Ali Emami Meibodi; Mehryar Dashab; Masoumeh Akbari Birgani
Abstract
The high average life of onshore facilities, entering the second half of the life of large fields, reducing the recovery factor of oil reservoirs and Iran's backwardness from the development of common fields are the most important challenges of the upstream part of Iran's oil industry.Due to the impossibility ...
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The high average life of onshore facilities, entering the second half of the life of large fields, reducing the recovery factor of oil reservoirs and Iran's backwardness from the development of common fields are the most important challenges of the upstream part of Iran's oil industry.Due to the impossibility of financing and necessary capital from domestic sources, it is necessary to pay more attention to foreign investment and its contractual methods in this field. Therefore, in this study, the financial-economic performance of Iran's service contracts model and Iraq is being studied and compared in terms of attracting foreign investment and financing projects for the development and exploitation of oil fields. in this regard, the financial simulation technique and sensitivity analysis of the contractor's rate of return on the changes in the financial parameters of the contractual models have been used. The results show that the IPC contract model provides better economic results for the contractor compared to buy back while motivating the contractor to achieve safe production, but the Iraqi service contract model due to the shorter payback period, which facilitates financing the project and reduces the risk of capital expenditure, especially at high oil prices is more attractive to the contractor.
Hamed Sahebhonar; Mahdi Feizi; Mohammadreza Lotfalipour; Mahmood Hooshmand
Abstract
This paper analyzes and compares the behavioral responses of the operator to the fiscal regime of the two types of contracts, Iran Petroleum Contract (IPC) and Production Sharing Contracts (PSC) with using the dynamic optimization approach (dynamic programming method). This paper aims to numerically ...
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This paper analyzes and compares the behavioral responses of the operator to the fiscal regime of the two types of contracts, Iran Petroleum Contract (IPC) and Production Sharing Contracts (PSC) with using the dynamic optimization approach (dynamic programming method). This paper aims to numerically compute the amount of distortions caused by the petroleum contracts, which creates some distortion in the investor's decision regarding to the neutral case that means there is no contractual restrictions including government share of resource rent, tax, extraction timing, cost recovery limit and so on. The focal point of this paper is the application of the stochastic dynamic programming for a real oil field in order to achieve the numerical results and using the deadweight loss (DWL) as an actual measure for assessment of the distortion of the contract regarding the first best case (neutral path). Accordingly, with using the information of the South Azadegan field, the results show that both fiscal terms of IPC and PSC have distortionary effects and the DWL of the IPC is more than that of PSC. For instance, in the reference scenario and reference oil prices the DWL of IPC and PSC are 22/22% and 21/14% respectively.
