Exhibit 10.1
CRUDE OIL SALES AGREEMENT between
PDVSA-PETRd3LEO S.A.
and
NUSTAR MARKETING LLC
dated effective as of
March 1, 2008
Table of Contents
Page # Part I DEFINITIONS AND CONSTRUCTION 1 Article 1 Definitions 1 1.1 Definitions 1 1.2 Construction 7 Part II SPECIAL TERMS 7 Article 2 Purchase and Sale 7 Article 3 Quantity 7 3.1 Annual Contract Quantity 7 3.2 Monthly Contract Quantity 7 Article 4 Destination; No Resale to Third Parties 9 4.1 Utilization at the Refineries 9 4.2 Discharge Documentation 9 Article 5 Price; Adjustment of Price Mechanism 9 5.1 Price 9 5.2 Adjustment of Price Mechanism 9 Article 6 Limited Market Adjustment 10 6.1 Calculation of Limited Market Adjustment 10 6.2 Expiration of Limited Market Adjustment 11 Article 7 Underlifting 12 Article 8 Payment Terms 12 8.1 Currency, Time and Place of Payment; Overdue Payments 12 8.2 Contents of Invoices; Substantiating Documentation 13 8.3 Payment Expenses 13 8.4 Security for Payment 13 8.5 Suspension of Deliveries 14 Article 9 Duration 14 9.1 Term 14 9.2 Renewal 14 Part III STANDARD TERMS 14 Article 10 Arrival Procedures and Lifting 14 10.1 Lifting Program 14 10.2 Substitution of Vessels 17 10.3 Advice of ETA 17
-i- 10.4 Notice of Readiness 17 10.5 Vessel Requirements; Security Regulations 18 Article 11 Loading Conditions; Demurrage 19 11.1 Berthing of Vessels; Commencement of Laytime 19 11.2 Shifting Loading Point of Vessels 20 11.3 Allowed Laytime 20 11.4 Adjustments to Laytime and Time on Demurrage 20 11.5 Demurrage 22 11.6 Buyer' s Liability for Delay and Damage 23 Article 12 Quantity Measurements 23 12.1 Determination of Quantity 23 12.2 Volume Corrections for Temperature 24 12.3 Conclusiveness of Measurements 25 Article 13 Quality 25 13.1 Determination of Quality 25 13.2 Analysis of Samples 25 13.3 NO WARRANTIES 26 Article 14 Delivery 26 14.1 Passage of Title 26 14.2 Port and Loading Expenses 26 14.3 Loading Port Regulations 26 14.4 Buyer' s Knowledge of Loading Port Facilities; Standard Procedures 26 14.5 Hazardous Warning Responsibility 27 Article 15 No Set-Off 27 Article 16 Notice of Claims 28 Article 17 Termination 28 17.1 Termination 28 17.2 Termination Not to Relieve Buyer of Obligations 29 17.3 Acceleration 29 17.4 Termination for an Insolvency Event 29 17.5 No Gifts 29 17.6 Other Rights and Remedies 29 Article 18 Confidentiality 30 Article 19 No Third-Party Beneficiaries; Assignment 30 Article 20 Force Majeure 31 20.1 Relief from Liability 31 20.2 Notice 31 20.3 Payment for Oil Sold and Delivered 31
-ii- 20.4 Obligation to Apportion 31 20.5 No Makeup of Deliveries Excused by Force Majeure 32 20.6 No Extension of Contract; Right to Terminate 32 Article 21 Dispute Resolution; Governing Law 32 21.1 Settlement by Arbitration 32 21.2 Governing Law 32 21.3 Buyer' s Waiver 32 Article 22 Representations and Warranties 32 22.1 Buyer Representations 32 22.2 Seller Representations 33 Article 23 Liquidated Damages and Limitation of Liability 34 23.1 Failure to Deliver Oil 34 23.2 Limitation of Liability 34 Article 24 Compliance with Law 35 Article 25 No Waiver; Cumulative Remedies 35 Article 26 Severability of Provisions 35 Article 27 Notices 36 Article 28 Satisfactory Documentation 36 Article 29 Merger 37 29.1 Exclusive Agreement 37 29.2 General Terms and Conditions 37 Article 30 Amendments and Waivers; Counterparts 37 30.1 Amendments and Waivers 37 30.2 Counterparts 37
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CRUDE OIL SALES AGREEMENT This CRUDE OIL SALES AGREEMENT (" Agreement" ) is entered into on March 19, 2008 and dated effective as of March 1, 2008, by and between PDVSA-Petrf3leo S.A., a corporation organized under the laws of the Bolivarian Republic of Venezuela (" Seller" ), represented by Mr. Fernando Valera, Executive Director of Supply and Commerce, and NuStar Marketing LLC, a Delaware limited liability company (" Buyer" ), represented by Mr. Curtis V. Anastasio, its Chief Executive Officer and President. Seller and Buyer may sometimes hereinafter be referred to individually as a " Party" , and, collectively, as the " Parties" .
