Faṣlnāmah-i Pizhūhish-i Huqūq-i Khuṣūṣī (Mar 2014)
The New Concession Agreements and the Interests of Oil Producer Countries:With Specific Reference to Ownership of the Oil, Host State’s Control and Management and the Fiscal Regime of the Agreements
Abstract
AbstractThe main purpose of this Article is to examine the new concession agreements, and to compare relevant modifications and changes with the traditional concessions, they have undergone. To this end three subjects are examined: The ownership of the oil, governmental control and management of the oil production and the fiscal regime of the agreements in question.In an attempt to deal with the first issue, the study has differentiated between two situations: A situation where the oil is still in place and has not yet been exploited. In this case, as is with other new oil contracts, under the new concessions the government still owns the oil. The other situation is when the oil is produced and is technically speaking at the wellhead, in which point the concessionaire acquires the ownership of the produced oil; while the host government retains ownership of resources that remains in the subsoil. This salient feature of the concessions (both the new and the traditional ones) makes it distinguishable from other petroleum contracts. For instance, in a production sharing agreement a percentage of the ownership of product is conveyed to the contractor at the exporting point, whereas, under a service contract, the contractor does not acquire any ownership rights over the oil production.With respect to governmental control and management, we have found that due to awareness of the host governments of the benefits of their natural resources, they were able to obtain the right of control and management of the exploration and exploitation of their resources , which found expression not only in the new concessions but also in such agreements as service and production sharing contracts. In practice, however, because of the paucity of the requisite skill and technology for exploration and exploitation operations, they have not been able to achieve such a purpose.As regards the question of the fiscal regime, where such matters as taxation, royalty and bonus were examined, we found that all changes made, were in favour of the host countries: except, however, where the risk of failure to explore successfully was very high; in which case more attractive and incentive rewards were granted to the concessionaire.
