ENERGY ECONOMICS

Analysis for a Crude Oil Company Investor

PSO505 - Energy Economics

Introduction3

Discussion3

Land Oil Resources3

Marine Petroleum Company4

Factors Need to Consider before Making an Investment4

Political Factors4

Government Interest in the Sector5

Light Crude Oil versus Heavy Crude Oil6

New versus plenty of existing E&P operations6

Opportunity for the Discovery of New Reservoirs7

Exploration and the Maximisation of the Resource Rent7

Who bear Risk of Exploration?8

Crudes Trade in the Global Market against their Respective Benchmark Crudes10

Conclusion10

References12

Analysis for a Crude Oil Company Investor

PSO505 - Energy Economics

Introduction

The idea behind the scenario thinking refers to search for flexibility in the process of decision making. When a single path is tailored with no alternative, any variation between reality and prediction may lead to a huge loss of investment. If the political situation of the country is unstable or the company does not have a diverse portfolio, these things do not eventuate in the manner they are expected and might result in financial loss to the investor. Managing and recognising probable risks and opportunities must avoid these circumstances. The in-depth evaluation of economic parameters will help the investor in assessing the possible risks and opportunities faced by the investor while making investment in Land Oil Resources or Marine Petroleum Company.

This report offers comprehensive and inclusive information that highlights the positive and negative aspects of Land Oil Resources and Marine Petroleum Company, in respect of the possible framework of investment. In addition, being an accredited expert on crude oil trading and energy economics, this report also examines the economic feasibility of the investment.

Discussion

Before moving towards thoroughly appraisal of the investment opportunities and risks faced by the investor, it is essential to look at the information and data provided.



Land Oil Resources

After the civil war and rebellion, Land Oil Resources is prosperous during recent times and has found new reservoirs in a surrounded land of West Africa. There has no assurance of long-term political stability while currently politicians received a backing of the army. The initial test drilling and seismic substantiate that country has a reserve of crude oil with an API gravity of 35° and a sulphur content of 0.12%. However, the country has an infant in energy and production industry while the government turned out to very supportively and desperately looking for private investors to boost economic growth and to create job opportunity, along with a desire that oil is discovered in a vast amount. The fiscal system of the country is beneficial for new entrants and investors in the past have veered away from the country. Moreover, the successful drilling possibility in the country is open to question because of incomplete measurement.

Marine Petroleum Company

Marine Petroleum Company has found proven and extensive oil reservoir in the offshore of a Caribbean country. The country has highly established levels of production; still there is an opportunity for new oil discoveries. For several years, the political condition of the country is stable. Moreover, the democratic government has a clear policy to charge the maximum amount of money to extract mineral assets of indigenous ...