Optimization of Exploration and Production Sharing Agreements Using the Maxi-Min and Nash Solutions

Abstract

Cooperation between supply chain partners in the oil industry is essential, especially when oil prices suffer from fluctuations that affect the profitability of each party. An essential task in oil field development projects is to create an optimum agreement between the national oil company and the international oil company to guarantee agreement optimization. In this paper, the national oil company is the first party (FP) and the international oil company is the second party (SP). The paper’s purpose is to investigate the use of game theory to obtain the best agreement between the FP and SP in order to enhance the cooperation and reduce conflict. In this paper, Nash and Maxi-min solutions have been applied for the first time in a special type of petroleum agreement, called exploration and production sharing agreements (EPSA). This is conducted for a case study in Libya. The study considers nine negotiation factors (issues) in the EPSA, which are the share percent, the four “A” factors, and the four “B” factors, which are usually affected by the fluctuations of oil prices; and the study investigates their effect on the total payoff function, the net present value (NPV), and internal rate of return (IRR) for both parties. The Maxi-min solution has shown an improvement in the NPV and IRR of the SP, where NPV increased from USD 148 million to USD 195 million, and IRR from 15.65% to 17.01%. The Nash solution has shown a little more improvement than the Maxi-min solution in the NPV and IRR for the SP, where the NPV and IRR have increased from USD 148 million to USD 222 million and from 15.65% to 17.94%, respectively.

New Sustainable Banana Value Chain: Waste Valuation toward a Circular Bioeconomy

“…As the suitable farm gate price of tree biomass has not been investigated, the farm gate price was varied to present different profits for both farmers and factory in both scenarios. All stakeholders in the value chain want the best opportunities to maximize their profits [58]. Considering fair trade [59] and to minimize the tradeoff among stakeholders, the farm gate price of the tree that provided equal profits for both farmers and factory was selected and assumed to be the value used for banana waste value chain development.…”

Industrial Chain, Supply Chain and Value Chain in the Energy Industry: Opportunities and Challenges

“…This Special Issue presents a collection of 10 rigorously researched papers that delve into the opportunities and challenges within the energy industry's industry chain, supply chain, and value chain. Highlighting the pivotal moment facing the energy sector, driven by the rapid transition towards renewable sources [1][2][3], evolution of the digital economy [3,4], and the pressing demand for sustainable, low-carbon energy solutions [3,5,6], market optimization and integration [7,8], technological innovation and diffusion [6,9], regional and international cooperations [4,5], and environmental governance and regulations [10], this issue contributes to the discourse on navigating the complexities of modern energy systems. It offers insights into leveraging digital transformation for sustainable development, underscoring the integral role of innovative approaches in advancing the global energy transition.…”