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Abstract
With the continuous low oil price, the national oil companies in China are under the pressure of lowering the development cost and improving their investment efficiency of their overseas investments. Optimal methods are needed in screening the overseas assets within the constraint of investment. This paper presents a multi-objective integer programming model for the optimal selection of overseas oil development projects for Sinopec based on the economic evaluation of various projects in different countries and regions. Combination of economic parameters and practical constraints are discussed and presented in the mathematical models. Application of the model shows its advantages over the traditional screening and ranking methods.
Highlights
In recent years as one of the major Chinese NOCs, China Petroleum & Chemical Corporation (Sinopec) have emerged as significant players in global mergers and acquisitions in upstream oil and natural gas for the need of domestic economic development
With the continuous low oil price, the national oil companies in China are under the pressure of lowering the development cost and improving their investment efficiency of their overseas investments
This paper presents a multi-objective integer programming model for the optimal selection of overseas oil development projects for Sinopec based on the economic evaluation of various projects in different countries and regions
Summary
In recent years as one of the major Chinese NOCs, China Petroleum & Chemical Corporation (Sinopec) have emerged as significant players in global mergers and acquisitions in upstream oil and natural gas for the need of domestic economic development. After years of expanding and diversifying its overseas reserves, Sinopec has made significant improvement in its overseas production levels. Under the pressure of low oil price, SIPC is seeking to reduce overseas investment and improve the management efficiency of overseas assets by lowering non-efficient overseas output, driving down operational costs of overseas oil and gas production and slashing management fees. The objectives of SIPC to reduce the expense and improve investment efficiency are realized by expanding or keeping good project and cutting or suspending the poor projects. This cannot be reached by selecting projects according to the economic indexes, such as NPV or PIR. In this paper a multi-objective programming model is presented considering all of the requirements and obligations under some limitation of capital expenditure or oil production
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