Potential role of new concession contracts in promoting the development of Iran's upstream oil and gas industry

The types and forms of oil and gas contracts play an important role in the negotiation of financing, operations, and risk and profit sharing in the development of the upstream oil and gas industry in Iran. Different forms of contracts co-exist in this globalised industry dominated by multinational oil and gas corporations. Increasingly, developed and developing countries have found it necessary to reconsider the forms of contract they enter into in consideration of whether they have served the nation’s interests in oil and gas development in the past, or are likely to in the future. Iran has a unique historical context and legal system in relation to oil and gas exploration and exploitation. This thesis focuses on the legal and contractual framework of the Iranian oil and gas industry from discovery to present day. This has been classified into three periods: from exploration of oil in Iran to nationalisation (1901-1951), from nationalisation to the Islamic revolution (1951-1979), and from revolution to the present day (1979-2017). It considers the strengths and weaknesses of past and present contractual forms having regard to the national interests of the Iranian government. Exerting State control over all oil production stages, especially upstream stages, has been popular from a historical perspective. However, regard should be given to the high costs of investment in oil projects and the risks where profitability and return of the capital is doubtful. In addition, oil-rich countries like Iran generally lack the required technology to efficiently exploit its resource fields as well as the financial resources for infrastructure development. The result has been a distortion of negotiations, particularly over all aspects of financing, infrastructure, and the allocation of project risks. The central theme of this thesis is the analysis of the concept of concession in oil and gas development. This is discussed through the main forms of concession contract; namely, the Classic Concession Contract (hereafter referred to as CCC) and the New Concession Contract (hereafter referred to as NCC). The present study examines the nature and features of the NCC as both a unique type of oil and gas contract and as a modified version of a concession contract. The research reviews other forms of contracts to have been adopted in Iran, and compares them with other arrangement such as joint venture contracts, production sharing agreements, service contracts, and buy-backs used internationally by sectors of the oil and gas industry. To consider the role of the NCC in developing national upstream oil and gas industry, comparative examples are drawn from countries currently using, or having previously used, NCC oil and gas contracts. The selected developed and developing countries are Brazil, Thailand, the United Kingdom, Australia and Norway. The analysis considers the extent to which the NCC has served to advance the objectives and national interests of the national governments in this industry. The implications for future contractual arrangements for this sector in Iran are considered, having regard to the experiences of the NCC discussed. The final chapters of the thesis focus on the relevant aspects of Iran’s Constitution and natural resource laws, and makes recommendations for law reform to Iran’s legal frameworks. It argues such reforms are required to implement the NCC as a contractual form for future upstream oil and gas development in Iran

Determination of the sustainability of the project portfolio of the oil and gas sector of the economy to external factors

The oil and gas sector of the economy in many states remains the main source of foreign exchange and tax revenues to the budget. Moreover, its share, for example, in Russia, accounts for about 12 % of all industrial production. However, this sector, as the practice of world oil prices shows, is experiencing not only a rise, but also a decline. Consequently, the problem of forming a balanced portfolio of oil and gas assets is an object of close attention on the part of national oil and gas companies. The issues of choosing the optimal combination of oil and gas assets in the portfolio are no less urgent, especially among the tasks that all oil and gas companies face, both in Russia and abroad. An investment portfolio or a portfolio of oil and gas assets, which includes new projects for the commissioning of fields, as well as measures to enhance oil recovery, and exploration are objects of real investment. The high volatility of the oil and gas industry is influenced by various factors, including: macroeconomic, innovation risks and a number of others. These circumstances stimulate the sector to increase the resilience of its project portfolios in order to respond flexibly to changes. In an increasingly challenging and uncertain environment, oil and gas companies around the world face constant pressures as difficult strategic decisions and building long-term plans lead to a sustainable portfolio. In order to achieve their goals and maximize profitability, companies should apply certain algorithms in their practice. The article substantiates the role and importance of project portfolio management in achieving the goals of the state and companies in the oil and gas sector. The main goal of the article is to build an algorithm that is aimed both at determining the stability of the portfolio and the ability to flexibly respond to changes in the environment. The scientific novelty of the research lies in the determination of an algorithm for assessing the sustainability of a portfolio of projects of oil and gas companies. Application of this algorithm will allow oil and gas companies to take into account the influence of external factors. The research methodology is based on such methods as analysis of internal regulations and reporting of companies for project portfolio management, risk analysis, project ranking; grouping and classification method

