TERMS OF REFERENCE1

REQUEST FOR PROPOSALS NEW GAS SALES AGREEMENT: REGASIFICATION CAPACITY AND NATURAL GAS SUPPLY

GNL CHILE S.A. November 12, 2014

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Version without Exhibits and Schedules. A complete version is available for purchase.

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TERMS OF REFERENCE Table of Contents 1.

2.

3.

4.

1.1 1.2 1.3 1.4 1.5 1.6 1.7

INTRODUCTION. ...................................................................................................................... 1

Background. .......................................................................................................................................1 Brief overview and history of GNLC. ..........................................................................................2 Brief description of GNLC’s system of contracting. ..............................................................3 Conditions precedent to each New GSA. ...................................................................................4 Summary of charges under New GSAs. .....................................................................................5 New Gas Buyer’s special right to terminate the New GSA. .................................................6 Guarantees to be delivered by Proponent...............................................................................6

THE RFP PROCESS. .................................................................................................................. 7

2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 3.1 3.2 3.3 4.1 4.2 4.3 4.4 4.5

Overview. .............................................................................................................................................7 Proposals. ............................................................................................................................................8 General Information. .......................................................................................................................8 Detailed Proposal. ......................................................................................................................... 11 Validity of Proposal and Proposal Bond. .............................................................................. 11 Form of submission of the Proposals. .................................................................................... 11 Notices. .............................................................................................................................................. 12 Complementary Instructions. ................................................................................................... 13 Inquiries and clarifications........................................................................................................ 13 Stages of the RFP Process. ...................................................................................................... 14

CLOSING. ..................................................................................................................................16

Closing. .............................................................................................................................................. 16 Place of Closing. .............................................................................................................................. 16 Actions to occur at Closing. ........................................................................................................ 16

FURTHER ACKNOWLEDGMENTS BY THE PROPONENTS. ..........................................16

No guarantee of return. ............................................................................................................... 16 No right of reimbursement. ....................................................................................................... 17 GNLC’s rights. .................................................................................................................................. 17 GNLC’s liabilities. ........................................................................................................................... 17 Confidentiality. ............................................................................................................................... 17

5.

TIMETABLE OF ACTIVITIES. ...............................................................................................18

6.

MISCELLANEOUS. ..................................................................................................................18

6.1 6.2 6.3 6.4 6.5 6.6 6.7

Acceptance of the RFP Documents. ......................................................................................... 18 Governing law. ................................................................................................................................ 18 Cost of participation in RFP Process. ...................................................................................... 18 Return of Proposal Bonds........................................................................................................... 18 Currency. .......................................................................................................................................... 19 Language. .......................................................................................................................................... 19 Entire RFP Documents. ................................................................................................................ 19

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TERMS OF REFERENCE

All capitalized terms not expressly defined in this document have the meanings assigned to them in Exhibit A. 1.

INTRODUCTION.

1.1

Background.

GNL Chile S.A. (“GNLC”) is proposing to undertake a project (the “2nd Expansion Project”) requesting the expansion of the Quintero Regasification Terminal, increasing available capacity for the regasification of liquefied natural gas (“LNG”) and allowing GNLC to sell additional volumes of natural gas (“Expansion Quantities”). The 2nd Expansion Project considers the construction of a third large LNG storage tank in the Quintero Regasification Terminal and an additional regasification train that would increase the send-out capacity of the Quintero Regasification Terminal, which comprise an additional capacity of approximately 179,450 MMBtu/day, and an estimated investment of USD 250 - 300 million. According to the information provided by GNL Quintero S.A., the estimated time of construction is 3 to 4 years from the final investment decision (“FID”), after the required environmental and regulatory permits are obtained. This 2nd Expansion Project is in addition to the first expansion project of the Quintero Regasification Terminal (the “1st Expansion Project”), currently under construction, which will increase the existing capacity from 358,900 MMBtu/day to approximately 538,350 MMBtu/day and is expected to be placed in service on or around the first quarter of 2015. The existing capacity and the capacity under construction are fully contracted. Thus GNLC is offering to the market a capacity of 3.2 MMm3/d (118,097 MMBtu/d) from the 2nd Expansion Project to be available and contracted by any Person (other than the existing Gas Buyers) that participates in this RFP Process (“Available Expansion Capacity”). The Available Expansion Capacity is not subject to any preferential rights for the Gas Buyers during this RFP Process. GNLC has therefore decided to initiate a public and international process seeking proposals (“Proposals”) for the entry into a new Gas Sale Agreement (“New GSA”) with GNLC as provided in these Terms of Reference (“ToR”), such agreement to come into force once all of the Conditions Precedent to such New GSAs, as set out in these ToR, have been satisfied. Persons that have executed a Confidentiality Agreement and purchased these ToR shall have the right to participate in the RFP Process and to submit Proposals on the terms set out in these ToR. The main terms and conditions under which gas may be sold to New Gas Buyers are outlined in these ToR.

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1.2

Brief overview and history of GNLC.

