Subsoil Auctions: Valuing a Lot Before the Bid

How Do Rosnedra Auctions Work?

An auction for the right to use a subsoil plot is the main route to a new oil and gas license in Russia. The winning criterion is set by Article 13.1 of Russia's Subsoil Law, and the whole procedure — from application to the results protocol — runs on an electronic trading platform.

"The criterion for determining the winner of an auction is the highest amount of the one-time subsoil-use payment offered." — ConsultantPlus — Russian Subsoil Law, Art. 13.1 (in Russian)

Russian legal entities and individual entrepreneurs registered in Russia can take part. Before filing, a participant transfers a deposit and a participation fee — the amounts and details are set by that specific auction's terms, and the lot notice is published well in advance.

"Before submitting a bid, a person wishing to take part in the auction transfers a deposit and a participation fee, in the amount and to the details set out in the auction's terms and conditions." — Rosnedra — organizing subsoil auctions (in Russian)

• Rosnedra publishes the auction terms and the starting one-time payment — at least 45 days before the auction.
• A participant pays the deposit and fee, then files through the electronic trading platform.
• On auction day, participants raise the one-time payment step by step — the highest bid wins.
• The winner pays the final one-time payment plus the state fee for the license.

How Do You Value a Lot Before Bidding?

Before filing, there's one practical question to answer: what is this license actually worth to you — not what the auction organizer is asking for it. The starting point is the category and volume of reserves: proved (A, B, C1) or forecast (C2, P1–P3). That decision drives which valuation method even applies.

"If a company were operating with current reserves and production data, the income approach would be preferable for valuing the license. But under mothballed, non-operating conditions, the comparative approach is the only reliable way to determine market value." — RBC Companies — valuing a subsoil-use license (in Russian)

The problem: a plot up for auction usually hasn't been developed yet, so there's no operating data of your own to lean on — and open data on past license-deal prices in Russia is thin. That makes a defensible set of analogs and a probabilistic reserves estimate worth more than a single number from someone else's deck. The minimum input set for a bid decision:

• Geological parameters and reserves volume by category
• Analogs — neighboring fields with similar geology and development history
• Production profile and economics (NPV, IRR) across oil and gas price scenarios
• The upper bound on the one-time payment at which the lot still pays back

How Does AVP AI Run the Numbers?

The one tool that actually matters at the auction is not instinct — it's a walk-away price, calculated before the bidding starts. AVP AI — an AI platform for oil and gas asset evaluation — builds that number from the same data a geologist and an economist would need by hand, in minutes instead of weeks.

Given coordinates or a license number, the platform pulls the plot's geology from open industry data, estimates reserves by analogy across a probabilistic P90/P50/P10 range, builds a production profile and a surface-facilities layout, and runs the economics — NPV, IRR — across several price scenarios. The output is a report with a value range for the asset and a defensible ceiling bid, not a single number you just have to trust.

If your shortlist runs to a dozen lots rather than one, it's worth running them through license area screening first — the platform ranks the list under one methodology and shows where a detailed valuation is actually worth the time. And once you've won, the same pipeline carries into oil and gas asset due diligence — now with the real license terms in hand.