Petroleum reservoir parameter inference is a challenging problem to many of the reservoir simulation work flows, especially when it comes to real reservoirs with high degree of complexity and non-linearity, and high dimensionality. In fact, the process of estimating a large number of unknowns in an inverse problem lead to a very costly computational effort. Moreover, it is very important to perform geologically consistent reservoir parameter adjustments as data is being assimilated in the history matching process, i.e., the process of adjusting the parameters of reservoir system in order to match the output of the reservoir model with the previous reservoir production data. As a matter of fact, it is of great interest to approximate reservoir petrophysical properties like permeability and porosity while reparameterizing these parameters through reduced-order models. As we will show, petroleum reservoir models are commonly described by in general complex, nonlinear, and large-scale, i.e., large number of states and unknown parameters. Thus, having a practical approach to reduce the number of reservoir parameters in order to reconstruct the reservoir model with a lower dimensionality is of high interest. Furthermore, de-correlating system parameters in all history matching and reservoir characterization problems keeping the geological description intact is paramount to control the ill-posedness of the system. In the first part of the present work, we will introduce the advantages of a novel parameterization method by means of higher order singular value decomposition analysis (HOSVD). We will show that HOSVD outperforms classical parameterization techniques with respect to computational and implementation cost. It also, provides more reliable and accurate predictions in the petroleum reservoir history matching problem due to its capability to preserve geological features of the reservoir parameter like permeability. The promising power of HOSVD is investigated through several synthetic and real petroleum reservoir benchmarks and all results are compared to that of classic SVD. In addition to the parameterization problem, we also addressed the ability of HOSVD in producing accurate production data comparing to those of original reservoir system. To generate the results of the present work, we employ a commercial reservoir simulator known as ECLIPSE. In the second part of the work, we will address the inverse modeling, i.e., the reservoir history matching problem. We employed the ensemble Kalman filter (EnKF) which is an ensemble-based characterization approach to solve the inverse problem. We also, integrate our new parameterization technique into the EnKF algorithm to study the suitability of HOSVD based parameterization for reducing the dimensionality of parameter space and for estimating geologically consistence permeability distributions. The results of the present work illustrates the characteristics of the proposed parameterization method by several numerical examples in the second part including synthetic and real reservoir benchmarks. Moreover, the HOSVD advantages are discussed by comparing its performance to the classic SVD (PCA) parameterization approach. In the first part of the present work, we will introduce the advantages of a novel parameterization method by means of higher order singular value decomposition analysis (HOSVD). We will show that HOSVD outperforms classical parameterization techniques with respect to computational and implementation cost. It also, provides more reliable and accurate predictions in the petroleum reservoir history matching problem due to its capability to preserve geological features of the reservoir parameter like permeability. The promising power of HOSVD is investigated through several synthetic and real petroleum reservoir benchmarks and all results are compared to that of classic SVD. In addition to the parameterization problem, we also addressed the ability of HOSVD in producing accurate production data comparing to those of original reservoir system. To generate the results of the present work, we employ a commercial reservoir simulator known as ECLIPSE. In the second part of the work, we will address the inverse modeling, i.e., the reservoir history matching problem. We employed the ensemble Kalman filter (EnKF) which is an ensemble-based characterization approach to solve the inverse problem. We also, integrate our new parameterization technique into the EnKF algorithm to study the suitability of HOSVD based parameterization for reducing the dimensionality of parameter space and for estimating geologically consistence permeability distributions. The results of the present work illustrate the characteristics of the proposed parameterization method by several numerical examples in the second part including synthetic and real reservoir benchmarks. Moreover, the HOSVD advantages are discussed by comparing its performance to the classic SVD (PCA) parameterization approach. The electronic version of this dissertation is accessible from http://hdl.handle.net/1969.1/154968