GNLC is a marketing company that sells natural gas to its Gas Buyers in accordance with their daily requests pursuant to an annual program. In order to meet these requests, GNLC is responsible for the purchase of LNG necessary to comply with the Gas Buyers’ annual program. The purchases of LNG are programmed by GNLC with the LNG Suppliers through an annual delivery program which is developed in a process that commences 135 days before the beginning of the contract year in which the relevant deliveries are to be made, and is to be agreed at least 30 days before the beginning of the same contract year. Subject to certain conditions, the annual delivery program may subsequently be revised. Such LNG is delivered to, stored and regasified at the Quintero Regasification Terminal and delivered as natural gas at the Delivery Point. GNLC is owned by ENAP, Endesa, and Metrogas (1/3 each). GNLC’s business model provides operational optimization to its clients, non-discriminatory rights, operation procedures and open access to new clients and cost-efficient use of the storage facilities. GNLC also acts as a demand aggregator, improving commercial conditions of LNG purchasing. The origins of GNLC goes back to 2004, when the Government of Chile launched a public invitation to all large scale natural gas consumers in the central region, under the leadership of ENAP, to take part in the development of the Quintero LNG Terminal. In response to that call, Endesa, Metrogas, Colbún and AES Gener expressed their interest in becoming sponsors of the project and together with ENAP in 2005 these companies incorporated GNL Chile S.A. (formerly called “Gestora del Proyecto GNL S.A.). In 2006, some of those companies opted to withdraw from the project leaving ENAP, Endesa and Metrogas as the sponsors of the project (together with BG). These three companies made the decision to carry on with the project and contract the supply of LNG (through long term contracts) with BG LNG Trading, LLC, an international leader in the LNG market. Following a period of fast-track operation, in 2011 the Quintero LNG Terminal achieved its commercial operation date, with a sendout capacity of approximately 358,900 MMBtu/day. Also, in 2011 GNLC launched an open season or request for proposal process, offering an available capacity of 2.7 MMm3/d (99,644 MMBtu/d) from the 1st Expansion Project. Said process involved a public and international invitation and was based on best market practices, enabling any person to enter into a New GSA with GNLC. The process drew significant market attention from local and international players, but it concluded with no binding offers from proponents. Given that the capacity from the 1st Expansion Project has been fully contracted by current customers, GNLC is now considering a second expansion of the Quintero LNG Terminal. Therefore, GNLC has decided to launch a second RFP Process process under the terms outlined in these ToR. 2

1.3

Brief description of GNLC’s system of contracting.

The contractual system under which GNLC operates and delivers its services to the Gas Buyers is set out below. Gas Buyer #1 LNG Supplier #1 Gas Buyer #2 LNG Supplier #2

GNL Chile Gas Buyer #3

LNG Supplier #N

1.3.1

To date: - Enap Refinerías - Endesa - Metrogas

Quintero Regasification Terminal

- SPA: LNG Supply Agreement - GSA: Gas Sales Agreement

Gas Buyer #M

Gas Sales Agreement (“GSA”) GNLC is a marketing company. Currently GNLC has three gas buyers and each of them has subscribed a long term GSA with GNLC. The GSAs govern the supply of natural gas to the Gas Buyers. Each month, each Gas Buyer pays GNLC for the supply of natural gas and associated terminal and marketing services. The payment of natural gas is passed through to the LNG Suppliers, pursuant to the relevant LNG Supply Contract. GNLC offers to all New Gas Buyers who enter into a New GSA in this RFP Process the same preferential rights that the current Gas Buyers have on available capacity resulting from the 2nd Expansion Project or any future expansion of the Regasification Terminal, in accordance with the terms set forth in the New GSA. Such rights will be effective as of the COD of the 2nd Expansion Project.

1.3.2

LNG Supply Contracts In order to supply the gas requirements of New Gas Buyers, GNLC, at the request of the New Gas Buyer will enter into one or more new LNG Supply Contract(s) with one or more LNG Suppliers agreed with the New Gas Buyer and at commercial terms agreed by the latter. The term of such LNG Supply Contract may be equivalent or shorter than the term of the New GSA. Programming of delivery of LNG under the LNG Supply Contracts is coordinated by GNLC pursuant to annual delivery programs, governed by provisions in those agreements and the GSAs, in order to satisfy the Gas Buyers’ gas delivery annual programs.

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Gas Buyers and New Gas Buyers may at any time present to GNLC a new LNG Supply Agreement for the purposes of supplying such Gas Buyer that satisfies the conditions of Schedule 1.3.2. LNG purchased by GNLC under the LNG Supply Contracts is delivered, stored and regasified at the Quintero Regasification Terminal. 1.3.3

Other Agreements and Guarantees Each Gas Buyer is also required to:

1.3.4

(a)

be Investment Grade; and if it is not Investment Grade, provide a parent guarantee from an Investment Grade entity to secure the Gas Buyer’s obligations under the relevant GSA;

(b)

provide any additional credit support required under the relevant GSA, including corporate guarantees, prepayments, deposits, letters of credit, pledges of collateral, or otherwise, in respect of the Gas Buyer’s share of GNLC’s credit support obligations under the relevant LNG Supply Contract (such relative responsibility of the Gas Buyer as compared to other Gas Buyers being specified in the GSA schedules);

(c)

provide any consent required for the pledging or assignment required by GNLC (and to Lenders, if required in any finance agreement to which GNL Quintero S.A. is a party), of payments or security (including letters of credit and guarantees) made by the Gas Buyer to GNLC in relation to Terminal Costs Charges; and

(d)

provide any consent required for the pledging or assignment by GNLC to the LNG Supplier of payments or security (including letters of credit and guarantees) made by the Gas Buyer to GNLC in relation to Hydrocarbon Charges.

