Before the start of the JSBA negotiations, the parties should assess what they offer the consortium (and what they expect from others). These discussions always involve the disclosure of economically sensitive information, so the parties must enter into a confidentiality agreement before any in-depth discussion. A particular party may bring much more value to the consortium than the others, if it alone holds certain high-quality information. In order to disclose this information to the consortium, it may seek a higher level of comfort in maintaining its confidentiality than is customary in a standard confidentiality agreement, for example by requiring certain compensation from the parties. Therefore, the parties should bear in mind that there may be debate in the negotiations regarding the confidentiality agreement and parties with less (or no) confidential information to share will therefore be less concerned with the confidentiality aspects of their relationships. The Joint Study and Offer Agreement (JSBA) is a common contractual agreement in the international oil and gas industry, where several parties wish to jointly examine a certain licensing area in order to present a joint licensing/concession offer outside of a registered joint venture. For more information on licences and concessions, see the practical note: understanding of upstream oil agreements – concessions, production sharing contracts and service contracts. The JSBA is, in its simplest form, an unincorporated short-term community society whose purpose is to regulate relations between the parties before the licensing/concession is granted. JSBA generally provides for a rapid implementation of an JOA as soon as a CSP is granted by the government. In order to save time to negotiate an JOA, the parties can agree and define some key principles within the JSBA, and they may also agree that these principles temporarily govern joint operations until a full JOA is executed. However, the parties should be careful to defer to the JOA principles for a longer period of time, as not all key principles agreed between the parties will be updated, as the Bahraini Oil Minister welcomed the agreement and said he would support the Kingdom`s efforts to develop the LNG sector. In addition, the parties should be aware that there may already be areas of common interest agreements (AMIAs) binding potential consortium members.
The impact of these existing agreements on the composition of the proposed consortium must be carefully considered. Caution should be exercised with respect to the inclusion of withdrawal provisions in the JSBA. Certain types of agreements, such as the AIPN Study and Bid Agreement (2006) model, provide for a party to withdraw from the agreement, with the outgoing party having to not enter into concession interest on all or part of the territory envisaged by the consortium for a period of one year after the withdrawal. In most cases, it would be preferable to extend this requirement to prohibit the lowering from applying in the corresponding licence cycle for the reasons mentioned in recital 4 above.