RECITALS WHEREAS , NuStar Asphalt Refining, LLC, a Delaware limited liability company and an affiliate of Buyer (" NAR" ), has agreed to acquire from CITGO Asphalt Refining Company (" CARCO" ) certain asphalt refineries located in Paulsboro, New Jersey and Savannah, Georgia (" Refineries" ) pursuant to that certain Sale and Purchase Agreement, dated as of November 5, 2007, between CARCO and NAR (" SPA" );
WHEREAS , one of the conditions to NAR' s proceeding to a closing of the transactions contemplated by the SPA is the execution and delivery by Seller of this Agreement to supply crude oil to the Refineries during the term;
WHEREAS , Seller desires to sell and deliver to Buyer, and Buyer wishes to purchase and lift from Seller, crude oil for processing at the Refineries in accordance with the terms and conditions hereof;
NOW, THEREFORE , in consideration of the premises and the mutual representations, warranties, covenants, agreements and undertakings hereinafter set forth or referred to in this Agreement, the Parties hereby agree as follows:
PART I DEFINITIONS AND CONSTRUCTION
Article 1
Definitions
1.1 Definitions . For purposes of this Agreement, the following terms, when capitalized, shall have the meanings indicated below:
(a)
" Affiliate" means with respect to another entity, any entity which, directly or indirectly, controls, is controlled by or is under common control with, such other entity. For purposes of this definition, " control" (including, with correlative meanings, the terms " controlled by" and " under common control with" ) means (i) the ownership, directly or indirectly, of at least 50% of the voting securities or other equity interests in such entity and/or
(ii) the right to determine management direction and policies of such entity, whether through majority representation on the applicable governing board or by contract;
(b)" Aggregate Deliveries" shall have the meaning set forth in Article 23.1;
(c)" Aggregate Nominated Volume" shall have the meaning set forth in Article 23.1; (d)" Agreed Laydays" shall mean the three-Day range for the arrival of a vessel set forth in an Agreed Lifting Program determined pursuant to Article 10.1;
(e)" Agreed Lifting Program" shall mean a final lifting program for a Month determined pursuant to Article 10.1; (f)" Agreement" shall mean this Crude Oil Sales Agreement, including this Part I, the Special Terms contained in Part II hereof, the Standard Terms contained in Part III hereof, and all Exhibits attached hereto, as the same may be amended, modified or supplemented from time to time;
(g)" All Fast" shall mean such time as a vessel is completely moored at the cargo transfer point with gangway down and secured; (h)" Allowed Laytime" shall mean the period of time which Seller shall be allowed, in accordance with Article 11.3, to complete the loading of a vessel without incurring demurrage;
(i)" Annual Accounting" shall have the meaning set forth in Article 23.1;
(j)" Annual Contract Quantity" shall have the meaning set forth in Article 3.1;
(k)" API" shall mean the American Petroleum Institute;
(l)" API-MPMS" shall have the meaning set forth in Article 12;
(m)" ASBA" shall mean the Association of Ship Brokers and Agents;
(n)" Asphalt Season" shall mean the period comprised of the Asphalt Season Months of any Year; (o)" Asphalt Season Months" shall mean the calendar months of March, April, May, June, July, August and September; (p)" ASTM" shall mean the American Society for Testing and Materials;
(q)" Barrel" shall mean a quantity of crude oil equal to forty-two (42) Gallons;
-2- (r)" Banking Day" shall mean any Day other than Saturday, Sunday or a Day on which banking institutions in New York, New York, United States are authorized or required by law to close;
(s)" BCF 13" shall mean crude oil of the Bachaquero BCF-13 type, typically having characteristics within the ranges specified in Exhibit 1 ; (t)" Bosce1n" shall mean crude oil of the Bosce1n type, typically having characteristics within the ranges specified in Exhibit 1 ;
(u)" Business Day" shall mean any Day other than Saturday, Sunday or any national holiday in Venezuela; (v)" Buyer" shall have the meaning set forth in the Preamble to this Agreement;
(w)" CARCO" shall have the meaning set forth in the Preamble to this Agreement;
