Modeling and solving a multi‐objective optimal portfolio of upstream oil and gas assets

With establishment of International Solar Alliance in New Delhi and due to the push given to renewable energy by the current government India has opened new dimension for innovation, investment and industry. This government has made a significant effort to push India’s renewable energy ambition. Due to this push India is now the 4th largest wind power producer in the world only behind of China, USA & Germany. India has made record addition to the solar power capacity in last 5 years. Although the recently concluded Financial Year (FY19) has shown a dip in installation of solar power with only 6500MW installed in the year. With this trend in the country the researchers are focusing on the scenario of renewable energy in India. So, the papers which are recently made available in the public domain are concerned with the current scenario. The surge in renewable energy is a good sign for the nation as renewable is the future. Though the rising demand of the fastest growing economy of the world can’t be satisfied with this growth in renewable energy. In simply words, the growth of the renewable energy is not enough to sustain the growth of the Indian economy. This statement is supported by the growing dependence of India on imported crude oil. Dependence of imported crude oil has gone up to 83.7% in Financial Year 19 from 82% in FY18. Hence, it can be said that the oil and gas sector is not getting the required focus. 
 Development of an optimum portfolio to minimize risk and maximize return is required before taking any investment decision. Portfolio optimization is required when you think of investing in oil and gas sector as its one of the most volatile sectors. This study is focused on developing an optimum portfolio for investment in oil and gas sector in India. Hence, 11 companies listed on Bombay Stock Exchange is selected for the study. Risk and return of all the 11 companies are calculated. The companies are ranked according to their risk. Weightage of investment is assigned to the top 5 companies (with lowest risk). 
 The study has been conducted to construct an optimum portfolio of oil and gas companies using Markowitz Model. The study has been conducted on individual securities listed in Bombay Stock Exchange (BSE). The objectives of this study are:
 
 Risk and return analysis of individual securities of oil and gas companies in India listed with BSE.
 
 
 To identify the opportunities of investment in oil and gas companies and development of an optimum portfolio for investment in these companies.
 
 
 To construct optimal portfolio using Markowitz Model.
 
 
 To check whether Markowitz Model performs well in Oil and gas companies well in BSE or not.

The oil and gas sector of the economy in many states remains the main source of foreign exchange and tax revenues to the budget. Moreover, its share, for example, in Russia, accounts for about 12 % of all industrial production. However, this sector, as the practice of world oil prices shows, is experiencing not only a rise, but also a decline. Consequently, the problem of forming a balanced portfolio of oil and gas assets is an object of close attention on the part of national oil and gas companies. The issues of choosing the optimal combination of oil and gas assets in the portfolio are no less urgent, especially among the tasks that all oil and gas companies face, both in Russia and abroad. An investment portfolio or a portfolio of oil and gas assets, which includes new projects for the commissioning of fields, as well as measures to enhance oil recovery, and exploration are objects of real investment. The high volatility of the oil and gas industry is influenced by various factors, including: macroeconomic, innovation risks and a number of others. These circumstances stimulate the sector to increase the resilience of its project portfolios in order to respond flexibly to changes. In an increasingly challenging and uncertain environment, oil and gas companies around the world face constant pressures as difficult strategic decisions and building long-term plans lead to a sustainable portfolio. In order to achieve their goals and maximize profitability, companies should apply certain algorithms in their practice. The article substantiates the role and importance of project portfolio management in achieving the goals of the state and companies in the oil and gas sector. The main goal of the article is to build an algorithm that is aimed both at determining the stability of the portfolio and the ability to flexibly respond to changes in the environment. The scientific novelty of the research lies in the determination of an algorithm for assessing the sustainability of a portfolio of projects of oil and gas companies. Application of this algorithm will allow oil and gas companies to take into account the influence of external factors. The research methodology is based on such methods as analysis of internal regulations and reporting of companies for project portfolio management, risk analysis, project ranking; grouping and classification method.

