Disaggregated Approach to Investigate Effect of Petroleum Contracts on Iran and Saudi Arabia’s Oil Production Trend

Bahadori, Shirkou; Mohammadi, Teymour; Momeni, Farshad; Kazeminajafabadi, Abbas

doi:10.22054/jiee.2017.7310

Disaggregated Approach to Investigate Effect of Petroleum Contracts on Iran and Saudi Arabia’s Oil Production Trend

Document Type : Research Paper

Authors

Shirkou Bahadori ¹

Teymour Mohammadi ²

Farshad Momeni ²

Abbas Kazeminajafabadi ³

¹ Ph.D., Oil and Gas Economics, Allameh Tabataba’i University

² Associate Professor, Department of Economics, Allameh Tabataba'i University, Tehran

³ Assistant Professor of Private Law, Faculty of Law and Politics Science, Allameh Tabataba’i University

https://doi.org/10.22054/jiee.2017.7310

Abstract

In this study the effect of petroleum contracts on Iran and Saudi Arabia’s oil production trend has investigated. Disaggregated approach has utilized to investigate the effect of petroleum contracts. In this approach, optimal production of the fields of above mentioned countries, has been evaluated in two scenarios. Then by summation of production data of all fields, production trend of these two countries has been calculated. In the first scenario, it is assumed that control of oil production is in the hands of host country, while control of production in the second scenario is determined based on the kind of contracts which the host country has had during its oil production history. Based on the estimated production trend of two countries, it is observed that in the case which International Oil Company controls the production, rate of oil extraction is more than the case which production is controlled by the host country. Also by increasing the portion of International Oil Company from the produced oil, it increases the production rate to maximize its own net present value.