WA Offshore Gas Joint Venture Agreement Upheld

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WA Offshore Gas Joint Venture Agreement Upheld

Apache Oil Australia Pty Ltd (Now Known As Quadrant Oil Australia Pty Ltd) v Santos Offshore Pty Ltd [2016] WASCA 213 (1 December 2016)

The parties are undertaking a joint venture agreement (JOA) for the exploration and production of offshore natural gas. The applicants hold a 55% stake in the joint venture whilst the respondent holds a 45% stake.

The issue on appeal was whether the respondent had the right to remove the Operator (Apache Oil) if, ‘in its capacity as Operator, it committed a material breach of the JOA which, in effect, has not been cured within a specified time’ pursuant to clause 4.10B of the JOA.

At first instance, the primary judge held that the Operator committed material breaches under the joint venture agreement. This was appealed on three grounds all of which were upheld. The court found that Santos did not establish that Apache Oil had breached the JOA to warrant the removal of them as the operator of the venture under clause 4.10B.

 

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