Decision support tools for assessing petroleum upstream investments

Abstract EN

The main aim of this paper is to provide a decision -support tool using a combination of real options analysis and portfolio optimization based on simulation modelling principles to analyze and assess petroleum upstream projects.

The provided method does not only takes in to account the risk concept, uncertainty and Managerial flexibility but also can be used to select the optimal portfolio.

Our results show that the use of real options analysis increases the value of the project, due to the flexibility that can be integrated into the decision process, and the use of portfolio optimization techniques helps the decision-makers to select the best set of projects, and the combination of the real options and portfolio optimization may reduce the project risks.