LETTER OF INSTRUCTIONS NO. 400

TO    :      The Governor, Central Bank of the Philippines

        The Chairman, Philippine National Oil Company
        The Chairman, Oil Industry Commission

1.    The Philippine National Oil Company (PNOC) and/or its affiliates and subsidiaries increase their crude tonnage capability by negotiating and executing appropriate charters and/or hire contracts covering crude tankers suitable for the requirements of oil companies operating in the Philippines, and to negotiate and execute appropriate contracts of affreightment and/or subcharters with the oil companies as to the transport of the latter's crude requirements to the Philippines. PNOC shall consider the following in negotiating the freight rate and other terms and conditions in its contracts with the oil companies: (a) the freight rate and other terms and conditions at which the oil companies operating in the Philippines have traditionally imported their crude requirements into the Philippines; (b) stability and adequacy of crude transport availability in the international market for Philippine crude requirements; (c) other factors and circumstances as PNOC shall consider material and relevant. 

2.    The Central Bank require as a condition for the remittance of foreign exchange payment of freight for crude hereafter imported into the Philippines a certification from the Philippine National Oil Company that it and/or its affiliates and subsidiaries did not have the appropriate and/or required tonnage capability, whether owned, chartered or hired, to transport the crude for which freight payment remittances is requested.

Since 19.07.98.