CRUDE OIL PURCHASE/SALE AGREEMENT

Crude Purchase Agreement

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GIANT INDUSTRIES INC | STATOIL MARKETING & TRADING (US) INC.

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Title: CRUDE OIL PURCHASE/SALE AGREEMENT
Governing Law: New York Date: 3/15/2004
Industry: Oil and Gas Operations Sector: Energy

CRUDE OIL PURCHASE/SALE AGREEMENT, Parties: giant industries inc , statoil marketing & trading (us) inc.

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Exhibit 10.33

FOIA CONFIDENTIAL TREATMENT REQUEST

COPY

WITH

REDACTED AREAS

CRUDE OIL PURCHASE/SALE AGREEMENT

INDEX OF CONFIDENTIAL TERMS

(i) Page 1, Title Page, Heading

(ii) Page 3, Table of Contents

(iii) Pages 5, 8 and 9, Article 2.1

(iv) Page 11, Articles 3.1 and 3.2

(v) Page 12, Article 4.1

(vi) Page 15, Article 7.2(b)(ii)

(vii) Page 22, Articles 10.2, 10.4 and 10.5

(viii) Page 36, Article 17

GIANT INDUSTRIES, INC.

FORM 10-K

FISCAL YEAR ENDED DECEMBER 31, 2003

PORTIONS HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT

FILED BY THE REGISTRANT WITH THE COMMISSION. THE OMITTED PORTIONS HAVE BEEN

FILED SEPARATELY WITH THE COMMISSION.

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===========================================================================

***** CRUDE OIL

PURCHASE / SALE AGREEMENT

2004 - 2008

between

STATOIL MARKETING & TRADING (US) INC.

and

GIANT YORKTOWN, INC.

Contract Reference Number - CTC 2004/01

*****Confidential treatment requested. Confidential information redacted.

===========================================================================

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TABLE OF CONTENTS

ARTICLE PAGE #

---------------------------- ------

1. CONTRACT PARTIES 4

2. DEFINITIONS AND CONSTRUCTION 5

3. QUALITY 11

4. VOLUME AND DELIVERY RATE 12

5. TITLE 13

6. RISK OF LOSS 13

7. SUPPLY AND DELIVERY 14

8. SHIPPING AND DISCHARGE PORT 17

9. NOMINATION 19

10. PRICE COMPONENTS 20

11. PAYMENT 23

12. MEASUREMENT AND INSPECTION 25

13. LAYTIME AND DEMURRAGE 28

14. CREDIT CONDITIONS 31

15. TAXES, DUTIES AND CHARGES 34

16. INSURANCE 35

17. TERM OF AGREEMENT 36

18. REPRESENTATIONS, WARRANTIES AND COVENANTS 36

19. AUDIT AND INSPECTION RIGHTS 39

20. SUSPENSION AND TERMINATION 39

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21. OBLIGATIONS AT TERMINATION 42

22. INDEMNIFICATION AND CLAIMS 44

23. DAMAGES 46

24. ASSIGNMENT 46

25. NOTICES AND ADDRESSES 47

26. WARRANTIES AND WAIVERS 48

27. APPLICABLE LAW, LITIGATION AND ARBITRATION 49

28. VOICE RECORDING 51

29. DISPOSAL 51

30. NOTICE OF NORWEGIAN STATE'S SOURCED CRUDE OIL 51

31. CONFIDENTIALITY 52

32. MISCELLANEOUS 52

APPENDIX I ADJUSTMENT TO QUALITY DIFFERENTIALS FOR *****

APPENDIX II THE ***** CRUDE OIL ASSAY

APPENDIX III BUYER'S PRICING TRIGGER PROCEDURE

APPENDIX IV CRUDE OPTIMIZATION PROCEDURE

APPENDIX V INVENTORY AND DELIVERY STATEMENTS

APPENDIX VI INTERCREDITOR AGREEMENT

APPENDIX VII TANK OWNER'S AGREEMENT

*****Confidential treatment requested. Confidential information redacted.

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ARTICLE 1

CONTRACT PARTIES

THIS CRUDE OIL PURCHASE/SALE AGREEMENT (this "AGREEMENT"), is made and entered

into as of the Effective Date between:

BUYER:

Giant Yorktown, Inc.

23733 North Scottsdale Road

Scottsdale, AZ 85255

SELLER:

Statoil Marketing & Trading (US) Inc.

225 High Ridge Road

Stamford, CT 06905

WHEREAS, the Parties agree that Seller shall sell and Buyer shall purchase Oil

on the terms and conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the premises and the respective promises,

conditions and agreements contained herein, and other good and valuable

consideration, the receipt and adequacy of which are hereby acknowledged, the

Parties hereby agree as follows:

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ARTICLE 2

DEFINITIONS AND CONSTRUCTION

2.1 DEFINITIONS.

For purposes of this Agreement, the following terms shall have the meanings

indicated below:

"ACIDIC" means that the total acid number ("TAN") of the crude oil

analyzed is more than 1.3 mgKOH/Kg.

"AGREEMENT" or "THIS AGREEMENT" means this ***** Crude Oil Purchase/Sale

Agreement, as it may be amended, modified, supplemented, extended, renewed

or restated from time to time in accordance with the terms hereof,

including the Appendices and Exhibits hereto.

"API" means American Petroleum Institute.

"ASTM" means American Society for Testing Materials.

