The corporate planner in an international petroleum company is faced with the difficult task of comparing potential investment opportunities across different geographic and fiscal regimes. The economics in many global fiscal regimes such as production sharing contracts (PSC) requires advanced modeling capabilities, iterative calculations and consolidated economics at a field or block level for appropriate accuracy. This process can be both computationally intensive and nonlinear in nature requiring a recalculation of each proposed portfolio including any delay and working interest factor applied to each project in the portfolio.

This paper will review and compare the effects of several typical international fiscal regimes with both traditional project ranking and more modern portfolio management techniques used in the exploration and production (E&P) capital investment process. The ability to use sophisticated optimization algorithms while achieving maximum computational efficiency and economic accuracy will be explored. The effects of stand-alone vs consolidated project economics at a PSC level will be discussed as well as key issues associated with using portfolio management to compare assets in a variety of fiscal regimes. A personal computer will be used to model several typical international fiscal regimes and analyze a set of petroleum assets in the context of choosing an optimal corporate portfolio.

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