Golar LNG Ltd 6K 2014 Q2

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

Commission File Number: 000-50113

GOLAR LNG LIMITED

(Translation of registrant's name into English)

Par-la-Ville Place

14 Par-la-Ville Road

Hamilton

HM 08

Bermuda

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F [ X ] Form 40-F [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ].

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ].

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Attached as Exhibit 99.1 is the Operating and Financial Review for the six months ended June 30, 2014 and the unaudited condensed consolidated interim financial statements of Golar LNG Limited (the "Company" or "Golar") as of and for the six months ended June 30, 2014.

Exhibits

The following exhibits are filed as part of this report on Form 6-K:



5.1	Engineering, Procurement and Construction agreement dated May 22, 2014 by and between Golar Hilli Corporation and Keppel Shipyard Limited.

16.1	Change in Auditors' Letter.

101	The following financial information from Golar LNG Limited Report on Form 6-K for the quarter ended June 30, 2014, filed with the SEC on September 4, 2014, formatted in Extensible Business Reporting Language (XBRL):
	i. Unaudited Condensed Consolidated Statements of Income for the six months ended June 30, 2014 and 2013;
	ii. Unaudited Condensed Consolidated Statements of Comprehensive Income for the six months ended June 30, 2014 and 2013;
	iii. Unaudited Condensed Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013;
	iv. Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013;
	v. Unaudited Condensed Consolidated Statements of Changes in Equity for the six months ended June 30, 2014 and 2013; and
	vi. Notes to the Unaudited Condensed Consolidated Financial Statements.

The information contained in this Report on Form 6-K is hereby incorporated by reference into the Company's registration statement on Form F-3 ASR (File no. 333-196992), which was filed with the U.S. Securities and Exchange Commission on June 24, 2014.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



GOLAR LNG LIMITED
(Registrant)


Date: September 4, 2014	By:	/s/ Brian Tienzo
	Name:	Brian Tienzo
	Title:	Principal Financial and Accounting Officer
		Golar Management Ltd. (Principal Financial Officer)

Exhibit 99.1

UNAUDITED CONDENSED INTERIM FINANCIAL REPORT

Forward Looking Statements

This report and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect of future events and financial performance. When use in this report, the words "believe", "anticipate", "intend", "estimate", "forecast", "project", "plan", "potential", "will", "may", "should", "expect", and similar expressions identify forward-looking statements.

The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitations, management's examination of historical operating trends, data contained in the our records and other data available for third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies, which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. As a result, you are cautioned not to rely on any forward-looking statements.

In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward looking statements include among other things:


•	changes in liquefied natural gas, or LNG, floating storage and regasification unit, or FSRU, and floating liquefaction natural gas vessel, or FLNGV, market trends, including charter rates, ship values and technological advancements;


•	changes in our ability to retrofit vessels as FSRUs and FLNGVs, our ability to obtain financing for such conversions on acceptable terms or at all, and the timing of the delivery and acceptance of such converted vessels;


•	changes in the supply of or demand for natural gas carried by sea;


•	a material decline or prolonged weakness in rates for LNG carriers or FSRUs;


•	changes in trading patterns that affect the opportunities for the profitable operation of LNG carriers, FSRUs or FLNGVs;


•	changes in the supply of or demand for natural gas generally or in particular regions;


•	changes in our relationships with major chartering parties;


•	changes in the availability of vessels to purchase, the time it takes to construct new vessels, or vessel's useful lives;


•	failure of shipyards to comply with delivery schedules on a timely basis or at all;


•	our ability to integrate and realize the benefits of acquisitions;


•	changes in our ability to sell vessels to Golar LNG Partners LP, or Golar Partners;


•	changes in our relationship with Golar Partners;


•	changes to rules and regulations applicable to LNG carriers, FSRUs or FLNGVs;


•	actions taken by regulatory authorities that may prohibit the access of LNG carriers, FSRUs or FLNGVs to various ports;


•	our inability to achieve successful utilization of our expanded fleet and inability to expand beyond the carriage of LNG;


•	increases in costs including among other things crew wages, insurance, provisions, repairs and maintenance;


•	changes in general domestic and international political conditions, particularly where our vessels operate;


•	changes in our ability to obtain additional financing on acceptable terms or at all;


•	continuing turmoil in the global financial markets; and


•	other factors listed from time to time in registration statements, reports and other materials that we have filed with or furnished to the U.S. Securities and Exchange Commission, or the Commission including our most recent annual report on Form 20-F.

We caution readers of this report not to place undue reliance on these forward-looking statements, which speak only as of their dates. Hence forward looking statements are not guarantees of our future performance, and actual results and future developments may vary materially from those projected in the forward looking statements.

All forward-looking statements included in this report are made only as of the date of this report and we assume no obligation to update any written or oral forward-looking statements made by us or on our behalf as a result of new information, future events or other factors.

The following is a discussion of our financial condition and results of operations for the six months ended June 30, 2014 and 2013. Unless otherwise specified herein, references to "the Company", "Golar", "we", "us", and "our", refer to Golar LNG Limited or any one or more of its consolidated subsidiaries, or to all such entities. You should read the following discussion and analysis together with the financial statements and related notes included elsewhere in this report. For additional information relating to management's discussion and analysis of financial condition and results of operation, please see our annual report on Form 20-F for the year ended December 31, 2013, which was filed with the Commission, on April 30, 2014.

Overview

We are a mid-stream LNG company engaged primarily in the transportation, regasification and liquefaction and trading of LNG. We are engaged in the acquisition, ownership, operation and chartering of LNG carriers and FSRUs through our subsidiaries and affiliates and the development of mid-stream LNG projects. As of the date of this report, our fleet consisted of eight vessels and nine newbuildings.

Recent and other developments in 2014

Four ship sale and leaseback financing

In February 2014, we executed a four ship sale and leaseback transaction with ICBL Finance Leasing Co. Ltd ("ICBCL"). The financing structure will fund 90% of the shipyard purchase price of each newbuilding. No funds had been drawn down on this facility as of June 30, 2014.

Golar Igloo disposal

In February 2014, we took delivery of the FSRU, the Golar Igloo. On March 28, 2014, we completed our sale of our equity interest in the company that owns and operates the Golar Igloo to Golar Partners for the price of $310.0 million for the vessel (including charter) less the assumed $161.3 million of bank debt, plus the fair value of the interest rate swap asset of $3.6 million and plus other purchase price adjustments and Golar Partners paid us the remaining balance in cash using the proceeds of Golar Partner's equity offering in December 2013.

Newbuild delivery

In May 2014, we took delivery of the LNG Carrier, the Golar Crystal. She is currently available for charter on the spot market while long-term opportunities are being pursued.

Hilli FLNGV conversion

On May 22, 2014, we entered into a contract with Keppel, or the Conversion Agreement, for the conversion of the 125,000 m³ LNG carrier the Hilli to a FLNGV. Keppel simultaneously entered into a sub-contract with the global engineering, construction and procurement company Black & Veatch, or B&V. We also entered into a Tripartite Direct Agreement with Keppel and B&V, which among other things, permits us to enforce all obligations under both the Conversion Agreement and the sub-contract. We expect the conversion will be completed and the FLNGV will be delivered in approximately 31 months, followed by mobilization to a project site for full commissioning. Once operational as an FLNGV, we expect the Hilli will have production capacity of between 2.2 to 2.8 million tonnes per year of LNG and on board storage of approximately 125,000 m³ of LNG. The total estimated conversion and vessel and site commissioning cost for the Hilli, including contingency, is approximately $1.3 billion, of which net proceeds of $660.9 million was raised from the Company’s offering of common shares that closed on June 30, 2014. We expect that the current project vendors will fund 10% of the total conversion and vessel and site commissioning cost by way of investment into the company that owns the Hilli. The remaining vessel and site commissioning cost will be funded by sources still to be put into place. Payments for the completion of the conversion of the Hilli, will be due from time to time upon completion of contractual milestones, and are expected to span from 2014 until the first quarter of 2017.

Work on the Hilli FLNGV conversion is underway. Certain long lead items have already been ordered. These include cold boxes, compressors and turbines. We have also entered into a 20-year maintenance contract with Nuovo Pigone SPA, an affiliate of GE Oil & Gas.

Annual General Meeting

On July 3, 2014, we announced that our 2014 Annual General Meeting will be held on September 19, 2014, and that the record date for voting at the Annual General Meeting is July 18, 2014.

Follow-on Equity Offering

On June 30, 2014, we closed a registered offering of 12,650,000 of our common shares, par value $1.00 per share, which included 1,650,000 common shares purchased pursuant to the Underwriters' option to purchase additional common shares. We raised net proceeds of $660.9 million¹.

Share options

During the six months ended June 30, 2014, we issued 0.1 million new common shares with the exercise of the same number of options. Following the exercise of these options, 0.5 million options remain outstanding. As of June 30, 2014 there were 93.3 million common shares outstanding excluding the common shares underlying the outstanding options.

Cash dividends

In May 2014, we declared a dividend of $0.45 per share in respect of the quarter ended March 31, 2014 which was paid in July 2014. In addition, Golar Partners made a final cash distribution of $0.5225 per unit in April 2014 in respect of the quarter ended March 31, 2014, of which we received $14.8 million of dividend income in relation to our common, subordinated and general partner units and incentive distribution rights ("IDRs") held at the record date.

On August 26, 2014, we declared a cash dividend in the amount of $0.45 per common share for the three months ended June 30, 2014, which will be paid on or about September 26, 2014 to all shareholders of record as of September 10, 2014.

Large shareholdings

In July 2014, our director and Vice Chairman, Tor Olav Troim, acquired 3.0 million shares in Golar from our majority shareholder World Shipholding Limited ("World Shipholding") bringing his total direct and indirect holding in us to 3.4 million shares representing a 3.6% interest. World Shipholding's ownership in us following this transaction is 33.8 million shares representing a 36.2% interest.

Change in auditors

In August 2014, we engaged Ernst & Young LLP as our principal accountants and PricewaterhouseCoopers LLP was dismissed. The decision to change accountants was approved by the Audit Committee and our Board of Directors. Refer to note 17 for further details.

Gimi FLNGV conversion

In addition to the Hilli conversion, we are in the process of negotiating definitive documentation with Keppel for the conversion of the Gimi into a FLNGV. We expect that the converted Gimi would have similar production capacity and on-board storage as the converted Hilli. We expect to reach agreement with Keppel on definitive documentation by October 2014, and as a condition precedent to the effectiveness of such agreement will make an initial payment in the order of $150.0 million, or the Initial Payment, to Keppel to start securing long lead items for the Gimi conversion. The Gimi construction agreements will be executed by a new subsidiary of Golar, Golar Gimi Corporation. The Initial Payment will be payable as a condition precedent to the effectiveness of the Gimi construction agreements following their execution. We also intend that the definitive agreements will provide for full construction activities to commence only upon the issue by Golar of a full notice to proceed (such notice to be issued not later than November 2015). Upon execution of the definitive documentation and the Initial Payment, we will retain termination rights that in an event of termination will require a portion of the Initial Payment be applied, to the extent that the Initial Payment has not been committed for the purposes of the works above, as a cancellation payment and to subcontractor break fees, with the remainder being applied as an advance payment for remaining sums payable in connection with the Hilli conversion. If the Initial Payment has been committed such that there is an insufficient amount remaining to be applied to the cancellation payment and subcontractor break fees, Golar Gimi Corporation will be required to meet the payment obligation.

The expected delivery date from the yard of the Gimi FLNGV is in the fourth quarter of 2017 or the first quarter of 2018, although there may be an opportunity to accelerate delivery by making a construction agreement effective sooner.

Keppel Shareholder Agreement

Our subsidiary, Golar GHK Lessors Limited has entered into a share sale and purchase agreement, or the Share with KSI Production Pte Ltd (a subsidiary of Keppel Corporation Limited) pursuant to which Keppel has agreed to purchase from Golar GHK Lessors Limited 10% of the shares that Golar GHK Lessors Limited holds in Golar Hilli Corporation, the owner of the Hilli. The closing under the Share Purchase Agreement is subject to certain conditions, primarily the receipt of payment from Keppel. Golar GHK Lessors Limited and KSI Production Pte Ltd, together with Golar Hilli Corporation, have also entered into a shareholders' agreement which will enter into effect upon the closing of the share sale under the Share Purchase Agreement. The shareholders' agreement governs the relationship between Golar GHK Lessors Limited and KSI Production Pte Ltd with respect to the conduct of the business to be undertaken by Golar Hilli Corporation, which includes seeking opportunities, and entering into agreements, with respect to the deployment and use of the Hilli for natural gas liquefaction projects. Under the shareholder’s agreement, Golar appoints the majority of directors and certain strategic decisions are subject to shareholder consent. Golar Hilli Corporation Limited may call for cash from the shareholders for any future funding requirements and shareholders are required to contribute to such cash calls up to a defined cash call contribution cap (after which funding is discretionary but non-funding results in dilution of the shareholders' interest).

Changes to Loan Facilities and Other Agreements

Certain of our loan facilities and other agreements contain provisions requiring that World Shipholding or its affiliates continue to own, directly or indirectly, 25% of our outstanding common shares. We have entered into agreements in principle with our lenders to remove such ownership requirements in exchange for certain amendments, such as stronger financial covenants for our loan facilities, including increases to the free cash and net worth covenants. These agreements are subject to definitive documentation.

Market Update

In providing an update on the current quarter, we have experienced continued softness in LNG spot rates. For the current quarter, we anticipate top-line performance in line with the prior quarter, with the potential for a modest improvement to profitability.

¹Includes additional issue costs of $0.6 million.

Operating and Financial Review

Six Month Period Ended June 30, 2014 Compared with the Six Month Period Ended June 30, 2013

Vessels operations segment



	Six Months Ended June 30,
(in thousands, $USD, except average daily TCE)	2014		2013		Change		% Change
Operating revenues	42,050		64,434		(22,384	)	(35	)%
Vessel operating expenses	(25,552	)	(21,910	)	(3,642	)	17	%
Voyage expenses	(9,355	)	(3,500	)	(5,855	)	167	%
Administrative expenses	(9,332	)	(11,173	)	1,841		(16	)%
Depreciation and amortization	(24,236	)	(17,439	)	(6,797	)	39	%
Gain on disposals to Golar Partners (includes amortization of deferred gain)	35,036		65,365		(30,329	)	(46	)%
Dividend income	12,855		15,101		(2,246	)	(15	)%
Other non-operating loss	(750	)	—		(750	)	(100	)%
Interest income	287		1,975		(1,688	)	(85	)%
Interest expense	(3,535	)	—		(3,535	)	(100	)%
Other financial items, net	(38,484	)	45,123		(83,607	)	(185	)%
Taxes	1,180		1,400		(220	)	(16	)%
Equity in net earnings of affiliates	7,084		5,490		1,594		29	%
Net (loss) income	(12,752	)	144,866		(157,618	)	(109	)%
TCE ⁽¹⁾ (to the closest $100)	32,800		73,600		(40,800	)	(55	)%


⁽¹⁾	Time Charter Equivalent, or TCE, is a non-GAAP financial measure. See the section of this report entitled "Non-GAAP measures" for a discussion of TCE.

Operating revenues: Total operating revenues decreased by $22.4 million to $42.1 million for the six months ended June 30, 2014 compared to $64.4 million for the same period in 2013. This was principally due to:

•

An overall decline in charter rates and lower utilization levels of our vessels trading on the spot market, the Golar Viking and the Gimi. The Gimi also entered into lay-up in January 2014. In addition, although our newbuildings, the Golar Seal and the Golar Celsius were delivered in October 2013 and the Golar Crystal delivered in May 2014, they have been mostly offhire, contributing only $5.7 million to revenue in the six months ended June 30, 2014;


•	Reduction in revenues of $3.0 million in relation to the Golar Maria following her disposal to Golar Partners in February 2013; and

Partially offset by an increase in operating revenues arising from:


•	Revenue contribution in the six months ended June 30, 2014 of $4.2 million from the Golar Igloo following her delivery and the commencement of her charter with Kuwait National Petroleum Company ("KNPC") in March 2014 and for the period prior to her disposal to Golar Partners on March 28, 2014.

Accordingly, this resulted in a lower daily time charter equivalent, or TCE, for the six months ended June 30, 2014 of $32,800 compared to $73,600 for the same period in 2013.

Vessel operating expenses: Vessel operating expenses increased by $3.6 million to $25.6 million for the six months ended June 30, 2014 compared to $21.9 million for the same period in 2013. The increase was primarily due to:


•	Additional operating costs in relation to our newbuildings, the Golar Seal and the Golar Celsius delivered in October 2013, the Golar Igloo delivered in February 2014 (prior to her disposal to Golar Partners on March 28, 2014) and the Golar Crystal delivered in May 2014. There were no comparable costs in the same period in 2013;


•	Higher operating costs in connection with the increase in our crewing pool in anticipation of the delivery of our newbuilds. Total operating costs in respect of our newbuilding crew pool for the six months ended June 30, 2014 was $7.0 million compared to $5.3 million in the same period in 2013;

Partially offset by a decrease in operating expenses arising from:


•	Lower operating costs from our vessels in lay-up. The Hilli and the Golar Gandria entered into lay-up in April 2013 followed by the Gimi in January 2014; and


•	Reduced operating costs in relation to Golar Maria following her sale to Golar Partners in February 2013.

Voyage expenses: Voyage expenses largely relate to fuel costs associated with commercial waiting time and vessel positioning costs. While a vessel is on-hire, fuel costs are typically paid by the charterer, whereas during periods of commercial waiting time, fuel costs are paid by us. The increase in voyage expenses of $5.9 million to $9.4 million for the six months ended June 30, 2014 compared to $3.5 million for the same period in 2013 was primarily due to (i) lower utilization of our spot vessels, the Golar Viking and the Gimi (prior to her entry into lay-up); and (ii) our newbuildings, the Golar Seal and Golar Celsius, which were delivered in October 2013 and Golar Crystal delivered in May 2014, were mostly off-hire during the six months ended June 30, 2014 which further contributed to higher voyage expenses. There were no comparable costs for these newbuildings in the same period in 2013.

Administrative expenses: Administrative expenses decreased by $1.8 million to $9.3 million for the six months ended June 30, 2014 compared to $11.2 million for the same period in 2013. This was primarily due to FLNG related items, such as (i) the capitalization of FLNG related project costs from May 2014, following the signing of the Hilli conversion contract, which resulted in a decrease in project costs; and (ii) partially offset by an increase in salaries and benefits mainly as a result of an increase in headcount.

Depreciation and amortization: Depreciation and amortization increased by $6.8 million to $24.2 million for the six months ended June 30, 2014 compared to $17.4 million for the same period in 2013. This was primarily due to additional depreciation expense on the newbuildings, the Golar Seal and Golar Celsius both delivered in October 2013, the Golar Igloo, delivered in February 2014 (prior to her disposal to Golar Partners in March 2014) and Golar Crystal, delivered in May 2014. This was partially offset by lower depreciation and amortization expense on the Golar Maria following her disposal to Golar Partners in February 2013.

Gain on disposals to Golar Partners (including amortization of deferred gain):

In March 2014, we sold a 100% interest in the company that owns and operates the FSRU, the Golar Igloo, to Golar Partners and made a gain on disposal of $34.7 million. This excludes the deferred gain of $8.6 million which is being amortized over the useful economic life of the vessel or until disposal. The purchase consideration was $310.0 million for the vessel less the assumed bank debt of $161.3 million plus the fair value of the interest rate swap asset of $3.6 million and other purchase price adjustments of $3.6 million.

In February 2013, we sold a 100% interest in the company that owns and operates the LNG carrier, Golar Maria, to Golar Partners and made an initial gain on disposal of $65.2 million. This excludes the deferred gain of $17.1 million which is being amortized over the useful economic life of the vessel or until disposal. The purchase consideration was $215.0 million for the vessel less the assumed bank debt of $89.5 million and the fair value of the interest rate swap liability of $3.1 million plus other purchase price adjustments of $5.5 million.

Dividend income: We recognized dividend income relating to cash distributions received from Golar Partners in respect of our interests in common units and general partner interests (during the subordination period) and IDRs. The decrease in dividend income of $2.2 million to $12.9 million for the six months ended June 30, 2014 compared to $15.1 million for the same period in 2013 was due to our sale of 3.4 million of our common units held in Golar Partners in December 2013.

Interest income: Interest income decreased by $1.7 million to $0.3 million for the six months ended June 30, 2014 compared to $2.0 million for the same period in 2013. The decrease was primarily due to (i) our disposal of our participation in Golar Partners high-yield bonds in November 2013. There was no comparable income earned in the six months ended June 30, 2014 compared to $1.2 million for the same period in 2013; and (ii) decrease in interest income of $0.6 million from our fixed deposits due to smaller deposits held on short-term deposits in 2014 compared to the same period in 2013.

Interest expense: Interest expense increased to $3.5 million for the six months ended June 30, 2014 compared to $nil for the same period in 2013. This was due to higher interest costs incurred compared to the same period in 2013 where interest expense incurred was fully offset by the effect of the capitalization of deemed interest costs in respect of our newbuilds.

Other financial items: Other financial items reported a loss of $38.5 million and a gain of $45.1 million for the six months ended June 30, 2014 and 2013, respectively. The movement of $83.6 million was primarily due to:

Net realized and unrealized (losses) gains on interest rate swap agreements: Net realized and unrealized (losses) gains on interest rate swaps resulted to a loss of $33.7 million for the six months ended June 30, 2014, from a gain of $46.4 million for the same period in 2013, as set forth in the table below:



	Six months ended June 30,
(in thousands of $)	2014		2013		Change		% change
Unrealized (mark-to-market) (losses) gains for interest rate swaps	(23,649	)	51,478		(75,127	)	(146	)%
Interest expense on undesignated interest rate swaps	(10,031	)	(5,101	)	(4,930	)	97	%
	(33,680	)	46,377		(80,057	)	(173	)%

As of June 30, 2014, we have an interest rate swap portfolio with a notional amount of $1.5 billion, of which 8% by notional amount are designated as hedges for accounting purposes. Accordingly, a further $2.0 million of unrealized gains were accounted for as a change in other comprehensive income which would have otherwise been recognized in earnings for the six months ended June 30, 2014. The shift to mark-to-market losses from gains on our interest rate swaps was due to the decrease in long-term swap rates during the six months ended June 30, 2014. In contrast, the outlook for the same period in 2013 was that long-term interest rates were going to increase.

In addition, we incurred interest expense of $4.7 million for the six months ended June 30, 2014 on forward start swaps entered into in the fourth quarter of 2012. There was no comparable cost for the same period in 2013.

Finance arrangement fees: Finance arrangement fees increased to $4.4 million for the six months ended June 30, 2014, compared to $0.3 million for the same period in 2013. This was mainly due to higher commitment fees in respect of our $1.125 billion newbuild facility entered into in July 2013. There were no comparable costs for the same period in 2013.

Income taxes: Income taxes relate principally to the taxation of U.K. based entities offset by the amortization of the deferred gains on the intra-group transfers on long-term assets resulting in an income tax credit.

Equity in net earnings of affiliates:



	Six months ended June 30,
(in thousands of $)	2014	2013	Change	% Change
Share of net earnings in Golar Partners	6,771	5,190	1,581	30	%
Share of net earnings in other affiliates	313	300	13	4	%
	7,084	5,490	1,594	29	%

Our share of the results of Golar Partners is calculated with reference only to our interests in its subordinated units, but partially offset by a charge for the amortization of the basis difference in relation to the gain on loss of control recognized on deconsolidation in 2012.

Net income: As a result of the foregoing, we recognized net loss of $12.8 million and net income of $144.9 million for the six months ended June 30, 2014 and 2013, respectively.

LNG trading commodity segment



	Six months ended June 30,
(in thousands, $)	2014		2013		Change		% Change
Administrative expenses	(39	)	(99	)	60		(61	)%
Depreciation and amortization	(231	)	(232	)	1		—	%
Other operating gains	1,317		—		1,317		100	%
Other non-operating income	718		—		718		100	%
Net financial expenses	(252	)	(2	)	(250	)	12,500	%
Net income (loss)	1,513		(333	)	1,846		(554	)%

The total income (loss) for LNG trading for the six months ended June 30, 2014 and 2013 amounted to an income of $1.5 million and a loss of $0.3 million, respectively. Administrative expenses for the six months ended June 30, 2014 were broadly in line with the same period in 2013.

Other operating gains represent realized gains on physical cargo trades, financial derivative contracts and proprietary trades entered into. During the six months ended June 30, 2014, we entered into a Purchase and Sales Agreement to buy and sell LNG cargo. The LNG cargo was acquired and subsequently sold on a delivered basis to a related party to KNPC to facilitate the commissioning of the Golar Igloo which entered into her long-term charter with KNPC in March 2014. This resulted in a gain of $1.3 million. The transaction was our first since 2011 when we scaled back our LNG trading activities but it's now our intention to position ourselves to manage and trade a number of LNG cargoes for the Golar Igloo during the course of her charter with KNPC.

Project Development Activity

Hilli FLNGV conversion

On May 22, 2014, we entered into a contract with Keppel, or the Conversion Agreement, for the conversion of the 125,000 m3 LNG carrier the Hilli to a FLNGV. Keppel simultaneously entered into a sub-contract with the global engineering, construction and procurement company Black & Veatch, or B&V. We also entered into a Tripartite Direct Agreement with Keppel and B&V, which among other things ensures our ability to enforce all obligations under both the Conversion Agreement and the sub-contract. We expect the conversion will be completed and the FLNGV delivered in approximately 31 months, followed by mobilization to a project site for full commissioning. Once operational as an FLNGV, we expect the Hilli will have production capacity of between 2.2 to 2.8 million tonnes per year of LNG and on board storage of approximately 125,000 m3 of LNG. The total estimated conversion and vessel and site commissioning cost for the Hilli, including contingency, is approximately $1.3 billion, of which will be partly funded with the net proceeds of $660.9 million was raised in the Company’s our follow-on offering of common shares that closed on June 30, 2014. The current project vendor will fund ten percent of the total conversion and vessel site commissioning cost by way of investment into the company that owns the Hilli. Payments for the completion of the conversion of the Hilli, will be due from time to time upon completion of contractual milestones, and will span from 2014 until the first quarter of 2017.

Gimi FLNGV Conversion

Keppel Shareholder Agreement

Liquidity and Capital Resources

As of June 30, 2014 we had cash and cash equivalents including restricted cash of $484.7 million and our outstanding long-term debt amounted to $782.0 million. As of August 15, 2014, $1.2 billion of our newbuilding contractual commitments remain outstanding due in 2014 and 2015 upon their delivery. We believe our current financial resources that are available to us, including the aggregate undrawn balance of $1.3 billion under our $1.125 billion (eight ships) facility and our $742.4 million ICBCL (four ships) sale and leaseback transaction will cover our remaining newbuilding commitments upon delivery of the associated vessels, distributions from Golar Partners and the potential sale of our vessel interests to Golar Partners will be sufficient to meet our liquidity requirements for our business, for at least the next twelve months. We have performed stress testing of our forecast cash reserves under extreme and largely theoretical scenarios, which include assumptions such as nil revenue contribution from our fleet, full operating costs and maintaining our dividend payments at current levels, and accordingly are confident of our ability to manage through the near term cash requirements.

Our medium and long-term liquidity requirements are primarily for funding the ongoing retrofitting of our vessels into floating liquefaction vessels and repayment of long-term debt balances. Sources of funding for our medium and long-term liquidity requirements include new loans, refinancing of existing arrangements, public and private debt and equity offerings, potential sales of our interests in our vessel-owning subsidiaries operating under long-term charters, that may include the Golar Eskimo which is due for delivery in 2014 and will operate under a long-term time charter and sale of our holding in the common units of Golar Partners. More recently we raised net proceeds of $660.9 million¹ from our successful equity offering in June 2014 for use to part fund the conversion payments of the Hilli through to the end of 2015, of which $165.1 million had been paid out as of June 30, 2014. Historically, we have also entered into financing arrangements with our related parties, such as World Shipholding to provide intermediate financing for capital expenditures until longer-term financing is obtained. Due to our current strong liquidity position and desire to reduce payment of commitment fees, the World Shipholding revolving credit facility of $120.0 million was terminated in August 2014. In addition, with respect to the Arctic debt facility, which matures with a balloon payment of $86.3 million due in January 2015, we are currently in the process of refinancing this debt and do not anticipate any issue with securing new debt finance prior to its maturity date.

¹ Includes additional issue costs of $0.6 million.

Cash flow

Our cash used in operating activities was $7.6 million for the six months ended June 30, 2014, compared to net cash provided by operating activities of $34.6 million for the same period in 2013. This decrease was primarily due to the softening of the LNG shipping market resulting in an overall decline in charter rates and lower utilization levels of our vessels trading on the spot market, in addition to our decision to place three vessels in lay-up (pending conversion opportunities).

Net cash used in investing activities of $474.9 million for the six months ended June 30, 2014 arose mainly due to:


•	higher installment payments in respect of our newbuilds;


•	initial milestone payments made in respect of the conversion of the Hilli into an FLNGV; and


•	granting of a short-term revolving credit facility to Golar Partners.

Partially offset by:


•	proceeds of $148.0 million received from Golar Partners in respect of the sale of the Golar Igloo in March 2014; and


•	release of performance bonds of $23.4 million for certain projects awarded to us in 2013.

Net cash used in investing activities of $226.8 million for the six months ended June 30, 2013 was primarily due to:


•	installment payments made in respect of newbuilds;


•	contributions of $2.6 million to Golar Partners to maintain our 2% general partner interest and payment of $12.4 million to acquire additional common units in connection with Golar Partner's January 2013 equity offering;


•	granting of a short-term loan to Golar Partners;


•	granting of a short-term loan to a third party of $12.0 million, of which $2.5 million was repaid at the end of 2013; and

Partially offset by


•	proceeds of $117.5 million received from Golar Partners in respect of the sale of the Golar Maria in February 2013.

Net cash provided by financing activities is principally generated from funds from new debt, partially offset by debt repayments and cash dividends.

Net cash provided by financing activities was $841.8 million for the six months ended June 30, 2014 mainly relating to the following:


•	net proceeds (relates to gross proceeds less underwriters' discount) received from the June 2014 equity offering of $661.6 million¹;


•	$289.2 million draw down in respect of our $1.125 billion facility to fund the final installment payments on the Golar Igloo and the Golar Crystal less payment of $7.9 million of related financing costs. The debt in relation to the Golar Igloo was assumed by Golar Partners on its acquisition of the company that owns and operates the Golar Igloo in March 2014; and


•	$67.6 million draw down from a short-term facility to fund the LNG cargo trade during the first quarter of 2014. This was paid subsequently in April 2014 with the receipt of $71.6 million upon settlement of the related LNG cargo trade receivable.

This was partially offset by the payment of dividends of $36.3 million and repayment of short-term and long-term debt (including debt due to related party) of $132.9 million.

Net cash used in financing activities for the six months ended June 30, 2013 of $41.1 million was mainly related to the payment of dividends of $36.5 million and repayment on our long-term debt of $4.7 million.

¹Excludes additional issue costs of $0.6 million which were paid in July 2014.

NON-GAAP measures

Time Charter Equivalent

The average time charter equivalent, or TCE, rate of our fleet is a measure of the average daily revenue performance of a vessel. For time charters, this is calculated by dividing total operating revenues, less any voyage expenses, by the number of calendar days minus days for scheduled off-hire. Under a time charter, the charterer pays substantially all of the vessel voyage related expenses. However, we may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time charter, during periods of commercial waiting time or while off-hire during drydocking. TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in an entity's performance despite changes in the mix of charter types (i.e. spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods. We include average daily TCE, a non-GAAP measure, as we believe it provides additional meaningful information in conjunction with total operating revenues, the most directly comparable GAAP measure, because it assists our management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. Our calculation of TCE may not be comparable to that reported by other entities. The following table reconciles our total operating revenues to average daily TCE.



