Iranian Energy Economics

Comparative Study of the Efficiency of Fiscal Regimes of the Buy Back and IPC

Document Type : Research Paper

Authors

Mohammad Reza Shokouhi 1
Mahsa Soleimani 2
Rasoul Sheikhinezhad moghaddam 3
Aye Katebi 4

1 Assistant Professor in Economics, Petroleum University of Technology

2 Department of oil and gas economics, Petroleum university of technology

3 financial petroleum expert

4 Law expert

https://doi.org/10.22054/jiee.2017.7312
Abstract
In this paper, utilizing a cash flow model in an Oil field as a case study, we compare the efficiency of fiscal regimes of buy back and Iranian Petroleum Contract (IPC). In order to implement the mentioned comparison, we have selected influential financial indices such as: internal rate of return (IRR), Net Present value (NPV), Payback period, Profit to investment ratio (PIR) and Government take (GT). Furthermore, considering three price scenarios, sensitivity analysis is performed for different oil prices. Subsequently, we model IPC comprising Enhanced Oil Recovery (EOR (/Improved Oil Recovery) IOR) operations and compare it with IPC without EOR/IOR in terms of the specified indices. Our results indicate that in addition to the more eligibility of IPC for contractors than buy back contracts, Government take is still adequate and noticeable enough in spite of the reduction it would confront in IPC. The paper concludes IPC comprising EOR/IOR is more beneficial to host government than E&P companies, therefore contractors do not have sufficient incentives to apply EOR/IOR operations in which the host government should lead the contractor toward by providing them with mutually acceptable options.

Keywords

Oil Contracts
Fiscal Regime
Buy Back
IPC

  • Receive Date 21 April 2016
  • Accept Date 06 March 2017
  • First Publish Date 06 March 2017
  • Publish Date 22 September 2016

Home

Editorial Board

Guide for Authors

Submit Manuscript

Reviewers

Contact Us