“Regulation Changes and Auction Performance: The Case of Oil Leases in Brazil” (Job Market Paper), 2021, Download
This paper analyzes the effects of changes in fiscal and contractual regimes on the behavior of oil firms in Brazil. Contracts and taxes affect the timing in which firms receive their cash flow and influencing the moment they decide to invest and how much oil to extract. My model uses information from auction results, production and investment to identify firms' operational and investment costs, and later simulate bidding strategies, investment, project execution and government revenues. Results show that government revenues are on average 9.8% under a multi-attribute auction with concession contracts, compared to production sharing contracts, but these results are contingent on the cost recovery assumptions and the level of competition in the auction.
“Balancing Rent Extraction and Project Execution: The Case of Auctions for Oil Leases in Mexico”, 2021 Download
This paper studies oil lease auctions where the winner is chosen by a formula combining royalties and exploratory commitments. The model analyzes the eﬀects of changing the weights in the allocation formula on bidding strategies, project execution and government revenues, using the case of onshore marginal ﬁelds in Mexico. Higher weights on the royalty component induce more adverse selection, and together with uncertainty regarding exploration costs, lead to a low execution of projects. My model allows identifying operational and exploration costs from variations in the bid components, to recover their joint distribution. Results show that rules with less extreme weights across bid dimensions and placing a cap on the royalty component of the bid increases project execution and overall government’s revenues by 36%, as well as ﬁrms’ proﬁts.
“The future of PDVSA: Challenges for the reconstruction of the oil sector in Venezuela”. Joint with F. Monaldi and J. La Rosa.
This paper examines the short and long run challenges for the operation of a National Oil Company (NOC) in Venezuela. The legal constraints related to economic sanctions, together with court processes opened, and the dire financial and operational situation imply that the company has limited scope to carry upstream activities. In addition, long-run challenges are related to the reduced demand prospects for hydrocarbons, which implies a strategic shift in the type of products and activities the company would carry as an operator, should a NOC remain in the country.