(x)" Cargo" shall mean a cargo of Oil to be sold by Seller and loaded by Buyer into one of its vessels during any Lifting Month; (y)" Contract Year" shall mean, except with respect to the First Contract Year and the Final Contract Year, a Year; (z)" Credit" shall have the meaning set forth in Article 6.1(c);
(aa)" Cumulative Net Surplus" means the sum of all Quarterly Surpluses less the sum of all Quarterly Deficits since the commencement date of the Agreement;
(bb) This paragraph (bb) is intentionally left blank;
(cc)" Day" shall mean a calendar day;
(dd)" Deliveries" shall have the meaning set forth in Article 23.1;
(ee)" Defaulting Party" shall have the meaning set forth in Article 17.4;
(ff)" ETA" shall mean estimated time of arrival;
(gg)" Final Contract Year" shall mean the period commencing on January 1 of the Year in which the later of the expiration of the Initial Term or the last Renewal Term of this Agreement occurs and ending on the anniversary date of this Agreement occurring in such Year;
(hh)" First Contract Year" shall mean the period commencing on the date of this Agreement and ending on December 31, 2008;
-3- (ii)" FOB" shall have the meaning ascribed to such term in Incoterms (2000 edition), published by the International Chamber of Commerce; provided , however , that, in the event of any conflict between the provisions of the Incoterms definition and this Agreement, the provisions of this Agreement shall apply;
(jj) Formula Price" shall have the meaning set forth in Article 6.2(a);
(kk)" Force Majeure" shall have the meaning set forth in Article 20.1;
(ll)" Gallon" shall mean a unit of volume, measured at 60b0F (equivalent to 15.56b0C), equal to 231 cubic inches or 3.7853 liters; (mm)" General Terms and Conditions" shall mean the Ministry' s General Terms and Conditions for PDVSA FOB Crude Oil Sales (November 2006) attached hereto as Exhibit 6 , as the same may be modified as provided herein;
(nn)" ICC Rules" shall have the meaning set forth in Article 21.1;
(oo)" Investment Grade" shall mean a rating of (i) BBB- or higher by Standard and Poor' s Rating Services, (ii) Baa3 or higher by Moody' s Investors Service, Inc. and (iii) BBB- or higher by Fitch Ratings, Ltd. (or, if any such agency changes its rating system, the equivalent successor rating applied by such agency at the time in question); (pp)" Governmental Mandate" shall have the meaning set forth in Article 20.1;
(qq)" Initial Term" shall have the meaning set forth in Article 9.1;
(rr)
" Insolvency Event" shall mean that an entity (i) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (ii) becomes insolvent or is unable to pay its debts or admits in writing its inability generally to pay its debts as they become due; (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (iv) (A) institutes a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation by it, or (B) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation and such proceeding either (1) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (2) is not dismissed, discharged, stayed or restrained in each case within sixty (60) Days of the institution or presentation thereof; (v) passes a resolution for its winding-up or liquidation (other than pursuant to a consolidation, amalgamation or
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merger); (vi) seeks or becomes subject to the appointment of a receiver, bankruptcy trustee, custodian or other similar official for it or for all or substantially all its assets; or (vii) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied or enforced on or against all or substantially all its assets; provided that such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within thirty (30) Days thereafter; (ss)" ISPS Code" shall have the meaning set forth in Article 10.5.2(d);
(tt)" Letter of Credit" shall have the meaning set forth in Article 8.4;
(uu)" Lifting Month" shall mean the Month for which a Cargo is programmed for lifting; (vv)" Limited Market Adjustment" shall have the meaning set forth in Article 6.1(a); (ww)" Loading Point" (either standing alone or as part of another defined term) shall mean a terminal, berth, jetty, buoy, dock, anchorage, sea terminal, mooring, submarine loading line, or any other place, including alongside lighters or other vessels, where a vessel can be loaded;
