Instructions to Vendor

1. Vendor shall comply with BPMIGAS Procedure Guidelines No. 007-REVISI-1/PTK/IX/2009 dated September 4, 2009 concerning Supply Chain Management for the Cooperation Agreement Contractor (the “PTK”) and all other prevailing regulations of BPMIGAS.

Vendor shall comply with the content of the procurement document such as all guidelines stated in the Request for Quotation (the “RFQ”), Instruction to Vendor (the “ITV”), Vendor Quotation Sheet (the “VQS”) and Purchase Order Terms and Conditions (the “TNC”).

2. Vendor is allowed to offer partially or entirely item(s) of the Goods in the VQS. However, vendor is not allowed to offer partial quantity item of the Goods.

3. Referring to VQS footnote, CNOOC SES Ltd. has the right to award partial item. CNOOC SES Ltd. also has the right at its sole discretion to cancel the quotation entirely or reject any quotation without any obligation or compensation or indemnification to any vendor.

4. a) Vendor shall fill-in VQS footnote as follows:
i. Delivery time
ii. Delivery point
iii. Validity of quotation
iv. Principal name, address, telephone and facsimile (if any)
b) Vendor must type partial item in VQS footnote.

5. If the total quotation price more than US$50,000 or Rp. 500,000,000.-, each vendor must attach in its VQS as mandatory submission of original Bid Bond issued by a Public Bank in Indonesia by giving priority to National Public Bank or Insurance Company as regulated by the Indonesian Government with the following requirements:

• Amounting 1% or above of the offered price.
•
• Bid Bond validity following quotation validity as stated in RFQ.
•
• Attached with statement letter of legality of the vendor’s bid bond affixed with a Rp.6.000,- stamp duty and signed by the authorized person in vendor company.

• Bid Bond will be encashed if vendor withdraws after submitting its quotation.

• Bid Bond will be promptly returned to unsuccessful vendors after the successful vendor award.

• National Public Bank concerned must state that the Bid Bond can be cashed-in immediately subject to Article 1832 of Indonesian Civil Code and deviating Article 1831 of Indonesian Civil Code.

• the Bid Bond must be a guarantee policy in the form of:
i. bid bond; or
ii. counter bank guarantee i.e. bid bond issued by Public Bank based upon liability insurance guarantee issued by an insurance company.

• to include a requirement that bid bond can be cashed-in or cancelled only if original bond is submitted.

• The Bid Bond must be guaranteed its originality under a certificate issued an insurance company concerned.

• Bidder’s name in the Bid Bond must be similar to company name included into the bidder’s bid proposal.

• The Bid Bond amount must include numerals and words. Amount in numerals must be similar as stated in words.
• CNOOC SES Ltd. name must be included into the Bid Bond.

• Title and number of procurement document included into the Bid Bond must be similar with title and number of procurement document.

Bid Bond issued by insurance company is acceptable by fulfilling the following criterion:
i. Demonstrating a surety bond and reinsurance programs under a bonafide insurance company outside Indonesia.
ii. Issuing a statement declaring their capability to pay the claim as stated in the Bid Bond.
iii. Providing a clause of Unconditional Bond on its Bid Bond.

6. Currency: United States Dollar or Indonesian Rupiah.

7. Unit price must include all freight, handling, packing, re-packing costs, customs, if any; except otherwise clearly specified by CNOOC SES Ltd.

8. Price offered should exclude Value Added Tax.

9. Vendor must include the clear price in numerals and words into the VQS. The amount in numerals must be equal to the amount in words. If there is a distinction between numerals and words, the valid price will be subject to the vendor’s quotation breakdown. However, if there is no such breakdown, the value of say in words will be valid.

10. In submitting a quotation, vendor is requested to state local content level (LCL) in its quotation proposal, in the form of an original statement letter that shall be the attachment of the ITV and signed by a duly stamp duty and authorized person for and on behalf of vendor in accordance with the Articles of Association and its amendment (if any), or duly authorized person.
Vendor is also requested to state the percentage of LCL of Goods offered by filling-in, affixing a duly stamp duty and signing by authorized person for and on behalf of vendor in accordance with the Articles of Association and its amendment (if any), or duly authorized person as per enclosed form. Vendor shall be responsible for the correctness of the amount stated in LCL form and its calculation.
Vendor is basically obliged to utilize the result of local production and competence in maximum effort by providing program of domestic production and competence utilization as part of its quotation. Minimum percentage requirement of LCL that must be fulfilled by vendor shall be therefore 25%.

