In March of 2015 New Zealand’s Court of Appeal brought to a conclusion a long
running dispute between the joint venture partners in the Pohokura gas and condensate field located in Taranaki, New Zealand. Todd Pohokura v. Shell Exploration NZ Limited et ano deals with the rights to production and offtake arising under the Association of International Petroleum Negotiator’s (AIPN) 1995 Model Form joint operating agreement (JOA), the powers of the Operating Committee in regards thereto and the practical implications of entering into a field development without documenting all the necessary gas sale and transportation arrangements in advance. The factual matrix provides an opportunity to review the principles of common law relevant to production and offtake, including the development of those principles from early English common law into U.S. domestic law, and how those principles have been reflected in model form JOAs on both sides of the Atlantic, including the AIPN forms and ultimately the Pohokura JOA. The analysis confirms the New Zealand courts’ rulings upholding the power of the Operating Committee to determine production rates under the AIPN Model form.
However, it concludes that gas offtake arrangements that amend or add to the rights and obligations of the parties under the JOA must be agreed unanimously and are not within the jurisdiction of the Operating Committee to determine
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