Estimating Optimum Crude Oil Production and the Annual Needed Investment for Iran on the Horizon Of Twenty Years

Document Type : Original Article

Authors

1 Department of Economics, Faculty of Economics and Political Science, Shahid Beheshti University

2 M.A. in Economics

Abstract

In this study, optimal daily production of Iran's crude oil and its annual required investment is calculated. To this aims, according to Kan-Taker Theorem and by applying non-linear programming, the present value of future profits from oil exporting is maximized in a twenty-year cycle. To compute the profit, revenue and cost functions are presented and used. The cost function is non-linear and exponential subject to exploration rate and stock level remaining of the reserve. The function is increasing to the exploration rate and decreasing to the stock level. For the future revenue of oil prices, the researchers considered three different scenarios, and the model is appropriate for all the three. Final results show that the current production rate is below the optimal rate. The profit maximizing daily rate of production is a little above five million barrels for the current prices, and the investment needed to reach this level is thirty billion dollars a year during the primary years.

Keywords


بهشتی دهکردی، علی و غلامعلی رحیمی (1383)، گزارش الزامات سرمایه‌گذاری در عرصه‌های تولید نفت خام و گاز طبیعی در کشور طی دو دهة آینده، گروه پژوهشی عرضه و تقاضا و بازارهای انرژی و تحولات بازار، مؤسسة مطالعات بین‌المللی انرژی، وزارت نفت.
ترازنامة انرژی، وزارت نیرو، سال‌های مختلف.
ترازنامة بانک مرکزی، سال‌های مختلف.
ترازنامة هیدروکربوری کشور، مؤسسة بین‌المللی مطالعات انرژی، وزارت نفت، سال‌های مختلف.
یزدی زاده، محمد (1370)، بررسی امکانات افزایش درآمد نفت اپک، پایان نامة کارشناسی ارشد، دانشگاه شهید بهشتی.
Ayed Al-Qahtani, Edward Balistreri, and Carol A. Dahl (2008), A Model for the Global Oil Market: Optimal Oil Production Levels for Saudi Arabia, Presented at the IAEE and Istanbul.
Augustine Chad, Jefferson W. Tester and Brian Anderson (2006), A Comparsion of Geothermal with Oil and Gas Well Drilling Costs, Chemical Engineering Department, Massachusetts Institute of Technology(MIT), Stanford, California.
Allen V. Knees, & James B. Sweeney(editors) (2006), Handbook of  Natural Resource and Energy Economics, Vol 3, Series editors: Kenneth J. Arrow &Micheal D. Intriligator, Elsevier 3th print, Netherlands.
Annual Energy Outlook 2011, U.S. Energy Information Administration.
Attansi, Emil and Philip Freeman (2004), “Oil and Natural Gas: Economics of Exploration”, Encyclopedia of Energy, Elsevier, Vol.4, pp 535-547.
BP Statistical Review of world energy (2009-2010), June.
Dahl, Carol A. and Yücel, Mine (1991), “Testing Alternative Hypothesis of Oil Producer Behavior, ” Energy Journal, 12(4):117-138.
Hotelling, Harold (1931), “The Economics of Exhaustible Resources”, Journal of  Political Economy, 39(2)   pp. 137-175.
Jansen J. D. & Currie P. k. (2004), "Modeling and Optimization of Oil and Gas Production Systems" , Section Petroleum Engineering, Version 5c, March.
Pindyck, Robert (1978), "The Optimal Exploration and Production of Nonrenewable Resources", Journal of Political Economy 86 (5) October 841-861.
Solow, Robert, and F.Y. Wan (1976), "Extraction Costs in the Theory of Exhaustible Resources", Bell Journal of Economics 17 (2) (Autumn) 359-370.