Integrating Decision Options and Uncertainty of Commodity Price in the Project Evaluation (to be presented in 36th Indonesian Petroleum Association (IPA) conference, 24 May 2012 at 08.00 am, Nuri Room, Jakarta Convention Center)
The era of high uncertainty of commodity prices requires an economic reassessment of many natural resource projects.
Current conventional NPV analysis has a limitation in recognizing uncertainty during project life and some biased in its assumption, i.e.:
- It is assumed future cash flows to be certain to happen.
- Project risk does not change throughout its life
- It is assumed once the project is undertaken; it will not be affected by any future managerial decision.
