Agreement for Biodiesel Supply

On March 9, 2012, the Secretariat of Energy (“SE”) enacted Resolution No. 56/2012 (the “Resolution”), which (i) ratifies the new agreement for biodiesel supply for to be blended with fossil fuels in Argentina dated January 31, 2012 (the “Agreement”), entered into by and between the SE and biodiesel manufacturing companies (the “Manufacturers”) and (ii) establishes the guidelines to be complied with for the supply of biodiesel to the fossil fuels market in the framework of Law No. 26,093 (please see Marval News No. 50, “New Regime for the Promotion of Production and Use of Biofuels in Argentina”.

1. The Agreement

The Agreement came into force on March 9, 2012 —when it was ratified by SE— and will continue to be in force until December 31, 2012. It can be renewed automatically for one year if required by SE.

The Manufacturers cannot change their condition as such during the term of validity of the Agreement and must make the quantities of biodiesel agreed upon available for the SE.

The biodiesel to be delivered must be exclusively produced by the Manufacturers. Custom-work or third-party agreements as well as inter-company product swaps or loans without prior clearance are forbidden.

The SE will quarterly award the amounts of biodiesel giving priority to the Manufacturers (i) that have accessed the promotional benefits established in Law No. 26,093, (ii) that have an annual manufacturing capacity of up to 50,000 tons inclusive, and (iii) those with a unfavorable location regarding the points from which biodiesel exportations are carried out.

When a Manufacturer is prevented from supplying the amounts awarded, it must notify the SE in the course of the three business days following the occurrence of the inconvenience.

In the event that the need for the supply of biodiesel for a determined monthly period is less than the sum of the amounts awarded, the SE will deduct the corresponding amounts —proportionally to the awards made in due time— from the quantities established. On the contrary, if during a monthly period the need for biodiesel supply is greater than the sum of the amounts awarded, the SE will request the missing difference from the Manufacturers on the condition of supplying the additional product also in proportion to the awards made in due time.

In the event that companies in charge of blending fossil fuels with biodiesel (the “Blenders” and, jointly with the Manufacturers, the “Companies”) require additional quantities of biodiesel for the supply of the internal market, and when reasons to justify this exist, the SE must expressly authorize the operations and distribute the corresponding quantities between the Manufacturers in condition to supply the additional product.

The manufacturing companies that are not party to the Agreement may be included in it. In these cases, the SE will award the corresponding quantities according to the established criteria and will deduct the amount —proportionally from the awards opportunely carried out— from the quantities established in the annex to the Agreement.

The price that the Manufacturers receive for the monthly quantities of biodiesel that they must deliver will be established by the SE according to a formula established in the Agreement. The price will be calculated monthly in Argentine pesos and will be published in the SE’s web page.

The SE is empowered to carry out audits and inspections in the Manufacturers’ premises. It can also adapt the Manufacturers’ biodiesel awards to their current capacity of production of its premises, if it does not match the information given by the Manufacturers.

2. The Resolution

The Resolution, in addition to approving the Agreement, established certain guidelines that must be fulfilled regarding the supply of biodiesel to the fossil fuel market which are compulsory for the Companies. It will be in force until December 31, 2012.

The SE shall inform to the Blenders the quantity of biodiesel that is awarded to each one to perform the blend and the date in which it can be withdrawn from the Manufacturers, taking into account he following elements: (i) the participation average of each of the Manufacturers in the internal gasoil market in the previous twelve months to each award; (ii) the forecast of gasoil supply for the period under consideration; (iv) the maximum refinery capacity of oil companies; (v) the analysis of information gathered in the previous months; and (vi) other variables that influence the fossil fuels market, considering the volumes of gasoil that, for their purposes, are expressly authorized by the Enforcement Agency to be marketed in its pure form.

Both pure biodiesel marketed in the framework of the Agreement and the final product that is obtained from the blend with fossil fuels must comply with the parameters of quality established in the regulatory framework in force.

For the purpose of acquiring the awarded quantity, the Blenders must give priority to the Manufactures following the same criteria established for the SE when carrying out the awards of biodiesel to the Manufacturers, described above.

The Blenders must report to the SE on a monthly basis the program of estimated volumes of supply to the market for the following quarter. They must also ratify or rectify monthly before the SE the information corresponding to the previous month. They must back up this information when the difference between what has been supplied and what has been estimated is higher than five per cent (5%).

The Blenders must also inform the dates in which each of the operations of the acquisition of biodiesel carried out in the previous month have taken place, the quantities acquired and the companies that have been the ones who provided them, in addition to bringing to SE’s notice the cases in which the Manufacturers have not complied with the quality of product specifications established in the regulatory framework in force.

The breach of any of the guidelines established in the Resolution or in the Agreement by the Companies will be subject to the sanctions established in Laws No. 26,022 and 26,093, and its complementary regulations.