"BANKRUPT" means a Person that (i) dissolved, other than pursuant to a

consolidation, amalgamation or merger, (ii) becomes insolvent or is unable

to pay its debts or fails or admits in writing its inability generally to

pay its debts as they become due, (iii) makes a general assignment or

arrangement for the benefit of its creditors, (iv) has instituted against

it a proceeding seeking a judgment of insolvency or bankruptcy or any

other relief under any similar law affecting creditor's rights, or a

petition is presented against it for its winding-up or liquidation, (v)

institutes a proceeding seeking a judgment of insolvency or bankruptcy or

any other relief under any bankruptcy or insolvency law or for

reorganization relief under the winding-up or liquidation, (vi) has a

resolution passed for its winding-up or liquidation, other than pursuant

to a consolidation, amalgamation or merger, (vii) seeks or becomes subject

to the appointment of an administrator, provisional liquidator,

conservator, receiver, trustee, custodian or other similar official for

all or substantially all of its assets, (viii) has a secured party take

possession of all or substantially all of its assets, or has a distress,

execution, attachment, sequestration or other legal process levied,

enforced or sued on or against all or substantially all of its assets,

(ix) files an answer or other pleading admitting or failing to contest the

allegations of a petition filed against it in any proceeding of the

foregoing nature or (x) takes any other action to authorize any of the

actions set forth above.

"BANKRUPTCY CODE" means Chapter 11 of Title 11, U.S. Code, as amended.

"BARREL" means a volume of forty-two (42) US gallons corrected for

temperature to sixty (60) degrees Fahrenheit, unless stated otherwise.

"BFO" means Brent/Forties/Oseberg.

*****Confidential treatment requested. Confidential information redacted.

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"BUSINESS DAY" means a day on which commercial banks are open for business

(including dealings in foreign exchange and foreign currency deposits) in

New York, New York.

"BUYER'S REFINERY UPGRADING TURNAROUND" means the scheduled upgrade of the

Refinery, including the installation of metallurgy and desalting

facilities, that Buyer shall implement and complete during the fourth

quarter of 2004.

"BUYER'S SUPPLY WINDOW" has the meaning given such term in Article 9(a).

"CARGO" means any particular quantity of Oil loaded or to be loaded into

Vessel as set out in this Agreement and includes part Cargoes.

"COLLATERAL" has the meaning given such term in Article 14.3.

"COLLATERAL EVENT" has the meaning given such term in Article 14.3.

"COMMODITY EXCHANGE ACT" means 7 U.S.C. Section 1, et seq.

"COMPLETION OF DISCHARGE" means, in respect of a Cargo, the final

disconnection from a Vessel's discharge manifold following the discharge

of Oil.

"CRUDE FIELD" means Buyer's crude oil storage tanks, including VEPCO tanks

"C", "D", and "E" if agreed to in advance by Seller, but excluding Buyer's

Daily Charge Tanks.

"DAILY CHARGE TANKS" means Buyer's crude oil tanks used to charge crude

oil to Buyer's crude units, excluding Buyer's Crude Field tanks.

"DEFAULT INTEREST RATE" means the lesser of (i) the applicable LIBOR rate

plus two (2) percentage points and (ii) the maximum rate of interest

permitted by Law.

"DELIVERED" or "DELIVERY" or "DELIVER" means when the Oil passes the title

transfer point from Seller to Buyer.

"DISCHARGE PORT" means the customary dockage, anchorage or place where a

Vessel may lie in connection with discharging a Cargo to the Refinery.

"DOLLARS" or "USD" or "US DOLLARS" or "$" means dollars of the United

States of America.

"EFFECTIVE DATE" means the date on which Buyer obtains all necessary

amendments to (i) the Credit Agreement referenced in Article 14.1 of this

Agreement and (ii) the term Loan Agreement dated as of May 14, 2002 (as

the same has been amended from time to time, the "Term Loan Agreement")

between Giant Yorktown, Inc., Wells Fargo Bank Nevada,

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National Association, and each of the Lenders named on Schedule IA of the

Term Loan Agreement, and the Parent Guaranty Agreement related to the Term

Loan Agreement.

"ENVIRONMENTAL LAW" means any Law, policy, judicial or administrative

interpretation thereof or any legally binding requirement that governs or

purports to govern the protection of persons, natural resources or the

environment (including the protection of ambient air, surface water,

groundwater, land surface or subsurface strata, endangered species or

wetlands), occupational health and safety and the manufacture, processing,

distribution, use, generation, handling, treatment, storage, disposal,

transportation, release or management of solid waste, industrial waste or

hazardous substances or materials, as may be amended or modified from time

to time.

"ESTIMATED WEEKLY QUANTITY" or "EWQ" means the approximate quantity of Oil

Delivered to Buyer during a period of one (1) week (between midnight on a

Wednesday to midnight on the previous Wednesday), as estimated by Buyer

and stated on the EWQ statement in the format of Appendix V.

"E.T." means the applicable, local Eastern Time in New York, New York.

"EVENT OF DEFAULT" or "DEFAULT" has the meaning given such term in Article

20.1.

"FORCE MAJEURE" means any cause or event reasonably beyond the control of

a Party including perils of navigation, fires, acts of God, wars (declared

or undeclared), terrorism, or any act, order, directive or necessity of

any governmental, civil or military authority (de facto or de jure), or

any regulation or interference (including regulation or interference

requiring the shutting down of the Refinery or any of its operating units

or requiring a substantial change in the manner of operating same), labor

disputes (whether or not involving a Party's employees), or partial

failure of producing, transportation, utility, loading or delivery

facilities, inability of Seller or Vessels selected by it to obtain war

risk insurance from usual commercial markets, closing of or restrictions

on use of harbors, docks, canals, or other assistance to or adjuncts of

shipping or navigation, actions by Seller to comply with directives of a

member government or agency thereof in the implementation of an emergency

allocation program of the International Energy Agency, or any other cause

reasonably beyond the control of either Party whether or not similar to

the foregoing and whether or not foreseeable, all of which by the exercise

of due diligence such Party is unable to prevent or overcome. For purposes

hereof, "failure of producing facilities" means a major disruption to the

Production Facilities and Loading Terminal associated with them.

"FOUR-DAY SUPPLY WINDOW" has the meaning given such term in Article 9(c).

"GALLON" means a U.S. standard gallon of 231 cubic inches at 60 degrees

Fahrenheit.

