An Analysis of Challenges of Oil and Gas Upstream Contracts in the Islamic Republic of Iran

Oil and gas industry plays a key role in Iranian economy because of significant oil and gas resources in Iran. Despite over a century of experience of Petroleum contracts, our country has not yet been able to resolve its weaknesses, due to various issues such as political, economic, social, administrative, legal, historical, and cultural considerations. Iran, like other developing countries, suffering from lack of sufficient capital and technical knowledge as well as a desirable management capability for implementing upstream large oil projects such as exploration, drilling, development and production. So the presence of international experienced companies in this industry seem to be inevitable and it seems that this requires concluding cooperation agreements with these International Oil Companies (IOCs). Accordingly, after outlining the basic research concepts, the legal requirements and constraints governing upstream oil and gas contracts, in order to assess the challenges have been studied. Subsequently, 26 of the most important challenges out of the 40 identified challenges from the literature were selected using the Fuzzy Delphi method. Finally, there are suggestions and solutions to reduce these challenges including the developing a comprehensive plan for development of the oil and gas fields, using international companies in the form of consulting and services contracts, aligning the interests of the employer and the contractor in the implementation of projects, paying close attention to the development of technology in the industry, strengthening regional organizations and treaties to strengthen energy diplomacy, maximizing production from sharing fields in the least time to reduce these challenges etc.