Abstract

This paper applies game theory to the selection of a natural gas field development method in Ukraine. Four states of nature are defined based on the depth of the reservoir and its thickness. For each state, the expected profits from gas production are estimated for three development methods: conventional, shale, and central-basin. The decision-making outcomes are evaluated using the maximax criterion, Wald’s maximin criterion, and Savage’s minimax regret criterion. The results indicate that the conventional development method yields the highest profitability. To further refine the analysis, the Bayes criterion is applied by incorporating the probabilities of the states of nature. These probabilities are estimated using data from 20 gas fields that have already been explored and are currently in operation. The Bayesian analysis confirms the robustness of the initial findings.