(in thousands of $USD except number of days and average daily TCE)	Six months ended June 30,
	2014		2013
Time charter revenues	36,872		59,466
Voyage expenses	(9,355	)	(3,500	)
	27,517		55,966
Calendar days less scheduled off-hire days	839		760
Average daily TCE (to the closest $100)	32,800		73,600

GOLAR LNG LIMITED

INDEX TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PAGE



Unaudited Condensed Consolidated Statements of Income for the six months ended June 30, 2014 and 2013				13

Unaudited Condensed Consolidated Statements of Comprehensive Income for the six months ended June 30, 2014 and 2013				14

Unaudited Condensed Consolidated Balance Sheets as of June 30, 2014 and for the year ended December 31, 2013				15

Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013				16

Unaudited Condensed Consolidated Statements of Changes in Equity for the six months ended June 30, 2014 and 2013				18

Notes to the Unaudited Condensed Consolidated Financial Statements				19

GOLAR LNG LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME



(in thousands of $ except per share amounts)	2014			2013
	Jan-Jun			Jan-Jun

Time charter revenues	36,872			59,466
Vessel and other management fees ¹	5,178			4,968
Operating revenues	42,050			64,434

Vessel operating expenses	25,552			21,910
Voyage expenses	9,355			3,500
Administrative expenses	9,371			11,272
Depreciation and amortization	24,467			17,671
Total operating expenses	68,745			54,353

Gain on disposals to Golar Partners (includes amortization of deferred gains)	35,036			65,365
Other operating gains and losses	1,317			—

Operating income	9,658			75,446

Other non-operating income (expense)
Dividend income	12,855			15,101
Other non-operating expense	(32		)	—

Total other non-operating income	12,823			15,101

Financial income (expenses)
Interest income	287			1,975
Interest expense	(3,535		)	—
Other financial items, net	(38,736		)	45,121
Net financial (expenses) income	(41,984		)	47,096

(Loss) income before taxes and equity in net earnings of affiliates	(19,503		)	137,643
Taxes	1,180			1,400
Equity in net earnings of affiliates	7,084			5,490

Net (loss) income	(11,239		)	144,533

Basic (loss) earnings per share ($)	(0.14		)	1.80
Diluted (loss) earnings per share ($)	(0.14		)	1.69

Cash dividends declared and paid per share²	$	0.90		$	0.45

⁽¹⁾This relates to related party ship management fee and management and administrative fee recharges. Refer to note 15.

⁽²⁾The dividends declared in May 2014 for the quarter ended March 31, 2014 of $36.2 million were paid in July 2014.

The accompanying notes are an integral part of these condensed consolidated financial statements.

GOLAR LNG LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



	2014		2013
(in thousands of $)	Jan-Jun		Jan-Jun
(in thousands of $)

Net (loss) income	(11,239	)	144,533

Other comprehensive income:
Unrealized net gain on qualifying cash flow hedging instruments (1)	1,751		3,008
Unrealized gain on investment in available-for-sale securities	58,333		52,110
Other comprehensive income	60,084		55,118
Comprehensive income	48,845		199,651

⁽¹⁾Includes share of net loss of $0.2 million and $nil for the six months ended June 30, 2014 and 2013, respectively on qualifying cash flow hedging instruments held by an affiliate.

The accompanying notes are an integral part of these condensed consolidated financial statements.

GOLAR LNG LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS



	2014	2013
(in thousands of $)	June-30	Dec-31
(in thousands of $)

ASSETS
Current
Cash and cash equivalents	484,683	125,347
Restricted cash	—	23,432
Trade accounts receivable	1,329	81
Inventory	9,112	11,951
Other current assets	10,281	14,574
Amounts due from related parties	15,839	6,311
Short-term debt due from a related party	20,000	—
Total current assets	541,244	181,696
Non-current
Restricted cash	3,111	3,111
Investment in available-for-sale securities	325,684	267,352
Investment in affiliates	340,526	350,918
Cost method investments	204,172	204,172
Newbuildings	765,524	767,525
Asset under development	211,607	—
Vessels and equipment, net	968,400	811,715
Other long-term assets	46,467	78,732
Total assets	3,406,735	2,665,221


LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Current portion of long-term debt	125,174	30,784
Other current liabilities	97,526	59,427
Amounts due to related parties	572	363
Total current liabilities	223,272	90,574
Long-term
Long-term debt	656,875	636,244
Long-term debt due to related parties	—	50,000
Other long-term liabilities	84,420	84,266
Total liabilities	964,567	861,084

Equity
Stockholders' equity	2,442,168	1,804,137

Total liabilities and stockholders' equity	3,406,735	2,665,221

The accompanying notes are an integral part of these condensed consolidated financial statements.

GOLAR LNG LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS



	2014		2013
(in thousands of $)	Jan-Jun		Jan-Jun


OPERATING ACTIVITIES
Net (loss) income	(11,239	)	144,533
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization	24,467		17,671
Amortization of deferred tax benefits on intra-group transfers	(1,744	)	(1,743	)
Amortization of deferred charges and parent guarantee	1,093		65
Gain on disposals to Golar Partners (includes amortization of deferred gains)	(35,036	)	(65,365	)
Equity in net earnings of affiliates	(7,084	)	(5,490	)
Dividend income from available-for-sale securities and cost investments recognized in operating income	(12,855	)	(15,101	)
Dividends received	30,153		31,290
Drydocking expenditure	(3,203	)	(235	)
Stock-based compensation	241		332
Net foreign exchange gain	(839	)	—
Change in assets and liabilities, net of effects from disposals to Golar Partners:
Trade accounts receivable	(7,443	)	(501	)
Inventories	(1,285	)	(5,449	)
Prepaid expenses, accrued income and other assets	29,491		(41,061	)
Amounts due from/to related companies	(1,662	)	1,191
Trade accounts payable	(6,548	)	(1,892	)
Accrued expenses and deferred income	4,696		(3,354	)
Other liabilities	(8,795	)	(20,254	)
Net cash (used in) provided by operating activities	(7,592	)	34,637

The accompanying notes are an integral part of these condensed consolidated financial statements.

GOLAR LNG LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS



	2014		2013
(in thousands of $)	Jan-Jun		Jan-Jun
(in thousands of $)

INVESTING ACTIVITIES
Additions to vessels and equipment	(2,224	)	(410	)
Additions to newbuildings	(459,041	)	(298,499	)
Additions to assets under development	(165,078	)	—
Short-term loan granted to third party	—		(11,960	)
Short-term loan granted to Golar Partners	(20,000	)	(20,000	)
Additions to investments	—		(2,620	)
Additions to available-for-sale securities	—		(12,400	)
Proceeds from disposal of business to Golar Partners, net of cash disposed ⁽¹⁾	148,048		117,517
Restricted cash and short-term investments	23,433		1,551
Net cash used in investing activities	(474,862	)	(226,821	)

FINANCING ACTIVITIES
Proceeds from issuance of equity, net of issue costs ⁽²⁾	661,582		—
Proceeds from short-term debt	67,559		—
Proceeds from long-term debt (including related parties)	289,203		—
Repayments of short-term and long-term debt (including related parties)	(132,941	)	(4,700	)
Financing costs paid	(7,853	)	(47	)
Cash dividends paid⁽³⁾	(36,271	)	(36,479	)
Proceeds from exercise of share options	511		153
Net cash provided by (used in) financing activities	841,790		(41,073	)
Net increase (decrease) in cash and cash equivalents	359,336		(233,257	)
Cash and cash equivalents at beginning of period	125,347		424,714
Cash and cash equivalents at end of period	484,683		191,457

⁽¹⁾In addition to cash consideration received for the disposals to Golar Partners, there was non-cash consideration, including assumption of bank debt, interest rate swap asset/liability and other purchase price adjustments (see note 4).

⁽²⁾This excludes additional issue costs of $0.6 millionwhich were paid in July 2014.

⁽³⁾Cash dividends declared in relation to the quarter ended March 31, 2014 amounting to$36.2 million were paid in July 2014.

The accompanying notes are an integral part of these condensed consolidated financial statements.

GOLAR LNG LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



(in thousands of $)	Share Capital	Additional Paid in Capital	Contributed Surplus	Accumulated Other Comprehensive (loss)/income		Accumulated Retained Earnings		Total Equity
Balance at December 31, 2012	80,504	654,042	200,000	(18,730	)	848,503		1,764,319

Net income	—	—	—	—		144,533		144,533
Dividends	—	—	—	—		(36,479	)	(36,479	)
Grant of share options	—	332	—	—		—		332
Exercise of share options	16	243	—	—		(106	)	153
Other comprehensive income	—	—	—	55,118		—		55,118

Balance at June 30, 2013	80,520	654,617	200,000	36,388		956,451		1,927,976



(in thousands of $)	Share Capital	Additional Paid in Capital	Contributed Surplus	Accumulated Other Comprehensive (loss)/income		Accumulated Retained Earnings		Total Equity
Balance at December 31, 2013	80,580	656,018	200,000	(6,757	)	874,296		1,804,137

Net loss	—	—	—	—		(11,239	)	(11,239	)
Dividends⁽¹⁾	—	—	—	—		(72,513	)	(72,513	)
Grant of share options	—	241	—	—		—		241
Exercise of share options	50	769	—	—		(308	)	511
Other comprehensive income	—	—	—	60,084		—		60,084
Net proceeds from issuance of shares⁽²⁾	12,650	648,297	—	—		—		660,947

Balance at June 30, 2014	93,280	1,305,325	200,000	53,327		790,236		2,442,168

⁽¹⁾Cash dividends declared in relation to the quarter ended March 31, 2014 amounting to $36.2 million were paid in July 2014.

⁽²⁾Includes additional issue costs of$0.6 millionwhich were paid in July 2014.

The accompanying notes are an integral part of these condensed consolidated financial statements.

GOLAR LNG LIMITED

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. GENERAL

Golar LNG Limited (the "Company", "Golar" or "we") was incorporated in Hamilton, Bermuda on May 10, 2001 for the purpose of acquiring the liquefied natural gas ("LNG") shipping interests of Osprey Maritime Limited ("Osprey"), which was owned by World Shipholding Limited ("World Shipholding"). As of June 30 , 2014 and December 31, 2013, World Shipholding owned 39.4% and 45.6%, respectively, of Golar.

As of June 30, 2014, we own and operate a fleet of eight LNG carriers and operate Golar LNG Partner LP’s ("Golar Partners" or the "Partnership") fleet of nine LNG carriers and Floating Storage Regasification Units ("FSRUs"). In addition, we have newbuild commitments for the construction of seven LNG Carriers and two FSRUs which are due for delivery during 2014 and 2015 and more recently we ordered our first Floating Liquefaction Natural Gas Vessel ("FLNGV") based on the conversion of our existing LNG Carrier, the Hilli.

As used herein and unless otherwise required by the context, the terms "Golar", the "Company", "we", "our" and words of similar import refer to Golar or anyone or more of its consolidated subsidiaries, or to all such entities.

2. ACCOUNTING POLICIES

Basis of accounting

The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The condensed consolidated financial statements do not include all of the disclosures required in the annual consolidated financial statements, and should be read in conjunction with our annual financial statements for the year ended December 31, 2013.

Significant accounting policies

The accounting policies adopted in the preparation of the condensed consolidated interim financial statements are consistent with those followed in the preparation of our audited consolidated financial statements for the year ended December 31, 2013.



3.	RECENTLY ISSUED ACCOUNTING STANDARDS

Adoption of new accounting standards

In February 2013, the FASB issued guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, including debt arrangements, other contractual obligations and settled litigation and judicial rulings. The guidance requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of (a) the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and (b) any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendment did not have a material impact on our consolidated financial statements.

In July 2013, the FASB issued guidance for the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists to provide guidance on the presentation of unrecognized tax benefits. The guidance requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendment did not have a material impact on our consolidated financial statements.

Accounting pronouncements to be adopted

In April 2014, the FASB issued guidance that amends the definition of a discontinued operation and requires entities to provide additional disclosures about disposal transactions. The revised guidance will change how entities identify and disclose information about disposal transactions. The guidance is effective prospectively for all disposals (except disposals classified as held for sale before the adoption date) or components initially classified as held for sale in periods beginning on or after December 15, 2014, with early adoption permitted. We are assessing what impact, if any, the adoption of this guidance will have on our consolidated financial position, results of operations and cash flows.

In May 2014, the FASB issued guidance that will supersede virtually all of the existing revenue recognition guidance. The standard is intended to increase comparability across industries and jurisdictions. The single, global revenue recognition model applies to most contracts with customers. Leases, insurance contracts, financial instruments, guarantees and certain non monetary transactions are excluded from the scope of the guidance. Revenue will be recognized in a manner that depicts the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled, subject to certain limitations. The guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is prohibited for companies applying US GAAP. We are assessing what impact, if any, the adoption of this guidance will have on our consolidated financial position, results of operations and cash flows.

4. DISPOSAL OF SUBSIDIARIES

In February 2013 and March 2014, we sold our interests in the companies that own and operate the Golar Maria and Golar Igloo, respectively, to Golar Partners.



(in thousands of $)	Golar Igloo		Golar Maria
Consideration received ⁽¹⁾	156,001		127,900
Carrying value of the assets sold to Golar Partners	(112,714	)	(45,630	)
Gain on disposal	43,287		82,270
Deferred gain on sale	(8,551	)	(17,114	)
Gain recognized on sale	34,736		65,156

The gain from the sale of the Golar Igloo in March 2014 was $43.3 million of which $34.7 million had been recognized at the time of the sale in the Condensed Consolidated Statements of Income under "Gain on disposals to Golar Partners (including amortization of deferred gains)". The remaining $8.6 million which represents profit based on our holding in the subordinated units in Golar Partners measured as of the date of the dropdown has been deferred under "Other current liabilities" and "Other long-term liabilities" and is being released to income over the remaining useful life of the vessel or until it is sold. As of June 30, 2014, the unamortized portion of the gain is $8.3 million.

The gain from the sale of the Golar Maria in February 2013 was $82.3 million of which $65.2 million had been recognized at the time of the sale in the Condensed Consolidated Statements of Income under "Gain on disposals to Golar Partners (including amortization of deferred gains)". The remaining $17.1 million which represents profit based on our holding in the subordinated units in Golar Partners measured as of the date of the dropdown has been deferred under "Other current liabilities" and "Other long-term liabilities"and is being released to income over the remaining useful life of the vessel or until it is sold. As of June 30, 2014, the unamortized portion of the gain is $16.4 million.

⁽¹⁾The cash consideration for the Golar Igloo comprised of $310.0 million for the vessel and charter less the assumed bank debt of$161.3 million plus the interest rate swap asset and other purchase price adjustments of $3.6 million and $3.6 million, respectively. While the cash consideration for the Golar Maria comprised of $215.0 million for the vessel less the assumed bank debt and interest rate swap liability of $89.5 million and $3.1 million, respectively, plus other purchase price adjustments of $5.5 million.

5. SEGMENTAL INFORMATION

We own and operate LNG carriers and operate FSRUs and provide these services under time charters under varying periods, and trade in physical and future LNG contracts. There have not been any intersegment sales during the periods presented. Segment results are evaluated based on net income. The accounting principles for the segments are the same as for our consolidated financial statements. Indirect general and administrative expenses are allocated to each segment based on estimated use.

Our reportable segments are as follows:


•	Vessel Operations - We are engaged in the acquisition, ownership, operation and chartering of LNG carriers and FSRUs on fixed terms to customers.


•	LNG Trading - Provides physical and financial risk management in LNG and gas markets for our customers around the world. Activities include structured services to outside customers, arbitrage service as well as proprietary trading.

We aggregate our vessel operations into one reportable segment as they exhibit similar expected long-term financial performance.

The LNG trading operations meets the definition of an operating segment as the business is a financial trading business and its financial results are reported directly to the chief operating decision maker. The LNG trading segment is a distinguishable component of the business from which it earns revenues and incurs expenses and whose operating results are regularly reviewed by the chief operating decision maker, and which is subject to risks and rewards different from the vessel operations segment.



	Six months ended June 30, 2014						Six months ended June 30, 2013
(in thousands of $)	Vessel operations		LNG Trading		Total		Vessel operations		LNG Trading		Total
Time charter revenues	36,872		—		36,872		59,466		—		59,466
Vessel and other management fees	5,178		—		5,178		4,968		—		4,968
Vessel and voyage operating expenses	(34,907	)	—		(34,907	)	(25,410	)	—		(25,410	)
Administrative expenses	(9,332	)	(39	)	(9,371	)	(11,173	)	(99	)	(11,272	)
Depreciation and amortization	(24,236	)	(231	)	(24,467	)	(17,439	)	(232	)	(17,671	)
Other operating gains and losses	—		1,317		1,317		—		—		—
Gain on disposals to Golar Partners (including amortization of deferred gains)	35,036		—		35,036		65,365		—		65,365
Dividend income	12,855		—		12,855		15,101		—		15,101
Other non-operating (loss)/ income	(750	)	718		(32	)	—		—		—
Net financial (expenses)/ income	(41,732	)	(252	)	(41,984	)	47,098		(2	)	47,096
Income taxes	1,180		—		1,180		1,400		—		1,400
Equity in net earnings of affiliates	7,084		—		7,084		5,490		—		5,490
Net (loss) income attributable to Golar LNG Ltd	(12,752	)	1,513		(11,239	)	144,866		(333	)	144,533
Total assets	3,405,382		1,353		3,406,735		2,463,481		602		2,464,083

Revenues from external customers

The vast majority of our vessel operations arise under time charters and in particular two charters, a major Japanese trading company and Kuwait National Petroleum Company (or KNPC) for the six months ended June 30, 2014. During the six months ended June 30, 2013, our vessels operated under time charters with four main charterers: KNPC, a major Japanese trading company, BG Group, GDF Suez and Eni S.p.A. KNPC is the national oil refining company of Kuwait. BG Group Plc is headquartered in the United Kingdom. GDF Suez is a power, natural gas and energy services company headquartered in France. Eni S.p.A is an integrated energy company headquartered in Italy.

In time charters, the charterer, not the Company, controls the choice of which routes our vessel will serve. These routes can be worldwide except for FSRUs which operate in a specific location. Accordingly, our management, including the chief operating decision maker, does not evaluate our performance either according to customer or geographical region.

For the six months ended June 30, 2014 and 2013, revenues from the following customers accounted for over 10% of our time charter revenues:



(in thousands of $)	Six months ended June 30,			Six months ended June 30,
	2014			2013
Major Japanese trading company	24,888	67	%	24,888	42	%
KNPC	4,183	11	%	—	—	%
BG Group plc	—	—	%	13,114	22	%
GDF Suez	—	—	%	10,015	17	%
Eni S.p.A	—	—	%	8,912	15	%

6. EARNINGS PER SHARE

Basic earnings per share (“EPS”) are calculated with reference to the weighted average number of common shares outstanding during the period. Treasury shares are not included in the calculation. The computation of diluted EPS for the six month periods ended June 30, 2014 and 2013, assumes the conversion of potentially dilutive instruments.

The components of the numerator for the calculation of basic and diluted EPS are as follows:



(in thousands of $)	Six months ended June 30,
	2014		2013
Net (loss) income attributable to Golar LNG Ltd stockholders - basic and diluted	(11,239	)	144,533

The components of the denominator for the calculation of basic and diluted EPS are as follows:



	Six months ended June 30,
(in thousands)	2014	2013
Weighted average number of common shares outstanding	80,572	80,515



	Six months ended June 30,
(in thousands)	2014	2013
Diluted earnings per share:

Weighted average of number of common shares outstanding	80,572	80,515
Effects of dilutive share options	207	182
Effect of dilutive convertible bonds	—	4,845
Common stock and common stock equivalent	80,779	85,542

(Loss) earnings per share are as follows:



	Six months ended June 30,
	2014			2013
Basic	$	(0.14	)	$	1.80
Diluted	$	(0.14	)	$	1.69

7. OTHER FINANCIAL ITEMS

Other financial items comprise of the following:



	Six months ended June 30,
(in thousands of $)	2014		2013
Unrealized (mark-to-market) (losses)/gains for interest rate swaps	(23,649	)	51,478
Interest expense on undesignated interest rate swaps	(10,031	)	(5,101	)
Others	(5,056	)	(1,256	)
	(38,736	)	45,121

8. NEWBUILDINGS

As of June 30, 2014, we have a total of seven LNG carriers and two FSRUs on order. The total contract cost of these newbuilds is approximately $1.9 billion of which $1.2 billion remains outstanding as of June 30, 2014. As of June 30, 2014, $765.5 million of newbuild costs had been capitalized.

As of June 30, 2014, the remaining installments for these vessels are due to be paid as follows:



(in thousands of $)
Payable in 6 months to December 31, 2014	954.9
Payable in 12 months to December 31, 2015	275.6
	1,230.5

9. ASSET UNDER DEVELOPMENT

In May 2014, we entered into key agreements for the conversion of the Hilli to a FLNGV. The primary contract was entered into with Keppel Shipyard Limited ("Keppel"). Following our payment of the initial milestone installment at the end of June 2014, these agreements became fully effective on July 2, 2014. Accordingly, the carrying value of the Hilli of $31.0 million, has been reclassified from "Vessels and equipment, net" to " Assets-under-development".

The total estimated conversion and vessel and site commissioning cost for the Hilli, including contingency, is approximately $1.3 billion. As of June 30, 2014, we have made an initial milestone payment of $165.1 million under the conversion contract. We expect the conversion will require 31 months to complete, followed by mobilization to a project for full commissioning.

10. VESSELS AND EQUIPMENT

Movement in vessels and equipment for the six months ended June 30, 2014 included the delivery of the newbuild FSRU, the Golar Igloo, in February 2014 and the newbuild LNG carrier, the Golar Crystal, in May 2014 at a total cost of $462.3 million. The Golar Igloo was sold to Golar Partners in March 2014.

11. DEBT

As of June 30, 2014 and December 31, 2013, we had long-term debt outstanding of $782.0 million and $717.0 million, respectively.

We also drew down on a short-term facility for $67.6 million to facilitate the LNG trade completed during the three months ended June 30, 2014. This was repaid in April 2014.

In addition, we repaid the $50.0 million debt to World Shipholding in April 2014. This facility was subsequently terminated in August 2014.

$1.125 billion facility

In February 2014, we drew down $161.3 million from our $1.125 billion facility to fund the final installment payment of the Golar Igloo. The facility is secured against the Golar Igloo and was assumed by Golar Partners upon the sale of the company which owns and operates the vessel in March 2014. The balance outstanding under the facility at the date of disposal to Golar Partners was $161.3 million (see note 4).

In May 2014, we drew down a further $127.9 million from our $1.125 billion facility to fund the final installment payment of the Golar Crystal.

Golar Arctic facility

As of June 30, 2014, we had $88.8 million of borrowings outstanding under the Golar Arctic facility which matures in January 2015 and thus, is presented under current debt. We expect to refinance this facility ahead of its expiration.

12. EQUITY ISSUANCE

The following table summarizes the issuance of common shares during the six months ended June 30, 2014:

Date

Number of Common Shares Issued¹

Offering Price

Gross Proceeds (in thousands of $)

Net Proceeds (in thousands of $)²

Use of Proceeds

June 2014

12,650,000

54.00

683,100

660,947

Part-fund the conversion of the Hilli to an FLNGV

_________________________________________

¹ Includes 1,650,000 common shares purchased pursuant to the exercise of the Underwriters' option to purchase additional common shares.

² Includes additional issue costs of $0.6 million which were paid in July 2014.

13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of accumulated other comprehensive income (loss) consisted of the following:



	Gain on available-for-sale securities	Pension and post-retirement benefit plan adjustments		Gains (losses) on cash flow hedges		Share of affiliates' comprehensive income		Total Accumulated comprehensive Income (loss)
Balance at December 31, 2012	5,911	(17,809	)	(6,832	)	—		(18,730	)
Other comprehensive income before reclassification	52,110	—		2,282		—		54,392
Amounts reclassified from accumulated other comprehensive income	—	—		726		—		726
Net current-period other comprehensive income	52,110	—		3,008		—		55,118
Balance at June 30, 2013	58,021	(17,809	)	(3,824	)	—		36,388

Balance at December 31, 2013	7,796	(12,731	)	(2,676	)	854		(6,757	)
Net current-period other comprehensive income	58,333	—		1,963		(212	)	60,084
Balance at June 30, 2014	66,129	(12,731	)	(713	)	642		53,327

There were no amounts reclassified from accumulated other comprehensive income to our statement of operations for the six months ended June 30, 2014.

14. FINANCIAL INSTRUMENTS

Fair values

We recognize our fair value estimates using a fair value hierarchy based on the inputs used to measure fair value. The fair value of hierarchy has three levels based on reliability of inputs used to determine fair value as follows:

Level 1: Quoted market prices in active markets for identical assets and liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The carrying values and estimated fair values of our financial instruments at June 30, 2014 and December 31, 2013 are as follows:



		June 30, 2014		December 31, 2013
(in thousands of $)	Fair value Hierarchy	Carrying Value	Fair value	Carrying Value	Fair Value
Non-Derivatives:

Cash and cash equivalents	Level 1	484,683	484,683	125,347	125,347
Restricted cash	Level 1	3,111	3,111	26,543	26,543
Investment in available-for-sale securities	Level 1	325,684	325,684	267,352	267,352
Cost method investment	Level 3	204,172	330,065	204,172	218,647
Short-term debt due from a related party	Level 2	20,000	20,000	—	—
Long-term debt - convertible bonds (1)	Level 2	235,490	319,678	233,020	254,063
Long-term debt - floating (1)	Level 2	546,559	546,559	434,008	434,008
Long-term debt - due to related party (1)	Level 2	—	—	50,000	50,000

Derivatives:
Interest rate swaps asset (2) (3)	Level 2	16,979	16,979	46,827	46,827
Interest rate swaps liability (2) (3)	Level 2	6,874	6,874	11,401	11,401
Foreign currency swaps liability (2)	Level 2	—	—	729	729


1.	Our debt obligations are recorded at amortized cost in the consolidated balance sheets.


2.	Derivative liabilities are captured within other current liabilities and derivative assets are captured within long-term assets on the balance sheet.

The fair value/carrying value of interest rate swap agreements that qualify and are designated as cash flow hedges for accounting purposes as of June 30, 2014 and December 31, 2013 was a liability of $3.0 million (with a notional amount of $127.5 million) and $5.3 million (with a notional amount of $128.0 million), respectively as of June 30, 2014. The expected maturity of these interest rate agreements is from January 2015 to April 2015.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:


•	The carrying amounts of accounts receivable, accounts payable, accrued liabilities and working capital facilities approximate fair values because of the short maturity of those instruments.


•	The carrying value of cash and cash equivalents, which are highly liquid, is a reasonable estimate of fair value.


•	The estimated fair value for restricted cash is considered to be equal to the carrying value since restricted cash bears variable interest rates which are reset on a quarterly basis and short-term investments are placed for periods of less than six months.

•

The carrying amount of the investment in available-for-sale ("AFS") securities reported in the balance sheet represents unrealized gains and losses on these securities, which are recognized directly in equity unless a gain is realized upon sale of these units or an unrealized loss is considered "other than temporary" in which case it is transferred to the statement of operations. The basis of valuation of the investment in AFS securities is at market value.

•

The carrying value of cost method investments refers to our holdings in Golar Partners (representing the general partner units and incentive distribution rights ("IDRs") which were measured at fair value as of the deconsolidation date December 13, 2012) and OLT Offshore LNG Toscana S.p.A ("OLT‑O"). As of June 30, 2014, we did not identify any events or changes in circumstances that would indicate the carrying values of our investments in Golar Partners and OLT-O were not recoverable. The fair value of our general partner units was based on the share price of the publicly traded common units of Golar Partners adjusted for restrictions over the transferability and reduction in voting rights. While the fair value of the IDRs was determined using a Monte Carlo simulation method.


•	For our investment in OLT-O, as we have no established method of determining the fair value of this investment, we did not estimate the fair value of this investment as of June 30, 2014.


•	The estimated fair value for the liability component of the unsecured convertible bonds is based on the quoted market price as at the balance sheet date.


•	The estimated fair values for both the floating long-term debt and long-term debt to a related party are considered to be equal to the carrying values since they bear variable interest rates, which are reset on a quarterly or six-monthly basis.

•

The fair value of our derivative instruments is the estimated amount that we would receive or pay to terminate the agreements at the reporting date, taking into account current interest rates, foreign exchange rates, closing quoted market prices and our creditworthiness and that of our counterparties. The mark-to-market gain or loss of our interest rate and foreign currency swaps that are not designated as hedges for accounting purposes is reported in the statement of operations caption "other financial items, net" (see note 7).

The fair value measurement of a liability must reflect the non-performance of the entity. Therefore, the impact of our credit worthiness has also been factored into the fair value measurement of the derivative instruments in a liability position.

The credit exposure of interest rate swap agreements is represented by the fair value of contracts with a positive value at the end of each period, reduced by the effects of master netting arrangements. It is our policy to enter into master netting agreements with counterparties to derivative financial instrument contracts, which give us the legal right to discharge all or a portion of the amounts owed to the counterparty by offsetting them against amounts that the counterparty owes to us.

As of June 30, 2014, we entered into the following interest rate swap transactions involving the payment of fixed rates in exchange for LIBOR as summarized below. The summary also includes those that are designated as cash flow hedges:



Instrument (in thousands of $)	Notional value	Maturity Dates	Fixed Interest Rates
Interest rate swaps:
Receiving floating, pay fixed	1,512,500	2014 to 2021	1.14% to 4.59%

As of December 31, 2013, our interest rate swaps had a total notional amount of $128.0 million with maturity dates in 2015 and and fixed interest rates ranging from 3.57% to 4.52%.

During the six months ended June 30, 2014 following the disposal of the Golar Igloo in March 2014, Golar Partners assumed Golar Igloo's bank debt and the related interest rate swap with a notional value of $100 million.

As of June 30, 2014, the notional principal amount of the debt outstanding subject to interest rate swap agreements was$1,512.5 million (December 31, 2013: $1,638.0 million). Interest rate swaps with a notional value of $25.0 million expired during the six months ended June 30, 2014.

The credit exposure of interest rate swap agreements is represented by the fair value of contracts with a positive fair value at the end of each period, reduced by the effects of master netting agreements. It is our policy to enter into master netting agreements with the counterparties to derivative financial instrument contracts, which give us the legal right to discharge all or a portion of amounts owed to counterparty by offsetting them against amounts that the counterparty owes to us. We have elected not to offset the fair values of derivative assets and liabilities executed with the same counterparty that are generally subject to enforceable master netting arrangements. However, if we were to offset and record the asset and liability balances of derivatives on a net basis, the amounts presented in our consolidated balance sheets as of June 30, 2014 and December 31, 2013 would be adjusted as detailed in the following table:



	June 30, 2014				December 31, 2013
(in thousands of $)	Gross amounts presented in the consolidated balance sheet	Gross amounts not offset in the consolidated balance sheet subject to netting agreements		Net amount	Gross amounts presented in the consolidated balance sheet	Gross amounts not offset in the consolidated balance sheet subject to netting agreements		Net amount
Total asset derivatives	16,979	(2,197	)	14,782	46,827	(4,327	)	42,500
Total liability derivatives	6,874	(2,197	)	4,677	12,130	(4,327	)	7,803

15. RELATED PARTY TRANSACTIONS

a) Transactions with Golar Partners and subsidiaries:

Net revenues:



	Six months ended June 30,
(in thousands of $)	2014	2013
Management and administrative services revenue (a)	1,410	1,393
Ship management fees revenue (b)	3,768	3,575
Interest income on high-yield bonds (c)	—	1,172
	5,178	6,140

Management and administrative services agreement - On March 30, 2011, the Partnership entered into a management and administrative services agreement with Golar Management, a wholly-owned subsidiary of Golar, pursuant to which Golar Management will provide to the Partnership certain management and administrative services. The services provided by Golar Management are charged at cost plus a management fee equal to 5% of Golar Management’s costs and expenses incurred in connection with providing these services. The Partnership may terminate the agreement by providing 120 days written notice.

