The Joint Study and Bid Agreement (JSBA) is a contractual agreement commonly used in the international oil and gas industry, under which several parties wish to jointly review a specific license area in order to ultimately submit a joint offer for the license/concession outside of a registered joint venture vehicle. For more information on licences/concessions, see practice note: Basic oil agreements - concessions, production sharing contracts and service contracts. The Association of International Petroleum Negotiators (AIPN) publishes a series of model contracts for the oil and gas industry, one of which is entitled "International Study and Bid Group Agreement". This type of agreement is a common starting point for companies wishing to engage in a common offer. In the case of Abu Dhabi, where there may not be a formal tendering procedure, such an agreement can be adapted relatively easily to meet the needs of companies wishing to commit to a coordinated common approach. The Law on Trading Companies provides that any decision requires the unanimous agreement of the joint participants, unless the agreement provides that a decision is taken by a simple majority. The Parties should take into account the level or type of governance that best suits their needs, and the agreement on joint offers should structure the governance of the Committee accordingly. There is no provision in the law on how to terminate joint participation. This is a matter left to the agreement between the parties.
In some legal systems, joint offer agreements may be subject to revision as they are contrary to competition law. We do not expect these kinds of problems in Abu Dhabi. Before JSBA negotiations begin, the parties should assess what they are offering the consortium (as well as what they expect from others). These discussions involve, without exception, the disclosure of economically sensitive information, so the parties must engage in a confidentiality agreement before engaging in in-depth discussions. It may be that one party in particular brings much more value to the consortium than the others when it alone has certain quality information. In order to enable it to communicate such information to the consortium, it may seek a higher level of comfort in protecting its confidentiality than is usually the case in a standard trust agreement, for example by requiring certain compensation from the parties. Therefore, the parties should take into account that a debate may take place during the negotiation of the confidentiality agreement and the parties who have to disclose less (or not) confidential information will therefore be less concerned about the confidential aspects of their relationship. Since the technical and financial competence of a third party may lie everywhere in areas of high to unproven competence, the criteria for the introduction of a third party must be carefully weighed in order to minimise the risk of dissatisfaction among the other members of the consortium in the event of a third party joining the group. The JSBA should define the criteria necessary to join the consortium and consider the procedure for third-party approval by the remaining members of the consortium (including obtaining unanimous approval). It is also recommended to provide the prerequisite for the effective novation of the JSBA to attract a third party.
This could be done by attaching an instrument of accession to the JSBA and by requesting permission to act on behalf of the outgoing party. Managing operations after a concession has been awarded may seem too far away to consider when signing a joint offer agreement, but it is important to do the details correctly and define the ground rules for decision-making from the outset. . . .