Year of grant:
A comparison of the Economic Efficiency of the Petroleum Fiscal Systems under Uncertainty: a Monte Carlo Simulation Approach
University of Aberdeen
01.01.2011 - 31.10.2012
Grant from the FRC in DKK:
The main theme of our thesis is comparisons of the three North Sea countries (UK, Norway and the Faroe Islands) petroleum fiscal systems under oil price uncertainty by using Monte Carlo simulations. The study will present a framework to perform a stochastic modeling encompassing calculations of the economic rents at (1) development RNPV@10% and (2) exploration stages EMV. Further on, four different oil price scenarios will be utilised; Constant Real oil price, Mean Reverting oil price, Mean Reverting oil price with Jumps, and Time dependent oil price, at three different mean levels of oil price such as $45/bbl, $60/bbl and $80/bbl. There will be a discussion of choice of fields in terms of sizes and costs, as well as choice of discount rates and investment hurdles. We will aim for a chapter on implications of modeling and results for Faroe Islands, having on mind that UK and Norway are much more mature provinces and with large proven reserves compared to Faroe Islands. Overall, findings of the study should be able to contribute to the Faroe Islands government future decision making with regards to design and implementation of national petroleum fiscal system if and when the Faroe Islands becomes the oil production country.
Defended Ph.d. at the University of Aberdeen 30 October 2012. The titel is "A comparison of the Economic Efficiency of the Petroleum Fiscal Systems under Uncertainty: a Monte Carlo Simulation Approach"