which may be termed 'political. risks'-may be important deter- minants of investment. After taking such risks into consideration in the exploration and development stage, a firm computing the pres- ent value of its probable income stream must consider several other factors. In addition to the current rate of production, it must con- sider these: (I) engineering limits to the rate of extraction in any given period, (2) physical limits to the total amount of the resource that can be produced within a given location, and (3) limits to the availability of new petroleum sources at the same costs...

l INTEREST in the off-shore petroleum resources of South-East Asia was manifested in the 1960s when development in off-shore technol ogy allowed oil companies to search beyond prospective land areas. The dramatic increases in oil prices in the early 1970s but more particularly the events of 1973 and 1974, when world oil prices were quadrupled by the oil exporting nations and major supply cutbacks were experienced by certain developed nations, further heightened this interest. Cost/price relationships had not only improved and made off-shore oil in hitherto less attractive areas commercially...

THE quadrupling of oil prices within a few months in late 1973 and early 1974 brought to an abrupt end the era of inexpensive oil. Since then the continuing increases in the price of oil traded in the international market and the higher prices of imports of manu factured goods have seriously disrupted the foreign exchange balances of many developing countries and forced them to replan their development programmes. The impact of high oil prices is felt in every country, whether developed or developing, and has brought to world attention the fact that not only are petroleum resources in limited...