North Baja Pipeline, LLC

Original Volume No. 1

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Effective Date: 09/27/2004, Docket: RP04-507-000, Status: Effective

Second Revised Sheet No. 124 Second Revised Sheet No. 124 : Effective

Superseding: First Revised Sheet No. 124

GENERAL TERMS AND CONDITIONS OF SERVICE

(Continued)

10. RIGHT OF FIRST REFUSAL UPON TERMINATION OF FIRM SHIPPER'S SERVICE

AGREEMENT (Continued)

10.2 (Continued)

the expiration of its contract except by agreeing to pay the

maximum applicable tariff rate. If NBP accepts any bid(s), the

original capacity holder will have ten (10) business days from the

date of notice to match the accepted bid(s) in order of economic

value (highest to lowest), provided that the original capacity

holder shall not have to match any bid rate higher than the

maximum applicable rate. NBP will announce the winning bid(s) as

soon as practicable after the close of the match period. If the

original capacity holder matches an accepted bid, the associated

capacity is awarded to the original capacity holder. If the

original capacity holder does not match an accepted bid, the

capacity shall be awarded to the highest acceptable bid(s). If

there is more than one equivalent winning bid, NBP shall award

capacity on a pro rata basis. New Shippers must execute a firm

transportation service agreement with NBP prior to service

commencement or within 30 days of a capacity award, whichever is

sooner. Original capacity holder is allowed to retain a portion

of its capacity by matching price and term according to the

procedure outlined in this provision, provided that the original

contract path is maintained.

10.3 Bids shall be evaluated on the net present value incorporating

price and term. The net present value of revenues to be received

from a Shipper bidding a Negotiated Rate shall be calculated using

the proposed reservation charge revenues and any proposed usage

charge revenues guaranteed by a minimum volume commitment or

otherwise. Where the Negotiated Rate is based on a Negotiated Rate

Formula, the future value of which cannot be determined at the

time of the bidding, NBP shall estimate the future revenues to be

received under the Negotiated Rate Formula using currently

available data.

10.4 If there are no acceptable bids received, the rate and terms of

continuing service is to be negotiated between original capacity

holder and NBP. NBP and original capacity holder shall have

twenty (20) business days from the end of the bid period to

mutually agree to acceptable terms. In the event NBP and original

capacity holder do not mutually agree to continue service,

original capacity holder shall no longer hold a right of first

refusal and NBP shall subject the capacity to a bidding process

consistent with Section 10.8. However, if during this 20-day

(Continued)