INTRODUCTION

As we know, the JOA is a contract that is needed whenever there is more than one owner of oil and gas rights under the same granting instrument in the same block or area. Absent a JOA, the co-owners of such oil and gas rights would need to rely on the provisions of local law, if any, applicable to co-ownership to determine each co-owner ‘ s individual right to explore for or exploit oil and gas rights within the commonly owned block and the other co-owner ‘ s obligation, if any, to contribute to costs related to such activities concurrently as they are incurred. Depending on the jurisdiction, exploration and exploitation of oil and gas may be blocked except where all co-owners agree to conduct the activities. Alternatively, the local law may allow individual co-owners to act on their own to conduct exploration and exploitation activities, but at their sole cost and risk without any obligation on the other co-owners to contribute concurrently to such costs. The JOA supplements and clarifies the provisions of law addressing co-ownership, and establishes the respective rights and obligations of the co-owners to conduct exploration and exploitation of oil and gas under the granting instrument.

The JOA does not and cannot amend or modify the granting instrument. All of the rights and obligations of the co-owners under the granting instrument vis- à -vis the government/national oil company/agency counterparty continue unaffected by the addition of the JOA. The government/national oil company/ agency counterparty in its/their capacity as the counterparty to the granting instrument is not a signatory to nor bound by the provisions of the JOA, although a national oil company in a separate capacity, namely as a co-owner of oil and gas rights under the granting instrument in the same block or area, may be a signatory to and separately bound by the provisions of the JOA.