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Sustainability 2016, 8(8), 708;

Assessing Risk in Chinese Shale Gas Investments Abroad: Modelling and Policy Recommendations

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
Author to whom correspondence should be addressed.
Academic Editor: Marc A. Rosen
Received: 9 May 2016 / Revised: 27 June 2016 / Accepted: 13 July 2016 / Published: 26 July 2016
(This article belongs to the Section Energy Sustainability)
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As the shale gas revolution expands globally, the future potential and economic profits of overseas shale gas reserves have attracted the interest of Chinese investors. Overseas shale gas development is becoming an investment hotspot for Chinese oil companies. However, this multibillion-dollar venture is surrounded by a complex and uncertain environment. Therefore, this paper carries out an integrated and publicly available model for assessing risk in overseas shale gas investments. The purpose of this model is to address the index weight calculation and risk ranking and provide investor with risk information. In view of this, the comprehensive weights are obtained based on an analytic hierarchy process (AHP) and entropy weight methods; and the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) method is performed to rank target countries. First, the paper identities five categories of risks with full consideration of the economic risk, political risk, geological risk, technological risk, and internal managements risk. Based on the risk identification, the assessment index system is established and valued. Secondly, China is taken as an example nation to use this model to prove the effectiveness of the proposed model and help the investor make wise decisions. According to the results, low-risk countries, such as Canada, Argentina, United States, and Algeria can be considered to be future key targets of shale gas investment abroad, while investors should be more cautious of high-risk countries such as South Africa and Brazil. Finally, policy recommendations are proposed to optimize the overseas shale gas investments from both the government and investor perspectives. View Full-Text
Keywords: China; shale gas investments abroad; risk assessment modelling; policy recommendations China; shale gas investments abroad; risk assessment modelling; policy recommendations

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Li, H.; Sun, R.; Lee, W.-J.; Dong, K.; Guo, R. Assessing Risk in Chinese Shale Gas Investments Abroad: Modelling and Policy Recommendations. Sustainability 2016, 8, 708.

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