of theTerminal . TiNe and rish Mcept tothe extent Incondstent with Clause 13 . 3 and Clause 17 . 5 , dlle and risk in relation to the Product skall remain v/ith the Customer at all times under the terms of thls Agreement . CTORAGE F'ACIMTIES 3.1z 4.1 Uae of Storage Facllldes The Gustomer shall only use the Storage Facilities for tha purposes spodfisd in the Agreement unless otherwise subiet to another Mstomer, lor which in such case the 4,4 Customer will affect a mutually agreed sublease contract to be annexed to this Commercial Storage Agreement.
Selection of Storage FacJlitlas 4.2 (a) Unless expressly provided olherv/ise in Ihe Agreement, the Operator skall, at its absolute alscretion, !n consultation witf \ If \ e Customer, select the Storage PacilltJes suitable for receipt and storage of the Products and shall be antllled to move tlJo Products from ono part of ths Storage Facilities fa another from lima to time with the approval ol’ the Customer (not to be unreasonably withheld or delayed) a \ no cost to the Customer . Subjeo to obtaining the consent of tha Customer to be given at the Cuslomer's sole discretion and other relevant cnstomors (which consent shall not be required in the event of an emergency), 1 he Operator may receive and store tho Products at any of the Storage Facilities at the Termlnal in common with Products of the same average quality and of the same 8 de as the Products . The Customer shall not be entitled to claim that Products, which the Operator shall subsequently deliver to the Cuetomer out of such common place purportedly as the Products, ars not in fact the Products, which the Customar had earlier delivered to tha Operator for carrying out the Services . The Operator shall as soon as possible, notify the Customer of any movement of the Products but the Customer shall hOt make any clalm agains( the Operator by reason of the fact that it has not been so notified, (b) (c) (d) 4.3 Suitability of Storage Facilities The Customer (or a thlrd - party surveyor engaged by the Cus 1 rner) shall be entitled to lnspect the Storage Facilities to ensure their claanliness, suitability and good condition prior to the delivery of the Products to the Operator . The rights to inspect shall be exercised at reasonable dmes and with prior written notice, provJded the relevant representative of tha Customer (or a third - party surveyor engaged by the Customer) shsJl comply with all on - site health and safety and other regulations . If the Customer (or a thirdparty surveyor engaged by the Customer) skall not make such inspection or shall not haye objected in writing to the cleanliness, suilabllity or condition of the Storage Facilities within Y days following such Inspection, the Storage Facilities shall be deemed to haye bean In a clean, suitable and good condition upon the delivery of the Products thereto andIe Operator shallnolbeliable In any way whatsoever far any Loss arising out of any lack of cleanliness or the state or condition of the Storage Facilities . The decislofl of any third party surveyor engaged by the Customar as to tho ateanliness or otherw \ se af the Storage Facilities shall, axcept In ths case of fraud or manifest errar, be final, Substitute Storage Factlitles If st any time during the term of the Agreement, the Operator finds it necessary to provide substitute storage facilities to lhe Customer, the Operator may do so provided such usa will not result in themixing of Ihe Product with theproduct of any other customer, any addlllorial costs involved in the transfer of Products isat tha expense of the Operator and tha Operator has obtained the Customers prior approva! (not to be unreasonably withheldor delayed) . Any such substitute sforaga faclNies, while In usa under this / \ greement, shallba deemed to be the Storage Facilities refenad to In this Agreement, The Operator shall compensate the Customer for the cost of any Produd lost as a result of the use of such subsll!ute Storage Facilities which is only beyond the tolerance rule of 0 . 5 ƒ /a plus or minus and that is caused by groes negligence of the Operstor .
4.S Maximum Contents Unloss explicitly permitted otherwise in welling by łhe Operator, the maximum aIlowsbIe weight, which may be stored in any Slorags Facility shall be equivalent to the weight of the volume of water at a temperature of 4 oC . with whlch the capacity of the Storage Eacilily in questiori can be filled, No reduction in the storage rates and charges payable as per Box 12 of the Key Commercial Terms shall be allowed an the ground that any part of such Storage Faó 8 tíea shall not have boan used . OPERA 7 ION ANO lŸlAfNTEMANCE QF STORAGE F clLrrlEs Operatlojl and Naintenance The Operator at al| times during the tern of the Agreement shall oparafs and maintain the Terminal and related equipment provided hereunder in good and serviceable condl 8 on to the Standards of a Reasonable and Prudent Operator, Provided that the Operator promptly and reasonably In advanœ nohFies the Customer, the Operator shall be endtłed, atany time and from time to time, to carry out M aintanancaWorks to the Terminal or to have the 6 a carried oul, and furtharmorøto effed alterations or to have these affected or alfernaüvely to fit additlonal or speÖal equlpment to the Terminal or to have these fitted, whenevar the Operator deems d necessary or prudent to do so or # ths Operator is obllged ło do so pursuant to Applicable Law . Mov)ng of Products Subject to obtaining the Customer's consent (which consent shall not be unreasonably withheld or delayed and shall not be required in the event of an emergancy), lhe Opeæłor shall be entitled to move the Products from tho Terminal to other paM of the Terminal if the Operator shall deem such movement to be necessary for tha Operator to carry out such Maintenance Work 9 and in such event the Opełalor shall as soon as passible notify the Customer ofsuchmovement of the Products . The Oparator shall compensate the Customer for any Product lost as aresult of the movement of Products . Liability The Customer shall not be entitled to maka any claim that has either directly or indirectly ańsen from Maintenance Works or from the deprivation of tha use of the Term 1 naI for any duration as a resull of auch Maintenance Works provided that the O perat o h r a s noëfied the Customer as soun as practicable afłer beaming awaæ of such works and, except In the caæ of an emergency, hæ consulted with the Customer In respect to such works . Nothing in this Clause 5 . 3 shall prevent the Customer from bringing a clalm which haą arisen from the gross negfigence or wílłul mlsœnduct of tho Operator . Payment during Maintenance Subject to the provisions of this Clause 5 . 4 , the Operator shall be antitled to payment by tha Customer of all łhe rates and charges or other sums payable by the Customer under t e Agreement in respect of the use of the Termlna 1 even during any period that the Customer may be deprlved oftha use of the Temina l aurlng such Malntenance Works, DtkN£eY A8D REDELiVERY Delivery The Products shall be deemed to have been delivered by or on behelf of the Customer to the Operator at the Terminal : 5. s.1 5.3 S.4 6.
6.1 6.2 (a) if the Proaucts are delivered from a Vessel, Immediately upon the Products passing the connecting flange of the pipeline at the TermiFiBl conna 0 ted to the manifold of the Vessel ; or if the Products are delivered through a pipeline of any other person, lmm ƒ dIateIy upon the Products passing the valve placed between that plpeline and the pipeline at lha Terminal . (b) The Products shall be deemed la have baan re - delivered by the Operator to the Customer from the Terminal: (a) if the Products are re - delivered to a Vessel, immedistely after the Product : s have passed the connecting flange of the pipeline af the Terminal connected to tho manifold of the Vessel ; or if the Products are re - delivered through a plpeGne of any other person, immediat’ely afler the Products have passed ftse valve placed batwaen the plpellne at the Teminal and the first mentioned pipelina . (b) 7. 7.1 DELIVERY AND REDELIVERY REQUIREMENTS Requirements The Opafa(Of shall receive from or re<lelIver to the Customer the Products: (a) {b) if so instructed by the Customer, against tha presentation of a receipt in a form approved by the Operator and duly signed and stamped by the Customer, provided that the Customer shall have parformed and observed the material terms and conditions of the Agreement and of any other agreement mads between the Operator and the Customer inrespect of other Products sttha Teminal, up to the date ofsuchre - delivery . No Obligation Prior to the re - delivery of the Praduct by the Operator to the Customer, the Customer shall advise the Operator In wrNng of lhe person(s) authorised lo take re - delivery of such Product . The Operator shall be entitled and shatl endeavour but not obliged to : 7.2 ‹ › demand from any person purporting to be entitled or authorised to take ra - delivery of the Pfoducts, satisfactory praof of the person's identity and of such endtlement and authority ; and satisfy itself that the slgnakire and stamp appearing on theinstiuclions und receipt are correct and valid as at the data of re - delivery . (b) The Operator may at âB son cLsot 4 on accept and acl or reject on any request or instruction given by any pefson who appeals orpurports to be authorised by the Customer to deal with or take redelivery of tha Products wkhout being required to varify lhe same with the Customer, and in the event that the Operator acts In iellance on any such request or instruction, the same shall be daemed to have been made or given by the Customer . Tha Operator shall not be liable for any Loss arising as a result of the Operator accepting and acting on or rejectlng any such request or Instructlon save in the ass of gross negligence or wilful misconduct or fraud ofths Operator provided the Operator has lmmedlately notified Ihe Customer of such action .
8. 8.1 8,3 HMDLING OF 'VEMELS POF The Customer acknowlsdges and agæes that all Vessels must bs acceptable ta the POF and lt ls the responsibility of the Mstomer to ensura that its nomlnated Vesseh at all times meat and comply wlth the requirements of the POF, the Port Regulations, Applicable Laws and any other requiraments and the Operator shall have no llablllty in lhls regard . The Customer further agrees that it shall compîy with the Port Régulations and Applicable Laws and any orders or diæclions issued by the POF or the harbour master, lnduding with respect to Vessol scheduling . loading, discharga and pilotage . Order of Arrlval Subject to Clause 8 . 1 and except where required otharwisa by the competent suthorifies or where deemad necessary by the Operator to facilitate other operations at lhe Tarmlnal, the Operator shall take delivory of Product from . and redelivar Product to, a Vessel berthed at OT 1 or OT 2 on a first - come - first - served basis in accordance with the notices givan to the Operator by such means and within such time as shall havs been agraad bety/een the Operator and the Cu 9 tomer . Delayed Arrival in the event of any delay caused to the Vessel or any delay, interruption or departure from the sequence of handing of the hsndling of the Vessel due to any cause whatsoever (including the non - availability of a barth or ancillary facilities), Ihe Oparator shall not be liable to the Customer or any othar person for any Loss arising from any such detay or intefYuption or departure, including any daim for any damurrage or other compensation for any temporary or permanent loss of usa of the Vessel . Handling Instructlona If the loading or unloadin g of the Products shall de undertaken by th ƒ Operator as part of the SerVicas, the Customer shall ensura thaf the Operator shall receive reasonably adequate directions which Is usual in the case of such delivery in sufficient time regarding the proper manner of such loading or unloadlng . Inadequate lnstructions 8.4 8.5 (a) If the Operator shall nothave received any or any reasonablyadequate dlreclbns as described in Clause 8 . 4 or shall not have received such dlrecllons within sufficient lime, the Operator shBII be entitled to rafuse to take delivery of or to re - delivef the Products and aftha risk and axpe»se of the Customer, to ramove the Vessel to any place chosen by the Operator at its absolute discretion ; and the Customer shall pay to the Operator all lossas, costs and expenses (including demurrage and consequential lossas) arlslng from such non - receipt, refusal and removal and shall beliabl 0 for any Loss arising from such failure and shallIndemnify the Operator against such Loss . (b) 8.6 Handling The Customer shall ensure tidal, when the Vessel has berthed or landed alongside a delivery or re - dallvery point at the Terminal designated by the Operator and tho Operator has declared Itself to be ready for such delivery or re - delivery, such loading from or unloading onto tha Vessel (lndudlhg the connection arid dlsconneclJon of hoses and the taking and analysis of samples of the Products) shall commence immediately and proceed diligently on a 24hour basis dally (Including Sundays and public holidays) without interruption or delay until the completion of such loading or unloading.
Without prejudice to the generality of Clause 8.5, the Customer shall enrure that: (a) the ProduCts shall be unk›aded mom a Vessel at the maximum pumping capacity whlch Is usual in the case of a vessel oí a Similar siza and tonnaøe unles 0 directed otherwise by the Operator, taklng Into account the rece(ving capacity of the Terminal and the requirements of safety ; and łha Products shall unless dlrected otherwise by the Operator, be pumped at such temperature, pressure and condition as will not dslay or impede such pumping . (D) łf the Operator and the Customer shall differ on the quesôon of such maximum pumping capacity, temperature, pressure or condiúon, Clause 30 shall apply. The Customer shall ensure that the Vessel shall be removed from the Terminal promptly upon camplstiori of such loading or unloading or, sooner if necessary for compliance with the requirements of the competent authorièœ or where deemed necesaary by the Operator to faólitøta other operations at the Terminal . Failure If: 8.9 (a) the Products shall not be unloaded from or Iœded onto the Vessel, as the case may be, at łhe times and the speed described in Clause 8 . 7 due to any reason whalsoever,or the Vessel shall not be æmovad from the Tarminal at tha dme described In Cìaus 6 8.8 due to any æason whatsoever (Including the arrest or seizure of the Vœsel by a third pąrty), (b) and the Operator shall have requeste d the Customer or themaster ofthe Vessel to increase the speed of such dlscharge or to remove the Vessel, Bsthe case may be, and the Customer or the master shall fail to comply with such rsquast du 9 to any reason whatsoever the Customer shallpay to the Operator alllosses, costs and expenses (including demurrage and consequen 8 al losses) arising from such failure and removal and shall be liable for any Loss arising directly from such failure and shall Indemnify the Operator against such 6 łaims . DETERMiNATlON OP QUANTITIES 0. QuantllJës loaded to or unloaded from a Vessel wgl be ascertained by the Operators automatic tanłt level gauging systam before and alter aach Ioadlna/unlOddlng event and shall take into account quanti 0 es of Product stored in the Terminal's pipellnes . ÆI determinations or quangties shall be in accordance wìłh ASTM International Stardards, Surveyor The Customer may appoint an indeperident inspector(s), the identity of which shall be approved by the Oparator, to witness the loading/unloading of the Products for delivery to, or redalivary ffom, the Terminal .
The decision of such Inspectors, if appointed, shall be 9.2 treated and BC 6 OptØd by ã a Customer and the Operator Bs condusiye and shall be final and binding upon the Operator and the Customer, save for fraud or manifest error, as to the quantity of the Products so laaded or unloaded . If no Inspector Is appointed, then in such an event the quantities ascertained by żhe Operator shall be final and binding íor both Pa/tles . ACCESS TO CRk \ ÏÑAL 1ß. 10.4 Authorised Accesa The Operator shall grant tha Customer and persons authorised in writing by the Customer, access to the Storage Facillães only for the purposes of the Agreement subject to thelr compllance with the requirements of the Operator and the competent authorities . Operator should prepare tha requlred cargo shipping documents requested by Customer, Operator is having the needed Infrastructure to transfer the Product through the matrix manifold of the FuJairah Oił Tanker Terminal . No Claim The Operator shall not be liable for any Loss due ło ariy cause whatsoever arising from the eritry Ø or presanca of fha Customer or such authorised persons on thø Terminal and the Customer shsIl indemnify the Operator against such Łoss except for Loss whkh arises due la the gross negligence or wilful misconduct of the Operator . CoNOITlONS ay PAviazHT \ nvoiclng and Payment 10.2 11. 11.1 (a) In Consideration to Box 13 of Commercial Storage Agreement, lha Customer will pay the Operator the Rental and Handling Charges (as may be ævlsed from time to tlme pursusnt lfie tems ofthfs Agreement) covering the Volume Commitment over the period of thlrty - six months, on account, and in advance . The first month to be pald in a current - dated cheque to be dated with Ił \ e date oł tM s Agreement and the remaining thirty - five months period to be paid wlłh thlriy - five post - dated cheques, in advance, dated 15 days prior lhe beginning of each storage month covering the æst of the Term . Not later than 1 ß days after the end of each month, the Operator ska(I submi(to łhe Mstomer an invoice for the Fee incurred (excluding the Rental and Handlirig Charges) in respect of the Immediately preceding month . The Customer shall pay such Invoice v/lthin 10 days of its being issued . All sums of whatever ńature due from the Customer to tha Operator under the Agreement shall be payable without demand and set - off, of counter cleim and without daduction . Æl amounts payable to the Operator under this Agreement are exclusive af any Value Added Tax or other appgcable sales tax or duty of any kind . For thø avoidance of doubt charges related to due Port of Fujairah wİll be charged to the Customer as per actual Port of Fujairah Invoice whłch is Inclusive of Value Addeü Tax . If any deducgon or withholding for or on account of tax Is required by the taws of any jurisdiction to be made by the Customer from any paymen(, the Customar shall pay to t 1 e Operator such additional amount æ will (aftor such deduction or withholding has bean made) leave the Operator with an amount equal la the payment whlch would have been due if no deduction œ wlthhokling for or on account of tax had baen required . (b) (c) {e) (d)
11.3 11.2 lmmedatePayment Notwlthstanding the period for payment stipulated In Clause 11.1: (a) 'rf legal proceedings shaTl be commenced by any third party for the bankruptcy or liquidation of winding up of the Customer, unless the Customer can provide evidence satisfactory to the Operator that such proceedings are frivolous or vexatious and can be dismissed within 15 days ; If the Customar shall make any offer of composltlon to Its creditors (axcept in the case of a voluntary reorganisation not Including the InsoNency of the Customer); if any order of distress of attachment or similar order shall be made against any property of the Customer and remains undischarged for 14 days; if the Customer shall cease to carry on the bus1ness In whlch It was engaged at the commencement of effect of the Agreement; or if tho Cuslzimer shall fall to perform or observe any material term or condition al th e Agreement. (b) (c) (d) (e) all sums due from the Customer to fha Operator shall become immediately due and payable. If due to any reason whatsoever (except the default of tha Operator), the Customer shall not pay any sum payable to the Operator under thee Agreement withln 15 days after tha date of the Opsratar's invoice then : (a) the Operator shsll bo entitled to engage the services of any person to recover such sum from tha Customer, in which evant the Customer shBII also bs liable for all actual cos \ s incurred by tha Operator for such aorvicas (including lhe legsl costs) ; and regardless of whether or not the Operator sfiall havo engaged the services of any person as described in Clause 11 . 3 (a) the Customer sha 8 in addition to all sums payabJa urder the Agraement and tha costs described in Clause 11 . 3 (a) (if any), pay to the Operator Interest on such sum and the ¢ osts at 5 ƒ 4 abova the then current LIBOR rate, which interest shall be payable on a day to day basis from the date Immediately after the due dale for paymant to the dats of actual payment of such sums, (b) the costs and interest thereon or to the dale of eXplry or sooner termlnadon of the Agreement, whichever is earlier . Suspension If the GMtomer fails to pay any amount within 1 o days after the due date under this Agreement, the Oparator may suspend the provision of Services under this Agreement untll such non - payment Is remedied, The Operator shall notify the Customer of any imminent suspension of the provision al 6 e rv i‹ : es, not less than 5 days prior to the date on which the Oparator shall effact such suspension . Failure by the Operator to provide notfication to the Customer of any suspension of the Serv 1 ces shall not limit, diminish or invalidate in any way the Operators rigM to suspend theprovision of the Services in accordance wlth thI 6 Clause 11 . 4 . During the perlod of suspension, the Rental and Handling Charges shall continue to be payable .
