Bargaining model in international hydrocarbon exploration and development project

ZHANG Shuquan; WANG Ye; LUO Dongkun

Abstract：Bargaining determines the final interests distribution between parties in international hydrocarbon projects.Existing work on bargaining status in game theory lacks systematic research,and studying bargaining mechanisms has significant practical and theoretical significance,especially for China,which has a high degree of dependence on oil and gas.This article discusses the definition,influencing factors,and mechanism of bargaining status in the field of oil and gas,and obtains the following main results:Firstly,through the axiomatic method proposed by von Neumann et al.,a model is established to describe the definition of bargaining status,linking intangible bargaining status with tangible bargaining benefits.Secondly,based on a large number of classic theories and bargaining case studies,a system of influencing factors for bargaining status is extracted,and the basic framework of the bargaining model is further established.Thirdly,a new concept of bargaining input and bargaining output is proposed,as well as a new idea of equal input-output ratio between bargaining parties.A complete framework for bargaining and a series of Input-Output Models are established,and the mechanism of all influencing factors on bargaining status is clearly described.Finally,Input-Output Model is proved to have theoretical rationality and application value.Based on the above research results,we hope the paper helps with enhancing bargaining status and benefits in international cooperation projects for Chinese oil and gas companies,as well as other energy companies.