Modeling of Production Strategies from Common Offshore Gas Field with Game Theory Approach

Document Type : Original Scientific Paper


Faculty of Management, University of Tehran


Common oil and gas fields are among the most valuable income and national wealth sources, so production delays cause irreparable damage to the national economy. The existing functions of revenues and production costs of gas fields have been identified and extracted from the current literature to optimize the production strategy. Cost func-tions include exploration, development, operation, production facility and wellhead, facility depreciation costs, and revenue functions include demand and income functions. After designing the model using mathematical optimiza-tion, the decision variables’ values have been calculated as optimal production, selling price, and profit for each play-er. For this purpose, two strategies of cooperation and non-cooperation were considered for each player. Solving the designed games showed that the best strategy and Nash equilibrium for the research case study is the strategy of co-operation. Also, according to the results of the equilibrium of designed games based on cooperation strategy, it is suggested that one of the main approaches of research case study in common fields is the process of multilateral and cooperative development.


[1] O. O. T. Ajimoko, Application of game theory for optimizing drilling cost reduction, Offshore Technol. Conf. Asia, Kuala Lumpur, Malaysia, (2016) OTC-26598-MS.
[2] A. Arab, I. Ghasemian Sahebi, M. Modarresi and M. Ajalli, A Grey DEMATEL approach for ranking the KSFs of environmental management system implementation (ISO 14001),
Calitatea 18 (160) (2017) p. 115.
[3] E. Bayati, B. Safavi and A. Jafarzadeh (in Persian), Iran-Qatar cooperation in extracting common gas reserves of south pars (north dome) with emphasis on game theory,
Q. J. Econ. Model. Res. 45 (1) (2019) 47 - 72.
[4] J. Chen and Q. Zhu, A stackelberg game approach for two-level distributed energy management in smart grids,
IEEE Trans. Smart Grid 9 (6) (2018) 6554 - 6565.
[5] O. Cobanli, Central Asian gas in Eurasian power game,
Energy Policy 68 (C) (2014) 348 - 370.
[6] B. C. Collins and M. Kumral, Game theory for analyzing and improving environmental management in the mining industry, Resour. Policy 69 (2020) 101860.
[7] Y. Cui, N. Quddus and C. V Mashuga, Bayesian network and game theory risk assessment model for third-party damage to oil and gas pipelines, Process Saf. Environ. Prot. 134 (2020) 178 - 188.
[8] P. V. dos SantosAlves, The Game of energy: A classroom game of cooperation and competition simulating The global energy market, Dev. Bus. Simul. Exp. Learn. 41 (1) (2014) 284 - 291.
[9] M. Esmaeili, A. Bahrini and S. Shayanrad, Using game theory approach to  interpret stable policies for Iran’s oil and gas common resource conflicts with Iraq and Qatar, Anim. Genet. 39 (5) (2015) 561 - 63.
[10] I. Ghasemian Sahebi, A. Arab, and M. R. Sadeghi Moghadam, Analyzing the barriers to humanitarian supply chain management: A case study of the Tehran Red Crescent Societies, Int. J. Disaster Risk Reduct. 24 (2017) 232- 241.
[11] I. Ghasemian Sahebi, A. Arab and S. P. Toufighi, Analyzing the barriers of organizational transformation by using fuzzy SWARA, J. Fuzzy Ext. Appl. 1 (2) (2020) 88 - 103.
[12] I. Ghasemian Sahebi and A. Jafarnejad, Demand forecasting of emergency resource in humanitarian supply chain, Int. J. Manage. Appl. Sci. (IJMAS) 4 (4) (2018) 56 - 63.
[13] I. Ghasemian Sahebi, S. P. Toufighi, G. Karakaya and S. Ghorbani, An intuitive fuzzy approach for evaluating financial resiliency of supply chain, OPSEARCH (2021).
[14] I. Ghasemian Sahebi, B. Masoomi, S. Ghorbani and T. Uslu, Scenario-based designing of closed-loop supply chain with uncertainty in returned products, Decis. Sci. Lett. 8 (4) (2019) 505 - 518.
[15] Y. Guo and A. Hawkes, Simulating the game-theoretic market equilibrium and contract-driven investment in global gas trade using an agent-based method, Energy 160 (2018) 820 - 834.
[16] V. Havas, War of Attrition in the Arctic Offshore: Technology Spillovers and Risky Investments in Oil and Gas Extraction, Thesis for the degree Master of Environmental, - Resource, - and Development Economics Department of Economics University of Oslo, 2015.
[17] J. He, Y. Li, H. Li, H. Tong, Z. Yuan, X. Yang and W. Huang, Application of game theory in integrated energy system systems: a review, IEEE Access 8 (2020) 93380 - 93397.