13,3 11.5 Basls For the avoidanca of doubt, IIis hereby agraod and decłared that: (a) whsre tha Products shall be deltvared or taken re - delivery otby a Vessel, such sums have been charged on tho basis that the Products shall be delivered or re - delivered at lhe flange of thepipeline which is connected to the manifold of the Vassel ; unless expressly agreed otherwise, such sums shallbe payable forthe whola peftod durlng which tha Storage Faclllties are available for tha Customer's use pursuant to the Agraoment regardless of whether or not the Customer shall have actually used the 6 ame ; unless expressly agreed otherwise, such sums shall bepayable on a mond›ly basis . Payment for a part only of a month should be on a pro rata basls ; and the Operator shall not ba obliged to recover from third parties any sums whlch may be due from third parties to the Customer in respect of the Products . (b) (c) (d) 12. 12.1 THIRD PORTY CHARsEs AHA SUMs ON PRODUCTS Customer's Liabllky The Customer shall pay to the Operator the amount of any properly invoiced charges or sums due or paid by the Operator to third parties (including any freight, port charges, taxes, duties, contributions, fines and any othar costs) in respect of the Customer's Produ ct arid/or the provlslori of Services to the Customer save for any charges which are spedfled in the Key Commercial Terms to be borne by the Operator and shall indemnify the Operator against any Loss arising inrespect of such unpald charges aodsums regardless of whe \ her or not the Products shall Ihen be present at the Terminal . RJsIJTs OF LJE 0 AgD ReTENzJON 13. 13.1 The Operator shall have a right of lien and retention over the Products and all sums (includlng any insured sums cotlacted by the Operator for the Customer), documents and valuables which the Operator shall now orhereaRer hold of or on behaK of the Customer or which is now or hereafter due to tha Customer, to sacure the perfbrmanc 6 of all of the duties, undertakings and obligations of the Customer under tho Agreement or under any other agreement made between the Operator and the Customer In respect of othar Products at the Terminal . The Operator shall exercise Its rights under Clause US . 1 by delivering a notice ta the Customer sstting out the amount of the sums due under the Agraamęnt and any other agreement baMaan the Operator and the Customer in respect ol other Products al the Teminal (a ’Failure to Pay t 4 oticag . The Failure to Pay Notice shall also set out a due date for payment of such sums, such date to fall at least 7 days after the date of issuance of the Failure to Pay Notice . The Gustomer acknowledges and agrees that if the Customer has not paid the amounts due by the due date set out in the Failure to Pay Notice, then the Operator shall be entitled to make an appfcation to any relevant oourt, td allow the Operator to sell a quantity of Product that wiM satlsfy the amounts due under the Failure fo Pay Notlce . 13.2 14.
T xt SFER OF OWNERSHIP The Customer may transfar tifle to Product stored ln the Stoiage Fadlitles to any person who has contractual rights to the necessary storage capacity in the Terminal . Any such transfer of title shali ba promptly notiFted to Oporator, REPREsCNYATlON 8 AND WARRANTÏES Each Party hereby represents and warrants fa the other Party that : 15. {a) it ]s a company duly incarporatad and v alidlyexisting under the laws of the jurisdiction raferied to in Box 2 of the Key Commercial Terms; it has the power and authority r”equired to enter Into thls Agreement and psrfom fully Its obllgatlons under this Agreement in accordance with its tems; subject to any general principles of law, assumptions or quallflcatlons referred to in (b) (c) any legal opinion requlréd In ralation to this Agreement, this A s ement is legal, valid and binding on it and isenforceable in sccordance with its tems; tha execution and delivery of this Agreemant and the performance of its obligatlonsunder this Agreement have been duly authorised by all thenecessary corporate actions on tho part of such Party ; and neither the enby into this Agreement nor the implementation of tha transactions contemplated by it will rasull in : (d) (I) a violation or breach of any provision of its statutes, by - laws or other constitutional documants; a breach of, or give rise to a default under, any contracl or other agreement to which it is a party or by which h Is bound; or a violation or braach of any apptlcabla laws or regulations or of any order, (Ili) (11) dacra a or judgment of any court, governmental agency or rsgulatory authority applicable to it or any of its assets, and in case of braach of any such representation and warranty, the Custofnor agraas to indamnify and keep Indemnified the Operator a g ainstany such breach. TEeulltATioN Early Termlnaflon by Operator Notwithstanding the other provisions of the Agreement, the Operator may at any tlme after the occurrence of an Event of Default by the Customer which is conllnuing terminate the Agreement, by giving wriben notlce ofsu ¢ h termlnatlon to the Mstomer . Event of Default Each of lhe followlng is an Event of Default bythe dus \ omer. 16.
16.1 1aJ (a) if the Customer shall fail to observe or perform any of its material ob 3 gations under the Agreement and shall nol ramedy |t 6 failure to so observe or perform such material obligations within 30 days' time after the Operator hss notified the Gustomer of such failure ; (Q (b) if the Customer shall fail to pay any sum due under this Agreement and shall not remedy its failure to pay mhm 15 days' time after the Operator has notified the Customer of such failure to pay ; if the Operator shall be of the reasonable opinion that the Products hava become subject to changes or deteriorated or may become subject to changes ordeteriorate and tho Operator is of the reasonable opinion that the Customer has failed to give proper or full Instructions to the Operator for the prevendon or reduction of such changes or deterioration ; if the Products stored at the Terminal are not in compliance with UAE Laws and the Port of Fujairah Laws : If Ihe Customer or any of ID shareholders, group company, parent company, subsldlaries, or, to the Customer's knoY/Jedge, any dlrector, officer, employee, agent, affiliate or represantativa of the Customer or any of its subsidiaries, is an Individual or entky ( ƒ Person") that Is, or Is owned or controlled by a Person that Is subject to any sanctions administered or enforced by the U . S . Department of Traasury's Offlce of Forelgn Assets Control, the United Nations Security Council, the Council of the European Union, Her Ma}esty'sTreasury, or other relevant sanctions authority (ccdectively, “Sanctions") . if tha Customer conducts businesses with any parent company, subsidiary, joint verikire partner or other Person that facllllates any actlvXles or business wlth any Person that, at the time of such facilitation, 1 s the subject of Sanctions . If the Customer shall have a receiver appointed over all or any substantlal part of its asset and in the case of an appointment by a creditor, such appointment is not dismissed within 20 days ; if the Customer shall make any composition with its creditors (except in the case of voluntary reorganisation not involving insolvency of ths Customer) ; or if the Customar shall go into liquidation whether voluntary or compulsory(otherwise than for tha purposes of amalgamation or reconstruction) . (c) (d) (a) (g) (h) (i) 16.3 Early Terminaôon by Customar Notwithstanding tha other provisions of the Agreement and the required notice periods theraln, tha Customer may fermlnata the Agreement forthwith at any time without claim or charge by the Operator, by giving notice 1 o the Operator if any of thefollowing has occurred find is continuing : (a) If the Operator shall have a receiver, bankrupky bustee or analogous person appointed over or to administer and manage all or any substantial part of its assets arid such appointment is not dismissed or withdrawn wIth 1 n 30 days ; or If the Operator shall make any composition wkh Its creditors (sxœpt In the case of voluntary reorganisabon nat involving insolvericy ofthe Operator) ; or iflhe Operator shall go into Iiqulda 8 on whelher voluntary or compulsory (otherwise than for Iha purpose of amalgamation or reconstruction), (b) (c)
provided that for as long as any amount owed to any secured Finance Party, or any agent or trustee acting on its behalf (a ’Security Trustee"), by the Operator Is outstanding, the Customer shall not be permitted to terminate this Agreement upon the occurrence of any of the evants or clrcumslances specified In Clauses 16 . 3 (a) to 16 . 3 (c) (Inclusive) and shall Instead, subject to the required notice period therein, only be Remitted to teminate this Agreement ; in tha event or circumstance set out In Clause 16 . 3 {a) occurs ; or if : (ill) (A) a recelver with a power of Sale has been appointed by any secured Finance Party or the Security Trustee ; a banlouptcy trustee has been appointed by a court in the United Arab Emirates on the application of any secured Finance Party Or lhe Securky Trustee ; or any analogous parson Is appolrited by or on ths applkation of any secured Finance Party or the Security Trustee, (B) (C) in each case over or to administer and manage: (D) (E) all or any substantial part of the Operator's asssts; or the shares In the Operator that have been charged to the secured Finance Party, or the Security Trustee (as the case may be), and any appointment referred toInparagraph (A), (B) or (C) Is not dismissed or wlthdrav n wlthln 30 days ; or any secured Finance Party or Security Trustee (as the case may be) has been awarded a favourable judgment of a court in the United Arab Emirates substantiating tho secured Finance Party's, or Security Trustee's (as the case may be) debt clalm and enabling It to sell (X) the Operator's business and/or assets that have been charged to the secured Finsncs Party, or the Security Trustee (as the casa may be) by tha Operator or (Y) the sharas in the Operator that have been charged to the secured Finance Party, or the security Trustee (as the case may be) , or a court ih the United Amb Emirates has issued a judgment of liquidation or olarwisa authorising (or permibing) tho dissolution of tho Operator folbw!ng a judgment of bankruptcy, or any similar or comparabb events under any nen legislation applicable to the Operator . 17. ArTsR TERMlNATlOk 1. Temlnatlon Payment on Early Termination by Operator The Customer shall pay to the Operator forthwith on any termination pursuant to Clause 16 . 1 , other than in the case of a termination pursuant to Clause 16 . 2 (i) due to an act or omission ofthe Operator or Farce Majeure, an amount equal to the aggregate of (a) any amounts then due or payable but unpaid by the Customer under this Agreement any amount to be due and to be invoicad under thla Agreement but unpaid by the Customer, equal to the aggregate of the due ard owing Rental and Handling Charges, the Excess (b)
Throvphput Charges, the Clrculadon Charges, the Inter Tank Transfer Charges, the Port of Fujairah TariPs and the Cleaning Charges ifdeaning of the Storage Facilities la necessary in the opinion of the Operator ; any Rental and Handllng Charges under this Agreement for lhe remainder ot the Agraoment period till expiry to fall immediately due for payment to the Operator, by way of agreed compensation, tho Termlnatlon Sum calculated as at tha date of that termination . (c) (d) 17.2 No liability following early termination by Customer Without prejudice to any accrued rights up to termination, the Operator shall have no liabillty under this Agroament or otherwise in connection with or as a result of any te/minafIon of this Agreement pursuant to Clausa 16 . 3 (Early Termination by Customer) . Removal of Products The Customer shall completely remove the Products from !he Storage Faoilides not later than the date of expiry ortha day falling 30 days aftef termination of the Agreement pursuant to Clause 16 . Return of Storage Facilities 17.3 17.4 If cleaning of the Storage Facllltles Is, in the opinion of the Operator, necessary, upon expry or termination of the Agreement, or due to a change in the nature of the Products stored or to be stored therein, during Iha torm hersof, or both, the Customer agrees to remova or causs to remove any Products and waste to permlt cleaning in a safe and legal v/ay and to reimburse tha Operator for said cleaning, removal and disposal . Right of Disposal If the Customer fails to remove the Products due to any reason whatsoever upon the expiry or termination of the Agreement In accordance with Clause 17 . 3 , the Operator shall be entitled, by natice to o« cwt ne‹, to remove the Products from the Storage Facilides (o any place whether in or outside tho Terminal and dispose of or destroy the Products in such manner as the Oparator deems fit and at the risf‹ and expanse of the Customer and by rendering any 6 urplus to the Customer to an account as notlfled by the Gustomer . Proceeds If the Operator shall dedds to dispose of the Products undar Clause 17 , 5 by sale by private freafy or publ{c auction any proceeds of the sa)e shall be applied by the Operator in the following manner : 17.5 17.6 (a) firstly, in payment of all sums due from the Customer to the Operator under the Agreement ot under any other agreement made between the Operator and the Cm : /omx . secondly, In payment of the expanses of the removal and disposal and any storage of the Products in tha pariod between such removal and dkposal ; and thirdly, in payment of any sums dua from the Customer to the competentauthoñties ; fourthly, in payment of othar claims or lions of whlch notice has bsen given by third parties to 1 he Operator, (b) (c) (d)
17,8 and by rendering any surplus to the Customer to an account as notified by the Custamer. )nsufficient Proceeds If the proceeds of any sale of the Products by the Operator pursuant to Clause 17 . 5 shall b 6 InsuffMent to satisfy in full any claim of the Operator under the Agresment and under any other agre 0 ment made between the Operator and tha Customar, the Operator shall ba entitled to recover the same from the Customer as a debt in any court of competent jurisdiction . Any salo of the Products by the Operator pursuant to Clause 17 . 5 shall be free from any encumbrances . No Liablllty The Operator shall not be liable for any cta!m arising from the removal, disposal, destruction and Intermediate storaga of the Products undar this Artlcle 17 , and the Customer shall indemnify the Operator against such claims . 17.7 18. 18.1 FORCE EMRE Scope of Force Majeure Any delays inor failure of performance by either Party shall not constitute dofaull hereunder or give lfabillty for any claims if and to the extent such delays in or fallures of performance are, without the fault or negligence on the part or the affected Party, caused by Force Majeure . "Force l ¥ Ia}eure" sha \ I mean any ovant or clrcumstancas, whlch Is not within the reasonable control of Ihe Parly (acting as a Reasonabls and Prudent Operator) affected by the cause and which, by the exercise of diligenca, such Pdrty (acting as a Reasonable and Prudent Opsrator) la unable to foresua or prevent and may include, but shall not be limited (a) war, hostiliłies, revolutian, ńats, inaurrection or other civil commotlon, acts of terrorism or sabotaga; nuclear explosion, radioactive, biological or chemical contaminallon, lonizing radlatlon, or the discovery of such contamination or radlatlon; strikes ard/or lockouts axcept any such action by amployees or subconbactors or a9ents ofthe Party claiminq Force Majeura; any effect of the natural elements, including lightning. flre, earlhquake, sandstorm, nood, storm, tsunami, cydone, typhoon or tornado; expłosiori (olher than nuclear explosion or an explosion rssulling from an act or war); epidernłc or plague; inability to obtaln nacessary equipment e materials due to blockada, embąrgo or sanctiona; and any act of omission of any competent authority Including any refusal to Usue, withdrawal, n¢xwenewal or non - extension of a license, pemit or approval. (b) (c) (d) (e) (f} (g) (h) Noóficaóon If either Party is prevented from or delayed in performing any of its obligations under the Agreement by Force lvtajeura, such Party shall imrnediataly notify the other Party in writing of the occurrence of the drcumstances conslifutlng Force Majeure .
Forthwith upon the IB.4 Force Majeure ceasing to have effect, the Party relying upuii if slia|l give wrHten notice thereof to the other Party . General Limitations The elected Party shall not be entitled to suspend peziormance under this Agreement for any greater scope or longer duration than is raquired by the Fares Majeure or the delay occasioned thareby . Ob \ lgations of the Parties that were required to be completely performed prior to the occurrence of Force Majeura shall not be excused as a result of such occurrence . The Customer shall be able to claim Force f ¥ laJeure only inrespect of a vsssal thatis loading or unloading at the Terminal, or whose scheduled loading and unloading at tile Terminal has been notlfiad to the Oparator . the failura or Inability of either Party to satisfy a payment obligation that has arisen under thls Agraement shall not ba excused by Forca Majeure . No Bæach {’Jeithar Party shall be deemed to bs inbreach of the Agreemant or be llable to the other for any delay in perfomance or non - parformanceof its obligations under tha Agra 6 ment to the axtent that such delay or non - performance is due to Force Majeure, of whlch lt has notified the other Party . The Party clalmlng Parce Majeure shall pefform and observe its obligations under the Agreemant insofar as lha performanœ and observance theraaf are not prevented by Forœ Majeure . To the extent that the Operator Is unable to pmvld e the Services as a result of Force Majeure affecting the Operator, the Customer shall not be obliged to pay the Rental and Handing Charges . Use of Storage Faciliôas If For 6 e Majeure Is being claimed by the Customer, and as a result of such Force Majeure, the Mstomer Is not using the Storage Facilities, the Operator may allow the use of the Storage Facilities to o th er customers for so long as the Force Majeure continues . Efforts The Party Calming Force IUa)eure shall use reasonable effons to promptly cure the effect of Force Majeure . Tennlnation Where an evenl of Force Majeure affecting Operator or Cu 6 tomer extends for more than 9 D consecutive days, ea ¢ : h Partyshall have the right to tamlnate this Agreement by giving 30 days' wñtten notice ta that effecL LIABiLlTY Operator's Llabllity 18.3 18.B 18.6 18.7 19.
19.1 (a) The Customer shall indemnify and f›oid me operator harmless from and agalnst all claims, cosb, losses, Stabilities, injury to person and/or damage to property, aused by or resulting from' (i) Any gross negligence, mlscofiduct, and/or any Intentional wrongkil acB oramissions on the part of the Customer, lt 6 employees, agants, contractors or any other persons actlng undar ils authorlty (Including but not limited to, any contractors transporting product to or from the terminal) in the performance of this Agreement : artd (il) To the extent not causad by tha negligence . misconduct, wrongful acts or omissians of the Operator, ‘Its employees, agents or contractors, any losses Incurred directly as a result of the physkal or chemical characteristics of the (b) For the avoidance of doubt, the Operator shsll not be liable to the Customer for any claims, costs, lossas, damages, liabilities, injury to person and/or damage to property Incurred by 1he Cus(omar fa the eXtent that such claims, losses, damages, 1iabililies, Injury to person and/or damage to proparly are caused (whether directly or indirectly) by the Operator In the performance of its obligations under this agreement in accordance wilh its telms. The Operator shall carry out the Services with reasonable cara and to the Standards of a Reasonable and Prudent Operator . Without prejudice to lhe Parties rlghts under the other provlsions of the Agreement, this clause 1 g . 1 shall not impose on the Operator any liabllify for claims arising from : (c) (d) Force Majeure; or any delay in the dalivery of the Products to the Operator 19.2 Event of Claim Notwithstanding anything to the contrary inIhis Agreement, In the event of any claim against the Operator: (a) the Operator shall not be liable for any forms of COnsequehlTal losses (including loss Or proMs, indirect loss or damage or other forms of purely economic lassas) ; the Operator shall not be liabla for any clalrn arising before delivery of the Products to the Operator or after re - dellvery of ttie Products to the GustomaH, the claim will be void if I?ie Customer shag not have notified the Operator thereof Yzithin 120 days after lhe occtJrrence of the event giving risa to the clalm or within 120 days after the re - delivery oftha Products to the Customer, whlchever 1 s earlier, and If tha ctaim shall hava been natlfied to the Operator in accordance with Clause 19 . 2 (d), the claim shall become void if the Customer shall not commenca legal proceedings in respect thereof within the perlod of 120 days after the date of such notice . {b) (c) (d) 19.3 Co m pensation If any clalm shall be msde against tha Operator by more Ihan oneperson and the Operator shall decide to pay compensation In respect of the claim, the Operator shall be enIJkecI to apportion such compensation among such parsons according to the extenl of proven loss or damage suffered by each of them .
