State Participation in Oil and Gas Projects: Concept, Reasoning and Challenges

Main goal of this article is to study the concept of State Participation in Oil and Gas Projects. We tried to define the Concept, characteristics, reasoning and challenges around the phenomenon. State Participation as a way of cooperation between Host State(HS) and International Oil Companies(IOC), may be used as main contract or as a Term of Main Contract. Government reasoning for State Participation mainly focuses on taking Control and managerial tasks by the Government, achieve experience and expertise in operations and enhance in government take. Conflict of interest, problems in financing government’s share of Costs and political interference in operations are main challenges of State Participation. Meanwhile, State Participation has some benefits: helps IOC and HS to improve their relations and mutual understanding, National Oil Companies (NOC) can take risk and responsibility for operations, NOCs can achieve experience and expertise in the field also, managerial knowledge of IOCs will be transferred to the NOCs.