A New Pricing Model for Crude Oil Pre-Sale Units via SPF (Standard Parallel Forward) in Iran

Abstract

Nowadays energy has an important role as a driving sector of economy. Forecasting 150 billion dollars investment in energy sector during the fifth development program in Iran, the banking and financial system require a dynamic and modern economy and financial instruments. Obviously, this approach needs to remove legal barriers and modification of contracts. Financing in the oil industry has faced with serious challenges in recent years. On the other hand, investing in common offshore oil and gas resources is indispensable. In this article we are going to prepare a proposal for the Iran Ministry of Petroleum (MOP) and present a model for pricing the oil Standard Parallel Forward (SPF) contract based on Black and Scholes option pricing model. In order to proper price estimation, a proposal is presented based on empirical research and statistical models. Finally, we have some recommendations to develop the oil SPF contract and also suggest to the other researchers working on pricing the oil SPF contracts according to this model.