19.4 Customer*s indemnJfies The Customer shall Indemnify, defend and hold harmless the Operator, its respective officers, employees and agents against: (a) any and all cfsims for Loss, damage and expense of whatever Mnd and nature . including all ralated costs and expenses, in respect of personal injury to or death of any person employed by the Customer, and (b) ar›y ana all claims for Loss, dama 9 e and expanse ol whatever kind or nature, including all relatad costs and expenses, brought by thlrd parties agsinst the Oparator or Its officers, employeas or a 8 entsin connection with any act or omission of the customer or its officers, employees or agsnts. 19.5 Operator's Indemnifies The Operator shall indemnify, defend and hold hamless tha Customer, Its respective oNcers,empoyeesandagenbaganstanyandatolamsforLOss,damageandexpen 6 e of whatevar kind and nature, Inducing allrelated costs and expenses, in respect of personal injury to or death of any person employed by the Operator . Indemnity Process 19.6 (a) Each of the Operator and the Customer undertakes and agrees, when 8 sssrting its right to i/idamnlflcatlon from the other Party for the negligence or misconduct or wrongful acts or omissions of any of such other Partys contmctors : (i) To first seek recourse against any such contractor (includlpg, wtjere applicable, recourse against the Owners, Insurers or P and I CIUbs of the responsible barge or marine vesssl) ; Touse commercially reasonable efforts to obtain from such Owners, Insurer or P and I Clubs 6 uffictent security to covor said contractors liability ; To claim under this indemnity only if and la tha extent such contactor (including, where applicable, recourse against the Owners, lnsursrs or P (li) (III) and I Clubs of the responsible ba ‹9• marine vessel) is liable and isunable within a reasonable tlme under the circumstances to meet and discharge its liabilities In fug : and That it wlll exercise commercially reasonable efforts to assist tha other i 0 obtaining recoursa and recompense from or on behalf of Ihird p artiestar losses incurrad . (iv ) (b) In the event that any loss in caused In whole or in partly by the concurrent negligence or intentional wrongful acts cr omissions of the Operator, its employaes, agents, contractors or any othsr parsons acting under its authority an the one hand and tlje Customer its employees . agents, contractors or any other persons acting under its authority on the othef hand, than this obligation to indemnify shall be comparative and each Party shall indemnify lhe other to the exterc that such Party's negllgence or intentional wrongful acts or omissions ware the ause of such loss .
20. 20.1 INSURANGE Insurance and Llabllity Tha Operator shall maintain throughout the ¢ourse of the Agreement the following insurance requirements: A) Worher's Compensation and Emplayer'a Liabili \ y insurance, as prascrlbed by applicable law CommerÔaJ Ganeral Llabîllty Insurance w‘Jh an adequate maximum llmi( per occurrence and in the aggregate per year for bodily injury, property damages, and œnlractLlBl liability coverage not excseding Ihs lagal liability . B) No Insurance of Products by Qperator Unless it has been explici 5 y sgreed in writing with the Customer, tho Operator shall not ba obligsd to insure the Products of the Customer or any other property of the Customer or any third party . Insurance of Products by Customer The Customer must malritaln adequate insurance for the Products of the Customer in the Terminal . The terms and conditions of such insurance shall Include : 203 {a) (b) (c) that the Operator be a co - insured in respect of such policy; the Insurers waive any ñghts of subrogation against the Opera to r, and such othar terms as the Operator shall reasonably specify. Redelivery In the event of the re - delivery of part of the Praducts, tho Customer shall notify the Operator of the insurable valua of the remaining part of the Products failing whJch the Operator may reduce the Insured sum In respect of the Products in the same proportion as the Products shall have been reduced in number, weigM, moasurament or content . Operator's Assistance If the Customer shall request the assistance of the Operator to determine the axtent and value of any bss, damage or destruction of the Products ; the Operator may, but shall not be obligad to, render such assistance subject to : 20.5 (a) the Customer's payment of the costs of such assistance (including the fee of the Opemtor)and If tha Operator so stipulates, the CustomeFs prlor payment in œsh of all sums due, from the CU 5 tornar ta the Operator under the Agreemant or under any other agreemant made between the Operator and the Customer, (b) 20.6 !nsurance of Protection and Indemnité Cover by Customer The Customer shall p«›aJre andmaintain (or, in the case ofVessels it has chaitared, cause to be procured and maintained), In reladon to Its Products, actlvlkes and the actMtles of its Vessels at the Terminal, comprehensive protection and indemnity insurance induding coverage for injury/loss of lives, full collision liability, damage to properly includlng fixed floating objects or Port of Fujairah property, crew, cargo, pollution liability, spillage and wreck removal, towage, •aar risks and linas, in accordance with good Industry practice in addition to any requirements imposed by the Port Regulations.
Co nouw Confidential lnformatlon 21. 21.1 (a) Subject to Clause 21 . 1 (b), each Party agrees to and shall cause its respective agents, representatives, affiliates, employees, officers and directors, to treat and hold as confldentlal (and not disclose or provide access to any person), all sonfldential Information raceived by It relating to the other Party, information relallng to the provisiom of and negotla 8 ons leading to Ihis Agreament, and all other confidantial or proprietary informatian with rospect to the Terminal . A Party may disclose information which would otherwise be confldential without the consent of the other Party, if and to the axtent : (b) (I) required by the rules of any stock exchange or sny governmental, regulatory or supervisory body or court of competent jurisdiction to whl 0 h the Party maklng the disclosure is sHbjact ; required by any stock exchange or any governmental, regulatory or supervisory body of the OperatoFs parent company, v/hich fbr the avoidance of doubt, Is listed on the Nasdaq Stock Exchange, New You re 9 uiredby tha law of any relevant jurisdiction ; required by lenders In connection wlth debt financing arrangements for the Terminal; required by any competent authority to register security in favour of any lender (howsoever described) in connection with debt financing arrangements for the Teminal ; disclosure Is made to the alfiliatas, professkmal adv \ sers, auditors and bankers of that Party; di6Closure is made to bona fide potential purchasers of shares in that Pañy and the professional advisers of such bona fide potential purchasers; the informadon has come into tho publlc domain through no fault of lhat (lil) (iv) (ii) (v) (vi) (vii) (lx) the other Party has given prior written approval to the disclosure. (c) This Clause 21 and such Clauses of this Agreement as are izecassary to perf/jlt the enforcement of this Clause 21 shall continue to apply for Mo( 2 ) years following the axpiry or \ erm 1 nation of this AgrsemanL 22. CUI \ tULATfVE RGHTS AND RsMEolE 6 The rights arid remadles given to the Parties undar this Agreement shall be cumulative remedies and shall not prejudice any other rlghts or remedies af the Partiss contained in the Agreement or at law or the right of actlon or other remedy of the Parties for the recovery of any sums due to it from any olhsr Party or In respect of any antecedent breach of the Agreement by that Party .
30. 30.1 24.2 A Party may notify the other Party of a change to lls name, ralevant addressae, address or fax number for the purposes of Clause 24 . 1 provided that such notification shall only be effective : (a) on the date speclfied in the notification as the date on whlch the change ls to take (b) if no date is specified or the date spscifled Is less than 10 days after the date on whlch notice is given, the dale falling 10 dsys after nolice of any such change has been glvan, 25. 25.1 ASSIGNMENT/SuBLEASE The Operator may at any tlme assign/sublease or otherwise transfer all or any part of its rights under this Agreement . Tfje Customer shall not assign or off \ erivise transfer all or any part of Its rights under thls Agreament without the prior consent of the Operator (which may be granted or withheld in its absolute discretion and may be granted subject ta any conditions as tha Operator deems necessary In !he circumstances) . The Customer shall also be entltled to sublease pañ or all tha Committed Volume to anolhar well reputed third party subject to fiavirtg the Operator*s prior wrllten approval (nol to be unreasonably wlthhald) . CONSENT OR WAivEit No consent or expressed or implied walver by a Party to or of ahy broach of any covenant, condition or duty of the other Party shall be conatructed es a consant or waiver by that Party to or of any other breach of the name or any other covenant condition or duty by that Party and shall not prejudice In any way the rights pmvers and remedles of that Party contained In the AgreamenL SEVERABILfTY 25.2 26. Should any part, term or provision of tha Agreement be judged illegal or in conflict with any Isw, by a court of competent jurisdiction, the validity of the remaining portions or provisions shall not be affected thereby . The Agreement and any dispute, dîfference, cantroversy or claim æislng out of or relating to 1 his Agreement including the negotiation, existence, validlty, învalldity, enforœablli \ y, breach or teminatiôn thereof regardless of whethsr the same shal| be regarded as conttactuaf of not (a "Dispute’), si \ ail be govemed by the federal laws of the United Arab Emiratas and the laws of the Emirate of Fujalrah . NOTICE OF DI 8 PUTE Any Party inlendfng to commence proceedings In relation to any Dispute shall give at least 10 Bualness Days' prior notice in writing to the other Par 0 es of its intention to do so, explsining the nature of the Dispute and the intended proceedings . Any Dispute shallbereferredto and finally reso \ Ysd by afbitraJon under the LCIA Arbitration Cantre Rules (tha "Rules") which (save as modifx 1 by thI 6 Clause 20 ) are deemed to be incorporated by reference into this Clause 30 . Capitalised tarms used in this Clause 30 and not otherwise defined in this Agreament have the meanlngs given (o them In the Rules .
3J.2 The seat, or legal place, or arbitration shall be the Dubai lnteii›atiunal Financlal C«ntre, Dubai, UniterJ Arnb Emirates. The number of arbitmto's shall be thee . The daimant (or, if m 0 re than ona claimant . the cl 3 li ¥ ianb jointly) Shall nominate one arbitrator and the respondent for, if more than one rc<pond«nt, th 0 respondents jointly) shall nominate one arbitrator, in each case in accordance with the Rules . The third arbitrator, who wlll act as chairperson of lhe arbibal trihural, shall be nominated jnintly fry lhe . A‘o co - arbitra(ors, provided that if the third aoltrator has not bean so nominated within 30 Business Days of ths time - llmit for service ol the response, lhe third arbitrator shall be appointed by the LCIA Court . The language to be used in the aibitral proceedings shall be English . TIJfRD PARw RIGHTS Save as expressly provlde0 in this Agreement, a person, whc or which Is not a party to the Agreement, has no right to enforce or enjoy Itie benefit of any term of Ihe Agreement. 30.3 30.4 31. )N MTJfiSSWHERE¢ \ E the Parties hereto have entered Into this Agreement and accepted tho General Terms and Condltlons on the r!ay an‹1year fi gned by lJr. Nicolaes L. Paaidenkooper for rind on behalf of Broope Pe zz 'oleum aitd Gas investment c. In tl›e Name for and on behalf CenGeo New Energy
Exhibit 4.92
Exhibit 4.93
DATED 13* December 2022 BROOGE PETROLEUM AND GAS INVESTMENT COMPANY FZE AS OPERATOR - and — CENGEO NEw ENERGY FZ - LLC As CUSTOMER COMMERCIAL STORAGE AGREEMENT Hogan Love3s Hogan Lovells (Mia:lle East) LLP 1 ^ Floor, Al Fattan Cre7ericy Tovor, Duhai International Flnancial Centre, PO Box 506602, Dubai, UAE The parties listed below agree, In this Commercial Storage Agreement (the "Agreement’) dated as of 13" December 2022 and executed in Dubai, UAE, the fdlowing: XEY COMMERC)ALTERMS 1.
Operator 2. Customer 3. Agreement to provide Services 4. Agreement 5. Definitions Brooge Petroleum and Gas Investment Company F - ZE, a company Incorporated in Fujairah Free Zone, having registradon number t 3 - FCC - 1117 and registered PO Box 50 f 70 Fujairah United Arab Emirates (the "Operator" or"BPGIC") . mira es e uatomer"). The Operator agrees to provide the Serdces in relation to the Product at the Terminal, and the Customer wishes to store the Product at the Terminal and desires to purchase storage related handling services from the Operator on the terms and conditions set out in this Agreement . This Agreement comprises these Key Commercial Terms and the General Terms and Conditions ("GTCs") which are attached to thls Agreement and are hereby incorporated by reference in this Agreement as if they were sat out in full and shall apply to the provisions of this 9 ment, SUbject to Clause 1.4 of the GTCS. In this Agreement, capitalised words and expressions have the meanings set out for them (whether by incorporation, cross - reference or otherwise) In the GTCs, unless otherwise defined in this Agreement or the context otherwise requires . In addibon, 1 .
"Circula 5 on Charges" means the charges described in Box 16 of these Key Commercial Terms ; 2. "Clause{s)" means the provision(s) and stipulation(s) of the GTCs; 3. "Commencement Date" means 15” January 2023; 4. 5. 6. 7. 8. 9. 10. "Excess Throughput Charges" means the charges described in Box 14 of theseKey Commercial Terms ; "Fee"means, in respect of each month an amount equal to the aggregate of the Rental and Handling Charges, the Excess Throughput Charges, the Tank Cleaning Charges, the Circulation Charges, the Tank Heating Charges, the Inter - Tank Transfer Charges, and the TopSide Facility Charges for such month ; "Finance Party" means any person provlding debt financing to tha Operator in connection with the Teminal (exduding any shareholder of the Operator or any Affiliate of any shareholder) ; "Floor Price’ has the meaning given to it in Box 13 of these Key Commemial Terms ; "Guarantee" not used ; "Guarantor" not used ; "GTCS" has the meaning given to it in Box 4 of these Key Commercial TeiTns ; 11. "Inter - Tank Transfer Charges" means the charges described in Box 18 of these Key Commercial Terms ; 12. "Key Commercial Terms" means the provisions of Box 1 to 22 ; 13. "I \ garket Prlce" has the meaning given to it In Box 13 of these Key Commercial Terms ; 14 . ”POF’has the meaning given to it in Box 9 of these Key Commercial Terms ; 15.
"Product" has the meaning given to it in Box B of these Key Commemial Terms ; 16. "Rental and Handling Charges" means the charges described in Box 13 oftheseKey Commercial Terms ; 17. "Services" has the meaning given to it in Box 10 of these Key Commercial Teims ; 18. "Storage Facilities" means any storage space with pipelines, pumps, component parts and equipment and appliances belonging thereto, which are within the Terminal, to be made available to or to be used by the Operator for the purpose of carrying out the Services pursuant to the Agreement ; 19. ’Tank Cleaning Charges" means the charges described in Box 15 of these Key Commercial Terms ; 20. " ƒ Tank Heating Charges" means the charges described in Box t 7 of these Key Commsmial Te/ms : 21. "Tank Turn " means a volume of Product equal to the Volume Commitment ; 22. "Term" has the meaning given to it in Box 7 of these Key Commercial Terms ; 23. "Temiinal" means the petroleum crude and product storage terminal described in Box 9 of these Key Commercial Terms ; 24. "TopSlde Padllty Charges" means the charges described in Box 16 of these Key Commemial Teims ; and 25. "Volume Commitment" has the meaning given to it in Box 11 of these Key Commercial Terms .; and 26. "Port Dues" has the meaning given to it inBox 20 ofthese Key Commemid Terms .
27 . "Wharfage Facility Chargee" has the meaning given to it in Box 20 of these Key Commemial Terms . Not used. Guarantee 6. The obligations under thls Agreement Period of Agreement 7. (including the obligation of the Operator to provide the Services and of the Customer to pay the Fee) shall begin on the Commencement Date, and shall, subject to the terms of this Agreement, continue for a period of 1 year, i.e.(the ’Term”). The Agreement can be renewed based on mutual agreement with to be defined conditions. The parties should start negotiations 30 (thirty) days prior to the expiry of the Term. The Product shall comprise Gasoil Product 8. delivered by the Customer to the Operator for the purposes of carrying out the Services, as described in the Port Rules for Topside Facility Operations (the "Top Side Rules") and the type and specifications of which shall be pre - agreed by the Parties prior to delivery. Terminal means the Phase lTank Farm Termlnal 9. with 369,324 cubic metre capacity crude oil, fuel oil and product storage terminal developed by BPGIC in the Emirate of Fujairah, and more specifically, located near the Port of Fujairah ("POF"), United Arab Emirates and any other premises, o9ice, bullding, Storage Facilities (as defined in the GTCs), tank, and pipeline at which or In which Serdces are provided to the Customer in accordance wlth this Agreement by the Operator or any third party appointed by the Operator. In case a third party is appointed by the Operator. The Services shall comprise any or all operations carried out or to be canied Senices 10. out by the Operator in respect of the Product at, oubida or through the Terminal, inclusive of but not restricted to:
1. maklng storage space available in respect of the Volume Commitment 2. storing, manipulating (which shall be deemed to include the through - pumping of the Product between the matñx manifbld and the Terminal), moving, treating, processing and delivering ; and 3. administrative handling of the Product (including preparing shipping documentation for, dealing with mandatory government reporting and/or other admlnistrative activities related to the Product) . For the avoidance of doubt, the Operator is entitled to sub • contract all or pait of the Services to a sub - contractor or third - party operator at its sole discretion . The Customer co renting a storage capacity of bm at the Terminal (the "Volume Commitment"), subject to the terms of this Agreement . Volume Commitment for Storage 11. Payment The Operator shall invoice, and the Customer shall pay In accordance with thls Agreement the aggregate for each month during the Term an amount equal to the aggregate of : 1. the Rental and Handling Charges; 2. the Excess Throughput Charges; 3. the Tank Cleaning Charges; 4. the Circulation Charges; 5 the Inter - Tank Transfer Charges; and 6 . the Port of Fujairah tariffs lnduding but not limited to Wharfage Facility Charges ; and the TopSide Facility Charges, for such month, which will be accepted by Customer only as per actual invoice from Port of Fujairah 12.
