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Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 21st World Petroleum Congress, June 15–19, 2014
Paper Number: WPC-21-0252
... enemies or friends? The effects of growing gas-to-gas competition The European and Asian gas markets are in flux. Gas-to-gas competition is rapidly growing in importance, with lower-priced spot supplies increasingly undermining the higher-priced long-term supply contracts that have tra- ditionally...
Abstract
Abstract History has told us that no year in gas is ever the same as the previous or the next one. A golden age of gas can easily turn to stone (and back again) as a result of a sudden regional imbalance of supply and demand or a change in regulatory, economic or political conditions. This unpredictability reminds us that gas, unlike oil, is still far from being a global market, despite significant recent advances in LNG carriage and the completion of major transnational pipelines. The huge divergence in gas prices between the US and Japan particularly reflects this. In moving through these "interesting times" for gas, Russia and the Middle East have more in common than a casual observation might suggest. In a fascinating paper which draws upon his extensive experience of both gas markets, Ken McKellar, Deloitte's Middle East Energy & Resources Leader, will uncover these common interests and how they can best be developed for the benefit of both regions and the world at large. Russia and the Middle East both supply gas to Europe and to Asia. In theory that makes them competitors. They are also both affected by Chinese demand and North American supply and in theory, that gives them a common cause. Should Russia and the Middle East be enemies or friends? The effects of growing gas-to-gas competition The European and Asian gas markets are in flux. Gas-to-gas competition is rapidly growing in importance, with lower-priced spot supplies increasingly undermining the higher-priced long-term supply contracts that have traditionally dominated the market. As a result, Russia and the Middle East are being forced to adapt to the more liberalized practices of European and Asian markets. On the basis that "a problem shared is a problem halved" there may be merit in Russia and the Middle East co-operating to supply these markets in a way that they have not achieved before. Long-term, oil-indexed contracts are under serious scrutiny as overall demand for gas decreases in Europe, while new, non-Russian, non-Middle Eastern sources of supply increase. Shale gas in the U.S. has freed up Liquefied Natural Gas (LNG) - - originally designed for American ports - - to address European and Asian spot markets. As a result, spot prices are now lower than the oil-indexed prices of Russian and Middle Eastern contracts, with the result that gas from these sources have become among the most expensive in the world. The extent of this shift is illustrated by France, a champion of nuclear power, increasing its imports to over 16 billion cubic metres (bcm) despite flat domestic consumption. Another example of this shift is in the U.K. where the spot prices at the virtual trading hub there, the National Balancing Point (NBP) are increasingly recognised in the market as independent benchmarks. To achieve this shift in 2011 the NBP attracted 22 bcm of alternative gas supplies, 85 percent of which was sourced from Qatar, bringing Qatar's total share of the European gas market to over 10 percent. With Belgium and the Netherlands physically connected to the U.K. where the NBP lies, European spot price influence is spreading eastwards towards the German border, where Russian gas prices have been fixed through long-term contracts. As a result, the big Russo-German pipelines, which were necessarily financed by long-term contracts and have formed the backbone of European supply over the past 50 years, are operating at less than full capacity. Key participants in the European gas market have acted accordingly. Statoil signed a GBP 13billion NBP-anchored supply agreement with the U.K.'s Centrica, which in turn signed a 3.26 bcm per year deal with Qatar. Spain's Gas Natural has contracted to receive LNG based on U.S. Henry Hub prices from 2016-17 onwards, following BG Group. As a result, in 2011, almost half of Europe's gas contracts were concluded outside longterm contracts.
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 20th World Petroleum Congress, December 4–8, 2011
Paper Number: WPC-20-0438
... industry. This capacity was reduced due to more than a decade with few contracts in this industry in the country. Upstream Oil & Gas structural geology local content regime asset and portfolio management financing energy project supplier Revenue Prominp ANP certification Brazil...
Abstract
Abstract Brazil Oil & Gas sector plays a major role in which concerns offshore investment in deep and ultra deep waters. From the first Exploration and Production blocks auction in 1999 until now, the Brazilian Oil & Gas sector passed though two distinct terms. The first one happened when was necessary to attract immediately the international suppliers of equipment and services to allow Petrobras and the other operators who won that auction to continue their investment in Brazil. The second term started in 2003, when the Oil & Gas National Industry Mobilization Program, PROMINP, was launched. Expectations on this second phase magnified as the Pre-Salt reservoir discoveries were announced and the demand outlook for new equipments and services was boomed. In order to be able to develop all the new national suppliers needed, the federal government sets regulations to promote local content with Brazilian local suppliers enlargement and to attract foreign direct investment from global suppliers. This paper discusses seven current regimes to promote Local Content in the Oil & Gas sector, their methodologies, partial results and challenges to reach their goals. Introduction The Brazilian Constitutional amendment No 09 from November, 09, 1995 together with the promulgation of the law No 9.478 from 1997, the so-called "petroleum law" allowed the end of Petrobras' monopoly in the activities of exploration and production. From then until nowadays, the Brazilian O&G market has passed through two distinct moments. The first one happened when was necessary to attract immediately equipment and services suppliers to attend the Brazilian market. They were indispensable to permit Petrobras and the others operators to continue their operations in Brazil, which were: Petrobras' partnerships with foreign operators up from the round zero in 1998, when the so-called blue blocks were awarded to Petrobras to fulfill their exploratory activities; and the blocks from the Brazilian Petroleum Agency (ANP, Brazilian Acronym) first auction round in 1999, who were awarded to Petrobras and several international oil and gas operators; Like that, it was necessary to create new conditions more favorable to those companies to establish themselves in Brazil. Not only that, but also to convince their suppliers to complete the low installed capacity in Brazil to support this industry. This capacity was reduced due to more than a decade with few contracts in this industry in the country.
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 19th World Petroleum Congress, June 29–July 3, 2008
Paper Number: WPC-19-3431
... research contracts have been commissioned amounting to ﹩12 million expenditure. Results of the programme will be published in peerreviewed journals and will subsequently be released through a publicly accessible data archive. Reservoir Characterization Knowledge Gap national research council...
