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

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.