ABSTRACT

The legal framework in Iran is derived from the Islamic (Sharia) legal system. The Islamic Republic of Iran was established after victory in the Iranian Revolution in 1979. The creation of the Republic saw the overthrow of the Pahlavi Monarchy and the establishment of new social system infrastructures relevant to law, economy, culture, military and social structures. It was the birth of a new era in the legal framework underpinning the petroleum industry.

The link between the legal system and oil and gas contracts in Iran is a broad topic. It has been narrowed in this chapter to concentrate on the oil and gas legal framework in Iran. The purpose of this chapter is to develop and answer to the final main question: What reform to Iran’s legal frameworks is necessary to implement this recommendation? Answering this question involves consideration of the extent to which the New Concession Contract (NCC), if chosen as the preferred contractual form, needs to be modified to meet the future needs of Iran’s developing upstream oil and gas industry.

This chapter is divided into two parts: Islamic (Sharia) law and its relevance to natural resources, and Iran’s legal oil and gas framework. In addition, this chapter examines the challenges associated with adopting the NCC in the Iranian oil and gas industry. Finally, this chapter proposes and explain the need to modernise Iran’s oil and gas contractual framework and regulations using the NCC framework.