Analyzing the Potential Hazards Associated with Buy Back Petroleum Contracts from the Contractor’s Perspective

Piri, Mehdi; Darboui, Hossein

doi:10.22050/pbr.2025.487808.1357

Analyzing the Potential Hazards Associated with Buy Back Petroleum Contracts from the Contractor’s Perspective

Document Type : Original Article

Authors

Mehdi Piri ¹

Hossein Darboui ²

¹ Assistant Professor, Faculty of Law and Political Science, Department of Public and International Law, University of Tehran, Tehran, Iran

² Ph.D. Candidate, Faculty of Law and Political Science, Department of Public and International Law, University of Tehran, Tehran, Iran

https://doi.org/10.22050/pbr.2025.487808.1357

Abstract

It is imperative to acknowledge the ongoing significance of oil and gas in the global economy, despite the global initiative to transition to renewable energy sources such as wind, solar, and geothermal power, which are more environmentally friendly and cost-effective. Following the lifting of sanctions by the United Nations and the European Union, Iran is actively pursuing capital, funding, advanced technologies, and expertise from both domestic and international sources to develop their oil and gas fields. The buyback upstream oil and gas contract, which is implemented in Iran, is an unattractive contract for contractors due to its substantial risks. Analyzing the primary risky events associated with buy back contracts is the primary objective of this study, as it has rendered this contract unappealing to contractors. In order to identify and monitor all contractual and non-contractual risks associated with buy back contracts, a combination of qualitative and quantitative methodologies is implemented. The main objective of the study is to offer investors valuable insights into the potential risks associated with upstream oil and gas buy back contracts and to aid the National Iranian Oil Company (NIOC) in effectively responding to and monitoring these risks.

Highlights

Empirical insights: This study draws on the qualitative data from interviews with oil industry experts, offering in-depth insights into the challenges and complexities of upstream buyback petroleum contracts.
Comprehensive risk analysis of buyback contracts: The research critically examines the potential risks in upstream buyback contracts from the contractor’s perspective, highlighting significant legal and operational vulnerabilities.
Identification of legal and economic risk factors: Key risks include contractual ambiguities, financial uncertainties, and regulatory challenges that could impact Iran’s oil and gas sector and diminish its appeal to international investors.
Strategic recommendations for contractual stability: The study proposes strategic recommendations to enhance the stability of buyback frameworks and effectively mitigate associated risks.
Advancement in oil and gas law scholarship: This work offers a valuable contribution to the understanding of petroleum contract frameworks in complex geopolitical settings, providing essential insights for scholars and practitioners in oil and gas law, contract negotiation, and international arbitration.

Keywords

Buy Back Contract

Risky Events

Fuzzy AHP Method

Fuzzy TOPSIS Method

Delphi Technique

Subjects

Law Studies

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