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"GIANT" means Giant Industries, Inc., a Delaware corporation. Giant is the

ultimate parent company of Buyer and the Guarantor described in Article

14.1(c).

"GOVERNMENTAL AUTHORITY" means any federal, state, regional, local, or

municipal governmental body, agency, instrumentality, authority or entity

established or controlled by a governmental or subdivision thereof,

including any legislative, administrative or judicial body, or any Person

purporting to act therefore.

"GPW" means Gross Product Worth as defined in Appendix I.

"*****" means ***** crude oil of normal export quality.

"INDEPENDENT INSPECTOR" means a company that is approved by U.S. Customs

and that is mutually appointed by the Parties for reporting the

measurement of quality and quantity of Oil.

"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement substantially

in the form attached hereto as Appendix VI.

"INVENTORY" OR "INVENTORIES" means the Oil inventories that Seller owns

and intends to sell to Buyer under this Agreement, wherever located,

including at the Refinery, VEPCO tanks `C', `D' or `E', loaded upon

Vessels and injected into or received from pipelines or other transport.

"IPE" means International Petroleum Exchange.

"LAW" means (i) any law, statute, regulation, code, ordinance, license,

decision, order, writ, injunction, decision, directive, judgment, policy,

decree and any judicial or administrative interpretations thereof, (ii)

any agreement, concession or arrangement with any Governmental Authority

and (iii) any license, permit or compliance requirement, in each case

applicable to either Party and as amended or modified from time to time.

"LIABILITIES" means any losses, claims, charges, damages, deficiencies,

assessments, interests, penalties, costs and expenses of any kind

(including reasonable attorneys' fees and other fees, court costs and

other disbursements), including any Liabilities directly or indirectly

arising out of or related to any suit, proceeding, judgment, settlement or

judicial or administrative order and any Liabilities with respect to

Environmental Law.

"LIBOR" means, as of the date of any determination, the London Interbank

Offered Rate for One-Month U.S. Dollar deposits appearing on page 3750 of

the Telerate screen (or any successor page) at approximately 11:00 a.m.

(London time). If such rate does not appear on page 3750 of the Telerate

screen (or otherwise on such screen), LIBOR shall be determined by

reference to such other comparable publicly available service for

displaying Eurodollar rates as the Parties may mutually select. LIBOR

shall be established on the first day on which a determination of the

interest rate is to be made

*****Confidential treatment requested. Confidential information redacted.

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under this Agreement and shall be adjusted daily based on the LIBOR quotes

made available through the foregoing sources.

"LOADING TERMINAL" means the port of loading of the Vessel for the

applicable Oil being Supplied.

"MONTH" means a calendar month. Where a specified Month is defined as

Month "M", Month M-1 shall mean the Month prior to Month M and Month M+1

shall mean the Month subsequent to Month M.

"OIL" means crude oil specified in this Agreement.

"NORMAL REFINERY OPERATIONS" means periods of time when the Refinery is

operating in a routine manner with all operating units on-line. Normal

Refinery Operations exclude maintenance turnarounds and shutdown periods.

For any periods of time other than during Normal Refinery Operations,

Buyer shall invoke the provisions of Articles 7.2 and/or 7.3.

"PARTY" or "PARTIES" means each Buyer and Seller defined in Article 1

"Contract Parties" and collectively, both Buyer and Seller.

"PERSON" means an individual, corporation, partnership, limited liability

company, joint venture, trust or unincorporated organization, joint stock

company or any other private entity or organization or Governmental

Authority, whether acting in an individual, fiduciary or other capacity.

"PREPRODUCTION ASSAY" means the ***** Crude Oil Assay, (Report number

04263/96, dated August 23, 1996) attached as Appendix II.

"PRODUCTION FACILITIES" means the offshore field production facilities

used for the production of *****.

"PROPERTY TAX" means any and all tangible personal property taxes, ad

valorem property taxes or the like imposed on the value of the Oil held

for sale by Seller to Buyer under this Agreement.

"REFINERY" means the petroleum processing and refining facilities located

in Yorktown, Virginia that are currently owned and operated by Buyer.

"SAMPLER" means an automatic in-line sampler located in the immediate

vicinity of the Vessel's discharge manifold and the Refinery's receiving

pipeline connection.

"SELLER'S SUPPLY WINDOW" has the meaning given such term in Article 9(b).

*****Confidential treatment requested. Confidential information redacted.

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"SUPPLIED" or "SUPPLY" or "SUPPLIES" means or refers to when the Oil

passes the flange connection between Seller's Vessel's permanent discharge

manifold and the receiving pipeline or hose at the Discharge Port.

"TANK OWNER'S AGREEMENT" means the Tank Owner's Agreement substantially in

the form attached hereto as Appendix VII.

"TAXES" means any and all (i) U.S. federal, state and local taxes, duties,

fees and charges of every description, including all fuel, excise,

environmental, spill, gross earnings, gross receipts and sales and use

taxes, however designated (except for taxes on income), paid or incurred

with respect to the purchase, storage, exchange, use, transportation,

resale, importation or handling of the Oil and (ii) Property Taxes.

"TERMINATION DATE" has the meaning given such term in Article 21.1.

"UCC" means the Uniform Commercial Code in effect in the relevant state

jurisdiction.

"VESSEL" means the ship or barge, whether owned or chartered or otherwise

obtained by Seller and employed by Seller to transport the Oil to the

Discharge Port.

2.2 CONSTRUCTION.

(a) All headings herein are intended solely for convenience of reference and

shall not affect the meaning or interpretation of the provisions of this

Agreement.

(b) Unless expressly provided otherwise, the word "including" as used herein

does not limit the preceding words or terms.

and quarters mean calendar days, weeks, Months and quarters, respectively. For

purposes of this Agreement, a calendar day shall begin at 12:00 a.m. E.T. and

end at 11:59 p.m. E.T.

