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Oil Exploration in the Developing Countries: Poor Geology or Poor Contracts?

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  • C. R. BLITZER
  • P. E. CAVOULACOS
  • D. R. LESSARD
  • J. L. PADDOCK

Abstract

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.

Suggested Citation

  • C. R. Blitzer & P. E. Cavoulacos & D. R. Lessard & J. L. Paddock, 1985. "Oil Exploration in the Developing Countries: Poor Geology or Poor Contracts?," Natural Resources Forum, Blackwell Publishing, vol. 9(4), pages 293-302, November.
    • Handle: RePEc:wly:natres:v:9:y:1985:i:4:p:293-302
    DOI: 10.1111/j.1477-8947.1985.tb01073.x
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    References listed on IDEAS

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    1. Charles R. Blitzer & Donald R. Lessard & James L. Paddock, 1984. "Risk-Bearing and the Choice of Contract Forms for Oil Exploration and Development," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-28.
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