13. Rental and Handling Charges 14. Excess Throughput Charges 15. Tank Cleaning Charges For each month, during the Term, the Rental and Handling Charges shall be determined as the Volume Commitment multiplied by : US$ er cbm par month. ("Floor Price"). The Customer shall have at no extra cast a throu h u f ce equal t ƒ per month. Tank turn means a volume of product equal to the Volume Commitment . If the Customer exceeds this allowance, the Customer shall pay to the Operator, the Excess Throughput Charges in respect of the excess Commitment d ” a rate of US above the Volume or redelivered at per cbm of the volume of the Product handled per each import/exporL Excess Throughput Charges will be reviewed and may be adjusted annually by the Operator. Unused free throughput cannot be carrled forward to subsequent months. If the Customer requiras atank allocate to it to be deaned as a result of th Customer requesting a change in th Product stored in that tank, or in theeven of the expiration/termination of th Agreement the Customer shall pay a amount equal to the actual documen costs incurred by the Operator i managing and procuring the leaning o the tank or tanks. A third - party surVeyo engaged by the Customer shall inspec and test the tank/tanks for cleanliness. Customer shall receive the tank in suitable condition and will be inspecte by Customer nominated inspectio company, which shdl comply with th terms agreed herein, and Customer wil handover and deliver It back to the Operator on the same basis.
The Customer shall pay to the Operator circulation charge Circulation Charges") at a US $ per hour In case such a service is requested by the Customer . Clrculation Charges 16. The Customer shall pay to the Operator Heating charges HeLna Charges") at a rate of US $ per hour In case product is being heated and at a rate of US $ per hour in case of product temperature Is belng maintained . Tank Heating 17. If the Customer requests, and the Operator consents to, the transferofthe Customer's Product from one tank to another, the Customer shall pay Inter - bank Tran 9 fer Charge e Operator at the amount of use er cbm of Product transferred between any tanks at the same Terminal and measured at amblent temperature during the transfer per month . The custody transfer voluma will be based on the issuing tank level gauge computation . Inter - Tank Transfers 18. The Customer will pay the Operator on a pass - through basis the TopSide Facility charges as charged by the POF as further set out in Clause 11 of the GTGs, and as per actual Port of Fujalrah invoices . 19. TopSlde Facllity Charges Port dues and any other charges (includng Wharfage Facility Charges) imposed by the POF on the Customer's vessels as defined in the port of Fujairah Port Tariff (effective from 1 May 2008 as amended from time to time) or any other applicable charges shall be borne directly by the Customer and are not applicable to this Agreement To the extent these amounts are invoiced directly to the Operator rather than the Customer, the Customer shall repay the Operator all such amounts upon receipt of an invoice in respect of such charges from 20.
Port Ducs and Wharfage Facility Charges the Operator in accordance with the provisions of Clause 11 . Any duties or taxes levied by any competent authority will be payable by the Custome as further set out in Clause 3 . 10 of the GTCs . Any material increase in costs reasonably Incurred or to be incurred and properly evidenced and satisfactorily documented by BPGIC in performing its obligations under this Agreement, induding any material increase that arises as a direct result of a change in law (including a change in interpretation of an existing law), regulation (including a change in interpretation of an existing regulation) or tax, will be borne by the Customer, based on mutual agreement, ona pro rata basis, that is pro rata to the proportion which ib Volume Commitment bears to the total storage capacity of the Terminal, by means of an adjustment to the appropriate element(s) of the Fee . Change in law 21. IN WITNESS WHEREoF the Parties here above written. ave entered into this Agreement on the day and year first ” Signed by Ms. Line Se/led for and on behal 8rooge Pg eum an¢f Gas investment Compazty/" - Zfi In the resence of: Name Signature Z - LL Sig Mr. fbr an on half of CenGeo New Ene In the presence of: Nam Signature:
DATED GENERAL TERMS AND CONDITIONS FOR TANK STORAGE AND HANDLING OF PRODUCTS Hogan Love3s 2022 Hogan Lovells (Middle East) LLP 19” Floor. Al Fattan Currency Tower. Dubai IntemationaJ Financial Cenlre, PO Box 506602. Dubai, UAE CONTENTS PAGE CLAUSE 2 APPLICABILITY OF GTCS 2.
3 PRODUCTS 3. 5 f2TORAGE FACILITIES 4. 7 OPERATION AND MAINTENANCE OF STORAGE FACILITIES 5. 7 DELIVERY AND REDELIVERY 6. 8 DELIVERY AND REDELIVERY REQUIREMENTS 7. 9 HANDLING OF VESSELS 8. 10 DETERMINATION OF QUANTITIES 9. 11 ACCESS TO TERMINAL 10. 11 CONDITIONS OF PAYMENT 11. 13 THIRD PARTY CHARGES AND SUMS ON PRODUCTS 12. 13 RIGHTS OF LIEN AND RETENTION 13. 14 TRANSFER OF OWNERSHIP 14. 14 REPRESENTATIONS AND WARRANTIES 15. 14 *TERMINATION 16. 16 AFTER TERMINATION 17. 18 FORCE MAJEURE 18. 19 LIABILITY 19. 22 INSURANCE 20. 23 CONFIDENTIALITY 21. 23 CUMULATIVE RIGHTS AND REMEDIES 22. 24 COMPLIANCE WITH STATUTES 23. 24 NOTICES 24. 25 ASSIGNMENT 25. 25 CONSENT OR WAIVER 26. 25 SEVERABILITY 27. 25 APPLICABLE LAW 28. 25 NOTICE OF DISPUTE 29. 25 ARBITRATION 30. 26 THIRD PARTY RIGHTS 31.
1. DEFINITIONS AND INTERPRETATION 1.1 Definitions In this Agreement: "Additional Documents" has the meaning as ascribed to it in Clause 3.2. "Affiliate" means a Party or person Controlling, Controlled by or under common Control with another Party . "Agreement" means this Agreement comprised of the Key Commercial Terms and the GTCs or any agreement made in writing between the Customer and the Operator for the carrying out the Services . "Applicable Laws" means any federal, emirate, municipal or authority statute, ordinance, regulation, guideline, rule, code, direction or any licence, consent, permit, authorisation or other approval, including any conditions attached thereto, of the United Arab Emirates, the Emirate of Fujairah or any public body or authority, local or federal agency, department, inspector, ministry, official or public or statutory person which has appropriate jurisdiction . "Business Day" means any day excluding Saturday and Sunday and any day which shall be a legal holiday or a day on which banking institutions are authorised or required by law or other governmental action to be closed in the United Arab Emirates ; "Control" in relation to a body corporate means the ability of a person to ensure that the activities and business of that body corporate are conducted in accordance with the wishes of that person and a person shall be deemed to have Control of a body corporate if that person possesses the majority of the issued share capital or the voting rights in that body corporate or the right to appoint or remove directors of that body corporate holding a majority of the voting rights at meetings of the board of directors (or equivalent management organ) on all, or substantially all, matters, and except as expressly provided in this Agreement cognates of the term Control shall be construed accordingly . "Customer" means the Customer as specified in the Key Commercial Terms. "Dispute" has the meaning given to it in Clause 28. "Energy Institute" means the professional body for the energy industry, based in the UK. "Failure to Pay Notice" has the meaning given to it in Clause 13.2. "Force Majeure" has the meaning given to it in Clause 18.1. "LIBOR" means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for USD and period of one month displayed on pages LIBOR 01 or LIBOR 02 of the Thomson Reuters screen or any benchmark rate which is formally designated, nominated or recommended as the replacement for LIBOR . "Loss" means any loss, damage, cost and expense suffered by the claimant due to the loss, destruction or damage of any property (including the property of the claimant) or from any damage to the environment or from the death or injury of any person (including the claimant) . "Maintenance Works" means checking, maintenance, repair and alteration work to the Terminal as per Clause 5 . 1 .
"OT 1 " and "OT 2 " means all permanent existing and planned oil tanker berths at Oil Tanker Terminal 1 and Oil Tanker Terminal 2 within the Port of Fujairah, along with the installations related thereto . "Party" and "Parties" means the Customer and the Operator individually and collectively as the context may require. "Port Regulations" means any rules, regulations, ordinances, procedures, directives, requirements, policies, standards or information of any kind, whether currently in force or introduced from time to time, produced by the POF in connection with POF and with which users of POF are required to comply, including the Port Guidelines, the Port Ordinance 1982 , and the Top Side Rules, as may be amended from time to time . "Reasonable and Prudent Operator" means a person seeking in good faith to perform its contractual obligations and in so doing and in the general conduct of its undertaking exercising that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced operator complying with the Port Regulations and all Applicable Laws and engaged in the same type of undertaking under the same or similar circumstances and conditions as contemplated by this Agreement . "Rules" has the meaning given to it in Clause 30.1. "Security Trustee" has the meaning given to it in Clause 16.3. "Standards of a Reasonable and Prudent Operator" means the standards, practices, methods and procedures expected from a Reasonable and Prudent Operator. "Termination Sum" means an amount equal to the aggregate amount that would have become due in respect of the Rental and Handling Charge (fixed at the higher of the Floor Price or the latest Market Price) under this Agreement until the date on which this Agreement would have expired in accordance with its terms . "Vessel" means any boat, ship or tanker delivering Product to the Terminal via the OT1, OT2 or any future jetties or any single buoy mooring system. 2. Interpretation Words importing the singular only also include the plural and vice versa where the context requires ; words and expressions importing the masculine gender include the feminine ; reference to person includes any public body and any body of persons incorporate or unincorporate . 3. Headings Clause headings shall be deemed not to be part of the Agreement and shall not be taken into account in the interpretation thereof . 4. Prevalence The provisions of the Key Commercial Terms and the Clauses of the GTCs are to be read as mutually explanatory one of another, but in case of conflict, discrepancy in or divergence between the provisions of the Key Commercial Terms and the Clauses of this Agreement, the provisions of the Key Commercial Terms shall prevail . 2. APPLICABILITY OF GTCs All Services shall be provided and carried out pursuant to this Agreement, unless otherwise agreed in writing by the Parties.
3. PRODUCTS 1. Description For each cargo of Product to be delivered to the Terminal, the Customer shall, when required by the Operator in accordance with the Operator's normal operating procedures, furnish to the Operator a correct and full written description of the Products as may be reasonably requested by the Operator and shall include : their nature, type, quality, composition, temperature, weight, volume, value, source, origin, hazard classification, their pressure and in addition thereto all physical/chemical properties including but not restricted to : boiling point, flash point, vapour pressure, toxicity, melting point, coagulation point, viscosity, degradableness in water, stability, corrosiveness, acidity, static loading, smell level, MAC/PEL value and all particulars, knowledge of which is material to the Operator for the provision of the Services or alternatively, which is of such nature that the Agreement would not have been entered into or not on the same conditions, if the Operator had had knowledge of those particulars . Such description shall be provided by the Customer in the form specified by the Operator . 2. Additional Documents The Customer agrees to execute in its name, pay for, and furnish to the Operator timely before the receipt of the Products all information, documents, permits, approvals and other materials and data ("Additional Documents") which may be required by any Applicable Law including statutes, ordinances, rules, or regulations of any public authority relating to the description, receipt, storing, handling (loading/unloading), blending, shipping, or disposal of the Products or their waste or waste products, to or from the Terminal, together with detailed written instructions as to their use and disposition . 3. Notification The Customer shall as soon as practically possible notify the Operator in writing of new data with regard to the Products falling under the Agreement that become known during the duration of the Agreement . 4. No Cognizance The Operator shall not be deemed to have knowledge of the description of the Products, if the descriptions referred to in Clause 3.1 and/or the Additional Documents as per Clause 3.2 are not materially complete or correct. The Operator may accept delivery of the Products notwithstanding the Operator's knowledge of any incorrect or incomplete description of the Products and/or incorrect or incomplete Additional Documents (having notified the Customer of such), and if the Operator shall choose to take delivery of the Products: (a) the Customer shall bear the risk and expense of any necessary measures carried out by the Operator in respect of the Products arising from such incorrect or incomplete description and/or such incorrect or incomplete Additional Documents and shall indemnify the Operator against all Loss arising from such measures ; and (b) the Operator shall not be liable for any Loss arising from such taking of delivery of the Products, save in each case to the extent such Loss arises from the gross negligence or wilful misconduct of the Operator.
3.5 Inspection of Products (a) The Operator is not bound to check the Products or their quality, conditions and conformity with their description and/or, as the case maybe, the completeness or correctness of the Additional Documents . Without prejudice to Clause 3 . 4 , the Operator shall, however, be entitled, on or before taking delivery of any Products, to measure, test or examine the Products and check the Additional Documents for the purposes of inspection or verification if the Operator suspects that the contents have been incompletely or incorrectly described and/or incomplete or incorrect Additional Documents have been furnished to the Operator . The Customer shall bear the reasonable and documented cost of the Operator's inspection and verification . (b) The Customer may appoint, at its own cost and expense, an independent inspector(s), the identity of which shall be approved by the Operator, to ascertain the quality of the Products at the Terminal . The decision of such inspector(s), if appointed, shall be treated and accepted by the Customer and the Operator as conclusive and shall be final and binding upon the Operator and the Customer, save in the case of fraud or manifest error, as to the quality of the Products so loaded or unloaded . If no inspector is appointed, then in such an event the qualities ascertained by the Operator shall be binding for both Parties . 3.6 Delivery of Products (a) Any taking of delivery of the Products by the Operator shall not constitute proof that the Products were delivered in a good and undamaged condition. (b) The Operator shall, as soon as possible, notify the Customer of any damage or defect of the Products and/or incompleteness or incorrectness of the description of the Products or the Additional Documents, which is apparent at the time of delivery thereof but the Customer shall not make any claim against the Operator by reason of the fact that it has not been so notified . (c) The Operator shall be entitled, at the expense of the Customer, to do all things necessary to prevent or reduce further deterioration in the condition of the Products and to arrange for a report to be made on the condition of the Products or, as the case may be, arrange for the correction or completeness of the Additional Documents, without being liable for any Loss arising from doing such things and the Customer shall indemnify the Operator against such Loss save where such Loss arises from the gross negligence or wilful misconduct of the Operator . 3.7 Refusal of Products Notwithstanding other provisions of the Agreement, the Operator shall be entitled to refuse to take delivery of the Products or to carry out any Services if the acceptance of Product or carrying out of Services may in the reasonable opinion of the Operator result in : (a) the Products delivered purportedly as the Products do not conform with the description thereof provided by the Customer as per Clause 3 . 1 and/or are not furnished with complete or correct Additional Documents as per Clause 3 . 2 ; (b) danger or damage either to persons, goods, the Terminal or property generally; (c) any environmental damage; or (d) a violation of the Port Regulations or Applicable Laws.
8. If the Products are at the Terminal and, in the reasonable opinion of the Operator, do not conform with the description thereof provided by the Customer as per Clause 3 . 1 and/or are not furnished with complete or correct Additional Documents as per Clause 3 . 2 , the Operator shall be entitled to remove the Products forthwith at the risk and expense of the Customer . 9. Admission to Terminal If the Operator gives its consent to admit to the Terminal the Products, whose quality deviates from the description referred to in Clause 3 . 1 and/or, as the case may be, the Additional Documents are incomplete or incorrect as per Clause 3 . 2 , all the necessary extra operations, of any nature whatsoever, which are carried out in relation to those Products and all further consequences shall be for the account of the Customer . 3.10 Duties, Taxes and Charges If the Products are or may be subject to duties, taxation or other charges under the Applicable Law, the Customer shall reasonably in advance and on demand furnish to the Operator, all information and documents required by the Operator to enable the Operator to make the appropriate declarations to such authorities for such purposes or to facilitate the Operator's dealings with such authorities . The Customer shall be liable for and shall indemnify the Operator against any Loss, penalties, taxes or duties paid or payable by the Operator as well as any declarations made to the authorities by the Operator based on the documents and information provided to the Operator by the Customer in connection with the duties, taxation and other charges which the Products are or may be subject to . 3.11 Warranty The Customer warrants that the Products : (a) will cause no damage to the Storage Facilities and/or ancillary equipment of the Terminal; (b) will not render, after cleaning, the Storage Facilities unfit for the proper storage of water white chemicals; and (c) may lawfully be stored at the Terminal. The Customer shall be responsible for all Losses, fines, penalties and damages directly resulting from the storage of the Products at the Terminal . Provided, however, the Customer shall not be responsible for such fines, penalties and damages arising from the Operator's failure to use reasonable care in safekeeping and handling of the Products or the property of the Customer pursuant to its obligations under the Agreement or any damage caused by the gross negligence or wilful misconduct of the Operator, or from any manufacturing defects in the materials or the manufacture of the tanks, interconnecting pipes, manifolds, the Storage Facilities and/or ancillary equipment of theTerminal . 3.12 Title and risk Except to the extent inconsistent with Clause 13 . 3 and Clause 17 . 5 , title and risk in relation to the Product shall remain with the Customer at all times under the terms of this Agreement . 4. STORAGE FACILITIES 4.1 Use of Storage facilities Customer will effect a mutually agreed sublease contract to be annexed to this Commercial Storage Agreement.
4.2 Selection of Storage Facilities (a) Unless expressly provided otherwise in the Agreement, the Operator shall, at its absolute discretion, in consultation with the Customer, select the Storage Facilities suitable for receipt and storage of the Products and shall be entitled to move the Products from one part of the Storage Facilities to another from time to time with the approval of the Customer (not to be unreasonably withheld or delayed) at no cost to the Customer . (b) Subject to obtaining the consent of the Customer to be given at the Customer's sole discretion and other relevant customers (which consent shall not be required in the event of an emergency), the Operator may receive and store the Products at any of the Storage Facilities at the Terminal in common with Products of the same average quality and of the same grade as the Products . (c) The Customer shall not be entitled to claim that Products, which the Operator shall subsequently deliver to the Customer out of such common place purportedly as the Products, are not in fact the Products, which the Customer had earlier delivered to the Operator for carrying out the Services . (d) The Operator shall as soon as possible, notify the Customer of any movement of the Products but the Customer shall not make any claim against the Operator by reason of the fact that it has not been so notified . 3. Suitability of Storage Facilities The Customer (or a third - party surveyor engaged by the Customer) shall be entitled to inspect the Storage Facilities to ensure their cleanliness, suitability and good condition prior to the delivery of the Products to the Operator . The rights to inspect shall be exercised at reasonable times and with prior written notice, provided the relevant representative of the Customer (or a third - party surveyor engaged by the Customer) shall comply with all on - site health and safety and other regulations . I f the Customer (or a third party surveyor engaged by the Customer) shall not make such inspection or shall not have objected in writing to the cleanliness, suitability or condition of the Storage Facilities within 7 days following such inspection, the Storage Facilities shall be deemed to have been in a clean, suitable and good condition upon the delivery of the Products thereto and the Operator shall not be liable i n any way whatsoever for any Loss arising out of any lack of cleanliness or the state or condition of the Storage Facilities .. The decision of any third party surveyor engaged by the Customer as to the cleanliness or otherwise of the Storage Facilities shall, except in the case of fraud or manifest error, be final . 4. Substitute Storage Facilities I f at any time during the term of the Agreement, the Operator finds it necessary to provide substitute storage facilities to the Customer, the Operator may do so provided such use will not result in the mixing of the Product with the product of any other customer, any additional costs involved i n the transfer of Products is at the expense of the Operator and the Operator has obtained the Customer's prior approval (not to be unreasonably withheldor delayed) . Any such substitute storage facilities, while in use under this Agreement, shallbe deemed to be the Storage Facilities referred to i n this Agreement . The Operator shall compensate the Customer for the cost of any Product lost as a result of the use of such substitute Storage Facilities which is only beyond the tolerance rule of 0 . 5 % plus or minus and that is caused by gross negligence of the Operator .
