Decision making under uncertainty in the upstream petroleum sector: Gazprom Neft case

Abstract

Research goal: to develop mothballing and reactivation criteria for respective investment decision making under oil price uncertainty for a case of operating oil well with known reserves. Research objectives: • Study features of the industry and investment projects in oil and gas extraction to create economic model • Examine existing methods of uncertainty modeling to forecast oil price • Study methods of project valuation and decision-making tools using real options approach • Construct the model, adapting chosen methods for a specifics of real project • Implement the model programing chosen methods Results: mothballing and reactivation criteria for respective investment decision making under oil price uncertainty were developed on the basis of case study of Gazprom Neft project.