Comparative Law Researches

Comparative Law Researches

Challenges of Project Financing in Iran Petroleum Contracts: A Bankability Perspective

Authors
ghazal keshavarzi 1
Majid Ghamami 2
1 Ph. D. Student in Oil and Gas Law, Faculty of Law and Political Science, University of Tehran, Tehran, Iran1
2 Associate Professor in Private Law, Faculty of Law and Political Science, University of Tehran, Tehran, Iran
10.48311/CLR.29.2.2
Abstract
The essential element for the successful execution of any project is its financing. In the oil and gas industry, due to the substantial investment required and the long lifecycle of projects, there is a predominant inclination towards project-based financing. Project financing is based on long-term borrowing and, considering two key features-high financial leverage and non-recourse and/or limited recourse to the sponsors and shareholders of the project-it compels lenders to conduct a thorough and comprehensive assessment of the project risks, and consequently, to evaluate the bankability of the project. The oil and gas industry, due to considerable expenses, long durations, and multiple risks such as fluctuations in oil prices, environmental issues, and political risks, requires reliable financial and contractual structures. One of the main challenges faced by authors of oil contracts in Iran has been the risk management system and, consequently, the bankability of these contracts. This article analyzes the impact of various risks on cash flows and the ability to manage these risks in order to enhance the bankability of oil and gas projects, with an emphasis on the model of Iran Petroleum Contracts (IPC), which currently follows a service contract framework.
Keywords
Project Finance
Bankability
risk
Iran Petroleum Contract
Upstream Oil and Gas Contract

