Types of Upstream Petroleum Contracts in Iran
As one of the most outstanding players in the market of energy, Iran has developed a new school of contractual model to accommodate the pace of modern legal innovations. More controversial, upstream oil and gas industries have been regulated as to attract foreign investment as much as possible. because of the need to high standardized technology and high costs and risks, average investors are reluctant to engage in upstream sector, in comparison with midstream and downstream petroleum industries. usually, there are a certain number of companies allowed to participate in Iran petroleum bids, from various countries. This number rounds about 30 and includes globally major companies specialized in this field. Even this number could be marked as competitive regarding the limited choices generally and acute conditions during Trump era.
The New Regulation and New Season of IPC
Yet, the exact terms and detailed descriptions of new-generation contracts are not clear. The modern form of these contracts is commonly known as Iran Petroleum Contract or IPC Model. The contractual terms and clauses shall concur with the guidelines recently issued by the Council of Ministers in the form of “Regulation Concerning the General Conditions, Structure and Patterns of Upstream Iran Petroleum Contracts”. This regulation stirred up a long debate throughout the political bodies. The legal basis upon which the regulation has been issued, is the article 7 of the “Act of functions and authorities of the Ministry of Petroleum”. The Guardian Council which is a political organ serving as a constitutional court, confirmed the technical accuracy on the matter of observing legal requirements.
New Policy to Attract Oil Majors
The core policy behind the regulation was to offer more flexible terms and switching the playground by covering more investment risks and taking into account oil price fluctuations, or in a word, to please oil majors. Although circumstances have been changed since the time this regulation came into effect (late 2015), the policy is now even more stronger continuing, as the democrats are now back in control in the US.
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