Some oil and gas companies, the major source of employment for SPE members, revealed their budgets for 2023 and the following years. A look at where the companies plan to direct their spending sheds light on the areas of expected job availability and needed competencies. The numbers show companies’ major allocation of funds for oil and gas exploration and production and concerted efforts to reduce their carbon footprint by reducing emissions resulting from their current operations (whether it is under scope 1, 2, or 3) and increasing efforts to develop new sources of energy. Oil and gas companies’ plans reflect a strategy that may be described as Petroleum ++. The Federal Reserve Bank of Dallas conducts a quarterly energy survey, and in its most recent one (released 29 December), it asked respondents about expectations for capital spending in 2023 vs. 2022. Most reporting companies indicated they plan to increase their capex spending within a range of 8 to 25%. Some major international companies announced additions to their capital budgets. While some reported their plans for 2023, others reported 5-year plans. I wish all were reported the same way with specific numbers for various activities so that we engineers can input all values in a table and reach quantitative conclusions, but this is not the case, and we must review what is being reported and reach a generalized understanding about future directions. For example, Chevron reported about $14 billion capex in 2023 with 82% going to upstream oil and gas projects, 14% towards the effort to lower its carbon footprint, and 7% toward new energy developments. ExxonMobil reported a capex budget of between $20–25 billion annually through 2027 with 15% directed to efforts to lower emissions. TotalEnergies plans to increase its annual budget by about 14% in the 2023–2025 period to about $14 billion per year and appears to be targeting about $6 billion for new oil and gas assets and $4 billion for new energy. Saudi Aramco approved $296 billion for 2023 and has created a $1.5-billion sustainability fund to invest in technology that can support a stable and inclusive energy transition. Petrobras will increase investment during the 2023–2027 period to $78 billion with 83% earmarked for traditional exploration and production activities, 6% to reduce carbon emissions, and about 1% for the decarbonization fund. The directions from the announced spending plans of oil and gas companies indicate that more than about 80% of their budgets are directed toward traditional oil and gas exploration and production and concerted efforts to reduce emissions and carbon footprint, and measurable sustainable investment in new energy. This clearly shows SPE members, employers, and educational institutions the needed competencies and technical skills that we all need to continue our work and provide the world with the energy it needs. As mentioned earlier this may be summarized by Petroleum ++. It is also reasonable to expect that with the increase in budgets of oil and gas companies, there will be an uptick in the employment of petroleum professionals. A modest increase that we just witnessed in the number of SPE members in 2022 for the first time in a few years may be a good indication.

High uncertainty is a universal characteristic of modern economic reality. Therefore, the behavior of oil and gas companies requires special prudence in the disposal of assets, interaction with the environment of their localization, implementation of production and project activities. Accordingly, the basis for the choice of decisions and actions of the managerial level today should be an adequate scientific and methodological basis, based on the system properties of the oil and gas company and allowing to measure the stability of subsystems and their contribution to the overall ability of the industrial enterprise to work effectively in turbulent conditions and to withstand the enormous pressure of rare and hard-to-predict events. The purpose of this study is to develop and validate a methodology for assessing the sustainability of an oil and gas company, which (unlike traditional ones) is based on the systemic economic theory and considers sustainability as a result of the interaction of subsystems of object, environment, process and project types, their potentials and their combined contribution to the overall sustainability of the enterprise. The methodology is based on the systemic economic theory as a scientific basis for ensuring the viability of oil and gas companies in conditions of high uncertainty. The order of counting the generalized criteria of stability of subsystems of an oil and gas company is based on the consistent use of the method of hierarchy analysis by T. Saaty and multidimensional comparative analysis. The integral indicator – ​the index of oil and gas company sustainability – ​is calculated on the basis of the index method using geometric average by U. Jevons, interpreted with an interval method. Approbation of the methodology for assessing the sustainability of oil and gas companies was carried out on the basis of the data on oil and gas companies operating in foreign markets. The results of calculations showed different levels of stability of individual subsystems of oil and gas companies. In particular, the project-type subsystem, the fragility of which is caused by the resource-raw material model of business conduct, requires special attention from the management of Russian companies; foreign companies – ​the subsystem of the environmental type, the viability of which is determined by the potential of oil and gas assets. Recommendations for the formation of a model of behavior of an oil and gas company taking into account the level of its sustainability are suggested.

