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INTERNATIONAL JOINT OPERATING AGREEMENTS
PART SIX: SCOPE OF THE AGREEMENT AND PARTICIPATING INTERESTS
Article III sets out the scope of the International Operating Agreement. Under Article 3.1(A), the purpose of the Agreement is to establish the rights and obligations of the Parties with regard to the operations provided for under the Contract. This would include the joint exploration and development of the Contract Area, and the production of Hydrocarbons therefrom. However, Article 3.1(B) makes clear that "downstream" facilities and transportation, the marketing and sale of Hydrocarbons, and Hydrocarbon activities outside the Contract Area, or activities for minerals other than Hydrocarbons, are outside the scope of the Agreement and must be addressed, if at all, elsewhere.1
Article 3.2 specifies the "Participating Interests" of the Parties – their respective undivided percentage interests that flow from the Contract and under the Agreement.2 Under Article 3.3, and unless provided otherwise in the Agreement, the Parties own Joint Property and Hydrocarbons, as well as their rights and interests under the Contract, in the same proportions.3 Obligations of the Parties and Joint Account charges and credits are also to be borne and shared in these ratios.
Parties are to pay when due their share of Joint Account expenses, including cash advances and interest, with time being of the essence for such payments.4
Next issue: "The Government Oil Company as a Co-Venturer"
1Certain aspects of these "excluded" areas are covered in the Agreement. For instance, marketing and sales of Hydrocarbons are addressed in Articles 7.5, 7.11(E), 7.4 and IX. Activities might be conducted outside the Contract Area under the terms of the Contract as a result of unitization with an adjoining contract area, in which case the applicable provisions of the Agreement would apply. In addition, "Hydrocarbons," as defined in the Agreement, means all substances covered by the Contract (including, of course, liquid and gaseous hydrocarbons).
2If a Party transfers all or a part of its Participating Interest (subject, of course, to the provisions of the Agreement and the Contract dealing with such prospective transfers), the Participating Interests of the Parties as set out in Article 3.2(B) are to be revised accordingly: see Article 3.2(B).
3Ownership of equipment and production may also be controlled by provisions of the Contract.
4Article 3.3(C). Payment of amounts charged to a party are without prejudice to the Party's right subsequently to contest the charge.
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