Summary of Agreements A more detailed summary of the New GSAs is provided in EXHIBIT B.

1.4

Conditions precedent to each New GSA.

Each New GSA entered into with an Awarded Proponent will be subject to the following Conditions Precedent: (a)

Receipt of all the regulatory and environmental permits required in order to implement the 2nd Expansion Project.

(b)

The operator of the Quintero Regasification Terminal obtains sufficient financing for the development, construction, testing and commissioning of the 2nd Expansion Project.

(c)

GNL Quintero S.A. issues the FID for the 2nd Expansion Project.

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(d)

Approval by the board of GNLC of the request to undertake the 2nd Expansion Project, which will be granted if the New Gas Buyer (i) is Investment Grade and (ii) agrees to enter into a New GSA based on the template provided by GNLC. In all other cases it will be decided based on the credit rating profile of the Proponent and the conditions requested at the negotiation, on an arm length basis.

(e)

Approval by the Lenders of the creditworthiness of the Awarded Proponent (if required in any finance agreement to which GNL Quintero S.A. is a party).

(f)

The Awarded Proponent entering into all agreements and executing all the guarantees required and related documents as provided for in these ToR, and in particular, the Awarded Proponent shall provide any credit support required by the entities which will provide financing for the 2nd Expansion Project.

(g)

GNLC will program New Gas Buyer gas demand only after GNLC has executed one or more valid LNG Supply Contracts requested by the New Gas Buyer, but not prior to the contract year in which the first LNG cargo under such LNG Supply Contract has been programed (provided that they meet the conditions required under current contracts, such as compatibility, assumption of liabilities, etc.), on its behalf, in respect of the quantities required under the New Gas Buyer’s New GSA and the 2nd Expansion Project COD has occurred.

The 2nd Expansion Project will proceed to FID only to the extent that New GSAs are executed with New Gas Buyers as a result of this RFP Process and the Conditions Precedent are satisfied. GNLC estimates that the FID would not take place prior to May 18, 2016. 1.5

Summary of charges under New GSAs.

Gas Buyers under New GSAs will be charged for the Terminal Cost Charge, the Hydrocarbon Charge (commodity payment) and Marketing Services Charge, plus the corresponding taxes, as defined in the relevant GSA. Further details regarding these charges are provided in EXHIBIT B. The Terminal Cost Charge will be confirmed once the 2nd Expansion Project is completed, and will depend on the roll-in of the total investment on the Quintero Regasification Terminal (including the 1st Expansion Project and 2nd Expansion Project). Nonetheless, Exhibit B Part II.2 provides examples of Terminal Cost Charge for several cases. The roll-in mechanism will apply only to the extent that the Terminal Cost Charge charged by GNLC (prior to the 2nd Expansion Project) to each of the Gas Buyers would not be increased as a result of undertaking the 2nd Expansion Project. Any such increase shall be borne by the New Gas Buyers as specified in Exhibit B Part II of these ToR. GNLC will give New Gas Buyer notice of any update or information as it becomes available regarding the Estimated 2nd Expansion Project Costs, Estimated Terminal Cost Charge and Estimated COD for the 2nd Expansion Project. Any such information will not be binding or final and will be provided without liability whatsoever to GNLC.

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1.6

New Gas Buyer’s special right to terminate the New GSA.

