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Risk-Bearing and the Choice of Contract Forms for Oil Exploration and Development

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  • Charles R. Blitzer
  • Donald R. Lessard
  • James L. Paddock

Abstract

The structure of taxes and fiscal contracts between host countries and foreign companies has major implications for the success of oil development projects. This is because of several key characteristics of such projects: large investment outlays, long lead times to project completion, and long periods of project output and payout. These characteristics usually are coupled with an incomplete sharing of information and technology, and significant differences in the ability of the various parties to bear the risks involved. These characteristics often lead to unstable contracts and, in many cases, to the failure to develop projects that are economically attractive in aggregate terms but unattractive to one or both parties because of uncertainties over sharing project risks and returns.

Suggested Citation

  • 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.
  • Handle: RePEc:aen:journl:1984v05-01-a01
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    Cited by:

    1. Siebert, Horst, 1987. "Institutional arrangements for natural resources," Discussion Papers, Series II 26, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    2. Diderik Lund, 2009. "Rent Taxation for Nonrenewable Resources," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 287-307, September.

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    JEL classification:

    • F0 - International Economics - - General

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