APPENDIX 2A Azeri Chirag Gunashli Production Sharing Agreement Extract Azeri Central East Project Appendix 2A Environmental & Social Impact Assessment ARTICLE 26 - Environmental Protection and Safety 26.1 Conduct of Operations Contractor shall conduct the Petroleum Operations in a diligent, safe and efficient manner in accordance with Good International Petroleum Industry Practice and shall take all reasonable actions in accordance with said standards to minimise any potential disturbance to the general environment, including the surface, subsurface, sea, air, lakes, rivers, animal life, plant life, crops, other natural resources and property. The order of priority for actions shall be the protection of life, environment and property. 26.2 Emergencies In the event of emergency and accidents, including explosions, blow-outs, leaks and other incidents which damage or might damage the environment, Contractor shall promptly notify SOCAR and MENR of such circumstances and of its first steps to remedy this situation and the results of said efforts. Contractor shall use all reasonable endeavours to take immediate steps to bring the emergency situation under control and protect against loss of life and loss of or damage to property and prevent harm to natural resources and to the general environment. Contractor shall also report to SOCAR and appropriate Government authorities on the measures taken 26.3 Compliance Contractor shall comply with present and future Azerbaijani laws or regulations of general applicability with respect to public health, safety and protection and restoration of the environment, to the extent that such laws and regulations are no more stringent than the then current Good International Petroleum Industry Practice being at the date of execution of this Contract those shown in Appendix 9, with which Contractor shall comply. If Appendix 9 specifies more than one standard with respect to a matter, Contractor will use the standard most appropriate relative to the ecosystem of the Caspian Sea. In the event any regional or multi-governmental authority having jurisdiction enacts or promulgates environmental standards relating to the Contract Area, the Parties will discuss the possible impact thereof on the project. The provisions of Article 23.2 shall apply to any compliance or attempted compliance by Contractor with any such standards, which adversely affect the rights or interests of Contractor hereunder. 26.4 Baseline Study and Ongoing Environmental Monitoring a) In order to determine the state of the environment in the Contract Area at the Effective Date, Contractor shall cause an environmental base line study to be carried out by a recognized international environmental consulting firm selected by Contractor, and acceptable to SOCAR. SOCAR shall nominate representatives to participate in preparation of the study in collaboration with such firm and Contractor representatives. The costs of such study shall be borne by Contractor, except that SOCAR shall be liable for all costs associated with the representatives nominated by SOCAR. The costs associated with this study shall be subject to Cost Recovery in accordance with Article 11. Contractor shall conduct ongoing environmental monitoring of its operations. Data collected will be evaluated at least annually to determine if any practices and discharge standards need to be revised. The Environmental Strategy included in Appendix 9 outlines the environmental program that Contractor (and SOCAR in the event it carries out operations with or without a Third Party pursuant to Article 15.2(c)) will follow during the course of Petroleum Operations within the Contract Area. The evaluation of data collected during the ongoing monitoring program, together with the baseline study, will provide a basis for determining whether any unacceptable environmental impact has been caused by Contractor in the course of conducting Petroleum Operations and for which Contractor may be liable under Article 20.2, or whether the conditions leading to such impact existed prior to the commencement of Petroleum Operations or otherwise from activities conducted by a party January 2019 2A/1 Final Azeri Central East Project Appendix 2A Environmental & Social Impact Assessment other than Contractor. SOCAR and Contractor shall review the environmental base line study and consult to determine whether any remedial action is warranted to mitigate the effects of any impact which occurs or has occurred from such prior conditions, and if so, whether a programme of remediation could be carried out by Contractor, it being agreed among the Parties that Contractor shall not be liable for any of the expense of such a remedial programme. Any such remedial program undertaken will be considered outside the scope of the Environmental Strategy and will be conducted pursuant to the terms of a separate agreement between SOCAR and Contractor. b) In the event SOCAR and/or any Third Party operates any facilities with respect to development of Non-Associated Natural Gas pursuant to Article 15.2(c), then in connection with performance of the ongoing monitoring program Contractor shall have the right to make periodic inspections of such facilities and SOCAR's and/or any Third Party's operations with respect thereto, including, but not limited to, the placement of monitoring devices and collection of samples relevant to the monitoring program. Contractor's above referenced inspections, sampling and placement of monitoring devices shall be performed by Contractor in a manner which does not unreasonably interfere with SOCAR's and/or any such Third Party's operations on above referenced facilities. 26.5 Environmental Damage c) Contractor shall be liable for those direct losses or damages incurred by a Third Party (other than the Government) arising out of any environmental pollution determined by the appropriate court of the Republic of Azerbaijan to have been caused by the fault of Contractor. In the event of any environmental pollution or environmental damage caused by the fault of Contractor, Contractor shall reasonably endeavour, in accordance with Good International Petroleum Industry Practice, to mitigate the effect of any such pollution or damage on the environment. d) Contractor shall not be responsible and shall bear no cost, expense or liability for claims, damages or losses arising out of or related to any environmental pollution or other environmental damage, condition or problems which it did not cause, including but not limited to those in existence prior to the Effective Date, as well as any environmental pollution or other environmental damage, condition or problems arising out of SOCAR's and/or any Third Party's development of Non-Associated Natural Gas pursuant to Article 15.2(c); and SOCAR shall indemnify and hold harmless Contractor, its Sub-contractors and its and their consultants, agents, employees, officers and directors from any and all costs, expenses and liabilities relating thereto. e) Any damages, liability, losses, costs and expenses incurred by the Contractor arising out of or related to any claim, demand, action or proceeding brought against Contractor, as well as the costs of any remediation and clean-up work undertaken by Contractor, on account of any environmental pollution or environmental damage (except for such pollution or damage resulting from the Contractor's Wilful Misconduct) caused by the Contractor shall be included in Petroleum Costs. January 2019 2A/2 Final Azeri Central East Project Appendix 2A Environmental & Social Impact Assessment APPENDIX 9 ENVIRONMENTAL PROTECTION AND SAFETY PRACTICES I. Environmental Sub-Committee A. The environmental sub-committee is composed of environmental representatives of Contractor Parties and SOCAR, MENR, Azerbaijan National Academy of Sciences and other research institutes. B. Responsibilities of the environmental sub-committee i) - Design Annual Monitoring Program for monitoring of selected environmental parameters - Coordinate Annual Monitoring Program - Review results and propose recommendations - Publish annual report ii) Select research projects - Administer environmental protection research projects - Allocate funding as designated for this purpose in any Annual Work Programme and Budget - Review progress - Publish results II. II. Environmental Strategy The environmental strategy to be pursued pursuant to Article 26.4 shall be as follows: A. Baseline Data 1. Literature review 2. International standards review 3. Audit of existing operations and practices 4. Environmental data collection - Atmospheric - Water Quality - Benthic - Flora and Fauna - Meteorological and Oceanographic - Sediment - Background Radiation B. Environmental Impact Assessment (existing facilities, exploration and production activities and new facilities) 1. Project description 2. Environment description 3. Technology assessment 4. Air emission inventory January 2019 2A/3 Final Azeri Central East Project Appendix 2A Environmental & Social Impact Assessment - Dispersion modelling - Impact evaluation 5. Water discharge inventory - Fate and effects modelling - Impact evaluation - Treat and discharge offshore - Treat onshore and discharge - Injection onshore or offshore 6. Waste Inventory - Disposal options - Impact evaluation - Offshore treatment and disposal - Transportation and onshore disposal 7. Abandonment studies - Disposal options - Impact evaluation 8. Cost benefit analysis 9. Environment statement of preferred options The entry into this Contract shall not affect