Resources of the majority of oil and gas companies in Russia are managed within functional organizational structure. Thereof productivity and management efficiency depends a little on needs of a company for use and development of an oil and gas field and its infrastructure. In some industry enterprises a project management is used. The analysis of project management in such companies, as TNK-BP, LUKOIL Overseas, Rosneft, Gazprom dobycha Yamburg, Gazprom dobycha Noyabrsk was made. It is offered to use a complex of 2 models for oil and gas enterprise management. The first model has to be based on concept of oil and gas asset, the second one has to use a project management methodology. A new definition for the term "Oil and Gas Asset" is entered. The oil and gas asset is one or several fields with integrated economy, production, auxiliary and transport infrastructure, grouped according to their development logic. The oil and gas asset has its own life cycle consisting of stages and including life cycles of fields entering in the asset. Life cycle�s stages are filled both traditional (operational) activity, and design (projects� programs and projects themselves). Management of an oil and gas asset is impossible without application of one-man management principle. A project, as well as an asset has to be managed by one owner � manager or administrator (depending on powers and responsibility delegated to him). For development, elaboration and support of fields and their infrastructure (i. e. that activity which is difficult to operate in functional organizational structures) it is offered to apply the project management methodology. A multilevel project management model, as well as examples of projects� type design practice, and structures of decomposition of their works have been presented in this paper. The specified models were applied to development and deployment of mana gement�s corporate systems in OAO Tomskgazprom and OOO Gazprom transgaz Tomsk. Systems apply complex integration approach to a problem of coordinated management of fields and other assets and resources related to the oil and gas company.

Subject. The article focuses on ratios of the market capitalization or enterprise value to balance sheet assets or equity of the twenty five leading publicly traded oil and gas companies within 2008 through 2018. Objectives. The aim of the study is to trace key trends in ratios of the market capitalization or enterprise value to balance sheet assets or equity of corporations in the oil and gas industry, as well as identify the key trends in their changes within the studied period, and establish factors that caused those changes. Methods. For the study, I used the methods of comparative, financial and economic analyses, summarizing financial reporting data. Results. The article establishes that the multipliers studied are acceptable for assessing the value of oil and gas companies, but it is preferable to use asset-based ratios. The multiples of the ratio of market capitalization to assets or market capitalization to equity in the oil and gas industry are characterized by a decrease, and the lack of stability of values does not allow using these ratios for other dates in valuation. It is necessary to analyze in detail the results of financial and economic activities and the structure of assets in order to select an analogue company, especially in times of crisis. There is a country factor in the stock market valuation of oil and gas assets. The influence on the market capitalization of the size of the debt component in the structure of total capital has been established. An increase in the level of debt burden over time was revealed. It is advisable to use an indicator of enterprise value that includes net debt instead of market capitalization when there is a difference in debt burden between the assessed corporation and the analogue company. Conclusions and Relevance. The overall decline in profitability and the increase in debt load in the stock market sector of the global oil and gas industry should be taken into account when using multipliers based on assets and shareholder capital in the assessment of the value of oil and gas corporations through a comparative approach. The findings can be used to appraise the value of oil and gas assets as part of the comparative approach and decide on actions for raising the market capitalization of publicly traded oil and gas corporations.

This paper investigated effect of employee mobility on skills retention in upstream oil and gas companies in Nigeria. A review of pertinent conceptual, theoretical, and empirical literature was done and a hypothesis was formulated. Three upstream oil and gas companies were surveyed using proportionate and stratified random sampling techniques. A total population of 9,437 regular and contract employees were investigated with a sample size of 807. The validity of the instrument was determined using content and construct validity while Cronbach Alpha was used to ascertain the reliability of the instrument. Multiple linear regression Analysis was used to analyse the hypothesis with the aid of Statistical Package for Social Science (V26.0). The study found that employee mobility components have positive and significant effect on skills retention of selected upstream oil and gas companies in Nigeria. Findings further revealed that employee buy-in has the highest contribution to skills retention in the selected upstream oil and gas companies in Nigeria. It concluded that employee mobility affects skills retention in selected upstream oil and gas companies in Nigeria. Based on the findings, the study recommends that management of upstream oil and gas companies in Nigeria should keep update on the employee retention policies and strategies to retain talented and skilled employees. Keywords: Employee Mobility, Knowledge Sharing, Hedge Relationships, Knowledge Transfer, Reward System, Skill Retention

The study investigates employee mobility and innovation of selected upstream oil and gas companies in Nigeria. The objective was to establish the effect of employee mobility and innovation of selected upstream oil and gas companies in Nigeria using a survey research design. Three upstream oil and gas companies were surveyed using proportionate and stratified random sampling techniques. A total population of 9,437 regular and contract employees were investigated with a sample size of 807. The validity of the instrument was determined using content and construct validity while Cronbach Alpha was used to ascertain the reliability of the instrument. Multiple linear regression Analysis was used to analyse the hypothesis with the aid of Statistical Package for Social Science (V26.0). The study found that employee mobility through knowledge sharing, hedge relationships, and knowledge transfer have positive significant effect on innovation of selected upstream oil and gas companies in Nigeria. Findings further revealed that reward system has a negative significant effect on innovation of selected upstream oil and gas companies in Nigeria. It concluded that employee mobility promotes innovation of selected upstream oil and gas companies in Nigeria. Based on the findings, the study recommends that upstream oil and gas companies in Nigeria should take advantage of knowledge sharing, hedge relationships and knowledge transfer with high reward system to enhance innovation within the companies.

