Joint Operating Company. Contractor shall as soon as practicable after the Effective Date form a Joint Operating Company, which may be incorporated or created outside of Azerbaijan but shall be registered in Azerbaijan in accordance with Azerbaijan law. Contractor shall have the right to substitute or to establish additional entities to undertake some or all of the responsibilities of the Joint Operating Company with respect to Petroleum Operations.
Joint Operating Company. Some parties might balance the conduction of the operations by the creation of another vehicle to operate the joint operations (i.e. incorporated operator). This option is different than the one described in chapter two of this paper as in this case the parties should first sign a JOA and then create a company to be the operator of such JOA. Such a vehicle should be composed of all parties of the consortium (even though less than all parties could be involved inside such entity).131 In any case, this vehicle shall remain subject to the instructions of the relevant JOA. 132 In simple terms, this approach would create another Opcom to perform the day to day activities of the consortium in a similar approach to many JDZs. 133 This option to create a joint operating company is more likely to happen in a development or production phase (specially whenever a NOC is involved). But some companies might argue that this solution creates more complexities and less efficiency. There could be some overlaps and conflicts between the JOA and the shareholder agreement of the operating company. In any case, it is relevant to stress that such solution might require more contribution from the Non-Operators and might even give more control to the Non-Operators (specially to be informed of “what is going on”). But the key issues should be determined by the decision process in the relevant committees, forums and staffing such operating company.
