ANNEX B

Block VIIb
b
Block VII is located in western Georgia.
Elevation above sea level is 0-350m.
Main Rivers are Supsa, Natanebi and Choloki.
Climate is humid subtropical, with warm winter and hot summer.
with other parts of the Georgia the region is connected by road and railway.
Area of the Block - 1175km2

Geology
Tectonics and geological evolution of Georgia and the Caucasus, or Black Sea–Caspian Sea region
as a whole, are largely determined by its position between the still converging Eurasian and Africa-
Arabian lithosphere plates, within the wide zone of a continent-continent collision and deformations.
The Black Sea–Caspian Sea region in the Late Proterozoic, Paleozoic, Mesozoic and Early Cenozoic
belonged to the now-vanished Tethys Ocean and its northern (Eurasian) and southern
(Gondwanian/Africa-Arabian) margins. Within this convergence zone there existed a system of island
arcs, intraarc rifts, back-arc basins etc. characteristic of pre-collisional stage (the Late Proterozoic-
Early Cenozoic) of evolution of the region. During syn-collisional (the Oligocene-Middle Miocene)
and post-collisional (the Late Miocene-Quaternary) stages of the Late Alpine tectonic cycle as a result
of continent-continent collision inversion of relief took place: at the place of back-arc basins were
formed fold-thrust belts of the Greater and Lesser Caucasus with the Transcaucasian intermontane
lowland instead of Transcaucasian rigid blocks (microcontinents, island arcs). The normal marine
basins were replaced by hemi-closed basins of euxinic type (Paratethys) and later on (the Late
Miocene, ~ 9-7 Ma) – by intracontinental basins with subaerial and coastal conditions of
sedimentation.
Mtkvari
Kartli (Kura)
Rioni Basin Basin
Basin
Ajara-Trialeti Kazbegi mt.
5046 m Alazani
Basin Southern Slope

Sevan
Lake
at
1 5 Gre s us
ca
Cau
2 6 N
3 7 ser
L es asus
a u c
4 8 C

1 - Continental crust ; 2 - Mesozoic-Paleogene sediments; 3 - Deformed Mesozoic sediments; 4 - Oligocene-Miocene sediments ;

5 - Plioceen-Quaternary sediments ; 6 - Neogen-Quaternary volcanism; 7 - Thrust a; 8 - Faults ;

Structural diagram of the Caucasus region

Stratigraphy and lithology

According to the surface and well data the region is built up by Jurassic, Cretaceous, Paleogene and
Neogene deposits.
The oldest Jurassic deposits in the wells are represented by Bajiocian basaltic tuffs, tuffic breccias,
tuffic sandstones with siltstone interbeds. In the same wells Bajiocian is followed by saltbearing Upper

1
Jurassic sandstones and siltstones (thickness 20-35m) covered by neocomian carbonates with 1-3m
tick sandstones at the bottom.
Neocomian-Aptian is represented by dolomites and limestones (thickness 475m).
Albian-Senomanian is represented by 785-800m thick marly clays and sandstones and volcanics.
Touronian-Danian on the surface is represented by pelitomorphic limestones and marls (thickness
150-200).
Paleocene-lower Eocene is represented by spackled clays with limestone linses, total thickness is 10-
15m.
Following Middle Eocenian represented by 1300-3000m thick volcanic and in three units: 1. Zekari
bedded tuffs. 2. Kintrishi massif volcanigenics; 3. Burnati trachyte tuffs and volcanics.
Upper Eocenian marly deposits crops out at the edges of Chokhatauri depression (thickness 500-
600m).
Following, 1300 m thick Maycopian deposits (Oligocene-Lower Miocene) mainly represented by
noncarbonatic clays with interbeds of sandstones. In some places thickness of sandstone-
conglomerateinte beds is 35-40m.
Sarmatian deposits represent by three units: lowermost unit (Lower Sarmatian) is built up by clays and
finegrained sandstones with coarse sandstones and conglomerates (thickness of conglomerates is from
3-8 up to 20-35m) in some places. Thickness of this unit increases from 100m in the west till 400m in
the east, in some wells reaches 700-1000m. Lower part of the following unit (middle Sarmatian) is
represented by sky blue carbonatic clays and alternation of fine and coarsegrained Sandstones
(thickness of the unit 700-800m). Upper part is represented by 700m thic medium and coarsegrained
carbonatic sandstones and conglomerates. third unit (upper Sarmatian) belongs 1000-1200m thick
wellcemented conglomerates with medium and large pebbles.
Pliocenian deposits unconformably covers Upper Miocenian and represented by Meotian clays with
interbeds of sandstones and white marls (thickness 200-300m), Pontian conglomerates and sandstouns
(in the lower part) and clays (thickness up to 1000m).

