Legal Investigation of Concession Agreements for Operation of Iranian Oil Companies

Iran s Ministry of Petroleum due to empowerment of Iranian companies for executing local mega projects, regional and international markets penetration and upgrading national technology in petroleum upstream industry, predicted a competent Iranian partner called Exploration and Production (E P) companies, for cooperating with the International Oil Company (IOC) in Article Four of the Cabinet Approval. Now considering the absence of IOCs, it seems that the capacity of other oil contract models to be used by Iranian oil companies should be examined. The purpose of this paper is to investigate the feasibility of Concession agreements’ execution, by an E P company in Iran’s upstream industry. The research method is descriptive and analytical and governing laws of Iran are reviewed in this study. Since the host government makes the final decision on the conduct of oil operations, it cannot be described as domination of oil resources, and therefore does not seriously contradict the Iran’s Constitution. Furthermore, E P companies will not be subject to Article 81 of the Constitution. In the Oil Laws, the only restriction on the inflow of foreign capital in the upstream industry of Iran has been observed, which again does not apply to E P companies. In the Laws of the Five-Year Plans, this restriction of oil laws has been adjusted too much in which it seems that the restriction has also been removed for IOCs. Finally, the investigation shows that there are no major legal barriers in applying Concession agreement in case that the operator is an Iranian E P company.