IDEAS home Printed from https://ideas.repec.org/a/eco/journ2/2016-03-22.html
   My bibliography  Save this article

Economic Evaluation of Nigerian Marginal Oil and Gas Field using Financial Simulation Analysis

Author

Listed:
  • Yusuf Opeyemi Akinwale

    (Faculty of Economic Sciences and Information Technology, North West University, Vaal Triangle Campus, South Africa,)

  • John-Felix Kayode Akinbami

    (Centre for Energy Research and Development, Obafemi Awolowo University, Ile-Ife, Nigeria.)

Abstract

Marginal oil and gas field could contribute immensely to wealth creation, employment generation and confidence in local oil firms if properly exploited by the indigenous firms. Despite the laudable marginal field initiative by the government, indigenous players still face challenges in exploiting these fields in Nigeria. This study evaluates the fiscal regime and the economic factors that could be hindering oil field development among the indigenous oil firms. The result of the financial cash flow modelling found that the marginal oil field s project is viable with post-tax net present value (NPV) and expected monetary value above $29 million. The petroleum profit tax, royalty and crude oil price have more impacts on the field s NPV. The study suggests a periodic assessment of the fiscal regime and appropriate policy by the government to encourage the local players in developing the marginal oil field.

Suggested Citation

  • Yusuf Opeyemi Akinwale & John-Felix Kayode Akinbami, 2016. "Economic Evaluation of Nigerian Marginal Oil and Gas Field using Financial Simulation Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 6(3), pages 563-574.
    • Handle: RePEc:eco:journ2:2016-03-22
    as