Structure

Area represents the fordeep originated on the northern edge of Adjara-Trialeti folded belt. The
boundary between these units represented by thrust. At the southern limit of the fordeep, along the
Chokhatauri fault Adjara-Trialetian middle Eocenian volcanigenics are overthrusted on Upper
Eocenian and Oligocene-Miocenian deposits.
The Guria Fordeep is characterised by linear folds, bracy-anticlines and domes, often these
folds are overturned to the north.
In the foredeep several structures with latitudinal strike are defined: Dafnara-Kvaliti
synklinorium, Anticlinorium of Gurian Hills, Chokhatauri Synklinorium.
Dafnara-Kvaliti synklinorium extends on 160 km from Black Sea to Surami. From the north it
is limited by Kolkhis Depression and Imereti Uplift, from the south – by Anticlinorium of Gurian
Hills. On the east structure is complicated by Mtisdziri brachy-anticline and Shuamta and Amagleba-
Tobanier sinclines and anticline dividing these two synclines. These folds are built up by Pontian
deposits and overturned to the north.
Anticlinorium of Gurian Hills strikes on 85 km from v. Shubni to Black Sea. Width of the
structure is 12 km, nerrows (2-4 km) to the east and ends at the junction of Lanchkhuti and
Chokhatauri faults. Supsa-Ompareti, Chikveti, Ninoshvili, Shroma and Zemo Natanebi anticlines were
defined. Anticlines are narrow, compressed and overturned and sometimes thrusted to the north.
Some of them are of fanlike shape.
Chokhatauri Synklinorium represents tectonical unit of the southern part Guria Foredeep and
extends on 90 km till the Black Sea. From the Adjara-Trialeti the Structure divided by Chokhatauri
Thrust. Unit comprises several, mainli symmetrical anticlinal and synclinal folds. Bigest of these
structures are Goraberejouli and Chaiosubani anticlines (built up by Maykop Series on the surface, and
Upper Eocenian terrigenous and Middle Eocenian volcanigenic deposits at the depth). Synklinorium
complicated by transversal (lateral) Lanchkhuti-Shuakhevi Uplift.

2
Oil and gas shows
Oil and gas shows in the region related to the different levels of the geological section from Jurasssic
to Quarternary. In the wells of northern part of the block oil shows related to the Neocomian
sandstones, Aptian limestones. Oil seeps on the surface and in the wells are known from Middle
Eocene volcanics. Oil shows from wells and seeps on surface from Neogene deposits are known from
the different ares of the block.

Oil fields
Two, Shromisubani and Supsa oil fields are located in the northern part of the Block.
Supsa Field is in exploitation from 1939 and related to the Lower Sarmatian deposits of the northern,
thrusted limb and southern limb of the Supsa-Ompareti anticline. Oil production is related to the
Sarmatian sediments of the crest of the thrusted to the north anticline and southern limb.
According the data of the wells drilled, 9 horizons of oil-bearing sandstones are defined. Thickness of
horizons – from 3-8 m up to 15-46m. Sandstones are fine- and mediumgrained, with low clay content;
porosity – 20%, permiabiliti – 30-40 md.
Physical-Chemical characteristics of oils from Sarmatian are following:
DENSITY – 0,863 – 0,897
VISCOSITY – 1.75-5.00
COOLING TEMPERATURE - -20oC
COX – 0.5%
ASPHALTENES – 7.7%.;
VISCOSITY 1,75 – 5,00
TAR 40%
Initial pressure of the Lover Sarmatian reservoir – 73-77kg/sm2; initial temperature – 25-27o;
During the period of 1939-1989 up to 52 000 tons of oil was produced.
Shromisubani field is related to the Meotian deposits of undershrust northern limb of the Supsa-
Ompareti anticline. The field is in exploitation from 1974 and till 1984 up to 35 000 tonns of oil was
produced. According the weel data Meotian is represented by sands and conglomerates with high
permeability and effective oil/gas shows. 6 oil-bearing horizons are defined. Porozity of sandy
horizons is 15%, permeability – 60md.
Characteristics of the oil from V horizon:
DENSITY – 0,931
PARAFFINE – 1.12%
METHENE- NAPHTHENE-CARBODRATES – 38.14-42.15%
AROMATIC CARBODRATES -27.99-29.60% ;
BENZOL TAR 13.14-13.36%,
SPIRIT-BENZOL TAR -4.68-7.6%
ASPHALTENES – 9.73-9.98%.;
SULFUR - 0.74%
BOILING INITIAL TEMPERATURE 93-109ooC

