Article

2009-07-02 Iraq

Ambitious oil firms dismayed at Iraq oil auction

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Posted by Fred 2009-07-02 00:00|| E-Mail|| Front Page|| [1729 views ] Top

1 So... Is someone too optimistic or just too greedy for the existing market?

Posted by tipover 2009-07-02 00:38|| 2009-07-02 00:38|| Front Page Top

2 I once spent a couple of months studying auction theory---biggest pile of crock since phlagiston theory.

Posted by g(r)omgoru 2009-07-02 05:37|| 2009-07-02 05:37|| Front Page Top

3 MMS lease auction system: there is a uniform nominal minimum bid, then any interested companies submit a secret bid for whatever amount they want, then the MMS checks the high bid against their own assessment of what the lease should cost. If the company bid is high enough, they get the lease, if not, the tract stays open. It kind of means that if you win the tract you paid too much.

Posted by Glenmore 2009-07-02 07:46|| 2009-07-02 07:46|| Front Page Top

4 Here's a really easy way to decide on oil rights.

Who's going to give the state the largest %age of the oil extracted? Then the state can hand out an oil dividend.

Posted by Bright Pebbles 2009-07-02 07:48|| 2009-07-02 07:48|| Front Page Top

5 Other ways to make the determination:
1) Who's going to pay the most cash up front for the rights to explore (very useful when not much is known about how much is to be found and produced.)
2) Who's going to pay the most cash per barrel (as opposed to percentage) - useful when budgeting in a volitile oil price marketplace.
3) Who's going to hire the most natives, either in the oil projects or other committments - politically very useful.
4) Who's going to pay the biggest bribes - historically the most important but tougher these days (now done by paying 'fines' for imaginary infractions, especially 'green' infractions.)

Posted by Glenmore 2009-07-02 09:40|| 2009-07-02 09:40|| Front Page Top

6 The thing is that the other option don't incentivise to get the oil out in the most profitable way, or provide ways to bribe state officials to undervalue assets.

Posted by Bright Pebbles 2009-07-02 11:23|| 2009-07-02 11:23|| Front Page Top

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