If the general definition approach is adopted, what constitutes “common action” is prudent. Too broad a definition can lead to a lack of clarity about the limits of joint operations; an overly prescriptive definition could lead to the exclusion of certain activities that should have been taken as joint operations. It is important to ensure that all activities necessary to exercise the rights and performance of the obligations arising from the licence are included in the scope of this provision as joint activities. The agreement expressly defines certain categories of losses that, for the purposes of the agreement, are considered to be included in the definition of “loss of consequence,” whether they are generally indirect or consecutive. The benefits of including these obligations in a common operating contract depend in part on the liability limitations imposed by the operator. A party that agrees to act as an operator often insists on the inclusion of a provision to limit or exclude liability to other parties to the joint venture and third parties for losses or damages caused by such an action under the agreement. The two model-joint enterprise agreements contain provisions that: Robert Meade deals with major international disputes in oil and gas exploration, in the midstream and downstream sectors, as well as litigation related to infrastructure, construction and international trade. His experience includes representing clients in disputes involving joint enterprise agreements, production-sharing contracts and construction contracts, as well as issues related to joint ventures and asset acquisitions. Rob has acted on a series of international arbitrations under the LCIA and ICC rules as well as litigation before the English high court. Ultimately, the objective of the parties should be to achieve an economically acceptable balance that ensures the implementation of their joint venture intentions and provides for a withdrawal if the risk and uncertainty of the project makes this approach acceptable.
Joint Operating Agreement (JOA) is the common method by which companies partner to form a joint venture in oil and gas exploration and production. JOAs are widespread both in the UK Continental Shelf (UKCS) and around the world. The JOA is needed mainly because of the profitability of the oil and gas industry, a high-risk, high-cost industry with very high initial capital, but then, if successful, the rewards are very high (Styles 2012). Entry into an AYA has several advantages for the parties involved, the most important being risk reduction and the allocation of capital-intensive research, development and production expenditures. This document therefore examines the concept and function of JOA and identifies the main clauses of an JOA. This involves examining the relevant literature and applying the knowledge gained through class work.