Economic Evaluation of Fiscal Regime of Buy-Back Contracts in Comparison with Production Sharing Contracts (Case Study: Azadegan Oil Field)

Authors

1 Faculty of Economics, University of Imam Sadiq (PBUH), Tehran, Iran

2 Faculty of Law, University of Imam Sadiq (PBUH), Tehran, Iran

Abstract

F





iscal regime is one of the main differences between petroleum contracts. Fiscal regimes in oil contracts are divided to two main categories namely Concessionary and Contractual Systems. In contractual systems, the main difference between service and production sharing contracts is the way of compensation of contractor services which could be in cash or in kind. In production sharing contracts the contractor receives a portion of produced oil. One of the main criteria to compare fiscal regimes is government and contractor takes in real values. Comparing the net present value of contractor take shows that it could have been more desirable and cost effective to use production sharing contract in Iranian Azadegan oil field instead of Buy-Back.
 

Keywords


Amir-Moeini, M. (2006). The Application of Financial Instruments in Oil and Gas Contracts: A Model for Iran. Quarterly Energy Economics Review, 8, 91–129.
Iranpour, F. (2014). Legal Analysis of Oil Contracts. Tehran: Rokhdad-e-No.
The Executive Order of Section (A) of Article 107 of the Direct Tax Code. (2016). Retrieved from http:\\www.dolat.ir.
Hatami, A., & Karimiyan, E. (2014). Foreign Investment Law in the Light of Investment Act and Contracts. Tehran: Teesa.
Dehghani, T. (2014). Investment and Financing of Oil and Gas Projects. Tehran: International Institute of Energy Study.
Rokni-Hosseini, J. (2014). Comparative Study of Financial Systems - Tax on Service Contracts of Iran (Buy-Back) and Iraqi Service Contracts in Upstream of the Oil and Gas Industry (Master’s Thesis). Shahid Beheshti University, Tehran.
Shiravi, A. (2014). Oil and Gas Law. Tehran: Meezan.
Askari, M., Shirijian, M., & Taheri Fard, A. (2016). Structural and Comparative Analysis of Optimal Levels of Investment and Oil Production in Upstream Contracts of Buy Back, Production Sharing & Iran Petroleum Contract. Economic Research, 15(58), 111–158.
The Law on the Amendments to the Direct Taxation Act of 1987. (2015). Retrieved from http:\\www.dolat.ir.
Kazemi-Najafabadi, A. (2014). Introduction to Petroleum Contracts. Tehran: SD institute of Law Research and Study.
Kazemi-Najafabadi, A., Ghaffari, A., & Takrousta, A. (2015). Economic Valuation of the Gas Buyback Contracts in South Pars Field through Comparing with Production Sharing Contracts. Iranian Energy Economics Research, 4(14), 153–190.
Momeni Vesali, H., Ghadimifard, H., & Mahmoudi, M. (2011). Comparison Research on Buy- back and Production Sharing Contracts in Upstream Projects of Oil and Gas Industry of Iran. Quarterly of Financial Economics, 3(6), 124–142.
Duval, C., Blinn, K. W., Le Leuch, H., & Pertuzio, A. (2009). International Petroleum Exploration and Exploitation Agreements: Legal, Economic & Policy Aspects. The American Journal of International Law, 81(4), 1015-1017.
Ghandi, A., & Linc, C. (2012). Do Iran’s Buy-Back Service Contracts Lead to Optimal Production? The Case of Soroosh and Nowrooz. Energy Policy, 41, 181–190.
Rystad Energy (2016). Cost of Oil Production Database. Retrieved from http://www.rystadenergy.com/Database.
Johnston, D. (1994). International Petroleum Fiscal Systems and Production Sharing Contract. Tulsa, Oklahoma: Penn Well Publishing Company.
Kaiser, M. J., & Pulsipher Allan, G. (2004). Fiscal System Analysis: Concessionary and Contractual Systems Used in Offshore Petroleum Arrangements. Retrieved from https://www.boem.gov/ESPIS/2/2977.pdf.
 
 
Kasriel, K., & Wood, D. (2013). Upstream Petroleum Fiscal and Valuation Modeling in Excel: A Worked Examples Approach. Chichester: John Wiley & Sons Ltd.
Mazeel, M. (2010). Petroleum Fiscal Systems and Contracts. Retrieved from
https://leseprobe.buch.de/images-adb/1d/31/1d313c36-114c-424a-ae18-8701fdc6f1ed.pdf.
Mian, M. A. (2011). Project Economics and Decision Analysis: Deterministic Models (2nd Ed.). Oklahoma: PennWell Corp.
Nakhle, C. (2010). Petroleum Fiscal Regimes: Evolution and Challenges, The Taxation of Petroleum and Minerals: Principles, Problems and Practice, In P. Daniel, M. Keen, & C. McPherson, The Taxation of Petroleum and Minerals: Principles, Problems and Practice. London and New York: Routledge and International Monetary Fund.
Tordo, S. (2007). Fiscal Systems for Hydrocarbons: Design Issues. Retrieved from https://books.google.com.
Wells, P. (2009). Iraq’s Technical Service Contract- A Good Deal for Iraq. Middle East Economic Survey, Retrieved from http://www.iraqoilforum.com/wp-content/uploads/2009/12/Iraqs-Technical-Service-Contracts.pdf.
International Energy Agency. (2008). World Energy Outlook. Retrieved from http://www.worldenergyoutlook.org.