Development and Evaluation of an Economic Model for a Libyan Oil Field Development with an EPSA Agreemen

Economic evaluation of any project is an essential part of the process of studying available investment opportunities and supporting decision-making, by using special methodology and scientific analysis to select best options. It is a decision-making tool. The evaluation of petroleum projects has general features which are similar to those in other industries. To be able to carry out a detailed economic evaluation study on an upstream petroleum project it is essential to be familiar with the applied petroleum fiscal regime.;An International Oil Company (IOC) operating in Libya has recently made a significant undersaturated oil discovery inside one of its designated concession areas within the Sirte Basin in the northern part of the Sahara Desert. The company is considering to develop this discovery under the existing Exploration & Production Sharing Agreement (EPSA-IV) with the Libyan National Oil Corporation (NOC). This agreement is a special case of the widely applied Production Sharing Contracts (PSC).;An economic model is developed with a set of basic (rough) data obtained from the company through NOC. NOC wants to determine the feasibility of developing this discovery based on the available data through the construction of an economic model. However, NOC does not have such a model. As a result, this study focuses on the construction of an economic model that incorporates the EPSA-IV terms and conditions to be used for evaluating the economics of development projects under this agreement. Further, the study determines the impact of variations in input parameters. The results indicate that the project will be profitable.