Decision and risk analysis based interactive project evaluation approach on oil and gas projects

Risk is an unavoidable factor of oil exploration and production projects. Together with uncertainties and risks associated with income and life-cycle cost factors such as potential reserves, capital & operating expenditures, production profiles and oil prices, it is extremely difficult to forecast earnings and cash flows for even the simplest projects.In this thesis, by having described the oil sector?s structure, current perspective and future trends, importance of oil projects was emphasized. Later on, oil E&P projects were focused particularly. Four primary phases of project (i.e. reservoir, surface facilities, production plans and sharing mechanisms) were analyzed from the project manager?s point of view. Moreover, a sample oil price forecasting was made, since it is one of the primary components of an economic analysis. The study has been designed to model an integrated oil project; and risks, that are faced at each step of the process, are integrated in the model in order to figure out the impacts of input factors. Three scenarios were designed for three probabilites (i.e. P10, P50, P90). Different project models were established for each scenarios. Simulations were used along the modelling. Therefore economic results, that are the outputs of models and used as the main tools in decision making, were made to include the risks associated with parameters in whole system. Related economic results were obtained as distributions from three scenarios. Distributions were integrated by simulation, and economic results of the project could be analyzed over special distributions. The thesis was completed with the sensitivity analysis over the economic results of the project.