Jarch Management Group responds Jonglei Governor

GOVERNOR OF JONGLEI

Dear Governor Thon Leek,

Our people have worked with both the SPLM and the SSDF to ensure a fair agreement for the people of the South. Let me highlight the key points and sections of our contract:

Article 10- Our contract pays a 10% royalty. This royalty is specifically to be used for displaced persons and for the local community.

You will notice that currently the Comprehensive Peace Agreement (CPA) pays only a
2% royalty. Also, the other agreements signed by certain members of the SPLA call for
other companies not to pay any royalties at all. In fact, as outrageous as it sounds, one oil
company will receive a 60% royalty after a 40% return on investment. In other words,
not only will there be no money for the people of Jonglei but there will be no money for
the people of the South. The officials of the South should really examine what a few
have done to the people of the South and understand the repercussions of such a contract.

Article 12- The profit oil split can be as high as 75% to the people of the South.

Please review what a few individuals have signed with other companies and compare.

Article 17- Training and Employment- Our Company is required to institute a training
program for the people of the South to train them in oil exploration activities. These
training activities are specifically spelled out in the contract with specific budgets. Also,
training will include skilled, technical, administrative and managerial positions in
relation to the work to be undertaken under the Contract. Such training will include
scholarships to international education institutions to improve the understanding of oil
industry operations in South Sudan. There are also conditions in the contract whereby at least 70% of the skilled labor (such as managerial, accounting, engineering and operators) the Company employs shall be nationals of Southern Sudan.

Mr. Governor, please examine the other contracts to see how money is allocated to training and ask yourself why are certain officials pushing so hard for these other companies.

Article 21- Environmental Protection. Our Company has an entire section dealing with
environmental protection which states the Operator shall conduct Petroleum Works in
accordance with health, safety and environmental standards internationally recognised
to be in accordance with good oilfield practice. The Operator shall make all practicable
commercial efforts such that the Petroleum Works have as minimal an impact as possible
upon the natural environment including water (surface and underground), wildlife,
freshwater fisheries and grazing and agricultural land. Specifically the Operator, shall make all practicable commercial efforts to limit any
excessive noise that may be associated with the Petroleum Works, and limit the
production of harmful waste products associated with the Petroleum Works and agrees to
collect and dispose of such harmful waste products. When
acquiring seismic data the Operator shall select
methods to minimise the environmental impact of such work ensuring that when using
explosive seismic sources all practicable commercial efforts are made to preserve and
protect the local population, local housing and ground water supplies and those
environmental aspects. The Operator shall make all practicable commercial efforts to
limit the risk of pollution and/or impact upon the natural environment that may result
from drilling exploration wells. With respect to drilling on land the Operator shall take
all practicable commercial steps to protect the ground waters from contamination by
toxic or saline products. Upon the abandonment of a well the Operator shall take all
practicable commercial measures to ensure that the well is plugged and sealed so that it
can in no way contaminates the surrounding ground and ground waters. All practicable
commercial efforts should be made to prevent the discharge of Hydrocarbons.
In the event that a discharge of Hydrocarbons does occur, then all practicable commercial efforts shall be made to limit the possible damage to the environment caused by such discharge. Any flaring or re-injection of natural gas shall be conducted in such a way as to reasonably minimise impact upon the environment and the health of the local population. Upon the completion of seismic or drilling works the Operator, shall ensure that where reasonable to do so the site of such works shall be cleared of evidence of such works having taken place and the environment be returned to its state which pertained prior to such works having taken place. A fair and reasonable indemnity shall be agreed between the Operator, and relevant landowners for any proven damages not repaired by the Operator that may have occurred to property and crops, including loss of harvest, as a direct result of the Petroleum Works having been carried out, and in accordance with any relevant regulation. Prior to carrying out any seismic or drilling operations the Operator shall provide an Environmental Impact Assessment (EIA) report that details the possible impact upon the environment of such seismic or drilling operations and contains recommendations as to how such impact can reasonably be minimized. The Operator will be held liable for any losses or damages resulting from the Petroleum Works in the event that such losses or damages result from either Gross Negligence or from Wilful Misconduct on behalf of the Operator. The Operator has an obligation to provide insurance cover.

The above are direct excerpts from the contract. Once again, please compare with what certain individuals have signed and what other companies may be doing. Other companies have claimed to be conducting seismic studies. Are they following the above guidelines?

Article 30 – Social Development Programmes. We have specific programs stated directly in the contract. Our programs are more than sending soccer jerseys into Juba during the World Cup. Our social programs include the provision of roads, the drilling of water wells and water treatment plants, free medical treatment, care and includes a dispensary or hospital headed by a resident medical doctor.

As you can see Mr. Governor, we truly do care about the people of the South and have always maintained an equitable stance for all sides. We respect the people of the South but have contempt for those individuals that are out for themselves and who have tried to squeeze the Company for their personal gain. It has always been our belief that if we stay true, the people will support us because we realize that it is your land, your oil. Please let us know if you have any questions with regard to the contracts signed with the SPLM or the SSDF.

Thank you,

Jarch Management Group, Ltd.