Any New Gas Buyer will be entitled to revoke its Award Acceptance and terminate the New GSA (if executed) by notice to GNLC at any time before the later of May 18th, 2016, or 15 days after the FID (such FID to be conditioned upon no New Gas Buyers exercise its rights under this paragraph). In order to grant the above right, after relevant corporate approvals have been obtained by GNLC, GNLC shall notify the FID to all Awarded Proponents and GSA holders, notified at the registered offices (in such documents) of such parties, after its approval by the relevant corporate authorities of GNLC, including the Estimated 2nd Expansion Project Costs, Estimated Terminal Cost Charge and Estimated COD as of the FID. Each Awarded Proponent shall be entitled at its cost and subject to reasonable notice, to audit the documents related to the FID (available to GNLC) in order to determine the accuracy of the calculation of the Estimated 2nd Expansion Project Costs and the Estimated Terminal Cost Charge. If one of the Awarded Proponent(s) exercises its rights under this paragraph 1.6, GNLC shall inform such circumstance to the other Awarded Proponents, if any. In such case, GNLC will grant an extension of 5 days to the other Awarded Proponents in order to exercise its termination rights. The New Gas Buyer that exercises its right to revoke its Award Acceptance and terminate the New GSA (if executed) shall bear all costs and expenses incurred and committed (if not already incurred) by GNLC after the Award Acceptance up until the date in which the New Gas Buyer exercises the termination right contained in this Section 1.6, in relation to the development of the 2nd Expansion Project, including but not limited to costs and expenditures related to basic and/or detailed engineering, EPC contract (including any penalty), permits and approvals, environmental assessment (the “Project Development Costs”). For the avoidance of doubt, the Project Development Costs shall not include any cost or expenditure committed after the FID. If more than one New Gas Buyer exercises its rights under this section 1.6, GNLC shall allocate the Project Development Costs among all New Gas Buyers that exercised their termination rights, pro rata based on the allocated firm sendout capacity of such New Gas Buyer. Nonetheless, GNLC shall not pass on Project Development Costs to any New Gas Buyer that has exercised this right under 1.6, if at least one New Gas Buyer has decided to carry on with the 2nd Expansion Project after this exit right has expired. If the New Gas Buyer elects not to exercise the right granted by this Section (within the term above said), then as party of a New GSA it shall be liable for any obligation provided therein, including but not limited to the full payment of the Terminal Cost Charge (as confirmed by GNLC once the 2nd Expansion Project is completed), without prejudice of whether any deviation from the Estimated 2nd Expansion Project Costs, Estimated Terminal Cost Charge and/or the Estimated COD has/have occurred. 1.7

Guarantees to be delivered by Proponent

Any Participant who desires to submit a Proposal shall provide the following guarantees as part of the RFP Process:

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1.7.1. Proposal Bond A Proponent that issues a Proposal must provide (together with the Proposal) a Proposal Bond using FORM C - PROPOSAL BOND, in accordance with 2.3.4 of the ToR. 1.7.2. Award Acceptance Bond An Offered Proponent that issues an Award Acceptance must provide (together with the Award Acceptance) an Award Acceptance Bond using FORM K - AWARD ACCEPTANCE BOND, in accordance with Section 2.10.2(f)(II). 1.7.3. Construction Bond The New Gas Buyer, who is a party to the New GSA following the FID notice under Section 1.6, must provide a Construction Bond using FORM K - AWARD ACCEPTANCE BOND, in accordance with SCHEDULE 2.10.2(f)(ii) – AWARD ACCEPTANCE BOND. Such Bond shall be provided on or before twenty (20) days following the FID notice provided by GNLC. If more than one New Gas Buyer must provide a Construction Bond, the amount of such Bond for each New Gas Buyer will be determined by GNLC pro rata based on the firm sendout capacity allocated to each New Gas Buyer. 1.7.4. Payment Bond The New Gas Buyer must provide a Payment Bond using FORM M - FORM K - AWARD ACCEPTANCE BOND, in accordance with SCHEDULE 2.10.2(f)(ii) – AWARD ACCEPTANCE BOND. Such Bond shall be provided on or before five (5) days after the COD of the 2nd Expansion Project (as informed by Seller). If more than one New Gas Buyer must provide a Payment Bond, the amount of such Bond for each New Gas Buyer will be determined by GNLC pro rata based on the firm sendout capacity allocated to each New Gas Buyer. Any guarantees under this Section 1.7 shall be provided in addition to any credit support required by the entities that will provide financing for the 2nd Expansion Project. 2.

THE RFP PROCESS.

2.1

Overview.

Through this RFP Process, GNLC intends to make an Award to one or more Proponents, based on the criteria set out in Section 2.10.2 of these ToR. The RFP Process shall consist of two stages. In the first stage, which will begin with the announcement of the RFP Process, Participants will analyze the ToR and submit to GNLC all

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the questions they could have and their non-binding Proposals, on the terms and in accordance with the information provided in these RFP Documents. In the second stage, GNLC will make an Award Offer or Award Offers, and the Offered Proponent(s) will, should they elect to do so, issue their binding Award Acceptance in respect of the relevant Award Offer. Participants are invited to submit a Requested Capacity Proposal for any of the following terms: (i) 10-year term (“Ten Year Purchase Proposal”), (ii) 15-year term (“Fifteen Year Purchase Proposal”) or (iii) 20-year term (“Twenty Year Purchase Proposal”). 20-year term is the regular term for the GSAs with GNLC, while 10-year and 15-year terms are terms specially offered by GNLC for the New GSAs subscribed under this RFP Process. Participants will be required to specify in the Requested Capacity Proposal the Requested Capacity (together with the Participant’s Minimum Requested Capacity) sought to be made available under a New GSA. The minimum Requested Capacity (for Ten Year Purchase Proposals, Fifteen Year Purchase Proposals and Twenty Year Purchase Proposals) is 0.6 MMm3/d (22,143 MMBtu/d). This RFP Process does not comprise the offer of capacity or any rights related to the truck loading facilities at the Quintero Regasification Terminal (export LNG capacity). Prior to submitting their Proposals, Participants will have the opportunity to submit inquiries regarding these ToR and review the information provided about GNLC, Quintero Regasification Terminal and the 2nd Expansion Project. All Participants will be provided with access to the New GSA and related documents, in a data room or virtual data room to be organized by GNLC. GNLC will be able to assist Participants in understanding the LNG market and facilitate the negotiation of prospects of LNG Supply Contracts with any LNG Supplier. 2.2

Proposals.