[18] A. Jafarzadeh, A. Shakeri, A. Ghasemi and A. Javan, Possibility of potential coalitions in gas exports from the Southern Corridor to Europe: a cooperative game theory framework, OPEC Energy Rev. 45 (2) (2021) 217 - 239
[19] A. H. Kani, M. Abbasspour and Z. Abedi, Estimation of demand function for natural gas in Iran: Evidences based on smooth transition regression models, Econ. Model. 36 (C) (2014) 341 - 347.
[20] K. H. Kheiravar, C. -Y. C. Lin Lawell and A. M. Jaffe, A structural econometric model of the dynamic game between petroleum producers in the world petroleum market *, Working paper, Cornell University, (2017) under review.
[21] J. Leroux and D. Spiro, Leading the unwilling: Unilateral strategies to prevent arctic oil exploration, Resour. Energy Econ. 54 (C) (2018) 125 - 149.
[22] F. Li, T. Li and X. Ding, The game analysis and measures of Sino-Russia oil project cooperation, Appl. Mech. Mater. 291-294 (2013) 1255 - 1258.
[23] I. Meidute-Kavaliauskiene, V. Davidaviciene, S. Ghorbani and I. Ghasemian Sahebi, Optimal allocation of gas resources to different consumption sectors using multi-objective goal programming, Sustainability 13 (10) (2021) 5663.
[24] A. Mirzaalian, M. Kermanshah and M. Moayedi (in Persian), Technical and legal approaches to the development of common oil and gas fields, Sci. Mon. Promot. Oil Gas Explor. Prod. 128 (2015) 19 - 23.
[25] N. Moradinasab, M. R. Amin-Naseri, T. Jafari Behbahani and H. Jafarzadeh, Competition and cooperation between supply chains in multiobjective petroleum green supply chain: A game theoretic approach, J. Clean. Prod. 170 (2018) 818 - 841.
[26] NIOC, Iran replaces ONGC with state company in oil field, 2019.
[27] M. Rahmes, T. Bingman, M. Blue and G. Lemieux, Continuous environmentally efficient pipeline leak detection, SPE Heavy Oil Conf. Calgary, Alberta, Canada (2015) SPE-174405-MS. 
[28] M. A. Ramos, M. Rocafull, M. Boix, D. Aussel, L. Montastruc and S. Domenech, Utility network optimization in eco-industrial parks by a multileader follower game methodology, Comput. Chem. Eng. 112 (2018) 132-153.
[29] S. Salimian and K. Shahbazi, Iran’s strategy in utilizing common resources of oil and gas: Game theory approach, Iran. J. Econ. Stud. 6 (2) (2017) 185 - 202.
[30] V. Samoylenko, V. Fedorenko and I. Samoylenko, The mathematical simulation of functional reliability of pipeline with redundancy - IEEE Conference Publication, Int. Russ. Autom. Conf. (2018) 1 - 5.
[31] B. B. Schitka, Applying game theory to oil and gas unitization agreements, J. World Energy Law Business 7 (6) (2014) 572 - 581.
[32] M. Sharif and R. Kerachian, Conflict resolution in construction projects using nonzero-sum fuzzy bimatrix games, Iran. J. Sci. Technol. Trans. Civ. Eng. 42 (4) (2018) 371 - 379.
[33] L. Skovsgaard and I. G. Jensen, Recent trends in biogas value chains explained using cooperative game theory, Energy Econ. 74 (2018) 503 - 522.
[34] S. P. Toufighi, M. R. Mehregan and A. Jafarnejad, Optimization of Iran’s production in Forouzan common oil filed based on game theory, Math. Interdeciplinary Res. 5 (3) (2020) 173 - 192.
[35] Y. Wadhawan and C. Neuman, Defending cyber-physical attacks on oil pipeline systems: A game-theoretic approach, APrAISe’16: International Workshop on AI for Privacy and Security, ACM, NY, United States (2016) pp. 1 - 8.
[36] M. Yang, F. I. Khan, R. Sadiq and P. Amyotte, A rough set-based game theoretical approach for environmental decision-making: A case of offshore oil and gas operations, Process Saf. Environ. Prot. 91 (3) (2013) 172 - 182.
[37] J. Yang and R. -G. Cong, Is there an optimal strategic oil reserve for each country? A study based on the game theory, The Open Fuels Energy Sci. J. 7 (2014) 69 - 72.
[38] J. Yin and T. Xiong, Game-theory based research on oil-spill prevention and control modes in three gorges reservoir area, IOP Conf. Ser.: Earth Environ. Sci. 108 (4) (2018) 042120.
[39] D. Yue, F. You and S. W. Snyder, Biomass-to-bioenergy and biofuel supply chain optimization: Overview, key issues and challenges, Comput. Chem. Eng. 66 (2014) 36 - 56.
[40] T. Zhang, C. Guo, L. Quan and F. Fu, Evolutionary game on oil and gas companies’ pollution treatment, J. Shanghai Jiaotong Univ. 21 (6) (2016) 750 - 756.
[41] L. Zhu, S. He, X. Liu, Q. Sun and H. Li, Game analysis of international marine petroleum cooperation’s environmental governance: The Bohai gulf oil spill, Open Cybern. Syst. J. 10 (1) (2016) 202 - 209.
[42] H. Zolnor and S. Matin, Optimizing Iran’s oil production path: An optimal control plan for dynamic planning, Q. J. Plan. Budg. 20 (4) (2016) 107-136.