Investigating the Challenges and Attractions of International Service Contracts in financing Upstream Project in Iran and Iraq  Oil and Gas Industry

Emami Meibodi, Ali; Dashab, Mehryar; Akbari Birgani, Masoumeh

doi:10.22054/jiee.2022.59111.1829

Investigating the Challenges and Attractions of International Service Contracts in financing Upstream Project in Iran and Iraq Oil and Gas Industry

Document Type : Research Paper

Authors

Ali Emami Meibodi ¹

Mehryar Dashab ²

Masoumeh Akbari Birgani ³

¹ Professor of Economics, Faculty of Economics, Allameh Tabataba’i University, Tehran, Iran

² Assistant Professor, Faculty of Law, Allameh Tabataba’i University, Tehran, Iran

³ Ph.D. Candidate, Faculty of Law, Allameh Tabataba’i University, Tehran, Iran

https://doi.org/10.22054/jiee.2022.59111.1829

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 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.

Keywords

Buy back

Iran Petroleum Contracts (IPC)

Iraq Service Contracts

Contract financial system contract