The Evaluation Of Coal-to-liquids Project Strategic Investment Value

In our country energy is characterized by "rich coal, less oil". In recent years, because the dependency on imported crude oil and oil products is rising and the unreasonable development and utilization of coal resources problems such as the destruction of environment and resources to form, so the relevant units and departments are starting to actively develop and promote coal processing and conversion to produce oil of modern coal chemical projects in China. But coal-to-liquid’s technology has a worldwide use less experience and less evaluation of the maturity about its’ technology. It can not simply to evaluate the development of coal-to-liquids industry’s strategic valuation by economic value evaluation which confirms or denies coal-to-liquid’s strategic value. At present, the standard textbooks’ evaluation method is the net present value method, but the net present value method is not only ignoring the coal-to-liquid project’s charactars of flexibility, uncertainty, irreversibility and etc, but also often difficults to analysi the impact on the company’s future operation and development’s important strategic investment decision. By contrast, although the real option which derived from financial option can be used as a kind of effective tool to evaluate project that is flexibility, irreversibility and uncertainty, it’s not involved in the strategy investment value’s impact which comes from the change of market volatility and the environmental cost when describing complex coal chemical projects.Analysis of the above situation, based on Smit and Trigeorgis(1997) option game strategic investment analysis framework, it established a coal-to-liquids project strategic investment value evaluation model, as a complement of traditional investment decision-making method. First of all, based on option games method, the investment strategyit built a coal-to-liquids project strategic investment value evaluation model which included the directly value of net present value, the flexibility value of real option and competitive value of the option game, SNPV(the extensive strategic investment value)= directly value NPV + flexibility value+competitive value. Among these, the project of the flexibility value calculated with no risk neutral probability and a binary tree option pricing model; competitive value calculated with building a duopoly competition of market competition mechanism which introduced pricing competition in a binary tree option model by using the method of strategy game.After this, it’s application of the established theory and method system.It calculated the A Company’s coal-to-liquid project strategic investment value by evaluation model, detailly discussed the calculation process and methods about how to apply the assess model on A Company’s coal-to-liquid project coal project, the model’s feasibility, validity and applicability has been proved,and provided a new theory and method system for coal-to-liquid project investment value evaluation. Finally, under the new strategy evaluation system discussed change of coal-to-liquids project value by the change of international energy price and environmental costs caused by carbon tax levying.