ECONOMIC EVALUATION OF PROJECTS FOR DEVELOPMENT OF RAW HYDROCARBONS FIELDS  IN THE CONDITIONS OF THE NORTHERN PRODUCTION AREAS USING BINARY AND REVERTING DISCOUNTING

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Evgenii A. Marin1, Tatiana V. Ponomarenko2, Natalia V. Vasilenko3, Sergey G. Galevskiy4

1, 2, 4Saint Petersburg Mining University, Saint Petersburg, Russia

3Saint Petersburg University of Management Technologies and Economics, Saint Petersburg, Russia

1eugeniy.a.marin@gmail.com, ORCID 0000-0002-7522-9681

2ponomarenko_tv@pers.spmi.ru, ORCID 0000-0001-5047-2880

3n.vasilenko@spbacu.ru, ORCHID 0000-0002-9031-6038

4galevskiy_sg@pers.spmi.ru, ORCID 0000-0001-9196-2464

Abstract. The conversion from the development of large deposits to unconventional, small and Arctic deposits  of hydrocarbon raw materials in the Russian requires oil and gas companies improving the quality of the economic justification of projects, including cost-effectively recoverable reserves. For this reason, the development of the discounted cash flow (DCF) method for economic evaluation of oil and gas projects is required. The purpose of the study was to develop a methodological approach to the economic evaluation of oil and gas projects. The disadvantages of the DCF model  in the economic evaluation of oil and gas field development projects are analyzed, a comparative analysis of project evaluation methods through the use of binary and reverting discounting models is performed. The authors justified  the choice of a risk-free discount rate for project outflows and dynamically changing values of discount rates for project cash inflows for the evaluation of oil and gas projects, taking into account their identified features. The application  of the developed methodological approach, both at the pre-project phase and during the operation of the field, will allow oil and gas companies to justify the magnitude of commercially exploitable reserves and indicators of the economic efficiency of the project due to more correct risk accounting. The developed methodological approach has been approved on the example of the Novoportovskoye field development project.

Keywords: oil and gas projects, economic evaluation, commercially exploitable reserves, Arctic fields, binary discounting, reverting discounting

For citation: Marin E. A., Ponomarenko T. V., Vasilenko N. V., Galevskiy S. G. Economic evaluation of projects  for development of raw hydrocarbons fields in the conditions of the northern production areas using binary and reverting discounting. Sever i rynok: formirovanie ekonomicheskogo poryadka [The North and the Market: Forming the Economic Order], 2022, no. 3, pp. 144–157. doi:10.37614/2220-802X.3.2022.77.010

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