(d) Unless expressly provided otherwise, references herein to "consent" mean the

prior written consent of the Party at issue, which shall not be unreasonably

withheld, delayed or conditioned.

(e) The Parties acknowledge that they and their counsel have reviewed and

revised this Agreement and that no presumption of contract interpretation or

construction shall apply to the advantage or disadvantage of the drafter of this

Agreement.

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ARTICLE 3

QUALITY

3.1 NORMAL EXPORT QUALITY. The Oil to be Supplied under this Agreement shall

be ***** crude oil of normal export quality. Other crude oils may be Supplied

under this Agreement to replace part of the ***** should a substitution be

agreed to between the Parties. Any such substitution will be made in accordance

with the procedures set out in Appendix IV.

3.2 VARIATIONS IN QUALITY. Both Parties recognize that the quality of *****

may vary from the quality of ***** defined in the Preproduction Assay and as

included as Appendix II. A significant variation in the quality of ***** from

the Preproduction Assay to subsequent assays will result in an adjustment of the

price as set out in Appendix I. Notwithstanding any quality variation, Seller

shall Supply the ***** and Buyer shall receive of the ***** subject to the

following:

(a) In the event the quality of the ***** is substantially different

from the quality defined in the Preproduction Assay, and this

directly results in significant technical problems to Buyer's

Refinery or Buyer is not able to manufacture finished petroleum

products meeting current specifications for the products in Buyer's

normal markets except under significant economic hardship, then the

Parties agree to meet in an expeditious manner to resolve the

situation in good faith. In order to resolve the technical problems

associated with the quality of the ***** being substantially

different from the quality defined in the Preproduction Assay, Buyer

shall take reasonable measures to receive alternative crude oils or

crude oil blends (Acidic or non-Acidic crude oils) Supplied by

Seller in substitution for the *****.

(b) In the event that the quality of the ***** is substantially

different from the quality defined in the Preproduction Assay such

that ***** is clearly worth substantially more than the Agreement

price based on market prices obtained by Seller from third parties,

the Parties agree to meet and discuss in good faith how to reduce

Seller's economic disadvantage from Supplying ***** to Buyer

according to the agreed prices. Buyer shall take reasonable measures

to receive alternative crude oils or crude oil blends (Acidic or

non-Acidic crude oils) Supplied by Seller in substitution for the

*****. Seller shall take reasonable measures to Supply crude oils or

crude oil blends at prices that provide Buyer with comparable

economics as if Buyer were receiving ***** as defined in the

Preproduction Assay.

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***** Confidential treatment requested. Confidential information redacted.

<PAGE>

ARTICLE 4

VOLUME AND DELIVERY RATE

4.1 TOTAL VOLUME. Seller shall Deliver, and Buyer shall take Delivery of, a

minimum of ***** Barrels of Oil under this Agreement. Buyer shall take delivery

of all Oil Supplied under this Agreement to the Refinery. The intent of the

Parties is that the first Cargo shall be Supplied during February 2004. The last

Cargo to be Supplied under this Agreement will include the ***** Barrel, so that

it is ensured that the minimum quantity is Supplied. Any quantity in addition to

the minimum that is Supplied in the last Cargo will be considered to be part of

the quantity to be Delivered under the Agreement.

4.2 DELIVERY RATE.

(a) Delivery Prior to Buyer's Refinery Upgrading Turnaround. From March 1st

2004, until the last day prior to Buyer's Refinery Upgrading Turnaround, Buyer

shall take Delivery of the Oil ratably at twenty thousand (20,000) Barrels per

day during periods of Normal Refinery Operations.

(b) Delivery Subsequent to Buyer's Refinery Upgrading Turnaround. From the first

day after the completion of Buyer's Refinery Upgrading Turnaround, Buyer shall

take Delivery of the Oil ratably at forty thousand (40,000) Barrels per day

during periods of Normal Refinery Operations; except that, if Buyer is able to

complete its turnaround prior to the end of September 2004, Seller shall have

the right to Deliver Oil at the rate of twenty thousand (20,000) Barrels per day

until September 30, 2004 and shall increase the rate of delivery of Oil to forty

thousand (40,000) Barrels per day beginning October 1, 2004. Notwithstanding the

foregoing, Buyer and Seller may mutually agree to an increase in the rate of

Deliveries prior to October 1, 2004, should this be acceptable to both Parties.

If Buyer is unable to take delivery at the higher rate as soon as reasonably

practical following Buyer's Refinery Upgrading Turnaround, then Buyer shall

invoke the provisions of Article 7.2 below, citing unscheduled downtime.

the Oil at a rate as close as operationally possible to the agreed rate. For the

avoidance of doubt, this shall not mean that Buyer shall be required to take

Delivery on any day at that exact rate but that, as a maximum deviation from

ratability, should Buyer be taking Deliveries at a higher or lower rate than the

agreed rate for a period of approximately two (2) Months (as first evidenced by

Buyer's EWQ's), then Buyer shall undertake to reduce or increase Deliveries, as

the case may be, in the third Month in order to compensate for the deviation in

the previous two (2) Months. In any case, excluding any reduction in volume as a

result of Articles 7.2 and/or 7.3 being invoked, the maximum deviation from

ratability over any Month shall be plus or minus five percent (5%).

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***** Confidential treatment requested. Confidential information redacted.

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ARTICLE 5

TITLE

5.1 TRANSFER OF TITLE. Title to the Oil shall pass from Seller to Buyer when

the Oil passes through the outlet flange of Buyer's Daily Charge Tanks. Delivery

shall be considered to be taken by Buyer at the same point as title passes to

Buyer.

5.2 COMMINGLED INVENTORY.

(a) Seller shall not have, or assert any claim to, title over, or any other

interest in, Buyer's segregated inventory or any portion of unsegregated

inventory with which the Oil inventories owned by Seller are commingled in

storage.

