Modelling optimal production rate with contract effects for international oil development projects

Optimizing oil production rate is one of the main challenges in designing development plan of oilfield in international cooperation projects. This paper establishes an oil production rate optimization model to maximize economic benefits within constraints of geological conditions and technology factors as well as oil contracts. This analysis describes the effects of contract terms on parameters of inputs and outputs, quantifies the relationships among production rate and production time, production, investment and costs. The oil exploration and production (E&P) project is illustrated for example, in which the optimal production rate under its own geological conditions and contract terms is calculated. The results reflect that the contract terms exert a tremendous influence on optimal production rate, at which the production in plateau phase occurs on the boundary of sliding scales provided in the contract. Simultaneously, changes in oil prices do not affect the optimal production rate. This study is important for companies to negotiate some elastic terms in contracts and design reasonable development strategies for resource distribution.