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Who can benefit from multi-license oil concessionaires valuation?

Author

Listed:
  • Oliva, I.
  • Ventura, M.

Abstract

In this paper, we study the interactions between a public body and several potential concession holders. We propose a dynamic stochastic optimization problem providing the optimal exercise price of the “expropriation” option, which safeguards the social interest from over-exploitation of the resource. Other crucial quantities are also determined, such as the optimal value of the option and the condition for mutual convenience to enter the deal. We apply the model to a Southern Italy oilfield finding that the deal was in the common interest and that the optimal expropriation value is quite high.

Suggested Citation

  • Oliva, I. & Ventura, M., 2024. "Who can benefit from multi-license oil concessionaires valuation?," Energy Economics, Elsevier, vol. 135(C).
    • Handle: RePEc:eee:eneeco:v:135:y:2024:i:c:s0140988324003487
    DOI: 10.1016/j.eneco.2024.107640
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    More about this item

    Keywords

    Oil; Concession license; Parameter estimation; Volatility; Optimal control;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment

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