Policies Governing the Implementation of Oil Sales contracts attached to upstream Contract with a Renegotiation Approach

In upstream contracts, selling oil to the investor in exchange for the services and expenses is a common practice in Iran, which is carried out through a contract related to the upstream contract, called the attached oil sales contract. In stable conditions, the stability of the oil sales contract is one of the goals of the parties to the contract, that is, the National Oil Company on behalf of the Ministry of Oil and the Government of Iran and the domestic or foreign contractor. The host government's adherence to this stability depends on the stabilization of domestic and international conditions at the time of signing the contract and the non-change of the macro energy and financial policies governing the implementation of these contracts. The occurrence of domestic and international changes shows the necessity of updating and maintaining the interests of the parties during the implementation of long- term contracts. After facing these changes, the interests of one of the parties are often affected and it deviates from the expectation of concluding the contract. The continuation of such a contract is against the initial intention of its signatories, and disrupting it also causes a delay in fulfilling the obligations of the upstream contract and related contracts. The primary solution is to foresee flexibility in the contract, including flexibility in time, price, type, amount, and delivery method. If the flexibility in the contract is not suitable for the changes that have occurred, the second solution is to use the renegotiation clause.The framework of this research is based on three principles: firstly, the importance and necessity of securing the interests of the host government through renegotiation, secondly, stating the objective criteria of its request and applying examples to these criteria, and thirdly, examining this issue in the context of the implementation of the attached oil sales contract; A contract through which it is decided to hand over half of the products of the field and the right decision can bring more benefits to the host government. The authors hypothesize that by accurately predicting and considering the criteria in the contract, it is possible to pursue the government's policies to secure its long-term interests through renegotiation and without the need to use the sovereign authorities and the subsequent occurrence of disputes. Because the issue has different dimensions and requires a correct and comprehensive interpretation and understanding of the attached oil sales contract and the importance of renegotiation in it, it is considered a qualitative research method and since the research achievements are used in the field of concluding, implementing and resolving disputes in oil sales contracts, it takes on a practical aspect.Based on the proposed hypothesis and descriptive-analytical study and review of existing articles, books, and laws, criteria such as changes in the conditions governing the contract, changes in national energy policies, and the loss of economic efficiency of the contract were explained as the basis for the start of renegotiation. Therefore, the host government can define the non-financial criteria for renegotiation and use them to protect the public interest, considering the obligation to repay the upstream investment and the governance aspect of it. The change in national energy policies is one of these non-financial criteria, which can be mentioned as having more and more diverse customers and making them depend on the purchase of Iranian oil to increase security in the country and the region and establish communication with other countries or prevent crude sales and support downstream industries. The Removal of sanctions is a clear example of the change in the circumstances governing the contract and the reasons for renegotiation, which has an external aspect. Increasing the internal capacity of refining and processing oil and turning it into derivatives, and the need for rawer materials for refineries and industries, are other cases of changes in the conditions of the contract that have an internal aspect. According to the proposed provisions of the renegotiation condition, if the contractor accepts the new conditions of the National Oil Company, the contract will be continued, otherwise the oil sale contract will be terminated and the rest of the investment repayment obligation will be done in another way and without any compensation claim.