Energy investment risk assessment for nations along China’s Belt & Road Initiative

Abstract

Overseas energy investment as an effective way of securing energy supply is being favored by the world’s leading energy consuming countries. However, energy investment has the potential high risk on multiple forms, including political and regulatory risk, currency, liquidity and refinancing risk as well as resource risk and so on. To effectively evaluate overseas energy investment risk, this study proposed a new indicator system from six dimensions. Furthermore, a fuzzy integrated evaluation model based on the entropy weight was constructed to rate the energy investment risk for 50 nations along China’s “Belt & Road initiative”. The findings indicate that resource potential and Chinese factors have become the main determinant of energy investment risk, while environmental constraints and political risk should also be considered for investing decisions. In conclusion, Saudi Arabia, United Arab Emirates, Pakistan, Kazakhstan, and Russia are the most ideal choices for China’s energy investment balancing resource potential and investment environment.