Investments în The Oil Branch and Their Recovery în The Circumstance of The Republic of Moldova

Introduction

The investments in petroleum exploration and production (E&P) projects are frequently of medium/long term, with valuable embedded real options (managerial and/or operational flexibilities), with high degree of irreversibility, and under conditions of economic uncertainty (such as the oil prices, reserves prices, costs) and technical uncertainty (like the volumes in place). The traditional method of discounted cash flow, is very limited to deal with uncertainties and flexibilities, and results frequently in the wrong decisions. This thesis uses more modern techniques for the economic analysis, with a real scientific approach, by modeling the economic uncertainty as a stochastic process, and using dynamic optimization under uncertainty that considers the managerial freedom degree of a project. The modern theory of investment under uncertainty, also named real options theory, separates the value of investment opportunity from the decision rule, so that the latter maximizes the former. The dissertation also analyses the situation of petroleum branch of the country and their key players that mean: (big oil companies, such as LukOil, Petrom and others) through a large research work comprising more than 120 news from internet, newspapers and reports, that was studied or consulted, resulting in bibliographical references

The scope of the investigation consist of methodological basis of the Oil and gas investments in the world and especially in the Republic of Moldova country, identifying and to argue the actions of the big petrol companies in investments of this branch.

Methodological and informational support of investigation: the investments in Oil and Gas branch and their revenues was study from different reports of big oil companies and the newspaper reports of different events in petroleum industry from the hole word, as: Working paper of Ehtisham Ahmad and Eric Mottu from International Monetary Found, Investigations of Alexander Wцstmann Professor from Netherlands and different sites of newspapers from Moldova, Europe and America.

The structure of this dissertation was determined from the investigations objectives, witch consist of Introduction, 3 chapters, conclusions and bibliography.

In the first chapter – “Investments in Petroleum branch” – is analyze the concept of this investments, the different methods used by investors as the most popular the Energy Exchange projects. Is identified the risks of this investments and is described risks management strategies. Also are described revenues from oil investments, of different countries of the world.

In the second chapter – “Investments and their revenues in Russia and Romaine” is described general situation of oil branches of these countries. Was accentuated information of the biggest oil companies and their investments in the economy.

In the third chapter – “Investments in Oil Branch of Republic of Moldova and their revenues” – is mentioned about the biggest project and investment in oil branch of our country “Giurgiulesti Oil Terminal” and also described the real market situations of the oil companies.

Chapter I. Investments in Petroleum branch

1.1 The concept of oil Investment

A window of opportunity has opened for the private investor in developing Country’s remaining energy reserves. Twenty years ago, there was plenty of funding available for domestic energy projects and high quality projects were hard to find. Independent oil companies and the major oil companies were competing for leases. Today, however, the tables have turned. The major energy companies are currently spending most of their money offshore and overseas. They are selling their domestic production to the smaller independent oil companies and, with the exception of very large acreage blocks, they are allowing most of their domestic leases to expire. Usually, independent energy companies pick up acreage when the majors move out of an area, but those conditions no longer exist. Most small energy companies have either closed their doors or do not have sufficient cash to purchase the thousands of oil and gas productive leases and still fund the drilling of wells on the properties. Since banks are no longer excited about providing independent oil and gas operators with drilling funds, individuals can finding investment opportunities in the petroleum industry that were only dreamed of a decade ago.