Enforcement of International Petroleum Industry Practices under Different Upstream Regimes

Abstract

For decades, companies involved in the petroleum industry are committed to complying with International Petroleum Industry Practices (IPIP) or similar terms in performing most of their obligations and operations. This paper examines the consequences of a breach of IPIP in light of reviewing dispute resolution methods in different regimes governing the upstream sector. Reviewing disputes and lawsuits related to the breach of IPIP suggests the different enforcement methods under the various regimes of operation in the upstream sector. With regard to the Iranian petroleum industry, using the results of this comparative study, it was shown that due to the contractual regime used in the relations between the National Iranian Oil Company (NIOC) and International Oil Companies (IOCs) involved in the development of the Iranian upstream sector, any dispute over IPIP as part of contractual terms will cause new risks by triggering the arbitration mechanism. It was also suggested that the preparation of IPIP in the form of precise documents and their periodical update by relevant authorities, including the Ministry of Petroleum, may reduce disputes between the contracting parties (NIOC and IOCs) and determine the latter’s scope of authorities related to selection and application of IPIP.

Keywords

• international petroleum industry practices
• enforcement
• dispute resolution methods
• upstream sector