4.5 Maximum Contents Unless explicitly permitted otherwise in writing by the Operator, the maximum allowable weight, which may be stored in any Storage Facility shall be equivalent to the weight of the volume of water at a temperature of 4 oC, with which the capacity of the Storage Facility in question can be filled . No reduction in the storage rates and charges payable as per Box 12 of the Key Commercial Terms shall be allowed on the ground that any part of such Storage Facilities shall not have been used . 5. OPERATION AND MAINTENANCE OF STORAGE FACILITIES 1. Operation and Maintenance The Operator at all times during the term of the Agreement shall operate and maintain the Terminal and related equipment provided hereunder in good and serviceable condition to the Standards of a Reasonable and Prudent Operator . Provided that the Operator promptly and reasonably in advance notifies the Customer, the Operator shall be entitled, at any time and from time to time, to carry out Maintenance Works to the Terminal or to have these carried out, and furthermoreto effect alterations or to have these effected or alternatively to fit additional or special equipment to the Terminal or to have these fitted, whenever the Operator deems it necessary or prudent to do so or if the Operator is obliged to do so pursuant to Applicable Law . 2. Moving of Products Subject to obtaining the Customer's consent (which consent shall not be unreasonably withheld or delayed and shall not be required in the event of an emergency), the Operator shall be entitled to move the Products from the Terminal to other parts of the Terminal if the Operator shall deem such movement to be necessary for the Operator to carry out such Maintenance Works and in such event the Operator shall as soon as possible notify the Customer of such movement of the Products . The Operator shall compensate the Customer for any Product lost as a result of the movement of Products . 3. Liability The Customer shall not be entitled to make any claim that has either directly or indirectly arisen from Maintenance Works or from the deprivation of the use of the Terminal for any duration as a result of such Maintenance Works provided that the Operator has notified the Customer as soon as practicable after becoming aware of such works and, except in the case of an emergency, has consulted with the Customer in respect to such works . Nothing in this Clause 5 . 3 shall prevent the Customer from bringing a claim which has arisen from the gross negligence or wilful misconduct of the Operator . 4. Payment during Maintenance Subject to the provisions of this Clause 5 . 4 , the Operator shall be entitled to payment by the Customer of all the rates and charges or other sums payable by the Customer under the Agreement in respect of the use of the Terminal even during any period that the Customer may be deprived of the use of the Terminal during such Maintenance Works . 6. DELIVERY AND REDELIVERY 6.1 Delivery The Products shall be deemed to have been delivered by or on behalf of the Customer to the Operator at the Terminal:
(a) if the Products are delivered from a Vessel, immediately upon the Products passing the connecting flange of the pipeline at the Terminal connected to the manifold of the Vessel ; or (b) if the Products are delivered through a pipeline of any other person, immediately upon the Products passing the valve placed between that pipeline and the pipeline at the Terminal . 6.2 Redelivery The Products shall be deemed to have been re - delivered by the Operator to the Customer from the Terminal: (a) if the Products are re - delivered to a Vessel, immediately after the Products have passed the connecting flange of the pipeline at the Terminal connected to the manifold of the Vessel ; or (b) if the Products are re - delivered through a pipeline of any other person, immediately after the Products have passed the valve placed between the pipeline at the Terminal and the first mentioned pipeline . 7. DELIVERY AND REDELIVERY REQUIREMENTS 1. Requirements The Operator shall receive from or re - deliver to the Customer the Products: (a) if so instructed by the Gustomer; (b) against the presentation of a receipt in a form approved by the Operator and duly signed and stamped by the Customer, provided that the Customer shall have performed and observed the material terms and conditions of the Agreement and of any other agreement made between the Operator and the Customer in respect of other Products at the Terminal, up to the date of such re - delivery . 7.2 No Obligation Prior to the re - delivery of the Product by the Operator to the Customer, the Customer shall advise the Operator in writing of the person(s) authorised to take re - delivery of such Product . The Operator shall be entitled and shall endeavour but not obliged to : (a) demand from any person purporting to be entitled or authorised to take re - delivery of the Products, satisfactory proof of the person's identity and of such entitlement and authority ; and (b) satisfy itself that the signature and stamp appearing on the instructions and receipts are correct and valid as at the date of re - delivery. The Operator may at its sde disoetion accept and act or reject on any request or instruction given by any person who appears or purports to be authorised by the Customer to deal with or take redelivery of the Products without being required to verify the same with the Customer, and in the event that the Operator acts in reliance on any such request or instruction, the same shall be deemed to have been made or given by the Customer . The Operator shall not be liable for any Loss arising as a result of the Operator accepting and acting on or rejecting any such request or instruction save in the case of gross negligence or wilful misconduct or fraud of the Operator provided the Operator has immediately notified the Customer of such action .
8.1 POF The Customer acknowledges and agrees that all Vessels must be acceptable to the POF and it is the responsibility of the Customer to ensure that its nominated Vessels at all times meet and comply with the requirements of the POF, the Port Regulations, Applicable Laws and any other requirements and the Operator shall have no liability in this regard . The Customer further agrees that it shall comply with the Port Regulations and Applicable Laws and any orders or directions issued by the POF or the harbour master, including with respect to Vessel scheduling, loading, discharge and pilotage . 8. HANDLING OF \ /ESSELS 8.2 Order of Arrival Subject to Clause 8 . 1 and except where required otherwise by the competent authorities or where deemed necessary by the Operator to facilitate other operations at the Terminal, the Operator shall take delivery of Product from, and redeliver Product to, a Vessel berthed at OT 1 or OT 2 on a first - come - first - served basis in accordance with the notices given to the Operator by such means and within such time as shall have been agreed between the Operator and the Customer . 8.3 Delayed Arrival In the event of any delay caused to the Vessel or any delay, interruption or departure from the sequence of handing of the handling of the Vessel due to any cause whatsoever (including the non - availability of a berth or ancillary facilities), the Operator shall not be liable to the Customer or any other person for any Loss arising from any such delay or interruption or departure, including any claim for any demurrage or other compensation for any temporary or permanent loss of use of the Vessel . 4. Handling Instructions If the loading or unloading of the Products shall be undertaken by the Operator as part of the Services, the Customer shall ensure that the Operator shall receive reasonably adequate directions which is usual in the case of such delivery in sufficient time regarding the proper manner of such loading or unloading . 5. Inadequate Instructions (a) If the Operator shall not have received any or any reasonably adequate directions as described in Clause 8 . 4 or shall not have received such directions within sufficient time, the Operator shall be entitled to refuse to take delivery of or to re - deliver the Products and at the risk and expense of the Customer, to remove the Vessel to any place chosen by the Operator at its absolute discretion ; and (b) the Customer shall pay to the Operator all losses, costs and expenses (including demurrage and consequential losses) arising from such non - receipt, refusal and removal and shall be liable for any Loss arising from such failure and shall indemnify the Operator against such Loss . 8.6 Handling The Customer shall ensure that, when the Vessel has berthed or landed alongside a delivery or re - delivery point at the Terminal designated by the Operator and the Operator has declared itself to be ready for such delivery or re - delivery, such loading from or unloading onto the Vessel (including the connection and disconnection of hoses and the taking and analysis of samples of the Products) shall commence immediately and proceed diligently on a 24 - hour basis daily (including Sundays and public holidays) without interruption or delay until the completion of such loading or unloading.
8.7 Pumping Capacity Without prejudice to the generality of Clause 8.5, the Customer shall ensure that: (a) the Products shall be unloaded from a Vessel at the maximum pumping capacity which is usual in the case of a vessel of a similar size and tonnage unless directed otherwise by the Operator, taking into account the receiving capacity of the Terminal and the requirements of safety ; and (b) the Products shall unless directed otherwise by the Operator, be pumped at such temperature, pressure and condition as will not delay or impede such pumping. If the Operator and the Customer shall differ on the question of such maximum pumping capacity, temperature, pressure or condition, Clause 30 shall apply . 8. Departure The Customer shall ensure that the Vessel shall be removed from the Terminal promptly upon completion of such loading or unloading or, sooner if necessary for compliance with the requirements of the competent authorities or where deemed necessary by the Operator to facilitate other operations at the Terminal . 9. Failure If. (a) the Products shall not be unloaded from or loaded onto the Vessel, as the case may be, at the times and the speed described in Clause 8 . 7 due to any reason whatsoever ; or (b) the Vessel shall not be removed from the Terminal at the time described in Clause 8.8 due to any reason whatsoever (including the arrest or seizure of the Vessel by a third party), and the Operator shall have requested the Customer or the master of the Vessel to increase the speed of such discharge or to remove the Vessel, as the case may be, and the Customer or the master shall fail to comply with such request due to any reason whatsoever the Customer shall pay to the Operator all losses, costs and expenses (including demurrage and consequential losses) arising from such failure and removal and shall be liable for any Loss arising directly from such failure and shall indemnify the Operator against such claims . 9. DETERMINATION OF QUANTITIES 1. Vessels Quantities loaded to or unloaded from a Vessel will be ascertained by the Operator's automatic tank level gauging system before and after each loading/unloading event and shall take into account quantities of Product stored in the Terminal's pipelines . All determinations or quantities shall be in accordance with ASTM International Standards . 2. Surveyor The Customer may appoint an independent inspector(s), the identity of which shall be approved by the Operator, to witness the loading/unloading of the Products for delivery to, or redelivery from, the Terminal .
The decision of such inspectors, if appointed, shall be treated and accepted by the Customer and the Operator as conclusive and shall be final and binding upon the Operator and the Customer, save for fraud or manifest error, as to the quantity of the Products so loaded or unloaded . If no inspector is appointed, then in such an event the quantities ascertained by the Operator shall be final and binding for both Parties . 10. ACCESS TO TERMINAL 1. Authorised Access The Operator shall grant the Customer and persons authorised in writing by the Customer, access to the Storage Facilities only for the purposes of the Agreement subject to their compliance with the requirements of the Operator and the competent authorities . Operator should prepare the required cargo shipping documents requested by Customer . Operator is having the needed infrastructure to transfer the Product through the matrix manifold of the Fujairah Oil Tanker Terminal . 2. No Claim The Operator shall not be liable for any Loss due to any cause whatsoever arising from the entry to or presence of the Customer or such authorised persons on the Terminal and the Customer shall indemnify the Operator against such Loss except for Loss which arises due to the gross negligence or wilful misconduct of the Operator . 11. CONDITIONS OF PAYMENT 11.1 Invoicing and Payment (a) In Consideration to Box 13 of Commercial Storage Agreement, the Customer will pay the Operator the Rental and Handling Charges (as may be revised from time to time pursuant the terms of this Agreement) covering the Volume Commitment, over the period of twelve months, on account, and in advance . The first month to be paid in a current - dated cheque to be dated with the date of this Agreement, and the remaining eleven months period to be paid with eleven post - dated cheques, in advance, dated 15 days prior the beginning of each storage month covering the rest of the Term . (b) Not later than 10 days after the end of each month, the Operator shall submit to the Customer an invoice for the Fee incurred (excluding the Rental and Handling Charges) in respect of the immediately preceding month . The Customer shall pay such invoice within 10 days of its being issued . (c) All sums of whatever nature due from the Customer to the Operator under the Agreement shall be payable without demand and set - off, or counter claim and without deduction . (d) All amounts payable to the Operator under this Agreement are exclusive of any Value Added Tax or other applicable sales tax or duty of any kind . For the avoidance of doubt, charges related to the Port of Fujairah will be charged to the Customer as per actual Port of Fujairah invoice which is inclusive of Value Added Tax . (e) If any deduction or withholding for or on account of tax is required by the laws of any jurisdiction to be made by the Customer from any payment, the Customer shall pay to the Operator such additional amount as will (after such deduction or withholding has been made) leave the Operator with an amount equal to the payment which would have been due if no deduction or withholding for or on account of tax had been required .
11.2 Immediate Payment Notwithstanding the period for payment stipulated in Clause 11.1: (a) if legal proceedings shall be commenced by any third party for the bankruptcy or liquidation or winding up of the Customer, unless the Customer can provide evidence satisfactory to the Operator that such proceedings are frivolous or vexatious and can be dismissed within 15 days ; (b) if the Customer shall make any offer of composition to its creditors (except in the case of a voluntary reorganisation not including the insolvency of the Customer); (c) if any order of distress or attachment or similar order shall be made against any property of the Customer and remains undischarged for 14 days; (d) if the Customer shall cease to carry on the business in which it was engaged at the commencement of effect of the Agreement; or (e) if the Customer shall fail to perform or observe any material term or condition of the Agreement, all sums due from the Customer to the Operator shall become immediately due and payable . 11.3 Interest If due to any reason whatsoever (except the default of the Operator), the Customer shall not pay any sum payable to the Operator under the Agreement within 15 days after the date of the Operator's invoice then : (a) the Operator shall be entitled to engage the services of any person to recover such sum from the Customer, in which event the Customer shall also be liable for all actual costs incurred by the Operator for such services (including the legal costs) ; and (b) regardless of whether or not the Operator shall have engaged the services of any person as described in Clause 11 . 3 (a) the Customer shall in addition to all sums payable under the Agreement and the costs described in Clause 11 . 3 (a) (if any), pay to the Operator interest on such sums and the costs at 5 % above the then current LIBOR rate, which interest shall be payable on a day to day basis from the date immediately after the due date for payment to the date of actual payment of such sums, the costs and interest thereon or to the date of expiry or sooner termination of the Agreement, whichever is earlier . 11.4 Suspension If the Customer fails to pay any amount within 10 days after the due date under this Agreement, the Operator may suspend the provision of Services under this Agreement until such non - payment is remedied . The Operator shall notify the Customer of any imminent suspension of the provision of Services, not less than 5 days prior to the date on which the Operator shall effect such suspension . Failure by the Operator to provide notification to the Customer of any suspension of the Services shall not limit, diminish or invalidate in any way the Operator's right to suspend the provision of the Services in accordance with this Clause 11 . 4 . During the period of suspension, the Rental and Handling Charges shall continue to be payable .
11.5 Basis For the avoidance of doubt, it is hereby agreed and declared that: 12. THIRD PARTY CHARGES AND SUMS ON PRODUCTS (a) where the Products shall be delivered or taken re - delivery of by a Vessel, such sums have been charged on the basis that the Products shall be delivered or re - delivered at the flange of the pipeline which is connected to the manifold of the Vessel ; (b) unless expressly agreed otherwise, such sums shall be payable for the whole period during which the Storage Facilities are available for the Customer's use pursuant to the Agreement regardless of whether or not the Customer shall have actually used the same ; unless expressly agreed otherwise, such sums shall be payable on a monthly basis . Payment for a part only of a month should be on a pro rata basis ; and (c) (d) the Operator shall not be obliged to recover from third parties any sums which may be due from third parties to the Customer in respect of the Products. 12.1 Customer's Liability The Customer shall pay to the Operator the amount of any properly invoiced charges or sums due or paid by the Operator to third parties (including any freight, port charges, taxes, duties, contributions, fines and any other costs) in respect of the Customer's Product and/or the provision of Services to the Customer save for any charges which are specified in the KeyCommercial Terms to be borne by the Operator and shall indemnify the Operator against any Loss arising in respect of such unpaid charges and sums regardless of whether or not the Products shall then be present at the Terminal . 13. RIGHTS OF LIEN AND RETENTION 1. The Operator shall have a right of lien and retention over the Products and all sums (including any insured sums collected by the Operator for the Customer), documents and valuables which the Operator shall now or hereafter hold of or on behalf of the Customer or which is now or hereafter due to the Customer, to secure the performance of all of the duties, undertakings and obligations of the Customer under the Agreement or under any other agreement made between the Operator and the Customer in respect of other Products at the Terminal . 2. The Operator shall exercise its rights under Clause 13 . 1 by delivering a notice to the Customer setting out the amount of the sums due under the Agreement and any other agreement between the Operator and the Customer in respect of other Products at the Terminal (a "Failure to Pay Notice") . The Failure to Pay Notice shall also set out a due date for payment of such sums, such date to fall at least 7 days after the date of issuance of the Failure to Pay Notice . 3. The Customer acknowledges and agrees that if the Customer has not paid the amounts due by the due date set out in the Failure to Pay Notice, then the Operator shall be entitled to make an application to any relevant court, to allow the Operator to sell a quantity of Product that will satisfy the amounts due under the Failure to Pay Notice .
14. TRANSFER OF OWNERSHIP The Customer may transfer title to Product stored in the Storage Facilities to any person who has contractual rights to the necessary storage capacity in the Terminal . Any such transfer of title shall be promptly notified to Operator . 15. REPRESENTATIONS AND WARRANTIES Each Party hereby represents and warrants to the other Party that: (a) it is a company duly incorporated and validly existing under the laws of the jurisdiction referred to in Box 2 of the Key Commercial Terms; (b) it has the power and authority required to enter into this Agreement and perform fully its obligations under this Agreement in accordance with its terms; (c) subject to any general principles of law, assumptions or qualifications referred to in any legal opinion required in relation to this Agreement, this Agreement is legal, valid and binding on it and is enforceable in accordance with its terms ; the execution and delivery of this Agreement and the performance of its obligations under this Agreement have been duly authorised by all the necessary corporate actions on the part of such Party ; and (d) neither the entry into this Agreement nor the implementation of the transactions contemplated by it will result in: (i) a violation or breach of any provision of its statutes, by - laws or other constitutional documents; (ii) a breach of, or give rise to a default under, any contract or other agreement to which it is a party or by which it is bound; or (iii) a violation or breach of any applicable laws or regulations or of any order, decree or judgment of any court, governmental agency or regulatory authority applicable to it or any of its assets, and in case of breach of any such representation and warranty, the Customer agrees to indemnify and keep indemnified the Operator against any such breach. 16. TERMINATION 1. Early Termination by Operator Notwithstanding the other provisions of the Agreement, the Operator may at any time after the occurrence of an Event of Default by the Customer which is continuing terminate the Agreement, by giving written notice of such termination to the Customer . 2.
