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Economics of oil regulation and the Brazilian reform: Some issues

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  • Hernandez-Perez, Adriana

Abstract

This paper reviews the economic fundamentals for regulation in the oil industry, with a focus on the current regulatory proposal for the Brazilian oil industry. The observed exploration and production (E&P) contracts foresee much of the characteristics of the optimal contract, with a remuneration structure that combines upfront with future payments to mitigate uncertainty and incentivize exploratory efforts. In Brazil, despite slow market deconcentration since 1997's liberalization, the current oil regulation is in general consistent with an optimal regulatory response. From an economic standpoint, the 2009's new regulatory proposal prompted by the major oil discoveries offshore in Brazil reduces the power of incentive schemes with respect to exploratory and cost-reducing efforts while the changes in the net risk of the E&P offshore activities are not so clear.

Suggested Citation

  • Hernandez-Perez, Adriana, 2011. "Economics of oil regulation and the Brazilian reform: Some issues," Energy Policy, Elsevier, vol. 39(1), pages 57-65, January.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:1:p:57-65
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    References listed on IDEAS

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    1. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
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    Cited by:

    1. Sylvain Rossiaud, 2014. "Opening the upstream oil industry to private companies," Working Papers halshs-00960681, HAL.
    2. Richard A Owusu & Terje I Vaaland, 2021. "Achieving Local Content in Extractive Industries of African Countries," International Journal of Innovation and Economic Development, Inovatus Services Ltd., vol. 7(1), pages 28-36, April.
    3. François Lévêque & Michelle Hallack, 2013. "The new Brazilian oil regulation: an ex ante economic assessment," RSCAS Working Papers 2013/48, European University Institute.
    4. Guevara, Zeus & Sebastian, Antonio & Carranza Dumon, Fabian, 2022. "Economy-wide impact of conventional development policies in oil-exporting developing countries: The case of Mexico," Energy Policy, Elsevier, vol. 161(C).
    5. repec:fgv:epgrbe:v:66:n:4:a:2 is not listed on IDEAS
    6. Moura, Rodrigo Leandro & Canêdo-Pinheiro, Maurício & Daitx, Fernando, 2012. "Determinantes do lance vencedor em leilões de petróleo e gás: Avaliando o caso brasileiro," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 66(4), December.
    7. Araujo Rodrigues, Larissa & Luís Sauer, Ildo, 2015. "Exploratory assessment of the economic gains of a pre-salt oil field in Brazil," Energy Policy, Elsevier, vol. 87(C), pages 486-495.
    8. Trojbicz, Beni & Loureiro, Maria Rita, 2018. "Brazilian oil sector reforms: The role of technical know-how and corporate ethos in Petrobras's dominance," Energy Policy, Elsevier, vol. 118(C), pages 588-595.
    9. Sylvain Rossiaud, 2015. "L’ouverture de l’amont pétrolier à des compagnies privées. Un cadre d’analyse en termes d’économie des coûts de transaction," Post-Print hal-01162793, HAL.

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