Characteristics of oil from I horizon:

DENSITY – 0,899
PARAFFINE – 6.99%
AROMATIC CARBODRATES -22.18% ;
TAR – 12.33%
SPIRIT-BENZOL TAR -3.68%
ASPHALTENES – 3.68%.;

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OIL ANALYSES

Oil from Sarmation deposites (Supsa oil field)

DENSITY – 0,863 – 0,897

METHENE- NAPHTHENE-CARBODRATES -62,5% ;
AROMATIC CARBODRATES - 25%;
WAX - 9,88%. ;
ASPHALTENES - 0,95%.;
SULFUR - 0,5%
VISCOSITY 1,75 – 5,00
TAR 40%
associated gas
METHANE 70,9 – 91,8%
ETHANE 2,5 – 11,6
BUTHANE 2,0 – 8,75%,
PROPANE 2,0 – 10,20%,
PENTHANE 0,8 – 5,67%,
CARBON-DIOXIDE GAS 0,53 – 2,00%.

Oil from Middle Eocene volcanics

DENSITY – 0,821
METHENE- NAPHTHENE-CARBODRATES -62,5% ;
AROMATIC CARBODRATES - 25%;
WAX - 9,88%. ;
ASPHALTENES - 0,95%.;
SULFUR - 0,5%
VISCOSITY 1,75 – 5,00
TAR 40%
GAGGAS from Middle Eocene volcanics
METHANE 94,7 – 95,74%;
ETHANE 4,5 – 2,95%;
BUTHANE 0,15%;
PROPANE 0,7 – 0,29%;
PENTHANE 0,1%;
HEXANE 0,05%
CARBON-DIOXIDE GAS 1,4%.

Oil from Middle Miocene (wells and syrface seeps)

DENSITY – 0,935 – 0,997.
ASPHALTENES - 7,66%.
SULFUR - 0,5%
VISCOSITY 1,75 – 5,00
BENZOL TAR 14,63%,
HYDROCARBONS 58,8%,
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Oil from Middle Sarmatian (wells)

DENSITY – 0,943 g/sm3,

BOILING TEMP. 1880C
METHENE- NAPHTHENE-CARBODRATES -62,5% ;
AROMATICS S - 36,75%,
WAX -insignificant;
ASPHALTENES - 1,27%.
SULFUR - 0,31%
VISCOSITY 1,75 – 5,00
BENZOL TAR 10,84%,
WAX-NAFTA HYDROCARBONS-44,54%,

Oil from Meothian deposits (wells, II-IV horizons)

DENSITY – 0,895 (II hor)-0,931 (V hor) g/sm3,,

BOILING TEMP. 93 - 1090C
METHENE- NAPHTHENE-CARBODRATES 48,15 – 38,14%,
AROMATICS S - 27,99 – 29,60%,
WAX -1,12%,;
ASPHALTENES - 9,73 – 9,98%,
SULFUR - 0,74%,
BENZOL TAR 13,14 – 13,36%,

I horizon
DENSITY – 0,899 g/sm3,,
BOILING TEMP. 1170C
METHaNE- NAPHTHENE-CARBODRATES 53,34%,
AROMATICS S - 22,18%,
WAX -6,99%,
ASPHALTENES - 3,68%,
BENZOL TAR 12,33%,
BOILING INITIAL TEMPERATURE 117oC

Guria Oil/Gas-bearing zone, which comprises Supsa and Shromisubani oil fields, according to
it’s lithofacial, structural and hydrodynamic characteristics belongs to ze prospective areas.
According to the geological data, resources of Block VIIB are calculated as: 60 mln tons of oil.

ANNEX C

VIIB

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 Minimum Work Program

Bidders shall submit a description of a minimum work program meeting at least the
minimum requirements set out below. The minimum work program must be scheduled
to be completed of four (4) years from the effective date of the Production Sharing
Contract. A full description of the Minimum Work Program will be incorporated into
the Production Sharing Agreement executed between the State and the bidder. Failure
to complete the Minimum Work Program or any phase thereof will be resulted in
termination of the Production Sharing Agreement and the License and penalties against
the investor.

In the period of the first stage investor/operator must submit the environmental studies
of the existed situation in order to mark off the pollution level of the old and new
territories and to work out environmental recommendations.

