A Hybrid Petroleum Fiscal System for Investment in the Exploration and Production E&P of Hydrocarbon

Globally, there are two types of petroleum fiscal system; the concessionary and the contractual petroleum fiscal system. The main differences between the two types of petroleum fiscal system is the ownership of the resources and some distinct fiscal terms. The contractual petroleum fiscal system specifies a cost recovery option and profit oil split unlike the concessionary petroleum fiscal system that allows the contractor to recoup his capital before payment of tax. This tends to increase the risk associated with the host government revenue as investment in the production of hydrocarbon is filled with uncertainties. There is a need to redesign the concessionary petroleum fiscal to enable it reduce the risk associated with the host government revenue by making the host government to earn revenue early from petroleum investment. This research therefore evaluated a hybrid petroleum fiscal system for investment in the exploration and production of hydrocarbon. The concessionary petroleum fiscal system was adjusted to include a cost recovery option. Petroleum economic model for investment in a typical onshore oil field was built using spreadsheet modelling technique with the fiscal terms in the hybrid petroleum fiscal system embedded in it. The cost recovery option and oil price in the model were varied between 0-100% and $20-$100 per barrel. The NCF, IRR and payout period of the investment were determined. It was observed that the lower the cost recovery option, the higher the host government revenue. From the profitability analysis of the investment in the hybrid petroleum fiscal system, it was observed that when the price of oil was $100/bbl, the NCF of the host government was $9146 and $8426.3 for 0% and 80% cost recovery option. The lower the cost recovery option, the higher the payout period and the lower the internal rate of return. Though lower cost recovery increased the host government revenue more but it may make the hybrid petroleum fiscal system unattractive for investment in periods of low oil price. Hence a higher cost recovery option was recommended for the use of this type of petroleum fiscal system.

Prince Kola Beverages Limited (PKBL)

Prince Kola Beverages Limited (PKBL) is an introduction-level decision modelling case that aims to help develop what-if analysis and spreadsheet modelling skills. It has already been taught in three cohorts of my executive course customized for Coca Cola Beverages Pakistan (CCBPL) Limited middle managers, ‘Data Savvy Decision-Making’, and was warmly received. It is also suitable for both MBA and undergraduate business students. The problem involves using elementary forecasting, scenario analysis and sensitivity analysis without the complexity of statistics. This was also part of a 4-hour session in executive courses that included in-lab trainings on Microsoft Excel what-if analysis tools. For 80–90-minute sessions, students must have already been equipped with these tools. Additionally, it would be better to have the spreadsheets of students submitted by an online learning management system in advance of the class so that their models can be displayed in class and debated.

The Efficacy of Spreadsheet Modelling As an Alternative Means of Teaching Process Simulation

Spreadsheet based simulation has many advantages over the pre-programmed simulation applications more commonly used in teaching simulation in undergraduate courses. They are almost universally ubiquitous in business settings around the world. There is near certainty that students will have access to them after graduation since spreadsheets are a standard business tool used by nearly all engineers [1]. In addition, spreadsheets are already present within most standard operating systems. This means that there will be no need to buy or get approvals from Information Technology software committees or other managerial roadblocks. As an alternative to this, there are now free OpenOffice and LibreOffice spreadsheets available on most platforms which make their access effectively universal. Aside from their excellent availability, spreadsheets are an extremely capable learning tool for best practices in process simulation. Most engineering students are arriving at college with a good set of spreadsheet skills from their primary education and then the rest tend to pick it up early as underclassmen [2]. Spreadsheet simulation is easy to explain and generally very simple to debug. Although the now mainly antiquated code-based simulation packages used to offer these same advantages, they have now been largely replaced by more graphically oriented packages which depend in part on subtle mouse clicks and sometimes complex sub-menu structures. In addition, spreadsheets offer easily accessible native analysis and excellent graphing capabilities. Several advantages and potential disadvantages of spreadsheet simulation are presented in comparison to contemporary process simulation. Several simulation projects are then discussed related to Markovian processes including stochastic scatter patterns, sequential random object movement, multi-server queueing processes, dynamic intercept models, complex traffic and evacuation models, and Susceptible-Infected-Removed infections design simulations were taught using spreadsheet simulation.