An appraisal of local content requirements in the Iranian oil and gas industry

Abstract

Leading countries in the petroleum industry strive to maximize their benefits from exploring, developing, and producing oil and gas by setting out various policies and requirements such as local content. Iran, like many other oil and gas-producing countries, has legal and contractual local content requirements. However, the lack of transparent and integrated regulatory and contractual frameworks and fixed threshold applied for all types and life cycle of fields and operations are considered as concerns and challenges of local content policies in Iran. Determining metrics to measure local content is another issue that is not clarified as required in legal and contractual requirements. Establishing a constructive local content policy in Iran requires the active integration of factors such as actual improvements in local service or product and labor productivity. Transparent legislative and regulatory frameworks, robust performance planning, monitoring, and control mechanisms, along with precise metrics for measurement of local content, are indispensable prerequisites for realizing local content policies. The characteristics of operations and the need to implement new technologies must also be considered to design an appropriate policy. Moreover, the development of integrated approaches and congruent laws and regulations could facilitate and accelerate the achievement of development goals.