Participants will be entitled to submit a Proposal in accordance with the requirements of this Section 2. Each Proposal must contain the General Information and the Detailed Proposal, the required contents of which are set out in 2.3 and 2.4 below. 2.3

General Information.

In the General Information, by using the forms listed below, the Proponent and each member of a Consortium, if applicable, shall deliver the information and documents described below (duly separated and labelled for purposes of easy location and review). 2.3.1

Power of Attorney. A certified copy of the power of attorney executed in Spanish before a Notary Public, appointing its Representative(s) and granting them sufficient authority to act on the

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Proponent’s behalf throughout the RFP Process, substantially in the form enclosed as Schedule 2.3.1. The Representative(s) will be the only persons entitled to represent the Proponent before GNLC. The Representative(s) may be replaced or removed at any time by the Proponent, effective upon delivery to GNLC of a power of attorney granted to such new Representative(s) pursuant to this Section 2.3.1. Such new Representative(s) must be vested with the same authority as that of the replaced Representative(s). 2.3.2

Legal background of Proponent. (a)

Using FORM A-1 - IDENTIFICATION OF THE PROPONENT, identification of Proponent and its Representative(s).

(b)

Using FORM A-2a - LEGAL INFORMATION OF PROPONENT (CHILEAN PROPONENTS) or FORM A-2b - LEGAL INFORMATION OF PROPONENT (FOREIGN PROPONENTS) (as applicable), (i)

in the case of a foreign Proponent: copy of its by-laws, articles of association, or equivalent organizational documents, and certificate of good standing issued within forty five (45) Days prior to the date of submission. All such documents shall be legalized in accordance with article 345 of the Chilean Code of Civil Procedure; and

(ii)

in the case of a Chilean Proponent: copy certified by a Notary Public of: (A) the public deeds containing its by-laws and all amendments thereto, and (B) their registrations and publications, and certificate of good standing issued by the relevant Registry of Commerce within twenty (20) Days prior to the date of submission.

(c)

Using FORM A-3 - COMMITMENT, a sworn statement issued by the Representative of the Proponent containing the Proponent’s irrevocable commitment that, if it issues an Award Acceptance, it will enter into the relevant GSA in accordance with these ToR.

(d)

Using FORM A-4 - LEGAL OPINION, a legal opinion issued by a qualified attorney in the jurisdiction of incorporation of the Proponent. The terms of the legal opinion shall be informed by GNLC by means of a Complementary Instruction.

(e)

Using FORM A-5 - CORPORATE AUTHORIZATION, documentation certified by a Chilean or foreign notary public, as applicable (and in the case of foreign Proponents legalized in accordance with article 345 of the Chilean Code of Civil Procedure) evidencing the corporate authorizations of the Proponent to: (i)

participate in the RFP Process; and

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(ii)

perform its obligations under the RFP Documents and the Proposal Documents.

In the case of a Consortium, the documentation mentioned in the preceding paragraphs shall refer to each of its members. (f)

2.3.3

Using FORM A-6 - CONSORTIUM INCORPORATION COMMITMENT, an executed copy of the Consortium’s agreement, if applicable.

ToR purchase invoice. Using FORM B - COPY OF PURCHASE INVOICE, a copy of the invoice evidencing the purchase of the ToR by the Proponent, a Consortium member, or an Affiliate thereof; in the latter case, evidence of the corresponding relationship with the Proponent shall also be provided.

2.3.4

Proposal Bond. Using FORM C - PROPOSAL BOND, the Proposal Bond issued in accordance with Schedule 2.3.4.

2.3.5

Certification of net worth, creditworthiness and financing. In order to demonstrate adequate capacity to finance their obligations, Proponents must submit, using FORM D - FINANCIAL INFORMATION:

2.3.6

(a)

current credit rating reports, if available, and financial statements for the three most recent accounting years, duly audited by international auditing firms, with information on statement of financial position, income statements and cash flow statements; and

(b)

a summary of the main items of the statement of financial position and income statement accounts submitted under paragraph (a) above.

Proposal Undertakings. Using FORM G - PROPOSAL UNDERTAKINGS, the Proposal Undertakings, substantially in the form set out in SCHEDULE 2.3.6 - PROPOSAL UNDERTAKINGS

2.3.7

Acceptance of the RFP Documents and Proponent’s commitment. Using FORM H - ACCEPTANCE OF RFP DOCUMENTS, the acceptance of the RFP Process, the Confidentiality Agreement and all the RFP Documents and Proponent’s commitment, substantially in the form set out in SCHEDULE 2.3.7 - STATEMENT OF CONFORMITY WITH RFP PROCESS. 10

2.4

Detailed Proposal.

