Legal Investigation of Concession Contracts for Execution of Operation by the Iranian Exploration and Production Companies

Ministry of Petroleum of Iran predicted a competent Iranian partner for cooperating with the International Oil Company (IOC) in Article 4 of the Council of Ministers Resolution. The reasons stated as empowerment of Iranian companies for executing local mega projects, regional and international markets presence, and upgrading national technology in the petroleum upstream industry. In this regard and based on the procedure of qualification method of exploration, development and production companies of petroleum fields, seventeen Iranian companies were qualified as Exploration & Production (E&P) companies. Now that IOCs have left the Iranian petroleum market, are there still legal restrictions on the use of other contractual models for Iranian oil companies? The purpose of this study is to investigate the possibility of using Concession contracts by an E&P company. The research method is descriptive and analytical. Governing laws of Iran are reviewed in this study. Since Iran’s government makes the final decision on the conduct of oil operations, it cannot be described as the domination of oil resources, and therefore does not seriously contradict the Articles 43 and 153 of Iran’s Constitution. Furthermore, E&P companies will not be subject to Article 81 of the Constitution. In Article 6 of the Oil Law, the only restriction on the inflow of foreign capital in the upstream industry of Iran has been observed, which again does not apply to E&P companies. Finally, the results show that there are no major legal barriers to applying Concession agreement in case that the operator is an Iranian E&P company.