(b) Buyer shall not have or assert any claim to, title over, or any other

interest in, or cause or allow any claim to, title over or any other interest

in, Seller's portion of any segregated or commingled Oil with which the crude

oil inventories owned by Buyer are commingled in storage. Nothing in this

Agreement shall be deemed to grant to Buyer or any person claiming by, through

or against Buyer, title to or create a security interest in, any of Seller's

Oil. Buyer authorizes Seller to file in all appropriate jurisdictions one (1) or

more UCC financing statements.

ARTICLE 6

RISK OF LOSS

Risk of loss of the Oil shall pass from Seller to Buyer when the Oil passes the

flange connection between Vessel's permanent discharge manifold and the

receiving pipeline or hose at the Discharge Port.

[This space intentionally left blank]

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ARTICLE 7

SUPPLY AND DELIVERY

7.1 SUPPLY.

(a) All Cargoes Supplied under this Agreement will be nominated in accordance

with Article 9 hereof and shall be subject to draught restrictions at the

Discharge Port as detailed in Article 8. All Oil will be Supplied outside of

U.S. Customs at the Refinery.

(b) The Oil shall be Supplied in Cargoes in a normal range of volume between

five hundred seventy thousand (570,000) Barrels and six hundred twenty thousand

(620,000) Barrels into Buyer's Refinery. Deviations to the normal range of

volume may occur in accordance with the following:

(i) Seller has the option at any time prior to the day that Seller

designates the Four-Day Supply Window to Supply Cargoes of a volume

between four hundred thousand (400,000) Barrels and seven hundred thousand

(700,000) Barrels. Seller shall communicate to Buyer its intention to

nominate such a volume so that Buyer can exercise its right to re-nominate

subsequent Cargoes in accordance with Article 9.3, and further, Seller

will ensure that it can comply with any changes to the Supply of

subsequent Cargoes. Seller may Supply Cargoes of volume less than four

hundred thousand (400,000) Barrels only with Buyer's prior consent.

(ii) Seller has the option, with Buyer's prior consent, to Supply Cargoes

up to approximately one million (1,000,000) Barrels. Buyer shall be

granted substantially earlier notice of such Supply and shall be able to

nominate a narrower Buyer's Supply Window. Buyer agrees to use its best

efforts to accommodate Seller's option.

the beginning of the subject Cargo's Four-Day Supply Window without Buyer's

prior consent.

(d) For Oil Supplied pursuant to this Agreement, Buyer represents to Seller that

Buyer shall not use any tanks leased from any third parties, including, but not

limited to, VEPCO, without first notifying Seller and obtaining either a Tank

Owner's Agreement substantially in the form attached hereto as Appendix VII or

providing additional security in the form of a letter of credit or cash deposit

reasonably satisfactory to Seller.

7.2 SCHEDULED AND UNSCHEDULED DISRUPTION TO SUPPLY OR RECEIPT OF OIL. Any

reduction in volume as a result of the provisions of this Article 7.2 shall only

be temporary and the total volume of Oil to be Delivered under this Agreement

shall not be affected. The Parties agree that the provisions of this Article 7.2

shall not be used for commercial gain.

(a) Buyer's Refinery.

(i) Scheduled Maintenance. Buyer shall give Seller at least ninety (90)

days' notice of any scheduled maintenance at the Refinery, which could

affect the rate at which the

<PAGE>

Oil is Delivered. During such scheduled maintenance, Buyer's obligation to

take Delivery of Oil from Seller will be reduced, to the extent required,

for the affected period.

(ii) Unscheduled Downtime. Unscheduled downtime at the Refinery due to an

event of Force Majeure shall be handled in accordance with Article 7.3.

During any period of unscheduled downtime not caused by an event of Force

Majeure, Buyer shall make reasonable attempts to take Delivery of Oil

under this Agreement. Should unscheduled downtime not caused by an event

of Force Majeure exceed five (5) days, Buyer is entitled to request the

rescheduling of future Cargoes. However, Seller shall not be required to

reschedule or delay any Cargo that has been accepted by Buyer for Supply

within a forty-five (45) day period immediately following the date Buyer

gives Seller notice of unscheduled downtime.

(b) Seller's Production Facilities and Loading Terminal.

(i) Scheduled Maintenance. Seller shall give Buyer at least ninety (90)

days notice of any scheduled maintenance at the Production Facilities or

at the Loading Terminal that could affect Supply of Oil under this

Agreement.

(ii) Supply Shortage. If, by reason of any of the causes described in

this Article 7.2, or by reason of production problems at the offshore

facility or any problems at the Loading Terminal or reduction of

production by a Governmental Authority, a shortage of supply occurs such

that the total of Seller's volumes, SDFI volumes ("State Direct Financial

Interest" volumes), and other third party volumes under long term

contracts to Seller, of ***** for any such period of supply shortage is

lower than the total of Seller's own system requirements (meaning Seller's

own refining system and its long term processing arrangements) and the

total nominated deliveries committed to other supply agreements for that

period, then Seller has the right to freely withhold, reduce or suspend

Deliveries under this Agreement to a level below the nominated quantity

for that period as set forth below. Any shortage of supply shall result in

Seller first canceling any uncommitted spot volumes. If that is not

sufficient to deal with the supply shortage, then any reduction in

Deliveries under this Agreement that Seller imposes shall correspond with

the reduction in volume imposed on other third party long-term buyers of

***** from Seller. For the purposes hereof, Buyer shall be considered a

long-term ***** customer.

If Seller has to reduce Deliveries under any of the above circumstances,

the Parties will discuss in good faith a new nomination plan to take into

account the reduced ***** volume. The Parties also shall discuss the

option of substituting alternative crude oils for any reduced *****

volumes. Such alternative crude oils will be considered, where possible,

on spot terms, based on fair market prices and relative values to *****.

