1. Oil Sector in Albania

2. Divided in Blocks in accordance with the geological formation and best international practices. Starting from 1992, foreign companies as Agip, Chevron, Shell, Hamilton, Occidental, OMV+Deminex, Mobil, Exxon, were periodically present in Albanian territory through Research and Development Operations.

3. Hydrocarbon Agreements HA for the Durres Block, Sea, with San Leone Energy Exploration and Beach Energy (operator San Leone Energy); HA for the Joni 5 Block, Sea, with Capricorn Albania Limited and Dyas Albania B.V. (operator Capricorn Albania Liomited); HA for the A – B Blocks, Land, with Petromanas; HA for the D – E Blocks, Land, with Petromanas; HA for the 2 – 3 Blocks, Land, with Petromanas; HA for the F Blocks, Land, with Bankers Petroleum Albania;

4. Legal Framework Law No.7811, dated 12.4.1994 On the Fiscal System of the Hydrocarbon Sector Provides the application of the Profit Tax, for petroleum operations conducted by private companies in the amount of 50% Law No.9975, dated 28.7.2008 On National Taxes Provides the application of the Mining Tax in the amount of 10%

5. Albpetrol Albeptrol Exclusively Operating Fields Albpetrol operates exclusively in some areas, conducting hydrocarbon operations in those areas, like crude oil and gas production. These areas regard the oil field of Amonica, condensate gas fields of Divjaka, Ballaj-Kryevidh, Frakull, Povlec, Panaj, Finiq, Durres, Kolonje Actually Albpetrol has signed 7 Petroleum Agreements with the companies Bankers Petroleum Albania Ltd, Stream Oil & Gas Ltd and Visoka Oil Corporation

6. PETROLEUM AGREEMENTS

7. Albpetrol Contractual Rights Petroleum agreements permit to third companies the implementation of hydrocarbon operations in the above mentioned areas. According to those agreements Albpetrol’ s right to perform hydrocarbon operations is limited but on the other hand some important contractual rights are recognized to Albpetrol. Below we will present a summary of these rights and percentages obtained by Albpetrol: Right of Pre-Existing Production The right of pre-existing production is Albpetrol’s right to obtain a certain percentage of the average production realized in the last 6 months from wells transferred to Contractor according to each hydrocarbon agreement. This percentage obtained by Albpetrol varies from 65 – 80% and has an annual decrease from 5 – 15%.

8. Albpetrol Albpetrol Share All of the Petroleum Agreements permit the Contractor to recover the costs it incurs in connection with production. However, during the period in which the Contractor is recovering its costs for petroleum production, the Contractors must transfer a portion of the oil produced by it to Albpetrol. The part being transferred to Albpetrol which is calculated according the R Factor it varies accordingly to each agreement from 1% to - 6% (the “Albpetrol Share”) of the available petroleum, after the Contractor have calculated its expenses and any oil flared or injected or used by the Contractor in its operations based on a ratio of the Contractor’s costs and revenues. Profit Petroleum Most of the Petroleum Agreements further provide that Contractors have also the obligation to transfer to Albpetrol another oil portion after deducting their investments. This part is called Profit Petroleum and it is provided only in the hydrocarbon agreements of Delvina, Cakran-Mollaj, Gorisht-Kocul and Ballsh – Hekal.

9. Albpetrol Privatization Selling 100% of the Shares The privatization Law no.10 490 dated 15.12.2011 “On determining the form and structure of the privatization formula of the company “Albpetrol” sh.a. Patos”, 100% (one hundred percent) of the capital shares of Albpetrol are offered to the strategic investors, which are specialized companies in the oil and gas fields. The law provides that the selling of shares will be realized through an opened procedure. Production Sharing Albpetrol has signed with third companies Petroleum Agreements which provide the Production Sharing between Albpetrol and the Contractors. Albpetrol will conserve its financial rights of Production Sharing after the privatization process is concluded.

10. Albpetrol Privatization Right of First Offer It is provided the right of First Offer, which is the right of Albpetrol to continue performing hydrocarbon operations in areas where third companies are operating according to Petroleum Agreements signed with Albpetrol, in cases when in these areas the agreements are terminated before the respective deadlines. Exclusively Operated Areas Albpetrol will conduct hydrocarbon operations in areas where it is actually performing exclusively hydrocarbon operations, for a 25 year period starting from the Effective Date of Albpetrol’ s Share Purchasing Agreement.

11. Albpetrol Privatization Areas Covered by Petroleum Agreements For the areas covered by Petroleum Agreements, where Albpetrol operates jointly with third Contractors, rights, obligations and terms of these agreements signed between Albpetrol and third Contractors will remain unchanged.