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Vessel Strategy for Greenfield Oil & Gas Project
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ABSTRACT
Oil and gas companies either buy or lease tanker vessels to transport crude oil to
refineries, and finished products from refineries to customers. The optimal
investment strategy hinges on figuring out whether it is beneficial to own the
vessels right from the start of a project or not. The purpose of this paper is to
develop a tool to assist the decision-making process with regards to evaluating the
right investment strategy considering the various risks and uncertainties.
Using Monte Carlo simulation of Net Present Values, buying and leasing strategies
are evaluated. The resulting distributions for the expected total cost of pursuing
each strategy are analyzed and compared. For different project durations, results
show that the time-charter contract seems to be the least risky among all options,
while the voyage charter seems to be the lowest cost option consistently. However,
if the underlying assumptions are varied, it is possible that optimal strategy might
shift to that of owning the vessel.
NONE
electronic file
MALAYSIA INSTITUTE FOR SUPPLY CHAIN INNOVATION
2016
Selangor
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