Abstract
ABSTRACT The offshore oil and gas industry uses sound in seismic surveys to study submarine geology. Sounds emitted in seismic exploration surveys have attracted regulatory attention in a number of jurisdictions. In response to this, and following publication of an initial position statement, member companies of OGP along with the International Association of Geophysical Contractors (IAGC) embarked on a Joint Industry Project to study the potential impacts of sound from the E&P industry on all aspects of marine life; marine mammals, fish and reptiles. The first phase of research established the gaps in our current knowledge. The second phase which started in May 2006 has 14 participating companies plus IAGC, contributing around $8 million in each of three years (2006-2008) to identify and conduct fundamental research to address these gaps. Research is being commissioned in 6 broad topic areas: – Source characterisation and propagation; – Physical physiological and hearing effects; – Behavioural reactions and biologically significant events; – Mitigation and monitoring; – Research tools; – Communication of results. By the second half of 2007 more than 30 research contracts have been commissioned amounting to ﹩12 million expenditure. Results of the programme will be published in peerreviewed journals and will subsequently be released through a publicly accessible data archive.
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 19th World Petroleum Congress, June 29–July 3, 2008
Paper Number: WPC-19-3020
... ABSTRACT Undoubtedly, the energy sector and particularly oil and gas plays a crucial and vital role in the economic world. Contracts are one of the most important instruments for the energy sector, which provides legal order and clears rights and obligations of the parties to prevent any...
Abstract
ABSTRACT Undoubtedly, the energy sector and particularly oil and gas plays a crucial and vital role in the economic world. Contracts are one of the most important instruments for the energy sector, which provides legal order and clears rights and obligations of the parties to prevent any probable disputes. Natural disasters such as earthquake, floods, natural fires etc, are acts of God which cause losses of life, equipment and profits, and make parties fail to perform their obligations. The most sensitive area where this problem arises is with respect to the responsibilities, obligations and profits of the parties in those international contracts which are concluded between profit owners, even in different countries. Although they would try to precisely predict all the reasonable events, still some unpredictable events may happen which will certainly change the order of the contracts of the projects and cause some problems in the relationship between them. This paper attempts to find an appropriate approach to the problem by means of diagnosing the constraints and contributing factors. Therefore, it will explore the factors which affect the performance of such contracts. To achieve the above mentioned goals the present study first attempts to state the characteristics, conditions and legal impacts of such events in Iranian, English and French laws and will explore topics such as ForceMajeur. Moreover it will look at the subject in some judicial and arbitral judgments, and will study the related clauses in some of the contracts in the energy sector. Analysis of the topic will show that such events are recognized in the laws and the parties can consider some good and clear clauses in the contracts to prevent any problem. Thus, this paper will pave the way for other researchers for future studies.
Proceedings Papers
REVENUE TRANSPARENCY, NATIONAL SOVEREIGNTY AND AUTHORITATIVE GOVERNMENT: ANY WAY OUT OF THE DILEMMA?
Publisher: World Petroleum Congress
Paper presented at the 18th World Petroleum Congress, September 25–29, 2005
Paper Number: WPC-18-0972
... these countries, public contracting in the oil sector is plagued by revenues vanishing into the pockets of western oil executives, middlemen and local officials." 2 Upstream Oil & Gas contract social responsibility and development Revenue Transparency block 4 US government information...
Abstract
Abstract: The near total dependence of the world's economy on oil, gas and mining has translated over time, to increased revenue for resource rich countries, as the world continues to depend on them for the supply of these natural resources and even for a very long time to come. This ordinarily should translate to improvement in the standard of living in these countries, but the structural deficiencies in the regulatory and economic framework in these countries provide a leeway for corruption and lack of transparency over revenues accruing from these resources, leaving in their trail poverty, hunger, conflicts, wars, human right abuses, stagnated development and a decimated populace, all in the midst of abundant revenue from the natural resources. The fact however that the consequences of lack of resource revenue transparency may in the long run have a cataclysmic effect on the rest of the world especially in the form of refuges (arising from conflict over the control of these resources), threat to energy security (through disruption of production activities and the consequent unsustainable operating environment for energy industries) calls for urgent remedial measures. The Publish What You Pay (PWYP) campaign which requires oil, gas and mining companies to publish net payments made to governments as a condition for being listed on international stock exchanges and financial markets were criticised as being contrary to the twin concept of National Sovereignty and Permanent Sovereignty over natural resources, including confidentiality clauses existing in most concession agreements. The authoritative nature of some of these governments also constitutes a problem for the energy industries who risk losing their competitive edge to others for disclosing what the pay. This paper reviews the above issues with a view to finding solutions to the problems and suggesting ways by which the issue of revenue transparency can be achieved. INTRODUCTION The last few years have witnessed a tremendous clamour for revenue transparency in the natural resource sector of developing countries, especially in relation to activities in the oil, gas and mining sectors of the economy. This clamour for revenue transparency is driven by the reality of corruption and the poor economic conditions in these countries, despite the huge revenue that flow into government's coffers from these resources. Resource rich countries seem to have become synonymous with corruption, as illustrated in a study by Transparency International which clearly demonstrates that corruption is more endemic in oil rich countries. The Transparency International Perception Index for 2004 shows that oil-rich Angola, Azerbaijan, Chad, Ecuador, Indonesia, Iran, Iraq, Kazakhstan, Libya, Nigeria, Russia, Sudan, Venezuela and Yemen, scored very high points on corruption and very low points on transparency. 1 The story is almost the same in most other resource rich countries. According to Peter Eigen of Transparency International, "in these countries, public contracting in the oil sector is plagued by revenues vanishing into the pockets of western oil executives, middlemen and local officials." 2
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 18th World Petroleum Congress, September 25–29, 2005
Paper Number: WPC-18-0958
... project, which is the largest Greenfield terminal, was constructed in shortest time of 36 months and has seen finalisation of all commercial contracts. Petronet LNG Limited makes the beginning of new gas market development in India which hitherto was largely a domestic supply driven. LNG arrived in India...