Ship management fees - Golar and certain of its affiliates charged ship management fees to the Partnership for the provision of technical and commercial management of the vessels. Each of the Partnership’s vessels is subject to management agreements pursuant to which certain commercial and technical management services are provided by certain affiliates of Golar, including Golar Management and Golar Wilhelmsen AS ("Golar Wilhelmsen"), a partnership that is jointly controlled by Golar and by Wilhelmsen Ship Management (Norway) AS.


c)	High-yield bonds - In October 2012, Golar Partners completed the issuance of NOK1,300 million in senior unsecured bonds that mature in October 2017. The aggregate principal amount of the bonds is equivalent to approximately $227 million. Of this amount, approximately $35 million was initially issued to us. We sold our participation in the Partnership's high yield bond in November 2013.

Receivables (payables): The balances with Golar Partners and its subsidiaries as of June 30, 2014 and December 31, 2013 consisted of the following:



(in thousands of $)	June 30, 2014		December 31, 2013
Trading balances due to Golar and affiliates (a)	15,533		5,989
Methane Princess security lease deposit movement (b)	(3,883	)	(4,257	)
$20 million revolving credit facility (c)	20,000		—
	31,650		1,732

Trading balances - Receivables and payables with Golar Partners and its subsidiaries are comprised primarily of unpaid management fees, advisory and administrative services and may include working capital adjustments in respect of disposals to the Partnership. In addition, certain receivables and payables arise when we pay an invoice on behalf of a related party and vice versa. Receivables and payables are generally settled quarterly in arrears. Trading balances due from Golar Partners and its subsidiaries are unsecured, interest-free and intended to be settled in the ordinary course of business. They primarily relate to recharges for trading expenses paid on behalf of Golar Partners, including ship management and administrative service fees due to us.

Methane Princess Lease security deposit movements - This represents net advances from Golar Partners since its IPO, which correspond with the net release of funds from the security deposits held relating to the Methane Princess Lease. This is in connection with the Methane Princess tax lease indemnity provided to Golar Partners under the Omnibus Agreement. Accordingly, these amounts will be settled as part of the eventual termination of the Methane Princess Lease.


c)	$20 million revolving credit facility - In April 2011, we entered into a $20 million revolving credit facility with Golar Partners. The facility matures in December 2014 and is unsecured and interest-free.

Other transactions

Disposals to Golar Partners

In December 2013, we entered into an agreement to sell our interest in the company that owns and operates the Golar Igloo for

the price of $310.0 million. The sale was completed in March 2014 (see note 4).

b) Net income (expenses) from (due to) other related parties (excluding Golar Partners):



	Six months ended June 30,
(in thousands of $)	2014		2013
Frontline Ltd. and subsidiaries ("Frontline") (a)	(110	)	202
Ship Finance AS ("Ship Finance") (a)	41		478
Seatankers Management Company Limited ("Seatankers") (a)	(8	)	(2	)
Seadrill Ltd and subsidiaries ("Seadrill") (a)	103		235
Golar Wilhemsen (c)	(7,230	)	(4,157	)
	(7,204	)	(3,244	)

(Payables to) receivables from related parties (excluding Golar Partners):



(in thousands of $)	June 30, 2014		December 31, 2013
Frontline (a)	(359	)	(60	)
Ship Finance (a)	32		2
Seatankers (a)	(137	)	91
Seadrill (a)	195		(74	)
World Shipholding revolving credit facility (b)	—		(50,000	)
Golar Wilhemsen (c)	(1,033	)	—
	(1,302	)	(50,041	)

We transact business with the following parties, being companies in which World Shipholding and companies associated with World Shipholding have a significant interest: Frontline, Ship Finance, Seatankers and Seadrill. Net expense/income from Frontline, Seatankers and Ship Finance comprise fees for management support, corporate and insurance administrative services, net of income from supplier rebates and income from the provision of serviced offices and facilities. Receivables and payables with related parties comprise primarily of unpaid management fees, advisory and administrative services. In addition, certain receivables and payables arise when we pay an invoice on behalf of a related party and vice versa. Receivables and payables are generally settled quarterly in arrears.

In April 2011, we entered into a $80 million revolving credit facility with a company related to our major shareholder, World Shipholding. In January, February and May of 2012, the revolving credit facility was amended to $145 million, $250 million and$120 million, respectively without any further changes to the original terms of the facility. In May 2013, the margin on the facility was amended from 3.5% to 3.0%. As of June 30, 2014, we had no borrowings under this facility. The facility is unsecured and bears interest at LIBOR plus 3.0% together with a commitment fee of 0.75% on any undrawn portion of the credit facility. We repaid the $50 million borrowed under the facility in April 2014. This facility was terminated in August 2014.


c)	Golar Wilhelmsen charged ship management fees to us for the provision of technical management of our and Golar Partners' vessels. Amounts due to Golar Wilhelmsen are included within "Other Current Liabilities" in the balance sheet.

16. OTHER COMMITMENTS AND CONTINGENCIES

Assets Pledged



(in thousands of $)	As of June 30, 2014	As of December 31, 2013
Book value of vessels secured against long-term loans	897,676	700,726

Tax lease benefits

The benefits under lease financings are derived primarily from tax depreciation assumed to be available to lessors as a result of their investment in the vessels. In the event of any adverse tax changes or a successful challenge by the U.K. Revenue authorities with regard to the initial tax basis of the transactions, or in relation to the lease restructuring and subsequent terminations we have entered into in 2010 or in the event of an early termination of our remaining leases, we may be required to make additional payments to the U.K. vessel lessors or the U.K. revenue authorities which could adversely affect our earnings and financial position. We would be required to return all or a portion of, or in certain circumstances significantly more than, the upfront cash benefits that we have received or accrued over time, together with fees that were incurred in respect of our lease financing transactions including the restructuring and subsequent termination transactions or post additional security or make additional payments to the U.K. vessel lessors. Six U.K. tax leases we entered into during 2003 were structured so that a cash benefit was received up front (in total a gross amount before deduction of fees of approximately £41.0 million British pounds). Of these six leases we have since terminated five, with one lease remaining, being that of the Methane Princess lease. Pursuant to the deconsolidation of Golar Partners in 2012, Golar Partners is no longer considered a controlled entity but an affiliate and therefore the capital lease obligation relating to this remaining U.K. tax lease is not consolidated into our balance sheet as of June 30, 2014.

Under the indemnity provisions of the Omnibus Agreement or the respective share purchase agreements, we have agreed to indemnify Golar Partners in the event of any liabilities in excess of scheduled or final scheduled amounts arising from the Methane Princess leasing arrangement and the termination thereof.

In addition, to the extent Golar Partners incurs any liabilities as a consequence of a successful challenge by the U.K. Revenue Authorities with regard to the initial tax basis of the transactions relating to any of the U.K. tax leases or in relation to the lease restructuring and terminations in 2010, we have agreed to indemnify Golar Partners.

Legal proceedings and claims

We may, from time to time, be involved in legal proceedings and claims that arise in the ordinary course of business. A provision will be recognized in the financial statements only where we believe that a liability will be probable and for which the amounts are reasonably estimable, based upon the facts known prior to the issuance of the financial statements.

NR Satu related claim

PT Golar Indonesia, a subsidiary of Golar Partners that is both the owner and operator of the NR Satu, has been notified of a claim that may be filed against it by PT Rekayasa, a subcontractor of the charterer, PT Nusantara Regas, claiming that Golar Partners and its subcontractor caused damage to the pipeline in connection with the FSRU conversion of the NR Satu and the related mooring. As of the current date, no suit has been filed and both we and Golar Partners are of the view that, were the claim to be filed with the Indonesian authorities, any resolution could potentially take years. We both continue to believe we have meritorious defences against these claims, however, we are currently involved in compromise settlement discussions with the other parties. The compromise settlement amount is expected to be approximately $3.3 million. Golar Partners considers it probable that approximately $2.5 million of the estimated settlement will be recoverable from its subcontractor who is also a party to these settlement discussions. As part of the disposal of the NR Satu in July 2012 by us, we have also agreed to indemnify Golar Partners against any non-recoverable losses. Accordingly , as of June 30, 2014, we have recorded a provision of $0.8 million in relation to our indemnity to Golar Partners' non-recoverable losses.

Golar Viking related claim

In January 2011, Qatar Gas Trading Company Limited ("Nakilat") chartered the Golar Viking from us for a period of 15 months. In April 2012, the time charter party agreement was terminated early. On February 15, 2013, Nakilat formally commenced arbitration proceedings against Golar initially claiming damages of $20.9 million for breach of contract, including that of unlawful termination of the charter. The claim has subsequently been revised to $24.8 million. We believe that we have strong arguments to defend ourselves against any such claims, accordingly, as of June 30, 2014, have not recorded any provision. The arbitration hearing is not timed no earlier than 2015, and it is possible that the outcome of the arbitration proceedings, including legal costs and interest, may result in a loss of anything up to a maximum of $31.5 million.

Douglas Channel LNG Assets Partnership claim

In May 2013, we provided a short-term loan of $12.0 million to Douglas Channel LNG Assets Partnership ("DCLAP") as part of the potential FLNG project in Douglas Channel, British Columbia. The General Partner of DCLAP is a company wholly owned by LNG Partner LLC ("LNGP"). The loan had a maturity date of September 30, 2013 and is secured by a general security agreement over the pipeline transportation capacity on the pipeline system that delivers natural gas to the area where the FLNG project is intended to operate. In September 2013, LNGP filed for bankruptcy. We have also since commenced legal proceedings against LNGP seeking to have a receiver appointed over the secured assets. Of the $12.0 million short-term loan, $2.5 million has been recovered to date. We believe that we have strong arguments regarding our claim and the outstanding loan is recoverable, accordingly, as of June 30, 2014, have not recorded any provision against the outstanding loan receivable.

17. SUBSEQUENT EVENTS

In July 2014, our director and vice chairman Tor Olav Troim acquired 3.0 million shares in Golar from our majority shareholder, World Shipholding, bringing his direct and indirect holding in us to3.4 million shares representing a 3.6% interest. World Shipholding's ownership in us following this transaction is 33.8 million shares representing a 36.2% interest.

On July 2, 2014 , the key agreement for the conversion of the Hilli to an FLNGV, became effective, see note 9 for further detail.

In August 2014, we declared dividend of $0.45 per share in respect of the quarter ended June 30, 2014 which will be paid in September 2014. In addition, Golar Partners made a cash distribution of $0.5475 per unit in August 2014 in respect of the quarter ended June 30, 2014, of which we received $15.0 million of dividend income in relation to our common, subordinated and general partner units and IDRs held at the record date.

Following our repayment of an outstanding balance under the World Shipholding revolving credit facility in April 2014, this facility was terminated in August 2014.

On August 14, 2014, our Audit Committee (the “Audit Committee”) and Board of Directors approved the appointment of Ernst & Young LLP (“Ernst &Young”) as our principal accountants. PricewaterhouseCoopers LLP was previously our principal accountants. Following the Audit Committee’s approval of Ernst & Young, PricewaterhouseCoopers LLP was dismissed.

The audit report of PricewaterhouseCoopers LLP on our consolidated financial statements as of and for the years ended December 31, 2012 and 2013 did not contain any adverse opinion or disclaimer of opinion, nor was the opinion qualified or modified as to uncertainty, audit scope, or accounting principles.

During the two fiscal years ended December 31, 2013, and the subsequent period through August 14, 2014, there were: (1) no disagreements with PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused them to make reference in connection with their opinions to the subject matter of the disagreement, or (2) no reportable events as defined under Item 16F(a)(1)(v), other than as of December 31, 2012 there was a material weakness identified in Management’s report on internal controls over financial reporting whereby we did not maintain effective controls over the accounting for our investments in equity securities. Controls were not designed appropriately to monitor for triggering events which require the reconsideration of control and consolidation and to assess the impact of those triggering events. As a result, the effect of a change in how the board members of Golar LNG Partners LP are appointed arising at its first Annual General Meeting was not identified on a timely basis as a trigger event resulting in deconsolidation. This material weakness was subject to discussion between the Audit Committee and PricewaterhouseCoopers LLP and the Company has authorized PricewaterhouseCoopers LLP to respond fully to the inquiries of Ernst & Young concerning this matter.

We have requested that PricewaterhouseCoopers LLP furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements. A copy of such letter, dated September 4, 2014, is filed as Exhibit 16.1 to this Form 6-K.

In addition to the Hilli conversion, we are in the process of negotiating definitive documentation with Keppel for the conversion of the Gimi into a FLNGV. We expect that the converted Gimi would have similar production capacity and on-board storage as the converted Hilli. We expect to reach agreement with Keppel on definitive documentation by October 2014, and as a condition precedent to the effectiveness of such agreement use a portion of the proceeds of this offering to make an initial payment in the order of $150.0 million, or the Initial Payment, to Keppel to start securing long lead items for the Gimi conversion. The Gimi construction agreements will be executed by a new subsidiary of Golar, Golar Gimi Corporation. The Initial Payment will be payable as a condition precedent to the effectiveness of the Gimi construction agreements following their execution. We also intend that the definitive agreements will provide for full construction activities to commence only upon the issue by Golar of a full notice to proceed (such notice to be issued not later than November 2015). Upon execution of the definitive documentation and the Initial Payment, we will retain termination rights that in the event of a termination will require a portion of the Initial Payment be applied, to the extent that the Initial Payment has not been committed for the purposes of the works above, as a cancellation payment and to subcontractor break fees, with the remainder being applied as an advance payment for remaining sums payable in connection with the Hilli conversion. If the Initial Payment has been committed such that there is an insufficient amount remaining to be applied to the cancellation payment and subcontractor break fees, Golar Gimi Corporation will be required to meet the payment obligation.

Our subsidiary, Golar GHK Lessors Limited has entered into a share sale and purchase agreement, or the Share Purchase Agreement, with KSI Production Pte Ltd (a subsidiary of Keppel Corporation Limited) pursuant to which Keppel has agreed to purchase from Golar GHK Lessors Limited 10% of the shares that Golar GHK Lessors Limited holds in Golar Hilli Corporation, the owner of the Hilli. The closing under the Share Purchase Agreement is subject to certain conditions, primarily the receipt of payment from Keppel. Golar GHK Lessors Limited and KSI Production Pte Ltd, together with Golar Hilli Corporation, have also entered into a shareholders' agreement which will enter into effect upon the closing of the share sale under the Share Purchase Agreement. The shareholders' agreement governs the relationship between Golar GHK Lessors Limited and KSI Production Pte Ltd with respect to the conduct of the business to be undertaken by Golar Hilli Corporation, which includes seeking opportunities, and entering into agreements, with respect to the deployment and use of the Hilli for natural gas liquefaction projects. Under the shareholder's agreement, Golar appoints the majority of directors and certain strategic decisions are subject to shareholder consent. Golar Hilli Corporation Limited may call for cash from the shareholders for any future funding requirements and shareholders are required to contribute to such cash calls up to a defined cash call contribution cap (after which funding is discretionary but non-funding results in dilution of the shareholders' interest).

Exhibit 5.1 EngineeringProcurementConstructionControl-KeppelHilli

Exhibit 5.1

EXECUTION VERSION

ENGINEERING, PROCUREMENT & CONSTRUCTION CONTRACT

BETWEEN

KEPPEL SHIPYARD LIMITED

AND

GOLAR HILLI CORPORATION

FOR THE REPAIR, MODIFICATION & CONVERSION

OF THE HILLI INTO A FLNG VESSEL

LL Ref: A17244245

Owner: ______

Contractor: ______

TABLE OF CONTENTS

1.DEFINITIONS 6

2.EFFECTIVE DATE 16

3.DELIVERY OF THE VESSEL 17

4.PERFORMANCE OF THE WORKS 18

5.DESIGN RESPONSIBILITY 18

6.CLASSIFICATION, CERTIFICATION AND DOCUMENTATION 19

7.FACILITIES FOR THE OWNER AT THE YARD 20

8.SUB-CONTRACTING 20

9.SUPERVISION, DRAWINGS, APPROVAL & INSPECTION & TESTS 21

10.PROGRESS REPORTING 23

11.VARIATIONS AND MODIFICATIONS 23

12.ERRORS AND CHANGES 26

13.CONTRACT PRICE AND TERMS OF PAYMENT 26

14.ADJUSTMENT OF CONTRACT PRICE 29

15.MECHANICAL COMPLETION 31

16.PRE-COMMISSIONING OF SUB-CONTRACT WORKS 31

17.COMMISSIONING OF THE WORKS 31

18.VESSEL LEAVING THE YARD 31

19.COMMISSIONING AT ANCHORAGE 32

20.REDELIVERY 32

21.SAILAWAY 33

22.PROJECT SITE WORKS 33

23.CONDITIONS PRECEDENT FOR PROJECT SITE COMMISSIONING 36

24.PROJECT SITE COMMISSIONING 37

25.START UP AND PERFORMANCE TESTS 38

26.FINAL ACCEPTANCE 42

27.DELAYS AND PERFORMANCE DEFICIENCIES – SUB-CONTRACT WORKS 42

28.DELAYS & EXTENSION OF TIME FOR REDELIVERY 43

29.SUSPENSION 45

30.TERMINATION FOR CAUSE 47

31.TERMINATION FOR CONVENIENCE 51

32.WARRANTY 52

33.LIABILITIES & INDEMNITIES 53

Owner: ______

Contractor: ______

LL Ref: A17244245

34.INSURANCE 55

35.PATENTS, TRADEMARKS, COPYRIGHTS ETC. 57

36.OWNER FURNISHED EQUIPMENT 58

37.CONFIDENTIALITY 58

38.INTELLECTUAL PROPERTY RIGHTS IN RELATION TO THE CONTRACTOR’S SCOPE 59

39.NOTICES 62

40.HEALTH, SAFETY, ENVIRONMENT & QUALITY ASSURANCE 63

41.GENERAL 64

42.TAXES & DUTIES 65

43.INTERPRETATION 66

44.DISPUTE RESOLUTION 66

45.SECURITIES 67

46.COMPLIANCE WITH ANTI-BRIBERY LAWS AND SANCTIONS 67

APPENDIX 1A: OWNER’S BASIS OF DESIGN70

APPENDIX 1B: OUTLINE SPECIFICATION OF CONVERSION, SPECIFICATION OF DRY-DOCKING AND REPAIR WORK71

APPENDIX 1C: OWNER RELY-UPON INFORMATION72

APPENDIX 1D: PRELIMINARY PROJECT SCHEDULE73

APPENDIX 2: TOPSIDES AGREEMENT74

APPENDIX 3: PRICE SCHEDULE75

APPENDIX 4: OFE AND OWNER ENGINEERING DELIVERABLES ROS DATES76

APPENDIX 5: PRELIMINARY PROJECT EXECUTION PLAN77

APPENDIX 6: PRELIMINARY SITE HEALTH, SAFETY AND ENVIRONMENTAL MANAGEMENT PLAN78

APPENDIX 7: PRELIMINARY PROJECT QUALITY PLAN79

APPENDIX 8: APPROVED VENDOR AND SUBCONTRACTOR LIST80

APPENDIX 9: ADMINISTRATION PROCEDURE81

APPENDIX 10: FORMS82

DELIVERY CERTIFICATE83

PROTOCOL OF MECHANICAL COMPLETION84

PROTOCOL OF REDELIVERY AND ACCEPTANCE85

FORM OF CORPORATE GUARANTEE86

CERTIFICATE OF VESSEL LEAVING THE YARD87

Owner: ______

Contractor: ______

LL Ref: A17244245

MECHANICAL COMPLETION CERTIFICATE / PROTOCOL OF MECHANICAL COMPLETION88

READY FOR STARTUP CERTIFICATE89

READY FOR FIRST GAS CERTIFICATE90

FORM OF VESSEL MORTGAGE91

FORM OF BANK GUARANTEE92

Owner: ______

Contractor: ______

LL Ref: A17244245

ENGINEERING, PROCUREMENT & CONSTRUCTION CONTRACT

This Engineering, Procurement & Construction Contract (“Agreement”) is made this 22^nd day of May 2014 (the “Date of Agreement”), by and between GOLAR HILLI CORPORATION, a company incorporated and organised under the laws of the Republic of the Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960 (hereinafter referred to as the “Owner”) of the first part and KEPPEL SHIPYARD LIMITED, a company incorporated and organised under the laws of the Republic of Singapore, having its principal place of business at 51 Pioneer Sector 1, Singapore 628437 (hereinafter referred to as the “Contractor”) of the second part.

WHEREAS

A) The Owner is the proposed registered owner of the vessel the HILLI (the “Vessel”).


B)	The Owner wishes to have the Vessel converted to a floating liquefied natural gas (“FLNG”) vessel, as specified in this Agreement, by the Contractor and has appointed the Sub-Contractor nominated by the Owner as the Contractor’s sub-contractor to carry out the Sub-Contract Works.

The Contractor shall carry out and be responsible for the Contractor’s Scope on the terms and conditions set forth in this Agreement. The Sub-Contractor shall carry out and be responsible for the Topsides Scope as the Contractor’s sub-contractor. The Contractor shall perform its own obligations under the Topsides Agreement and use reasonably practicable endeavours (in accordance with the Contractor’s Scope) for the Sub-Contractor to perform its obligations under the Topsides Agreement.


D)	The Owner has provided the Contractor and the Sub-Contractor with the Basis of Design and the Owner Rely-Upon Information for the purpose of the front-end engineering design (“FEED”) of the Contractor’s Scope and the Topsides Scope.


E)	Relying on the Basis of Design and Owner Rely-Upon Information the Contractor carried out the FEED for the Contractor’s Scope and engaged the Sub-Contractor to carry out the FEED for the Sub-Contract Works (collectively the “FEED Studies”).

The Owner has reviewed the FEED Studies and has endorsed the FEED Studies. It shall be the Contractor and Sub-Contractor’s obligation to ensure that the portion of the FEED Studies performed by it is in accordance with the Basis of Design. The Contractor has adopted the FEED Studies for the design and engineering of the Contractor’s Scope, and the Sub-Contractor has adopted the FEED Studies for the Topsides Scope.


G)	The Owner recognises that the Contractor is reliant on the Sub-Contractor for the performance of the Topsides Scope.


H)	The Owner has had the opportunity to review and is aware of the terms of the Topsides Agreement.

Owner: ______

Contractor: ______

LL Ref: A17244245

IT IS HEREBY AGREED BETWEEN THE PARTIES AS FOLLOWS: -

Owner: ______

Contractor: ______

LL Ref: A17244245


1.	DEFINITIONS


1.1	In this Agreement, the following expressions shall have the following meanings except where the context requires otherwise:

1.1.1

“Affiliate” means, with respect to a company or legal entity, any other company or legal entity that, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such company or legal entity. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a company or legal entity, whether through the ownership of voting securities, by contract or otherwise;


1.1.2	“Agreement” means this Agreement comprising all of the Articles hereof and the Appendices referred to herein;

1.1.3

“Anti-Bribery Laws” shall mean the United States Foreign Corrupt Practices Act of 1977 and the United Kingdom Bribery Act of 2010 (as amended from time to time), and all other applicable national, regional, provincial, state, municipal or local laws and regulations that prohibit the bribery of, or the providing of unlawful gratuities, facilitation payments or other benefits to, any Government Official or any other person;

1.1.4

“Applicable Laws” means all national, municipal or state statutes, laws, ordinances, certifications, orders, decrees, licences, regulatory approvals, agreements, judgments, rules, and regulations, or other legislative or administrative action or official requirement of any Authority having jurisdiction over all or any part of the Works including Authorisations, with the exception of those at the Project Site;


1.1.5	“Approved Vendor” means any person listed in Appendix 8;


1.1.6	“Article” means an article of this Agreement. “Articles” shall accordingly refer to articles of this Agreement;


1.1.7	“Authorisation” means any permit, consent, approval, authorisation, agreement, no objection certificate, waiver or licence which must be obtained from any Authority by the Owner or the Contractor in connection with the Works or in order for the Works to be performed and for any portion of the Works to be transported, imported or exported;

1.1.8

“Authority” means any national, federal, regional, state, municipal or local government, and any division, body, ministry, department, instrumentality, agency, authority or other emanation of any of the same, including any court, commission, board, branch or similar authority of such government and any body empowered to grant, withdraw or determine the terms and conditions of any Authorisation;


1.1.9	“Basis of Design” means the basic engineering set out in Appendix 1A;


1.1.10	“Business Day” means a day on which banks are open for business in Singapore;


1.1.11	“Certification Body” means DNV while performing the function referred to in Article 6;

Owner: ______

Contractor: ______

LL Ref: A17244245


1.1.12	“Certificate of Vessel Leaving The Yard” means the document referred to in Article 18.1;


1.1.13	“Change in Law” means any change in Applicable Laws including any new or change in interpretation of any Applicable Laws by any Authority (excluding only any Applicable Laws with respect to taxes on or measured by the Contractor’s net income or its employees’ income or similar measurements or withholding) that is enacted after the Date of Agreement;


1.1.14	“Classification Society” or “DNV” means Det Norske Veritas Germanischer Lloyd;


1.1.15	“Commissioning” means inspections and testing to verify and document functionality and operability;


1.1.16	“Commissioning Certificate” means a certificate following successful Commissioning of the Works as referred to in Article 17.2;


1.1.17	“Commissioning Spares” means those replacement parts that may be required for Startup and Commissioning. For the avoidance of doubt, Commissioning Spares do not include operational or capital spares, which are to be provided by the Owner as Owner’s Spares;


1.1.18	“Confidential Information” shall have the meaning given to it in Article 37;


1.1.19	“Contract Price” means the total price for the performance of the Works and Sub-Contract Works, pursuant to Article 13 of this Agreement, and as the same may be adjusted in accordance with the provisions of this Agreement;

1.1.20

"Contractor Background Intellectual Property" means the pre-existing Intellectual Property Rights of the Contractor and original drawings, specifications, reports and other Project Information which the Contractor prepares and delivers pursuant to this Agreement and/or the Topsides Agreement and any intellectual property of the Contractor developed, used or modified by the Contractor in the performance of the Works;


1.1.21	“Contractor Guarantor” means Keppel Offshore & Marine Ltd;

1.1.22

“Contractor’s Group” means, collectively, the group of entities and persons comprising of the Contractor, its Affiliates, its contractors and subcontractors at all tiers (excluding any member of the Sub-Contractor’s Group) and the representatives, agents, officers, directors, employees and personnel of each and every one of the foregoing entities but excluding any member of the Sub-Contractor’s Group;


1.1.23	“Contractor’s Scope” means the scope of work set out in Appendix 1;


1.1.24	“Conversion Price” shall have the meaning given to it in Article 13.3;


1.1.25	“Date of Agreement” shall have the meaning given to it in the recitals;


1.1.26	“Day” means a calendar day;

Owner: ______

Contractor: ______

LL Ref: A17244245


1.1.27	“Default Interest Rate” means eight per cent (8%) per annum;


1.1.28	“Delivery” means when the Vessel is delivered by the Owner to the Contractor in accordance with Article 3;


1.1.29	“Delivery Certificate” means a certificate in the form of Appendix 10;


1.1.30	“Delivery Date” shall be the date on or the period during which the Vessel is required under Article 3.2(a) of this Agreement to be delivered by the Owner to the Contractor;

1.1.31

“Derivative Works” means any minor or major change, elaboration, annotation, modification, new functions or features, new capability and improvement, update, upgrade, whether it is software, or copyrightable, patentable or not, made to the Owner Background Intellectual Property in whole or in part, by or on behalf of the Contractor or the Sub-Contractor, as the case may be, using, incorporating, based on, derived from or in relation to the Owner Background Intellectual Property. For the avoidance of doubt, Derivative Works do not include any improvement, invention, know-how, Intellectual Property Rights, software, work product or result of services, or any of the other items in the immediately preceding sentence, provided by the Contractor or the Sub-Contractor to the Contractor Background Intellectual Property or the Sub-Contractor Background Intellectual Property, as applicable, and the Intellectual Property Rights therein shall be retained by the Contractor and the Sub-Contractor respectively.


1.1.32	“Direct Agreement” means the direct agreement between the Owner, the Contractor and the Sub-Contractor dated on or about the date of this Agreement;


1.1.33	“Directed Change” shall have the meaning given to it in Article 11.3;


1.1.34	“Disputed Difference” shall have the meaning given to it in Article 11.3;


1.1.35	“Effective Date” means the date on which all the conditions in Article 2 have been fulfilled;

1.1.36

“Equipment” means the system to be supplied by the Sub-Contractor for the liquefaction of natural gas, including front-end gas treatment and conditioning, that complies with the requirement(s) of the FEED Study Report and with other terms and conditions of this Agreement. A reference to Equipment includes all the individual component equipment of the Equipment, as well as all the materials and equipment to be procured by the Sub-Contractor, for permanent installation on the Vessel;


1.1.37	“Extended Warranty Period” means the period stated in Article 32.5;


1.1.38	“FEED Studies” shall have the meaning given to it in recital E;


1.1.39	“FEED Study Report” means the front end engineering design report prepared by the Sub-Contractor for the Contractor which is in Appendix C of the Topsides Agreement;


1.1.40	“Final Acceptance” means the successful completion of all Performance Tests at the Project Site and completion of the Topsides Scope as set out in Appendix O of the Topsides Agreement;

Owner: ______

Contractor: ______

LL Ref: A17244245


1.1.41	“First Gas” means the date when feed gas is first introduced to the Equipment after arrival of the Vessel at the Project Site;


1.1.42	“Fixed Price” shall have the meaning given to it in Article 13.1;


1.1.43	“Flag State Registry” means the Marshall Islands Registry;


1.1.44	“Force Majeure Event” has the meaning given in Article 28.2;


1.1.45	"Government Official" shall have the meaning ascribed to it in Article 46.1;


1.1.46	“Guaranteed LNG Output” shall have the meaning given in the Topsides Agreement;


1.1.47	“Guaranteed Performance Certificate” means the document referred to in Article 25.9;


1.1.48	“HAZOP” has the meaning given to it in Article 12.4;


1.1.49	“Initial Payment” means the first instalment of the Contract Price pursuant to Article 2.1.4;

1.1.50

“Intellectual Property Rights” means any and all rights of, in and to, wherever and whenever existing in: (a) any invention (whether or not patentable); (b) any and all patents, patent applications, together with all provisionals, reissuances, continuations, or divisionals thereof, any invention therein, and any related invention disclosures; (c) trademarks, service marks, trade dress, trade names, corporate names, other names, logos, brands, symbols, indicia of origin and/or design of any kind, in any language and/or any script, domain names and URLs; (d) copyright, mask works, any works (whether copyrightable or not), all copies therefrom, and including all applications, registrations, and renewals in connection therewith, whether based on statute or common law; (e) trade secrets, confidential information and other proprietary business information; (f) any translation, transliteration, copy, reproduction, manifestation, derivation or version of any of the foregoing, in any form or format whatsoever; and (g) all goodwill and reputation associated therewith; and all applications, registrations and renewals in connection therewith and thereto.


