A critical review on the legal regime of New Iranian Petroleum Contracts and response to them

Over the last decades, the buy-back contract model kept evolving over the last 3 generations. Despite its significance, it was always faced with heavy criticism. After sanctions against Iran and the occurrence of the Joint Comprehensive Plan of Action (JCPOA), there was a crucial need of international investment by joining foreign investors and domestic contractors on behalf of the host government. Thus, there was a vital need for an enhanced model contract after changes in laws allowing this agreement. Because most of Iran’s current reservoirs have been depleted, it is essential to do sustainable exploitation with a maximum efficient rate of recovery including prioritizing the use of shared reservoirs. This lead to the enactment of a new model of oil and gas contracts called Iranian Petroleum Contracts, also known as IPC. This new model has its own flaws in the legal regime and is faced with criticism just as with the previous model. This paper attempts to analyze and respond to these critical arguments. Although there are some gaps in the model, especially in the operating phase, it can pave the way for the advancement of legal and fiscal regimes leading to further foreign investment and future contracts, in hopes to strengthen Iran’s position in OPEC and world trade of oil and gas for long-term.