On Method Of Economic Evaluation Of Petroleum Development Projects

With the rapid development of our economy, more and more petroleum are needed, the tendency of our petroleum enterprises have to enter into overseas searching for oil & gas reserves are more and more strong. Much more styles of petroleum development projects are faced by our petroleum enterprises. So, evaluating the petroleum investments scientifically and rationally to ensure the profit of petroleum development is very important and urgent. Traditional investment evaluation methods are unsuitable for the value evaluation under uncertainty conditions, so establish a set of more scientific evaluation system for petroleum investment is of the theoretical importance and practical significance. Petroleum development project is risk investment project involves in huge investment, standard style of economic evaluating should be established. The paper suggested a style as economic evaluating-risk analysis- project decision. Real options theory opens an entirely new way to investment evaluation for investors. The paper attempted to introduce it into the evaluation of petroleum development and suggested the real option evaluating method of both license pricing and time choice of petroleum development. An evaluating method for adjusting project was suggested on the basis of analysis of value devotion. The paper also attempted to introduce Monte Carlo simulation method to risk analysis and apply zone analysis method and utility theory to decision processes in the end in order to make decision more scientifically.The work of the paper will help to improve and perfect the evaluating method and tools of China's petroleum development project and make our petroleum enterprises evaluate the value of development project more precisely to improve their investment efficiency and promote the development of petroleum industry of our country.