1.1.51	“ITP Plan” means the schedule of testing provided by the Contractor to the Owner in accordance with Article 9.10;


1.1.52	“Mechanical Completion” means that the Works and the Sub-Contract Works are mechanically, electrically and functionally complete, and ready for Pre-Commissioning;


1.1.53	“Mechanical Completion Certificate” means a certificate in the form in Appendix 10;


1.1.54	“Milestone Achievement Certificate” shall have the meaning prescribed in the Topsides Agreement;


1.1.55	“Minimum Performance” means when the liquefaction plant has achieved, in the aggregate, an average LNG output of at least 80 per cent of the Guaranteed LNG Output over a period of 72 consecutive hours.

Owner: ______

Contractor: ______

LL Ref: A17244245


1.1.56	“Minimum Performance Certificate” means the document referred to in Article 25.8;


1.1.57	“OFE” means all the equipment and other supplies specified in Appendix 4 to be furnished by the Owner to the Contractor in accordance with this Agreement;


1.1.58	“Outstanding Works” shall have the meaning ascribed to it in Article 15.2;


1.1.59	“Owner Background Intellectual Property” means the pre-existing Intellectual Property Rights of the Owner and original drawings, specifications, reports, and other engineering documents which the Owner prepares and delivers pursuant to this Agreement and any intellectual property of the Owner developed, used or modified by the Owner in the performance of its obligations in this Agreement;


1.1.60	“Owner Rely-Upon Information” means all the information contained in the documents listed in Appendix 1C;

1.1.61

“Owner’s Group” means, collectively, the group of entities and persons comprising of the Owner, its immediate customer(s) in respect of the Vessel, such customer’s or customers’ intermediate and ultimate clients (who can benefit from the use of or employment of the Vessel whether as a charterer of the Vessel or from the exploration or production of hydrocarbons or otherwise), the Affiliates of each and every one of the foregoing entities at all tiers, each and every one of the contractors and subcontractors, excluding any member of the Contractor’s Group or the Sub-Contractor’s Group, at all tiers of the foregoing entities, invitees or guests of the Owner, the registered (or beneficial) owner, manager and crew of the Vessel and the representatives, agents, officers, directors, employees and personnel of each and every one of the foregoing entities, but excluding any member of the Contractor’s Group or of the Sub-Contractor’s Group;


1.1.62	“Owner’s Representative” shall be the representative of the Owner appointed pursuant to Article 9.1;


1.1.63	“Owner’s Spares” means the two-year operational and capital spares in respect of the Equipment that are OFE;


1.1.64	“Parent Company Guarantee” means the guarantee in the form set out in Appendix 10;


1.1.65	“Parties” means both the Contractor and the Owner. A “Party” means either the Contractor or the Owner;


1.1.66	“Performance Guarantees” means those guarantees by the Sub-Contractor specified in Appendix N of the Topsides Agreement;


1.1.67	“Performance Tests” means the tests set out in the Specifications to be carried out by the Owner with the assistance of the Sub-Contractor at the Project Site;


1.1.68	“Permitted Delay Event” means any one of the following:


(a)	any default or act of prevention of the Owner or act or omission of the Owner or any contractor engaged by the Owner; or

Owner: ______

Contractor: ______

LL Ref: A17244245


(b)	a Variation awarded in accordance with this Agreement; or


(c)	a technical dispute in respect of which the Classification Society upholds the Contractor’s views; or


(d)	defects that could not be detected by the Contractor using reasonable care and diligence; or


(e)	a Force Majeure Event; or


(f)	a delay to the Contractor’s Scope arising out of or in relation to the performance of the Topsides Agreement, except to the extent such delay is caused by the Contractor;


(g)	any error, defect, omission, ambiguity or discrepancy in the Basis of Design or the Owner Rely-Upon Information; or


(h)	a delay to the Contractor’s Scope resulting from events within the control of the Owner and/or any third party;


1.1.69	“Plans” mean drawings, documents and specifications which are required under this Agreement and the Specifications to be submitted to the Owner for approval;


1.1.70	“Pre-Commissioning” means those activities set out in Appendices J, K and Z of the Topsides Agreement as will be detailed in the pre-commissioning procedures to be developed by the Contractor based on the operations manual to be developed by the Sub-Contractor;


1.1.71	“Pre-Commissioning Certificate” means a certificate in the form of Appendix X of the Topsides Agreement;


1.1.72	“PRICO^® Licence Agreement” means the agreement between the Owner and Black and Veatch Corporation pursuant to which Black and Veatch Corporation shall licence to the Owner certain PRICO^®technology on the terms and conditions set forth therein;

1.1.73

“Project Information” shall mean all technical reports, data, designs, drawings, bill of materials, estimates, instructions, weight information, specifications, recommendations, certificates or other documents or information developed, provided by or on behalf of one party to another party (whether the Owner, the Contractor, or the Sub-Contractor) from time to time showing dimensions, work methods and any other details whatsoever of a technical nature for the purposes of the this Agreement, the Topsides Agreement, and the FEED Study Report;


1.1.74	“Project Schedule” means the schedule for the execution of the Works, as detailed in Appendix 1D, as may be amended from time to time in accordance with this Agreement;


1.1.75	“Project Site” means the location where the Project Site Works are to be carried out;

Owner: ______

Contractor: ______

LL Ref: A17244245


1.1.76	“Project Site Commissioning” means those activities set out in Appendices D, K and Z of the Topsides Agreement as will be detailed in the Project Site Commissioning procedures developed by the Sub-Contractor;


1.1.77	“Project Site Personnel” means all personnel provided by the Owner for the Project Site Works, to include, officers and crew, mechanics, labourers, skilled craftsmen, technicians, operators trained by the Sub-Contractor and all other personnel in sufficient quantity and quality to undertake in good time all activities required at or near the Project Site;

1.1.78

“Project Site Works” means the works and services to be performed by the Contractor and/or the Sub-Contractor after the Vessel has arrived at the Project Site and up to and including Final Acceptance (the Contractor’s role as specified in and forming part of the Contractor’s Scope and the Sub-Contractor’s role as specified in and forming part of the Sub-Contract Works), and the works and services to be performed at the Project Site by the Project Site Personnel, as more particularly described in Appendices D, K and Z of the Topsides Agreement;


1.1.79	“Protocol of Mechanical Completion” means the document in the form of Appendix 10;


1.1.80	“Protocol of Redelivery and Acceptance” means the document in the form of Appendix 10;


1.1.81	“Provisional Conversion Price” shall have the meaning given to it in Article 13.3;


1.1.82	“Prudent Engineering and Construction Practice” means a thorough, efficient and workmanlike manner with due diligence and care by qualified and competent personnel, exercising that degree of skill and diligence which would ordinarily be expected from a skilled and experienced international contractor engaged in a similar undertaking to the Contractor’s Scope;


1.1.83	“Ready for First Gas” shall occur when the conditions set forth in Article 23.2 have been achieved;


1.1.84	“Ready for First Gas Certificate” means the certificate in the form of Appendix 10 issued in accordance with Article 23.2;


1.1.85	“Ready for Startup Certificate” means the certificate in the form of Appendix 10;


1.1.86	“Redelivery” means the final acceptance by the Owner of the Works in accordance with Article 20;


1.1.87	“Redelivery Date” shall be the date on which Redelivery is required to take place as provided in Article 20.2;

1.1.88

“Restricted Party” means a person that is: (i) listed on, or owned or controlled by a person listed on, or acting on behalf of a person listed on, any Sanctions List; (ii) located in, incorporated under the laws of, or owned or (directly or indirectly) controlled by, or acting on behalf of, a person located in or organized under the laws of a country or territory that is the target of country-wide or territory-wide Sanctions; or (iii) otherwise a target of

Owner: ______

Contractor: ______

LL Ref: A17244245

Sanctions (“target of Sanctions” signifying a person with whom a US person or other national of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities);


1.1.89	“Sailaway” means the departure of the Vessel from the anchorage or location referred to in Article 21;

1.1.90

“Sanctions” means the economic sanctions, laws, regulations, embargoes or restrictive measures administered, enacted or enforced by: (i) the United States government; (ii) the United Nations; (iii) the European Union; (iv) the United Kingdom; or (v) the respective governmental institutions and agencies of any of the foregoing, including, without limitation, the Office of Foreign Assets Control of the US Department of Treasury (“OFAC”), the United States Department of State, and Her Majesty’s Treasury (“HMT”) (together the “Sanctions Authorities”);


1.1.91	"Sanctions List" means the "Specially Designated Nationals and Blocked Persons" list maintained by OFAC, the Consolidated List of Financial Sanctions Targets and the Investment Ban List maintained by HMT, or any similar list maintained by, or public announcement of Sanctions designation made by, any of the Sanctions Authorities;


1.1.92	“Specifications” means, collectively, the specifications and general drawing arrangements as contained in Appendix 1B, including any amendments thereto pursuant to the terms of this Agreement;


1.1.93	“Startup” means, for each train, that period of time beginning with the initial operation of the Equipment for the production of LNG and ending at achievement of Final Acceptance;


1.1.94	“Sub-Contract Works” means the product of work by the Sub-Contractor in the performance of the Topsides Scope;

1.1.95

“Sub-Contractor Background Intellectual Property” means the pre-existing Intellectual Property Rights of the Sub-Contractor and the original drawings, specifications, reports and other Project Information which the Contractor prepares and delivers pursuant to the Topsides Agreement and any intellectual property of the Sub-Contractor developed, used or modified by the Sub-Contractor in the performance of the Sub-Contract Works;


1.1.96	“Subjective Error” shall have the meaning given to it in Article 12.2;


1.1.97	“Substantial Performance” means when the liquefaction plant has achieved, in the aggregate, an average LNG output of at least 70 per cent of the Guaranteed LNG Output over a period of 72 consecutive hours;


1.1.98	“Substantial Performance Certificate” means the document referred to in Article 25.7;


1.1.99	“Sub-Contractor” means a consortium consisting each of Black and Veatch Corporation, Black and Veatch International Company, Black and Veatch Singapore Pte. Ltd., Black and Veatch (Beijing) Engineering Design Co. Ltd. and any other entity designated as the Sub-Contractor under the Topsides Agreement from time to time;

Owner: ______

Contractor: ______

LL Ref: A17244245


1.1.100	“Sub-Contractor’s Group” means, collectively, the group of entities and persons comprising of the Sub-Contractor, its Affiliates, its contractors and sub-contractors at all tiers and the representatives, agents, officers, directors, employees and personnel of each and every one of the foregoing entities;


1.1.101	“Topsides Agreement” means the agreement between the Contractor and the Sub-Contractor, a copy of which is Appendix 2;


1.1.102	“Topsides Price” means the price payable by the Owner to the Contractor under this Agreement in respect of the Sub-Contract Works;


1.1.103	“Topsides Scope” means the scope of work of the Sub-Contractor as stated in Appendix 2 ;


1.1.104	“Third Party” means a person who is not within the Contractor’s Group, the Owner’s Group or the Sub-Contractor’s Group;


1.1.105	“Variation” means a variation to the Contractor’s Scope or the Topsides Scope pursuant to Article 11;


1.1.106	“Variation Order” means a document referred to in Articles 11.1 and 11.2 in respect of a Variation;


1.1.107	“Vessel” means the Hilli, an ex-Kvaerner Moss Type B LNG tanker owned on the Date of Agreement by Golar Hilli Limited and which shall be owned by the Owner, or such other vessel as the Parties may agree by a Variation Order in accordance with Article 11;


1.1.108	“Vessel Leaving The Yard” shall have the meaning given to it in Article 18.


1.1.109	“Warranty Period” means the period stated in Article 32.1;


1.1.110	“Working Day” means a day on which Works are being or are scheduled to be carried out by the Contractor, between Monday to Friday and excluding public holidays in the place where such Works are being or are scheduled to be carried out;


1.1.111	“Works” means the product of work by the Contractor in performance of the Contractor’s Scope; and


1.1.112	“Yard” means any of the shipyards occupied or operated by the Contractor or the Contractor’s Affiliates in Singapore.


1.2	For the avoidance of doubt, the reference to “contractors and sub-contractors at all tiers” shall be a reference to each and every person or entity: -


(a)	In the case of Contractor’s Group, who has been contracted by any person falling within the definition of the Contractor’s Group (including such person or entity) to perform any work and/or supply any materials, equipment or services in any way whatsoever related to the performance of the Contractor’s obligations or any part thereof under this Agreement; or

Owner: ______

Contractor: ______

LL Ref: A17244245

(b)

In the case of the Owner’s Group, who has been contracted by any person, falling within the definition of the Owner’s Group (including such person or entity) to perform any work and/or supply any materials, equipment or services in any way whatsoever related to or connected with the Vessel including, but not limited to, the supervision or inspection of the Vessel in its various stages of the Works or the supply and installation of equipment or machinery not within the scope of the Contractor’s obligations under this Agreement or the operation of the Vessel; or


(c)	In the case of the Sub-Contractor’s Group, who has been contracted by any person falling within the definition of the Sub-Contractor’s Group (including such person or entity) to perform any work and/or supply any materials, equipment or services in any way whatsoever related to the performance of the Sub-Contractor’s obligations or any part thereof under the Topsides Agreement.


1.3	Unless the context otherwise requires, the singular shall include the plural and the plural the singular, and words indicating persons shall include firms and corporations.


1.4	Article headings are inserted for convenience only and shall be ignored for the purposes of construction or interpretation.


1.5	The Appendices are:

Appendix 1A


•	Owner’s Basis of Design

Appendix 1B


•	Outline specification of conversion


•	Specification of dry-docking and repair work

Appendix 1C


•	Owner Rely-Upon Information

Appendix 1D


•	Preliminary project schedule, including key milestone dates

Appendix 2 – the Topsides Agreement, including its appendices

Appendix 3 – Price schedule


•	Conversion scope


•	Annex 1: Re-measurable


•	Annex 2: Broken Down Repair Costs

Appendix 4 - OFE & owner engineering deliverables ROS dates

Appendix 5 – Preliminary project execution plan

Appendix 6 – Preliminary site health, safety and environmental management plan

Appendix 7 – Preliminary project quality plan

Owner: ______

Contractor: ______

LL Ref: A17244245

Appendix 8 – Approved vendor & subcontractor list

Appendix 9 – Administration procedure

Appendix 10 – Forms


1.6	The following documents together forming this Agreement are to be taken as mutually explanatory of one another. For the purposes of interpretation, the priority of the documents shall be in accordance with the following sequence:


a)	Articles 1-46 of this Agreement (excluding the Appendices);


b)	Clauses 1 – 59 of the Topsides Agreement;


c)	The Basis of Design;


d)	The Appendices of this Agreement in the order set out in Article 1.5 above; and


e)	The appendices of the Topsides Agreement in the order set out therein.


2.	EFFECTIVE DATE


2.1	With the exception of Articles 35, 37, 39, 41, 42, 43, and 44 (which shall enter into full force and effect on the Date of Agreement) the provisions of this Agreement shall become effective on the satisfaction or waiver of the following:


2.1.1	the Contractor shall have provided to the Owner a Parent Company Guarantee pursuant to Article 45;


2.1.2	the Contractor shall have received from the Owner the First Instalment pursuant to Article 13.4(a) on or before 20 June 2014;


2.1.3	the Topsides Agreement shall have become effective pursuant to Clause 2 therein;


2.1.4	the Contractor shall have received from the Owner the Initial Payment (as defined in the Topsides Agreement) on or before 20 June 2014 so as to enable the Contractor to promptly pay that amount to the Sub-Contractor and notify the Owner of the same;


2.1.5	the PRICO^®Licence Agreement shall have been executed by the Owner and Black and Veatch Corporation and all payment obligations thereunder, if any, are current;


2.1.6	the Owner, the Contractor and the Sub-Contractor shall have entered into the Direct Agreement;


2.1.7	any other payment obligations under this Agreement due before the Effective Date shall have been paid in full;


2.1.8	the Contractor shall have received documentary evidence satisfactory to it that a mortgage over the Vessel in a form and substance satisfactory to the Contractor has been registered in its favour at the Office of the Deputy Commissioner of Maritime Affairs of the Republic of the Marshall Islands as a first preferred Marshall Islands ship mortgage which shall

Owner: ______

Contractor: ______

LL Ref: A17244245

constitute a valid first preferred maritime lien on the Vessel under the laws of the Marshall Islands in which the Vessel is registered; and


2.1.9	title to the shares in the Vessel shall have been transferred from Golar Hilli Limited to the Owner on or before 30 May 2014.


2.2	Each Party undertakes, so far as is within its control, to use its best endeavours to ensure the timely fulfilment of the conditions in Article 2.1. Each Party shall inform the other in writing promptly upon the fulfilment of all the above conditions that each Party is to fulfil.


2.3	The Contractor shall only commence the Works and the Sub-Contractor shall only commence work on the Sub-Contract Works from the Effective Date.


2.4	If the Effective Date does not occur on or before 24 June 2014, either Party may, provided it has satisfied its obligations under Article 2.2, terminate this Agreement by notice in writing given at any time before the Effective Date, whereupon this Agreement shall terminate and no Party shall have any claim against any other under it.


3.	DELIVERY OF THE VESSEL


3.1	The Owner shall notify the Contractor in writing at least 60 Days, 30 Days and 15 Days in advance of the arrival of the Vessel at the Yard.


3.2	The Owner shall deliver the Vessel to the Contractor:


(a)	at the Yard and quayside (or in the vicinity thereof) notified in writing by the Contractor to the Owner at least 7 Days before the date and arrival of the Vessel, which shall be no earlier than 1 month after the Effective Date but no later than 5 months after the Effective Date; and


(b)	with its tanks emptied, cleaned and gas-freed, as necessary in order for the Vessel to enter the Yard.


3.3	Upon Delivery of the Vessel by the Owner to the Contractor, the Owner shall execute a declaration that the Vessel is free and clear of all mortgages, liens, charges, encumbrances and other claims whatsoever (other than those in favour of the Contractor), and shall undertake, at its cost and expense, to maintain such status of the Vessel until Vessel Leaving The Yard.


3.4	Upon Delivery, the Parties shall execute the Delivery Certificate to evidence the delivery of the Vessel and the date thereof, whereupon Delivery shall have been accomplished.

3.5

Not later than Delivery, the Owner shall, at its own cost and expense, forthwith engage the Classification Society to determine and certify whether any repair and life extension works, additional to those set out in Appendix II will be required in respect of the Vessel. If additional work or repairs are required in respect of the Vessel, such additional work or repairs may if the Owner so requires be incorporated as part of the Works by a Variation Order in accordance with Article 11.

Owner: ______

Contractor: ______

LL Ref: A17244245


3.6	From Delivery to the time of Vessel Leaving The Yard in accordance with Article 18 the Vessel shall be in the possession of and at the risk of the Contractor, but title to the Vessel shall remain with the Owner.


4.	PERFORMANCE OF THE WORKS


4.1	The Contractor shall perform the Works in accordance with:


(a)	Prudent Engineering and Construction Practice;


(b)	within the rules of the Classification Society as modified by Appendix 1B;


(c)	the Specifications;


(d)	Applicable Laws as at the Date of Agreement;


(e)	the rules, regulations and requirements of the Flag State Registry as at the Date of Agreement; and


(f)	and any other requirements of this Agreement.

The Sub-Contractor shall perform the Sub-Contract Works. The Owner shall co-operate with the Contractor in the efficient and timely performance of this Agreement and the Topsides Agreement so as to avoid any unnecessary cost or expense to the Contractor and any unnecessary impact on the Works.

4.2

The Owner recognises and accepts that the Contractor is reliant on the Owner-nominated Sub-Contractor for the performance of the Sub-Contract Works and does not have the capability to perform the Sub-Contract Works itself. It is the intention of the Parties that the Contractor does not undertake any of the obligations of the Sub-Contractor under the Topsides Agreement, but that the Works shall include but not be limited to the management and co-ordination of the Sub-Contract Works, including expediting the Sub-Contractor and the assembly, installation and integration of the Equipment in accordance with Prudent Engineering and Construction Practice.

4.3

All equipment and materials supplied by the Contractor in the performance of its obligations under this Agreement shall be new and unused (unless agreed otherwise), originally manufactured with certificates of quality and of the Classification Society where normally available. The Contractor shall obtain certificates of the Classification Society where normally available in respect of the Contractor’s Scope.


4.4	All old parts and equipment of the Vessel shall remain the property of the Owner and may be removed by the Owner if it wishes. All materials scrapped except the shaft and propeller shall become the property of the Contractor.


5.	DESIGN RESPONSIBILITY

Owner: ______

Contractor: ______

LL Ref: A17244245


5.1	The Owner shall at all times remain and be responsible for the Basis of Design and the Owner Rely-Upon Information. The Owner has reviewed the FEED Studies and has endorsed the FEED Studies. It shall be the Contractor’s and Sub-Contractor’s obligation to ensure that the portion of the FEED Studies performed by it is in accordance with the Basis of Design.


5.2	The Contractor shall at all times remain and be responsible for all design and engineering within the Contractor’s Scope, subject to Article 5.1.

5.3

It is acknowledged by the Parties that the Specifications in respect of the Contractor’s Scope set out in Appendix 1B have been developed by the Contractor pursuant to the FEED Studies based on and from the Basis of Design and Owner Rely-Upon Information provided by the Owner. The Contractor shall perform the detailed engineering for the Contractor’s Scope based on and from the Basis of Design, Owner Rely-Upon Information, FEED Studies and all other requirements in this Agreement. Notwithstanding the above, the Parties acknowledge that certain portions of the Contractor’s Scope have been developed in reliance by the Contractor on information provided to it by the Sub-Contractor.


5.4	It is acknowledged by the Parties that the Specifications in respect of the Topsides Scope set out in Appendix 2 have been developed by the Sub-Contractor pursuant to the FEED Study Report of November 2013 based on and from the Basis of Design and the Owner Rely-Upon Information.


5.5	It shall be the Contractor and Sub-Contractor’s obligation to ensure that the portion of the FEED Studies performed by it is in accordance with the Basis of Design.


6.	CLASSIFICATION, CERTIFICATION AND DOCUMENTATION


6.1	The Works shall so far as applicable be performed in accordance with the rules (the edition and amendments thereto being in force as of the Date of Agreement) of the Classification Society and the Vessel shall be converted to the notation:

“✠OI Ship-Shaped LNG Production and Storage Unit, POSMOOR”

For the avoidance of doubt, PROD notation is not required and the Topsides Scope shall not be classed.

6.2

The Vessel’s topside’s engineering, equipment and installations are to be certified to be in accordance with DNV-OS-E201 (as at December 2012). Where the Certification Body requires further certification of equipment beyond that listed in Appendix L and Appendix M of the Topsides Agreement in order for the topsides to achieve compliance with DNV-OS-E201, the Contractor shall be entitled to claim such costs from the Owner as the Sub-Contractor is entitled to claim from the Contractor under the Topsides Agreement.


6.3	Decisions of the Classification Society as to compliance or non-compliance of the Works with its requirements shall be final and binding upon both Parties.


6.4	The Works shall also comply with Applicable Laws and with the rules, regulations and the requirements of the Flag State Registry in each case as in force at the Date of Agreement.

Owner: ______

Contractor: ______

LL Ref: A17244245

Machinery and/or equipment supplied by the Contractor as part of the Works shall be provided with such maintenance/operation manuals, drawings, standard maker’s tools and spare parts, and maker’s certificate of origin as the Contractor may receive at no extra cost to it from the vendor.


6.5	All fees and charges incidental to the classification and with respect to compliance with the above referred Applicable Laws, rules, regulations and requirements in respect of the Contractor’s Scope shall be for the account of the Contractor. The Owner shall be responsible for all fees and expenses of the Classification Society save in respect of equipment certification.


6.6	The Owner shall at its own cost and expense keep the Vessel registered under the laws of the Flag State Registry from Delivery until Redelivery.


6.7	The Topsides Agreement provides that the Sub-Contractor shall deliver where appropriate certification of the Certification Body of the compliance of the relevant Equipment with DNV-OS-E201.


7.	FACILITIES FOR THE OWNER AT THE YARD


7.1	Within 30 Days of the Date of Agreement and until Redelivery, the Contractor shall provide the following facilities at the Yard for use by the Owner: -


(a)	Office space for up to ten (10) persons;


(b)	Two (2) international telephone and facsimile lines each;


(c)	One (1) facsimile/scanner/photocopier machine; and


(d)	Electronic mail facilities, including internet broadband connection complete with two standalone computers.


7.2	The Owner shall pay for all international telephone, facsimile, electronic mail and internet charges incurred by it. The Contractor shall pay for all domestic telephone and facsimile charges incurred by the Owner.


8.	SUB-CONTRACTING


8.1	The Contractor may, at its sole discretion and responsibility, subcontract part of the Works except that the Contractor:


(a)	shall only subcontract the Sub-Contract Works to the Owner-nominated Sub-Contractor;

(b)

shall nominate any subcontractor, supplier or vendor from the Approved Vendor list for equipment it intends to procure. The Owner may within 7 days require the Contractor to select a different subcontractor, supplier or vendor from the list, carrying, through a Variation Order, any cost difference and schedule impact, which is to be reasonably proven by the Contractor. If the Contractor wishes to procure any equipment that is not

Owner: ______

Contractor: ______

LL Ref: A17244245

listed in Appendix III, the Contractor shall obtain the prior written approval from the Owner, which shall not be unreasonably withheld or delayed; and


(c)	may not in the performance of the Works use or procure any materials or equipment which has been produced in Bangladesh or is supplied by a Bangladeshi supplier, vendor or subcontractor.

8.2

Subcontracting of all or any part of its obligations under this Agreement shall not relieve the Contractor from any of its obligations under this Agreement and the Contractor shall be responsible, only in the performance of the Works, for the acts or defaults of any of its subcontractors (other than the Sub-Contractor), its agents or employees, as if they were the acts or defaults of the Contractor itself.


9.	SUPERVISION, DRAWINGS, APPROVAL & INSPECTION & TESTS

Supervision

9.1

The Owner shall within 30 Days after the Effective Date appoint at its own cost and expense, to the extent required by Prudent Engineering and Construction Practice, a properly qualified, competent and experienced representative who shall be duly authorized for and on behalf of the Owner (the “Owner’s Representative”) to supervise the Works . The Owner’s Representative shall have full authority to act for and on behalf of the Owner in all matters connected with this Agreement, to approve drawings, Plans, documentation, attend all tests and inspect all workmanship, equipment and materials during the course of the performance of the Works. The Owner’s Representative shall have full and free access at all reasonable times to inspect, check, request copies of calculations and samples of materials and make test of the Works as they are performed and shall inform the Contractor as soon as practicable if any particulars of the Works inspected do not comply with this Agreement. For all such purposes, the Owner’s Representative shall be given full and free access to the Yard and such other places of business of the Contractor (subject to compliance with safety rules and other work regulations applicable to such places) and its subcontractors, if any, and the Contractor shall ensure that such subcontractors are informed of the Owner’s Representative’s rights of access to their premises for such purposes. Failure of the Owner’s Representative to inspect or to call to the attention of the Contractor any particulars in which the Works do not comply with this Agreement shall in no way relieve the Contractor of its obligations under this Agreement. The Owner may by notice in writing inform the Contractor of any change in its appointment of the Owner’s Representative at any time at its own discretion.


9.2	The Owner’s Representative may delegate any of his powers to attend tests, inspect workmanship, equipment and materials to another properly qualified, competent and experienced person and to the extent that it elects to do so, the Contractor shall be entitled to rely on the actions of such person as if he were the Owner’s Representative for the purposes of the matters delegated to him.


9.3	The Contractor shall within thirty (30) Days of the Effective Date appoint and maintain at the Yard at its own cost and expense a properly qualified, competent and experienced representative (the “Contractor’s Representative”) to whom all enquiries of the Owner’s Representative shall be directed. The Contractor’s Representative shall have full authority

Owner: ______

Contractor: ______

LL Ref: A17244245

to act for and on behalf of the Contractor in all matters connected with this Agreement. The Contractor’s Representative shall remain in this capacity and, so long as he remains in the Contractor’s employ, shall not be relieved until completion of the Works except upon prior written consent of the Owner, which shall not be unreasonably withheld or delayed.

Drawings & Approvals


9.4	All Plans required for the Works pursuant to this Agreement, shall be submitted to the Owner in one (1) hard copy and one (1) electronic copy.


9.5	The Owner shall within twelve (12) Days after receipt thereof return to the Contractor one (1) copy of such Plans with the Owner’s approval or with the Owner’s remarks and amendments (if any) written thereon. If no Owner comments are received within such period, the Contractor may continue on the basis that the Owner is deemed to have approved the submittal.

9.6

If the Owner makes any remarks or amendments in accordance with Article 9.5, the Contractor shall review and resubmit such Plans and resubmit a revised Plan as appropriate in one (1) copy for further review by the Owner within 5 Business Days. The scope of such second (and, if applicable, any subsequent) review of any resubmitted Plan shall be limited to the ambit of the Owner’s remarks and amendments of the previously submitted Plan and any subsequent review of the later Plan shall be subject to such limitation of the scope of review. The period for the second (and, if applicable, any subsequent) review shall not exceed six (6) Days after receipt of the resubmitted Plans from the Contractor. If no Owner comments are received within such period, the Contractor may continue on the basis that the Owner is deemed to have approved the submittal.

9.7

The Contractor shall take due note of the Owner’s remarks and amendments (if any) on the Plans submitted (or resubmitted) pursuant to this Article 9 and if such remarks or amendments are not of such a nature or extent as to constitute modifications to the Specifications, then the Contractor shall commence or continue the Works in accordance with the corrected or amended Plans. If such remarks or amendments are not clearly specified or detailed, the Contractor shall be entitled to seek clarification of the same from the Owner before implementing the same. The Owner’s acceptance or approval of such Plans shall not relieve the Contractor of its obligation to comply with the terms of this Agreement.

Inspections & Tests

9.8

The Contractor shall arrange for the inspections and tests referred to in the ITP Plan to be carried out and ensure that all inspection and testing are carried out as require by the Classification Society, and as may otherwise be required under this Agreement to discover any deviations from the Specifications, or any defects in the Works or the Sub-Contract Works. The Owner’s Representative shall have, during the repair, modification and conversion of the Vessel, the right to attend such tests and inspections of the Works and of the Sub-Contract Works to the extent provided in the Topsides Agreement.


9.9	The Owner’s Representative may inspect the Works and equipment and materials supplied as part of the Works wherever the Works are being performed or the equipment and materials are being stored (including the Yard’s workshops, stores and offices of the Contractor or its

Owner: ______

Contractor: ______

LL Ref: A17244245

subcontractors) to determine whether the Works are being performed in accordance with this Agreement and the Specifications.


9.10	The Contractor shall provide to the Owner the ITP Plan by 6 months after the Effective Date. The ITP Plan shall specify the anticipated schedule for equipment testing.

9.11

The Contractor shall, in relation to the Works which take place solely in the Yard, give the Owner’s Representative at least one (1) Working Day’s prior written notice of each inspection or test to be conducted at the Yard, and three (3) Days prior written notice for any other inspection or test which the Owner’s Representative separately identifies sufficiently in advance in writing as requiring such notice. In relation to the Sub-Contract Works which take place solely in the Yard , the Contractor shall give notice to the Owner’s Representative within one (1) Working Day of the Contractor’s receipt of notification from the Sub-Contractor of each inspection or test to be conducted. Provided such notice is given, the Contractor may proceed with any inspection or test which the Owner’s Representative fails to attend. The Owner shall be bound in such circumstances to accept the result of any such inspection or test although such result will still have to satisfy the requirements of the Classification Society to the extent required under this Agreement. The Owner (or its representatives) shall have no right to instruct the Sub-Contractor with regards to any portion of the Sub-Contract Works.