Abstract
Abstract: Increasing gas demand and Limited domestic gas production has created a large demand supply gap of natural gas in India leading to shortages of gas supply to existing Industries. Meeting demand of natural gas from domestic production has been a great challenge under the controlled price regime for gas in India. Due to this reason, Government of India, in 1997, approved the formation of Petronet LNG Limited (PLL) with the participation of four large national Oil & Gas Companies viz IOC, ONGC, GAIL, BPCL, Strategic partner (Gaz de France), LNG supplier and public to develop LNG terminals and import LNG at coastal locations. Soon after formation, PLL took various steps for creating a complete chain of activities to build a 5 million tonnes LNG import and regasification terminal at Dahej on West coast of India which included following: Selection of a LNG supplier through Global Competitive bidding process Signing of LNG SPA with RasGas Selection of a Time Charter party for the transportation of the LNG Signing of Time Charter Agreements, Construction of an LNG Regasification Terminal at Dahej. Market development for LNG and price affordability. Dahej LNG import project, which is the largest Greenfield terminal, was constructed in shortest time of 36 months and has seen finalisation of all commercial contracts. Petronet LNG Limited makes the beginning of new gas market development in India which hitherto was largely a domestic supply driven. LNG arrived in India when first tanker loaded at RasLaffan port reached Dahej LNG terminal on 30th January 2004. Commercial supplies to customers have begun with commissioning of terminal in March 2004. Market for entire 5 Million tonnes LNG has been tied up and there is a more demand of LNG. Four more LNG terminals will be be developed in india in next 5 years to meet the growing demand of gas. LNG terminals in Developing Markets Developing markets like India and China had been largely using coal and oil as the major fuels in the energy basket. The share of natural gas has been much lower in energy basket compared to the developed world mainly due to the fact that gas supplies were limited to production from domestic basins and no imports of gas were envisaged. Countries like India have been meeting gas demand from domestic gas production and the balance requirement was fulfilled from the liquid fuels in case the adequate gas was not made available to the industries. During last few year gas demand had become much higher than availability of gas production from domestic basins. Crude oil imports have risen sharply over the last onedecade in India and currently about 70% of the countries liquid fuel demand is being met from the imported crude oil. Increase in oil demand was also partly due to the unavailability of natural gas from domestic production and the consumers had no other option but to fall back on liquid fuels to meet the fuel and feedstock demand.
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 18th World Petroleum Congress, September 25–29, 2005
Paper Number: WPC-18-0959
..., though expensive, option. gas monetization LNG trade LNG Business Europe LNG government producer flexibility liquified natural gas LNG project Trinidad and Tobago Atlantic Basin gas reserve Midstream Oil & Gas contract market dynamic block 3 forum 14 liquefaction LNG market...
Abstract
Abstract: LNG has emerged as an important element to the international trade in natural gas. It is currently the only commercially available technology for transporting natural gas over open waters. Although the industry requires expensive transfer and storage facilities, LNG has found ready markets in Europe, Japan, and the U.S., and is projected to grow over the next ten years as new projects and markets are developed. This paper will examine the underpinnings of the evolutionary changes that the global LNG market has been experiencing over the past few years. It is clear that the fundamentals of the industry have shifted from their previous position and this paper will trace the developments that are taking place as the industry strives to find a new position in the global energy matrix. The paper will also pay special attention to the shifting bases that demarcate the very exciting Atlantic Basin LNG market. This particular segment of the LNG business has emerged as a driver for much of the market changes being currently experienced and forecast activity in this geographical location is significant enough to the global business to demand special emphasis. INTRODUCTION Natural gas is the world's fastest growing fuel. It is available in commercial quantities in many countries of the world. Proven reserves of gas are sufficient to cope with anticipated increases in demand for at least from the present period till 2030. It also accounts for almost a quarter of the world's commercial energy needs. The worldwide community consumes about 90 trillion cubic feet (Tcf) of natural gas each year. Fortunately, natural gas is a resource found in significant volumes throughout the globe. According to the BP statistics, in 2003 the world's proven natural gas reserves were estimated at about 6,200 trillion cubic feet (Tcf), roughly 67 times the volume of gas consumed in that year and clear evidence that despite the world's appetite for natural gas, exploration and development efforts have more than met demand. Countries having large natural gas reserves and relatively low domestic gas consumption generally seek to monetize their gas resource via conversion to more easily transported products such as petrochemicals, or develop gas export schemes. Regarding the latter, if there are no high value gas markets within a reasonable pipeline distance, then liquefaction of natural gas becomes one option for achieving this goal. Natural gas is set to have a far reaching influence on the world economy because it has become obvious that gas is the fuel of the 21st century, just as coal powered the 19th and oil fuelled the growth of the 20th century. Asia has been the cornerstone demand center that spawned the large-scale development of liquefied natural gas (LNG). Natural gas supply in Asia has been limited by the distance of these gas-utilizing markets from major sources of gas. Long-distance pipelines to Asia were not practical or economical and this led to the emergence of LNG as the obvious, though expensive, option.
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 18th World Petroleum Congress, September 25–29, 2005
Paper Number: WPC-18-1025
... through Algeria, the Trans-Saharan Gas Pipeline TSGP, will be on the other hand fully dedicated to the European union market. gas monetization forum 24 Nigeria Midstream Oil & Gas contract Bcm LNG infrastructure Road Map pipeline project international pipeline project Africa Session...
Abstract
Abstract: An M.O.U between SONATRACH and NNPC was signed in 2003 to carry out a feasibility study of a Gas pipeline between Nigeria and Europe, passing through Niger and Algeria. This important project, registered in the NEPAD program, has both a Trans-African and Trans-Mediterranean nature. Its implementation will constitute the example of the South- South co-operation and will contribute to the consolidation of the co-operation between the South and the North in the energy field. The TSGP, as any cross - border pipeline, is distinguished by complex aspects linked : To its international statute that has implications on the scheme of: geopolitics geostrategy relationship and international law... To the number of the States concerned by the project with implications with respect to the legal and regulations framework of each country (system ownership, taxation, authorizations and permits, right of way...). To the number and capacity of the partners with implications on the scheme : To technical, economical, financial (market, costs...) and political (regulation...) risks level. The optimal implementation of the project in reasonable times and costs often encounter major constraints. This require from actors will and perseverance to find alternatives which satisfies both internal conditions to the project (technical, economic, commercial, financial...) and external ones (political, legal and tax environment). Our presentation, based on our experience on cross border pipeline projects, will highlight the great challenges raised in the implementation process of such project and will post the overall alternatives of its arrangement through a methodological approach. INTRODUCTION All the specialized sources dealing with the energetic matters strongly believe that the natural gas presents an economic and strategical stake in long term with regards to the large expected demand. Europe is witnessing a spectacular development of its gas industry, all the estimations related to its future evolution in terms of forecast emphasise on its strong gas dependence that will be more than 60% by 2015-2020. This very strong appeal of the importation sources would not be limited only to current suppliers and routes. The deficit would be filled only by the development of new gas reserves of the traditional suppliers and by the recourse to new remoted sources notably from those situated in the Middle East, Caspian, Nigeria… Concerning the Nigerian gas, in addition to the extension of the liquefaction unit of Bonny that will bring the capacity of this first complex of Nigerian LNG to 21.8 BCM per year from 2005, it is foreseen in the framework of long term perspectives to built three others LNG units with a global capacity of more than 25 BCM per year by 2008. If the three feasibility studies are favourable, almost all the LNG produced will be intended for the American market. The other project of a bigger importance, the gas pipeline from Nigeria to Europe through Algeria, the Trans-Saharan Gas Pipeline TSGP, will be on the other hand fully dedicated to the European union market.