Using FORM I - the Proponent must submit its Detailed Proposal, which must contain:

2.5

(a)

reference to whether the Detailed Proposal is a Ten Year Purchase Proposal, Fifteen Year Purchase Proposal or Twenty Year Purchase Proposal; and

(b)

the Requested Capacity (in MMBtu/d) and Minimum Requested Capacity (in MMBtu/d).

Validity of Proposal and Proposal Bond.

Each Proposal and its corresponding Proposal Bond shall remain in effect for two hundred and forty (240) Days following the Proposal Submission Date. 2.6

Form of submission of the Proposals. (a)

All Proposals shall be submitted to GNLC on the Proposal Submission Date and shall comprise the following packages of information: (i)

Package 1 containing the information described in letter (i) of Section 2.6(b);

(ii)

Package 2 containing the information described in letter (ii) of Section 2.6(b), and

Each of such packages shall be delivered to GNLC in separate sealed envelopes. Each envelope shall contain the hard copies of the original documents and electronic copies (CD or DVD) of such original documents. All such envelopes shall be duly labelled with the name and address of the Proponent, indicating its content with the following identification and security markings: GNL Chile S.A.- GSA RFP. Attention: General Manager Proponent Identification: [Name of Proponent] Envelope Identification: (indicated in tables 1 and 2 of the following Section). (b)

Each information package referred to in Section (a) shall contain the following:

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(i) Package 1

Envelope Identification General Information

(ii) Package 2

Package 1 (General Information). Content Includes the following Forms: (a) Identification of Proponent (Form A-1) (b) Legal information of Proponent (Form A-2a or Form A-2b) (c) Commitment of Proponent (Form A-3) (d) Legal Opinion (Form A-4) (e) Corporate Authorization (Form A-5) (f) Consortium Agreement, if applicable (Form A-6) (g) Copy of ToR Purchase Invoice (Form B) (h) Financial Information (Form D) (i) Acceptance of the RFP Process and all the RFP Documents (Form H) (j) Proposal Bond (Form C)

Package 2 (Detailed Proposal).

Envelope Identification Detailed Proposal

Content Includes the following Forms: (a) Proposal Undertakings (Form G) (b) Detailed Proposal (Form I).

2.7

Notices.

All notices and communications made in this RFP Process shall be in writing in either English or Spanish. Notices and communications addressed to GNLC must be sent initially by e-mail to [email protected], followed with a hard copy to:

GNL Chile S.A. - GSA RFP Address: Rosario Norte 532, oficina 1303 Las Condes, Santiago, Chile Attn.: General Manager

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Notices and communications sent by GNLC shall be sent by electronic mail, fax or courier service and deemed served on the Day immediately following transmission by electronic mail or fax, and on the date they have been posted by courier. Notices to Participants shall be sent to their Representatives or the person that the Representative appoints for notices and communications (such appointment to be notified to GNLC in accordance with this Section 2.7). 2.8

Complementary Instructions.

In the event that GNLC issues any Complementary Instruction in accordance with these ToR, such instructions shall be deemed part of the RFP Documents. 2.9

Inquiries and clarifications.

Participants may make inquiries and request clarifications, before the Proposal Submission Date, in writing to GNLC, by e-mail to [email protected] followed by a hard copy to: GNL Chile S.A. - GSA RFP Address: Rosario Norte 532, oficina 1303, Las Condes, Santiago, Chile Attn.: General Manager GNLC will respond in writing to the questions that it deems appropriate through the issuance of Complementary Instructions addressed to all Participants, to all Proponents, or to all Offered Proponents, as applicable. Participants will have access to information relating to GNLC, Quintero Regasification Terminal and the 2nd Expansion Project. In addition, Participants will have access to meetings with GNLC’s management and to the New GSA in the virtual data room to be organized by GNLC. GNLC shall have the right to: (a)

modify, amend, correct, make additions to or clarify these ToR, through Complementary Instructions issued during the RFP Process up to ten (10) Days prior to the Proposal Submission Date; and

(b)

modify or clarify administrative aspects of the RFP Process and the New GSA up to five (5) Days prior to the Proposal Submission Date (including postponing the Proposal Submission Date) and up to five (5) Days prior to the Award Acceptance submission date in relation to the Offered Proponents.

No later than five (5) Days prior to the Proposal Submission Date, GNLC shall provide to all Participants a consolidated version of these ToR, including any questions and responses provided in the Q&A rounds as well as any Complementary Instructions.

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2.10

Stages of the RFP Process.

2.10.1

Deadline for submission of Proposals. Proposals will be received by GNLC on the Proposal Submission Date (see Section 5), as informed by GNLC through ToR or a Complementary Instruction.

2.10.2

Steps to be followed. (a)

Receipt of Proposals. On the Proposal Submission Date GNLC will receive the Proposals according to the following procedures: (i)

after confirming that a Proponent submitted all the required envelopes as provided in Section 2.6, GNLC will certify receipt by means of a certificate of receipt delivered to such Proponent;

(ii)

Package 1 will be opened on the Proposal Submission Date (to confirm whether all the required information is included). Package 2 containing the Detailed Proposal will be kept unopened, in escrow by GNLC, until the stage of evaluation of the Detailed Proposal and review of consistency with acceptable General Information according to Section 2.10.2(c), all the above pursuant to the timetable contained in Section 5.