9.12	In relation to any Works which take place outside the Yard, the Contractor shall give the Owner’s Representative at least fifteen (15) Days’ prior notice of the proposed date, and for those tests and inspections which the Owner’s Representative confirms that it wishes to attend, five (5) Days’ prior notice of the actual date of such Works.


10.	PROGRESS REPORTING


10.1	The Contractor shall submit detailed monthly progress reports for the Works to the Owner containing a description of:


(a)	the work performed during the month, including a comparison of the current progress as compared with scheduled progress, together with a narrative on each item of the work; and


(b)	any present or anticipated slippage or other problem and the steps being taken to overcome it.


10.2	Beginning 25 months from the Effective Date, the Contractor shall also submit to the Owner a weekly summary report based on the information produced by the Contractor for its internal purposes.


10.3	The Contractor shall submit to the Owner copies of the progress reports for the Sub-Contract Works received from the Sub-Contractor.


11.	VARIATIONS AND MODIFICATIONS

Owner: ______

Contractor: ______

LL Ref: A17244245

11.1

The Contractor’s Scope and/or the Specifications may be modified and/or changed by written agreement of the Parties (a Variation) provided that such modifications and/or changes or an accumulation thereof will not in the Contractor's judgement (acting reasonably), materially adversely affect the Contractor's planning or program in relation to the Contractor's other commitments, and provided, further, that the Owner shall first agree, before such modifications and/or changes are carried out, to a Variation Order in respect of alterations in the Contract Price, the Redelivery Date and such other terms and conditions of this Agreement and Specifications occasioned by or resulting from such modifications and/or changes.


11.2	Such Variation shall constitute an amendment to this Agreement and/or the Specifications. No change in the Contractor’s Scope shall be made and no additional work shall be performed by the Contractor until a Variation Order has been written, dated and signed for identification by the authorised representatives of both Parties.

11.3

Notwithstanding the foregoing, where a change and/or modification is to be made to the Contractor’s Scope (but not the Sub-Contract Works), the Owner shall, subject to the limitations expressed in this Article 11, have the right to instruct the Contractor to perform such change (a “Directed Change”). The difference between the Contractor’s and the Owner’s proposed adjustment to the Contract Price shall be known as the “Disputed Difference”. The Owner shall not be entitled to issue a Directed Change, nor shall the Contractor be obliged to perform a Directed Change, where the Disputed Difference in respect of all Directed Changes (including the proposed Directed Change) exceeds the aggregate sum of Five Million United States Dollars U.S.$5m. The Contractor’s obligation to adjust delivery dates under this Article 11 shall be conditioned upon the Contractor’s ability to obtain the corresponding adjustment from its suppliers. A Directed Change shall be paid for monthly by the Owner to the Contractor on a time and materials, cost plus basis in accordance with Appendix 3 pending resolution of the Disputed Difference.

11.4

The Owner may request changes to the Contractor’s Scope by altering, adding or deducting from it by giving a written request of such changes to the Contractor. Within seven (7) Days (provided always that the Owner’s request is clear and the details thereof are sufficient for the Contractor to work out the variation required) from delivery of the request, the Contractor will give notice to the Owner in writing of the alteration to the Specifications and (if any) to the Contract Price and/or the Redelivery Date. The Owner shall notify the Contractor in writing within three (3) Days of receipt of the Contractor’s notice whether or not it agrees to the change being carried out on such terms. A Variation shall be signed by the Parties if the Owner agrees to the change, otherwise the Contractor shall not make the change.

11.5

Further, if the Owner makes remarks or amendments on Plans or drawings submitted by the Contractor or requests the performance of specific work which in the Contractor’s reasonable opinion is not part of its obligations under this Agreement, then the Contractor may issue a notice in writing to the Owner setting out in sufficient detail the requested modification and any adjustment to the Contract Price and/or Redelivery Date and/or any other provision of this Agreement and/or the Specifications which the Contractor requires before performing the requested modification. The Owner shall notify the Contractor in writing within three (3) Days of receipt of the Contractor’s notice whether or not it agrees to the modification

Owner: ______

Contractor: ______

LL Ref: A17244245

being carried out on such terms. A Variation Order shall be signed by the Parties if the Owner agrees to the change, otherwise the Contractor shall not make the change.


11.6	For modifications and/or changes agreed in a Variation Order to be performed on a lump-sum basis, payment shall be made by the Owner, unless otherwise agreed, in the following manner:


(i)	on the date of the Variation Order, payment of such percentage of the value of the Variation Order as is equivalent to the total percentage of the Conversion Price which has become due to the Contractor; and

(ii) thereafter, payment of the balance of the value of the Variation Order by instalments in the same percentage and on the same dates as the succeeding instalments of the Conversion Price.

For modifications and/or changes performed on a unit rate, time-and-materials, or cost-plus basis, payment shall be made by the Owner at the end of every calendar month in accordance with the work performed pursuant to such modification and/or change in that month.

11.7

In the event that any of the materials required by the Specifications or otherwise under this Agreement for the Contractor’s Scope cannot be procured in time or are in short supply to maintain the Redelivery Date, the Contractor may, provided that the Owner shall so agree in writing, supply other materials capable of meeting the requirements of the Classification Society and of the rules, regulations and requirements with which the repair, modification and conversion of the Vessel must comply. Any agreement as to such substitution of materials shall be effected in the manner provided in this Article 11 and shall likewise include alterations in the Contract Price and Redelivery Date and other terms and conditions of this Agreement occasioned by or resulting from such substitution.

11.8

Notwithstanding Articles 11.1 and 11.2, as regards the Sub-Contract Works, the Contractor shall have no obligation to instruct the Sub-Contractor to carry out such modifications and/or changes unless: (i) it is entitled to demand such modifications and/or changes from the Sub-Contractor; (ii) the Sub-Contractor and the Contractor agree a Variation Order in accordance with the Topsides Agreement; and (iii) a Variation Order is signed by the Owner and the Contractor as provided above. The Owner shall reimburse the Contractor for the cost to the Contractor of making such alterations and/or changes within 30 Days of the Contractor's invoice. In the event that the only disagreement between the Owner and the Contractor is the impact of a proposed modification and/or change to the Sub-Contract Works on the Topsides Price, the Owner may instruct the Contractor to instruct the Sub-Contractor to perform the modification and/or change in accordance with Clause 34.5 of the Topsides Agreement.


11.9	The Owner hereby undertakes not to request changes and/or modifications that increase or decrease the Contractor’s Scope or the Topsides Scope beyond the intent of the original scope.


11.10	If the Owner requests engineering services from the Contractor in the preparation of a Variation, and the Owner elects not to issue a Variation, the Owner shall compensate the

Owner: ______

Contractor: ______

LL Ref: A17244245

Contractor for its costs incurred in the preparation and submittal of information and documents in response to the Owner’s request at the rates set out in Appendix 3. If requested by the Owner in writing, the Contractor shall provide a written cost estimate prior to responding to any of the Owner’s requests which may amount to a Variation.


11.11	For the avoidance of doubt, any changes to the Basis of Design or the Owner Rely-Upon Information shall constitute a modification and/or change to which this Article 11 applies.

11.12

The Contractor shall also be entitled to a Variation Order in respect of any additional work or delays caused by (a) any failure of the Owner to comply with its obligations under this Agreement resulting in an impact on the Contractor; (b) changes in applicable standards from those applicable at the Date of Agreement, (c) any Change in Law, after the Date of Agreement, (d) delays and extra costs after the Date of Agreement that are caused by a Force Majeure Event, (e) any changes in the results of the FEED Study Report, (f) any Variation Order to which the Sub-Contractor is entitled pursuant to the Topsides Agreement.


12.	ERRORS AND CHANGES


12.1	The Contractor shall be entitled to a Variation Order in respect of adjustment of the Contract Price (calculated in accordance with Appendix 3) and in respect of delays to the Contractor’s Scope resulting from an Objective Error as defined in the Topsides Agreement, to the extent not compensated for by the Sub-Contractor under the Topsides Agreement.


12.2	The Contractor shall be entitled to a Variation Order in respect of adjustment of the Contract Price calculated in accordance with Appendix 3 and in respect of delays to the Works resulting from a Subjective Error as defined in the Topsides Agreement, to the extent not compensated for by the Sub-Contractor under the Topsides Agreement.

12.3

Without prejudice to the exercise of rights under Clause 54 of the Topsides Agreement, in the event that (i) there is any disagreement as to the Certification Body’s decision on whether the Sub-Contractor’s interpretation of the discretionary elements of DNV-OS-E201 was in accordance with Prudent Engineering and Construction Practice; (ii) there is any disagreement as to whether changes to the Sub-Contract Works arising from HAZOP are due to the Sub-Contractor’s Objective Error(s) and/or Subjective Error(s); or (iii) the Certification Body fails to provide such opinion within 30 days of the Sub-Contractor’s written request (copied to the Contractor and Owner), such disagreement or decision shall be referred to an independent third party. The independent third party will be retained by the Sub-Contractor subject to the mutual agreement of the Owner, which shall not be unreasonably withheld. The costs of the independent third party shall be paid by whichever of the Owner or the Sub-Contractor, or such combination of the foregoing, as the independent third party decides. Either the Owner or the Sub-Contractor may seek to have the independent third party’s ruling adjudicated under Clause 54 of the Topsides Agreement. The Owner shall, pending the decision of such independent third party, have the right to instruct the Contractor to instruct the Sub-Contractor to comply with the decision of the Certification Body.


12.4	The Contractor shall be entitled to a Variation Order in respect of adjustment of the Contract Price calculated in accordance with Appendix 3 and in respect of delays to the Works arising

Owner: ______

Contractor: ______

LL Ref: A17244245

from a Hazard & Operability Analysis study (“HAZOP”), to the extent not compensated for by the Sub-Contractor under the Topsides Agreement.


13.	CONTRACT PRICE AND TERMS OF PAYMENT

Contractor’s Scope


13.1	The price for the performance of the Works (excluding the Re-measurable Scope, as defined in Article 13.2 below) shall be the sum of US$293,119,390.00 net receivable by the Contractor, (the “Fixed Price”) which is exclusive of the OFE and shall be subject to adjustment, if any, as hereinafter set forth in this Agreement.

13.2

The provisional price (“Provisional Re-measurable Price”) for the performance by the Contractor of the erection, installation and integration of the Topsides Scope, and for the performance of repair and life extension works of the Vessel, as set out in Appendix 3 (“Re-measurable Scope”) shall be the sum of US$81,183,332.00. The actual price for the performance by the Contractor of the Re-measurable Scope shall be based on a re-measurement of the actual work, materials and equipment required to carry out the Re-measurable Scope at the rates set out in Appendix 3 (“Final Re-measurable Price”), which the Contractor shall determine no later than 14 Days before Vessel Leaving The Yard. The Fourth Instalment shall be adjusted to take into account the difference between the Provisional Re-measurable Price and the Final Re-measurable Price through a Variation Order.

13.3

The total price for the performance of the Works (“Conversion Price”) shall be the total of the Fixed Price and the Final Re-measurable Price, which is exclusive of the Topsides Price and shall be subject to adjustment, if any, as provided in this Agreement. Pending ascertainment of the Final Re-measurable Price, the total of the Fixed Price and the Provisional Re-measurable Price is referred to as the “Provisional Conversion Price”.

Works

13.4 The Owner shall pay the Contractor the Conversion Price in instalments as follows:


a)	the First Instalment of US$149,721,088.80 being 40% of the Provisional Conversion Price shall be paid not later than the Effective Date.


b)	the Second Instalment of US$37,430,272.20 being 10% of the Provisional Conversion Price, together with payment for any Variations then due, shall be paid on completion of fabrication works for the sponsons by the Contractor.


c)	the Third Instalment of US$37,430,272.20 being 10% of the Provisional Conversion Price, together with payment for any Variations then due, shall be paid on the earlier of: (i) the mechanical completion of the refrigerant compressor in the Works; or (ii) 25 months after the Effective Date.


d)	the Fourth Instalment of such amount as will result in the Contractor receiving a total of 93% of the Conversion Price taking into account payments already received by the Contractor in respect of the Provisional Conversion Price and the Topsides Credit

Owner: ______

Contractor: ______

LL Ref: A17244245

referred to in Article 13.10 together with the aggregate of any increase or decrease of the Conversion Price arising from the provisions of this Agreement, and all other amounts then due to the Contractor from the Owner, or to the Owner from the Contractor pursuant to Article 27.3, shall be paid on Vessel Leaving The Yard.


e)	the Fifth Instalment of such amount as represents 2% of the Conversion Price, together with payment for any Variations then due, shall be paid on Redelivery.


f)	the Sixth Instalment of such amount as represents 2.5% of the Conversion Price, together with payment for any Variations then due, shall be paid on the earlier of: (i) Sailaway; or (ii) the expiry of 30 Days from Vessel Leaving The Yard.


g)	the Seventh Instalment of such amount as represents 1% of the Conversion Price, together with payment for any Variations then due, shall be paid on the earlier of: (i) First Gas; or (ii) the expiry of 120 Days from Vessel Leaving The Yard.


h)	the Eighth Instalment of such amount as represents 1.5% of the Conversion Price, together with payment for any Variations then due, shall be paid on the earlier of: (i) the date of achievement of Final Acceptance; or (ii) the expiry of 180 Days from Vessel Leaving The Yard.


13.5	The Contractor shall submit to the Owner an invoice for each payment referred to in Article 13.4 not later than 7 Business Days before the date when such payment is due.

Sub-Contract Works


13.6	The Owner shall pay to the Contractor such amounts as are due from the Contractor to the Sub-Contractor so as to enable the Contractor to pay such amounts to the Sub-Contractor in full when due. The Sub-Contractor shall submit an invoice to the Contractor each month for the milestones achieved and for progress pertaining to Variation Orders in the preceding month.


13.7	The Contractor shall deliver to the Owner copies of all Milestone Achievement Certificates received and approved by the Contractor from the Sub-Contractor. The Owner shall review and comment on each Milestone Achievement Certificate in good time to enable the Contractor to comply with Clause 6.8.1 of the Topsides Agreement.


13.8	The Contractor shall deliver to the Owner copies of all invoices received and approved by the Contractor by the Sub-Contractor together with an invoice in the same amount from the Contractor to the Owner. The Owner shall review and comment on each invoice in good time to enable the Contractor to comply with Clause 5.8 of the Topsides Agreement.


13.9	The Owner shall pay the amount invoiced by the Contractor and the Sub-Contractor in good time to enable the Contractor to comply with Clause 5.5 of the Topsides Agreement.


13.10	The Owner shall pay to the Contractor at the same time as payment of the First Instalment under Article 13.4 the additional sum of Five Million United States Dollars (U.S. $5,000,000) (the “Topsides Credit”). In the event that the Owner fails to make timely payment of any amount due to the Contractor in respect of the Sub-Contract Works, the Contractor shall

Owner: ______

Contractor: ______

LL Ref: A17244245

make such payment from the Topsides Credit upon which the Owner shall forthwith pay to the Contractor by the last day of the same calendar month such amount as will restore the Topsides Credit to the aforementioned sum.


13.11	Such amount, if any, of the Topsides Credit remaining at Vessel Leaving The Yard shall be dealt with in accordance with Article 13.4(d).

General


13.12	Payment of sums due to the Contractor under this Agreement shall be made without any discount, set off, deduction or withholding of any nature whatsoever by wire transfer free of all transfer charges to the Contractor’s bank account as may from time to time be designated and notified in writing (or as may be detailed in any invoice) to the Owner for credit to the account of the Contractor.


13.13	Interest shall accrue on any delayed payment at the Default Interest Rate (before or after judgment or arbitration award) until full payment is made.


14.	ADJUSTMENT OF CONTRACT PRICE

14.

The Contract Price shall be subject to adjustment, as set forth below, in the event of the following contingencies (it being understood by both Parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty and that the remedies provided in this Article 14 shall constitute the Owner’s sole remedy for delay in the performance of the Contractor’s Scope and/or the Sub-Contract Works), provided that any reduction by way of liquidated damages shall only be made if the Owner has an arms length contract with a party unconnected with the Owner for the employment of the Vessel.

Contractor’s Scope

14.1


(a)	No adjustment shall be made and the Conversion Price shall remain unchanged for the first 15 Days of delay in Redelivery beyond the Redelivery Date (the “Grace Period”);

(b)

If Redelivery is delayed more than 15 Days beyond the Redelivery Date for reasons solely attributable to the Contractor, then in such event, beginning from the 16^th Day after the Redelivery Date (i.e. the end of the Grace Period) until the end of two (2) calendar months from the end of the Grace Period, the Conversion Price shall be reduced by deducting the sum of fifty thousand United States Dollars (U.S.$50,000) per Day for each Day of delay beyond the expiry of the Grace Period.

(c)

If Redelivery is delayed more than two (2) calendar months beyond the end of the Grace Period for reasons solely attributable to the Contractor, then in such event, beginning from the third calendar month after the end of the Grace Period until the end of four calendar months after the end of the Grace Period, the Conversion Price shall be reduced by deducting the sum of seventy-five thousand United States Dollars (U.S.$75,000) per Day for each Day of delay beyond the end of two (2) calendar months following the expiry of the Grace Period.

Owner: ______

Contractor: ______

LL Ref: A17244245

(d)

If Redelivery is delayed more than four (4) calendar months beyond the end of the Grace Period for reasons solely attributable to the Contractor, then in such event, beginning from the fifth calendar month after the end of the Grace Period until the end of six calendar months after the end of the Grace Period, the Conversion Price shall be reduced by deducting the sum of one hundred thousand United States Dollars (U.S.$100,000) per Day for each Day of delay beyond the end of four (4) calendar months following the expiry of the Grace Period.

(e)

If Redelivery is delayed more than six (6) calendar months beyond the end of the Grace Period for reasons solely attributable to the Contractor, then, in such event, beginning from the seventh calendar month after the end of the Grace Period until the Contractor accrues the total limit for liquidated damages stated below in Article 14.3, the Conversion Price shall be reduced by deducting the sum of one hundred and forty five thousand United States Dollars (U.S.$145,000) per Day for each Day of delay beyond the end of six (6) calendar months following the expiry of the Grace Period.


14.2	However, the total reduction in the Conversion Price on account of such liquidated damages shall not be more than forty million United States Dollars (U.S.$40,000,000).


14.3	For the purposes of this Article 14, Redelivery shall be deemed to be delayed when and if the Vessel, after taking into full account all postponements of the Redelivery Date by reason of permissible delays and/or any other reasons under this Agreement, is not delivered by the date upon which Redelivery is required under the terms of this Agreement.


14.4	It is expressly understood and agreed by the Parties that in any case, if the Owner terminates this Agreement pursuant to Article 30.1 or Article 31, the Owner shall not be entitled to any damages or to liquidated damages as provided in this Article 14.

14.5

The Parties acknowledge and agree that the amount of liquidated damages payable for delay in Redelivery as provided in this Article 14 constitutes a genuine pre-estimate of the loss that would be suffered by the Owner as a result of the Contractor’s non-compliance with its obligations under this Agreement. In the event that such liquidated damages are determined to be unenforceable, the Owner shall be entitled to recover direct damages provided that such damages shall not exceed the maximum amount of liquidated damages which would have been recoverable under this Article 14 if the liquidated damages had been enforceable.

14.6

If Redelivery occurs earlier than the Redelivery Date, as may be adjusted in accordance with the terms of this Agreement, the Conversion Price shall be increased at the discretion of the Owner by a sum between one million to five million United States Dollars (U.S. $1,000,000 - $5,000,000), provided that the Conversion Price shall be increased only if the Owner has an arms-length contract with a party unconnected with the Owner for the employment of the Vessel. Such sum, if any, shall be paid by the Owner to the Contractor within 14 Days of the achievement of Substantial Performance.

Sub-Contract Works


14.7	As regards to the Sub-Contract Works the Contractor shall have no obligation to the Owner, whether by way of liquidated damages or otherwise, for delays to the Sub-Contractor’s performance of the Sub-Contract Works or for delays to the Works arising out of or in

Owner: ______

Contractor: ______

LL Ref: A17244245

connection with the Sub-Contract Works, unless those delays are caused by the Contractor in breach of its obligations under the Topsides Agreement or this Agreement. Further, the Contractor shall have no obligation to the Owner in respect of the performance of the Topsides Scope in any Performance Tests or otherwise.


14.8	Where the Contractor’s performance of the Contractor’s Scope is delayed by causes which are the responsibility of the Sub-Contractor, such that Redelivery is delayed beyond the Redelivery Date, the Redelivery Date shall be postponed to the extent of the impact to the Contractor’s performance of the Contractor’s Scope.


14.9	Subject to Article 27, the Contractor shall endeavour to avoid or minimise the impact of any delays to the Contractor’s Scope caused by the Sub-Contractor.


15.	MECHANICAL COMPLETION


15.	The Contractor shall be responsible for achieving Mechanical Completion in respect of the Works.

15.1

Upon each stage of successful Mechanical Completion, the Owner’s Representative and the Contractor’s Representative shall sign Mechanical Completion Certificates in accordance with the procedure which the Contractor and the Owner shall agree before commencement of Mechanical Completion. In the event of minor works that are not completed but which do not affect the safe departure of the Vessel (“Outstanding Works”), the Mechanical Completion Certificate shall be signed with an agreed punch list of the Outstanding Works, which shall be subsequently completed by the Contractor within one month after Redelivery provided that the Owner grants the Contractor reasonable access and facilities.


15.2	Acceptance of Mechanical Completion as above provided shall be final and binding so far as conformity of the Works with this Agreement and the Specifications are concerned and shall preclude the Owner from refusing Redelivery.


16.	PRE-COMMISSIONING OF SUB-CONTRACT WORKS


16.	The Contractor shall be responsible for carrying out activities at the Yard for the Pre-Commissioning of the Sub-Contract Works, with the assistance of the Sub-Contractor, in accordance with the Topsides Agreement.


16.1	Upon each stage of successful Pre-Commissioning of the Sub-Contract Works, the Owner’s Representative and the Contractor’s Representative shall sign Pre-Commissioning Certificates of the Sub-Contract Works, in accordance with the procedure which the Contractor shall agree with the Sub-Contractor before commencement of Pre-Commissioning of the Sub-Contract Works.


17.	COMMISSIONING OF THE WORKS


17.	The Contractor shall perform Commissioning of the Works, as further detailed in Appendix 1B.

Owner: ______

Contractor: ______

LL Ref: A17244245


17.1	Upon each stage of successful Commissioning of the Works, the Owner’s Representative and the Contractor’s Representative shall sign a Commissioning Certificate in accordance with the procedure which the Contractor and the Owner shall agree before commencement of Commissioning of the Works.


17.2	The procedure set out in Article 15.2 in respect of Outstanding Works in relation to Mechanical Completion shall also apply to Commissioning of the Works.


18.	VESSEL LEAVING THE YARD

18.

Upon the completion of the Commissioning of the Works provided in Appendix 1B to be carried out in the Yard, the Owner’s Representative and the Contractor’s Representative shall sign the Certificate of Vessel Leaving The Yard in the form set out in Appendix 10, whereupon (subject to the payment of the Fourth Instalment in accordance with Article 13.4(d)) the care, custody and control of the Vessel shall pass from the Contractor to the Owner (“Vessel Leaving The Yard”). The Owner shall concurrently deliver to the Contractor a bank guarantee in the form of Appendix 10 from a first-class Singapore bank acceptable to the Contractor, to be valid until the full discharge by the Owner of its obligations under this Agreement, whereupon the Contractor shall deliver to the Owner a discharge of the mortgage over the Vessel referred to in Article 45.

18.1

On and from the signing of the Certificate of Vessel Leaving The Yard and payment as set out in Article 18.1, the Vessel shall be at the sole risk of the Owner. The Owner shall be responsible for manning, security, watchmen and all other costs and liabilities relating to the Vessel after 7 days from such date of signing. The Contractor’s prevailing mooring/berthing rates will be payable by the Owner whilst the Vessel remains at the Yard beyond 7 Days after the signing of the Certificate of Vessel Leaving The Yard. During the 7 Days after the signing of the Certificate of Vessel Leaving The Yard that the Vessel remains in the Yard, the Contractor shall be fully entitled to move the Vessel to another part of the Yard at the Owner’s cost and risk of loss or damage arising from such movement.


18.2	Following the signing of the Certificate of Vessel Leaving The Yard in accordance with Article 18.1, and before it is required under this Agreement to cause the departure of the Vessel from the Yard, the Owner may, at its entire risk and cost, carry out Pre-Commissioning and Commissioning activities on and in respect of the Sub-Contract Works.


19.	COMMISSIONING AT ANCHORAGE


19.	Following the signing of the Certificate of Vessel Leaving The Yard and payment in accordance with Article 18.1, the Owner shall, at its own risk and cost, cause the Vessel to be moved within 7 Days from the Yard to an anchorage in Singapore.


19.1	The Contractor shall perform at such anchorage the remaining Commissioning of the Works in accordance with Appendix 1B, for which purpose the Owner shall provide to the Contractor reasonable and timely access and facilities. The procedure set out in Article 15.2 in respect of Outstanding Works in relation to Mechanical Completion shall also apply to Commissioning of the Works.


20.	REDELIVERY

Owner: ______

Contractor: ______

LL Ref: A17244245


20.	The Owner shall accept Redelivery immediately upon the completion of Commissioning at anchorage, and make payment of the Fifth Instalment and all other amounts then due to the Contractor from the Owner.


20.1	Redelivery shall take place within 31 months and 2 weeks after the Effective Date, as such date may be adjusted in accordance with the terms of this Agreement. The aforementioned date or such later date to which the requirement of Redelivery is postponed pursuant to the terms of this Agreement, is herein called the “Redelivery Date”.

20.2

Provided that the Owner shall have made payment of the Fifth Instalment, Redelivery shall be effected by the concurrent delivery by each of the Parties to the other the Protocol of Redelivery and Acceptance acknowledging Redelivery of the Vessel by the Contractor and acceptance thereof by the Owner. Upon Redelivery, ownership, property and title to all goods, materials, spares, equipment (including, but not limited to, the Equipment and other items referred to in the Topsides Agreement), machineries, appurtenances, outfit, articles and items supplied to or installed on the Vessel whether pursuant to this Agreement, the Topsides Agreement or otherwise (hereinafter referred to collectively as the “Contractor’s Equipment”) shall, unless otherwise agreed, pass to the Owner but, until such time as the Vessel is redelivered to the Owner in accordance with this Article 20, ownership, property and title to all the Contractor’s Equipment as aforesaid shall remain vested solely and exclusively in the Contractor.


20.3	Upon Redelivery, the Contractor shall deliver to the Owner the following documents (if not already delivered): -


20.3.1	Protocol of Mechanical Completion;


20.3.2	Instruction books and operation manuals in the English language from the vendors or suppliers of the equipment procured by the Contractor under this Agreement including those received from the Sub-Contractor in respect of the Sub-Contract Works; and


20.3.3	Drawings and certificates as listed in the Specifications.


20.4	Concurrently with Redelivery, the Owner shall pay to the Contractor the Fifth Instalment (unless already paid in accordance with Article 13.4) and all other amounts then due to the Contractor from the Owner.


20.5	If the Owner fails to accept Redelivery according to this Agreement without any justifiable reason, the Contractor shall have the right to tender Redelivery after compliance of the procedural requirements as provided above.


20.6	The procedure set out in Article 15.2 in respect of Outstanding Works in relation to Mechanical Completion shall also apply to Redelivery. The Owner shall install the Commissioning Spares on the Vessel before Redelivery.


21.	SAILAWAY

Owner: ______

Contractor: ______

LL Ref: A17244245


21.	Following Redelivery, the Owner shall, at its own risk and cost, cause the Vessel to be moved promptly from Singapore anchorage to the Project Site (“Sailaway”).


21.1	Upon the earlier of Sailaway or 30 Days following Vessel Leaving The Yard, the Owner shall pay to the Contractor the Sixth Instalment and all other amounts then due to the Contractor from the Owner, if any.


22.	PROJECT SITE WORKS


22.	The Owner shall be responsible at its own costs, expense and risk for mobilising the Vessel to the Project Site, installing here there, hook up and all other activities required for the preparation for and carrying out of the Project Site Works.


22.1	The Owner shall provide Project Site Personnel to perform those Project Site Works to be carried out by the Owner with the assistance of the Contractor as provided in Appendix K and of the Sub-Contractor as provided in Clause 27 of the Topsides Agreement.

22.2

The Owner shall ensure that the Project Site is safe, accessible, compliant with Applicable Laws and not in breach of any term of this Agreement or of the Topsides Agreement. The Owner shall notify the Contractor in writing as soon as possible, but not less than 120 Days before the commencement of the Project Site Works, of the location of the Project Site, to enable the Contractor and the Sub-Contractor to prepare for mobilisation of the Contractor’s personnel and the Sub-Contractor Project Site Personnel (as defined in the Topsides Agreement) to the Project Site and to enable the Contractor and the Sub-Contractor to satisfy themselves as to the safety, regulatory, legal and operational environment at the Project Site.

22.3

The Owner shall provide the Contractor’s Representative and the Sub-Contractor with written notices at 90, 45, 21 and 5 Days prior to the date or dates when the Project Site Works are to commence. The 5-Day notice shall be accompanied by confirmation that the pre-conditions set out in Article 22.5 either have been fulfilled or will be fulfilled prior to the commencement of the Project Site Works.


22.4	Prior to the commencement of the Project Site Works and prior to the arrival of the Sub-Contractor Project Site Personnel at the Project Site (as defined in the Topsides Agreement), the Owner shall provide the following at the Project Site:


22.4.1	access to the Vessel from the date of commencement of the Project Site Works until Final Acceptance, to the extent necessary for the Contractor and the Sub-Contractor to perform their respective scopes of work in relation to the Contractor’s Scope and the Topsides Scope;


22.4.2	arrangements for transport of the Contractor’s and the Sub-Contractor’s personnel and materials between the nearest commercial international airport within the country in which the Project Site is located and the Project Site;


22.4.3	appropriate accommodation and catering for such personnel while they are required to be on the Vessel or on or near to the Project Site;

Owner: ______

Contractor: ______

LL Ref: A17244245


22.4.4	adequate Project Site office space;

22.4.5

adequate infrastructure support and Project Site Personnel for the Contractor’s and Sub-Contractor’s use at the Project Site for the purposes of the Project Site Works, adequate construction craft labour as may be required to support the activities of the Contractor and the Sub-Contractor at the Project Site including all supervision, labour and skilled mechanics with necessary small tools and consumables and all other material to ready the project for Project Site Works up through Final Acceptance, all to be provided in accordance with the Owner’s rate sheet containing labour rates on a non-profit basis, that shall be provided to the Contractor and Sub-Contractor no later than 30 Days prior to the scheduled Redelivery;


22.4.6	an adequate number of qualified and properly trained operators and maintenance personnel in a timely manner to support the Project Site Works;


22.4.7	reasonable assistance for the Contractor and the Sub-Contractor to obtain Authorisations as required by Applicable Laws at the Project Site for the Contractor and the Sub-Contractor to perform the Project Site Works;


22.4.8	sufficient feed stock and utilities (including fuel, air, power, water) and consumables (including reagents, chemicals, grease and lubricants complete with MSDS data) for the Project Site Works (providing however that the Sub-Contractor shall provide the Owner, with reasonable notice of its requirements at the Project Site);

22.4.9

first fills including but not limited to lubricants, refrigerants, catalyst, perlite insulation and chemicals following delivery of the Vessel to Project Site at the times and to the specification requested by the Sub-Contractor in order to complete the Project Site Works, provided that the Sub-Contractor has, six months prior to scheduled Sailaway or such shorter period of time as is reasonable under the circumstances, provided the Owner with a list identifying the foregoing items and quantities thereof;


22.4.10	sufficient storage for LNG product produced by the Vessel during the Project Site Works to support continuous, steady state operation necessary to achieve Final Acceptance in accordance with the Project Schedule;


22.4.11	cooled down LNG storage tanks on the Vessel ready to accept LNG production;


22.4.12	all required catalyst, chemicals, Owner’s Spares, fuels, lubricants, and the Commissioning Spares (which shall have been delivered by the Sub-Contractor in accordance with the Topsides Agreement) as listed in Appendix S of the Topsides Agreement. Such items shall be readily available either on the Vessel or adjacent to the Vessel;


22.4.13	LNG or liquefied nitrogen or other means to cool down the Vessel’s LNG storage tanks;


22.4.14	the safe, secure and stable mooring of the Vessel at the Project Site and the hooking up and commissioning of the relevant gas feed line;


22.4.15	the necessary Authorisations for the Project Site Works having been obtained; and


22.4.16	the availability of accommodation on the Vessel for the Contractor’s and Sub-Contractor’s personnel; and the Contractor's and the Sub-Contractor’s acceptance

Owner: ______

Contractor: ______

LL Ref: A17244245

(acting reasonably) of the health, safety, security and other arrangements at the Project Site in accordance with Article 40 of this Agreement and Clause 12.5 of the Topsides Agreement.

