The Application of Islamic Project-based Means (sukuk- Bonds) in Financing Investments in Oil and Gas Sector

The intensification of international financial constraints on Iran in recent years and insufficiency of internal banking resources are considered among the most important constraints of financing in oil industry. These constraints has led to delay in the extraction of oil and gas from joint fields and loss of national resources due to maximal use of these resources by partner countries. Using a qualitative approach and an interpretive method based on the views of experts and focusing on a case study, the present paper seeks to find Islamic project-based means of financing appropriate to upstream sector of oil industry. According to the hypothesis of the paper, this finance can be provided by designing Islamic project-based means in which its two conditions (repayment of resources by using the revenues of the project and its being Islamic, i.e. conforming to legal principles) are observed. The research findings indicate that National Iranian Oil Company can use such means as rent Sukuk (Islamic bonds) Istisna' (construction order) and forward purchase to finance upstream sector of oil industry. Furthermore, public contractors can use rent Sukuk and Istisna' in EPCE (engineering, procurement and construction contract) approaches to finance their projects.