RAJKUMAR

UNIVERSITY OF PETROLEUM & ENERGY STUDIES

LICENSE
Oil companies are granted license and enters in to
production sharing contract in order to secure the
necessary rights to recover petroleum
JOINT VENTURE
Oil companies usually enter in to joint ventures for
exploration purposes to share financial investment &
risk
Joint venturers will commonly negotiate and execute a
joint operating agreement
JOINT OPERATING AGREEMENT
JOA governs the rights and liabilities of the parties as
between themselves and their relationship with the
group member responsible for conducting the joint
operations, known as the operator
LEGAL RELATIONSHIP
The companies under JOA are not partners, but
separate joint venture companies.
However under the license their liability to the host
government will normally be joint i.e., each will be
liable for the obligations of each of the others

Article 7
Article 7 of the MPSC imposes obligation on the part of the
contractor to execute a JOA
As per article 7 the functions under this contract shall be
performed by the operator on behalf of all constituents

Within 45 days of the effective date or longer period as may
be agreed to by government, the contractor shall execute a
joint operating agreement

Operator shall provide a copy of the duly executed joint
operating agreement within 30 days


Article 7
It also talks about the provisions to be included in the
agreement
In case of a single company constitutes the contractor,
the provisions of article 7.4 and 7.4.1 shall not be
applicable
MAIN PROVISIONS
Duration
The agreement is to continue as long as the license or
lease or Production sharing contract is in force and
until all joint property has been disposed of and final
settlement made between the parties
SCOPE
The JOA applies both to the exploration for and
production of petroleum but does not normally extent
to detailed arrangements for disposed of produced oil
and gas.
INTEREST OF THE PARTIES
Parties beneficial interest are set out here
OPERATOR
This provision says who is the operator and rights to
resign and rights of the other parties to remove it and
the circumstances under which they may do so
The clause sets out operators rights and
responsibilities to conduct joint operations on behalf
of other constituents and limitations of his liability
Other obligations like how to sue, how to enter in to
contracts with other parties will also be mentioned in
that clause
See Article 7 of PSC
OPERATING COMMITTEE
Constitution of operating committee and detailed
provisions governing the establishment, powers of
voting rights, meetings and procedures etc..


PROGRAMME AND BUDGET
The provision often divided in to separate parts
addressing exploration, development and production
programmes respectively and detailed budget for the
programme.
The operator submits the work programme and
budgets to all the parties and finally reviewed and
approved by the operating committee
SOLE RISK
This clause says circumstances in which only one
person carrying out particular activity(drilling, testing
or development activity) and indemnify others for all
claims and losses

DEFAULT
If one party defaults in the payment towards
expenditure then non defaulting party may contribute
and recover in the interest of the of the defaulting
party
DISPOSAL OF PETROLEUM
Share of petroleum each party takes is contained
under this clause
PUBLIC ANNOUCEMENT
Public announcement is important in oil and gas
sector during controversial matters like accident or
loss of life, damage, pollution or other emergency. This
clause says who makes public announcement in the
aforementioned events.
ASSIGNEMENT
This clause contains how assignment can be done.
Usually can find restrictions on transfer of interest
Transfer to an affiliated company is normally
permitted
Assignment to a third party may need prior consent,
sometime triggers preemption right i.e., have to get
the prior approval from the other parties if your
interest has to be assigned
These days preemption clause are discouraged

ASSIGNMENT
The clause may include that any assignment must be
of partys undivided share in JOA as well as in license
There may be a restriction on any interest retained by
the assigning party not falling below a certain
minimum level
APPLICABLE LAW
This clause sets out the law the parties have chosen to
govern the JOA (Normally the law of the area of
0perations) Because the local courts are in the best
position to interpret local law