In the event vendor offers goods with LCL equal to or more than 25%, it is therefore evidenced with:
a. TKDN Certificate issued by an agency specializing in industry or
b. Had been included into Inventory List of Goods Domestically Produced issued by an agency specializing in industry or
c. Had been included into Goods List of Used Mandatory Domestically Produced issued by BPMIGAS.
If vendor offers goods with LCL less than 25%, it is therefore evidenced with a statement letter of manufacture location, LCL statement and nature of goods manufacture component originating from domestic.
In case vendor does not enclose or show the above evidences/LCL statement, therefore statement LCL in its quotation shall not be considered in quotation evaluation.
Statement letter and detailed LCL must show the same percentage and will be part of ITV. In case of misplaced such statement letter and detailed LCL into the related envelope, it will cause disqualification of vendor’s quotation.

The related forms of LCL calculation are available in attachments of the ITV i.e. T-1 & C-1 for goods. Vendor is fully responsible for the correctness of LCL value statement content.

Price Preference Based-on LCL - In evaluating and selecting vendor, CNOOC will give priority vendors offering local product, by evaluating based on LCL and by calculating price preference based on statement LCL in its quotation. Price preference will be given if LCL statement for goods reaches minimum twenty five (25%).

Price preference is used as one of comparison tool of the proposed price at price evaluation stage for proposal that has fulfilled administrative and technical requirements.

Detail explanation concerning price preference is available on Item 8 Book 2 Chapter III of PTK.

Vendor, who can not fulfill LCL statement as agreed in the quotation, will be applied with administrative and financial sanctions as set forth in Item 5 Book 2 Chapter XIII of PTK.

11. A Rp.6.000,- stamp duty must be affixed to vendor sealed quotation which must be signed by the authorized person in accordance with the Articles of Association and its amendment (if any), or duly authorized person.

12. The award of the successful vendor shall be evaluated based on lowest quoted price upon its compliance of administrative and technical requirements.

13. Should it be awarded as the successful vendor and prior to collecting and signing the Purchase Order (“PO”) for the price more than US$50,000, the successful vendor must submit an original Performance Bond issued by a preferably National Public Bank in Indonesia as regulated by the Indonesian Government. The Performance Bond amount is equal to five percent (5%) of the PO price in the same currency, which is valid as of the facsimile of intent date until ninety (90) days upon the promised delivery date of the Goods.

The validity of the Performance Bond shall be the same as guarantee period, including verification period of Local Content Level achievement, added with at least one (1) month.

National Public Bank concerned must state that the Performance Bond can be cashed-in immediately subject to Article 1832 of Indonesian Civil Code and deviating Article 1831 of Indonesian Civil Code.

CNOOC SES Ltd. name must be included into the Performance Bond as receiving party.

The Performance Bond amount must include numerals and words. Amount in numerals must be similar as stated in words.

The successful vendor must submit a statement letter assuring the Performance Bond originality that is signed by a duly authorized person for and on behalf of vendor in accordance with the Articles of Association and its amendment (if any), or duly authorized representative.

The successful vendor's Bid Bond will be returned when the Performance Bond is furnished and received by CNOOC SES Ltd.
If there is a distinction or improperly towards the above condition, then the Performance Bond must be exchanged with the correct one and/or completed with the required document.

After Supplier has delivered the Goods and agreed verification of LCL statement, the Performance Bond can be taken by Supplier.

14. If the successful vendor fails to collect the PO or withdraws or vendor is unwilling to be appointed to for any reason or vendor cannot fulfill the CNOOC requirements after award notification, vendor Performance Bond and/or Bid Bond and the different amount (from total amount of Performance Bond) will be invoiced to Supplier, if any, and such vendor will be subject to the sanction as per PTK.
15. The PO must be signed by authorized person who signed the quotation as stated in item 10, or a representative appointed to sign the PO based on a Power of Attorney that must be submitted in writing along with the collecting of the PO.

The submitted Bid proposal must be in both the Indonesian and English languages side by side like these instructions. If vendor furnishes Bid Bond and Performance Bond in both Indonesian and English texts, the Indonesian text shall prevail.

16. CNOOC SES Ltd. and Supplier that are binding in a PO shall have a bank account of Public Bank owned by State/Local Government in the Republic of Indonesia territory. Payment due to Supplier will be made by CNOOC SES Ltd. through such of bank account.

17. If CNOOC SES Ltd. requires conducting pre-bid meeting to clarify the procurement document and process including the scope of work etc., vendors shall attend such meeting.

18. Terms such as “EX-STOCK SUBJECT TO PRIOR SALE” are not valid.

19. Failure to comply with the items no. 1, 2, 4, 5, 6, 7, 8, 9, 10, 11, 13 and 17, will cause the disqualification of the vendor’s quotation.