Worldwide oil and gas asset retirement obligations circa 2021

Purpose: the main idea of the article is to prove that the level of corporate social responsibility (hereafter CSR) of large gas and oil companies can be improved. This is a necessary condition for providing sustainable development of these companies because on the one hand the new paradigm of their development considers transition to low-carbon technologies, on the other hand, the main activity of gas and oil companies is associated with natural resources consumption, which inevitably leads to certain negative environmental consequences. At the same time, it is these consequences that trigger the process of establishing a green economy.Methods: the authors conducted a comparative and iterative analysis of the CSR development process of four major Western and four major Russian oil and gas companies.Results: large oil and gas companies around the world are deeply involved into the implementation of various areas of CSR in different directions to ensure long-term sustainable development. Our analysis showed that CSR areas are different and correspond to the basic set of CSR activities. Also, there are more advanced activities, though this applies only to individual companies. Oil companies have demonstrated certain features in their CSR practice, such as the variety of issues being addressed, the wide presence of intersectoral partnerships, and interaction with social entrepreneurs. However, not all companies are equally involved in the implementation of CSR.Conclusions and Relevance: the results of research allow us to determine the main reserves for improving the competitiveness of the analysed companies. The practical application of the results of this study is possible in the field of corporate governance, strategic planning for oil and gas companies. The results of the study are also of interest from the point of view of the development of scientific ideas about modern ways of implementing corporate social responsibility and the specifics of its implementation in the oil and gas industry.

In recent years, the oil and gas industry has been facing objections from a public greatly concerned with the severe environmental impact caused by fossil fuels and their infrastructures, and strong demands from policy makers seeking to meet decarbonisation goals. Amidst a global energy transition, the future demand, finance, and social responsibilities of oil and gas companies are increasingly in question. One of the biggest problems of the industry is what are the “green” solutions for the late-life offshore oil and gas assets. Energy integration with reusing or repurposing oil and gas assets for new technologies could be a worthwhile investment strategy helping reduce carbon emission from oil and gas production as well as accelerating carbon capture and storage (CCS) and green hydrogen development to support the global decarbonisation. According to research, the late-life offshore oil and gas assets play an important role in energy integration while helping to have more opportunities to develop the new technologies that are in the early stages of development with high capex, necessary to make them more economically attractive and facilitate maximum energy integration. Reusing or repurposing oil and gas infrastructure can lead to 30% capex saving and million tons of CO2 pa emission reductions.
 In this paper, potential concepts of energy integration for offshore oil and gas assets are introduced, and some lessons learned and implications for reusing or repurposing late-life offshore assets for Vietnam are also presented.

Subject. This article focuses on ratios of enterprise value to EBITDA and enterprise value to DACF of the twenty five leading publicly traded oil and gas companies within 2008 through 2018. Objectives. The article aims to trace key trends in ratios of enterprise value to EBITDA and enterprise value to DACF of corporations in the oil and gas industry, as well as identify key trends in their change within the studied period and identify the factors that caused those changes. Methods. For the study, I used the methods of comparative, financial and economic analyses, summarizing financial reporting data. Results. The article finds that EV/EBITDA and EV/DACF multiples are acceptable for valuing oil and gas companies. The EV level depends on profitability, proved reserves and a country factor. It is required to adjust EBITDA for information on impairment, revaluation and write-off for assets that are reported separately from depreciation, depletion and amortization costs, as well as for income or expenses arising after the sale of fixed assets and as a result of effective court decisions or settlement agreements. It is advisable to adjust DACF for income, expenses and changes in assets and liabilities, which are caused by events that are unusual for oil and gas companies. Adjustment for interest payments can come to the fore in the DACF when the adjustment factor is significantly outside the standard range, and then it is better to limit to the EV/CF multiple. Conclusions and Relevance. The application of EV/EBITDA and EV/DACF multiples requires a detailed analysis and if necessary, adjustments of their constituent components. However, they are quite relevant in the context of declining profitability and growing debt burden in the stock market sector of the global oil and gas industry. The findings can help appraise the value of oil and gas assets as part of a comparative approach and decide on actions for raising the market capitalization of publicly traded oil and gas corporations.