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 17th World Petroleum Congress, September 1–5, 2002
Paper Number: WPC-32033
... industry Petrobras liquified natural gas investment thermo-power plant infrastructure Bolivian gas contract Argentina southern cone Brazil presentation distribution utility gas market consumption 353BLOCK 1 BRAZIL SESSIONS NATURAL GAS: AN EMERGING INDUSTRY Chairman: Antonio Luiz Silva de...
Abstract
Silva de Menezes Good afternoon to you all. Welcome to the panel entitled "Natural Gas and the Emergent Industry", at the 17th World Petroleum Congress. First of all, I would like to ask you to complete the assessment sheet at the end of the presentations and the conclusions of this Panel Session, as requested by the Coordinators. In addition to welcoming you all, I would also like to say that as a primary energy source with the highest growth rates in the global energy matrix, Natural Gas is rated as an excellent option for use at the international level. Due to its characteristics, some people rank it as a transition fuel, halfway between liquid oil-based fuels and carbon-free gas fuels such as hydrogen. It is only over the past few years that discussions on Natural Gas have become part of the agendas in Brazil for issues related to its use as one of the most important energy feedstock of this new century. Until now, almost no attention whatsoever was paid to this fuel, which is why its participation in Brazil's energy matrix was - and still is - negligible. This situation was basically due to the fact that little gas was available for supplying the market. This situation altered due to two major facts: discoveries of associated gas reserves in the Campos Basin and the construction of the Bolivia-Brazil Gas Pipeline. At the moment, Natural Gas consumption hovers around 23 million m3 per day, holding only a 3% share in Brazil's matrix, which is why this industry is rated as emergent in Brazil. It is estimated that by 2005, the share held by Natural Gas in Brazil's energy matrix will reach 6%, equivalent to consumption of over 60 million m3 per day. It is clear that this significant increase will not take place for obvious reasons. As this is a dynamic process, frequent analyses are required of the critical factors in its success, in order to make the necessary adjustments in the policies that will pave the way for this much-desired expansion in the share held by Natural Gas. A Brazilian energy source. Among other matters, I would like to stress the regulatory framework and the role of thermo-power, investments in infrastructure and technology, capacity-building and staff training, financing, research and development, alterations in culture, and the integration policy among the Southern Cone countries. With this World Petroleum Congress, we have an excellent forum for this type of discussion, particularly as it brings together a highly select group of authorities specializing in energy issues. This topic will certainly not be exhausted here. The panel that is now opening will offer an important time for reflection on the future of the Natural Gas industry in Brazil, through discussions of aspects related to some of the factors listed above. BLOCK 1 - - BRAZIL SESSIONS 353 NATURAL GAS: AN EMERGING INDUSTRY Specifically this afternoon, we will have five
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 17th World Petroleum Congress, September 1–5, 2002
Paper Number: WPC-32324
... 1. LNG's rigid LNG consumers in East Asia, such as Japan, Korea and Taiwan have sustained the rapid growth of contract terms: a dilemma for Asian global LNG trade since the 1970s. One of the major elements for this steep growth has been the LNG buyers fact that the LNG buyers in these countries...
Abstract
1. LNG's rigid LNG consumers in East Asia, such as Japan, Korea and Taiwan have sustained the rapid growth of contract terms: a dilemma for Asian global LNG trade since the 1970s. One of the major elements for this steep growth has been the LNG buyers fact that the LNG buyers in these countries, being power and gas utilities, have been blue-chip or state-run enterprises with extremely high levels of credibility, and that sponsoring consortia including the international oil majors have been able to procure capital thanks to the take-or-pay guarantees provided by these "bankable" companies. The LNG business is a specialized process industry handling a unique product with temperatures down to minus 162 degree Celsius and immense investment requirements on the sides of both seller and buyer for liquefaction plants, tankers and receiving and storage facilities. As a result, early LNG projects were by necessity based on negotiations between individual sellers and buyers. Consequently, in its early years the LNG business developed based on relatively rigid "point-topoint" trade where distribution channels were limited with no resale possibilities. Also, in general LNG business requires a longer period than crude oil to recover the massive investments required. For these reasons, the provision of rigid transaction guarantees was indispensable for mitigating the risk of the LNG sponsoring firms and lenders. The take-or-pay obligation that covers a considerable volume under long-term contracts exemplifies such guarantees and, under such guarantees, the LNG sponsoring firms have acquired financing and realized their projects. Since the beginning of the 1990s, as Japan, Korea and Taiwan each embarked on programs of liberalization in the energy sector and as Korea and Taiwan developed the privatization and BLOCK 3 - - FORUM 17 193 CHALLENGES FACING ASIAN LNG MARKETS: A BUYER'S PERSPECTIVE segmentation of enterprises, medium- and long-term outlooks for power and gas demand have grown increasingly uncertain. These uncertainties, as well as the sharp decline in economic growth rates of these counties, have brought uncertainty to the traditional foundation for LNG projects, namely the firm demand for LNG that had historically supported the fast-paced expansion of the LNG business. As they face fierce competition and their markets no longer continue to grow from strength to strength, the electric power and gas companies in these countries are beginning to realize that the take-or-pay clause which they used to accept as quid pro quo for stable supply could, on the contrary, amount to a high-risk contract term in the new business environment. They therefore have become reluctant to guarantee inflexible LNG off-take commitments spanning over 15 to 30 years and have become increasingly resistant to accommodating traditionally rigid t
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 17th World Petroleum Congress, September 1–5, 2002
Paper Number: WPC-32329
... between regional markets. However we believe that investors in LNG projects will want the security of selling at least some proportion of their outpout under long term contract. BLOCK 3 - - FORUM 17 251 THE BUSINESS TRADING OF LNG IN THE 21ST CENTURY Consequently, like many others in the gas industry...
