Overseas oil investment projects under uncertainty: How to make informed decisions?

摘要: Abstract To better address the complexity of overseas oil investment and help investors to make informed decision in investment, this paper applies real options theory Monte Carlo simulation study evaluation. The model has incorporated not only uncertainties price cost but also exchange rate environment. These unique features have enabled our be best equipped evaluate value projects three field sizes (large, medium, small) under different resource tax systems (royalty production sharing contracts). In empirical setting, we selected China as an investor country Indonesia investee a case study. Our results show that, although contract (PSC) is convertible that royalty system, given flexibility PSC, it can great extent increase bargaining power country. As there important tradeoff between investor, medium small sized negotiation company should try limit avoid term windfall profits reduce risk fields.