Abstract
The distortionary effect of upstream petroleum taxation has been discussed extensively by economists. The literature however, has largly neglected the Production Sharing Contract (PSC) which is widely used by the internationl petroleum industry. We examine how a PSC can distort the optimal time path of production from an oil reservoir. To do that, we use optimal control theory and solve the problem with Hamiltonian function. We show that, regardless of the contract parameters, a PSC always distort the time path of production unless the oil price changes at the rate of interest rate.
Original language | English |
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Title of host publication | Operations Research Proceedings 2015 |
Subtitle of host publication | Selected Papers of the International Conference of the German, Austrian and Swiss Operations Research Societies (GOR, ÖGOR, SVOR/ASRO), University of Vienna, Austria, September 1-4, 2015 |
Editors | Karl Franz Doerner, Ivana Ljubic, Georg Pflug, Gernot Tragler |
Publisher | Springer International Publishing |
Pages | 555-561 |
Number of pages | 6 |
ISBN (Electronic) | 9783319429021 |
ISBN (Print) | 9783319429014 |
DOIs | |
Publication status | Published - 2017 |
Event | International Conference on Operations Research: Optimal Decisions and Big Data - University of Vienna, Vienna, Austria Duration: 1 Sept 2015 → 4 Sept 2015 https://or2015.univie.ac.at/home/ |
Conference
Conference | International Conference on Operations Research |
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Abbreviated title | OR 2015 |
Country/Territory | Austria |
City | Vienna |
Period | 1/09/15 → 4/09/15 |
Internet address |