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Oil Exploration in the Developing Countries: Poor Geology or Poor Contracts?
Author(s) -
BLITZER C. R.,
CAVOULACOS P. E.,
LESSARD D. R.,
PADDOCK J. L.
Publication year - 1985
Publication title -
natural resources forum
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.646
H-Index - 49
eISSN - 1477-8947
pISSN - 0165-0203
DOI - 10.1111/j.1477-8947.1985.tb01073.x
Subject(s) - developing country , investment (military) , business , phenomenon , distribution (mathematics) , risk analysis (engineering) , economics , economic growth , political science , law , mathematical analysis , physics , mathematics , quantum mechanics , politics
The present geographic pattern of investment in oil and gas exploration is skewed away from the developing countries and towards the developed countries. This paper presents statistical data relevant to this situation, analyzes its causes, and proposes solutions. The paper argues that this phenomenon is largely distributional, arising from continuing difficulties in reaching ‘equitable’ contractual agreements regarding the distribution of risks, benefits and costs, compounded by uncertainity about contract sancity. Both parties could gain if contracts were designed, on a country‐by‐country basis, to (1) take better advantage of comparative ability to assume different categories of risk; (2) ensure efficient project management; and (3) be more self‐enforcing.