Event of Default Each of the following is an Event of Default by the Customer : (a) if the Customer shall fail to observe or perform any of its material obligations under the Agreement and shall not remedy its failure to so observe or perform such material obligations within 30 days' time after the Operator has notified the Customer of such failure ; (# (b) if the Customer shall fail to pay any sum due under this Agreement and shall not remedy its failure to pay within 15 days' time after the Operator has notified the Customer of such failure to pay ; (c) if the Operator shall be of the reasonable opinion that the Products have become subject to changes or deteriorated or may become subject to changes or deteriorate and the Operator is of the reasonable opinion that the Customer has failed to give proper or full instructions to the Operator for the prevention or reduction of such changes or deterioration ; (d) if the Products stored at the Terminal are not in compliance with UAE Laws and the Port of Fujairah Laws; (e) if the Customer or any of its shareholders, group company, parent company, subsidiaries, or, to the Customer's knowledge, any director, officer, employee, agent, affiliate or representative of the Customer or any of its subsidiaries, is an individual or entity ("Person") that is, or is owned or controlled by a Person that is subject to any sanctions administered or enforced by the U . S . Department of Treasury's Office of Foreign Assets Control, the United Nations Security Council, the Council of the European Union, Her Majesty's Treasury, or other relevant sanctions authority (collectively, “Sanctions") . if the Customer conducts businesses with any parent company, subsidiary, joint venture partner or other Person that facilitates any activities or business with any Person that, at the time of such facilitation, is the subject of Sanctions . (g) if the Customer shall have a receiver appointed over all or any substantial part of its asset and in the case of an appointment by a creditor, such appointment is not dismissed within 30 days ; (h) if the Customer shall make any composition with its creditors (except in the case of voluntary reorganisation not involving insolvency of the Customer); or (i) if the Customer shall go into liquidation whether voluntary or compulsory (otherwise than for the purposes of amalgamation or reconstruction).
16.3 Early Termination by Customer Notwithstanding the other provisions of the Agreement and the required notice periods therein, the Customer may terminate the Agreement forthwith at any time without claim or charge by the Operator, by giving notice to the Operator if any of the following has occurred and is continuing : (a) if the Operator shall have a receiver, bankruptcy trustee or analogous person appointed over or to administer and manage all or any substantial part of its assets and such appointment is not dismissed or withdrawn within 30 days ; or (b) if the Operator shall make any composition with its creditors (except in the case of voluntary reorganisation not involving insolvency of the Operator); or (c) if the Operator shall go into liquidation whether voluntary or compulsory (otherwise than for the purpose of amalgamation or reconstruction), provided that for as long as any amount owed to any secured Finance Party, or any agent or trustee acting on its behalf (a "Security Trustee"), by the Operator is outstanding, the Customer shall not be permitted to terminate this Agreement upon the occurrence of any of the events or circumstances specified in Clauses 16 . 3 (a) to 16 . 3 (c) (inclusive) and shall instead, subject to the required notice period therein, only be permitted to terminate this Agreement : (i) in the event or circumstance set out in Clause 16.3(a) occurs; or (ii) if: (A) a receiver with a power of sale has been appointed by any secured Finance Party or the Security Trustee; (B) a bankruptcy trustee has been appointed by a court in the United Arab Emirates on the application of any secured Finance Party or the Security Trustee ; or (C) any analogous person is appointed by or on the application of any secured Finance Party or the Security Trustee, in each case over or to administer and manage: (D) all or any substantial part of the Operator's assets; or (E) the shares in the Operator that have been charged to the secured Finance Party, or the Security Trustee (as the case may be), and any appointment referred to in paragraph (A), (B) or(C) is not dismissed or withdrawn within 30 days; or (iii) any secured Finance Party or Security Trustee (as the case may be) has been awarded a favourable judgment of a court in the United Arab Emirates substantiating the secured Finance Party's, or Security Trustee's (as the case may be) debt claim and enabling it to sell (X) the Operator's business and/or assets that have been charged to the secured Finance Party, or the Security Trustee (as the case may be) by the Operator or (Y) the shares in the Operator that have been charged to the secured Finance Party, or the Security Trustee (as the case may be) ; or (iv) a court in the United Arab Emirates has issued a judgment of liquidation or otherwise authorising (or permitting) the dissolution of the Operator following a judgment of bankruptcy, or any similar or comparable events under any new legislation applicable to the Operator . 17. AFTER TERMINATION 17.1 Termination Payment on Early Termination by Operator The Customer shall pay to the Operator forthwith on any termination pursuant to Clause 16 . 1 , other than in the case of a termination pursuant to Clause 16 . 2 (i) due to an act or omission of the Operator or Force Majeure, an amount equal to the aggregate of : (a) any amounts then due or payable but unpaid by the Customer under this Agreement; (b) any amount to be due and to be invoiced under this Agreement but unpaid by the Customer, equal to the aggregate of the due and owing Rental and Handling Throughput Charges, the Circulation Charges, the Inter Tank Transfer Charges, the Port of Fujairah Tariffs and the Cleaning Charges if cleaning of the Storage Facilities is necessary in the opinion of the Operator ; (c) any Rental and Handling Charges under this Agreement for the remainder of the Agreement period till expiry to fall immediately due for payment to the Operator; (d) by way of agreed compensation, the Termination Sum calculated as at the date of that termination.
2. No liability following early termination by Customer Without prejudice to any accrued rights up to termination, the Operator shall have no liability under this Agreement or otherwise in connection with or as a result of any termination of this Agreement pursuant to Clause 16 . 3 (Early Termination by Customer) . 3. Removal of Products The Customer shall completely remove the Products from the Storage Facilities not later than the date of expiry or the day falling 30 days after termination of the Agreement pursuant to Clause 16 . 4. Return of Storage Facilities I f cleaning of the Storage Facilities is , i n the opinion of the Operator, necessary, upon expiry or termination of the Agreement, or due to a change in the nature of the Products stored or to be stored therein, during the term hereof, or both, the Customer agrees to remove or cause to remove any Products and waste to permit cleaning in a safe and legal way and to reimburse the Operator for said cleaning, removal and disposal . 5. Right of Disposal If the Customer fails to remove the Products due to any reason whatsoever upon the expiry or termination of the Agreement in accordance with Clause 17 . 3 , the Operator shall be entitled, by notice to the Customer, to remove the Products from the Storage Facilities to any place whether in or outside the Terminal and dispose of or destroy the Products in such manner as the Operator deems fit and at the risk and expense of the Customer and by rendering any surplus to the Customer to an account as notified by the Customer . 6. Proceeds If the Operator shall decide to dispose of the Products under Clause 17 . 5 by sale by private treaty or public auction any proceeds of the sale shall be applied by the Operator in the following manner : (a) firstly, in payment of all sums due from the Customer to the Operator under the Agreement or under any other agreement made between the Operator and the Customer ; (b) secondly, in payment of the expenses of the removal and disposal and any storage of the Products in the period between such removal and disposal; and (c) thirdly, in payment of any sums due from the Customer to the competent authorities; (d) fourthly, in payment of other claims or liens of which notice has been given by third parties to the Operator, and by rendering any surplus to the Customer to an account as notified by the Customer.
any other agreement made between the Operator and the Customer, the Operator shall be entitled to recover the same from the Customer as a debt in any court of competent jurisdiction . Any sale of the Products by the Operator pursuant to Clause 17 . 5 shall be free from any encumbrances . 17.8 No Liability The Operator shall not be liable for any claim arising from the removal, disposal, destruction and intermediate storage of the Products under this Article 17 , and the Customer shall indemnify the Operator against such claims . 18. FORCE MAJEURE 18.1 Scope of Force Majeure Any delays in or failure of performance by either Party shall not constitute default hereunder or give liability for any claims if and to the extent such delays in or failures of performance are, without the fault or negligence on the part of the affected Party, caused by Force Majeure . "Force Majeure" shall mean any event or circumstances, which is not within the reasonable control of the Party (acting as a Reasonable and Prudent Operator) affected by the cause and which, by the exercise of diligence, such Party (acting as a Reasonable and Prudent Operator) is unable to foresee or prevent and may include, but shall not be limited to : ( † (g) (a) war, hostilities, revolution, riots, insurrection or other civil commotion, acts of terrorism or sabotage; (b) nuclear explosion, radioactive, biological or chemical contamination, ionizing radiation, or the discovery of such contamination or radiation; (c) strikes and/or lockouts except any such action by employees or subcontractors or agents of the Party claiming Force Majeure; (d) any effect of the natural elements, including lightning, fire, earthquake, sandstorm, flood, storm, tsunami, cyclone, typhoon or tornado; (e) explosion (other than nuclear explosion or an explosion resulting from an act or war); epidemic or plague; inability to obtain necessary equipment or materials due to blockade, embargo or sanctions; and (h) any act of omission of any competent authority including any refusal to issue, withdrawal, non - renewal or non - extension of a license, permit or approval. 18.2 Notification If either Party is prevented from or delayed in performing any of its obligations under the Agreement by Force Majeure, such Party shall immediately notify the other Party in writing of the occurrence of the circumstances constituting Force Majeure .
Forthwith upon the Force Majeure ceasing to have effect, the Party relying upon it shall give written notice thereof to the other Party . 3. General Limitations The affected Party shall not be entitled to suspend performance under this Agreement for any greater scope or longer duration than is required by the Force Majeure or the delay occasioned thereby . Obligations of the Parties that were required to be completely performed prior to the occurrence of Force Majeure shall not be excused as a result of such occurrence . The Customer shall be able to claim Force Majeure only in respect of a vessel that is loading or unloading at the Terminal, or whose scheduled loading and unloading at the Terminal has been notified to the Operator . The failure or inability of either Party to satisfy a payment obligation that has arisen under this Agreement shall not be excused by Force Majeure . 4. No Breach Neither Party shall be deemed to be in breach of the Agreement or be liable to the other for any delay in performance or non - performance of its obligations under the Agreement to the extent that such delay or non - performance is due to Force Majeure, of which it has notified the other Party . The Party claiming Force Majeure shall perform and observe its obligations under the Agreement insofar as the performance and observance thereof are not prevented by Force Majeure . To the extent that the Operator is unable to provide the Services as a result of Force Majeure affecting the Operator, the Customer shall not be ob 1 iged to pay the Rental and Handing Charges . 5. Use of Storage Facilities I f Force Majeure is being claimed by the Customer, and as a result of such Force Majeure, the Customer is not using the Storage Facilities, the Operator may allow the use of the Storage Facilities to other customers for so long as the Force Majeure continues . 6. Efforts The Party claiming Force Majeure shall use reasonable efforts to promptly cure the effect of Force Majeure . 7. Termination Where an event of Force Majeure affecting Operator or Customer extends for more than 90 consecutive days, each Paity shall have the right to terminate this Agreement by giving 30 days' written notice to that effect . 19. LIABILITY 1. Operator's Liability (a) The Customer shall indemnify and hold the Operator harmless from and against all claims, costs, losses, liabilities, injury to person and/or damage to property, caused by or resulting from : (i) Any gross negligence, misconduct, and/or any intentional wrongful acts oromissions on the part of the Customer, its employees, agents, contractors m. @m e m † C@.
WOPWWWW WW † iWW TIWCOP TfW W4IfJWPiC/ /iWWi t T iW @ Jâ G † WWf iiWifo (ii) To the extent not caused by the negligence, misconduct, wrongful acts or omissions of the Operator, its employees, agents or contractors, any losses incurred directly as a result of the physical or chemical characteristics of the Product . (b) For the avoidance of doubt, the Operator shall not be liable to the Customer for any claims, costs, losses, damages, liabilities, injury to person and/or damage to property incurred by the Customer to the extent that such claims, losses, damages, liabilities, injury to person and/or damage to property are caused (whether directly or indirectly) by the Operator in the performance of its obligations under this agreement in accordance with its terms. The Operator shall carry out the Services with reasonable care and to the Standards of a Reasonable and Prudent Operator . Without prejudice to the Parties ' rights under the other provisions of the Agreement, this Clause 19 . 1 shall not impose on the Operator any liability for claims arising from : (c) (d) Force Majeure; or any delay in the delivery of the Products to the Operator 19.2 Event of Claim Notwithstanding anything to the contrary in this Agreement, in the event of any claim against the Operator: (a) the Operator shall not be liable for any forms of consequential losses (including loss or profits, indirect loss or damage or other forms of purely economic losses); (b) the Operator shall not be liable for any claim arising before delivery of the Products to the Operator or after re - delivery of the Products to the Customer; (c) the claim will be void if the Customer shall not have notified the Operator thereof within 120 days after the occurrence of the event giving rise to the claim or within 120 days after the re - delivery of the Products to the Customer, whichever is earlier ; and (d) if the claim shall have been notified to the Operator in accordance with Clause 19 . 2 (d), the claim shall become void if the Customer shall not commence legal proceedings in respect thereof within the period of 120 days after the date of such notice . 19.3 Compensation If any claim shall be made against the Operator by more than one person and the Operator shall decide to pay compensation in respect of the claim, the Operator shall be entitled to apportion such compensation among such persons according to the extent of proven loss or damage suffered by each of them .
19.4 Customer's indemnities The Customer shall indemnify, defend and hold harmless the Operator, its respective officers, employees and agents against: (a) any and all claims for Loss, damage and expense of whatever kind and nature, including all related costs and expenses, in respect of personal injury to or death of any person employed by the Customer ; and (b) any and all claims for Loss, damage and expense of whatever kind or nature, including all related costs and expenses, brought by third parties against the Operator or its officers, employees or agents in connection with any act or omission of the Customer or its officers, employees or agents . 19.5 Operator's indemnities The Operator shall indemnify, defend and hold harmless the Customer, its respective officers, employees and agents against any and all claims for Loss, damage and expense of whatever kind and nature, including all related costs and expenses, in respect of personal injury to or death of any person employed by the Operator . 19.6 Indemnity Process (a) Each of the Operator and the Customer undertakes and agrees, when asserting its right to indemnification from the other Party for the negligence or misconduct or wrongful acts or omissions of any of such other Party's contractors : (i To first seek recourse against any such contractor (including, where applicable, recourse against the Owners, Insurers or P and I Clubs of the responsible barge or marine vessel) ; (ii) To use commercially reasonable efforts to obtain from such Owners, Insurer or P and I Clubs sufficient security to cover said contractors liability; (iii) To claim under this indemnity only if and to the extent such contractor (including, where applicable, recourse against the Owners, Insurers or P and I Clubs of the responsible barge or marine vessel) is liable and is unable within a reasonable time under the circumstances to meet and discharge its liabilities in full ; and (iv) That it will exercise commercially reasonable efforts to assist the other in obtaining recourse and recompense from or on behalf of third parties for losses incurred . (b) In the event that any loss in caused in whole or in partly by the concurrent negligence or intentional wrongful acts or omissions of the Operator, its employees, agents, contractors or any other persons acting under its authority on the one hand and the Customer its employees, agents, contractors or any other persons acting under its authority on the other hand, then this obligation to indemnify shall be comparative and each Party shall indemnify the other to the extent that such Party's negligence or intentional wrongful acts or omissions were the cause of such loss .
20. INSURANCE 20.1 Insurance and Liability The Operator shall maintain throughout the course of the Agreement the following insurance requirements : A) Worker's Compensation and Employees Liability insurance, as prescribed by applicable law B) Commercial General Liability Insurance with an adequate maximum limit per occurrence and in the aggregate per year for bodily injury, property damages, and contractual liability coverage not exceeding the legal liability . 2. No Insurance of Products by Operator Unless it has been explicitly agreed in writing with the Customer, the Operator shall not be obliged to insure the Products of the Customer or any other property of the Customer or any third party . 3. Insurance of Products by Customer The Customer must maintain adequate insurance for the Products of the Customer in the Terminal . The terms and conditions of such insurance shall include : (a) that the Operator be a co - insured in respect of such policy; (b) the insurers waive any rights of subrogation against the Operator; and (c) such other terms as the Operator shall reasonably specify. 4. Redelivery In the event of the re - delivery of part of the Products, the Customer shall notify the Operator of the insurable value of the remaining part of the Products failing which the Operator may reduce the insured sum in respect of the Products in the same proportion as the Products shall have been reduced in number, weight, measurement or content . 5. Operator's Assistance If the Customer shall request the assistance of the Operator to determine the extent and value of any loss, damage or destruction of the Products, the Operator may, but shall not be obliged to, render such assistance subject to : (a) the Customer's payment of the costs of such assistance (including the fee of the Operator) and (b) if the Operator so stipulates, the Customer's prior payment in cash of all sums due, from the Customer to the Operator under the Agreement or under any other agreement made between the Operator and the Customer . 20.6 Insurance of Protection and Indemnity Cover by Customer The Customer shall procure and maintain (or, in the case of Vessels it has chartered, cause to be procured and maintained), in relation to its Products, activities and the activities of its Vessels at the Terminal, comprehensive protection and indemnity insurance including coverage for injury/loss of lives, full collision liability, damage to property including fixed floating objects or Port of Fujairah property, crew, cargo, pollution liability, spillage and wreck removal, towage, war risks and fines, in accordance with good industry practice in addition to any requirements imposed by the Port Regulations.
21. CONFIDENTIALITY 21.1 Confidential Information (a) Subject to Clause 21 . 1 (b), each Party agrees to and shall cause its respective agents, representatives, affiliates, employees, officers and directors, to treat and hold as confidential (and not disclose or provide access to any person), all confidential information received by it relating to the other Party, information relating to the provisions of and negotiations leading to this Agreement, and all other confidential or proprietary information with respect to the Terminal . (b) A Party may disclose information which would otherwise be confidential without the consent of the other Party, if and to the extent: ( ‹) (VÏÏ) (VÏÏÏ) (i) required by the rules of any stock exchange or any governmental, regulatory or supervisory body or court of competent jurisdiction to which the Party making the disclosure is subject ; (ii) required by any stock exchange or any governmental, regulatory or supervisory body of the Operator's parent company, which for the avoidance of doubt, is listed on the Nasdaq Stock Exchange, New York . (iii) required by the law of any relevant jurisdiction; (iv) required by lenders in connection with debt financing arrangements for the Terminal; (v) required by any competent authority to register security in favour of any lender (howsoever described) in connection with debt financing arrangements for the Terminal ; disclosure is made to the affiliates, professional advisers, auditors and bankers of that Party; disclosure is made to bona fide potential purchasers of shares in that Party and the professional advisers of such bona fide potential purchasers; the information has come into the public domain through no fault of that Party; or (ix) the other Party has given prior written approval to the disclosure. This Clause 21 and such Clauses of this Agreement as are necessary to permit the enforcement of this Clause 21 shall continue to apply for two ( 2 ) years following the expiry or termination of this Agreement . (c) 22. CUMULATIVE RIGHTS AND REMEDIES The rights and remedies given to the Parties under this Agreement shall be cumulative remedies and shall not prejudice any other rights or remedies of the Parties contained in the Agreement or at law or the right of action or other remedy of the Parties for the recovery of any sums due to it from any other Party or in respect of any antecedent breach of the Agreement by that Party .