Owner’s Spares


22.5	The Sub-Contractor shall deliver to the Owner a list of Owner’s Spares with itemised prices as provided for in Clause 19.3 of the Topsides Agreement.


22.6	The Owner shall procure at its own cost the Owner’s Spares, either from the Sub-Contractor or from others.


22.7	The Owner’s Spares shall be made available at or transported to the Project Site by the Owner at its own cost prior to the Sub-Contractor’s arrival at the Project Site.


22.8	The Owner’s Spares may be used by the Sub-Contractor during Startup, Project Site Commissioning and in support of warranty work pursuant to Clauses 19.5 to 19.6 of the Topsides Agreement.


23.	CONDITIONS PRECEDENT FOR PROJECT SITE COMMISSIONING


23.	Project Site Commissioning will commence when the Owner has issued the Ready for First Gas Certificate.


23.1	The Ready for First Gas Certificate shall be issued by the Owner to the Sub-Contractor when the Owner is satisfied that feed gas may be introduced into the liquefaction system, including the satisfaction by the Owner of all the following conditions precedent:


23.1.1	the hook up of the gas transmission line has been accomplished;


23.1.2	all necessary Authorisations have been obtained in order for Project Site Commissioning to commence;


23.1.3	the Vessel is free from any damage to equipment or systems that may have occurred in transit to the Project Site and which would affect the operation of the Sub-Contract Works;


23.1.4	the feed gas pipeline is fully operational;


23.1.5	all “dried” systems have maintained dryness during transit or have been dried at the Project Site;


23.1.6	all infrastructure required to support Project Site Commissioning, the warranty work and rectification efforts is available (e.g. crew vessels, craft labour, spare parts, etc.);


23.1.7	a pre-start-up safety review has been completed;


23.1.8	cool down of the Vessel LNG storage tanks is completed in sufficient time for the introduction of produced LNG;

Owner: ______

Contractor: ______

LL Ref: A17244245


23.1.9	operator training has been completed and a sufficient number of trained operation and maintenance personnel are on board to support Startup and Project Site Commissioning;


23.1.10	the provision of all safety management and issuance of any subsequent work permit and/or hot work permits which may be required to support the Commissioning schedule; and


23.1.11	the Owner formally assuming responsibility for all safety management and issuance of any subsequent work permits which may be required to support Project Site Commissioning.


23.2	The Owner shall demonstrate satisfaction of the above conditions precedent together with the Ready for First Gas Certificate.


23.3	The Sub-Contractor shall respond to the Ready for First Gas Certificate in writing either with its agreement or, if it disagrees, with full details of its reasons within three Days of receipt of the Ready for First Gas Certificate.

23.4

If any of the conditions precedent listed in Article 23.2 is not fulfilled, causing the Ready for First Gas Certificate not to be issued (and for Project Site Commissioning not to commence) (or any repetition thereof in the event of prior failure), the Owner shall, at its own cost, make all appropriate adjustments and modifications with all reasonable speed and at its own expense to enable the Ready for First Gas Certificate to be issued. If the Ready for First Gas Certificate has not been issued to the Sub-Contractor within 28 Days from the receipt by the Sub-Contractor of the final notice referred to in Article 22.4 for reasons which are not the Sub-Contractor’s responsibility, the Sub-Contractor shall be entitled to a Variation Order (from the Owner, through the Topsides Agreement and this Agreement) for its reasonable increased costs arising from such delay.


24.	PROJECT SITE COMMISSIONING


24.	The Owner shall perform the Project Site Commissioning with the assistance of the Contractor and of the Sub-Contractor.


24.1	The Owner, the Contractor or the Sub-Contractor shall be entitled to order the cessation of any aspect of Project Site Commissioning if damage to the Vessel or other property or personal injury is likely to result from continuation.


24.2	Project Site Commissioning activities of the Owner shall be presented in a written report(s) produced and delivered by the Owner to the Sub-Contractor within five (5) Days of the completion of the relevant aspect of Project Site Commissioning. The form and content of the report(s) will be agreed between the Owner and the Sub-Contractor prior to Sailaway.


24.3	The Sub-Contractor may, acting reasonably, within five (5) Days of receipt of a report produced by the Owner in accordance with Article 24.3, give the Owner a notice that it considers:

Owner: ______

Contractor: ______

LL Ref: A17244245


24.3.1	the report to be deficient in any way and that it requires the Owner to correct and resubmit the report, and the Owner must, at its own cost, resubmit the report;


24.3.2	that the Owner has failed to achieve Project Site Commissioning, such notice setting out the reasons for such failure; or


24.3.3	that Project Site Commissioning has been successfully performed.

24.4

If any part of the Project Site Commissioning fails (or any repetition thereof in the event of prior failure) or if Project Site Commissioning (or any part thereof) is stopped before completion, the Owner shall, at its own cost, make all appropriate adjustments and modifications with all reasonable speed and at its own expense and Project Site Commissioning (or the relevant part thereof) shall be repeated by the Owner as soon as practicable thereafter, and the Sub-Contractor shall be afforded schedule adjustments which may apply.


24.5	Where Project Site Commissioning has been achieved such that the Sub-Contractor has issued the requisite notice pursuant to Article 24.4.3, and all other Commissioning requirements have been satisfied, the Owner shall immediately issue the Ready for Startup Certificate in the form set out in Appendix 10 and proceed to Startup.


25.	START UP AND PERFORMANCE TESTS

25.

The Owner shall perform Startup and the Performance Tests with the assistance of the Sub-Contractor. The Sub-Contractor shall provide technical services in accordance with Appendices D, K and Z of the Topsides Agreement concerning Startup and the carrying out of the Performance Tests in accordance with the procedures and requirements for the Performance Tests set out in Clause 29, and Appendices N and O of the Topsides Agreement.


25.1	The Topsides Agreement provides as follows in relation to performance of the Equipment during the Performance Tests:


•	Substantial Performance


•	Minimum Performance


•	Guaranteed Performance


•	Guaranteed Fuel Usage


•	Guaranteed Electrical Power Consumption

as each of those terms is defined in the Topsides Agreement.


25.2	The Performance Tests shall demonstrate the achievement of Substantial Performance, Minimum Performance and Guaranteed Performance (together the “Performance Tests”), the latter to include Guaranteed Fuel Usage and Guaranteed Electrical Power Consumption.

Owner: ______

Contractor: ______

LL Ref: A17244245


25.2.4	Substantial performance ("Substantial Performance") shall be achieved when the liquefaction plant has achieved, in the aggregate, an average LNG output of at least 70 per cent of the Guaranteed LNG Output over a period of 72 consecutive hours.


25.2.5	Minimum performance ("Minimum Performance") shall be achieved when the liquefaction plant has achieved, in the aggregate, an average LNG output of at least 80 per cent of the Guaranteed LNG Output over a period of 72 consecutive hours.

25.3

Notwithstanding anything in Article 25.3 to the contrary, the Owner, the Contractor and the Sub-Contractor recognise that there may be circumstances during Commissioning, Startup and Performance Tests where there is enough feed gas to only operate one or more, but less than all, of the trains. The manner in which Substantial Performance, Minimum Performance and Guaranteed Performance under such circumstances will be determined shall be in accordance with Appendix N of the Topsides Agreement.


25.4	The Contractor, the Owner or the Sub-Contractor shall be entitled to order the cessation of any Performance Tests if damage to the Works or other property or personal injury is likely to result from continuation.


25.5	The results of the Performance Tests shall be collected and presented by the Owner in accordance with Appendix O (Performance Tests Procedures) of the Topsides Agreement.

25.6

Where all the requirements for Substantial Performance have been satisfied, the Sub-Contractor shall issue a notice (in the form of Appendix X of the Topsides Agreement) to the Owner that Substantial Performance has been achieved. Upon the Owner’s verification and signing off, such notice shall become the Substantial Performance Certificate, effective as of the date of notice by the Sub-Contractor. In the event that the Owner fails to sign off on or object to the Sub-Contractor’s notice within 2 Days, Substantial Performance shall be deemed to have been achieved on the date of the Sub-Contractor’s notice.

25.7

Where all the requirements for Minimum Performance have been satisfied, the Sub-Contractor shall issue a notice (in the form of Appendix X of the Topsides Agreement) to the Owner that Minimum Performance has been achieved. Upon the Owner’s verification and signing off, such notice shall become the Minimum Performance Certificate, effective as of the date of notice by the Sub-Contractor. In the event that the Owner fails to sign off on or object to the Sub-Contractor’s notice within 4 Days, Minimum Performance shall be deemed to have been achieved on the date of the Sub-Contractor’s notice.

25.8

Where all the requirements for Guaranteed Performance have been satisfied, the Sub-Contractor shall issue a notice (in the form of Appendix X of the Topsides Agreement) to the Owner that Guaranteed Performance has been achieved. Upon the Owner’s verification and signing off, such notice shall become the Guaranteed Performance Certificate, effective as of the date of notice by the Sub-Contractor. In the event that the Owner fails to sign off on or object to the Sub-Contractor’s notice within 4 Days, Guaranteed Performance shall be deemed to have been achieved on the date of the Sub-Contractor’s notice

Owner: ______

Contractor: ______

LL Ref: A17244245


25.9	If:


25.9.1	a notice of objection is given by the Owner stating the Sub-Contract Works have failed to achieve either Substantial Performance, Minimum Performance or Guaranteed Performance following a Performance Test (or any repetition thereof in the event of prior failure), the Sub-Contractor shall:

(a)

proceed with rectification efforts as soon as is practicable and thereafter continue to expeditiously (subject to having unimpeded access to the Sub-Contract Works) make all appropriate adjustments and modifications with all reasonable speed. The Owner shall provide, on a timely basis in support of the Sub-Contractor’s plan for rectification, all labour, tools, spare parts and all other resources for making such adjustments and modifications as required by the Sub-Contractor at the Sub-Contractor’s expense all in accordance with the Owner’s rate sheet containing labour rates on a non-profit basis, that shall be provided by the Owner to the Sub-Contractor no later than 30 Days prior to the scheduled Redelivery. The Sub-Contractor shall give the Owner one Day’s prior notice that the Sub-Contract Works is ready for the re-performance of the Performance Tests (or the relevant part thereof); or

(b)

if Minimum Performance has been achieved, within five (5) Days after the date of issue of the notice under Article 25.10.1, provide the Owner with a schedule detailing the work to be performed in accordance with Article 25.10.1(a). Within three (3) Days of receipt of such schedule, the Owner, acting reasonably, will approve the schedule or advise the Sub-Contractor of any reasonable amendments required (giving reasons for such amendments). The Sub-Contractor will continue to resubmit amendments to the schedule until approved by the Owner. If the Owner fails to advise under this Article 25.10.1(b) within three (3) Days then the schedule provided shall be deemed to be approved with no amendments. The Sub-Contractor will perform the work referred to in Article 25.10.1(a) in accordance with the schedule approved by the Owner in accordance with this Article 25.10.1(b) and


25.9.2	either (a) following a period of no less than 280 Days after the Ready for First Gas Certificate, the Sub-Contractor has failed to achieve Substantial Performance or (b) following a period of no less than 180 Days after the achievement of Substantial Performance, the Sub-Contractor has subsequently failed to achieve Guaranteed Performance, the Owner may:

(i) instruct the Sub-Contractor to perform such remedial or rectification works or services as may be necessary for the Sub-Contractor to achieve Substantial Performance or Guaranteed Performance, as the case may be. In such circumstances, any remedial or rectification works or services shall be performed by the Sub-Contractor on a cost-only basis and, without prejudice to the right to collect liquidated damages that may be payable by the Sub-Contractor subject to the overall limitation of liability, the Sub-Contractor’s overall limitation of liability set out under Clause 31.13 of the Topsides Agreement shall be reduced by such amount of

Owner: ______

Contractor: ______

LL Ref: A17244245

costs incurred in the performance of any such remedial or rectification works or services; or

(ii) give the Sub-Contractor a notice that it is of the view that no further commercially reasonable efforts will improve the performance of the Sub-Contract Works, in which case the Owner may instruct the Contractor to terminate the Topsides Agreement pursuant to Clauses 39.1.11 and 39.1.12 of the Topsides Agreement and upon such termination carry out any remedial or rectification works or services itself or by others approved by the Sub-Contractor (acting reasonably). In such circumstances the cost and expense of any remedial or rectification works or services shall be borne by the Sub-Contractor (and, for the avoidance of doubt, such costs and expenses are included within the caps on the Sub-Contractor’s liability under Clause 31.13 of the Topsides Agreement). In such circumstances the Owner shall be entitled to recover liquidated damages from the Sub-Contractor subject to the provisions of Clause 29.12.2 of the Topsides Agreement and the caps on the Sub-Contractor’s liability under Clause 31.13 of the Topsides Agreement. The actual documented cost and expense as aforesaid properly incurred by the Owner in achieving Substantial Performance shall be paid by the Sub-Contractor to the Owner within 30 Business Days of receipt by the Sub-Contractor of a written demand (accompanied by relevant supporting documentation) from the Owner or, at the Owner’s election, may be deducted from any amounts held by the Owner (after providing the relevant supporting documentation);

25.9.3

the Sub-Contractor is, at any time, of the view that no further commercially reasonable efforts will improve the performance of the Sub-Contract Works, the Sub-Contractor shall give the Owner notice of such held view (provided that such notice shall not constitute an abandonment of this Agreement by the Sub-Contractor). Notwithstanding anything in this Agreement to the contrary, the actual costs of the Sub-Contractor’s rectification efforts to achieve Guaranteed Performance shall count towards the Sub-Contractor’s overall limit of liability in Clause 31.13 of the Topsides Agreement.

25.10

Under the Topsides Agreement Substantial Performance shall be achieved on or before 145 Days from First Gas (the “Guaranteed Substantial Performance Date”). If Substantial Performance is achieved on or before 71 Days after First Gas, and provided that both Guaranteed Performance and Final Acceptance are subsequently achieved, the Sub-Contractor shall be entitled, from the Owner, to an additional payment via the Contractor at the rate of U.S. $10,000 per diem for Days 67 through 71 and U.S. $25,000 for Days 66 and earlier. The Owner shall pay to the Contractor such amounts equal to the amount due to the Sub-Contractor in good time to enable the Contractor to discharge its obligation to the Sub-Contractor.

25.11

The Sub-Contractor’s guarantee regarding the Guaranteed Substantial Performance Date is conditioned upon no delay for any reason other than those solely attributable to the Sub-Contractor. If the Sub-Contractor becomes aware of a delay to the Project Schedule not solely attributable to the Sub-Contractor the Sub-Contractor shall provide written notice to the Owner and Contractor of the same and shall update the Project Schedule on a daily basis.

Owner: ______

Contractor: ______

LL Ref: A17244245

25.12

For the purposes of the Sub-Contractor carrying out the Project Site Works, any work to be done by the Sub-Contractor in order to achieve Substantial Performance, Minimum Performance, Guaranteed Performance and/or Final Acceptance, the Owner shall arrange for the Owner’s Spares to be readily available. Any spare parts used by the Sub-Contractor shall promptly (by a reasonable standard) and at its own cost and expense be replaced by it and delivered to such location as the Owner may direct in writing. To the extent the Owner’s Spares are not available for any of the activities listed in the first sentence of this Article 25, the Sub-Contractor and the Contractor shall be entitled to a Variation to the extent their respective costs or schedule are adversely impacted.


25.13	For the purposes set out in Article 25.13, the Owner shall provide the Sub-Contractor with the necessary access to the Vessel as set out in a reasonable plan and schedule to be delivered by the Sub-Contractor to the Owner sufficiently in advance.

25.14

If Minimum Performance is achieved but Guaranteed Performance is not achieved and the Sub-Contractor is not given access to the Vessel by the Owner pursuant to Article 25.10 for at least six periods each of access sufficient for the performance of rectification activities by the Sub-Contractor within a period of 180 Days from the date when Minimum Performance is achieved as provided for in the plan and schedule referred to in Article 25.10.1(b) above, then the Sub-Contractor shall be deemed to have achieved Guaranteed Performance on the date which is 180 Days from the date when Minimum Performance is achieved.


26.	FINAL ACCEPTANCE


26.	When all Sub-Contract Works necessary to achieve Final Acceptance are completed including:


(a)	having obtained required certifications of the Sub-Contract Works from the Certification Body;


(b)	completion of all Sub-Contract Works, except for those obligations expressly provided to be completed after Final Acceptance; and


(c)	having successfully completed all Performance Tests, or such tests being deemed completed, or the Sub-Contractor having paid to the Owner any liquidated damages due for failure to achieve Guaranteed Performance as provided in Appendix P of the Topsides Agreement,

the Sub-Contractor shall give the Owner notice in writing in the form of Appendix X of the Topsides Agreement that it considers Final Acceptance to have been achieved.

26.1

The Owner shall, within five (5) Days after receipt of such notice from the Sub-Contractor either notify the Sub-Contractor in writing of its agreement that Final Acceptance has been achieved effective as of the date of the Sub-Contractor’s notice, or otherwise shall provide the Sub-Contractor with a formal notice that specifies those items that the Owner considers to be outstanding by reference to the terms of the Topsides Agreement.


26.2	The Sub-Contractor shall remedy all outstanding items notified by the Owner to the Sub-Contractor under Article 26.2, and shall carry out any appropriate tests to demonstrate that

Owner: ______

Contractor: ______

LL Ref: A17244245

Final Acceptance has been achieved. The Sub-Contractor shall give the Owner notice in writing when it considers that Final Acceptance has been achieved, whereupon the Owner and the Sub-Contractor shall again follow the procedure set forth in Article 26.2, and, if necessary, shall repeat the process until the Sub-Contract Works achieve Final Acceptance, when the Owner shall notify its agreement by signing on the Final Acceptance Form in Appendix X of the Topsides Agreement.


26.3	Notwithstanding anything in this Agreement to the contrary, at any time after achieving Minimum Performance the Sub-Contractor shall have the right to pay performance liquidated damages based on the results of the last Performance Test in which case the Sub-Contractor shall be deemed to have achieved Guaranteed Performance.


27.	DELAYS AND PERFORMANCE DEFICIENCIES – SUB-CONTRACT WORKS

27.

The Contractor shall take reasonably practicable steps to avoid or minimise any delay to Redelivery which might otherwise result from the Sub-Contractor’s performance of the Topsides Scope, provided that the cost to the Contractor of doing so shall not exceed the amount received by the Contractor from the Sub-Contractor in respect of such delay by the Sub-Contractor pursuant to Clause 31.2 of the Topsides Agreement.


27.1	The Contractor shall be entitled to a Permitted Delay Event for any delay to Redelivery despite the Contractor’s taking of those steps.


27.2	Any payment received on or before Redelivery by the Contractor from the Sub-Contractor pursuant to Clauses 31.3 and/or 31.4 of the Topsides Agreement shall be credited by the Contractor against the Sixth Instalment of the Conversion Price.


27.3	Any other payment received by the Contractor from the Sub-Contractor pursuant to Clauses 31.3, 31.4, 31.7, 31.8, and/or 31.9 of the Topsides Agreement shall be credited by the Contractor against the Eighth Instalment of the Conversion Price.


27.4	In the event that after payment by the Owner to the Contractor of the Seventh Instalment, any payment is received by the Contractor from the Sub-Contractor pursuant to Clauses 31.3, 31.4, 31.7, 31.8, and/or 31.9 of the Topsides Agreement, the Contractor shall pass such amount received by it from the Sub-Contractor to the Owner after deducting any amount due to the Contractor from the Owner.


27.5	The Contractor shall have no responsibility for either the performance of the Sub-Contract Works in the Performance Tests nor for any defect, deficiency or suitability of the Sub-Contract Works.


28.	DELAYS & EXTENSION OF TIME FOR REDELIVERY

28.

The Contractor shall be entitled to a Variation Order in respect of any delay to the Works resulting from any Permitted Delay Event. In addition, the Contractor shall also be entitled to a Variation Order in respect of the delay, costs and expenses relating to the Works incurred by it as a consequence of any such delay exceeding 70 Days in the aggregate. The Contractor shall be entitled to a Variation Order in respect of the costs and expenses and delay to the

Owner: ______

Contractor: ______

LL Ref: A17244245

Sub-Contract Works resulting from a Force Majeure Event and shall be entitled to monthly payment of such costs and expenses during the pendency of such event. For the avoidance of doubt, the Sub-Contractor’s labour costs shall be invoiced in accordance with the discounted rates set forth in Appendix B of the Topsides Agreement for the first 30 Days of delay, in the aggregate.

28.1

For the purposes of this Article 28, a “Force Majeure Event” is an unanticipated event beyond the reasonable control of, and without the fault or negligence of, the Party claiming such Force Majeure Event and may include, without limitation, acts of God; unusually severe actions of the elements such as droughts, storms, floods, hurricanes, tornadoes, lightning, earthquakes or landslides; epidemics; sabotage; terrorism; war (declared or undeclared); embargoes; fire; explosion; strikes or other labour disputes, excluding those specifically targeting any contractor at the Yard; civil unrest, riots, delays in transportation, car shortages, and actions or failure to act of any government authority (including expropriation, requisition, or injunction), preventing delaying or adversely affecting the performance of a Party to this Agreement. However, a Force Majeure Event does not include change in economic conditions or shortage of funds.

Notice of Permitted Delay Event

28.2

Within five (5) Days of becoming aware of a Permitted Delay Event the Contractor shall notify the Owner in writing of the date such Permitted Delay Event occurred. The Contractor shall also notify the Owner of the period by which the Redelivery Date and the dates scheduled for the achievement of Substantial Performance and Final Acceptance by the Sub-Contractor are postponed by reason of such cause of delay with all reasonable despatch after it has been determined.


28.3	An addendum to this Agreement specifying the reasons for and extent of such extension will be discussed, agreed and executed by the Parties. Furthermore, the Sub-Contractor shall be entitled to, and the Owner shall pay, for additional costs incurred by the Sub-Contractor in relation to Force Majeure Events affecting the Sub-Contractor.


28.4	In the event:

any Permitted Delay Event, or in case of the Sub-Contract Works any Force Majeure Event (“Topsides Force Majeure”) causes a prolonged delay in the progress in carrying out the Works or Sub-Contract Works such that an interruption in operations through the occurrence of the Permitted Delay Event and/or the Topsides Force Majeure continues for a period of one hundred and eighty (180) Days or more, or two hundred and seventy (270) Days in aggregate, the Owner, or


ii.	any such interruption in operations continues for a period of three hundred and sixty (360) Days or more in aggregate, the Contractor

may upon seven (7) Days’ notice in writing terminate this Agreement without giving rise to any claim for compensation from either Party to the other Party other than a claim for compensation from the Contractor for the Works completed up to the date of termination and for the unused materials and equipment ordered for the Works by the Contractor (any such unused material becoming the property of the Owner). The Owner shall also indemnify

Owner: ______

Contractor: ______

LL Ref: A17244245

the Contractor for any amount which may become payable by the Contractor to the Sub-Contractor as a consequence of the termination by the Contractor of the Topsides Agreement following the termination by the Owner of this Agreement. Upon termination and payment by the Owner, the Contractor shall promptly make available to the Owner or the Owner’s Representative any such unused materials and/or equipment. Upon receipt by the Contractor of payment by the Owner under this Article 28.5, the Contractor shall deliver to the Owner a discharge of the mortgage over the Vessel referred to in Article 45, and the Owner shall take possession of the Vessel, all unused materials, equipment and documentation relating to the Works and Sub-Contract Works (including computer software and electronically stored information). Where the Owner or the Contractor does not elect to terminate this Agreement within seven (7) days after becoming entitled to do so, the Works and the Sub-Contract Works shall be deemed to be suspended in accordance with Article 29.

Duty to Minimise Delay


28.5	Each Party shall at all times use reasonable endeavours to overcome the effects of and minimise any impact to the performance of this Agreement as a result of a Permitted Delay Event and/or a Force Majeure Event.


28.5.1	The affected Party shall also provide notice to the other Party as soon as reasonably practicable of:


(a)	the cessation of the Permitted Delay Event; and


(b)	the cessation of the effects of the event of the Permitted Delay Event on the affected Party’s ability to recommence performance of its obligations under this Agreement.


28.6	Force Majeure Affecting a subcontractor

Any non-performance of the Contractor’s subcontractor (other than the Sub-Contractor) shall not excuse the Contractor from fulfilling its obligations under this Agreement, except to the extent that such non-performance is due to a Force Majeure Event affecting such subcontractor.


29.	SUSPENSION

29.

The Owner shall have the right, not before the expiry of 12 months from the Effective Date but no later than 6 months before the scheduled date of Vessel Leaving The Yard, by written notice to the Contractor, to suspend the Works and/or the Sub-Contract Works or any part thereof (the “Suspended Works”) from the date, for the period and to the extent detailed in the notice, for any of the following reasons:


(a)	in the event that suspension is necessary for the proper execution or safety of the Suspended Works, or safety of persons or property; or


(b)	to suit the convenience of the Owner.


29.1	The Owner shall have the right after Sailaway by written notice to the Contractor and Sub-Contractor, to suspend the Sub-Contract Works or any part thereof (the "Suspended Works") from the date, for the period and to the extent detailed in the notice, for any of the following reasons:

Owner: ______

Contractor: ______

LL Ref: A17244245


29.1.1	the lack of availability of a Project Site;


29.1.2	the lack of employment opportunities for the Vessel;


29.1.3	the lack of gas available for liquefaction at the Project Site;


29.1.4	the lack of commercial shipping available for produced LNG; or


29.1.5	the Owner not being ready to commence the Project Site Works within 2 months of such planned date.


29.2	Upon receipt of any such notice, the Contractor shall, unless instructed in writing by the Owner otherwise:


(a)	discontinue the Suspended Works detailed in the notice, on the date, for the period and to the extent specified;


(b)	properly protect and secure the Works, including any action reasonably required by the Owner, and including taking necessary measures for the preservation of the Works already executed (if any) and of the Equipment (or part thereof);


(c)	take all reasonable measures to minimize the resulting costs, expenses and losses, including placing no further orders and making no further subcontracts with its suppliers with respect to the Suspended Works other than as specified in the notice;


(d)	promptly make reasonable effort to obtain suspension of all outstanding orders and subcontracts to the extent they relate to the execution of the portion of the Suspended Works; and


(e)	continue to perform all unsuspended parts of the Works and/or the Sub-Contract Works, as applicable.


29.3	As a result of any such suspension, the Conversion Price and Redelivery Date shall be adjusted as relevant in accordance with Article 11, except where the suspension for safety reasons is solely caused by the Contractor.

29.4

As a result of any such suspension, the Topsides Price and schedule for the Sub-Contract Works shall be adjusted as relevant in accordance with the Topsides Agreement, except where the suspension for safety reasons is solely caused by the Sub-Contractor. Where such suspension has been called by the Owner, the Owner shall be fully responsible for any resulting adjustments of the Topsides Price in accordance with the Topsides Agreement. This includes that where any period of suspension occurs for a continuous period of 30 days or more, the Owner shall pay for the Sub-Contractor’s entitlement to invoice for payment in accordance with the Topsides Agreement for Sub-Contract Works performed until suspension without regard to whether or not a milestone has been achieved (less any amounts previously paid for or in relation to the Sub-Contract Works).

Owner: ______

Contractor: ______

LL Ref: A17244245


29.5	The Owner may, by further notice, instruct the Contractor to resume the Suspended Works to the extent specified.


29.6	During the period of such suspension, the Vessel shall remain in the Yard.


29.7	In the event of any suspension, the Owner and the Contractor shall meet at not more than seven (7) Day intervals with a view to agreeing a mutually acceptable course of action during the suspension.

29.8

If the period of any suspension pursuant to Article 29 exceeds 30 Days per occurrence or 90 Days in the aggregate, the Contractor may serve a written notice on the Owner requesting written permission within seven (7) Days from the Owner's receipt of such notice to proceed with the Suspended Works. If the period of any suspension pursuant to Article 29.2 exceeds 270 Days in the aggregate, the Sub-Contractor may serve a written notice on the Owner requesting written permission within twenty one (21) Days from the Owner's receipt of such notice to proceed with the Suspended Works. If within such period the Owner does not grant such permission the Contractor or the Sub-Contractor, by a further notice, may at its option treat the suspension as either:


29.8.1	where it affects part only of the Works, and/or of the Sub-Contract Works a deletion of such part under Article 11; or


29.8.2	where it affects the whole of the Works, and/or the Sub-Contract Works, termination in accordance with Article 31.


29.9	As soon as possible after the Contractor and/or the Sub-Contractor re-commences performance of the Works and/or the Sub-Contract Works following suspension pursuant to Article 29 or 29.2 the parties shall discuss in good faith and use reasonable efforts to agree any extension of time to which the Contractor and/or the Sub-Contractor may be entitled pursuant to Article 29.4 and 29.5.


29.10	For the avoidance of doubt, a suspension under this Article 29 shall not affect the Owner’s payment obligations under Article 13.


30.	TERMINATION FOR CAUSE


30.	The Contractor shall be deemed to be in default of the performance of its obligations under this Agreement in the following cases: -


(a)	Redelivery is delayed for reasons which the Contractor is solely responsible beyond such time as would elapse if the maximum amount of liquidated damages payable by the Contractor for such delay pursuant to Article 14.3 is exceeded;


(b)	the Contractor is in breach of any of its other material obligations under this Agreement and fails within thirty (30) Days to take reasonable steps to commence the remedy of such breach and within a reasonable period cure such breach after written notice has been given to the Contractor by the Owner pursuant to this Article 30.1(b) with particulars of the breach that is required to be remedied;

Owner: ______

Contractor: ______

LL Ref: A17244245

(c)

an order or an effective resolution is passed for the winding up of the Contractor (other than for the purposes of a reconstruction or amalgamation) or if a receiver or an administrator or judicial manager or liquidator is appointed over the whole or any part of the undertaking or property of the Contractor or if winding up or other types of insolvency proceedings are commenced against the Contractor or if the Contractor becomes insolvent or suspends payment generally of its debts or ceases to carry on its business or makes any special arrangement or composition with its creditors or if a voluntary winding up resolution has been made in respect of the Contractor;


(d)	an event analogous to Article 30.1(c) above occurs in relation to the Contractor Guarantor;


(e)	a material adverse change occurs in the financial condition of the Contractor which would affect the Contractor’s ability to perform all its obligations under this Agreement;


(f)	the aggregate cap on the Contractor’s liability under this Agreement pursuant to Article 33.2 is reached; or


(g)	the Contractor is in material breach of its obligations under Article 46;

and the Owner may and may only in such cases have a right to terminate this Agreement and may do so by giving written notice to such effect to the Contractor.


