[Title] Agreed Minutes to the Agreement between Japan and the Republic of Korea Concerning Joint Development of the Southern Part of the Continental Shelf Adjacent to the two Countries

The representatives of the Government of Japan and the Government of the Republic of Korea wish to record the following understanding which has been reached during the negotiations for the Agreement between Japan and the Republic of Korea concerning joint development of the southern part of the continental shelf adjacent to the two countries signed today (hereinafter referred to as "the Agreement"):

1. "The laws and regulations" referred to in the Agreement shall be construed, unless the context otherwise requires, to include concession agreements between the Government of the Republic of Korea and its concessionaires.

2. The geographical coordinates as specified in paragraph 1 of article II and the appendix to the Agreement are based on Japan Maritime Safety Agency Chart No. 210 of December 1955, New Edition.

3. (1) Regardless of whether the sole risk party is the operator, sole risk operations referred to in paragraph 1 of article V shall be carried out by the operator of the sub-zone concerned.

(2) Natural resources extracted through sole risk operations shall be equally shared between the concessionaires concerned in accordance with article IX.

(3) The non-sole risk party shall pay in money to the sole risk party the reasonable price for the portion of natural resources equal to the half of the sole risk bonus, less expenses incurred in connection with the sale of such portion and tax or other charges paid in connection with such portion.

4. As regards "adjustment of fisheries interests" referred to in paragraph 1 of article V, the Government of each Party shall give administrative guidance to its concessionaires so that they will, before operations for exploration or exploitation of natural resources begin in the subzones with respect to which they have been authorized, endeavour to adjust fisheries interests of nationals concerned of that Party.

5. As regards paragraph 2 of article V, the two Governments shall notify each other of the date on which the operating agreement was submitted to them and the date on which they intend to approve or disapprove the operating agreement.

6. As regards article VI, the two Governments shall endeavour to ensure that the designation of operators be made in such a way as to be equitable to the greatest possible extent.

7. "Expenses reasonably attributable to exploration and exploitation" referred to in paragraph 2 of article IX shall include expenses incurred for the purposes of survey in the Joint Development Zone prior to the date of entry into force of the Agreement.

8. The provisions of paragraph 2 of article IX shall not apply to expenses incurred by sole risk operations.

9. As regards paragraph 3 of article X, application for an extension of the period of exploitation right shall be made at least six months prior to the expiration of each of such periods.

10. As regards paragraph 4 of article X, the two Governments shall, after consultations, grant exploitation right respectively to concessionaires of both Parties on the same date.

11. As regards paragraph 5 of article X, the new concessionaire may apply for an extension of the period of exploitation right under paragraph 3 of article X.

12. For the purposes of article XII, sole risk operations shall be regarded as having been carried out by concessionaires of both Parties.

13. When concessionaires of both Parties are unable to comply with the provisions of article XII for unavoidable reasons, they shall submit for approval a statement setting forth reasons for, and the period of, such delay or suspension to the respective Governments authorizing them. The two Governments shall consult with each other before giving such approval.

14. The approval of the Party referred to in paragraph 1 of article XV shall not be withheld without justifiable reasons.

15. As regards paragraph 2 of article XV, when the remaining concessionaire of one Party who was not the operator under the operating agreement to which such concessionaire and the former concessionaire were parties carries out exploration or exploitation of natural resources under paragraph 1 of article XV, such concessionaire shall be regarded as the concessionaire of the other Party designated and acting as the operator, while retaining its own concessionaireship.

16. As regards paragraph 2 of article XV, taxes on income shall not include royalty.

17. Taxes and other charges to be imposed under paragraph 2 of article XVII include

(1) For Japan:

(a) Mineral product tax,

(b) Fixed assets tax and

(c) Mine lot tax;

(2) For the Republic of Korea:

(a) Royalty,

(b) Property tax and

(c) Rental.

18. (1) "Damage caused by digging operations of seabed and subsoil" referred to in paragraph 3 of article XXI include damage caused by blow-out of oil or natural gas.

(2) "Mine water" referred to in paragraph 3 of article XXI means water flowing out in the course of drilling wells for exploration or exploitation of natural resources, and oil and other substances flowing out together with such water.

19. The provisions of paragraph 3(1) (a) of article XXI shall apply when a concessionaire of one Party carries out exploration or exploitation of natural resources under paragraph 1 of article XV. In such a case, the provisions of paragraph 3 (1) (c) of article XXI shall not apply.

20. As regards paragraph 2 (1) of article XXIII, each Government shall take, within its powers, necessary measures so that its concessionaires and other persons will not exploit independently the structure or field referred to in paragraph 1 of article XXIII during the six-month period referred to in paragraph 2 (1) of article XXIII or during the period in which the two Governments hold consultations for the purpose of making a joint proposal.

21. A concessionaire shall not enter into the agreement referred to in paragraph 2 (2) of article XXIII unless the other concessionaire authorized with respect to the same subzone also enters into such agreement.

Seoul, January 30, 1974.

For the Government of Japan:

TORAO USHIROKU

For the Government of the Republic of Korea:

DONG-JO KIM