    Download full text from publisher

    File URL: http://www.econjournals.com/index.php/ijeep/article/download/2412/1753
    Download Restriction: no
    File URL: http://www.econjournals.com/index.php/ijeep/article/view/2412/1753
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alexander G. Kemp, 1992. "Development Risks and Petroleum Fiscal Systems: a Comparative Study of the UK, Norway, Denmark and the Netherlands," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    2. Luo, D.K. & Dai, Y.J. & Xia, L.Y., 2011. "Economic evaluation based policy analysis for coalbed methane industry in China," Energy, Elsevier, vol. 36(1), pages 360-368.
    3. Kaiser, Mark J. & Yu, Yunke, 2010. "Marginal production in the Gulf of Mexico - II. Model results," Applied Energy, Elsevier, vol. 87(8), pages 2526-2534, August.
    4. T. R. Stauffer & John C. Gault, 1985. "Exploration Risks and Mineral Taxation: How Fiscal Regimes Affect Exploration Incentives," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhang, Rongda & Wei, Jing & Zhao, Xiaoli & Liu, Yang, 2022. "Economic and environmental benefits of the integration between carbon sequestration and underground gas storage," Energy, Elsevier, vol. 260(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hamawand, Ihsan & Yusaf, Talal & Hamawand, Sara G., 2013. "Coal seam gas and associated water: A review paper," Renewable and Sustainable Energy Reviews, Elsevier, vol. 22(C), pages 550-560.
    2. Wang, Ziwei & Qin, Yong & Shen, Jian & Li, Teng & Zhang, Xiaoyang & Cai, Ying, 2022. "A novel permeability prediction model for coal based on dynamic transformation of pores in multiple scales," Energy, Elsevier, vol. 257(C).
    3. Zheng, Shizhuo & Zhang, Xin & Wang, Tao & Liu, Jie, 2015. "An experimental study on premixed laminar and turbulent combustion of synthesized coalbed methane," Energy, Elsevier, vol. 92(P3), pages 355-364.
    4. Wang, Ting & Lin, Boqiang, 2014. "Impacts of unconventional gas development on China׳s natural gas production and import," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 546-554.
    5. Larsen, E.Roed., 2005. "Are rich countries immune to the resource curse? Evidence from Norway's management of its oil riches," Resources Policy, Elsevier, vol. 30(2), pages 75-86, June.
    6. Zhang, Baoxin & Deng, Ze & Fu, Xuehai & Yu, Kun & Zeng, Fanhua (Bill), 2023. "An experimental study on the effects of acidization on coal permeability: Implications for the enhancement of coalbed methane production," Energy, Elsevier, vol. 280(C).
    7. Shouqing Lu & Yuanping Cheng & Jinmin Ma & Yuebing Zhang, 2014. "Application of in-seam directional drilling technology for gas drainage with benefits to gas outburst control and greenhouse gas reductions in Daning coal mine, China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 73(3), pages 1419-1437, September.
    8. Smith, James L., 2014. "A parsimonious model of tax avoidance and distortions in petroleum exploration and development," Energy Economics, Elsevier, vol. 43(C), pages 140-157.
    9. Smith, James L., 2013. "Issues in extractive resource taxation: A review of research methods and models," Resources Policy, Elsevier, vol. 38(3), pages 320-331.
    10. Yang, Ruiyue & Hong, Chunyang & Huang, Zhongwei & Song, Xianzhi & Zhang, Shikun & Wen, Haitao, 2019. "Coal breakage using abrasive liquid nitrogen jet and its implications for coalbed methane recovery," Applied Energy, Elsevier, vol. 253(C), pages 1-1.
    11. Liu, Jianye & Li, Zuxin & Duan, Xuqiang & Luo, Dongkun & Zhao, Xu & Liu, Ruolei, 2021. "Subsidy analysis and development trend forecast of China's unconventional natural gas under the new unconventional gas subsidy policy," Energy Policy, Elsevier, vol. 153(C).
    12. Adam Konto Kyari, 2020. "The Impact of Petroleum Tax Incentives on Foreign Direct Investment Inflow: Evidence from Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 10(4), pages 516-524.
    13. Zhao, Xu & Luo, Dongkun & Xia, Liangyu, 2012. "Modelling optimal production rate with contract effects for international oil development projects," Energy, Elsevier, vol. 45(1), pages 662-668.
    14. Liu, Huihu & Sang, Shuxun & Wang, Geoff G.X. & Li, Yangmin & Li, Mengxi & Liu, Shiqi, 2012. "Evaluation of the synergetic gas-enrichment and higher-permeability regions for coalbed methane recovery with a fuzzy model," Energy, Elsevier, vol. 39(1), pages 426-439.
    15. Fan, Lurong & Ma, Ning & Zhang, Wen, 2023. "Multi-stakeholder equilibrium-based subsidy allocation mechanism for promoting coalbed methane scale extraction-utilization," Energy, Elsevier, vol. 277(C).
    16. Guo, Zixi & Zhao, Jinzhou & You, Zhenjiang & Li, Yongming & Zhang, Shu & Chen, Yiyu, 2021. "Prediction of coalbed methane production based on deep learning," Energy, Elsevier, vol. 230(C).
    17. Kaiser, Mark J., 2010. "Marginal production in the Gulf of Mexico - I. Historical statistics & model framework," Applied Energy, Elsevier, vol. 87(8), pages 2535-2550, August.
    18. Nakhle, Carole, 2007. "Do high oil prices justify an increase in taxation in a mature oil province? The case of the UK continental shelf," Energy Policy, Elsevier, vol. 35(8), pages 4305-4318, August.
    19. Carole Nakhle, 2007. "Do High Oil Prices Justify an Increase in Taxation in a Mature Oil Province? The Case of the UK Continental Shelf," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 116, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
    20. Zhao, Changxin & Cheng, Yuanping & Li, Wei & Wang, Liang & Zhang, Kaizhong & Wang, Chenghao, 2023. "Critical stress related to coalbed methane migration pattern: Model development and experimental validation," Energy, Elsevier, vol. 284(C).

    More about this item

    Keywords

    Indigenous; Marginal Oil and Gas Field; Financial Simulation; Government;
    All these keywords.

    JEL classification:

    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ2:2016-03-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.