Title: Trade-offs between government revenue and future resource-acquisition objectives

Authors: S.J. Torok

Addresses: Natural Resources Division, UN Economic and Social Commission for Asia and the Pacific (ESCAP), The United Nations Building, Rajadamnern Avenue, Bangkok, Thailand

Abstract: The effect of current lower oil prices on both oil producing and oil importing developing countries is discussed. The exploration (and R&D) investment decision is then characterised as an open-ended planning problem with low (mostly imperfectly known) probabilities of success. It is argued that actuarial probabilities should be used to design reward structures for such investments, so as to separate these from fluctuations in energy prices. In the appendix a fictitious example is given to illustrate this problem.

Keywords: actuarial probabilities; decision making; energy-economy interactions; energy policy; exploration investment; investment reward structures; government revenue; resource acquistion objectives; energy prices.

DOI: 10.1504/IJGEI.1989.063732

International Journal of Global Energy Issues, 1989 Vol.1 No.1/2, pp.61-66

Published online: 19 Jul 2014 *

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