Oguk Standard Agreements

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Apr 11

Oguk Standard Agreements

The AP precedent, founded in the 1970s, has mutated its DNA over the years to take the form of the modern JOA. Historically, these events have helped shape the JOAs in today`s agreements used today in the oil and gas industry. This update focuses on the key differences in operator liability between two common enterprise agreements on model forms. The first was spent by Oil and Gas UK (OGUK), a representative body of the UK offshore oil and gas industry, for offshore mining on the UK continental shelf. The second is the model of the International Joint Enterprise Agreement established by the Association of International Petroleum Seekers (AIPN), which is the most commonly used international agreement. From the operator`s point of view, a cap on liability is desirable and, when negotiating joint enterprise agreements on the basis of the OGUK agreement, consideration should be given to the question of whether limits should be imposed on losses or damage caused by the deliberate delay of the operator. Serious negligence and gross misconduct According to the OGUK agreement, non-responsibility and compensation in favour of the operator apply regardless of the operator`s negligence or failure. On the other hand, if the parties to the AIPN contract do not apply the optional provision on gross negligence or premeditation, the disclaimer and compensation may continue to apply, even if the damage is caused by “an existing defect or negligence… gross negligence, premeditation, strict liability or any other legal fault of the operator. The position in the AIPN agreement (if the optional provision is not in force) is very favourable to the operator and in fact means that the only recourse available to the parties to the joint venture against the operator in the event of a breach of the operator`s obligation to carry out the joint transactions, in accordance with the standard set out in the joint enterprise agreement of AIPN, is to: remove the operator.

, even if the parties to the joint venture suffered harm as a result of gross negligence or intentional misconduct by the operator. After World War I, many international oil companies (IOCs) entered into concession agreements with oil-rich countries to explore and exploit their oil wealth.