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CHAPTER 4JOINT OPERATING AGREEMENT (JOA)
Article 7 of the PSC embodies and acknowledges the existence of a JointOperating Agreement and also prescribes that it must include certain essentialfeatures. But this agreement is required only when two or more than two partiesconstitute the Contractor. Out of which one party is designated as Operator whocarries on operations on behalf of the all other parties constituting theContractor. No change in the operator ship shall be effected without the consentof the Government and such consent shall not be unreasonably withheld. It isoften provided in the PSC that the functions required of the Contractor underthis Contract shall be performed by the Operator subject to, and in accordancewith, the terms and provisions of this Contract and generally accepted GoodInternational Petroleum Industry Practice provided, however, that this provisionshall not be construed as relieving the Constituent(s) of Contractor from any ofits obligations or liability under the Contract.Within fifteen (15) days of the Effective Date (or such longer period asmay be agreed to by Government), the Companies constituting Contractor arerequired to execute an Operating Agreement. This agreement should beconsistent with the provisions of this Contract. Operator is to provide to theGovernment a copy of the duly executed Operating Agreement within thirty (30)days of the Effective Date or such longer period as may be agreed to byGovernment.The Operator is selected at the time of bid submission. The operatorcarries on petroleum operations on behalf of all the parties who have entered into Joint Operating Agreement.A committee known, as Operating Committee is constituted where all theconsortium partners are represented and they take all important decisions in themeetings of the committee.The procedure to collect money (cash call) from consortium partners getsspecial treatment and dealt in detail and provision for a penalty which extends toforfeiture of participating interest in the project, is made if a party defaults in thepayment of cash call.Other provisions relating to sole risk operations, assignment with orwithout a right of pre-emption or first refusal, relinquishment, force-majuere,dispute settlement etc are also provided in the Joint Operating Agreement.Amongst various regimes in vogue, India has chosen production sharingregime. In this type of regime a contract is entered into between Government ofIndia acting through Ministry of Petroleum and Natural Gas and contracting partyor parties as the case may be. In the event of contractor consisting of more thenone party, a joint operating agreement is also executed by consortium partnersso as to regulate their relationship. These contracts are of long durationextending up to 25 years with provision for extension.
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DRAFTJOINT OPERATING AGREEMENT
BETWEENABCDANDXYZFOR---------------------
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TABLE OF CONTENTSARTICLE CONTENTS PAGE NO.
1 Definitions and Interpretation 52 Effective Date, Duration , and Scope 103 Participating Interest and Joint Operations 114 Operator 115 Operating Committee 206 Programmes and Budgets 237 Costs and Expenses 268 Ownership of Assets 319 Information , Reports and Confidentiality 3210 Work Programme 3611 Relinquishment 3812 Withdrawal 3913 Sale, Transfer and Assignment 4214 Force Majeure 4415 Relationship of Parties,Mutual Indemnities andNo Partition4616 Insurance and Indemnification 4817 Notices 5018 Termination 5119 Arbitration 5320 Applicable Law 5421 General 54
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