Should the Parties fail to agree on terms for the supply of alternative

crude oils, Buyer shall have the option to secure such supplies directly

from third parties. In this case, Buyer shall propose to Seller for its

consent an amended nomination schedule for future deliveries of Oil.

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***** Confidential treatment requested. Confidential information redacted.

<PAGE>

7.3 FORCE MAJEURE. The Parties agree that the provisions of this Article 7.3

shall not be used for commercial gain.

(a) Neither Party shall be liable to the other if it is rendered unable by an

event of Force Majeure to perform in whole or in part any obligation or

condition of this Agreement, for so long as the event of Force Majeure exists

and to the extent that performance is hindered by the event of Force Majeure;

provided, however, that the Party unable to perform shall use any and all

commercially reasonable efforts to avoid or remove the event of Force Majeure.

(Notwithstanding the foregoing, neither Party shall be required to (i) settle

labor disputes by acceding to the demands of the opposing party or parties to

such disputes or (ii) incur a major capital expenditure). During the period that

performance by one (1) of the Parties of a part or whole of its obligations has

been suspended by reason of an event of Force Majeure, the other Party likewise

may suspend the performance of all or a part of its obligations to the extent

that such suspension is commercially reasonable, except for any payment and

indemnification obligations.

(b) The Party rendered unable to perform shall give written notice to the other

Party as soon as reasonably possible after receiving notice of the occurrence of

an event of Force Majeure, including, to the extent feasible, the details and

the expected duration of the event of Force Majeure and the volume of Oil

affected. Such Party also shall promptly notify the other when the event of

Force Majeure is terminated.

Parties may mutually agree to the delivery of other alternative crude oils.

(d) In the event that a Party's performance is suspended due to an event of

Force Majeure in excess of sixty (60) consecutive days from the date that notice

of such event is given, and so long as such event is continuing, either Party,

in its sole discretion, may terminate this Agreement by written notice to the

other, and neither Party shall have any further liability to the other in

respect of this Agreement except for rights and remedies previously accrued

under this Agreement and any payment and indemnification obligations by either

Party under this Agreement.

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<PAGE>

ARTICLE 8

SHIPPING AND DISCHARGE PORT

8.1 SELECTION OF VESSEL.

(a) The Oil under this Agreement shall be Supplied on Vessels acceptable to

Buyer. Buyer shall not unreasonably withhold such acceptance. Seller shall

submit to Buyer for its approval a list of Vessels that may be employed by

Seller to Supply the Oil. The list shall be regularly reviewed by both Parties

and shall only include Vessels built within twenty (20) years of the Cargo

nomination date. Seller immediately shall notify Buyer of any change in a

Vessel's status or performance, which could affect a Vessel's approval by Buyer.

Buyer shall have the option to remove a Vessel that is no longer acceptable to

it from the approved list, provided such Vessel has not already been accepted by

Buyer and scheduled to be employed for a specific voyage. Seller shall have the

right, subject to Buyer's acceptance, to nominate a Vessel not included in the

list.

(b) Buyer agrees to accept or reject any Vessel nominated by Seller within two

(2) hours of receipt from Seller of all information requested by Buyer

concerning that Vessel, provided that Buyer receives such information by 4:00

p.m. E.T. on a Business Day.

8.2 INSTRUCTIONS TO VESSEL.

Seller shall instruct all Vessels to comply with Buyer's then current rules and

regulations and all Law at the Discharge Port. Buyer shall provide Seller with

an electronic copy of its rules and regulations and any amendments thereto.

8.3 BERTH AND DISCHARGE PORT CONDITIONS AND COSTS.

Buyer shall provide free of charge, a berth or berths at the Discharge Port

which Vessel can safely reach and leave and at which Vessel can lie and

discharge always afloat. This Agreement is based on Buyer's confirmation that,

at high tide, any Vessel can safely transit to, lie alongside and discharge with

a draught up to and including thirty-six feet and six inches (36'06") salt

water. In the event that the permissible draught is reduced to less than 36'06"

salt water, then any reasonable associated costs, including possible

deadfreight, will be for Buyer's account so long as Seller mitigates its damages

and follows the reasonable recommendations of Buyer. Any reasonable costs

associated with the Supply of the Oil into a port other than the Discharge Port,

or to a berth other than at the Refinery at the Discharge Port, shall, unless

for a reason attributable to the Vessel or Seller, be for the account of the

Buyer.

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<PAGE>

8.4 WAR RISK TO CARGO & VESSEL.

The Seller reserves the right to refuse at any time, without being considered in

breach of this Agreement:

a) to direct any Vessel to undertake or to complete the voyage to the Discharge

Port if such Vessel is required in the performance of this Agreement:

i) to transit or to proceed to or to remain in waters so that the

Vessel concerned would be involved in a breach of any Institute

Warranties (if applicable) or, in the Seller's reasonable opinion,

to risk its safety; or

ii) to transit or to proceed to or to remain in waters where there is

war or terrorist activity (de facto or de jure) or threat thereof.

b) prior to the commencement of loading, to direct any Vessel to undertake the

voyage to the intended Discharge Port if such Vessel is required in the

performance of the terms of this Agreement to transit waters which, in the

Seller's reasonably held opinion, would involve abnormal delay; or

c) to undertake any activity in furtherance of the voyage which in the opinion

of the Vessel's master could place the Vessel, its cargo or crew at risk.

However, at Buyer's request, if Seller agrees to direct a Vessel to undertake or

to complete the voyage as referred to in subsections a), b) or c) above, then

Buyer undertakes to reimburse the Seller, in addition to the price payable under

the Agreement, for costs incurred by the Seller in respect of any additional

insurance (cargo or Vessel) premia and any other sums that the Seller may be

required to pay to the Vessel's owner including but not limited to any sums in

respect of any amounts deductible under such owner's insurance and any other

costs and/or expenses incurred by the Seller.