(xx)" Loading Port" shall mean any of Seller' s Loading Points located at Puerto Miranda, La Salina and Bajo Grande; (yy)" MBD" shall mean a thousand Barrels per Day;
(zz)" Ministry" shall mean the Ministerio del Poder Popular para la Energeda y Petrf3leo of Venezuela ; (aaa)" Month" shall mean a calendar month;
(bbb)" Monthly Contract Quantity" shall have the meaning set forth in Article 3.2;
(ccc)" NAR" shall have the meaning set forth in the Preamble to this Agreement;
(ddd)" Nominated Volume" shall have the meaning set forth in Article 23.1;
(eee)" Non-Affiliated Buyer Purchases" shall have the meaning set forth in Article 6.2(a); (fff)" Non-Defaulting Party" shall have the meaning set forth in Article 17.4;
(ggg)" NOR" shall have the meaning set forth in Article 10.4;
-5- (hhh)" Oil" shall mean Venezuelan crude oil of the types specified in Exhibit 1 ; (iii)" P&I Club" shall mean a maritime protection and indemnity mutual insurance company; (jjj)" Parties" shall mean Seller and Buyer, which may sometimes hereinafter be referred to individually as a " Party" and collectively as the " Parties" ;
(kkk)" Quarter" means any period of three consecutive Months commencing January 1, April 1, July 1 or October 1 of any Year;
(lll)" Quarterly Deficit" means, with respect to any Quarter, the amount, if any, by which the Formula Price is less than the Maya parity price calculated in accordance with Exhibit 4 ;
(mmm)" Quarterly Surplus" means, with respect to any Quarter, the amount, if any, by which the Formula Price exceeds the Maya parity price calculated in accordance with Exhibit 4 ;
(nnn)" Ratings Agencies" shall mean Standard and Poor' s Rating Services, Moody' s Investors Service, Inc. and Fitch Ratings, Ltd.; (ooo)" Refineries" shall have the meaning set forth in the Preamble to this Agreement; (ppp)" Renewal Term" shall have the meaning set forth in Article 9.2;
(qqq)" S & W" shall mean sediments and water;
(rrr)" Security Regulations" shall have the meaning set forth in Article 10.5.2(d); (sss)" Seller" shall have the meaning set forth in the Preamble to this Agreement;
(ttt)" Specified Loading Port" shall mean a Loading Port specified in an Agreed Lifting Program; (uuu)" SPA" shall have the meaning set forth in the Preamble to this Agreement;
(vvv)" Storage Facility" shall have the meaning set forth in Article 6.1(b);
(www)" United States" or " U.S." shall mean the United States of America;
(xxx)" U.S. Dollars" or " U.S.$" and " cents" shall mean the lawful currency of the United States of America; (yyy)" Venezuela" shall mean the Bolivarian Republic of Venezuela;
-6- (zzz)" Worldscale" shall mean, at any relevant time under this Agreement, the applicable standard freight rate stated in the most recent edition of the New Worldwide Tanker Nominal Freight Scale jointly published by Worldscale Association (London) Limited and Worldscale Association (NYC) Inc., expressed in U.S. dollars per metric ton for the route specified; (aaaa)" Worldscale Assessment" shall mean, at any relevant time under this Agreement, the current assessment published in the most recent edition of Platt' s Oilgram Price Report, under the table representing " Dirty" cargoes of 50,000 metric ton size for Caribbean to U.S. Gulf Coast routes, in the column labeled " WS" ; and (bbbb)" Year" shall mean a calendar year.
1.2 Construction . Terms defined in the singular have the corresponding meanings in the plural, and vice versa. All headings herein are for convenience only and shall not affect the construction or interpretation of this Agreement. Unless otherwise specified, all references herein to Parts, Articles and Exhibits are to the Parts, Articles and Exhibits of this Agreement. The terms " hereof," " herein," " hereunder" and words of similar import shall refer to this Agreement as a whole and not to the particular Part, Article or Exhibit in which such term appears.
PART II SPECIAL TERMS
Article 2
Purchase and Sale
Subject to and in accordance with the terms and conditions of this Agreement, Seller shall sell and deliver, and Buyer shall purchase and lift, Oil of the Bosce1n type and the Bachaquero BCF-13 type, each having the typical characteristics set forth on Exhibit 1 and in the quantities set forth on Exhibit 2 .
