Asymmetric Information in Oil and Gas Lease Auctions with a National Company

33 Pages Posted: 22 Jun 2011 Last revised: 17 Oct 2013

See all articles by Rafael Matoso

Rafael Matoso

Petroleo Brasileiro SA (Petrobras)

Marcelo Rezende

Board of Governors of the Federal Reserve System

Date Written: September 12, 2013

Abstract

This paper analyzes bidding behavior in oil and gas tract auctions in Brazil, where the main winner has been Petrobras, a national company. We test predictions from the theory of common-value, first-price, sealed-bid auctions with asymmetric information. The tests indicate that Petrobras was better informed about tract values than other bidders. We show that Petrobras bid higher than its competitors for more profitable tracts, and that it bid more frequently than its competitors for tracts being re-offered after receiving no bids in previous auctions. We also find evidence that Petrobras could bid competitively in a limited number of auctions only, and we discuss how our results can help to improve oil and gas tract auction rules.

Keywords: Asymmetric Information, Oil Tracts, Auctions

JEL Classification: D44, D82, L71

Suggested Citation

Matoso, Rafael Silva and Rezende, Marcelo, Asymmetric Information in Oil and Gas Lease Auctions with a National Company (September 12, 2013). Available at SSRN: https://ssrn.com/abstract=1868976 or http://dx.doi.org/10.2139/ssrn.1868976

Rafael Silva Matoso

Petroleo Brasileiro SA (Petrobras) ( email )

Rio de Janeiro
Brazil

Marcelo Rezende (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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