Subject. This article explores the ratios of the company's market capitalization and value to the balance sheet value of assets and equity of the twenty five leading public oil and gas companies between 2008 and 2018. Objectives. The article aims to identify key trends in the changes in market capitalization and value ratios of the company to the balance sheet value of assets and equity of the largest public oil and gas companies, identify the factors that have caused these changes, and establish the applicability of these multipliers to estimate the value of the business within the oil and gas industry. Methods. For the study, I used comparative, and financial and economic analyses, and generalization of materials of the companies' consolidated financial statements. Results. The article establishes that the multipliers studied are acceptable for assessing the value of oil and gas companies, but it is preferable to use asset-based ratios. Conclusions and Relevance. The overall decline in profitability and the increase in debt load in the stock exchange sector of the global oil and gas industry should be taken into account when using multipliers based on assets and shareholder capital in the assessment of the value of oil and gas corporations through a comparative approach. The results of the study can be used to assess the possible value of oil and gas assets as part of a comparative approach and develop measures to increase the market capitalization of public oil and gas companies.

The Russian oil and gas complex is closely integrated with global financial markets and has been building trade and logistics links with foreign trade partners throughout the 21st century, as the main flow of produced hydrocarbons and their derivatives is exported. The oil and gas complex plays a key role in generating state budget revenues, replenishing the country’s foreign exchange reserves and ensuring the country’s balance of payments. As of 2024, the share of the oil and gas complex in the structure of the Russian stock market is 45%, and the market price of equity capital reaches 50% of the capitalization of the Russian securities market. Despite the economic shocks caused by the consequences of the pandemic, special military operations, large-scale sanctions restrictions, and military and political conflicts in the Middle East, the Russian oil and gas complex is a steadily growing industry with high macroeconomic indicators. Also, the investment potential of Russian oil and gas companies is revealed in their ability to provide not only the safety of savings, but also significant financial benefits from rising share prices and attractive dividend income under the strict monetary policy of the Bank of Russia and high inflation. The presence of risks, volatility of quotations together with other factors create uncertainty for investors on the stock market. It is difficult and, in some cases, impossible to determine to what extent one or another parameter influences the change of derivative price. As a consequence, the main purpose of the article is to create statistically significant models for analysing and investing in securities of oil and gas companies, taking into account benchmark markers, to form a relevant investment portfolio in the Russian oil and gas market in the current turbulent conditions. The results of the scientific research reflect the obtained multifactor regression equations and relevant investment portfolio of securities of oil and gas gas companies in Russia.

Subject. This article focuses on the market-capitalization-to-net-income ratios of the twenty five leading publicly traded oil and gas companies within 2008 through 2018. Objectives. The article aims to identify key trends in the changes in the values of market-capitalization-to-corporations'-net-income ratios of the oil and gas companies, as well as identify key trends in their change within the studied period, and identify the factors that caused those changes. Methods. For the study, I used the methods of comparative, financial and economic analyses, summarizing financial reporting data. Results. The article finds that the studied multipliers based on net income of shareholders are of little use for assessing the value of oil and gas companies due to the volatility of oil prices. Integrated corporations are not as dependent on oil prices as independent companies. Net income can be affected not only by a decrease in revenue, but also by the cost of impairment, revaluation or write-off of assets in the event of a fall in oil prices, and therefore, the use of the multipliers is advisable in case of high profitability in the industry. Net income may also be affected by income and expenses that are not related to operating activities. This factor should be taken into account when choosing an analogue company. It was revealed that the characteristic features of the market capitalization of companies in the industry are reflected in the indicators, which include the provision with proved reserves and level of debt. It is better to use an enterprise value indicator instead of market capitalization in a multiplier if there is a noticeable difference in debt burden. Conclusions and Relevance. To apply the multipliers based on net income is very difficult in the face of declining profitability and increasing debt burden in the stock market sector of the global oil and gas industry. The findings can help appraise the value of oil and gas assets as part of a comparative approach and decide on actions for raising the market capitalization of publicly traded oil and gas corporations.