(iii) GNLC will not accept oral or written inquiries from the Participants after the Proposal Submission Date. Participants must refrain from contacting GNLC, its directors, officers, employees or advisors to discuss any issue directly or indirectly related to the RFP Process after such date. GNLC may, however, request additional information or clarifications with respect to the Proposals. (b)

(c)

Evaluation of General Information. (i)

In evaluating the General Information, GNLC will consider whether the General Information submitted by the Proponent (including but not limited to the information submitted in the FORM D - FINANCIAL INFORMATION) is complete, accurate and does comply with the requirements set forth in these ToR.

(ii)

GNLC shall return, unopened, those Detailed Proposals that do not satisfy the requirements set forth above.

Evaluation of Detailed Proposal and of consistency with acceptable General Information.

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Detailed Proposals corresponding to favorably valuated General Information will be evaluated based on the criteria set forth in Exhibit D. (d)

Selection of Proposals. (i)

GNLC will select Proposals that, according to the criteria of Capacity Allocation Mechanism described in Exhibit D, constitute the best feasible Proposals to allocate the Available Expansion Capacity following the completion of the 2nd Expansion Project.

(ii)

The Award Offer issued by GNLC shall be final and not subject to appeal.

(iii) The Proponents who become Offered Proponents shall abide by the terms of the Proposal Documents. Failure to do so shall constitute a material breach of Proponent’s obligations under these ToR which will entitle GNLC to (A) draw upon the corresponding Proposal Bond; (B) reject the Proposal, (C) issue an Award Offer to another Proponent, and (D) award the relevant New GSA to another Proponent. (e)

Award Offer. (i)

(f)

The Award Offer shall consist of either an offer to the Offered Proponent in respect of the Requested Capacity and for the Term sought in that Offered Proponent’s Proposal, or a counter-offer to the Offered Proponent of a different capacity from the Requested Capacity according to the Capacity Allocation Mechanism described in Exhibit D, both subject to the Award Acceptance of the Offered Proponent.

Award Acceptance. (i)

The Offered Proponents are bound to issue a final answer prior to or on the final date set forth in Section 5 of these ToR, either accepting (“Award Acceptance”) or rejecting the Award Offer, irrevocably (except for its right under Section 1.6) and unconditionally. An Offered Proponent’s Award Acceptance must be made using FORM J - AWARD ACCEPTANCE, the irrevocable and unconditional Award Acceptance, substantially in the form enclosed as SCHEDULE 2.10.2 (F)(I) – AWARD ACCEPTANCE.

(ii)

An Offered Proponent that issues an Award Acceptance must include with the Award Acceptance the Award Acceptance Bond, using FORM K AWARD ACCEPTANCE BOND, in accordance with SCHEDULE 2.10.2(f)(ii) – AWARD ACCEPTANCE BOND.

(iii) An Offered Proponent that issues an Award Acceptance shall become an Awarded Proponent and shall abide by the terms of the Proposal Documents. Failure to do so shall constitute a material breach of Proponent’s obligations under these ToR which will entitle GNLC to (A) draw upon the

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corresponding Award Acceptance Bond; (B) treat the Award Acceptance as void, (C) issue an Award Offer to another Proponent, and (D) award the relevant GSA to another Proponent.

3.

CLOSING.

3.1

Closing.

The closing of the transactions provided in these ToR (the “Closing”) shall take place at GNLC’s offices located in Rosario Norte 532, Office 1303, Las Condes, Santiago, Chile, or at such other place informed by GNLC to the Awarded Proponents by a Complementary Instruction. 3.2

Place of Closing.

The Closing shall take place before a Notary Public chosen by GNLC and communicated to the Awarded Proponent(s) through a Complementary Instruction. 3.3

Actions to occur at Closing.

At the Closing, (a)

GNLC and each Awarded Proponent shall execute the New GSA based on the template provided by GNLC;

(b)

GNLC and each New Gas Buyer shall execute any other contract and document as provided in Sections 2.3.7 and 2.8;

(c)

Each New Gas Buyer shall deliver to GNLC the guarantees and performance bond to be delivered pursuant to the New GSA;

(d)

Each Awarded Proponent shall perform (and shall cause to be performed) all other acts that may be required for the execution of the New GSA.

4.

FURTHER ACKNOWLEDGMENTS BY THE PROPONENTS.

4.1

No guarantee of return.