23. COMPLIANCE WITH STATUTES The Parties shall comply with the provisions of all statutes affecting the Products, the Services and the Agreement (including, without limitation, those specified in Box 20 of the key Commercial Terms) and shall give all necessary notices and the Customer shall obtain all requisite permission, approvals and consents . The Customer shall indemnify the Operator against any fines, penalties, losses, costs or expenses incurred by the Operator in respec( of any non - compliance with the provisions of such statutes save for where such fines, penalties, losses, costs or expenses were caused by the gross negligence or wilful misconduct of the Operator . 24. NOTICES 24.1 Unless otherwise provided for herein, all notices to be given or made in connection with the matters contemplated by this Agreement shall be in writing and shall be delivered personally or sent by prepaid mail : In the case of the Operator to: Brooge Petroleum and Gas Investment Company FZE Address: P.O. Box 50170, Fujairah, UAE Attention: Ms. Lina Saheb Interim Chief Executive O/Nicer In the case of the Customer to: Attention: and shall be deemed to have been duly given or made served as follows : (a) if personally delivered, upon delivery at the address of the relevant Party; (b) if ssnt by mail, 2 Business Days after the date of posting; and provided that if, in accordance with the above provision, any such notice, demand or other communication would otherwise be deemed to be given or rriade on a non - Business Day after 5 . 00 p . m . at the location of the recipient, such notice, demand or other communication shall be deemed to be given or made at 9 . 00 a . m . on the next Business Day at the location of the recipient . Unless the contrary be proven, proof of postage or delivery shall be proof of service .
24 . 2 A Party may notify the other Party of a change to its name, relevant addressee, address or fax number for the purposes of Clause 24 . 1 provided that such notification shall only be effective : (a) on the date specified in the notification as the date on which the change is to take place; or (b) if no date is specified or the date specified is less than 10 days after the date on which notice is given, the date falling 10 days after notice of any such change has been given . 25. ASSIGNMENT/SUBLEASE 25.1 The Operator may at any time assign/sublease or otherwise transfer all or any part of its rights under this Agreement. 25 . 2 The Customer shall not assign or otherwise transfer all or any part of its rights under this Agreement without the prior consent of the Operator (which may be granted or withheld in its absolute discretion and may be granted subject to any conditions as the Operator deems necessary in the circumstances) . The Customer shall also be entitled to sublease part or all the Committed Volume to another well reputed third party subject to having the Operator's prior written approval (not to be unreasonably withheld) . 26. CONSENT OR WAIVER No consent or expressed or implied waiver by a Party to or of any breach of any covenant, condition or duty of the other Party shall be constructed as a consent or waiver by that Party to or of any other breach of the name or any other covenant condition or duty by that Party and shall not prejudice in any way the rights powers and remedies of that Party contained i n the Agreement . 27. SEVERABILITY Should any part, term or provision of the Agreement be judged illegal or in conflict with any law, by a court of competent jurisdiction, the validity of the remaining portions or provisions shall not be affected thereby . 28. APPLICABLE LAW The Agreement and any dispute, difference, controversy or claim arising out of or relating to this Agreement including the negotiation, existence, validity, invalidity, enforceability, breach or termination thereof regardless of whether the same shall be regarded as contractual or not (a "Dispute"), shall be governed by the federal laws of the United Arab Emirates and the laws of the Emirate of Fujairah . 29. NOTICE OF DISPUTE Any Party intending to commence proceedings in relation to any Dispute shall give at least 10 Business Days' prior notice in writing to the other Parties of its intention to do so, explaining the nature of the Dispute and the intended proceedings . 30. ARBITRATION 30 . 1 Any Dispute shall be referred to and finally resolved by arbitration under the LCIA Arbitration Centre Rules (the "Rules") which (save as modified by this Clause 30 ) are deemed to be incorporated by reference into this Clause 30 . Capitalised terms used in this Clause 30 and not otherwise defined in this Agreement have the meanings given to them in the Rules .
30Z The seat, or legal plase, of arbitration shall be the Dubai International Financial Cenbe, Dubai, United Arab Emirates. 3. The number of arbitrators shall be three . The claimant (or, if more than one claimant, the claimants joindy) shall nominate one arbitrator and the respondent (or, if more than one respondent, the respondents jointly) shall nominate one arbitrator, in each case in accordance with the Rules . The third arbitrator, who will act as chairperson of the arbitral tribunal, shall be nominated jointly by the Mo co - arbitrators, provided that if the third arbitrator has not been so nominated within 30 Business Days of the time - limit for service of the response, the third arbitrator shall be appointed by the LCIA Court 4. The language to be used In the arbitral praceedings shall be English. 31. THIRD PARTY RIGHTS Save as expressly provided in this Agreement, a person, who or which is not a party to the Agreement, has no right to enforce or enjoy the benefit of any term of the Agreement. iNWITNESS WHEREOF the Parties hereto have entered Into this Agreement and accepted the General Terms an " ' first above wriken. Signed b us e e and on behalf of Brooge Petroleum and Gas Inveslme zi t Company FZE In the presence of: Named.................. Signature Signed b for CenGeo New Nam Signature:
Exhibit 4.94
Exhibit 4.95
Exhibit 4.96
Exhibit 11.2
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: 1 of 13 Prepared by: KLG |
MNMT-PL-004
Policy on Insider Trading of Brooge Energy Limited
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: Prepared by: KLG |
Version History
| Version | Action | Name | Title | Date | Description of change |
| 0.0 | Prepared by | Douglas Maclennan | CFO | Sept 2018 | New policy “Insider Dealing and Market Abuse Policy” |
| 0.0 | Reviewed by | Ernst and Young | External Auditor | Sept 2018 | New policy “Insider Dealing and Market Abuse Policy” |
| 0.0 | Approval by | Nicolaas Paardenkooper | CEO | Sept 2018 | New policy “Insider Dealing and Market Abuse Policy” |
| 001 | Prepared by | KLG | Legal counsel | Dec 2019 | New Policy “Policy on Insider Trading” |
| - Nasdaq/SEC compliance | |||||
| - replaces version 0.0 | |||||
| 001 | Approved by | Nicolaas Paardenkooper | CEO | Dec 2019 | New Policy “Policy on Insider Trading” |
| - Nasdaq/SEC compliance | |||||
| - replaces version 0.0 | |||||
| 001 | Approved by | Board of Directors | Board of Directors | 13 December 2019 | New Policy “Policy on Insider Trading” |
| - Nasdaq/SEC compliance | |||||
| - replaces version 0.0 | |||||
| 002 | Reviewed by | Nicolaas Paardenkooper / Corp. Legal Secretary | CEO / Corp. Legal Secretary | June 2022 | New Policy “Policy on Insider Trading” |
| - Nasdaq/SEC compliance | |||||
| - replaces version 0.1 | |||||
| 002 | Reviewed by | Saif Alhazaimeh / Corp. Legal | CEO of BPGIC FZE / Corp. | October 2024 | New Policy “Policy on Insider Trading” |
| Secretary | Legal Secretary | - Nasdaq/SEC compliance | |||
| of BPGIC FZE | replaces version 0.2 |
All rights reserved. This document has been prepared for internal use for Brooge Energy Ltd and its subsidiaries. It is the user’s obligation to comply with all applicable laws and regulations. No warranty is made, either expressed or implied.
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: Prepared by: KLG |
Table of Contents
| 1. | Applicability | 5 |
| 2. | General Policy: No Trading or Causing Trading While in Possession of Material Nonpublic Information | 5 |
| 3. | Definitions | 6 |
| 4. | Exceptions | 8 |
| 5. | Violations of Insider Trading Laws | 8 |
| 6. | Inquiries | 8 |
| 1. | Blackout Periods | 9 |
| 2. | Trading Window | 10 |
| 3. | Pre-clearance of Securities Transactions | 10 |
| 4. | Prohibited Transactions | 11 |
| i. | Short-term trading. | 11 |
| ii. | Short sales. | 11 |
| iii. | Options trading. | 11 |
| v. | Hedging. | 11 |
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: Prepared by: KLG |
Policy on Insider Trading
of
Brooge Energy Limited
This Insider Trading Policy describes the standards of Brooge Energy Limited and its subsidiaries (the “Company”) on trading, and causing the trading of, the Company’s securities or securities of certain other publicly traded companies while in possession of confidential information. This Policy is divided into two parts: the first part prohibits trading in certain circumstances and applies to all directors, officers and employees and their respective immediate family members of the Company and the second part imposes special additional trading restrictions and applies to all (i) directors of the Company, (ii) executive officers of the Company, consisting of the Chief Executive Officer (CEO) and Chief Finance Officer (CFO) (together with the directors, “Company Insiders”), (iii) the employees listed on Appendix A (collectively, “Covered Persons”), and (iv) certain other employees that the Company may designate from time to time as “Covered Persons” because of their position, responsibilities or their actual or potential access to material information.
One of the principal purposes of the federal securities laws is to prohibit so-called “insider trading.” Simply stated, insider trading occurs when a person uses material nonpublic information obtained through involvement with the Company to make decisions to purchase, sell, give away or otherwise trade the Company’s securities or to provide that information to others outside the Company. The prohibitions against insider trading apply to trades, tips and recommendations by virtually any person, including all persons associated with the Company, if the information involved is “material” and “nonpublic.” These terms are defined in this Policy under Part I, Section 3 below. The prohibitions would apply to any director, officer or employee who buys or sells Company stock on the basis of material nonpublic information that he or she obtained about the Company, its customers, suppliers, or other companies with which the Company has contractual relationships or may be negotiating transactions.
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: Prepared by: KLG |
Part I
| 1. | Applicability |
This Policy applies to all trading or other transactions in the Company’s securities, including common stock, options and any other securities that the Company may issue, such as preferred stock, notes, bonds and convertible securities, as well as to derivative securities relating to any of the Company’s securities, whether or not issued by the Company. This Policy applies to all employees of the Company, all officers of the Company and all members of the Company’s board of directors and their respective family members.
| 2. | General Policy: No Trading or Causing Trading While in Possession of Material Non- public Information |
| 2.1 | No director, officer or employee of the Company or any of their immediate family members may purchase or sell, or offer to purchase or sell, any Company security, whether or not issued by the Company, while in possession of material non-public information about the Company. (The terms “material” and “non-public” are defined in Part I, Section 3(a) and (b) below.) |
| 2.2 | No director, officer or employee of the Company or any of their immediate family members who knows of any material non-public information about the Company may communicate that information to (“tip”) any other person, including family members and friends, or otherwise disclose such information without the Company’s authorization. |
| 2.3 | No director, officer or employee of the Company, or any of their immediate family members may purchase or sell any security of any other company, whether or not issued by the Company, while in possession of material non-public information about that company that was obtained in the course of his or her involvement with the Company. No director, officer or employee or any of their immediate family members who knows of any such material non-public information may communicate that information to, or tip, any other person, including family members and friends, or otherwise disclose such information without the Company’s authorization. |
| 2.4 | For compliance purposes, you should never trade, tip or recommend securities (or otherwise cause the purchase or sale of securities) while in possession of information that you have reason to believe is material and non-public unless you first consult with, and obtain the advance approval of, the Compliance Officer (which is defined in Part I, Section 3(c) below). |
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: Prepared by: KLG |
| 2.5 | Covered Persons must “pre-clear” all trading in securities of the Company in accordance with the procedures set forth in Part II, Section 3 below. |
| 3. | Definitions |
| 3.1 | Material. Insider trading restrictions come into play only if the information you possess is “material.” Materiality, however, involves a relatively low threshold. Information is generally regarded as “material” if it has market significance, that is, if its public dissemination is likely to affect the market price of securities, or if it otherwise is information that a reasonable investor would want to know before making an investment decision. |
Information dealing with the following subjects is reasonably likely to be found material in particular situations:
| (i) | significant changes in the Company’s prospects; |
| (ii) | significant write-downs in assets or increases in reserves; |
| (iii) | developments regarding significant litigation or government agency investigations; |
| (iv) | liquidity problems; |
| (v) | changes in earnings estimates or unusual gains or losses in major operations; |
| (vi) | major changes in the Company’s management or the board of directors; |
| (vii) | changes in dividends; |
| (viii) | extraordinary borrowings; |
| (ix) | major changes in accounting methods or policies; |
| (x) | award or loss of a significant contract; |
| (xi) | cybersecurity risks and incidents, including vulnerabilities and breaches; |
| (xii) | changes in debt ratings; |
| (xiii) | proposals, plans or agreements, even if preliminary in nature, involving mergers, acquisitions, divestitures, recapitalizations, strategic alliances, licensing arrangements, or purchases or sales of substantial assets; and |
| (xiv) | offerings of Company securities. |
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: Prepared by: KLG |
Material information is not limited to historical facts but may also include projections and forecasts. With respect to a future event, such as a merger, acquisition or introduction of a new product, the point at which negotiations or product development are determined to be material is determined by balancing the probability that the event will occur against the magnitude of the effect the event would have on a company’s operations or stock price should it occur. Thus, information concerning an event that would have a large effect on stock price, such as a merger, may be material even if the possibility that the event will occur is relatively small. When in doubt about whether particular nonpublic information is material, you should presume it is material. If you are unsure whether information is material, you should either consult the Compliance Officer before making any decision to disclose such information (other than to persons who need to know it) or to trade in or recommend securities to which that information relates or assume that the information is material.
| 3.2 | Non-public. Insider trading prohibitions come into play only when you possess information that is material and “non-public.” The fact that information has been disclosed to a few members of the public does not make it public for insider trading purposes. To be “public” the information must have been disseminated in a manner designed to reach investors generally, and the investors must be given the opportunity to absorb the information. Even after public disclosure of information about the Company, you must wait until the close of business on the second trading day after the information was publicly disclosed before you can treat the information as public. |
Nonpublic information may include:
| (i) | information available to a select group of analysts or brokers or institutional investors; |
| (ii) | undisclosed facts that are the subject of rumors, even if the rumors are widely circulated; and |
| (iii) | information that has been entrusted to the Company on a confidential basis until a public announcement of the information has been made and enough time has elapsed for the market to respond to a public announcement of the information (normally two trading days). |
As with questions of materiality, if you are not sure whether information is considered public, you should either consult with the Compliance Officer or assume that the information is nonpublic and treat it as confidential.
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: Prepared by: KLG |
| 4. | Compliance Officer |
The Company has appointed the Corporate Secretary as the Compliance Officer for this Policy. The duties of the Compliance Officer include, but are not limited to, the following:
| (i) | assisting with implementation and enforcement of this Policy; |
| (ii) | circulating this Policy to all employees and ensuring that this Policy is amended as necessary to remain up-to-date with insider trading laws; |
| (iii) | pre-clearing all trading in securities of the Company by Covered Persons in accordance with the procedures set forth in Part II, Section 3 below; and |
| (iv) | providing approval of any Rule 10b5-1 plans under Part II, Section 1(c) below and any prohibited transactions under Part II, Section 4 below. |
| (v) | providing a reporting system with an effective whistleblower protection mechanism. |
| 5. | Exceptions |
The trading restrictions of this Policy do not apply to the following:
| (a) | ESPP. Purchasing Company stock through periodic, automatic payroll contributions to the Company’s Employee Stock Purchase Plan (“ESPP”). However, electing to enroll in the ESPP, making any changes in your elections under the ESPP and selling any Company stock acquired under the ESPP are subject to trading restrictions under this Policy. |
| (b) | Options. Exercising stock options granted under the Company’s applicable Stock Option Plan for cash or the delivery of previously owned Company stock. However, the sale of any shares issued on the exercise of Company-granted stock options and any cashless exercise of Company-granted stock options are subject to trading restrictions under this Policy. |
| 6. | Violations of Insider Trading Laws |
Penalties for trading on or communicating material nonpublic information can be severe, both for individuals involved in such unlawful conduct and their employers and supervisors, and may include jail terms, criminal fines, civil penalties and civil enforcement injunctions. Given the severity of the potential penalties, compliance with this Policy is absolutely mandatory.
| 6.1 | Legal Penalties. A person who violates insider trading laws by engaging in transactions in a company’s securities when he or she has material non-public information can be sentenced to a substantial jail term and required to pay a criminal penalty of several times the amount of profits gained or losses avoided. |
In addition, a person who tips others may also be liable for transactions by the tippers to whom he or she has disclosed material nonpublic information. Tippers can be subject to the same penalties and sanctions as the tippers, and the SEC has imposed large penalties even when the tipper did not profit from the transaction.
The SEC can also seek substantial civil penalties from any person who, at the time of an insider trading violation, “directly or indirectly controlled the person who committed such violation,” which would apply to the Company and/or management and supervisory personnel. These control persons may be held liable for up to the greater of $1 million or three times the amount of the profits gained or losses avoided. Even for violations that result in a small or no profit, the SEC can seek penalties from a company and/or its management and supervisory personnel as control persons.
| 6.2 | Company-imposed Penalties. Employees who violate this Policy may be subject to disciplinary action by the Company, including dismissal for cause. Any exceptions to the Policy, if permitted, may only be granted by the Compliance Officer and must be provided before any activity contrary to the above requirements takes place. |
| 7. | Inquiries |
If you have any questions regarding any of the provisions of this Policy, please contact the Compliance Officer at compliance@bpgic.com.
