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What Are The Various Operating Agreement In The Petroleum Industry

15.4.2021

The JOA can also be defined as the private agreement that “divides” the solidarity commitments (as awarded by the State concerned) imposed by the licensing conditions and regulates relations, obligations and rights between the partners of the joint venture. A JOA covers many aspects of partner investments and is generally designed to last the entire life of the investment, from exploration to production. It will address issues such as project accounting funding, voting procedures and default mechanisms if a partner does not act in compliance with the JOA and meets its funding commitments. [8] Therefore, the JOA is a contract between two or more parties. In addition, a full review of the JOA should be conducted at least every three to five years. This revision should address all of the problems/challenges of the JOA and ensure a synergy between the provisions of the revised oil legislation and the JOA. The operator`s distance rights are strictly limited. An operator may only be removed from non-operators for “good reasons” by the “yes” of a majority stake (on the basis of ownership) after excluding the operator`s right to vote. Such a vote is considered effective only when an operator has not provided the operator with a written notification detailing the alleged default and if the operator has not cured the failure. “Good cause” for these purposes refers to gross negligence or intentional misconduct, substantial breach or inability to comply with the operating standards contained in the contract, or material failure or inability to discharge its obligations under the contract. Therefore, non-operators have the authority to remove the operator. Article 2.4.2[13] states that, in addition to historical factors, economic and strategic factors play a role in the current oil and gas industry. This contract allows the state to participate in the oil industry in the form of a joint venture with other companies.

However, this required the Minister of Petroleum to intervene inappropriately in the treaty. It is necessary to have national legislation or legislation on the JOAs, which are clear: worldwide, the exploration, development, production and marketing of oil and gas and related products is carried out within the framework of the laws of the host government and commercial contracts. In most countries, the state claims ownership of hydrocarbons on its territory. In other cases, the landowner may own the title. In general, the state creates the commercial, legal and fiscal framework in which the use of hydrocarbons takes place. The state and oil companies are generally the parties to these agreements. Article 2.2.1 of the Nigerian JOA states that “the operator conducts all joint operations of good faith and good quality, in accordance with good business practices, and the applicable rules apply to all transactions carried out in connection with this activity.” [12] As a result, the operator is required to conduct “good and good” operations.

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