Joint Operating Agreements. Peter Roberts
JOA will be invaluable in locking in the commercial behaviours that those new parties will be expected to observe.
The release of an updated version of a particular model form JOA will not supersede any JOA that has already been drafted and executed on the basis of any earlier version, and the parties will always be free to use all or part of such an earlier version as the basis of their JOA if they prefer to do so.
Despite the variations between the different forms of JOA that are highlighted in this book, there will be relatively significant commonality between JOA forms wherever they are used. Within a particular country, this commonality can be attributed to the need for state approval of the terms of a JOA in certain jurisdictions (see below), which will impose a certain degree of consistency in the terms of the JOAs that are used in that country, but such commonality will also arise on a wider scale in consequence of a desire of the parties to apply consistent standards in their JOAs worldwide for greater ease of operation and administration.
Whether any particular model form JOA has the capacity to become a contract with a truly global appeal remains to be seen. Notwithstanding that different jurisdictions have produced different (and often very distinct) model form contracts, there may be some greater sense of convergence as we see a more harmonised appreciation of the problems, and the possible solutions, that can arise in any unincorporated joint venture for exploration for and production of petroleum. The greater use of a particular model form contract will also help to develop a body of academic and judicial interpretation of that contract, which can help in resolving later disputes concerning any JOA.
When it comes to the negotiation and detailed drafting of the terms of a JOA, it should be remembered that the words used in any model form JOA are there for a reason. The parties should resist the temptation to assume that most of the agreement is standard, boilerplate wording. The object and the effect of the selected wording should be examined in each case; not least since the JOA will need to address the implications and the idiosyncrasies of the petroleum law, the concession, the petroleum project and the parties to which it relates.
The terms of the JOA might be defined and used in a manner that replicates the terms of the concession, which is generally to be applauded in the interests of applying some consistency across the key petroleum project documents. On the other hand, the terms of the JOA might need to be written in a manner that best fits the needs of the parties, and so there is something of a balance to be struck between these competing aims. A practical example of this issue is provided by how a petroleum discovery might be declared to be commercial as a precursor to the preparation of a development plan; the state’s view of what might be commercial for the purposes of the concession might not be the same as the expectation of the parties under the JOA.
(a)Model form contract options
Certain model form JOAs have been promulgated by various trade and industry associations and educational bodies:
•American Association of Professional Landmen (AAPL) – the AAPL JOA is regarded as the earliest model form JOA and is the standard for US onshore and offshore operations. It was first issued in 1956 for onshore operations (known as Form 610 and subsequently revised in 1977, 1982, 1989 and 2015). Form 710 was issued for application to offshore shallow water Gulf of Mexico Continental Shelf operations in 1998 (and revised in 2002 and 2007). Form 710 also applies separate exhibits for US coastal states subject to common law and the Napoleonic Code. Form 810 was issued for application to offshore Gulf of Mexico deep-water operations in 1996 (and revised in 2000, 2007 and 2015). Addenda for application to CBM projects were also issued in 1982 and 1989. References in this book to the AAPL JOA are to the AAPL JOA Form 810 unless otherwise stated. The AAPL JOA is available at www.landman.org.
•American Petroleum Institute (API) – a model form JOA was published by the API in 1984 (as API MF 5U05), and reissued in 1996. It has not been kept up to date since then, and was effectively taken over by the AAPL JOA forms (see above).
•Association of International Petroleum Negotiators (AIPN) – the AIPN JOA is internationally the most widely used model form JOA. It was first issued in 1990, and was subsequently revised in 1995 and in 2002 and most recently in 2012 (and is presently under review with a view to a possible reissue in 2021). The AIPN JOA is also accompanied by a series of related model form agreements, such as an accounting procedure (most recently issued in 2012), a petroleum lifting agreement (see 12.3) issued in 2001 and a unitisation and unit operating agreement (most recently updated and re-issued in 2020). In 2008 a drafting guide for the use of the AIPN JOA in Australian operations was issued. In 2014 a JOA specifically tailored to unconventional petroleum operations was issued. References in this book to the AIPN JOA are to the 2012 issue unless otherwise stated. The AIPN JOA is available at www.aipn.org.
•Australian Mining Petroleum Law Association (AMPLA) – in 2011 AMPLA issued the first version of its model form petroleum JOA, which is described as intended for use in non-complex oil and gas projects principally onshore in Australia, with the possibility of use for offshore projects. AMPLA has also previously issued a model form joint venture agreement for use in mining joint ventures. The AMPLA JOA is stated to be intended for use in a three-party joint venture, at least as a starting point for further amendment. The AMPLA JOA is available at www.ampla.org.
•Australian Petroleum Production and Exploration Association (APPEA) – a model form JOA was published by the APPEA in 1984. It has not been kept up to date since then.
•Canadian Association of Petroleum Landmen (CAPL) – the CAPL JOA – which consists of a head agreement containing details of the parties and their interests, and an appended operating procedure – is the standard for Canadian petroleum exploration and production operations. It was first issued in 1971, and was subsequently revised in 1974, 1981, 1990, 2007 and 2015. References in this book to the CAPL JOA are to the 2007 issue unless otherwise stated. The CAPL JOA is available at www.landman.ca.
•Oil & Gas UK (OGUK) – the OGUK JOA (issued in 2009) represents the latest version in a long line of model form JOAs used for offshore operations on the UKCS, starting with a model form JOA prepared as part of the fifth offshore licensing round in 1977 and issued by the British National Oil Corporation (BNOC). The OGUK JOA has been issued and updated in 2003 and 2009, with amendments and guidance notes in 2011 and 2013, and is available at www.oilandgas.org.uk.
•Rocky Mountain Mineral Law Foundation (RMMLF) – the RMMLF publishes forms of joint operating agreements for use in petroleum exploration and production operations (first published in 1968) and also for mining, mineral extraction and mine operation activities. The RMMLF JOAs are intended for use in US onshore operations. The RMMLF JOAs are available at www.rmmlf.org.
It is also the case that in certain jurisdictions the prevailing regulatory authority mandates a form of JOA for use in that jurisdiction:
•Brazil – the Brazilian upstream regulatory agency ANP mandates a particular short-form consortium agreement for entry between consortium members where a PSC is granted. This is a registrable document. A more conventional full-length JOA will also be entered into separately between those persons to record the terms of their joint venture. The consortium agreement is available at http://rodadas.anp.gov.br/arquivos/Oferta_Permanente/Edital/contrato_op_blocos.pdf.
•Denmark – in Denmark the government, acting through the Danish Energy Agency (DEA), has a prescribed form of JOA for use locally.