Comparative Analysis of the Financial Regime of New Petroleum Contracts, Known as IPC, and Buyback Trade in Terms of Costs
Subject Areas : Journal of Investment Knowledge
Alireza Hasanalizadeh
1
(Alireza Hasanalizadeh P.h.D Student Of financial-financial Low.Department of Management and Economic Science and research Branch, Islamic Azad University.Tehran. Iran)
ali zarea
2
(Ali Zare, Assistant Professor of private Group, Faculty of Law. Theology and Political Science. Science and research unit Azad University.Tehran. Iran.)
mahdi montazer
3
(Mehdi Montazer, Assistant Professor. of Private Law. Faculty of Human Sciences. Damavand Branch Islamic Azad University, Tehran, Iran.)
Keywords: buyback contracts, direct and indirect capital expenditure, cost of money, Iran’s new petroleum contracts, cost of remuneration,
Abstract :
One of the key components of contracts is the associated charges. This paper studies types of costs in buyback and the new petroleum contracts for the first time. Buyback contracts are financially comprised of capital expenditure, non-capital expenditure, project’s financing cost, operating cost and remuneration. The most important difference between the new petroleum contracts and the buyback contracts is the longer duration of the new petroleum contracts as well as the presence of the contractor during the period of operation. The financial structure of these contracts is comprised of government revenue and oil cost and the oil cost is comprised of direct capital expenditure, indirect cost, cost of money, operating cost and remuneration. Unlike the buyback contracts, direct capital expenditure in the new petroleum contracts has no specified ceiling from the outset and it is determined on an annual basis in consideration of the behavior of reservoir and market conditions (inputs). Cost of money has been provisioned in the new petroleum contracts for project financing and this item is defined in the buyback contracts as “bank charge”. In contrast to the buyback contracts in which all direct and indirect expenses incurred by contractor were subject to interest, in the new petroleum contracts, only indirect expenses and delay in repayment of expenses on due date are subject to interest.
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