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Quantification and Risk Assessment of Hydrocarbon Resources Development Projects in the Arctic Region

Author

Listed:
  • Dudin, Mikhail N.

    (Russian Presidential Academy of National Economy and Public Administration)

  • lyasnikov, Nikolai V.

    (Russian Presidential Academy of National Economy and Public Administration)

  • Protsenko, Oleg D.

    (Russian Presidential Academy of National Economy and Public Administration)

  • Tsvetkov, Valery A.

    (Russian Presidential Academy of National Economy and Public Administration)

Abstract

The article outlines the main scientific and methodological views and approaches to risk measurement of the projects related to extraction of hydrocarbon resources in the Arctic. Special attention is paid to the methods of quantification of risks of the Arctic projects, i. e. those risks which have no definite value or quantitative expression and must be estimated using verbal and mathematical transformations. Regarding quantification of risks of the Arctic projects related to the extraction of hydrocarbon resources, the article proposes a methodology based on integration of financial, econometric, and economic methods which allows to convert original information into a comparable magnitude. Testing methods using the example of two Arctic projects have shown that risks in these projects are above average. This, in turn, may affect the environment and economic efficiency of the hydrocarbon production in the Arctic. The methodical approach proposed by the authors gives an adaptive tool that can also be used in order to analyze and measure the risk of other capital investment projects in the energy sector. As a key conclusion, the authors specify that the quantification of the risks, as well as publication of the data on the level of risks of the Arctic projects, will undoubtedly contribute to improving transparency of the activities of international and Russian oil and gas corporations. In turn, this will ensure growth of social and environmental responsibility of corporate structures which suggests that exploration, as well as work related to the production of hydrocarbon resources in the Arctic, will meet modern scientific and management paradigm (socialization, greening activities providing sustainable development of corporate and business structures).

Suggested Citation

  • Dudin, Mikhail N. & lyasnikov, Nikolai V. & Protsenko, Oleg D. & Tsvetkov, Valery A., 2017. "Quantification and Risk Assessment of Hydrocarbon Resources Development Projects in the Arctic Region," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 4, pages 168-195, August.
  • Handle: RePEc:rnp:ecopol:ep1747
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    References listed on IDEAS

    as
    1. Christoph Humrich, 2013. "Fragmented International Governance of Arctic Offshore Oil: Governance Challenges and Institutional Improvement," Global Environmental Politics, MIT Press, vol. 13(3), pages 79-99, August.
    2. Harsem, Øistein & Eide, Arne & Heen, Knut, 2011. "Factors influencing future oil and gas prospects in the Arctic," Energy Policy, Elsevier, vol. 39(12), pages 8037-8045.
    3. Alessandro Clerici & Bruno Cova & Gabriele Callegari, 2015. "Decarbonization of the Electrical Power Sector in Europe: An Asset, An Opportunity or a Problem?," Energy & Environment, , vol. 26(1-2), pages 127-142, January.
    4. Ren, Jingzheng & Gao, Suzhao & Tan, Shiyu & Dong, Lichun & Scipioni, Antonio & Mazzi, Anna, 2015. "Role prioritization of hydrogen production technologies for promoting hydrogen economy in the current state of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 1217-1229.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    oil and gas; the Arctic shelf; stocks of raw materials; risks; Arctic projects; risk assessment techniques; quantification.;

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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