Simplified Country Risk Assessments for Global Petroleum Investments

Abstract

AbstractAs 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, and downstream resources are similarly pursued by NOCs and IOCs alike. Evaluation of potential countries or regions targeted for reserves replacement objectives must be made based on assessment of key risk factors for mid to long timeframe.Country Risk Assessments for new country or region entry decisions serve as a crucial decision point in determining viability of project or project portfolio from a location perspective, but such assessments typically tend to be time consuming, complex, somewhat subjective, and often do not provide a basis for any objective comparison between candidate countries or regions.Using a matrix of weighted risk factors this model presents a simplified approach for objectively assessing a potential country or region under consideration, and provides a basis for apples-to-apples comparison between shortlisted countries or regions. This approach is applicable to IOCs, NOCs, or Service Companies alike. Based on a relevance-weighted approach this model can assist in quick screening before further due diligence is embarked on. This not only accelerates decision-making for such investment considerations, but also provides input for later detailed project risk management.