Subjects

اشکوه، حسین، صبحیه، محمد حسین. (1394). روش تامین مالی پروژه‌محور و شرکتی از منظر حاکمیت پروژه موردکاوی: پروژه‌های بالادستی پارس جنوبی در ایران و قطر. چشم انداز مدیریت مالی, 5(12), 81-108.
2. جنیدی، لعیا، مجید غمامی و محسن علیجانی، مقایسه تطبیقی حق جایگزینی در تأمین مالی پروژه محور با نهادهای سنتی حقوق مدنی، تحقیقات حقوقی، دوره ،21،1397 شماره 8.
3. غمامی، مجید، کسنوی، شادی. (1401). بانک پذیری و الزامات حقوقی آن در الگوی تامین‌مالی پروژه محور. فصلنامه تحقیقات حقوقی, 25(98), 95-118. doi: 10.29252/jlr.2021.202682.1800
4. غمامی، مجید. (1389). تأمین مالی پروژه‌های ساخت، بهره‌برداری و انتقال (BOT ). مطالعات حقوق تطبیقی، 1(2), 101-122. doi: 10.22059/jcl.2010.80797
5. کسنوی شادی، باقری محمود. جایگاه حقوقی و اعتباری قرارداد فروش محصولات پروژه در ‌زنجیره قراردادهای تأمین مالی پروژه محور: نقش شروط ‌قرارداد فروش در بانک پذیری پروژه. پژوهش‌های حقوق تطبیقی. ۱۴۰۱; ۲۶ (۱) :۱۲۳-۱۴۷، http://clr.modares.ac.ir/article-۲۰-۵۲۰۴۶-fa.html
6. کسنوی، شادی، ابراهیمی، سید نصراله، باقری، محمود. (1400). تحلیل ماهیت حقوقی‌ـ‌اقتصادی تأمین‌مالی پروژه‌محور: تعیین سلسله‌مراتب بین زنجیره قراردادها و چالش تعارض و هماهنگی بین آنها. فصلنامه مطالعات میان‌رشته‌ای در علوم انسانی, 13(2), 149-176. doi: 10.22035/isih.2021.3951.4058
7. کسنوی، شادی، زنجیره قرردادها در مدل تامین مالی پروژه‌محور،تهران: بنیاد حقوقی میزان،1400.
8. نیکبخت فینی، حمیدرضا، باقری، محمود، قربانی، الهه. (1397). بررسی مقایسه‌ای چارچوب قراردادی بیع متقابل و قرارداد نفتی ایران (IPC) در خصوص حقوق مالکیتی، شناخت ذخایر و رژیم مالی. مطالعات حقوق انرژی، 4(2), 547-570. doi: 10.22059/jrels.2019.245095.155
7-2 منابع انگلیسی
9. Blitzer, C. R., Lessard, D. R., & Paddock, J. L. (1984). Risk-Bearing and the choice of contract forms for oil exploration and development. The Energy Journal, 5(1), 1–28. https://doi.org/10.5547/issn0195-6574-ej-vol5-no1-1
10. Chima, C. M. (2011). Supply-Chain management issues in the oil and gas industry. Journal of Business & Economics Research (JBER), 5(6). https://doi.org/10.19030/jber.v5i6.2552
11. Clews, R. (2016). Project finance for the international petroleum industry. Academic Press.
12. Delmon J, Private Sector Investment in Infrastructure: Project Finance,PPP Projects and PPP Frameworks, Edition3,Kluwer Law International,2016, 9041162739, 9789041162731.
13. Demirmen, F. (2007). Reserves estimation: the challenge for the industry. Journal of Petroleum Technology, 59(05), 80–89. https://doi.org/10.2118/103434-jpt
14. DiLuzio, D. (2018). An update of the Global Standard in Reserves/Resources Classification and Definitions. Journal of Petroleum Technology, 70(09), 74–77. https://doi.org/10.2118/0918-0074-jpt
15. Flyvbjerg, B. (2011). Over budget, over time, over and over again. In Oxford University Press eBooks. https://doi.org/10.1093/oxfordhb/9780199563142.003.0014
16. Gatti S.,(May 2013) Project Finance in Theory and Practice, Designing, Structuring and Financing Private and Public Projects, Academic Press.
17. Higuuchi, Takao.(2019) Natral trsouce and ppp infranstracture projects and project finance
18. Hultzsch, P., Lake, L. W., & Gilbert, R. B. (2008). Uncertainty Estimation through the Life of the Field. Energy Exploration & Exploitation, 26(3), 175–195. https://doi.org/10.1260/014459808786933726
19. Majerowicz, W., & Shinn, S. A. (2016). Schedule matters: Understanding the relationship between schedule delays and costs on overruns. IEEE Aerospace Conference, 1–8. https://doi.org/10.1109/aero.2016.7500722
20. McKenzie, G., & Wolfe, S. (2004). The impact of environmental risk on the UK banking sector. Applied Financial Economics, 14(14), 1005–1016. https://doi.org/10.1080/0960310042000261880
21. Müllner, J.(2017) International project finance: review and implications for international finance and international business. Management Review Quarterly, 67(2), doi:10.1007/s11301-017-0125-3
22. Muwooya, Daniel.( 2014). Political Risk and Project Finance. An Evaluation of the Proposed Uganda Kenya Crude Oil Export Pipeline,https://www.researchgate.net/publication/261723393
23. Niehuss John M.(2015). International project finance in a nutshell ,St. Paul, MN : West Academic Publishing.
24. Saptarini, D. &Nainggolan, Y. (2022). Risk Management in Oil and Gas Field Development Project with Marginal Resources:A Case in Mature Field in East Kalimantan, European Journal of Business and Management Research Available at www.ejbmr.org
25. Spence, D. B. (2010). Corporate social responsibility in the oil and gas industry: The importance of reputational risk. Chicago-Kent Law Review, 86(1), 59. https://doi.org/10.15781/t21c1tg6n
26. Yescombe E.R. (2014) Principles of Project Finance, Second Edition, Academic Press, https://doi.org/10.1016/C2011-0-04268-0.
27. Yescombe E.R.(2007). Public-Private Partnerships: Principles of Policy & Finance, Edition: 1stPublisher: Butterworth-Heinemann, DOI:10.1016/ B978-0-7506.
28. Zahari, Wan Zulhafiz, On the Contractual Risk Allocation in Oil and Gas Projects (October 13, 2017). The Law Review (LR). pp. 168-193, 2017, Available at SSRN: https://ssrn.com/abstract=3052064