Evaluating the Impact of Economic Components of IPC and PSC Contracts on Cumulative Production of Oil Fields: A Case Study of Foroozan Oil Field

Iran's new petroleum contract, dubbed as IPC, is a new generation of oil service contracts.The most significant flaw observed in various contracts is that cumulative profits and cumulative production do not necessarily follow the same direction, a kind of incompatibility arises between the interests of governments and contractors. In this research, using stochastic dynamic programming approach, the researcher introduces contractual components for IPC and PSC contracts and includes them in the model structure.The results of this study indicate that reducing the cost recovery ceiling in the IPC contract leads to the maximum reduction in cumulative production. In addition, increasing the government's share of profit oil as well as reducing the cost recovery ceiling, has had the greatest impact on cumulative production in the PSC contract. Innovation of this research is in the randomization of oil prices. Also modeling based on the parameters of Foroozan field is another innovation of this article.