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<PAGE>

ARTICLE 9

NOMINATION

9.1 NOMINATION WINDOWS.

(a) Buyer shall nominate to Seller a ten (10) day supply window ("BUYER'S SUPPLY

WINDOW") for each Cargo no later than the 1st day of any Month M-1. The first

day of such ten (10) day supply window shall fall between the 15th day of Month

M and the 14th day of Month M+1.

(b) No later than the 20th day of Month M-1, Seller shall nominate to Buyer a

ten (10) day supply window ("SELLER'S SUPPLY WINDOW") with the first day of such

ten (10) day supply window no more than three (3) days earlier and no more than

one (1) day later than the first day of Buyer's Supply Window.

day supply window ("FOUR-DAY SUPPLY WINDOW"), falling wholly within Seller's

Supply Window, no later than twenty (20) days prior to the first day of the

Four-Day Supply Window.

9.2 REQUIRED INFORMATION. At the time of Seller's nomination of the Four-Day

Supply Window, Seller shall provide to Buyer:

(a) the volume of the Cargo, subject to a shipping operational tolerance

of plus or minus five percent (5%);

(b) the name of the Vessel (which must be pre-approved by Buyer);

(d) the Loading Terminal for, and origin of, the Oil.

Seller shall notify Buyer as soon as reasonably possible on a Business Day

should any of the information change, and information that could be considered

time critical will be communicated immediately. In addition, Seller shall update

Buyer on a regular basis of Seller's intended Supply plan. Once the Cargo has

loaded at the Loading Terminal, each Business Day Seller shall provide Buyer

with an updated estimated arrival date and time at the Refinery.

9.3 NOMINATIONS OUTSIDE NORMAL RANGE. Should Seller nominate a Cargo with a

volume outside the range of between five hundred seventy thousand (570,000)

Barrels and six hundred twenty thousand (620,000) Barrels, Buyer shall have the

right to re-nominate a new ten (10) day Supply window for any subsequent Cargo

for which a ten (10) day window has already been nominated, in order to reflect

a change in expected volume on that Cargo. The new window will replace Seller's

Supply Window. Both Parties shall follow the normal nomination procedures

thereafter.

Notwithstanding the above, it is the intent of the Parties (i) to continuously

have sufficient Oil in inventory at Buyer's Refinery to allow Buyer to take

Delivery of the Oil at the rate agreed, (ii) to permit Seller commercially

reasonable flexibility in managing its lifting requirements at the Loading

Terminal, and (iii) that Seller shall not normally Supply two (2) consecutive

Cargoes with fewer than seven (7) days separation.

<PAGE>

ARTICLE 10

PRICE COMPONENTS

The price per Barrel net of S&W for Oil Delivered under this Agreement shall be

computed as the sum of the components: (10.1) pricing element (10.2) quality

differential (10.3) Trigger Adjustment and (10.4) Gross Product Worth

adjustment.

10.1 PRICING ELEMENT.

(a) Volume

(i) Deemed Volumes. The total volume of Oil that will be priced in each

Month shall be deemed. Because volumes will be deemed significantly

earlier than the Oil is Delivered, the Parties acknowledge that actual

Delivered volumes may not exactly match the deemed volumes.

Notwithstanding the foregoing, it is the intent of the Parties that the

volume that is deemed to price in each Month shall be approximately equal

to the volume that is Delivered in each Month, and Buyer agrees to adjust

(from time to time) the rate at which Delivery is taken, so that the rate

of pricing matches the rate of Delivery.

(ii) First Pricing Period. The first pricing period for the Oil to be

Delivered will commence on 1st March 2004, and will continue until the

last day prior to Buyer's Refinery Upgrading Turnaround. Pricing will be

suspended from (and including) the first day, to (and including) the last

day of Buyer's Refinery Upgrading Turnaround. The volume deemed to price

during each Month of this first pricing period will be calculated based on

a daily rate of twenty thousand (20,000) Barrels for all days in that

Month, which are included in such first pricing period, subject to any

adjustments detailed below.

(iii) Second Pricing Period. On the first day following the completion of

Buyer's Refinery Upgrading Turnaround, the second pricing period will

commence and continue until all the Oil to be Delivered under this

Agreement has been priced. The volume that shall be deemed to be priced

during each Month of the second pricing period will be calculated based on

a daily rate of forty-thousand (40,000) Barrels for all day in that Month,

which are included in such second pricing period, subject to any

adjustments detailed below. Should Seller exercise the right not to

increase the rate of Delivery following the turnaround, the volume to be

priced shall be reduced accordingly.

(iv) Changes to Delivery Rate. In cases where Deliveries are suspended as

a result of a situation covered in Articles 7.2 or 7.3, the Parties shall

agree to a modification to the pricing structure. Buyer shall advise

Seller of a reduced Delivery rate resulting from any reduction or

suspension in Deliveries, and the volume of Oil to be priced during that

period will be reduced to match the reduced rate of Delivery. The normal

rate of pricing will be resumed when Buyer's normal rate of Delivery is

resumed.

Notwithstanding the foregoing, there shall be no volume reduction in any

pricing period that has already commenced, unless mutually agreed by the

Parties. Furthermore, the volume that shall price in any Month cannot be

any lower than the volume of Oil that has

<PAGE>

already been triggered in that Month unless the Parties agree otherwise.

Should Buyer request to reduce the volume below the volume that has been

triggered, then this reduction can only occur with Seller's agreement, and

should Seller request to reduce the volume below the volume that has been

triggered, then this reduction can only occur with Buyer's agreement.

Should a situation covered in Article 7.2 or 7.3 above occur that would

lead to a volume reduction in any pricing period that cannot be reduced

for these reasons, then any reduction that cannot occur in the Month for

which Article 7.2 or 7.3 has been invoked shall lead to that reduction

occurring in the following Month.

Should the Parties agree to increase the rate of Delivery of the Oil, they

shall agree to a concomitant increase in the volume to be priced.

(b) Pricing Basis.

