Study On The Overseas Project Investment Strategies Of Petroleum Enterprises In The Option-game Framework

In recent years, with the rapid development of national economy, China has afast-growing demand for energy resources, especially for oil and gas. Since Chinabecame a net oil importer in1993, its net oil import has been rising year by year andthe import dependence degree has also been gradually ascending. In2011, China’s netoil import reached272million tons and the net crude oil import reached253milliontons, with the import dependence degree56.7%and55.1%respectively (for the firsttime in history both exceed55%). Under these circumstances, stepping out of thehomeland to investing overseas oil and gas projects becomes inevitable for Chinesepetroleum enterprises to meet the needs of national energy security and their owndevelopment strategies.Distinct from domestic exploration and development projects, overseasinvestment projects confront petroleum enterprises with complicated political andeconomic climate. At the same time, incomplete information materials and uncertainresource conditions make the investment more risky. In addition, the involvement ofcompetitive enterprises reduces to some extent the investment value and affectingpetroleum enterprises in choosing the best time to invest. However, traditionaldecision methods of petroleum enterprises project investment lack the flexiblereaction ability towards uncertainties and ignore the strategic value of investment increating subsequent opportunities. While the option-game theory integrates the idea ofreal option and game theory with the consideration for the option value of uncertaintyand the game value of strategy interaction. Therefore, analyzing the enterprises’overseas investment projects with the option-game theory can not only reach aanalytic judgment for the project value but also express the analysis-correspondinggame equilibrium characteristics and subject strategy choices.This article analyzes the waiting option value and investment point of petroleumenterprises’ overseas investment under the condition of monopoly and competition.Under the condition of monopoly, petroleum enterprises can wait till the investmentpoint so as to increase the project value, while in competition enterprises shouldinvest in advance in consideration of the risk of losing investment opportunities.