Abstract
1. Introduction Since the latter half of the 19th century, a major industry has developed around the exploration and production of crude oil, and the marketing and transport of oil derived fuels that have promoted and substained the industrial growth of developing countries. In the process, large volumes of natural gas have been discovered: however, to a large extent the exploration for gas has been secondary to oil, particularly in the Asia pacific region. As the demand for gas increases, there will be increasing incentives for gas focused exploration, which will result in a large increase in the current reserves of gas. The Asia Pacific region is the traditional hub of the global liquified natural gas (LNG) business. The main reason for this is that, as well as being the home of major LNG producing countries like Indonesia, Malaysia, Brunei and Australia and major importing countries like Japan, Korea and Taiwan, the region lacks an integrated gas pipe line grid of the kind that has evolved in Europe and the U.S. over the past 50 years. Nowdays, it is generally agreed that the global LNG business faces a supply surplus, but this is only one picture. LNG trade is unusual in that it is divided into two distinct markets:the Asia Pacific and the Atlantic Basin. Each one is driven by different dynamics and has its own characteristics, including pricing. Most people understand the Atlantic Basin to include The Americas, Europe, North Africa and the Mediterranean. In sharp contrast to the Asia Pacific, the Atlantic Basin faces a shortage of LNG supplies, and this strange supply and demand imbalance lie the seeds of change that could transform the global LNG business. The surplus of LNG in the Asia Pacific combined with the shortage of LNG in the Atlantic Basin and the availability of uncommitted ships from mid-2002 will create the potential for increased shortterm trading between the regional markets. But, instead of trying to transport LNGfrom the Asia Pacific to markets in the Atlantic Basin, it was an opportunity for buyers and sellers to create a more efficient way of delivering LNG to market. Although such an arrangement could prove complicated, as it would increase price transparency and could lead to some convergence in pricing between the regional market. It was predicted that over the next decade short-term LNG trade will increase, and with it the movement of LNG between regional markets. However we believe that investors in LNG projects will want the security of selling at least some proportion of their outpout under long term contract. BLOCK 3 - - FORUM 17 251 THE BUSINESS TRADING OF LNG IN THE 21ST CENTURY Consequently, like many others in the gas industry, we don't think that short-term trading in LNG will reach a
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 17th World Petroleum Congress, September 1–5, 2002
Paper Number: WPC-32326
... Malaysia under long-term pipeline gas supply contracts from the West Natuna offshore gas province, and has signed a second such supply contract with Singapore based on gas from South Sumatra. Indonesia will thus become Singapore's main supplier of natural gas, primarily for power generation. In addition...
Abstract
Summary This paper addresses the Tangguh LNG project, Indonesia's new LNG export centre. To place the Tangguh LNG project in context, Indonesia's position as the world's largest LNG exporter is briefly described. The paper then explains how the Tangguh LNG project will enable Indonesia to maintain and expand the level of its LNG exports in the decades ahead. This in turn supports the policies of both the Indonesia government and of the provincial government in Irian Jaya, while supplying clean energy on a competitive basis to LNG importing countries in the Asia-Pacific region. Indonesian LNG and gas exports Indonesia commenced LNG exports to Japan from Bontang in 1977 and from Arun in 1978. Over the next 20 years the export capacity of both plants was increased progressively to achieve a combined export capacity of over 30 mtpa by 2000. In 1986 and 1990 Indonesia became the first LNG supplier to Korea and to Taiwan respectively, and Indonesia is the largest single supplier of LNG to each of Japan, Korea and Taiwan. The evolution of Indonesia's LNG sales is shown in Figure 1. Indonesia LNG Sales and Market Share Indonesia LNG Sales and Market Share LNG Sales Asia Pacific Market Share MTPA Oma n(in 2 0 0 0) 2 % 3 0 Taiwan Australia A bu Korea 1 0 % Brune i Dhabi 9 % 2 5 Japan 6% U S A Qatar 2 % 2 0 1 3 % 1 5 1 0 Indonesi a Malaysia 3 7 % 2 1 % 5 7 7 7 9 8 1 8 3 8 5 8 7 8 9 9 1 9 3 0 9 5 9 7 9 9 Yr. 2000 Figure 1: Indonesia LNG Sales & Market Share Today the Bontang LNG plant in East Kalimantan has a capacity of 22 mtpa, and there are sufficient proven reserves to maintain that level of exports well into the 3rd decade of this century. The gas reserves supplying the Arun LNG plant in North Sumatra are however depleting, which makes it BLOCK 3 - - FORUM 17 211 THE TANGGUH LNG PROJECT timely to develop Indonesia's 3rd LNG export centre at Tangguh. Physically, Indonesia's 3 export centres are well separated, as shown in Figure 2. The Tangguh LNG project is located in the western part of Irian Jaya province (also known as West Papua), which lies in the eastern part of Indonesian. Indonesian LNG Indonesian LNG Centres Centres Arun LNG Plant Bontang LNG Plant Tangguh LNG Plant Site Sumatera Irian Jaya Kalimantan Sulawesi Jakarta Surabaya Java 5000 km Figure 2: Indonesian LNG Centres Also of note, Indonesia has recently commenced natural gas supplies to Singapore and Malaysia under long-term pipeline gas supply contracts from the West Natuna offshore gas province, and has signed a second such supply contract with Singapore based on gas from South Sumatra. Indonesia will thus become Singapore's main supplier of natural gas, primarily for power generation. In addition to the significant role which natural gas plays in supplying Indonesia's domestic fuel market (notably in West and East Java), Indonesia is therefore contributing very substantially to the sup
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 17th World Petroleum Congress, September 1–5, 2002
Paper Number: WPC-32433
... in the world. The share of gas in the commercial energy consumption is about 9% and the domestic gas pr LNG re-gasified lng fertilizer government of india Midstream Oil & Gas coal contract flexibility consumption liquified natural gas power plant pricing block 4 Indian...
