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Risk Assessment of China’s Overseas Oil Refining Investment Using a Fuzzy-Grey Comprehensive Evaluation Method

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  • Hui Li

    (School of Business Administration, China University of Petroleum (Beijing), Beijing 102249, China
    Energy Systems Research Center, The University of Texas at Arlington, Arlington, TX 76019, USA)

  • Kangyin Dong

    (School of Business Administration, China University of Petroleum (Beijing), Beijing 102249, China
    Department of Agricultural, Food and Resource Economics, Rutgers, The State University of New Jersey, New Brunswick, NJ 08901, USA)

  • Hongdian Jiang

    (School of Business Administration, China University of Petroleum (Beijing), Beijing 102249, China)

  • Renjin Sun

    (School of Business Administration, China University of Petroleum (Beijing), Beijing 102249, China)

  • Xiaoyue Guo

    (School of Business Administration, China University of Petroleum (Beijing), Beijing 102249, China)

  • Yiqiao Fan

    (Chongqing CISDI Engineering Consulting Co., Ltd., Chongqing 400010, China)

Abstract

Following the “going out” strategy, Chinese oil and gas companies have been widely involved in investing and operating business abroad to mitigate the increasing energy imbalance between supply and demand. Overseas oil investment, characterized by high risks and high returns, plays a significant role in ensuring energy security and strengthening global competitiveness in China. However, compared with overseas upstream projects, the downstream oil refining investment is still in the preliminary development stage, with limited experience for references, which further increases the risk surrounding such multibillion-dollar ventures. Hence, it is significant to assess the investment risks so as to help investors be fully aware of them and then make optimal investment decisions. To this end, this paper successfully identifies the main risk factors, including the local investment environment risk, technical risk, organization management risk, health, safety and environment (HSE) and social responsibility risk, and economic risk. Then, a qualitative-quantitative comprehensive risk evaluation method, combining the fuzzy mathematics and the grey system theory, is proposed and applied to analyze the investment risks of one Chinese overseas oil refining project as a case study. The assessment results are basically in accordance with the practical conditions, which validate the reliability and reasonability of the proposed risk assessment model in regard to the overseas oil refining project. The findings of this research provide the theoretical foundation and practical methodology of the risk analysis for future investment in oil refining areas.

Suggested Citation

  • Hui Li & Kangyin Dong & Hongdian Jiang & Renjin Sun & Xiaoyue Guo & Yiqiao Fan, 2017. "Risk Assessment of China’s Overseas Oil Refining Investment Using a Fuzzy-Grey Comprehensive Evaluation Method," Sustainability, MDPI, vol. 9(5), pages 1-18, April.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:5:p:696-:d:97055
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    References listed on IDEAS

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    Cited by:

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    2. Zhou, Na & Wu, Qiaosheng & Hu, Xiangping & Xu, Deyi & Wang, Xiaolin, 2020. "Evaluation of Chinese natural gas investment along the Belt and Road Initiative using super slacks-based measurement of efficiency method," Resources Policy, Elsevier, vol. 67(C).
    3. Yeltsin Tafur & Eric Lilford & Roberto F. Aguilera, 2022. "Assessing the risk of foreign investment within the petroleum sector of South America," SN Business & Economics, Springer, vol. 2(6), pages 1-32, June.
    4. Qiyong Chen & Shiyu Chen & Changfeng Shi & Qinghua Pang & Ang Li, 2021. "Evaluation of agricultural investment environment in countries around the Black Sea under the background of The Belt and Road," Natural Resources Forum, Blackwell Publishing, vol. 45(4), pages 464-483, November.
    5. Kodad Rajaa & Jingfeng Yuan & Lei Zhang & Junwei Ma & Lei Zhang, 2021. "External Factors Affecting Investment in Overseas Electric Power Projects," Springer Books, in: Gui Ye & Hongping Yuan & Jian Zuo (ed.), Proceedings of the 24th International Symposium on Advancement of Construction Management and Real Estate, pages 1455-1472, Springer.

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