# Optimal Investment Timing and Scale Choice of Overseas Oil Projects: A Real Option Approach
## 5 Conclusions and Policy Implications
#### Unit operation cost effectively affects investment timing and oil project value  
According to the analysis above, changing unit operation cost is of great significance and effective in altering optimal investment timing and oil project value. Compared with other factors, such as geological condition, the length of contract period, and tax holiday, investment threshold is quite sensitive to unit operation cost, which includes environmental cost and production cost. Reducing unit production cost can obviously decrease critical oil price, and international oil companies can take the initiative of oilfield development at a low level of investment threshold. In a competitive environment, the operation cost and sunk cost potentially affect companies in many aspects, such as merger activity [62; 63]. In practice, international oil companies should strive to use more efficient management techniques and optimal oil production technology to decrease unit operation costs. Considering policies to restrict pollution and emission, environmental charges also play a key role in the investment decision-making process, which alters the optimal investment timing and project value. Investors should pay more attention to the environmental constrains and sustainability. In this article, the real option model does not fix the degree of development, which helps investors to select both the optimal investment timing and scale. Previous researches have always set the investment cost as the constant in their real option model; by contrast, the investment scale is variable in this model. Compared with relevant studies, the value of management flexibility and uncertainties of economics factors can be greatly taken into account. In order to reflect the actual practice of oil projects, characteristics of oil production and tax regimes are considered in this model. However, it is clear that using one model cannot capture the variables that influence optimal investment decision in the uncertain environment [64; 65]. This research may have some limitations in application. Firstly, oil prices are affected by various factors [66; 67; 68], and it is hard to determine the currently stable oil price for making optimal investment decision. Therefore, choosing the appropriate time extent to calculate the recent average oil price is important for investors. The daily price and weekly price are not suitable for supporting investment decision-making because of instability. Second, the parameters in this model should be adjusted by actual production practice. Overseas oil projects combine many uncertainties and realistic details of investment and operation, which was not discussed in this article. In further research, this model should be extended to consider the uncertainty of investment cost and operation cost, which can reflect the local political or geological conditions. From the perspective of social responsibility, the cost of green practice and contributions for fighting global warming should be considered more carefully [69]. In addition, it will be important to study the impact of enhanced oil recovery (EOR) and specific tax regimes in overseas oil projects [70]. These issues are interesting and attractive for us to address in our future work. All authors have cooperated in the preparation of this work. Conceptualization, B.-J.T. ; Data curation, J.-Y.H. ; Formal analysis, J.-Y.H., Y.-F.C., and H.-L.Z. ; Methodology, J.-Y.H., Y.-F.C., and H.-L.Z. ; Project administration, B.-J.T. ; Supervision, B.-J.T. and N.W. ; Validation, H.C. and B.-J.T. ; Visualization, J.-Y.H. and Y.-F.C. ; Writing--original draft, J.-Y.H. ; Writing--review & editing, H.C., B.-J.T. and N.W. We gratefully acknowledge financial support from the National Natural Science Foundation of China (Grant Nos. 71573013, 71521002, 71642004, 71704011), Special Items Fund for Cultivation and Development of Beijing Creative Base (Grant No. Z171100002217023), Key Project of Beijing Social Science Foundation Research Base (Grant No.15 DJA084), National Key R&D Program (Grant No.