Abstract
Introduction India is witnessing major economic reforms and the energy sector is no exception. Under liberalized policy the Oil and Gas industry, which was hitherto heavily controlled, is steadily moving towards decontrol at all levels. Being the largest democracy in the world, the energy requirements of India are immense. Though the average per capita consumption of petroleum in India is just 113 Kg against the world average of 927 kg, the demand for hydrocarbons in is growing very rapidly. Over the years the consumption of energy has grown at 6-7 per cent per annum whereas the world average is 1.5 per cent per annum. The consumption of petroleum products in India is expected to grow from a level of 97 million tons (MMT) in 1999–2000 to about 180 MMT in 2006–07 and further to around 370 MMT by 2024–25. The demand of Natural gas is expected to be 230 MMSCMD by 2006–07 and to increase to about 390 MMSCMD by 2024–25. Indian Oil and Gas sector, till the mid 1970s, was operating as a free market and many of the multinational oil companies had a significant presence in India. Nationalization of the oil industry resulted in these players being taken over by the government. Since then state owned ‘Public Sector Undertakings’ (PSUs) have played a dominant role in the Oil and gas sector and the prices of end products were controlled by the Federal Government through a system of Administered Prices. However, Government of India has now dismantled the Administered Pricing Mechanism (APM) and has moved to the market determined pricing for petroleum products from 1st April 2002. Gas use in India Presently about 67 MMSCMD of natural gas is consumed by industries in India. Major consumption is by the core sectors of Fertilizer and Power, which together consume nearly 75 % of the total gas consumption. BLOCK 4 - - FORUM 24 231 IMPORT OF NATURAL GAS & COMMERCIAL ISSUES - AN INDIAN PERSECTIVE As one of the fastest growing markets for energy in Asia, India's demand for energy is increasing by leaps and bounds and Natural Gas is poised to play a prominent role in the future. The India Hydrocarbon Vision-2025 has projected that the demand for gas will increase from a level of 151 MMSCMD at present to 231 MMSCMD by 2007, to more than 313 MMSCMD by 2012 and almost 391 MMSCMD by 2025. The growth in the gas demand would be mainly driven by new capacities required in the power sector and the fertilizer sector. 400 391 322 313 300 231 216 200 166 151 MMSCMD 117 100 70 58 45 36 0 2002 2007 2012 2025 Year LOW DEMAND HIGH DEMAND SUPPLY The burgeoning gap between demand and supply of natural gas has impelled the Govt. to promote import of natural gas. India is one of the largest emerging gas markets in the world. The share of gas in the commercial energy consumption is about 9% and the domestic gas pr
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 17th World Petroleum Congress, September 1–5, 2002
Paper Number: WPC-32011
..., financial, regulatory and environmental issues that need to be addressed to br reserves replacement asset and portfolio management liquified natural gas Upstream Oil & Gas gas monetization investment contract reserves evaluation Reservoir Characterization block 1 Efficiency LNG oil...
Abstract
First of all, I would like to convey to you Mr Chakib Khelil's sincere regrets for not being able to be here today. Mr. Khelil who was planning to address this session this morning was held back by an urgent commitment. He wishes you all the success at this conference. For me, it is a great pleasure to be back in Rio and to have the chance to talk to you this morning. It is also a pleasure to see so many colleagues and partners in the audience today. The last time I was here in November 95 during the 8th International Deep Offshore Technology Conference the Topic was "Subsea Developments in Ultra Deep Water". Since then a whole series of technological innovations have been taking place in Brazil, especially in Campos basin. These technological changes have transformed the efficiency of the way in which we can recover and produce oil from ultra deep waters. Petrobras has played a leading role in research to develop and apply new subsea technologies and continue to do so through the Deep Water Technologies Program Procap 3000. I would like to take this opportunity to pay tribute to Brazil and Petrobras for their technological contributions to our industry. Today, I would like to share my thoughts with you on the outlook of the Gas industry and the risks and opportunities facing this sector. The growth in demand for natural gas has risen at almost double the rate for oil by more than 20% since 1990. Gas has become the fuel of choice, mainly at the expense of coal. Most forecasters see gas demand rising significantly for the next 10 years. It is expected that consumption for gas will increase by another 25% by 2010. One important factor which is reshaping the energy business is the long term shift toward cleaner, less carbon intensive fuels. Among other factors which are helping natural gas to capture a growing share of world's energy market is the existence of plentiful reserves around the world. Based on current estimates total proved world gas reserves amount to 5000 + trillion cubic feet that is the equivalent of roughly 70 years supply of gas at current rates of consumption. The challenge today is that while there is a general agreement that huge reserves remain in many different parts of the world, bringing these supplies in the amounts needed to the market cannot be taken for granted. BLOCK 1 - - PLENARIES 53 RISKS AND OPPORTUNITIES FACING THE GAS INDUSTRY AT THE DAWN OF THE NEW CENTURY As we know nature did not always put gas where it is easy to find and produce. Often gas is available in areas of the world where the operating environment is difficult and the technological and logistical requirements are daunting. Equally important are the political, financial, regulatory and environmental issues that need to be addressed to br
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 17th World Petroleum Congress, September 1–5, 2002
Paper Number: WPC-32028
... geologic, commercial or political. Similarly, foreign investors have come to understand that host governments need both money and technical assistance for the development of their domestic economies and that short-term gain from unrealistic contract terms can be outweighed by long-term damage from...
Abstract
ABSTRACT The allocation of benefits from a petroleum development project can be a significant factor in the commercial success or failure of the project for both the foreign investor and the host government. In recent decades, host governments and foreign investors have developed a much greater understanding of each others' needs and motivations. Host governments have come to understand that they are competing for foreign investors' capital and that to attract that capital, they must allow foreign investors to earn a profit commensurate with the risk they are taking, whether that risk is geologic, commercial or political. Similarly, foreign investors have come to understand that host governments need both money and technical assistance for the development of their domestic economies and that short-term gain from unrealistic contract terms can be outweighed by long-term damage from adversarial relationships. Petroleum activities in the developing world are now more than ever a joint undertaking by host governments and foreign investors for their mutual benefit. Unfortunately, benefits to host governments at the national level may not lead to benefits for those most immediately affected by petroleum development. These include local and regional governments in the area affected by the development, individuals living on the land affected by the development and individuals and communities affected economically by the development. The grievances of affected groups may not arise because of petroleum development, but petroleum development is often a lightening rod for the expression of those grievances. Foreign investors and host governments have reacted to the problem of extending benefits of petroleum development to affected individuals and communities in a variety of ways. Some of the traditional means of extending benefits to local communities include construction of infrastructure such as roads, hospitals and schools by foreign investors, reservation of jobs for local residents, mandatory "buy local" requirements that encourage the development of local industry and training programs to provide local residents with technical skills. More significant steps, such as assigning some of the financial benefits of petroleum development directly to regional and local governments, or establishing trust funds to provide revenues in the future for local populations, have been considered or taken by some host governments. These steps are generally supported by foreign investors, who often bear the brunt of local communities' 1. The author would like to thank Kit Armstrong of Chevron Texaco and Terry Meriage from Occidental Petroleum Corporation, who shared some of their thoughts and experiences with the author. Al
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 17th World Petroleum Congress, September 1–5, 2002
Paper Number: WPC-32031
... government investment information block 1 discovery Ibama new player Petrobras Brazil Session queiroz galvão exploration social impact assessment ANP contract Entrepreneur license basin operator Brazil 297BLOCK 1 BRAZIL SESSIONS UPSTREAM: ATTRACTING NEW PLAYERS Chairman: Stephen...
