Petroleum Exploration and Production Rights : Allocation Strategies and Design Issues
Petroleum has become an integral part of today's global economy and a key component of many national economies. Hence, the presence of petroleum in meaningful quantities can have important economic, developmental, and strategic consequences fo...
| Main Authors: | , , |
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| Format: | Publication |
| Language: | English |
| Published: |
World Bank
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000333038_20100218232459 http://hdl.handle.net/10986/2701 http://hdl.handle.net/10986/5954 |
| Summary: | Petroleum has become an integral part of
today's global economy and a key component of many
national economies. Hence, the presence of petroleum in
meaningful quantities can have important economic,
developmental, and strategic consequences for a country.
While a country's petroleum resource base is a gift of
nature, translating this resource into saleable crude oil
requires investment and effort. Whether governments choose
to invest directly or allow private investors to do so,
their primary concern should be to maximize the social
benefits derived from the exploitation of the resource base.
In practice, however, defining what constitutes maximum
social welfare is essentially a political question, which
helps explain the variety of objectives pursued by
governments over time. In order to exploit their natural
resources efficiently, many governments rely on private oil
companies. Governments have a challenging task in deciding
which companies should be awarded the exclusive rights to
explore, develop, and produce their resources, and on what
conditions such rights should be awarded. There is little
empirical documentation on the design and relative
effectiveness of alternative systems for the allocation of
petroleum exploration, development, and production (E&P)
rights and their policy implications. This paper analyzes
the available evidence on the advantages and disadvantages
of various practices used by petroleum producing countries
to allocate petroleum E&P rights, and draws conclusions
about the optimal design of E&P allocation systems. |
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