An empirical analysis of the determinants of high bonus bids for petroleum leases in the U.S. Outer Continental Shelf (OCS)

Iledare, Omowumi; Pulsipher, Allan G.; Olatubi, Williams O.; Mesyanzhinov, Dmitry V.

doi:10.1016/j.eneco.2004.01.001

Cited by 6 publications

(21 citation statements)

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“…This section presents a descriptive analysis of the structure, conduct, and performance of the market for oil and gas exploration leases under the NELP auctions from 1999-2010, based on the approach in Iledare et al (2004). We begin by setting out a broad picture of the performance of the auctions at an aggregate level, using standard performance indicators described in the literature -the number of blocks on offer, the number of blocks for which bids were received, the number of blocks which were awarded (to the highest bidder), and the number of contracts signed (assuming one contract signed per block).…”

Section: Characteristics Of the Market For Nelp Auctionsmentioning

confidence: 99%

“…47 This is discussed further in Section 7.2. 31 econometric model which analyses the correlates of successful bids, based on an empirical approach from Iledare et al (2004).…”

Section: The Objectives Of the Auctioneer -Optimality Versus Efficiencymentioning

confidence: 99%

“…Although there are no clear international benchmarks for the number of bids per block, we refer to the US auctions for leases on the Outer Continental Shelf (OCS) as these have generated sufficient data to allow for reasonable observation. Iledare et al (2004) show that during the period 1954-99, average numbers of bids per block in the US OCS auctions ranged from a minimum of 2.66 to a maximum of 3.96. By these standards, the NELP auctions lie in the lower range -with the exception of the fifth, sixth, and seventh rounds, which appear to have been relatively more successful, based on this parameter.…”

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confidence: 99%

“…It has been argued that the incidence of joint ventures and the number of bidders or bids should therefore be positively correlated (Iledare et al, 2004;Markham, 1970;Saidi and Marsden, 1992). 55 Data for the first and second bidding rounds was unavailable; however, this inadvertently equalizes the length of each policy period (4 years).…”

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confidence: 99%

“…Based on an approach set out in Iledare et al (2004), Table 6.1 analyses participation in bidding rounds in greater detail using the measure of the number of bids per block, and accounting for geological and other differences, by breaking this data down by:…”

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Auctions for Oil and Gas Exploration Leases in India

Sen¹

2013

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This paper addresses the following policy question: why, despite nearly 15 years of operation of India's New Exploration Licensing Policy (NELP), representing two full exploration cycles has this regime yielded inconclusive results, both in terms of a firm indication of India's resource potential, and increased domestic production? This paper argues that a substantial part of the reason for this lack of performance may lie in auctions and market design, and uses data for the period 1999-2010, covering nine rounds of auctions, to explore three lines of argument relating to some unintended consequences of the NELP. First, the regime has led to a highly concentrated market in upstream acreages where a small number of firms hold the largest amounts of acreage. Second, the regime has led to a 'holdup' problem that can be attributed to information asymmetries between the government and bidders, where winning bidders may later not fulfil their work programme commitments within the stipulated timeframe. Third, the lack of a clearer definition of the objectives of the auction and their relative importance, specifically, optimality versus efficiency, may have acted as a constraint on the effectiveness of the regime. We use a combination of theory and empirics to explore these three hypotheses. At the end of the paper we draw the results together, showing that problems relating to auctions and market design may have led to a cycle of information asymmetry and inefficiency, the net effect of which has been a slowdown in India's domestic production, shortages in meeting supply targets, and the need for expensive imports. We suggest some policy options and areas for further research.iii Acknowledgments We are extremely grateful to Christopher Allsopp for his support, from providing advice in the early stages of research right through to reading numerous drafts. We would also like to thank Anil K. Jain for sharing with us his knowledge on Indian energy, and without whom it would have been very difficult to meet with key decision-makers in Indian government and industry. Colleagues at the OIES,

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Section: Characteristics Of the Market For Nelp Auctionsmentioning

confidence: 99%

“…47 This is discussed further in Section 7.2. 31 econometric model which analyses the correlates of successful bids, based on an empirical approach from Iledare et al (2004).…”

Section: The Objectives Of the Auctioneer -Optimality Versus Efficiencymentioning

confidence: 99%

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