Investment behaviour in the international oil and gas industry : essays in empirical petroleum economics

PhD thesis in FinanceThis thesis is based on the overview and 6 articles. The articles are: 1) Mohn, K. & Osmundsen, P. (2008) Exploration economics in a regulated petroleum province. Energy Economics, 30(2), 303-320. 2) Mohn, K. (2008) Efforts and Efficiency in Oil Exploration: A Vector Error-Correction Approach. The Energy Journal, 29(4), pp. 53-78 3) Mohn, K. and Misund, B. (2009) Investment and uncertainty in the international oil and gas industry. Energy Economics, 31(2), 240-248. 4) Mohn, K. and Misund, B. (2011) Shifting sentiments inoil and gas investment: an application to the oil industry. Applied Financial Economics, 21(7), 469-479. 5) Aune, F.R.; Mohn, K., Osmundsen, P. and Rosendahl, K.E. (2010) Financial market pressure, tacit collusion, and oil price formation. Energy Economics 32(2), 389-398. 6) Mohn, K., Asche, F., Misund. B. and Osmundsen, P. (2006) Valuation of international oil companies. The Energy Journal, 27(3), pp. 49-64High growth and welfare aspirations will require massive energy investment in the years ahead of us, especially in the non-OECD area. With more than 60 per cent of primary energy supply, oil and natural gas play a dominant role in today’s global energy market. Even with high ambitions to contain greenhouse gas emissions and arrest global warming, petroleum is likely to remain an important source of energy in a 20-year perspective. A good understanding of the investment process among oil and gas companies is important to grasp the full picture of oil and gas supply. Insights from oil and gas investment studies may translate into policies to improve the security of energy supply, to promote energy efficiency and economic growth, and to pull people out of poverty through the extension of affordable energy. In petro-states like Norway, oil and gas investments play an important role for macroeconomic fluctuations in the short to medium term. A proper understanding of investment behaviour in the oil and gas industry is therefore useful for economists, market analysts, policy-makers, and everyone who takes an interest in economic and financial market fluctuations. Moreover, strategies for resource management become important for any country rich in petroleum resources. In this context, the links between exploration, reserve accumulation, field development and production become important both to corporate strategists and to policy-makers. Profit maximisation is the key behavioural assumption for international oil and gas companies, as for most other industries. However, some features are specific to oil and gas production. The reserve concept is unique to nonrenewable resource industries, and so is exploration activity. High capital intensity, imperfect competition, and extensive political attention are some other distinguishing characteristics. Industry-specific methods and tailored analyses are therefore required. Combining industry-specific theories of investment behaviour with the best statistical methods available, this thesis adds new empirical insights on issues of capital formation and interaction between companies and markets in the international oil and gas industry. [...