The 2004 AIPN Model Form International Accounting Procedure - Claims for Adjustments and Audit Issues and the Upcoming Revision, (2010)

The Association of International Petroleum Negotiators (AIPN) publishes an accounting procedure for use in the international oil and gas industry. The AIPN accounting procedure is designed to be attached as Exhibit A to the AIPN Model Form International Operating Agreement, the latest form of which is the one published in 2002 (“Operating Agreement”).

The AIPN first published an accounting procedure in 1992. The 1992 form was revised in 2000 and then again in 2004. (The latest form, the 2004 AIPN Model Form International Accounting Procedure, will be referred to in this paper as the “2004 AIPN AP.”) The 2004 AIPN AP itself is now about to be revised by an AIPN committee charged with looking into what additional changes and updates need to be made to the form and with coordinating that revision with the currently ongoing revision of the Operating Agreement. The AIPN plan is to publish the revised Operating Agreement and the revised 2004 AIPN AP at the same time so that both version have the same revision date.

This paper will review the purpose and structure of the 2004 AIPN AP, the principal revisions made to the 2000 version of the AIPN accounting procedure to produce the 2004 AIPN AP and then some of the issues that have arisen under the US accounting procedure form published by the Council of Petroleum Accountants Societies (COPAS) which are relevant in construing the 2004 AIPN AP, particularly Section 1.8 on Audits and related provisions such as Section 1.7 on Adjustments. In addition, the paper will review some of the issues which the AIPN committee charged with revising the 2004 AIPN AP may be looking at in the upcoming revision of that form.