Abstract
Stephen Thurston About 81% of the wells have been unsuccessful. On the mappable discoveries, it is hard to really say: right now we have one - we feel fairly comfortable in saying that the recently announced BC- 60 discovery by a Petrobras announcing 600 million barrels, sounds like they have hit the commercial threshold. We are keeping an eye on five other blocks - BC-2, BC-10, BS-4, BC-600 and BS-500. No firm development plans or commercial discoveries have yet been announced, but we see a lot of activities, so we are hopeful for those will yield commercial results. But the conclusion is about the same. It looks like the commercial success rate in the last couple of years may hover around one and ten or potentially higher risk than that. And certainly it is not in the lower range or 1 and 3 or 1 and 5. So if we look at the resource opportunity today, 2002, we can only conclude that the discoveries to date are smaller than about half a billion barrels which is the average we saw, and it looks like in many cases, we are clustering smaller discoveries to come up with the commercial inertia. Oil gravities have in many cases less than 18 API. The hopeful sign is that most of the E&P around 1, 2, 3 blocks have yet to be drilled and we see significant drilling campaigns being prepared for 2003 and 2004. So, our overall conclusions, we would have to say, the risk has gone up; the prospects appear to be smaller, but we still have significant opportunities in the next couple of years on the blocks that have already been leased. So, now let us turn to the next element to sustain the empty industry, and that is competitive terms and conditions. We recognize the initial terms and conditions that were put forth were competitive, they were based on a view of significant fields sizes found in deep water; we recognize there are some elements of those competitive terms, on commercial terms, which are less competitive. We recognize the complex tax regime, indirect taxes that are focused more on the yielding or upfront activity rather than on the revenue string; we see special participation taxes that were designed based on the view of the reserve that would be found at the time and some foreign exchange issues. If we look at the fiscal regimes, all we can really say is that they are somewhat complex and somewhat numerous, and I am not going to go into them here. Just to say that on an undercounted basis, if you look at the Brazil fiscal regime, it is competitive when you look at on an undercounted basis with the OCS of the US, Angola, Nigeria. However, because a lot of the Brazilian fiscal regime is focused on taxes on transactions up front, and you recognize you are in long-term development projects over time, that the discounted government take is a differen
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 16th World Petroleum Congress, June 11–15, 2000
Paper Number: WPC-30311
... Parliament therefore had to a piping design Upstream Oil & Gas offshore pipeline piping simulation delivery network platform gas monetization contract inch pipeline Germany single field supplier operation liquified natural gas Norwegian Trench Norway LNG design pressure North Sea...
Abstract
INTRODUCTION first pipelines were laid by foreign oil companies in rather shallow water and were In the late 1950's very few people believed trenched to protect against fishing activities that the Norwegian Continental Shelf might and ship traffic. conceal rich oil and gas deposits. However, the Figure 1: Delivery network for oil, gas discovery of gas at Groningen in the and condensate from the Norwegian Netherlands in 1959 made geologists revise Continental Shelf their thinking on the petroleum potential of the North Sea. Norwegian waters were opened for exploration in 1965, following the proclamation of Norway's sovereignty over its continental shelf on 31 May 1963. Currently about 30% of the Norwegian Continental Shelf has been opened for exploration. The forecasts regarding petroleum reserves proved to be wrong, the Norwegian Continental Shelf turned out to contain significant reserves of both oil and gas. The growth rate and the magnitude of the production of these reserves meant that the income from exports of oil and gas became increasingly important for the Norwegian economy. 2 DEVELOPING THE GAS DELIVERY NETWORK 2 .1 The Pioneer Period The Norwegian oil and gas adventure started in the early seventies, with the development of the Ekofisk and the Frigg areas in the North Sea. The Ekofisk area is located in the southern part of the Norwegian Sector of the North Sea, close to the UK, 2 .2 The Oil And Gas Industry Goes Danish, German and Dutch sectors, while the Ashore In Norway Frigg area is located in the Northern North Statoil was established in 1972. Offshore Sea, at the border of the Norwegian and UK pipeline technology immediately became a sector. These first developments were focus area within the company. From the developed and operated by foreign companies, beginning of the 1980's, Statoil gradually Phillips developing the Ekofisk field and Total became the most important builder and the Frigg field. operator of offshore export pipelines in The Norwegian Parliament had previously Norway. established, as a main rule, that all petroleum explored on the Norwegian Continental Shelf 2 .2 .1 Statfjord should be landed in Norway. However, studies performed in 1971-72 on a pipeline from the The Stat fjord field, located some 150 km Ekofisk field to the coast of Norway, crossing off the coast of Norway, was discovered in the Norwegian trench, demonstrated that such 1974. A comprehensive research for landing a pipeline would exceed the limits of existing the oil in Norway by pipeline was initiated by technology, and could not be laid without Statoil on behalf of the Statfjord Group in significant uncertainties. The Norwegian 1976. Despite the fact that the study concluded Parliament therefore had to a
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 16th World Petroleum Congress, June 11–15, 2000
Paper Number: WPC-30455
... constitutions, including that of Iran, initiated in regards to foreign investment and right of ownership of land and natural resources in a given country. Thus this legal solution allows the contractor to have all the privileges of ownership during the period of the contract, without actually having any title...