30.1	The Owner shall be deemed to be in default of the performance of its obligations under this Agreement in the following cases:

(a)

The Owner fails to pay the Contractor any monies that have become due and payable under this Agreement after the Contractor has given the Owner 30 Days’ written notice of its failure to pay such monies; provided, however, that as an alternative to termination the Contractor and the Sub-Contractor shall be entitled to suspend the performance of the Works and/or Sub-Contract Works work after the Owner’s failure to pay any undisputed amount due under the provisions of this Agreement and/or the Topsides Agreement within thirty (30) Days’ written notice from the Contractor and/or Sub-Contractor of such failure by the Owner to pay on the due date;

(b)

The Owner fails to deliver the Vessel to the Contractor within 150 Days after the time prescribed for its Delivery under Article 3.2, unless within such period the Parties agree and sign a Variation Order pursuant to Article 11 and the Contractor and the Sub-Contractor agree and sign a Variation Order, pursuant to the terms of the Topsides Agreement providing for the terms (including price and schedule) for the substitution of the “Gimi” for the Vessel;


(c)	The Owner fails to take Redelivery and pay all amounts due to the Contractor within fourteen (14) Days after the Contractor having given written notice to the Owner of its failure to take Redelivery or tendered the Vessel for Redelivery and stating its intention to terminate this Agreement pursuant to this Article 30.2;


(d)	An order or an effective resolution is passed for the winding up of the Owner (other than for the purposes of a reconstruction or amalgamation) or if a receiver or an

Owner: ______

Contractor: ______

LL Ref: A17244245

administrator or judicial manager or liquidator is appointed over the whole or any part of the undertaking or property of the Owner or if winding up or other types of insolvency proceedings are commenced against the Owner or if the Owner becomes insolvent or suspends payment generally of its debts or ceases to carry on its business or makes any special arrangement or composition with its creditors or if a voluntary winding up resolution has been made in respect of the Owner;


(e)	The Owner is in breach of any of its material obligations under this Agreement and fails to within thirty (30) Days to take reasonable steps to commence the remedy of such breach and within a reasonable period cure such breach after written notice has been given to the Owner by the Contractor pursuant to this Article 30.2(e) with particulars of the breach that is required to be remedied;


(f)	A material adverse change occurs in the financial condition of the Owner which would affect the Owner’s ability to perform all its obligations under this Agreement;


(g)	A change in control of the Owner (save where the control of the Owner passes to an Affiliate of the Owner) occurs without prior written consent of the Contractor, such consent not to be unreasonably withheld;

(h)

The Owner fails to make timely payment of any amount due to the Contractor in respect of the Sub-Contract Works and the Contractor, having applied all of the Topsides Credit towards any payment then outstanding of the Sub-Contractor, does not receive within 7 Days of written notice to the Owner, such amount as the Owner should have paid under the terms of this Agreement and the Topsides Agreement, in addition to restoring as the Topsides Credit to the level prescribed in Article 13.10;


(i)	At any time up to Vessel Leaving The Yard, the Contractor does not receive from the Owner, upon 14 Days of the Contractor’s written demand, such amount that will result in the Contractor having available to it the full Topsides Credit set out in Article 13.10; or

(j)

The Owner fails to obtain and/or procure, in the event of any detention, seizure, arrest, expropriation, attachment, sequestration, distress or execution of the Vessel (except where such detention, seizure, arrest, expropriation, attachment, sequestration, distress or execution of the Vessel is by the Contractor’s sub-contractors and caused solely by the Contractor’s non-payment of its sub-contractors), the release of the Vessel from the same within thirty (30) Days of such detention, seizure, arrest, expropriation, attachment, sequestration, distress or execution of the Vessel,

and the Contractor may and may only in such cases have a right to terminate this Agreement and may do so by giving written notice to such effect to the Owner provided however that with respect to Article 30.2(a), the Contractor’s right to terminate shall not apply to monies validly disputed by the Owner provided that the Owner within seven (7) Days of such written notice from the Contractor delivers to the Contractor security for the amount in dispute in wording, amount and from a guarantor reasonably acceptable to the Contractor.

Owner: ______

Contractor: ______

LL Ref: A17244245


30.2	If this Agreement is terminated by the Contractor pursuant to Article 30.2, the Owner shall immediately pay the Contractor:


(a)	for the Works performed until termination (less any amounts previously paid to the Contractor for the Works);


(b)	the cost of any uninstalled equipment or materials, not already included in Article 30.3(a);


(c)	any reasonable additional amount incurred by the Contractor as a result of termination of the part or parts of the Works including any unavoidable liability to subcontractors, suppliers and vendors directly related to termination of part(s) of the Works;


(d)	such amount as will indemnify the Contractor for any amount which may become payable by the Contractor to the Sub-Contractor as a consequence of the termination by the Contractor of the Topsides Agreement;


(e)	fifteen percent (15%) of the balance of the Conversion Price

and subject to the Owner paying Contractor as aforesaid, the Contractor shall redeliver to the Owner the Vessel in accordance with Article 18.3, together with any uninstalled equipment or materials and Plans, and the Owner shall remove the Vessel from the Yard within 14 Days of such redelivery.


30.3	If this Agreement is terminated by the Owner pursuant to Article 30.1, then the Owner shall immediately pay to the Contractor:


(a)	for the Works performed until termination (less any amounts previously paid to the Contractor for the Works);


(b)	the cost of any uninstalled equipment or materials, not already included in Article 30.4(a);


(c)	for the Sub-Contract Works performed until termination; and


(d)	security for any amount in dispute in wording, amount and from a guarantor reasonably acceptable to the Contractor,

and subject to the Owner paying the Contractor as aforesaid, the Contractor shall redeliver to the Owner the Vessel, any uninstalled equipment or materials and Plans. The Contractor shall to the extent possible, if required assign to the Owner such of its major subcontracts and supply contracts as the Owner may request including the Topsides Agreement provided that all amounts due to the Contractor and the Sub-Contractor upon termination have been paid. The Owner shall take over the remaining obligations under such subcontracts and supply contracts by means of a novation agreement with the Contractor and such subcontractors and suppliers including the Sub-Contractor. The Contractor shall use reasonable endeavours to provide for such rights of assignment in all its major subcontracts or supply contracts with such subcontractors and suppliers. If the Owner engages another

Owner: ______

Contractor: ______

LL Ref: A17244245

contractor to complete the Contractor’s Scope at another site, the Contractor shall pay the Owner any and all reasonable additional costs the Owner incurs to complete the Contractor’s Scope, such amount not to exceed 15% above what the Owner would have paid the Contractor for completing the Contractor’s Scope at the Contractor’s Yard.


30.4	In no circumstances shall the Contractor have any responsibility to the Owner in respect of the Sub-Contract Works, whether or not the Sub-Contract Works have been completed at the time of such termination.


30.5	For the avoidance of doubt, in no event shall the Owner be entitled to a refund of payments effected by the Owner to the Contractor for Works performed by the Contractor or the Sub-Contractor and the remedies set out herein shall be the Owner’s sole and exclusive remedy (whether at law, contract, equity or otherwise) in the event of termination of the Agreement by the Owner.


30.6	Without prejudice to any other rights or remedy which the Contractor may have, if the Owner does not within 14 days of the date of termination, make payment to the Contractor in accordance with either Article 30.3 or Article 30.4 or furnish security for such payment on terms satisfactory to the Contractor, the following provisions shall apply:

30.6.1

The Contractor shall have the full right and power either to complete or not to complete the Vessel as it deems fit, and to take, retain, keep possession, preserve or sell the Vessel, or any part thereof or any Equipment or OFE by way of a public or private sale by any means or process including but not limited to a court process in any jurisdiction at such price and on such terms and conditions as the Contractor in its sole discretion thinks fit or to dispose of the Vessel or any part thereof or the Equipment or OFE, without being answerable for any loss or damage.

30.6.2

In the event of the sale of the Vessel in its completed state, the proceeds of sale received by the Contractor shall be applied firstly to payment of all expenses attending such taking, retention, possession, preservation, sale or disposal and otherwise incurred by the Contractor as a result of the Owner's default, including but not limited to mooring, wharfage, berthing and dockage dues, costs of manning, security and watchmen, any movement, towage and then to payment of all unpaid instalments of the Conversion Price and interest on such instalments at the Default Interest Rate from the respective due dates thereof to the date of application.

30.6.3

In the event of sale of the Vessel in its incomplete state, or any part thereof or any Equipment or OFE, the proceeds of sale received by the Contractor shall be applied firstly to all expenses incurred by the Contractor as a result of the Owner's default, including but not limited to mooring, berthing, wharfage and dockage dues, costs of manning, security and watchmen, any movement, towage and then to payment of the amounts due under Articles 30.3 (a) to (e) and Articles 30.4 (a) to (c) .

30.6.4

In either of the above events of sale, if the proceeds of sale exceeds the total of amounts to which such proceeds are to be applied as aforesaid, the Contractor shall promptly pay the excess to the Owner without interest, provided however, that the amount of such payment to the Owner shall in no event exceed the total amount of instalments already paid by the Owner (without interest) and the cost of the OFE, if any.

Owner: ______

Contractor: ______

LL Ref: A17244245


30.6.5	If the proceeds of sale are insufficient to pay such total amounts payable as aforesaid, the Owner shall promptly pay the deficiency together with interest to the Contractor upon request.

30.6.6

The Owner hereby irrevocably and unconditionally grants to the Contractor full power and authority to sell the Vessel in accordance with the terms of this Article 30, to take all such steps as may be necessary to complete the sale, to receive the sale proceeds into its own account and to keep or retain the same or to apply the same in the manner set out in this Article 30 and for the purposes of such sale to confer legal and beneficial title and ownership in the Vessel to the buyer, deliver the Vessel to such buyer and do all acts and things as many be necessary for the purposes of giving effect to such sale including but not limited to the execution or signing of any contract, memorandum of agreement, bill of sale, certificate or document, or assignment of its right under the PRICO^®License Agreement.


31.	TERMINATION FOR CONVENIENCE


31.	The Owner may in any event terminate this Agreement for any reason or for its own convenience at any time by giving not less than sixty (60) Days’ notice in writing to the Contractor. In such event the Contractor shall be entitled to recover from the Owner by way of full and final satisfaction of all claims: -


(a)	For the Works performed until termination (less any amounts previously paid to the Contractor for the Works);


(b)	The cost of any uninstalled equipment or materials, not already included in Article 31.1(a);


(c)	Any reasonable additional amount incurred by the Contractor as a result of termination of the part or parts of the Works including any unavoidable liability to subcontractors, suppliers and vendors directly related to termination of part(s) of the Works;


(d)	Such amount as will indemnify the Contractor for any amount which may become payable by the Contractor to the Sub-Contractor as a consequence of the termination by the Contractor of the Topsides Agreement; and


(e)	Fifteen percent (15%) of the balance of the Conversion Price.

Upon receipt of such payment, the Contractor shall redeliver to the Owner the Vessel, any uninstalled equipment or materials and Plans. Without prejudice to any other rights or remedy which the Contractor may have, if the Owner does not within 14 days of the date of termination, make payment to the Contractor in accordance with this Article or furnish security for such payment on terms satisfactory to the Contractor, the provisions of Articles 30.5 to 30.7 shall apply.


32.	WARRANTY


32.	Subject to the provisions set forth herein, Contractor undertakes to remedy any defect(s) in the Works (but not in the Sub-Contract Works) which are due to defective design, defective

Owner: ______

Contractor: ______

LL Ref: A17244245

material and/or bad workmanship on the part of Contractor and/or its subcontractors provided that the defect(s) is/are discovered within a period of either: (i) 18 months after the date of Redelivery; or (ii) the earlier of twelve (12) months after either the original planned date of First Gas as set forth in Appendix K of the Topsides Agreement or the actual date of First Gas, whichever is earlier, (“Warranty Period”) and a notice thereof is duly given to the Contractor as hereinafter provided.

32.1

The Contractor's sole obligation in respect of defects in the Sub-Contract Works shall be to assign to the Owner such rights as the Contractor may have in that respect against the Sub-Contractor which the Owner may pursue at its sole risk and expense, indemnifying the Contractor for any costs, expenses or liabilities including in respect of its or the Sub-Contractor's legal costs and the costs of any litigation.

32.2

The Owner shall notify the Contractor in writing of any defect(s) for which a claim is made under this Article 32 as promptly as possible after discovery thereof. Such notice shall contain a description of the nature and extent of the defect(s). The Contractor shall have no obligation for any defect(s) discovered prior to the expiry of the Warranty Period (or Extended Warranty Period, in a case where such period applies under this Article 32) unless notice of such defect(s) is received by the Contractor promptly after discovery of the defect and in any event no later than 30 Days after the expiration of the Warranty Period (or Extended Warranty Period, in a case where such period applies under this Article 32).

32.3

The extent of the Contractor’s obligation upon receipt of such notice is (1) to, at the Contractor’s cost and expense, repair or replace and thereby remedy such defect at the Contractor’s Yard or (2) to reimburse the Owner the costs of such repair or replacement in the event that such repair or replacement are not carried out at the Yard but at another location provided that the maximum reimbursement allowed or claimable hereunder shall not exceed 115% of the costs of carrying out such repair or replacement at Contractor’s Yard under this Article 32. If the Contractor advises the Owner in writing that such repair or replacement is to be made in the Yard, then the Owner will either return the Vessel (or the part or item affected where feasible to detach it from the Vessel) to the Yard at the Owner’s costs and risk, for such repair or replacement or if the Owner advises the Contractor in writing that it is not convenient for the Owner to so return the Vessel or component to the Yard, then in such event, the Contractor shall pay to the Owner the amount stated in (2) above, after prompt inspection and admission of the defect, in lieu of the Contractor making such repair or replacement.

32.4

In the event that any repair or replacements are provided by the Contractor and/or its subcontractors during the Warranty Period, the Warranty Period in respect of such repairs or replacements shall be extended for the remaining balance of the Warranty Period or a period of 6 months from the date upon which the same is carried out, whichever is the longer period, provided that the total accumulated period of warranty in respect thereof shall not under any circumstances exceed either: (i) a period of 24 months after the date of Redelivery; or (ii) the earlier of eighteen (18) months after either the original planned date of First Gas as set forth in Appendix I of the Topsides Agreement or the actual date of First Gas, whichever is earlier (“Extended Warranty Period”).


32.5	The Contractor shall have no responsibility for any other defects whatsoever in the Vessel than the defects specified in Article 32. Nor shall the Contractor in any circumstances be

Owner: ______

Contractor: ______

LL Ref: A17244245

responsible or liable for the transportation of the Vessel to and from the Yard (or the costs thereof) or to any other location to carry out or perform the repair or replacement of any defect warranted herein, or for any loss of time, loss of profit or earning or demurrage directly or indirectly occasioned to the Owner by reason of the defects specified in Article 32.1 or due to repairs or other works done to the Vessel to remedy such defects, nor for any consequential or direct or indirect or special losses, damages or expenses.

32.6

The Contractor shall not be responsible for any defect in any part of the Vessel which may subsequent to Redelivery have been replaced or in any way repaired by any other contractor, or for any defects which have been caused or aggravated by omission or improper use and maintenance of the Vessel on the part of the Owner, its employees or agents or by ordinary wear and tear or by any other circumstance beyond the control of the Contractor. For the avoidance of doubt, this warranty shall also not extend to defects in any of the OFE for which the Owner shall seek recourse exclusively from the vendors of the relevant OFE.


32.7	The warranty contained in this Article 32 shall be in lieu of and shall replace any other liability, guarantee, warranty, remedy, condition and/or term imposed or implied by the law, customary or statutory or otherwise. The remedies contained in this Article 32 shall be the Owner’s sole and exclusive remedies in relation to any and all defects warranted under this Article 32.


33.	LIABILITIES & INDEMNITIES

33.

Except for liquidated damages expressly provided for in this Agreement, the Contractor and the Contractor’s Group shall not in any event nor under any circumstances, whether as a result of breach of contract, warranty, indemnity, tort (including negligence), strict liability or otherwise, be liable for any loss of profit or revenues, loss of use of any equipment, cost of capital, cost of substitute equipment, facilities, services or replacement power, downtime costs, claims of the Owner’s partners or customers for such damages, whether deemed to be direct or indirect and whether or not foreseeable or disclosed at the time of this Agreement, or for any special, consequential, incidental, indirect or exemplary or punitive damages suffered by the Owner and the Owner shall release and hold harmless the Contractor’s Group from such claims.

33.1

Notwithstanding any provision in this Agreement, the Topsides Agreement or the Direct Agreement to the contrary or any inconsistency in or across them, it is agreed between the Parties that the Contractor’s total and entire liability under this Agreement (other than the Sub-Contract Works) and the Direct Agreement, including warranty and damages (liquidated or unliquidated), tort (including negligence and breach of statutory duty) or otherwise in relation to or in connection with this Agreement and/or the repair, modification or conversion of the Vessel and/or the Works and/or the performance by the Contractor of its obligations in the Topsides Agreement shall not exceed United States Dollars Forty Million U.S.$40m and the Owner releases the Contractor from any and all liability in excess thereof. This shall apply regardless of any act, default, omission or negligence, in whatever form or degree, and whether sole, partial, concurrent or contributory on the part of any person within the Contractor’s Group and regardless of any other breach of duty or liability, whether strict, statutory, contractual or otherwise, by any person within Contractor’s Group.

Owner: ______

Contractor: ______

LL Ref: A17244245


33.2	Notwithstanding any provision herein to the contrary or inconsistent herewith, it is agreed between the Parties that the Sub-Contractor’s total and entire liability shall be in accordance with the requirements stated in the Topsides Agreement.

33.3

Until the Owner has fully and completely performed and discharged all its duties, liabilities and obligations under this Agreement, the Owner shall remain the sole, legal and equitable owner of the whole of the Vessel and shall not transfer legal or equitable ownership of the Vessel to any third party or create or permit any lien, charge, debt, mortgage or any other claim whatsoever over or in relation to the Vessel, other than a lien and a mortgage in favour of the Contractor pursuant to the terms of this Agreement.


33.4	Without prejudice to any other rights or remedy which the Contractor may have, whether under this Agreement, under common law, statute, or otherwise and whether in rem or in personam:

33.4.3

The Vessel, all her equipment (whether installed on board or not) whenever the same may come into the Contractor's possession, custody or control, the OFE and all goods, materials, Plans, Project Information, documents (including but not limited to the Vessel's certificates), choses-in-action, monies (including but not limited to any insurance proceeds), items and properties in the possession, custody or control of the Contractor (collectively the "Lien Property") shall be subject to a particular and general lien and right of detention for:


33.4.3.1	all monies, sums, amounts and payments due in respect of the Lien Property, including but not limited to monies, sums, amounts and payments due and/or arising under this Agreement and the Direct Agreement; and

33.4.3.2

any particular or general balance or other sums, monies, amounts and payments due from the Owner to the Contractor, including but not limited to berthing, mooring, wharfage and dock charges or dues, storage fees costs of any equipment, goods or materials or manpower supplied to the Vessel, the costs of any movement of the Vessel, including the towage thereof, insurance premiums, legal fees and the cost of recovering all such charges, fees, costs and expenses, for the purpose of exercising or preserving or attempting or preparing to exercise and preserve such lien.

33.4.4

The Contractor, by itself or its servants or agents or otherwise shall be entitled to exercise a possessory lien upon the Lien Property in respect of any monies, sums, amounts and payments howsoever and whatsoever due to the Contractor (including but not limited to those referred to under Article 33.5.1 above) and shall for the purpose of exercising such possessory lien be entitled to take, retain and keep possession of the Lien Property at the sole risk and expense of the Owner.

33.5

The Owner shall be liable for and pay to the Contractor all costs and expenses howsoever and whatsoever incurred by or on behalf of the Contractor including but not limited to berthing, mooring, wharfage and dock charges or dues, storage fees costs of any equipment, goods or materials or manpower supplied to the Vessel, the costs of any movement of the Vessel including the towage thereof, insurance premiums, legal fees and the cost of recovering all such charges, fees, costs and expenses, for the purpose of exercising or preserving or attempting or preparing to exercise and preserve such lien.

Owner: ______

Contractor: ______

LL Ref: A17244245

33.6

Notwithstanding the Redelivery of the Vessel to the Owner or any delivery or re-delivery of any other Lien Property to the Owner, the Contractor shall be entitled to exercise its rights pursuant to Article 33.5 as long as the Lien Property is in the Yard or in the possession of the Contractor. Further, it is agreed that any agreement on the part of the Contractor to permit or allow any Lien Property to leave the Yard for any reason whatsoever (including but not limited to sea trials of the Vessel) whether pursuant to the terms of this Agreement or otherwise shall not prejudice nor be deemed as a waiver of the Contractor's lien (possessory or otherwise) over the Lien Property or of its rights hereunder. It is further expressly agreed that the Contractor's said lien shall re-attach and apply in the event the Lien Property returns to the Yard or to the possession of the Contractor.


34.	INSURANCE


34.	Builder’s All Risk (BAR) Insurance:

34.1.1

From the time of Delivery of the Vessel by the Owner to the Contractor until Vessel Leaving The Yard, the Contractor shall keep the Vessel, the Equipment, and all machinery, materials, equipment, appurtenances and outfit (including OFE which shall not exceed a delivered value of Four Million United States Dollars (U.S.$4m) delivered to the Yard or built into or installed in or upon the Vessel), insured against all risks under coverage corresponding to the Institute of London Underwriters’ Institute Clauses for Builders’ Risks (1/6/88) (hereafter referred to as the “BAR”). The amount of such insurance coverage shall, up to the date of Vessel Leaving The Yard, be an amount at least equal to the aggregate of (a) Forty Million United States Dollars (U.S.$40m) being the value of the Vessel on arrival at the Yard, (b) the aggregate of the payments made by the Owner to the Contractor, (c) the value of the OFE as and when any of them are delivered to the Contractor at the Yard up to the limit mentioned hereinbefore, and (d) Fifty Million United States Dollars (U.S.$50m) to cover the Owner’s execution costs. All losses under such policy shall be payable to the Contractor.

Notwithstanding the above, the Owner shall compensate the Contractor for the insurance costs and expense incurred in procuring the BAR insurance policy in accordance with the terms of this Agreement, as well as, the increased insurance cost and expense incurred by the Contractor, if any, due to an extension of the date of Vessel Leaving The Yard not arising out of the Contractor’s default as specified in Article 30.1 or where the delivered value of OFE exceeds the amount permitted under this Article 34.1.1.


34.1.2	In the event the Vessel is damaged by any insured cause whatsoever prior to Vessel Leaving The Yard and:

(a)

Such damage is not determined by the underwriters to be an actual or a constructive total loss of the Vessel, the Contractor and/or the Owner shall apply the amount recovered under the BAR policy referred to in Article 34.1.1 above to the repair of such damage reasonably satisfactory to the Owner and the Classification Society, and the Owner shall accept the Vessel if completed in accordance with this Agreement; or


(b)	Such damage is determined by the underwriters to be an actual or constructive total loss of the Vessel, the Contractor shall, with the mutual agreement between the Parties, either:

Owner: ______

Contractor: ______

LL Ref: A17244245

(i)

Proceed in accordance with the terms of this Agreement, in which case the amount recovered under the insurance policy shall be applied to the reconstruction of the Vessel, provided the Parties shall have first agreed in writing as to such reasonable postponement of the Redelivery Date and adjustment of other terms of this Agreement including the Contract Price as may be necessary for the completion of such reconstruction; or

(ii)

Pay the insurance proceeds under the BAR insurance policy to the Owner within sixty (60) days of receipt thereof less the value of the Works performed by the Contractor up to the date the damage occurred (less any amounts already paid by the Owner to the Contractor under this Agreement), whereupon this Agreement shall be deemed to be terminated and all rights, duties, liabilities and obligations of each of the Parties to the other shall terminate forthwith.

If the Parties fail to reach mutual agreement within two (2) months after the Vessel is determined to be an actual or constructive total loss, the provisions of sub-paragraph (b)(ii) above shall apply.


34.2	Hull & Machinery and P & I: From the time of Vessel Leaving The Yard, the Owner shall maintain comprehensive hull and machinery, protection and indemnity and any operational insurance policies over the Vessel covering at least the value of the Vessel.


34.3	Co-assurance & Waiver of Subrogation: The insurance required above to be taken out by the Parties shall name the other Party as co-assured and waive subrogation against the other Party’s group.


34.4	Other Insurance: The Parties shall, at their respective cost and expense, effect and maintain the following insurance:


34.4.1	In the case of the Contractor:


(a)	Workmen’s Compensation and Employer’s Liability Insurance as prescribed by applicable laws of Singapore;


(b)	Commercial General Liability Insurance with limits of not less than US$1,000,000 per occurrence and US$2,000,000 in aggregate.


34.4.2	In the case of the Owner:


(a)	Any Workmen’s Compensation and Employer’s Liability Insurance or the equivalent thereof covering its employees as prescribed by the states and/or countries of residence of such employees


(b)	Commercial General Liability Insurance with the same limits as that applicable for the Contractor.


35.	PATENTS, TRADEMARKS, COPYRIGHTS ETC.

Owner: ______

Contractor: ______

LL Ref: A17244245


35.	Machinery and equipment of the Vessel in respect of the Works may bear the patent number, trademarks or trade names of the manufacturers.


35.1	The Contractor shall defend, indemnify and save harmless the Owner from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of the Works and also including costs and expenses of litigation, if any.


35.2	Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Agreement, and all such rights are hereby expressly reserved to the true and lawful owners thereof.

35.3

The Contractor’s warranty hereunder does not extend to the OFE. The Owner shall defend, indemnify and save harmless the Contractor from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention in connection with or related to the OFE and also including costs and expenses of litigation, if any.

35.4

The Contractor retains all rights with respect to the Specifications and Plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and upgrading & conversion of the Vessel and the Owner undertakes not to disclose the same or divulge any information contained therein to any third party without the prior written consent of the Contractor, except where it is necessary for usual operation, repair and maintenance of the Vessel.


36.	OWNER FURNISHED EQUIPMENT


36.	The Owner shall at its own risk, cost and expense, supply and deliver to the Contractor all OFE at the warehouse or other storage of the Yard in proper condition ready for installation in or on the Vessel, in accordance with the time schedule stated in Appendix 4 hereto or such other time schedule as may be mutually agreed between the Parties.

36.1

In order to facilitate installation by the Contractor of the OFE in or on the Vessel, the Owner shall furnish the Contractor with necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations within the time schedule stated in Appendix 4 hereto. The Owner, if so requested by the Contractor, shall without any charge to the Contractor, cause the representatives of the manufacturers of the OFE to assist the Contractor in installation thereof in or on the Vessel and/or to carry out installation thereof by themselves or to make necessary adjustment thereof at the Yard.

36.2

The delivery dates mentioned in Appendix 4 are based on the Delivery of the Vessel to the Contractor by the Delivery Date. In the event of any delay in the Delivery of the Vessel to the Contractor, the delivery dates or delivery periods mentioned in Appendix 4 shall be extended by the period of delay in the Delivery of the Vessel to the Contractor or such dates or periods as the Parties may otherwise mutually agree in writing.


36.3	Any and all of the OFE shall be subject to the Contractor’s reasonable right of rejection, as and if they are found to be unsuitable or in improper condition for installation.

Owner: ______

Contractor: ______

LL Ref: A17244245

36.4

Should the Owner fail to deliver any of the OFE within the prescribed time, the Redelivery Date shall be extended for a period of such delay in delivery or such longer period caused to the performance of the Works if the Contractor is able to demonstrate the same . In such event, the Owner shall be responsible and pay to the Contractor for all losses and damages incurred by the Contractor by reason of such delay in delivery of the OFE and such payment shall be made upon Redelivery of the Vessel. If delay in delivery of any of the Owner’s OFE exceeds thirty (30) Days, then, the Contractor shall be entitled to proceed with the Works without installation thereof in or on the Vessel, without prejudice to the Contractor’s other rights as hereinabove provided, and the Owner shall accept and take Redelivery of the Vessel so upgraded and converted.

36.5

The Contractor shall be responsible for storing and handling with reasonable care the OFE after delivery thereof at the Yard and shall at its own cost and expense, install them in or on the Vessel, unless otherwise provided herein or agreed by the Parties provided always that the Contractor shall not be responsible for quality, efficiency and/or performance of any of the OFE. The Owner acknowledges and agrees that the Contractor shall also not be responsible for any failure to meet the requirements contained in the Specifications that are attributable to the quality, efficiency and/or performance of any of the OFE.


37.	CONFIDENTIALITY


37.	All information acquired or furnished by the Parties to each other that is:


(i)	designated in writing as “confidential” or “proprietary” at the time of written disclosure; or


(ii)	verbally designated as “confidential” or “proprietary” at the time of verbal disclosure and is confirmed to be “confidential” or “proprietary” in writing within 10 Days after the verbal disclosure

other than information that:


(a)	is or becomes generally available to the public other than from disclosure by the receiving Party;


(b)	is or becomes available to the receiving Party or its representatives or Affiliates on a non-confidential basis from a source other than the disclosing Party when the source is not, to the best of the receiving Party’s knowledge, subject to a confidentiality obligation to the disclosing Party;


(c)	is already known by the receiving Party at the time of disclosure;


(d)	is required to be disclosed by law, a valid legal process or a government agency (including the requirements of the relevant stock exchange);


(e)	is independently developed by the receiving Party, its representatives or Affiliates, without reference to Confidential Information; and

Owner: ______

Contractor: ______

LL Ref: A17244245


(f)	is approved for disclosure in writing by an authorized representative of the disclosing Party

shall be known as “Confidential Information”. Confidential Information is to be treated as confidential and each Party shall not disclose (except to its employees, agents, contractors advisors or financing parties who have a need to know) and shall ensure that such of its employees, agents and others who have a need to know do not disclose such Confidential Information received from the other Party without the prior written consent of the other Party, and shall use (and shall ensure that such employees, agents and others who have a need to know shall use) such Confidential Information only for the purposes of or in connection with the performance of the Works or this Agreement.


37.1	The confidentiality obligations under this Agreement shall survive for a period of five (5) years from the Date of Agreement.


37.2	Neither Party hereto shall issue any press release or provide any information to the media or any other Third Party without the prior written approval of the other Party, except where it is necessary to satisfy securities laws or regulations and stock exchange requirements.


38.	INTELLECTUAL PROPERTY RIGHTS IN RELATION TO THE CONTRACTOR’S SCOPE


38.	For the purposes of this Article 38 only, “Party” shall mean either the Owner, the Contractor or the Sub-Contractor, and “Parties” shall refer to the Owner, the Contractor and the Sub-Contractor collectively.

