Managing Risks of Capital Applicant in ‎Holding Tenders of Oil and Gas Upstream ‎Development Contracts within The Adverse ‎Selection Model (Case Study of Selection of ‎Exploration and Production Companies)‎

The information asymmetry between the National Iranian Oil Company and the companies applying to enter into oil and gas development contracts is the cause of the phenomenon of adverse selection in those contracts. This study seeks to answer this question: what are the legal and contractual solutions for managing risks due to adverse selection, and whether the selection process of exploration and production companies guarantees the prevention of adverse selection or not. For this purpose, the findings of economics have been used in the framework of the adverse selection model with the aim of identifying legal and contractual tools to manage these risks. Examination of the evaluation processes of exploration and production companies indicates that the methods adopted for the evaluation and screening of applicants are not sufficient and this process can be considered as an example of adverse selection e. In this regard, designing and establishing a comprehensive contractor evaluation system, assigning the evaluation of financial capacity of contractors to credit rating agencies and using the capacity of contractual conditions to implement signaling and screening patterns are some of the strategies that can minimize client risks relevant to adverse selection.