The Oil law of 1957, however , was revised in 1974 .as a result , foreign company’s investments in the upstream oil sector operations , or exploration, development and production became possible only through service contracts.( Very similar to “ Buy Back “ contracts of now )The law prohibited foreign participation in the production and utilization phases. Based on the new law, foreign companies prepared to ink a service contract , would have to accept the risks associated with exploration operations . In other words ,if operations were not positive in leading them to commercially producing fields , they could not exact the amount they had spent . But if they reached oil , they had to hand over the discovered field to the National Iranian Oil Company ( NIOC) and exact their expenses in 10 yearly installments and deduct them from their payments for crude oil they purchased.
