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