Joint operating agreement—key clauses
Produced in partnership with Peter Roberts, Head of Oil & Gas of Orrick
Joint operating agreement—key clauses

The following Energy practice note Produced in partnership with Peter Roberts, Head of Oil & Gas of Orrick provides comprehensive and up to date legal information covering:

  • Joint operating agreement—key clauses
  • Scope
  • Voting control, budgets and contract awards
  • Petroleum allocation, lifting and disposal
  • Default and forfeiture
  • Operator liability
  • Exclusive operations
  • Withdrawal, transfers, pre-emption and change of control
  • Governing law and dispute resolution

The joint operating agreement (JOA) has a number of key commercial provisions.

Scope

The scope of the JOA is, generally speaking, to 'establish the respective rights and obligations of the parties with regard to operations and activities under the JOA including the joint exploration, appraisal, development, production and disposition of petroleum products from and decommissioning of the area of joint operations. The scope of the JOA will be determined through a list of identified activities which will constitute the joint operations and a list of activities which are specifically removed from the definition of joint operations, as ‘excluded activities’.

Joint operations might be described as those activities necessary to exercise the rights and perform the obligations which result from the concession. Alternatively, the JOA could apply a more technical definition of what constitutes joint operations, derived by reference to the distinct operational elements of a typical petroleum project (exploration, appraisal, pre-development, development, production, disposal and decommissioning). Over the lifetime of a concession these various operational activities could occur at varying stages and the JOA will need to cater for a sequenced approach.

Voting control, budgets and contract awards

Where the JOA includes the concept of an operating committee (OpCom) each party (regardless of the size of that party’s participating interest under the JOA) is usually entitled to appoint a single nominated representative to the OpCom. When the OpCom meets

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