38.1

Each Party may at any time provide another Party with certain Project Information. Such Party shall retain the Intellectual Property Rights in the Project Information it provides. The Parties shall forthwith return all the Project Information to the Party it received such Project Information from upon the completion of both the Works and Sub-Contract Works, or upon the earlier termination of this Agreement or the Topsides Agreement; provided, however, that each Party may retain for its own use only one record copy of such Project Information for the sole purpose of this Agreement and shall not use it for any other purpose. Each Party shall save, indemnify, defend and hold harmless all other Parties from all claims, losses, damages, costs (including legal costs), expenses, and liabilities of every kind and nature for, or arising out of, any alleged infringement or infringement of Intellectual Property Rights of the Project Information by any member of such Party's Group in respect of Project Information provided by it.

38.2

All Derivative Works developed or created by the Contractor or the Sub-Contractor for the Project (as defined in the Direct Agreement) shall be deemed to be and considered as “Commissioned Works” under applicable laws and regulations except where such Derivative Works are (i) created or made by the Sub-Contractor and (ii) any other agreement (including but not limited to the PRICO® Licence Agreement) governs, controls, pertains to or otherwise deals with the same or substantially similar subject matter, in which case the Parties expressly agree that such Derivative Works shall not constitute, be deemed to be or be considered to be Commissioned Works and such other agreement or agreements shall prevail over this Agreement in respect of such Derivative Works. The Parties agree and acknowledge that the Owner is the commissioning party of the Commissioned Works and

Owner: ______

Contractor: ______

LL Ref: A17244245

all Intellectual Property Rights in the Commissioned Works will solely vest ab initio in the Owner, provided that if for any reason, whether by the operation of law or otherwise, the Contractor and/or Sub-Contractor still retains any rights, title, interests or benefits in the Commissioned Works, each of the Contractor and the Sub-Contractor hereby agrees to assign, including by way of present assignment of future rights, to the Owner all rights that it may have in the Commissioned Works to the Owner. If, for whatever reason, any Commissioned Works does not vest in the Owner by virtue of this Article 38.3, then the Contractor and/or the Sub-Contractor, as applicable shall hold such Commissioned Works on trust for the Owner’s sole use and benefit and shall promptly assign such Commissioned Works to the Owner upon its request. If the Commissioned Works cannot be assigned to the Owner by operation of applicable laws or otherwise, the Contractor and Sub-Contractor shall grant to the Owner a world-wide, paid-up, royalty-free and irrevocable sole license to use, exploit, distribute, promote, sub-license third parties, and to create further derivative works of all Commissioned Works.


38.3	The Contractor may use the Commissioned Works as may be necessary for the purposes of this Agreement only. The Contractor shall not use, disclose to or procure a third party to use or disclose any of the Commissioned Works for any other purpose. For the avoidance of doubt, Articles 38.3 and 38.4 do not apply to the Contractor Background Intellectual Property.

38.4

The Owner hereby grants to the Contractor an irrevocable (except in the event of a breach of this license), non-transferable, nonexclusive, royalty-free license to utilise the Owner Background Intellectual Property, Commissioned Works only to the extent necessary for the construction, operation, maintenance, repair, or alteration of the Works. Notwithstanding any provision in this Agreement to the contrary, rights to intellectual property developed, utilized or modified in the performance of the Sub-Contract Works, excluding the Owner Background Intellectual Property, Derivative Works, and the Contractor Background Intellectual Property, shall remain the exclusive property of the Sub-Contractor. The Contractor hereby grants to the Owner an irrevocable (except in the event of a breach of this license), non-transferable, nonexclusive, royalty-free license to utilise the Contractor Background Intellectual Property only to the extent necessary for the operation, maintenance, rectification or repair of the Works.

38.5

Nothing contained in this Article 38 shall be construed as limiting or depriving the Contractor of its rights to use its Project Information, the Contractor Background Intellectual Property and other basic knowledge and skills (but for the avoidance of doubt this shall not include the Owner Background Intellectual Property, or the Commissioned Works) to design or carry out other projects or work for itself or others, whether or not such other projects or work are similar to the work to be performed pursuant to this Agreement. In circumstances where the Contractor is a party to a validly-created and existing contract with the Owner for the repair, modification and conversion of any Moss Type liquefied natural gas tanker into a floating liquefied natural gas production and storage unit using a two-tiered open lower deck sponson attached to the ship’s sides, then the Contractor shall notify the Owner before undertaking the same work for a party that is not a Party to the Direct Agreement. The Contractor shall have the right to retain and use copies of drawings, documents, and engineering and other data furnished or to be furnished by the Contractor and the information contained therein.

Owner: ______

Contractor: ______

LL Ref: A17244245


38.6	Rights to the Contractor Background Intellectual Property shall at all times remain the property of the Contractor. Rights to the Owner Background Intellectual Property shall at all times remain the property of the Owner.

38.7

The Contractor and the Owner shall not use or include any third party Intellectual Property Rights in the performance of this Agreement unless (i) it has all licences, consents and approvals as may be necessary to use or include such third party Intellectual Property Rights in the relevant manner and (ii) it procures any licences or consents as may be necessary to enable the Contractor to use the third party Intellectual Property Rights in accordance with the Agreement.


38.8	The Owner and the Contractor hereby warrant to each other that:


(a)	it is the owner of the Project Information provided by it and that it has the right to assign and grant the licences and rights to the other in accordance with this Article 38;


(b)	it has not granted and will not grant any rights to any third party which conflict with or may adversely affect the rights granted to the other under this Article 38;

(c)

the performance of their respective obligations in accordance with this Agreement and/or the Topsides Agreement and/or the Direct Agreement will not infringe any rights including, but not limited to Intellectual Property Rights, of any third party, the Owner Background Intellectual Property, the Contractor Background Intellectual Property, or the Sub-Contractor Background Intellectual Property (as the case may be), or the Project Information provided by any other Party to the Party giving this warranty; and


(d)	it has all necessary rights and licences for the performance of its obligations under this Agreement, the Topsides Agreement, and the Direct Agreement.

38.9

The Contractor shall defend, protect and indemnify and hold the Owner (including its assigns) harmless from and against any third party claims, demands, expenses, liabilities, losses, damages or proceedings (including legal costs on an indemnity basis) in connection with any infringement or alleged infringement of copyright, registered design, trademark rights or patent arising from, out of or in connection with:


(a)	the Contractor’s and/or the Owner’s, consistent with the intended purpose, use or possession of the Works of the Contractor under this Agreement or any component or element thereof;


(b)	the use, consistent with the intended purpose, of any materials or equipment by the Contractor in the performance of the Works by the Contractor under this Agreement or the manner in which the same is used; and/or


(c)	the use, consistent with the intended purpose, of designs, drawings and specifications furnished to the Owner by the Contractor.


38.10	The Owner shall defend, protect and indemnify and hold the Contractor (including its assigns) harmless from and against any third party claims, demands, expenses, liabilities, losses, damages or proceedings (including legal costs on an indemnity basis) in connection

Owner: ______

Contractor: ______

LL Ref: A17244245

with any infringement or alleged infringement of copyright, registered design, trademark rights or patent arising from, out of or in connection with:


(a)	the Owner's and/or the Contractor's, consistent with the intended purpose, use or possession of the Owner Background Intellectual Property, the Works and the Sub-Contract Works or any component or element thereof; and/or


(b)	the use, consistent with the intended purpose, of Project Information, designs, drawings and specifications furnished to the Contractor and/or the Sub-Contractor by the Owner.


38.11	The Contractor’s obligations pursuant to this Article 38 are limited solely to the Contractor’s Scope.


39.	NOTICES


39.	Every notice demand or other communication under this Agreement shall be sent by email confirmed in writing. Such notice shall be sent to the respective addresses set out below or to such other address as may be notified in writing for such purpose: -

To the Contractor: - KEPPEL SHIPYARD LIMITED

51 Pioneer Sector 1

Singapore 628437

Attention: Melvyn Lee, Senior Project Manager

heemeng.lee@keppelshipyard.com

To the Owner: - GOLAR HILLI CORPORATION

c/o Golar Management Ltd.
One America Square
13th Floor, 17 Crosswall
London EC3N 2LB
United Kingdom

Attention: Dan Werner

Facsimile No: +1-832-553-8033 or +44-20-7063-7901

Email: dan.werner@golar.com (with a copy to morten.daviknes@golar.com)


39.1	Every notice demand or other communication sent by email shall be deemed to have been received:


39.1.1	if received during working hours, at the time of receipt; or


39.1.2	otherwise at the start of working hours on the next Business Day.


40.	HEALTH, SAFETY, ENVIRONMENT & QUALITY ASSURANCE

Owner: ______

Contractor: ______

LL Ref: A17244245

Safety

40.

The Contractor will perform the Works in compliance with, and shall cause its employees and subcontractors to comply, in all respects, with the provisions of Appendix 6 and all applicable safety and health laws, rules and regulations of governmental agencies having jurisdiction in the country where any of the Works is being performed. The Contractor is also responsible for providing and maintaining a safe and healthy work environment on its premises. The Contractor shall provide, at no additional cost to the Owner, all necessary safety induction of the Owner’s personnel at the Yard. The Owner shall, and shall ensure that each member of the Owner’s personnel shall, at all times, comply with all the Contractor’s regulations and Applicable Laws relating to health, safety and the environment.


40.1	The Contractor shall provide and keep readily available in good working order all safety appliances as well as those reasonably necessary in accordance with good industry practices for safe operation and prescribed by proper bodies and competent authorities.


40.2	The Contractor shall inform the Owner of any injury/damage to its personnel and/or equipment and to the Owner’s personnel and/or materials. The Owner shall inform the Contractor during the performance of the Works, or Sub-Contract Works at the Yard or the Project Site immediately of any situation that is potentially hazardous to workers.


40.3	The Owner’s personnel must possess applicable safety training certificates, and prior to performing work at the Yard, shall be required to have completed a safety induction course (referred to at the Yard as a Shipyard Safety Instruction Course (General Trade)).


40.4	The Owner shall provide each member of the Owner’s personnel at the Yard and Project Site with, or require them to have, appropriate Personal Protective Equipment (PPE) and shall ensure that they use them correctly while working in the Yard’s premises or facilities or the Project Site.

40.5

The Owner shall ensure that its employees and each member of the Owner's personnel at the Yard and Project Site comply with the health, safety and environmental requirements in this Agreement. The Contractor shall be entitled to bar any employee of the Owner or any member of the Owner’s personnel who fails to comply with such health, safety and security regulations and Applicable Laws from entry to the Yard’s premises.

Health & Environment

40.6

The Contractor shall give all notices and otherwise fully comply with all laws, statutes, regulations, ordinances, rules, standards, orders or determinations of any governmental authority (including related determinations, interpretations, orders or opinions of any judicial or administrative authority) which has jurisdiction over the Contractor and the performance of this Agreement pertaining to the protection or conservation of the air, land, human health, industrial hygiene or other aspects of the environment which are directly applicable to the performance of this Agreement.


40.7	The Contractor represents and warrants to the Owner that in the performance of the Works, the operations will not contain or otherwise have incorporated into them any chemical,

Owner: ______

Contractor: ______

LL Ref: A17244245

material or other substance defined as or included in the definition of “hazardous substance”, “hazardous material”, “hazardous chemical”, “hazardous chemical substance”, “hazardous waste” or “toxic substance” or words of similar meaning and regulatory effect, as such terms are defined under any environmental laws, any broader definition of such terms that are used by a state or locality that has jurisdiction over the performance of this Agreement or any interpretation by administrative or judicial authorities, or any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority or which may or could pose a hazard to human health and safety, such definitions, representations and warranties shall exclude however hydrocarbons, discharged water and production related chemicals.

Quality Assurance

40.8

This Agreement shall be carried out under “Quality Assurance” conditions and in accordance with the Specifications. The Quality Plan shall be submitted to the Owner. Without prejudice to the Contractor’s obligations hereunder, the Owner reserves the right to confirm to the Contractor in writing its agreement to the above documentation within thirty (30) Days of submission. If the Owner does not respond within the prescribed time, the documentation submitted shall be deemed accepted by the Owner.

Indemnity from consequences of Asbestos

40.9

The Owner shall indemnify in full, defend and hold the Contractor harmless from and against any and all claims, losses, liability, damages, costs, expenses, demands or proceedings whatsoever and howsoever arising due to and as a result or consequence of asbestos or radioactive or other hazardous waste (or the discharge thereof) from the Vessel and the legal costs in connection therewith (on an indemnity basis) including but not limited to illness, death or personal injury of any person (including, but not limited to, members of the Contractor’s Group).


41.	GENERAL

41.

Change in Control Any change in control in the Owner (save where the control of the Owner passes to an Affiliate of the Owner) shall be permitted only with the prior written consent of the Contractor, such consent not to be unreasonably withheld or delayed. A change in control in the Owner is deemed to occur when a person or persons acting in concert acquire(s) direct or indirect control of (i) over fifty percent (50%) of the total voting rights conferred by all the issued shares in the capital of the Owner which are exercisable in the general meeting of shareholders or (ii) the majority composition of the board of directors of the Owner.


41.1	Severability If any of the provisions of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions of this Agreement shall continue in force and shall not in any way be affected or impaired.


41.2	Headings Headings are used only for reference and for convenience and do not define, limit or describe the scope of intent of any Article and shall be ignored for purposes of interpretation of this Agreement.

Owner: ______

Contractor: ______

LL Ref: A17244245


41.3	Independent Contractor In the performance of this Agreement, the Contractor is and shall remain an independent contractor. Neither the Contractor nor any one employed by the Contractor shall be deemed for any purpose to be the employee, agent, servant, borrowed servant or representative of the Owner in the performance of the Works.


41.4	Assignment Neither Party shall assign this Agreement or any part thereof without the prior written consent of the other Party except that the Owner may assign the Agreement to:


(a)	Its Affiliate;


(b)	Its lender(s) or financier(s) for the project involving or involving, inter-alia, the Works;


(c)	Any other party with the prior written consent of the Contractor, not to be unreasonably withheld or delayed.


41.4.1	Third Party Rights Nothing in this Agreement is intended to confer any benefit on or intended to be enforceable by or against any person who is not a party to this Agreement. Accordingly, no person other than the Parties may enforce this Agreement by virtue of the Contracts (Rights of Third Parties) Act 1999.


41.5	Counterparts This Agreement may be signed in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any Party may enter into this Agreement by signing any such counterpart and each counterpart may be signed and executed by facsimile and shall be as valid and effectual as if executed as all original.


42.	TAXES & DUTIES


42.	The Contractor shall bear and pay all taxes and duties imposed in Singapore in connection with the execution and/or performance of the Works, excluding any taxes and duties imposed in Singapore upon the OFE.


42.1	The Owner shall bear and pay all taxes and duties imposed outside Singapore in connection with the execution and/or performance of this Agreement, except taxes and duties imposed upon those items to be procured by the Contractor for the performance of the Works at the Contractor’s Yard.


43.	INTERPRETATION


43.	This Agreement and the rights and obligations of the Parties hereunder shall be governed by and construed in accordance with the laws of England.

43.1.1

This Agreement contains the entire agreement and understanding between the Parties and supersedes all prior negotiations, representations, letters of intent, term sheets, undertakings and agreements on any subject matter of this Agreement. Any and all previous agreements and/or arrangements between the Parties shall be superseded and become null and void unless incorporated into this Agreement either by specific reference there to or by attachment to this Agreement as an Appendix hereto.

Owner: ______

Contractor: ______

LL Ref: A17244245


43.2	All provisions or requirements contained in the Specifications and the Articles of this Agreement are intended to amplify, explain and complement each other. In the event of any conflict or inconsistency between these documents, the Articles shall take precedence over the Specifications.


44.	DISPUTE RESOLUTION


44.	In the event of any dispute arising out of or relating to this Agreement, or the breach, termination or invalidity thereof, the same shall be brought to the attention of each Party’s executive management who shall attempt to resolve such dispute.


44.1	If such dispute cannot be mutually resolved by the Parties, the Parties agree that legal proceedings may be brought in the courts of England to resolve such dispute and the Parties hereby irrevocably submit to the non-exclusive jurisdiction of such courts.


44.2	With regard to any dispute or difference related to technical matters affecting the Vessel, such may be resolved and determined by the Classification Society if so and to the extent agreed by the Parties in writing whereupon the Parties agree to be bound by the decision of the Classification Society and such decision shall be final and binding upon the Parties.


44.3	The Contractor irrevocably appoints as its agent for service of proceedings issued by the Owner in the courts of England: Nausch, Hogan & Murray (U.K.), 11-13 Crosswall London, EC3N 2JY, United Kingdom.


44.4	The Owner irrevocably appoints as its agent for service of proceedings issued by the Contractor in the courts of England: Golar Management, 13^th Floor, One America Square, 17 Crosswall, London EC3N 2LB.


44.5	The Owner irrevocably consents to be joined in any proceedings between the Contractor and the Sub-Contractor which may be relevant to, arise out of, or has or may have any consequence upon the rights or obligations of the Contractor under, pursuant to or in connection with this Agreement.


45.	SECURITIES

45.

Subject to Article 45.2 below and upon receipt of the Contractor’s notification pursuant to Article 2.1.4, as security for the performance of the Owner’s obligations under this Agreement the Owner shall execute and deliver to the Contractor on or before 24 June 2014, at the Owner’s own cost and expense, a first ranking ship mortgage on the Vessel in favour of the Contractor, in the form set out in Appendix 10 (Form of Vessel Mortgage) governed by the laws of the Marshall Islands, and which shall constitute a valid first preferred maritime lien on the Vessel under the laws of the Marshall Islands in which the Vessel is registered. Such mortgage shall remain effective, valid, unencumbered and existing until the date of Vessel Leaving The Yard, after which the provisions of Article 45.2 below shall apply.


45.1	Upon Vessel Leaving The Yard, the ship mortgage granted by the Owner to the Contractor under Article 45.1 above shall be released and discharged, and the Owner shall execute and deliver, at its own cost and expense, a bank guarantee in the form set out in Appendix 10

Owner: ______

Contractor: ______

LL Ref: A17244245

(Form of Bank Guarantee) from the Singapore branch of an international bank with a rating not less than AA based on Standard & Poor’s credit rating reasonably acceptable to the Contractor. Such bank guarantee shall be effective from the date of Vessel Leaving The Yard until the satisfaction of all of the Owner’s payment obligations under this Agreement. For the avoidance of doubt, the Contractor shall not be obliged to release or discharge the ship mortgage until it has received such bank guarantee.


45.2	As security for the performance of the Contractor’s obligations under this Agreement, the Contractor agrees and undertakes to deliver to the Owner a duly and validly executed Parent Company Guarantee in the form of Appendix 10 from Keppel Offshore & Marine Ltd within 14 Days from the Date of Agreement.


46.	COMPLIANCE WITH ANTI-BRIBERY LAWS AND SANCTIONS


46.	For purposes of this Article 46 the following term shall have the following meaning:

“Government Official” shall mean any official or employee of any government, or any agency, ministry, department of a government (at any level), person acting in an official capacity for a government regardless of rank or position, official or employee of a company wholly or partially controlled by a government (for example, a state owned oil company), political party and any official of a political party; candidate for political office, officer or employee of a public international organisation, such as the United Nations or the World Bank, or immediate family member (meaning a spouse, dependent child or household member) of any of the foregoing.


46.1	The Contractor represents and warrants that, in connection with this Agreement and the Works:


46.1.1	it is knowledgeable about Anti-Bribery Laws applicable to the performance of this Agreement and shall comply with all such Anti-Bribery Laws; and

46.1.2

neither it nor, to the best of its knowledge and belief, any other member of the Contractor’s Group have made, offered or authorised or will make, offer or authorise any payment, gift, promise or other advantage, whether directly or through any other person or entity, to or for the use or benefit of any Government Official or any person where such payment, gift, promise or other advantage would (i) compromise a facilitation payment; and/or (ii) violate the Anti-Bribery Laws.

Owner: ______

Contractor: ______

LL Ref: A17244245


46.2	The Contractor undertakes to immediately notify the Owner if, in connection with this Agreement or the Works, it receives or becomes aware of any request from a Government Official or any person for any payment, gift, promise or other advantage of the type mentioned in Article 46.2.2.


46.3	The Owner confirms that its appointment of the Contractor was expressly made on the basis that Anti-Bribery Laws would not be violated. The Contractor acknowledges that the contents of this Agreement may be disclosed by the Owner to governmental authorities (or their duly-authorised agents) for the purpose of demonstrating compliance with this Article 46.

46.4

The Contractor shall indemnify, defend and hold harmless the Owner’s Group from and against, any and all losses, damages, claims, expenses (including legal costs), fines and penalties incurred by the Owner’s Group arising out of the Contractor’s representations in this Article 46 being untrue or arising out of the Contractor’s breach of any of its representations, warranties and undertakings in this Article 46.


46.5	Failure to comply with any obligation under this Article 46 will be regarded as due cause for the Owner to give notice to terminate this Agreement in accordance with Article 30.1(g) (Contractor’s default).

46.6

The Contractor and all other members of the Contractor’s Group subject to the Anti-Bribery Laws shall maintain adequate internal controls and procedures to assure compliance with Anti-Bribery Laws, including procedures to ensure that all transactions in connection with the Works are accurately recorded and reported in its books and records to truly reflect the activities to which they pertain, such as the purpose of each transaction and to whom it was made or from whom it was received.


46.7	The Contractor shall maintain, either physically, by electronic media or on microfilm, all records and information related to this Agreement and/or any work statement in connection therewith for a period of five (5) years after the later of: (i) the end of the Warranty Period; or (ii) in the event of termination, the date of termination.

46.8

In the event an Authority undertakes a lawful investigation of the Owner’s violation of obligations under the Anti-Bribery Laws the Owner shall have the right to employ, at the Owner’s expense, an unaffiliated third party to audit all information, rates and costs and expenses related to this Agreement in connection therewith at any time during and within five (5) years after the later of: (i) the end of the Warranty Period; or (ii) in the event of termination, the date of termination. Subject to the consent of the relevant Authority or Authorities, the Contractor shall be provided with a complete copy of the audit upon its completion and prior to its submission to the Owner solely for the purpose of ensuring that none of the Contractor’s pricing, mark-up and profit margins are disclosed. The third party authorised by the Owner may have access at all reasonable times to any place where the records are being maintained and the Contractor shall afford every reasonable facility for this right of access. The third party authorised by the Owner shall have the right to reproduce and retain copies of any of the aforesaid records or information subject to an obligation of confidentiality consistent with the one in this Agreement, and subject further to the exclusion of any documents to the extent they show the Contractors pricing, mark-up and profit

Owner: ______

Contractor: ______

LL Ref: A17244245

margins, except to the extent necessary to disclose alleged violations of the Anti-Bribery Laws, comply with Applicable Laws or the instructions of the Authorities. The Contractor shall implement all agreed recommendations arising from audits within a time mutually agreed with the Owner.


46.9	Upon the Owner’s request the Contractor will, as soon as reasonably practical, provide the person authorised by the Owner with all records relating to the Contractor and/or, to the extent reasonably available, any work statement in connection therewith which are created or kept by any other member of the Contractor’s Group.

46.10

The Contractor shall not, and shall not knowingly permit or authorise any member of the Contractor’s Group to, directly or indirectly, procure any equipment or any enter into any arrangement or do anything in connection with this Agreement or the Works with, or for the benefit of, any Restricted Party or undertake the Works in a manner, or do or omit to do anything, that would reasonably be expected to result in the Owner or any member of the Owner’s Group being in breach of any Sanctions or becoming a Restricted Party.

IN WITNESS WHEREOF, the Parties have by their respective duly authorized representatives below mentioned duly executed this Agreement on the day and year first above written:

Signed by the Owner, GOLAR HILLI CORPORATION, a company incorporated in the Republic of the Marshall Islands, by Doug Arnell, being a person who, in accordance with the laws of that territory, is acting under the authority of the company

Signature

/s/ Doug Arnell

………………………..

Doug Arnell

Attorney-in-fact

Authorised Signatory

Signed by the Contractor, KEPPEL SHIPYARD LIMITED, a company incorporated in the Republic of Singapore, by Michael Chia Hock Chye, being a person who, in accordance with the laws of that territory, is acting under the authority of the company

Signature

/s/ Michael Chai Hock Chye

………………………..

Michael Chia Hock Chye

Director

Authorised Signatory

APPENDIX 1A: OWNER’S BASIS OF DESIGN

Owner: ______

Contractor: ______

LL Ref: A17244245

APPENDIX 1B: OUTLINE SPECIFICATION OF CONVERSION, SPECIFICATION OF DRY-DOCKING AND REPAIR WORK

Owner: ______

Contractor: ______

LL Ref: A17244245

APPENDIX 1C: OWNER RELY-UPON INFORMATION

Owner: ______

Contractor: ______

LL Ref: A17244245

APPENDIX 1D: PRELIMINARY PROJECT SCHEDULE

Owner: ______

Contractor: ______

LL Ref: A17244245

APPENDIX 2: TOPSIDES AGREEMENT

Owner: ______

Contractor: ______

LL Ref: A17244245

APPENDIX 3: PRICE SCHEDULE


•	Conversion Scope


•	Conversion scope


•	Annex 1: Re-measurable


•	Annex 2: Broken Down Repair Costs

Owner: ______

Contractor: ______

LL Ref: A17244245

APPENDIX 4: OFE AND OWNER ENGINEERING DELIVERABLES ROS DATES

Owner: ______

Contractor: ______

LL Ref: A17244245

APPENDIX 5: PRELIMINARY PROJECT EXECUTION PLAN

Owner: ______

Contractor: ______

LL Ref: A17244245

APPENDIX 6: PRELIMINARY SITE HEALTH, SAFETY AND ENVIRONMENTAL MANAGEMENT PLAN

Owner: ______

Contractor: ______

LL Ref: A17244245

APPENDIX 7: PRELIMINARY PROJECT QUALITY PLAN

Owner: ______

Contractor: ______

LL Ref: A17244245

APPENDIX 8: APPROVED VENDOR AND SUBCONTRACTOR LIST

Owner: ______

Contractor: ______

LL Ref: A17244245

APPENDIX 9: ADMINISTRATION PROCEDURE

Owner: ______

Contractor: ______

LL Ref: A17244245

APPENDIX 10: FORMS

Owner: ______

Contractor: ______

LL Ref: A17244245

DELIVERY CERTIFICATE

KNOW ALL MEN BY THESE PRESENTS:

That on this day, the ____ day of ________________, 20__, the vessel known as the _____________ (the “Vessel”) has been delivered by ____________________ (the “Owner”) to KEPPEL SHIPYARD LIMITED (the “Contractor”) of 51 Pioneer Sector 1, Singapore 628437 pursuant to the EPC Contract dated ________________, 20__ and all amendments thereto (“Agreement”) entered between the Owner and the Contractor.



Owner	Contractor
……………………………………	……………………………………
Name:	Name:
Title:	Title:

Owner: ______

Contractor: ______

LL Ref: A17244245

PROTOCOL OF MECHANICAL COMPLETION

KNOW ALL MEN BY THESE PRESENTS:

That on this day, the ____ day of ________________, 20__, the works on the vessel known as the _____________ (the “Vessel”) has achieved mechanical completion and has been successfully completed by KEPPEL SHIPYARD LIMITED (the “Contractor”) of 51 Pioneer Sector 1, Singapore 628437 and accepted by the ______________________ (the “Owner”) pursuant to the EPC Contract dated ________________, 20__ and all amendments thereto (“Agreement”) entered between the Owner and the Contractor.



Owner	Contractor
……………………………………	……………………………………
Name:	Name:
Title:	Title:

Owner: ______

Contractor: ______

LL Ref: A17244245

PROTOCOL OF REDELIVERY AND ACCEPTANCE

KNOW ALL MEN BY THESE PRESENTS:

That the vessel known as the __________ (the “Vessel”) has been repaired, modified and converted by KEPPEL SHIPYARD LIMITED (the “Contractor”) of 51 Pioneer Sector 1, Singapore 628437 in accordance with the terms of the EPC Contract dated ________________, 20__ and all amendments thereto (“Agreement”) entered between the Contractor and ____________________ (the “Owner”) and that the Contractor by these presents does hereby redeliver the Vessel to the Owner pursuant to the terms of the Agreement and the Owner, through its duly authorized representative, does hereby accept redelivery of the Vessel.

The Vessel located at _________________________ is hereby redelivered by the Contractor and accepted by the Owner as of ________ hours on the __________________, 20__.



Owner	Contractor
……………………………………	……………………………………
Name:	Name:
Title:	Title:

Owner: ______

Contractor: ______

LL Ref: A17244245

FORM OF CORPORATE GUARANTEE

Owner: ______

Contractor: ______

LL Ref: A17244245

CERTIFICATE OF VESSEL LEAVING THE YARD

Owner: ______

Contractor: ______

LL Ref: A17244245

MECHANICAL COMPLETION CERTIFICATE / PROTOCOL OF MECHANICAL COMPLETION

Owner: ______

Contractor: ______

LL Ref: A17244245

READY FOR STARTUP CERTIFICATE

Owner: ______

Contractor: ______

LL Ref: A17244245

READY FOR FIRST GAS CERTIFICATE

Owner: ______

Contractor: ______

LL Ref: A17244245

FORM OF VESSEL MORTGAGE

Owner: ______

Contractor: ______

LL Ref: A17244245

FORM OF BANK GUARANTEE

Owner: ______

Contractor: ______

LL Ref: A17244245

Exhibit 16.1 ChangeofAuditorsLetterPwCLNG

Exhibit 16.1

CHANGE OF AUDITORS LETTER

September 4, 2014

Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549

Commissioners:

We have read the statements made by Golar LNG Limited (copy attached), which we understand will be filed with the Securities and Exchange Commission as part of the Form 6-K of Golar LNG Limited dated September 4, 2014. We agree with the statements concerning our Firm in such Form 6-K.

/s/ PricewaterhouseCoopers LLP
London, United Kingdom
As Auditors of Golar LNG Limited

Item 16F. Change in Registrant’s Certifying Accountant

On August 14, 2014, the Audit Committee (the “Audit Committee”) and Board of Directors of Golar LNG Limited (the “Company”or “Golar”) approved the appointment of Ernst & Young LLP (“Ernst &Young”) as the Company’s principal accountants. PricewaterhouseCoopers LLP was previously the principal accountants for the Company. Following the Audit Committee’s approval of Ernst & Young, PricewaterhouseCoopers LLP was dismissed.

The audit report of PricewaterhouseCoopers LLP on the consolidated financial statements of Golar as of and for the years ended December 31, 2012 and 2013 did not contain any adverse opinion or disclaimer of opinion, nor was the opinion qualified or modified as to uncertainty, audit scope, or accounting principles.

During the two fiscal years ended December 31, 2013, and the subsequent period through August 14, 2014, there were : (1) no disagreements with PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused them to make reference in connection with their opinions to the subject matter of the disagreement, or (2) no reportable events as defined under Item 16F(a)(1)(v), , other than as of December 31, 2012 there was a material weakness identified in Management’s report on internal controls over financial reporting whereby we did not maintain effective controls over the accounting for our investments in equity securities. Controls were not designed appropriately to monitor for triggering events which require the reconsideration of control and consolidation and to assess the impact of those triggering events. As a result, the effect of a change in how the board members of Golar LNG Partners LP are appointed arising at its first Annual General Meeting was not identified on a timely basis as a trigger event resulting in deconsolidation. This material weakness was subject to discussion between the Audit Committee and PricewaterhouseCoopers LLP and the Company has authorized PricewaterhouseCoopers LLP to respond fully to the inquiries of Ernst & Young concerning this matter.

The company has requested that PricewaterhouseCoopers LLP furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements. A copy of such letter, dated September 4, 2014, is filed as Exhibit 16.1 to this Form 6-K.

glng-20140630.xml
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glng-20140630.xsd
Attachment: XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

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