Abstract
Abstract. For the First time in the last 20 years, Islamic Republic of Iran has developed a list of projects containing onshore fields for development with exploration projects offering for foreign investment opportunities through buy - back schemes. Under this system, the foreign oil company makes the investment to bring the Company field underproduction, then hands it over to the Iranian National Oil (NIOC), in effect simply providing a service. The company then recoups its investment, plus an agreed rate of return through the oil and gas production from the field. Naturally, it is in the best interest of any nation not to share its natural resources with foreign entities. According to Code 81 of Iran's Constitution, the granting of any concessions regarding the essential affairs of the state is forbidden. The concept of buyback is actually a solution for the legal obstacles that some constitutions, including that of Iran, initiated in regards to foreign investment and right of ownership of land and natural resources in a given country. Thus this legal solution allows the contractor to have all the privileges of ownership during the period of the contract, without actually having any title under his name. For the time, however, buy- back seems to have become Iran's favored way for both up and down stream foreign oil investments. INTRODUCTION According to buy-back scheme, the source 1. CHARACTERISTICS OF of any payment to foreign oil companies, IRAN'S BUY-BACK SCHEME would be only the sales of the product itself, and no specific budget would be assigned for Buy-back contracts aim at attracting such transactions. The contractor, i.e. the foreign capital and technology to: foreign company, would be in fact the risk- * Develop oil fields taker without having any guarantee from * Develop gas fields Iranian banks or government authorities. The * Boost productivity rate of return on investment on all such * Protect wells contracts are anticipated to be somewhere while priorities being: between 15–16 percent, and all operating * Covering projects with higher yield and expenses would be the contractor's lower costs by allowing priority to joint-field responsibility. projects. It has been tried to make buy-back * Protecting fields and increasing contracts more attractive to the foreign recycling by giving priority to joint field investors. When Total signed the Sirri projects. development contract in 1995, covering the The obligations imposed by Islamic Sirri oil fields complex in the Persian Gulf off Consultative Assembly on buy - back projects Iran, a second contract provided that it could are: sell the nearby Dubai the associated gas * The government of Islamic Republic of produced, in addition to the oil lifted under the Iran is not allowed to undertake or guarantee to contract. Late
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 16th World Petroleum Congress, June 11–15, 2000
Paper Number: WPC-30451
... international lng project obligation Midstream Oil & Gas contract LNG financing Power Company debt service government support east asian buyer diagram liquefaction plant Financing International LNG Projects 234 Financing International LNG Projects Naoki Sato, The Bank of Tokyo-Mitsubishi, Ltd...
Abstract
Abstract. Limited recourse finance has been successfully utilized for financing LNG projects in the past. The slowing demand growth of the East Asian Buyers, combined with the emerging demand for the Emerging Market Buyers, makes it very likely that future LNG projects would be based on multiple offtakes across both traditional and emerging market buyers. For the East Asian Buyers, the terms and conditions of off-take are expected to evolve towards shorter off-take periods, longer build-up periods and larger downward quantity tolerance reflecting the increased competition on the side of the buyers who need more flexibility in their off-takes. This increased off-take flexibility will limit the source of debt service, and therefore will arise as one of the critical issues in future LNG financing. As for the Emerging Market Buyers, the elements of the facilities in the LNG Chain which requires financing have also expanded, and this will lead to a greater investment size and more complex commercial structures. In this situation, finance will be an even more important issue for the successful implementation projects, and traditional LNG finance structures will have to be adjusted to accommodate the new issues that have arisen. 1. Traditional LNG financing comfortable in taking the whole LNG chain structures (mismatch) risk, and tend to reduce their project risk in the chain through a comprehensive 1.1 LNG Chain security package. Many of commercial banks A particular characteristic of LNG have become familiar with assuming certain risk financing, which differentiates it from project provided that such risks can be quantified and financing in other natural resource projects, is an well mitigated. interdependency among the various segments of the project, known as the "LNG Chain" 1.2 Financing structure (Diagram 1). The LNG chain consists of In a bankable LNG financing structure upstream development, liquefaction plant and (Diagram 2), the following risks must be storage, LNG vessels, receiving terminals and mitigated to the extent acceptable to the lenders; end-user facilities such as gas distribution systems and power plants in the importing First, for the political risk of the country. The interdependency results in all exporting country, this risk is generally mitigated parties being exposed to all risks in the LNG through a mixture of (i) escrow account Chain since failure in any part of the chain arrangement in a third country, (ii) political risk affects all other parts. For example, upstream insurance provided by public and private parties may be affected by failure to complete insurance companies, (iii) involvement of multi-LNG receiving terminals, since an LNG gas lateral and bilateral financial agencies and (iv) producer normally has no outlet other than its contractual protections such as host associated liquefa
Proceedings Papers
Publisher: World Petroleum Congress
Paper presented at the 16th World Petroleum Congress, June 11–15, 2000
Paper Number: WPC-30457
... international markets. South Pars reserves replacement economic analysis guidelines asset and portfolio management Upstream Oil & Gas reserves evaluation Persian Gulf foreign exchange investment shahriar hendi contract interest rate Turkey protection Iran pipeline islamic republic...
Abstract
Abstract. Political and economic security of the host countries is a key argument for foreign financier. Investor companies are expected to evaluate economic profits of each project and make sure of their benefits. Moreover, they try to secure their assets. In this paper I intend to perform an analysis of some leading oil and gas projects in Iran, comparing them to similar cases in the region and to assess the political, economic and legal environment of the country for implementing the energy projects. For this reason, it is attempted to recount advantages of choosing Iran as a location for foreign investments in the oil and gas sector, and to review the legal framework, economic advantages and political support in Iran for attraction and protection of foreign investment. INTRODUCTION and gas in Persian Gulf and Central Asia. After the collapse of the Soviet Union, Iran's We can find impacts of oil and gas in the geopolitical and economic importance has most economic, political and even historical become even more significant. and social events, during the past century. So Iran is OPEC's second largest oil producer the recognition of regions or countries that and holds 90 billion barrels of proven oil have these types of energy is very important. reserves (or roughly 9% of the world's On the other hand, extraction and utilization of reserves). Furthermore, in October 1999, Iran these energies requires investment. Therefore announced that it had found its biggest oil finding the companies, institutions and discovery in 30 years, a giant onshore field countries having capital is another important called Azadegan located in the province of issue. Khuzestan. The field could contain 26 billion Presence of effective factors in the host barrels of oil. countries for attraction of international capital Iran has proven gas reserves close to 862 constitutes one side of the coin, while the trillion cubic feet, about 16% of the world and perceptions on policies of relevant commercial 50% of the Middle East. It should be and political institution at home countries is mentioned that South Pars gas field, which is the other side of it. the largest independent natural gas reserve in In the paper, I examined investment in the the world is situated on the common border of oil & gas industry in Iran. For doing so, in the Iran and Qatar at the Persian Gulf. It may be first section, brief information of the country - fair to say that Iran is now focusing her especially from the oil and gas reserves point attention on production of natural gas to meet of view- are introduced. Then, positive the growing domestic demand and to enter features of Iran as an advantageous and international markets. South Pars