Stage I - Procure, interpret and reprocess the existing geological and

geophysical data within 6 (six) months from effective date of contract;

- Estimation and selection of the existed wells for their further

rehabilitation ;
- Ensure the ecological safety of the wells, including carry out of
the coast-fixing works if it is necessary;

Stage II - Carry out complex geophysical activities within 24 (twenty four)

months from effective date of contract including: 2D exploration-
seismic activities – comprising not less than 150 linear kilometers;
3Dseismic activities – comprising not less than 50 square kilometers;

- Rehabilitation of the selected wells on the bases of studies and

reprocessing of the materials;

Stage III - In case of getting satisfactory results at Stages II and on the bases of
obtained data and within 24 (twenty four) months after completion of
this stage, drill two (existing field or new structure, under 1+1
principle) exploratory wells sufficient to test the deepest horizon
reasonably prospective for a commercial discovery, as determined by
oil and gas exploration internationally accepted standards and taking
into consideration local conditions;

Remark: The first and the second stage of the minimum work program represent the obligatory
minimum and correction and renewal of it will be done by the mutual consent of the parties , in
accordance with geological and geophysical results, which is obtained from each fulfilled phase of the
minimum work programm;

ANNEX D

THE FOLLOWING INFORMATION WILL BE REQUIRED, UNDER THE REGULATIONS OF

THE STATE AGENCY, TO BE SUBMITTED BY BIDDERS SELECTED AS BEST BIDDERS
WITHIN FIVE DAYS AFTER NOTIFICATION THAT BIDDER HAS BEEN SELECTED FOR
NEGOTIATIONS.

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Regulations of the State Agency for Regulation of Oil and Gas Resources

Article 224. Organization Report

Each Operator shall submit an Organization Report to the Agency not later than thirty days from the
effective date. In the event that a Contract or other agreement has been negotiated with, or awarded to,
an Operator that has not previously submitted an Organization Report the report must be submitted not
less than ten days prior to the time the Agency is required to sign such Contract or agreement or issue
a License. The Agency shall not be required to sign or issue such Contract or License until a complete
Organization Report is submitted. The Report shall include the following:
(a) Certificate of good standing from the jurisdiction of incorporation (if such certificates are issued
by the jurisdiction) dated not more than six months prior to the date of submission. The certificate
may be an original, a copy certified as a true copy by the body with authority over corporate
registration, or an authenticated abstract from the court of registration;
(b) Ownership and Control Information:
(i) The name and address of any person or firm owning or controlling more than ten percent of the
Operator. If a corporation, partnership, or other legal person holds ten percent or greater ownership
or control, the name of the chief executive officer and both the registered address and main office
address of the entity must be provided. The information required by this sub-paragraph shall be
provided in a document properly attested by the corporate secretary of the Operator.
(ii) The Agency may require the submission of additional information concerning the
ownership and/or control of firms owning or controlling a ten percent or greater interest in
the Operator and may further require the submission of additional information concerning
officers, directors, key personnel and significant shareholders or partners of such firms.
(c) The names and business addresses of the current officers of the company, listed in a document
properly attested by the corporate secretary;
(d) An abstract, properly authenticated, of the company’s registration in Georgia, whether original
registration or as a representative office;
(e) The firm’s Georgia tax identification number, if available;
(f) The following financial information:
(i) For Reporting Companies required to file annual reports or similar filings by the securities
regulatory authority of the jurisdiction of incorporation or the jurisdiction in which shares are
principally traded: A copy of the latest annual filing of financial condition with a regulatory
body, certified as a true copy by the authority with which it is filed. If annual reports are
distributed to shareholders, a copy of this report should also be provided. Annual reporting
data should be supplied each year within one month of its filing with the securities regulatory
body;
(ii) For Non-Reporting Companies: An audited financial statement prepared by chartered or
certified public accountants and dated not more than one (1) year prior to the date of filing with
the Agency. For a wholly owned subsidiary of a reporting company, the Reporting Company’s
statement will suffice if it shows adequate information reflecting the financial condition of the
subsidiary doing business in Georgia.
(g) A letter from the chief executive officer designating the person in charge of the firm’s business in
Georgia;
(h) A letter from the person in charge of the company’s business in Georgia, setting out his or her
office address, business telephone numbers and business e-mail addresses;
(i) Such additional information as the Agency may reasonably request.

Besides the above mentioned information the best bidder shall submit the bank guaranty on the
amount of the signature bonus before the start of the negotiations , the text of the bank guaranty
shall be agreed with Agency.

7
Remark: In case of unmatched texts between the Georgian and English versions of the submitted
tender packet, Georgian text shall be privileged.

8
ANNEX E

9
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