Rapid Country Entry Risk Screening Using Objective Relevance-Weighted Model for Transnational Petroleum Initiatives

Abstract

AbstractIn OECD Europe, oil consumption increased from 13.7 MMbbl/d in 1990 to 15.5 MMbbl/d in 2005, net increase 1.8 MMbbl/d. Oil consumption is expected to rise only 0.1 MMbbl/d in OECD Europe over the next 15 years. In Russia and FSU countries, though, oil consumption is expected to dramatically increase in next 15 years after years of low consumption levels. Moreover, developing Asia and Middle East is expected to reshape future oil markets. As Rate of Reserve Replacement continues to be challenged, International Oil Companies (IOCs) face competition from other IOCs as well as from entrepreneurial national oil companies (NOCs) aggressively looking to develop assets domestically and overseas. A disproportionately large fraction of reserves are controlled by a few NOCs. Downstream resources are similarly pursued by NOCs and IOCs alike.Rapid, objective risk assessment of potential countries or regions targeted for petroleum investments has become an increasingly essential part of business development in an equally dynamic global market. Though a critical decision point for transnational ventures, Country Entry Risk Screening remains time consuming, complex, often subjective, and generally provides no basis for objective comparison between candidate locations.Application of the Rajan-Vikas model1 enables apples-to-apples comparison between shortlisted countries or regions. Applicable to IOCs, NOCs, or Service Companies (SCs) alike, the model uses scores on a consistent relevance-weighted risk factors matrix to perform simplified objective assessment of a potential country or region under consideration. Screening of candidate locations prior to actual project due diligence is greatly expedited. Model application produces reusable artifacts for quick future reference or input for later detailed project risk management.