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: Prepared by: KLG |
Part II
| 1. | Blackout Periods |
All Covered Persons are prohibited from trading in the Company’s securities during blackout periods as defined below.
| 1.1 | Quarterly Blackout Periods. Trading in the Company’s securities is prohibited during the period beginning at the close of the market on the day that is two weeks before the end1 of each fiscal quarter and ending at the close of business on the second trading day following the date the Company’s financial results are publicly disclosed. During these periods, Covered Persons generally possess or are presumed to possess material non-public information about the Company’s financial results. |
| 1.2 | Other Blackout Periods. From time to time, other types of material non-public information regarding the Company (such as negotiation of mergers, acquisitions or dispositions, investigation and assessment of cybersecurity incidents or new product developments) may be pending and not be publicly disclosed. While such material non-public information is pending, the Company may impose special blackout periods during which Covered Persons are prohibited from trading in the Company’s securities. If the Company imposes a special blackout period, it will notify the Covered Persons affected. |
| 1.3 | Exception. These trading restrictions do not apply to transactions under a pre-existing written plan, contract, instruction, or arrangement under Rule 10b5-1 under the Securities Exchange Act of 1934 (an “Approved 10b5-1 Plan”) that: |
| (i) | has been reviewed and approved at least one month in advance of any trades thereunder by the Compliance Officer (or, if revised or amended, such revisions or amendments have been reviewed and approved by the Compliance Officer at least one month in advance of any subsequent trades); |
| (ii) | was entered into in good faith by the Covered Person at a time when the Covered Person was not in possession of material nonpublic information about the Company; and |
| (iii) | gives a third party the discretionary authority to execute such purchases and sales, outside the control of the Covered Person, so long as such third party does not possess any material nonpublic information about the Company; or explicitly specifies the security or securities to be purchased or sold, the number of shares, the prices and/or dates of transactions, or other formula(s) describing such transactions. |
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: Prepared by: KLG |
| 1.4 | In accordance with SEC Rule 10b5-1 and its amendments, all employees, directors, and officers who wish to establish or modify a Rule 10b5-1 trading plan must adhere to the following cooling-off periods: |
| (i) | For Directors and Section 16 Officers: A cooling-off period of 90 days shall apply after the adoption of the trading plan or two business days following the public disclosure of the issuer’s financial results for the fiscal quarter in which the plan was adopted, whichever is later. This cooling-off period shall not exceed 120 days from the date of adoption of the plan. |
| (ii) | For Other Employees: A mandatory cooling-off period of 30 days shall apply between the adoption of any Rule 10b5-1 trading plan and the commencement of trading under that plan. |
| 2. | Trading Window |
Covered Persons are permitted to trade in the Company’s securities when no blackout period is in effect. Generally, this means that Covered Persons can trade during the period beginning on the third trading day following the date the Company’s financial results for the most recently ended fiscal period are publicly disclosed2 and ending on the day two weeks before the end of the current fiscal quarter. However, even during this trading window, a Covered Person who is in possession of any material nonpublic information should not trade in the Company’s securities until the information has been made publicly available or is no longer material. In addition, the Company may close this trading window if a special blackout period under Part II, Section 1(b) above is imposed and will re-open the trading window once the special blackout period has ended.
| 3. | Pre-clearance of Securities Transactions |
| 3.1 | Because Company Insiders are likely to obtain material nonpublic information on a regular basis, the Company requires all such persons to refrain from trading, even during a trading window under Part II, Section 2 above, without first pre-clearing all transactions in the Company’s securities. |
| 3.2 | Subject to the exemption in subsection (d) below, no Company Insider may, directly or indirectly, purchase or sell (or otherwise make any transfer, gift, pledge or loan of) any Company security at any time without first obtaining prior approval from the Compliance Officer. These procedures also apply to transactions by such person’s spouse, other persons living in such person’s household and minor children and to transactions by entities over which such person exercises control. |
| 3.3 | The Compliance Officer shall record the date each request is received and the date and time each request is approved or disapproved. Unless revoked, a grant of permission will normally remain valid until the close of trading two business days following the day on which it was granted. If the transaction does not occur during the two-day period, pre-clearance of the transaction must be re-requested. |
| 3.4 | Pre-clearance is not required for purchases and sales of securities under an Approved 10b5-1 Plan. With respect to any purchase or sale under an Approved 10b5-1 Plan, the third-party effecting transactions on behalf of the Company Insider should be instructed to send duplicate confirmations of all such transactions to the Compliance Officer. |
Note to Draft: This period begins on the day after the blackout period ends.
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: Prepared by: KLG |
| 4. | Prohibited Transactions |
| 4.1 | Company Insiders are prohibited from trading in the Company’s equity securities during a blackout period imposed under an “individual account” retirement or pension plan of the Company, during which at least 50% of the plan participants are unable to purchase, sell or otherwise acquire or transfer an interest in equity securities of the Company, due to a temporary suspension of trading by the Company or the plan fiduciary. |
| 4.2 | Covered Persons, including any person’s spouse, other persons living in such person’s household and minor children and entities over which such person exercises control, are prohibited from engaging in the following transactions in the Company’s securities unless advance approval is obtained from the Compliance Officer: |
| 4.2.1 | Short-term trading. Company Insiders who purchase Company securities may not sell any Company securities of the same class for at least six months after the purchase; |
| 4.2.2 | Short sales. Covered Persons may not sell the Company’s securities short; |
| 4.2.3 | Options trading. Covered Person may not buy or sell puts or calls or other derivative securities on the Company’s securities; |
| 4.2.4 | Trading on margin or pledging. Covered Persons may not hold Company securities in a margin account or pledge Company securities as collateral for a loan; and |
| 4.2.5 | Hedging. Covered Persons may not enter into hedging or monetization transactions or similar arrangements with respect to Company securities. |
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: Prepared by: KLG |
ACKNOWLEDGMENT OF RECEIPT AND REVIEW
All Covered Persons are required to sign the attached acknowledgment and certification.
The undersigned does hereby acknowledge receipt of the Company’s Insider Trading Policy. The undersigned has read and understands (or has had explained) such Policy and agrees to be governed by such Policy at all times in connection with the purchase and sale of securities and the confidentiality of nonpublic information.
| Signature | |
| Please print name | |
| Date |
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Policy on Insider Trading | Document: MNMT-PL-004 Revision: 03 Page: Prepared by: KLG |
APPENDIX A
LIST OF EMPLOYEES TO WHOM THE INSIDER TRADING POLICY IS APPLICABLE
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Exhibit 12.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Ines Bezaznia, certify that, to the best of my knowledge and based on the information provided to me by the Company's other relevant personnel:
1. I have reviewed this annual report on Form 20-F of Brooge Energy Limited;
2. Based on my knowledge and reasonable assurance provided by the Company's internal controls and procedures, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge and reasonable assurance provided by the Company's internal controls and procedures, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
6. The Company is currently undergoing a comprehensive review of all controls and policies to ensure compliance with regulatory requirements and to enhance the effectiveness of its internal controls.
| Date: | 10 November 2024 | |
| By: | /s/ Ines Bezaznia | |
| Name: | Ines Bezaznia | |
| Title: | Interim Chief Executive Officer |
Exhibit 12.2
CERTIFICATION OF PRINCIPAL EXECUTIVE FINANCIAL
OFFICER PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Ines Bezaznia, certify that, to the best of my knowledge and based on the information provided to me by the Company's other relevant personnel:
1. I have reviewed this annual report on Form 20-F of Brooge Energy Limited;
2. Based on my knowledge and reasonable assurance provided by the Company's internal controls and procedures, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge and reasonable assurance provided by the Company's internal controls and procedures, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
6. The Company is currently undergoing a comprehensive review of all controls and policies to ensure compliance with regulatory requirements and to enhance the effectiveness of its internal controls.
| Date: | 10 November 2024 | |
| By: | /s/ Ines Bezaznia | |
| Name: | Ines Bezaznia | |
| Title: | Chief Financial Officer |
Exhibit 13.1
Certification of Principal
Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Ines Bezaznia, the Interim Chief Executive Officer of Brooge Energy Limited (the “Company”), hereby certify, that, to the best of my knowledge and based on the information available to me and provided by other relevant personal:
| 1. | The Company’s Annual Report on Form 20-F for the year ended December 31, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company, based on reasonable assurance provided by the Company's internal controls and procedures. |
| 3. | The Company is currently undergoing a comprehensive review of all controls and policies to ensure compliance with regulatory requirements and to enhance the effectiveness of its internal controls. |
| Date: | 10 November 2024 | |
| By: | /s/ Ines Bezaznia | |
| Name: | Ines Bezaznia | |
| Title: | Interim Chief Executive Officer |
Exhibit 13.2
Certification of Principal
Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Ines Bezaznia, the Chief Financial Officer of Brooge Energy Limited (the “Company”), hereby certify, that, to the best of my knowledge and based on the information available to me and provided by other relevant personal:
| 1. | The Company’s Annual Report on Form 20-F for the year ended December 31, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company, based on reasonable assurance provided by the Company's internal controls and procedures. |
| 3. | The Company is currently undergoing a comprehensive review of all controls and policies to ensure compliance with regulatory requirements and to enhance the effectiveness of its internal controls. |
| Date: | 10 November 2024 | |
| By: | /s/ Ines Bezaznia | |
| Name: | Ines Bezaznia | |
| Title: | Chief Financial Officer |
Exhibit 15.3
Exhibit 15.4
 |
 |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Office of the Chief Accountant
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Ladies and Gentlemen:
We have read the statements made by Brooge Energy Limited (BROG) under Item 16F of its Current Report on Form 20F dated on or about November 11, 2024.
We agree with the statements concerning our firm contained therein.
We have no basis to agree or disagree with other statements of the registrant contained therein.
For, Pipara & Co LLP (6841)
/s/ Pipara & Co LLP
Place: Ahmedabad, India
Date: November 04, 2024
| New York Office: 1270, Ave of Americas, Rockfeller Center, FL7, New York – 10020, USA |
Corporate Office: “Pipara Corporate House” Near Bandhan Bank Ltd., Netaji Marg, Law Garden, Ahmedabad - 380006 |
Mumbai Office:
#3, 13th floor, Tradelink, ‘E’ Wing, A - Block, Kamala Mills, Senapati Bapat Marg, Lower Parel, Mumbai - 400013 |
Delhi Office:
1602, Ambadeep Building, KG Marg, Connaught Place New Delhi- 110001 |
Contact: T: +1 (646) 387 - 2034 F: 91 79 40 370376 E: usa@pipara.com naman@pipara.com |
Exhibit 97.1
Brooge Energy Limited
Executive Officer Incentive Compensation Recovery Policy
I. Purpose
The Board of Directors (the “Board”) of Brooge Energy Limited, a Cayman corporation (the “Company”), has adopted this policy (this “Policy”) which requires the recovery of certain executive compensation in the event that the Company is required to prepare an Accounting Restatement (as defined below). References herein to the Company also include all of its consolidated direct and indirect subsidiaries. This Policy is designed to comply with Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rule 10D-1 thereunder, and The Nasdaq Stock Market (“Nasdaq”) Listing Rule 5608 (“Rule 5608”) and will be interpreted and applied accordingly.
II. Administration
This Policy will be administered by the compensation committee (the “Committee”). The Committee is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy. Any determinations made by the Committee will be final and binding on all affected individuals.
III. Covered Persons
This Policy applies to the Company’s current and former executive officers, as determined pursuant to Rule 16a-1(f) promulgated under the Exchange Act and including executive officers identified under Item 401(b) of Regulation S-K (“Executive Officers,” and together with any former Executive Officer, the “Covered Persons”). Each Executive Officer shall be required to sign and return to the Company the Acknowledgement Form attached hereto as Exhibit A pursuant to which such Executive Officer will agree to be bound by the terms and comply with this Policy.
IV. Recoupment upon an Accounting Restatement
If the Company is required to prepare an Accounting Restatement, the Company will recover reasonably promptly all Erroneously Awarded Compensation from each Covered Person, unless the Committee determines in accordance with Section VI below that such recovery is impracticable.
For purposes of the foregoing:
| ● | “Accounting Restatement” means an accounting restatement of any of the Company’s financial statements due to the Company’s material noncompliance with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or to correct an error that is not material to previously issued financial statements, but would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, within the meaning of Rule 10D-1 and Rule 5608. For the avoidance of doubt, an Accounting Restatement will not be deemed to occur in the event of a restatement of the Company’s financial statements due to an out-of-period adjustment or due to a retrospective (i) application of a change in accounting principles; (ii) revision to reportable segment information due to a change in the structure of the Company’s internal organization; (iii) reclassification due to a discontinued operation; (iv) application of a change in reporting entity, such as from a reorganization of entities under common control; or (v) revision for stock splits, reverse stock splits, stock dividends, or other changes in capital structure. |
| ● | “Covered Incentive Compensation” means Incentive Compensation Received on or after October 2, 2023 by a person: (i) after beginning service as an Executive Officer, (ii) who served as an Executive Officer at any time during the performance period for that Incentive Compensation, and (iii) while the Company has a class of securities listed on a national securities exchange or a national securities association, and (iv) during the three completed fiscal years immediately preceding the date that the Company is required to prepare the Accounting Restatement (or such longer period as required under Rule 5608 in the event the Company changes its fiscal year). The date that the Company is required to prepare the Accounting Restatement will be the earlier of (x) the date the Board concluded or reasonably should have concluded that the Accounting Restatement is required, and (y) the date a court, regulator or other authorized body directs the Company to prepare the Accounting Restatement. |
| ● | “Erroneously Awarded Compensation” means the amount of Covered Incentive Compensation that was Received by each Covered Person in excess of the Covered Incentive Compensation that would have been Received by the Covered Person had such Covered Incentive Compensation been determined based on the restated Financial Reporting Measure following an Accounting Restatement, computed without regard to taxes paid. For this purpose, if the amount of Covered Incentive Compensation that is Received by a Covered Person was based on the Company’s stock price or total shareholder return and is not subject to mathematical recalculation directly from the Accounting Restatement, the amount to be recovered as Erroneously Awarded Compensation shall be based on a reasonable estimate of the effect of the Accounting Restatement on the Financial Reporting Measure upon which the Covered Incentive Compensation was Received. The Company’s Corporate Secretary shall, on behalf of the Committee, obtain and maintain all documentation of the determination of any such reasonable estimate and provide such documentation to Nasdaq when required. |
| ● | “Financial Reporting Measure” means (i) any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements and any measure that is derived wholly or in part from any such measure, and (ii) the Company’s stock price and the total stockholder return of the Company. A measure, however, need not be presented within the financial statements or included in a filing with the U.S. Securities and Exchange Commission (“SEC”) to constitute a Financial Reporting Measure. |
| ● | “Incentive Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure. For the avoidance of doubt, Incentive Compensation shall also be deemed to include any amounts which were determined based on (or were otherwise calculated by reference to) Incentive Compensation (including, without limitation, any amounts under any long-term disability, life insurance or supplemental retirement plan or any notional account that is based on Incentive Compensation, as well as any earnings accrued thereon). |
| ● | “Received” - Incentive Compensation is deemed “Received” in the Company’s fiscal period during which the Financial Reporting Measure specified in such Incentive Compensation is attained. |
Recoupment of Erroneously Awarded Compensation pursuant to this Policy is made on a “no fault” basis, without regard to whether any misconduct occurred or whether any Covered Person has responsibility for the noncompliance that resulted in the Accounting Restatement.
V. Method of Recoupment
The Committee will determine, in its sole discretion, the method for recouping Erroneously Awarded Compensation hereunder, which may include, without limitation, any of the following:
| ● | Requiring reimbursement of cash Incentive Compensation previously paid; |
| ● | Seeking recovery of any gain realized on or since the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards; |
| ● | Offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Person (including, without limitation, any severance otherwise payable by the Company to the Covered Person); | |
| ● | Making a deduction from the Covered Person’s salary; | |
| ● | Requiring the Covered Person to transfer back to the Company any shares he or she received pursuant to an equity award; | |
| ● | Surrendering to the Company any shares being held pursuant to stock ownership guidelines; | |
| ● | Cancelling, or reducing the number of shares subject to, or the value of, outstanding vested or unvested equity awards; and/or | |
| ● | Taking any other remedial and recovery action permitted by law, as determined by the Committee. |
The Committee will consider Section 409A of the U.S. Internal Revenue Code of 1986, as amended, prior to offsetting recouped amounts against future payments of deferred compensation. In addition, the Committee may, in its sole discretion, determine whether and to what extent additional action is appropriate to address the circumstances surrounding the noncompliance so as to minimize the likelihood of any recurrence.
VI. Impracticability
The Committee will recover any Erroneously Awarded Compensation in accordance with this Policy unless the Committee determines that such recovery would be impracticable because (i) the direct expense paid to a third party to assist in enforcing the Policy would exceed the amount to be recovered, (ii) recovery would violate an applicable home country law adopted prior to November 28, 2022, or (iii) recovery would likely cause an otherwise tax-qualified, broad-based retirement plan of the Company to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder. Before concluding that it would be impracticable to recover any Erroneously Awarded Compensation based on the expense of enforcement, the Company shall make a reasonable attempt to recover such Erroneously Awarded Compensation, and the Company Secretary, on behalf of the Committee, shall document such reasonable attempt(s) to recover and provide that documentation to the Nasdaq when required. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on violation of law, the Committee shall engage legal counsel experienced and qualified to practice law in the applicable jurisdiction (if such counsel is acceptable to the Nasdaq) to render an opinion that recovery would result in a violation of law and shall provide such opinion to the Nasdaq. The Company shall provide funding for the fees and expenses of such legal counsel as approved by the Committee.
VII. No Indemnification or Insurance
Neither the Company nor any of its subsidiaries or affiliates shall indemnify any Covered Person against the loss of any Erroneously Awarded Compensation. Further, neither the Company nor any of its subsidiaries or affiliates shall pay or reimburse any Covered Person for any insurance policy entered into by a Covered Person that provides for full or partial coverage of any recoupment obligation under this Policy.
VIII. Amendment; Termination
The Board or the Committee may amend this Policy from time to time in its discretion in any manner consistent with applicable law and regulation. The Board or Committee may terminate this Policy at any time when the Company does not have a class of securities listed on a national securities exchange or a national securities association.
IX. Other Recoupment Rights
The Board intends that this Policy will be applied to the fullest extent of the law. Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company (a) under applicable law, regulation or rule, (b) pursuant to the terms of the Company’s corporate security policy, the Company’s related party transactions policy, the Company’s pre-approval policy, any similar policy or recoupment provision in any employment agreement, severance agreement, equity award agreement, bonus plan, or similar agreement or plan, and (c) any other legal remedies available to the Company. Further, the provisions of this Policy are in addition to (and not in lieu of) any rights to repayment the Company may have under Section 304 of the Sarbanes-Oxley Act of 2002.
X. Successors
This Policy shall be binding and enforceable against all Covered Persons and their beneficiaries, heirs, executors, administrators, or other legal representatives.
XI. Disclosure
The circumstances of any recoupment pursuant to this Policy will be publicly disclosed where required by Rule 10D-1, Item 402 of Regulation S-K and Rule 5608. In accordance with Rule 10D-1, the Policy shall be filed with the SEC as an exhibit to the Company’s Form 20-F, as provided in Item 601(b) of Regulation S-K.
XII. Change of Listing
In the event that the Company lists its securities on any national securities exchange or national securities association other than the Nasdaq, all references to “Nasdaq” in this Policy shall mean each national securities exchange or national securities association upon which the Company has a class of securities then listed.
Exhibit A
Brooge Energy Limited
Executive Officer Incentive Compensation Recovery Policy Acknowledgment Form
By signing below, the undersigned acknowledges and confirms that the undersigned has received and reviewed a copy of the Brooge Energy Limited Executive Officer Incentive Compensation Recovery Policy (the “Policy”). Capitalized terms used but not otherwise defined in this Acknowledgement Form (this “Acknowledgement Form”) shall have the meanings ascribed to such terms in the Policy. By signing this Acknowledgement Form, the undersigned acknowledges and agrees that the undersigned is and will continue to be subject to the Policy and that the Policy will apply both during and after the undersigned’s employment with the Company. Further, by signing below, the undersigned agrees to abide by the terms of the Policy, including, without limitation, by returning any Erroneously Awarded Compensation to the Company to the extent required by, and in a manner permitted by, the Policy.
| Signature | |
| Print Name | |
| Date |
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