Real Option Valuation of a Portfolio of Oil Projects

Various methodologies exist for valuing companies and their projects. We address the problem of valuing a portfolio of projects within companies that have infrequent, large and volatile cash flows. Examples of this type of company exist in oil exploration and development and we will use this example to illustrate our analysis throughout the thesis. The theoretical interest in this problem lies in modeling the sources of risk in the projects and their different interactions within each project. Initially we look at the advantages of real options analysis and compare this approach with more traditional valuation methods, highlighting strengths and weaknesses ofeach approach in the light ofthe thesis problem. We give the background to the stages in an oil exploration and development project and identify the main common sources of risk, for example commodity prices. We discuss the appropriate representation for oil prices; in short, do oil prices behave more like equities or more like interest rates? The appropriate representation is used to model oil price as a source ofrisk. A real option valuation model based on market uncertainty (in the form of oil price risk) and geological uncertainty (reserve volume uncertainty) is presented and tested for two different oil projects. Finally, a methodology to measure the inter-relationship between oil price and other sources of risk such as interest rates is proposed using copula methods.Imperial Users onl

Arctic Standards: Recommendations on Oil Spill Prevention, Response, and Safety in the U.S. Arctic Ocean

Oil spilled in Arctic waters would be particularly difficult to remove. Current technology has not been proved to effectively clean up oil when mixed with ice or when trapped under ice. An oil spill would have a profoundly adverse impact on the rich and complex ecosystem found nowhere else in the United States. The Arctic Ocean is home to bowhead, beluga, and gray whales; walruses; polar bears; and other magnificent marine mammals, as well as millions of migratory birds. A healthy ocean is important for these species and integral to the continuation of hunting and fishing traditions practiced by Alaska Native communities for thousands of years.To aid the United States in its efforts to modernize Arctic technology and equipment standards, this report examines the fierce Arctic conditions in which offshore oil and gas operations could take place and then offers a summary of key recommendations for the Interior Department to consider as it develops world-class, Arctic-specific regulatory standards for these activities. Pew's recommendations call for improved technology,equipment, and procedural requirements that match the challenging conditions in the Arctic and for full public participation and transparency throughout the decision-making process. Pew is not opposed to offshore drilling, but a balance must be achieved between responsible energy development and protection of the environment.It is essential that appropriate standards be in place for safety and for oil spill prevention and response in this extreme, remote, and vulnerable ecosystem. This report recommends updating regulations to include Arctic specific requirements and codifying temporary guidance into regulation. The appendixes to this report provide substantially more detail on the report's recommendations, including technical background documentation and additional referenced materials. Please refer to the full set of appendixes for a complete set of recommendations. This report and its appendixes offer guidelines for responsible hydrocarbon development in the U.S. Arctic Ocean

Enterprise Risk Management In The Oil And Gas Industry: An Analysis Of Selected Fortune 500 Oil And Gas Companies Reaction In 2009 And 2010

In 2009, four of the top ten Fortune 500 companies were classified within the oil and gas industry. Organizations of this size typically have an advanced Enterprise Risk Management system in place to mitigate risk and to achieve their corporations\u27 objectives. The companies and the article utilize the Enterprise Risk Management Integrated Framework developed by the Committee of Sponsoring Organizations (COSO) as a guide to organize their risk management and reporting. The authors used the framework to analyze reporting years 2009 and 2010 for Fortune 500 oil and gas companies. After gathering and examining information from 2009 and 2010 annual reports, 10-K filings, and proxy statements, the article examines how the selected companies are implementing requirements identified in the previously mentioned publications. Each section examines the companies Enterprise Risk Management system, risk appetite, and any other notable information regarding risk management. One observation was the existence or non-existence of a Chief Risk Officer or other Senior Level Manager in charge of risk management. Other observations included identified risks, such as changes in economic, regulatory, and political environments in the different countries where the corporations do business. Still others identify risks, such as increases in certain costs that exceed natural inflation, volatility and instability of market conditions. Fortune 500 oil and gas companies included in this analysis are ExxonMobil, Chevron, ConocoPhillips, Baker Hughes, Valero Energy, and Frontier Oil Corporation. An analysis revealed a sophisticated understanding and reporting of many types of risks, including those associated with increasing production capacity. Specific risks identified by companies included start-up timing, operational outages, weather events, regulatory changes, geo-political and cyber security risks, among others. Mitigation efforts included portfolio management and financial strength. There is evidence that companies in later reports (2013) are more comprehensive in their risk management and reports as evidenced by their 10-K and Proxy Statements (Marathon Oil Corporation, 2013)

Risk Management in the Arctic Offshore: Wicked Problems Require New Paradigms

Recent project-management literature and high-profile disasters—the financial crisis, the BP Deepwater Horizon oil spill, and the Fukushima nuclear accident—illustrate the flaws of traditional risk models for complex projects. This research examines how various groups with interests in the Arctic offshore define risks. The findings link the wicked problem framework and the emerging paradigm of Project Management of the Second Order (PM-2). Wicked problems are problems that are unstructured, complex, irregular, interactive, adaptive, and novel. The authors synthesize literature on the topic to offer strategies for navigating wicked problems, provide new variables to deconstruct traditional risk models, and integrate objective and subjective schools of risk analysis

Independent Expert Scientific Panel – Report on Unconventional Oil and Gas

No abstract available