Improving the fiscal regime of risk service contracts, IPC model, to enhance investment in Iran's gas fields

Document Type : Research Paper

Authors

1 Policy Research Institute (SPRI), Sharif University of Technology, Tehran, Iran.

2 Department of Economy, Faculty of Economics and Political Sciences, Shahid Beheshti University, Tehran, Iran.

Abstract

The gas shortage in the winter of 2020, as well as the supply-demand mismatch in the coming years, will require investment in gas field development along with demand-side management policies. The National Iranian Oil Company's internal financial resources are insufficient for the development of gas fields due to the company's low share of oil and gas sales profits, and it requires to attract investors through risky service contracts. The high capital cost of developing particular fields, including the low richness-low condensate- of the produced gas, prevents complete repayment from exported condensate, especially in the case of sanctions with a 50% cost recovery cap. Consequently, IPC contract modeling was used to examine five major parameters affecting the gas field development economy: capital cost, quality of gas produced, condensate rice, cost recovery cap, and natural gas price. The proposed financial relationship is provided by picking the ideal value of the two parameters of the cost recovery and gas price for a combination of three additional factors.

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Main Subjects

References

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Strategic Studies of public policy
Volume 11, Issue 41
March 2022
Pages 30-53

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