Article 3 Quantity
3.1 Annual Contract Quantity . Except as performance may be expressly excused in accordance with this Agreement, in each Contract Year Seller shall sell and deliver, and Buyer shall purchase and lift, an aggregate quantity of Oil equal to seventy-five thousand (75,000) Barrels times the number of Days in such Contract Year, apportioned between Barrels of Oil of the Bosce1n type and the BCF-13 type as set forth in Exhibit 2 (the " Annual Contract Quantity" ), subject to an annual tolerance of three hundred twenty-five thousand (325,000) Barrels for each such grade of Oil; provided that, with respect to the First Contract Year and the Final Contract Year, the annual tolerance shall not be prorated for such partial Year periods.
3.2 Monthly Contract Quantity . In satisfaction of Buyer' s obligation to purchase and lift, and Seller' s obligation to sell and deliver, the Annual Contract Quantity (except as performance
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may be expressly excused in accordance with this Agreement) during each Month of each Contract Year, Seller shall sell and deliver, and Buyer shall purchase and lift, such number of Barrels of Oil of the Bosce1n and BCF-13 type as set forth in Exhibit 2 in respect of such Month (the " Monthly Contract Quantity" ), subject to the following exceptions: (a) an operational tolerance of five percent (5%) on each Cargo of Oil Buyer is scheduled to lift due to conditions at the Loading Port or affecting the vessel utilized by Buyer;
(b) notwithstanding Buyer' s obligations under Article 10.1.5 to minimize deadfreight in developing the Agreed Lifting Program for any Month and solely for the purpose of eliminating deadfreight, Seller shall at its option:
(i) permit Buyer to overlift the amount required to accept all vessels as proposed by Buyer in its Lifting Program for such Month; it being understood that Seller shall have no obligation to permit an overlifting in any Month greater than 250,000 Barrels of Bosce1n and 325,000 Barrels of BCF-13; or
(ii) defer lifting for the last vessel to the first ten (10) Days of the immediately subsequent Month; or (iii) specify a short load for the last vessel of either or both types of Oil to limit deliveries in such Month to a level at or above the Monthly Contract Quantity;
provided that: (A) if Seller selects clause (i) above, the resulting quantity overlifted shall be subtracted from the Monthly Contract Quantity for the immediately subsequent Month; (B) if Seller selects clauses (ii) or (iii) above, the resulting quantity underlifted shall be added to the Monthly Contract Quantity for the immediately subsequent Month; and (C) if Seller selects clause (iii) above, Buyer shall present a claim for reimbursement to Seller, and notwithstanding any provision herein to the contrary, Seller shall reimburse Buyer for the allocable portion of deadfreight cost based on the unit cost of freight for the subject vessel and Buyer' s proposed lifting volume applied to the short-loaded volume;
(c) notwithstanding the foregoing clauses (a) and (b) to the contrary, solely in respect of the first Month of the First Contract Year, Buyer shall have the option to nominate a Monthly Contract Quantity with a tolerance of thirty percent (30%) for each grade of Oil to enable Buyer to offset any Oil inventory surplus or shortfall at the Refineries.
In the event Buyer overlifts or underlifts the Monthly Contract Quantity in a given Month as a result of any of the exceptions set forth in clauses (a) or (b) above, Buyer shall accumulate and apply the net amount of such overlifted or underlifted quantity toward the Monthly Contract Quantity to be lifted in any subsequent Month.
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Article 4
Destination; No Resale to Third Parties
4.1 Utilization at the Refineries . The Oil to be sold by Seller to Buyer is intended to be utilized by Buyer at the Refineries. No Cargo purchased by Buyer under this Agreement may be shipped to any other facility except: (a) a facility utilized by Buyer for storage of Oil;
(b) a facility with which Buyer has an arrangement to process such Cargo and receive all refined products produced therefrom;
(c) any other U.S. refinery owned by Buyer or its Affiliates; provided , however , that, any delivery to such other U.S. refinery shall not relieve Buyer or its Affiliates from any of its obligations to lift, or receive delivery of, the full quantity of crude oil required to be lifted or received from Seller under any other long-term supply arrangement for such refinery. In the event that Buyer shall deliver any Cargo of Oil purchased from Seller hereunder to any other refinery within Buyer' s or its Affiliate' s U.S. refining system which is located in a geographic market other than that in which the Refineries are located, the prices determined pursuant to the provisions of Exhibit 3 shall be the Seller' s prices applicable for deliveries in such other geographic market; or
(d) with respect to any Cargo lifted by Buyer, any facility with the express written consent of Seller having been first obtained, which consent shall not be unreasonably withheld if it is requested in connection with an event described in Article 20.1.
