05.07.2009

AMI refers to the coming together of parties over a defined territory though it does not necessarily mean that any of the members has already possessed a legal right on part or all of the territory. The agreement can entail the stages of the partnership and can be for the purpose of reconnaissance and feasibility studies or even up to production sharing. The concept almost resembles a joint bidding agreement; one difference being the latter’s much shorter contract duration. Traditionally the duration of AMI is long and can go up to 30 years. Nowadays it is generally less than 10 years. An operator is not appointed in most AMIs hence dismissing the notion of it being a JOA. There is a term operator in an AMI but this is more defined as a coordinating role. An AMI supposedly binds parties together i.e. none can directly pursue an interest in the agreed area without consent of the others; however past drafts have been rather loose on this aspect (bear in mind that there is no mandatory standard applied on AMI). It becomes a grey area as well when a party (or its parent or its affiliates) uses an indirect route to grab an opportunity(s) as defined in the AMI e.g. the party buys over company holding a block that the AMI parties are interested in. Is the party obligated to offer/share the block in question to the AMI partners? If so, under what valuation should it be i.e. a pro-rata amount of the purchase value or a valuation based on any cost sharing mechanism within the AMI? The general AMI principle allows for a premature withdrawal of a party but forbids the party concerned to compete in the area of interest (applying provisions similar to a non-competition agreement). Even the defined territory of an AMI may eventually lead to its invalidity in view of changing circumstances e.g. an old AMI covering East Germany (which no longer exist – does it then mean Germany?). Hence, adjudication on a present commercial dispute tied especially to an old AMI can be difficult. The general AMI principle allows for a premature withdrawal of a party but forbids the party concerned to compete in the area of interest (applying provisions similar to a non-competition agreement). The issue here is whether it is permissible to impose anti-competition clauses. Within EU for example, anti-competition is generally not allowed. Even within the English courts the view is similar provided that the matter may result in a restraint on trade.

Gina Cohen
Natural Gas Expert
Phone:
972-54-4203480
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