Cabinet approves general conditions governing Iran’s Upstream Oil and Gas Contracts (2016): improvements in the assessment and management of the environmental impacts of upstream oil and gas operations

Abstract

This article examines the new changes an Iranian Cabinet decree have brought about in the assessment and management of the environmental impacts of upstream oil and gas operations. Under these changes, the National Iranian Oil Company (NIOC) and its subsidiaries are required to prepare environmental impact assessment (EIA) reports and develop plans to manage such impacts before finalizing any upstream oil and gas contract. They also extend the need for EIA from being limited to the phase of exploitation to include the exploration phase and the removal of installations. The decree also makes it possible for two new terms to be included in these contracts: The first is a contractual performance bond for compliance with the plan to manage the environmental impacts, even if there has been no environmental contamination; the second is the supplementing of national regulations on the management of environmental impacts through contractual terms that reference international regulations and/or industry best practices.