Buyer shall not resell any Oil purchased under this Agreement to any Person not an Affiliate of Buyer.
4.2 Discharge Documentation . Upon Seller' s request, Buyer shall provide, for any Cargo of Oil delivered hereunder, a discharge certificate, which may consist of: (a) an independent inspector' s certificate of discharge, (b) a customs fees receipt or other government document evidencing the port in which the Cargo of Oil was discharged, (c) the exemption from customs fees at the port of discharge or (d) any other document that Seller deems an appropriate substitute for the foregoing.
Article 5
Price; Adjustment of Price Mechanism
5.1 Price . The price for each type of Oil to be sold by Seller and purchased by Buyer hereunder shall be determined in accordance with the provisions of Exhibit 3 , as adjusted by the Limited Market Adjustment determined in accordance with the provisions of Article 6 and Exhibit 4 .
5.2 Adjustment of Price Mechanism . Seller shall have the right at any time and from time to time, based on (i) discontinuance of the published market markers in the pricing formulas set forth in Exhibit 3 or the Limited Market Adjustment set forth in Exhibit 4 , (ii) changes in circumstances which make the applicability of the published market markers in the pricing
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formula or the Limited Market Adjustment inconsistent with a competitive market-based pricing formula, or (iii) changes in the quality of one or more types of Oil, to notify Buyer that it wishes to adjust or amend the pricing provisions of Exhibit 3 and/or the Limited Market Adjustment in Exhibit 4 with the objective of ensuring that the price of Oil reflects market conditions for similar crude oils. Seller' s notice shall state the proposed effective date thereof, which shall be no earlier than thirty (30) Days after the date of its notice; provided , however , that the succeeding provisions of this Article 5.2 shall only apply if such proposed adjustment or amendment is applicable to Seller' s publicly announced pricing formula for deliveries of Oil destined for ports in the United States and that the new price shall not apply to Oil already nominated by Buyer. Buyer shall then have thirty (30) Days in which to accept or reject such proposed changes. If Buyer accepts Seller' s proposal or does not notify Seller within such thirty (30) Day period that it rejects Seller' s proposal, then the provisions of Exhibit 3 and/or Exhibit 4 shall be deemed amended in accordance with Seller' s proposal as of the effective date specified in Seller' s notice. If Buyer rejects Seller' s proposal, then the provisions of Exhibit 3 and/or Exhibit 4 shall remain in effect and unchanged; provided , however , that Seller shall have the right to submit the matter to arbitration pursuant to Article 21.1. In such arbitration, each Party shall submit its proposed alternative pricing mechanism, and the arbitration panel shall determine the appropriate adjustments, if any, to be made to the pricing formulas and/or the Limited Market Adjustment as of the effective date specified in Seller' s notice.
Article 6
Limited Market Adjustment
6.1 Calculation of Limited Market Adjustment .
(a) For each Quarter during the Initial Term, Seller shall set off and deduct, and Buyer shall receive a credit and reduction for, an amount equal to (a) the difference, if any, between (i) the price per Barrel of Oil charged by Seller with respect to each Cargo of Oil lifted during such Quarter calculated in accordance with Exhibit 3 and (ii) the price per Barrel of Oil calculated in accordance with Exhibit 4 , multiplied by (b) the respective quantities of Bosce1n Oil and BCF-13 Oil delivered to the Refineries with respect to each such Cargo of Oil. Such setoff, deduction, credit and reduction is referred to herein as the " Limited Market Adjustment ," and each Limited Market Adjustment shall be determined and applied in accordance with clause (b) below; it being understood that any Cargo of Oil not delivered to either of the Refineries shall be disregarded for purposes of the Limited Market Adjustment.
(b) In the event that Buyer shall deliver any Cargo of Oil to any storage facility (" Storage Facility" ) for subsequent redelivery to a Refinery, upon the redelivery of such Cargo to a Refinery, such Cargo shall, for purposes of calculating the Limited Market Adjustment, if any, applicable to such Quarter, be deemed to have been delivered to a Refinery in the Quarter within which such redelivery occurs and the prices to be used shall be the prices applicable at the time of the original purchase.
(c) To the extent that, at any time, the sum of all Quarterly Surpluses exceeds the sum of
