The 2023 AIEN Model Form JOA Placing ESG Issues at the Heart

The 2023 AIEN Model Form JOA Placing ESG issues at the heart of oil and gas operations

Energy Analysis : Darren Spalding , Adam Blythe and Adam Quigley of Bracewell LLP consider the key updates to the Association of International Energy Negotiators ’ ( AIEN ) 2023 version of its model form joint operating agreement ( JOA ) which places ESG issues at the heart of oil and gas operations . On 16 February 2023 , the Association of International Energy Negotiators ( AIEN ), formerly the Association of International Petroleum Negotiators or AIPN , published an updated version of its model form joint operating agreement ( JOA ). The AIEN JOA has for many years been adopted as the standard agreement used across the oil and gas industry for unincorporated joint ventures , notwithstanding that there are alternative regional model forms that are popular in some jurisdictions .
This article by Darren Spalding , Adam Blythe and Adam Quigley of Bracewell LLP first appeared on Bracewell LLP on 2 March 2023 and is published with permissions on Lexis ® PSL which can be found here ( subscription required ).
On 16 February 2023 , the Association of International Energy Negotiators ( AIEN ), formerly the Association of International Petroleum Negotiators or AIPN , published an updated version of its model form joint operating agreement ( JOA ). The AIEN JOA has for many years been adopted as the standard agreement used across the oil and gas industry for unincorporated joint ventures , notwithstanding that there are alternative regional model forms that are popular in some jurisdictions .
Those familiar with the earlier 2012 version of the AIEN JOA ( which itself was an update from 2002 and 1995 versions ) will be reassured that the updates in this 2023 version do not change the fundamental principles of the 2012 version — with the intention to address two of the significant challenges currently faced by the sector . The primary focus is on environmental , social and corporate governance ( ESG ) matters that have become increasingly prominent issues for the oil and gas industry . The revised JOA offers some useful additions and optionality to address these topics . The other main area of revision is the introduction of an economic sanctions regime ( not previously covered by the 2012 version ), a topic of considerable recent concern in the aftermath of the Ukraine invasion .
This note is intended to offer a speed-read summary of the key updates to the 2023 version of the JOA .
Decommissioning
Many of the amendments to the 2023 JOA relate to decommissioning and provide additional optionality . One matter to consider in this regard is that , in many jurisdictions ( including those in emerging markets ), the decommissioning regime set out in newer production sharing contracts , concessions or licences are now regularly more detailed that those of the past , so any JOA provisions dealing with this issue must obviously dove-tail with those regulatory or contractual requirements . The new JOA provisions include :
• decommissioning arrangements in respect of wells that are already producing at the effective date of the JOA ( referred to as legacy wells )
• alternatives in relation to decommissioning liability where fewer than all of the JOA parties elect to take over joint facilities or wells
• updates to the ‘ Decommissioning Procedures ’ ( which is itself an optional schedule to the JOA ), including escrow arrangements for the decommissioning provision amounts