The New GSA will not guarantee any return or profit in favor of the Awarded Proponent(s). Participants must submit any Proposal and issue any Award Acceptance (as the case may be) on the basis of their own evaluations, analyses and studies of the Chilean energy sector, at their sole risk and expense. Except for representations or warranties expressly made by GNLC in the New GSA, GNLC will not assume any liability or obligation whatsoever in favor of the Participants due to the incorrectness or inaccuracy of the information that GNLC provides during the RFP Process. Therefore, neither the information provided by GNLC to the Participants, nor any errors, inaccuracies or omissions therein, shall release or relieve those

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Participants from their liabilities in relation to any Proposal they submit or Award Acceptance they issue, including, but not limited to, their obligation to directly obtain information in relation to Chilean energy market regulations, GNLC, the 2nd Expansion Project and, in general, all the information required to evaluate and submit a Proposal or issue an Award Acceptance (as the case may be). 4.2

No right of reimbursement.

All costs and expenses incurred by Participant(s) in relation to this RFP Process shall be exclusively borne by those Participant(s) (as the case may be), with no right to reimbursement or compensation of any kind by GNLC. If an Awarded Proponent makes investment to provide for use of the Expansion Quantities obtained under a New GSA, whether or not the useful life of such investments exceeds the Term of the New GSA, it shall make such investments with no right to reimbursement, payment, indemnification or compensation whatsoever from GNLC. 4.3

GNLC’s rights.

GNLC shall be entitled to (i) make an Award in respect of all or only part of the Requested Capacity; (ii) cancel, terminate or suspend the RFP Process at any time; (iii) amend or clarify these ToR and administrative aspects of the RFP Process as per paragraph 2.9 above; or (iv) call for new offers in respect of Available Expansion Capacity. All costs and expenses incurred by the Participants in any of such events shall be borne by the Participants with no right to reimbursement or compensation of any kind by GNLC. 4.4

GNLC’s liabilities.

GNLC shall not bear any liability towards the Participants in relation to (i) any refusal or failure to accept any Proposal; (ii) the failure of any Participant to be selected as an Offered Proponent; (iii) an Award that does not comply with these ToR; (iv) any losses or damages suffered by any Participant directly or indirectly resulting from the RFP Process, or (v) by any other reason related to the RFP Process. Consequently, under no circumstance may any Participant file any claim against GNLC, or any of its shareholders, Affiliates, board members, directors, managers, officers, employees, agents or advisors.

4.5

Confidentiality.

It is a condition of the Participant's access to these ToR and its ongoing participation in the RFP Process that is has entered into the Confidentiality Agreement with GNLC and continues to comply with the obligations contained therein.

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5.

TIMETABLE OF ACTIVITIES.

Activity or milestone

Dates

RFP Notice Purchase the ToR and execute the Confidentiality Agreement First round of Participants’ questions in relation to the ToR Answers provided to first round of questions Second round of Participants’ questions to the ToR, GSAs and 2nd Expansion Project Answers provided to second round of questions Issuance of consolidated ToR (including questions and responses during Q&A rounds and complementary instructions) Proposal Submission Date Issue of Award Offer(s) Award Acceptance (Binding Agreement formed) Closing and New GSA execution Estimated FID 6.

MISCELLANEOUS.

6.1

Acceptance of the RFP Documents.

Nov 5, 2014 Nov 12, 2014 – Jan 9, 2015 Jan 26 – Jan 30, 2015 Feb 20, 2015 Mar 9 – Mar 12, 2015 Mar 25, 2015 Apr 8, 2015

Jun 9, 2015 Jun 24, 2015 Dic 10, 2015 Mar 9, 2016 May 18, 2016

Each Proponent, by submitting a Proposal, represents that the Proponent has read, understands and accepts the RFP Documents in full. 6.2

Governing law.

The interpretation and performance of the RFP Documents shall be governed and construed in accordance with the laws of the Republic of Chile. 6.3

Cost of participation in RFP Process.

Each Participant shall bear all costs directly or indirectly associated with its participation in the RFP Process and GNLC shall under no circumstances be responsible or liable for those costs, regardless of the outcome of the RFP Process. 6.4

Return of Proposal Bonds.

A Proponent’s Proposal Bond(s) shall be returned to that Proponent within ten (10) Business Days of: (a)

Closing; 18

6.5

(b)

The date (in accordance with the dates set on Section 5) that Award Offers are issued and that Proponent does not receive an Award Offer; or

(c)

Subject to Schedule 2.3.4 – Proposal Bond, in the event that a Proponent withdraws from the RFP Process or an Offered Proponent does not issue an Award Acceptance and withdraws from the RFP Process, the date upon which that Proponent gives notice of its withdrawal from the RFP Process.

Currency.

Unless otherwise expressly agreed, the currency shall be Dollars. 6.6

Language.

The Proposal Documents may be in English or Spanish. Documentation in a third language shall be translated by a qualified translator into English or Spanish. 6.7

Entire RFP Documents.

These ToR, together with any Complementary Instructions, Participants inquiries and answers provided by GNLC and the New GSA template to be provided by GNLC, constitute the entire RFP Documents, constitute all the terms and conditions of the RFP Process, and supersede and replace any and all regulations that might be applicable to GNLC or the Participants in respect of the subject matter hereof. Notwithstanding in case of discrepancy between the terms of any of the RFP Documents and the New GSA template to be provided by GNLC, the latter shall prevail.

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