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Comparative Analysis of Fiscal Terms of Iran Petroleum Contract (IPC) and Production Sharing Contract (PSC): Case study of South Azadegan field

Author

Listed:
  • Sahebhonar, Hamed

    () (PhD Candidate in Economics, Ferdowsi University of Mashhad)

  • Lotfalipour, Mohammad Reza

    () (Professor of Economics, Ferdowsi University of Mashhad)

  • Hooshmand, Mahmood

    () (Professor of Economics, Ferdowsi University of Mashhad)

  • Feizi, Mahdi

    () (Assistant Professor of Economics, Ferdowsi University of Mashhad)

Abstract

This paper simulates and compares the fiscal terms of Iran Petroleum Contract (IPC) and Production Sharing Contract (PSC) for first time. The Scenario approach has been used, in which timing and the volume of investment and production profile are assumed as given and the effects of fiscal parameters of the contract on the key variables such as Internal Rate of Return (IRR) and take of the contractor are computed. This paper uses the technical and economic information of the South Azadegan field (phase II) as a case study for financial simulation. One of the significant results is the possibility of reaching the same economic and fiscal results regardless of the contract type. Another important result of this article is that the IPC fiscal regime is less flexible and progressive than PSC and is less attractive specifically in more capital intensive fields. The reason of this issue is some restriction in IPC such as amortization of the capital costs and having longer payback period and the lack of direct relation between IOC’s fee and the field revenue.

Suggested Citation

  • Sahebhonar, Hamed & Lotfalipour, Mohammad Reza & Hooshmand, Mahmood & Feizi, Mahdi, 2017. "Comparative Analysis of Fiscal Terms of Iran Petroleum Contract (IPC) and Production Sharing Contract (PSC): Case study of South Azadegan field," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 4(1), pages 87-118, May.
  • Handle: RePEc:ris:qjatoe:0067
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    More about this item

    Keywords

    : Fiscal regime; fiscal simulation; South Azadegan field; Iran Petroleum Contract (IPC); Production Sharing Contract (PSC);

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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