Iran's Strategy in Utilizing Common Resources of Oil and Gas: Game Theory Approach

Document Type: Research Paper

Authors

Department of Economics, Urmia University, Urmia, Iran.

Abstract

Utilization management of Persian Gulf oil and gas reserves is important, because of the importance of this area owing to the fact that it comprised 60% of the proven oil reserves and 40% of the proven gas reserves of the world and it determines the world's oil and gas strategies. By using game theory, this paper seeks to achieve the best strategy that Iran could use in confronting other partners of common fields. Moreover, it seems to find the best approach for Iran and other countries in cooperation and non-cooperation conditions in extraction. The results showed that the higher the number of countries for a common resource, the less the attempt of each country would be; however, the more the total attempt of countries will be, which means more waste of attempt. Overall, partner countries in a resource are recommended to take actions to extract common resource via agreement and mutual cooperation; so that they could extract the same amount of common resources exercising less effort.

Keywords


References

 Abduli, Q. (2007). Game Theory and Its Applications (Static and Dynamic Games of Complete Information). Academic Jihad of University of Tehran, Tehran, 

Abduli, Q. (2012). Game Theory and Its Applications (Incomplete, Complementary and Collaborative Information Games). SAMT. Tehran.

Ahmadian, M., & Varharami, V. (2013). Achieving optimum path of extraction from offshore reservoirs of south pars (through applying environmental limitations) with emphasis on the significance of financial resources. Journal of Practical Economic Studies in Iran. 2(6), 105-120.

Aplak H. S., & Sogut M. Z. (2013). Game theory approach in decisional process of energy management for industrial sector. Energy Conversion and Management, 74, 70–80.

Beyene, Z., & Wadley I. L.G. (2004). Common goods and the common goods: trans-boundary natural resources, principle cooperation, and the nil basin initiative. Center for African Studies, Berkley University.

Daneshnia, F. (2011). The application of game theory and neo-liberal institutionalization in behavior analysis of main players of gas OPEC. Journal of Political Sciences. 8(1), 143-172.

Darvishi, F., & Nojomi, E. (2007). The common hydrocarbon reserves of Iran in Persian Gulf: Challenges and chances. Scientific and Research Journal of Iran Geographical Association. 5 (12-13), 167-186.

 Emami Meybodi, A., Haqdoust, E., & Pakdin J. (2010). The growth sustainability test on unrecoverable resources (review of Hoteling model) case study: OPEC Oil. Journal of Iran Economic Studies. 14 (42), 149-167.

Esmaeili, M., Bahrini, A., & Shayanrad, S. (2015). Using game theory approach to interpret stable policies for Iran’s oil and gas common resources conflicts with Iraq and Qatar. Journal of Industrial Engineering International, 11(4), 543–554.

Forneth, M. (2004). Powering foreign policy; the rule of oil in diplomacy and conflict, research fellow physicians for social responsibility. PSR Energy Security Initiative.

Gibbons, R. (1997). An introduction to applicable game theory. Journal of Economic Perspective, 11(1), 127-149.

Ghorbani Pashakolaie, V., Khorsandi, M., Mohammadi, T., Khaleghi, S., Shakeri, A., & Abtahi Foroshani, S. T.  (2014). Modeling optimal oil extraction using optimal control model: A case study of an Iranian oil field. Iranian Energy Economics Research. 4 (13), 191-220.

Haile P. H., Hendricks, K., & Porter, R. (2010). Recent U.S offshore oil and gas lease bidding: A progress report. International Journal of Industrial Organization, 28(4), 390-396.

Haji Mirzaei, S. M. A., Emami Meybodi, A., Ebrahimi, M., Sori, A., & Ghorbani Pashakolaie, V. (2016). Optimal extraction path in an oil and gas Broun field under the buyback contractual framework (case study on the Iranian oil field in the Persian Gulf). Journal of Economic Modeling Research. 6 (24), 41-82.

Hotelling, H. (1929). Stability in competition, Economic Journal, 39, 41–57.

Ilias, S. (2008). Iran’s Economy. Congressional Research Service (CRS) Report for Congress, 15–16, updated on June 2008, viewed on January 5, 2012. http://www.parstimes.com/history/ crs_economy_08.pdf.

Jahani, F. (2011). Exploration of common oil and gas fields & marine delimitation. The Judiciary Law Journal, 75, 113-145.

Keramati Moezabad, M., & Ghasem, M. (2014). Determination of optimum well number in one of the Iranian oil reservoirs using Monte Carlo and genetic algorithm models. Journal of Petroleum Research.  25(82) ,82-94.

Leighty, W., & Lin, C. Y. C. (2012). Tax policy can change the production path: A model of optimal oil extraction in Alaska. Energy Policy, 41, 759-774.

Lin, C. Y. C. (2009). Insight from a simple Hotelling model of the world oil market. Natural Resources Research, 18(1),19-28.

Magirou, V. F. (1984). Switching away from oil: A game-theoretic approach. Resource Energy, 6(4), 397–410.

Mas-Colell, A., Whinston, M. D., & Green, J. R.  (1995). Microeconomic theory. London: Oxford University Press.

Mir Abbasi, S. B., & Jahani, F. (2011). Legal regime on utilization of common fields of oil and gas in Persian Gulf in terms of international laws. Rahbord Quarterly, 20(61), 91-122.

Navazani, B., & Nojomi, E. (2008). Legal pattern of extraction from common hydrocarbon reserves of Persian Gulf. Journal of Economic-Political Information, 247-248.

Popescu, M. F., & Hurduzeu, G. (2015). Energy challenges for Europe - scenarios of the importance of natural gas prices from a game theory perspective. Journal of Game Theory, 4(2), 26-35.

Pyndyck, R. (1978). The optimal exploration and production of nonrenewable resources. Journal of Political Economy, 86(5), 841-861.

Rashidi, S. (2013). Nash Equilibrium in Quantum Game Theory. MA thesis, Uremia University, 16-17.  

Shy, O. (2014). Industrial Organization: Theory and Applications. Translated by Kiomars Shahbazi, Nashre Daneshgahi Publication, Tehran.  

Siegfried, T. (2013). A beautiful math: John Nash, game theory, and the modern quest for a code of nature. Translated by Mehdi Sadeqi, Ney publication, 2nd edition, Tehran

Tabibian, M. (2010). On equilibrium in conflict. available from http://drsayad.blogfa.com/post-1316.aspx

Zeng, L., Zhao, L., Wang, Q., Wang, B., Xie, Y., Ma, Y., & Cui, W. (2018). Modeling interprovincial cooperative energy saving in China: An electricity utilization perspective. Energies, 11(1), 1-25.