Indemnity and Insurance Clauses in Joint Venture, Farmout and Joint Operating Agreements

Abstract

Many oil and gas operations conducted under a joint venture agreement are accompanied by liabilities for losses and damages, and parties to the joint venture look to the agreement to determine responsibility for such liabilities. The indemnity clause is a common contractual method of allocating liability. In addition to a contractual indemnification, the party being indemnified takes a covenant from the indemnitor that he will obtain insurance against the risk of liability. This article discusses the use of indemnity and insurance clauses in joint venture agreements and analyzes the problems which are most often encountered in the drafting of indemnity and insurance clauses in joint venture agreements.