All Oil sold under this Agreement shall be priced on one of the following

pricing bases, or a combination of both, at Buyer's election:

(i) ("WTI BASIS") WTI NYMEX Crude Oil First Line Futures

Settlements - to be determined as the average of the daily

NYMEX settlement prices for WTI Crude Oil First Line Futures

for all settlement days in the applicable Month; or

(ii) ("DATED BASIS") Dated (BFO) Platts quotation - to be

determined as the average of the daily mean of the low and

high price quotations for Brent (DTD) assessments for BFO

Cargoes as currently published in Platts Crude Oil Marketwire

("Platts") (or other suitable price marker) for all quotation

days in the applicable Month.

Buyer shall have the option to determine the volume in each Month that

will price on the WTI BASIS and the volume that will price on the DATED

BASIS.

If the relevant Platts index ceases to be published or is not published

for any portion of any period applicable to calculation of a sale price,

or if the Parties mutually agree to cease using the Platts index for

purposes of this Agreement, the Parties shall cooperate in good faith to

select an alternative publication or other reference source that reflects

as nearly as possible the same information as would have been published in

the Platts index. In the event that the Dated BFO component ceases to be

the representative North Sea Benchmark for pricing purposes or ceases to

be quoted in any agreed publication or reference source, then the Parties

shall agree on an alternative North Sea grade and formula for pricing

purposes.

The pricing element shall be determined as the sum of the fraction of the

total volume deemed to price on the WTI BASIS multiplied by the WTI BASIS

price, and the fraction of the total volume deemed to price on the DATED

BASIS multiplied by the DATED BASIS price. The pricing element shall be

calculated to four (4) decimal places.

<PAGE>

10.2 QUALITY DIFFERENTIAL. The quality differential to be applied to all

volumes shall be determined in accordance with the following:

(a) For the first ***** Barrels, *****

(b) For the next ***** Barrels, ***** *****and

10.3 TRIGGER ADJUSTMENT. The Trigger Adjustment to be applied for all volume

deemed to price in Month M shall be determined according to the difference in

market value between:

(i) Dated BFO for Month M-1, and

(ii) the pricing basis for Month M, as defined in Article 10.1(b).

When Buyer triggers all or part of the volume of the Oil for each Month,

it shall invoke the procedures described in Appendix III to determine the

Trigger Adjustment for that volume. The objective of Appendix III is to

give Buyer a fair and market related mechanism to determine the Trigger

Adjustment, and to define clear practical procedures to effect the

conversion and make the necessary price adjustments.

10.4 GPW AND QUALITY ESCALATORS. An adjustment will be made to the price of

***** to reflect the changes in quality from time to time of the ***** that is

being Supplied using the procedures in Appendix I. The adjustment will be

calculated in the form of a per Barrel differential, which shall be applied to

the price of ***** as calculated in this Article 10 and shall apply for all

***** Supplied under this Agreement.

10.5 MARGIN SHARING AGREEMENTS. Buyer and Seller shall make best efforts to

agree in good faith during 2004 on a margin sharing arrangement based on the

following principles:

(a) Seller will provide an additional discount of ***** per Barrel for

any volume on which margin is to be shared.

(b) Margin sharing will occur above a benchmark likely based on

historical average refining margins. The difference between the

actual margin and that benchmark will be subject to profit sharing

when the actual margin is higher than the benchmark.

audited refinery margin, or a margin constructed from published

prices to closely simulate Buyer's actual margin.

There shall be no margin sharing arrangements under this Agreement absent the

mutual agreement of the Parties.

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***** Confidential treatment requested. Confidential information redacted.

<PAGE>

ARTICLE 11

PAYMENT

Payment for Oil Delivered under this Agreement shall be made in full, without

discount, deduction, withholding, set-off or counterclaim upon presentation of

Seller's commercial invoice, on or before the payment due date pursuant to the

provisions in Article 11.1.

11.1 PAYMENT TERMS. Payment shall be made in US Dollars by wire transfer of

immediately available funds (same day funds) into Seller's designated bank

account on the next Business Day after receipt of Seller's invoice and

supporting documentation, delivered by facsimile, electronic mail or U.S. mail.

11.2 INVOICING. Buyer shall provide to Seller an EWQ in the format set forth in

Appendix V, Section (A) no later than 12:00 p.m. ET on the Thursday or the first

Business Day after the EWQ is determined. The EWQ shall include any necessary

volume adjustment for over or under billed volumes from a previous period, as

described in Article 11.3. Seller shall invoice Buyer for the EWQ as soon as

possible after receipt. Seller's invoice also shall include any payment

adjustment resulting from a true-up between provisional prices and actual prices

pursuant to Article 11.4.

11.3 DETERMINATION OF ESTIMATED WEEKLY QUANTITY AND RESULTING INVOICE.

(a) The EWQ will be the approximate quantity Delivered between midnight

Wednesday and midnight on the previous Wednesday, as estimated by Buyer. The

estimate shall be determined using the pumphouse computer automatic tankdip

readings at midnight for each tank in the Crude Field and the Daily Charge

Tanks, and Buyer's estimate of the percentage of Oil in each tank that is owned

by Seller. In addition, Buyer shall establish a part-EWQ for the period between

midnight on the last day of the Month and midnight on the immediately previous

Wednesday.

(b) The sum of all EWQ's for a Month (including any part-EWQ's for shorter

periods at the beginning or end of such Month) shall be compared with the actual

quantity Delivered during such Month as determined pursuant to Article 12.1(c),

and the volume difference will be established.

adjusted in accordance with any such volume difference. However, if the first

payment due date for Month M+1 occurs within three (3) Business Days of the

beginning of such Month, then the volume adjustment shall be made to the volume

for payment on the second payment due date of such Month.

(d) Should the sum of all EWQ's (including all part-EWQ's) be greater than the

total quantity Delivered, then the volume due for payment on the appropriate

payment due date, shall be red

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