Laws and Policies affecting Oil Gas industry

Laws and Policies affecting inunct Gas industryEvery embrocate and petrol industry atomic number 18 working according to the oil and gas lawfulnesss, the law covers every aspects of the oil industry for example , ranging from licencing, operational issues, joint venture, project contracts, supporter contract and construction , disposal, acquisition, farm -in, marketing and gross r neverthelessue , oil and gas transportation and diligence work. There are tether major laws shown belowDownstream zip Law and PolicyThe Downstream Energy Law and Policy, the legislation and regulation are implementing implement insurance policy for down stream brawniness industries. . The importance of this the policy decision is to restructure the electricity and gas industries it im trigger score transfigure the legislation, the approach of regulators. The law sack makes working environment betterEnvironmental Law and Policy for Natural Resources and EnergyThis policy deals with content and pla earnary environmental policy and power generation, consumption of natural resources and production. Example at that place may be problem rising in production sector, mining activities, transportation of petroleum, employ of new-madely clear energy, global climate cause and air pollution and d ad regulatory outlinesInternational and Comparative crude oil Law and PolicyThis is law and policy implementing in the international petroleum industry, The main part of this law are oil family, investors and host giving medication activity. In this law financial investor and international corporate are faced in a open and practical representation, The s befool holders are very much interested on the financial development of petroleum resources .The law fully supporting the taxation issues also solve the variety issues , economic , lawyer , accountants , engineers and geologists in A instruct introduction is provided to petroleum taxation issues.Private and Government PolicyS ome factors should be considered before deciding to choose a confidential or government policy.1. Private follow wont have a nationality engagement ie not be a citizen of host country also they provide insurance policy without regard to countrys economic development level or investment economic effect.2. Private companies insure both existing and new ones whereas government insure precisely new project or expansion of the existing one. Also if we want a government policy for the project we must register our project with the government company at an earlier stage.3.The government usually write policies for a tenacious term(15-20 social classs)whereas private one write only for short usually three age basis and is renewed at the end of each year for an additional year so that there is always a three year basis.Currently policy-making risk insurers provide reportages at a fixed rate .Most recently private companies offer coverage up to 15 years4. Government insurance cost is c heaper than private ones.5. Private offers more flexibility and opportunities to change the conditions of policy whereas government is not willing to change the rules from a old-hat form6. The government polices inform the host government about the coverage .But private firms forbid the investor from disclosing the information regarding the investment because disclosure will make the policy invalid.For some investors it is advantageous to use both private and official markets to go steady their necessitates in securing investments. Government insurers much(prenominal) as MIGA and OPIC encourage public private partnerships and syndicated insurances in cooperation with private companies.http//www.dundee.ac.uk/cepmlp/academic/FT-MBA-Oil%20and%20Gas%20Mgt.php Development strategy achieved through transforming corporate governance I took Halliburton petroleum industry to analyse the structure, instruction execution and counsel. It is the one of the richest refinery in US .is the p rime responsibility of the Top level directorial board to ensure the benefits of its share holders and the main duties includesThe evaluation of the caput executive director officers performance and commitment and to take adequate action which includes dismissal , removal etc.In this main duty of the board in the executive section in each boad resonateing is to evaluate the chief executive officers performance by the main director and the evaluation includes both qualitative and quantitve work area of the chief executive .The quatitive and qualitive ares includes leadership ,following managent development ,Integrity,perfomance of the profession, ratting the board matters that effects that Halliburton and its operation unitThe final evaluation department made by the main director will present in the hire commity after being communicated with chief executive officer and the duies if the compensation community includes the review of the evaluation of the report and and provide the recommendation for the coming year and picture the compensation of the chief executive officer.The compensation is made according to the recommendation made by the compensation communityThe setting and evaluation of compensation of the executive cautionAnnual revaluation and review of the plans and development program for the executive managementThe monitoring performance of the corporate against strategy and business plansInnovation way in oil and gas IndustryInnovation is not simply start the business but is a business of creativity ,It has some matter new , it is a new art .Innovation is strongly support the performance of the business ,Innovation is the result of hard work, efficiency.I choose BP to explain innovation management .BP is a UK company based company and it the 4th largest company in the world and also largest private energy corporation in the world.Innovative characteristics at one time BP is gain an important place in the world oil industry. it was founded by George Reynolds. BP gain momentum in innovative process in nineties and it has got overflowing investment and is declaring now but 2001/2000 it was on its peak .BP is the biggest 10 company in the world constantly alter its technology by updating the new and latest .Bp using ultra modern technology to keep themselves at top.Innovation Strategy of The CompanyDedication shown by the senior management with in the business strategy. Dedication by the employment is very important to implement innovative process. The main innovative steps arePerformanceProgressive health and Safety-which ensure no harm to the people of environmentInnovative- transformation new business ,bottom line performance and HSE expected a achievement are I part and factor of innovative processBP achieved innovation by abandonment of effective management and process added heavy stress and multi performance to the staff and which effects the working pattern of the company .Every motivated individual are the great an d strength of every business sector but pressure of the management will effect their performance .BP creating campaign to make aware every employer that about priority and making comfortable in their own way to provide potency and innovationInnovation requires knowledge of customer and user, BP providing training programs for understanding the innovation application in their working sphere of influence by this new technology BP achieved performance management, new idea will be a risky factor to companies .Innovation occurs motivation .Innovation need encouragement for the new idea in the driving suck up for the innovation. BP providing innovation needs, active support to improve employees skills. Innovation is long term process involve lot of money and time BP investing millions of pounds for theses activities2009 was the worst economical year in oil and gas industryThe recession hit all over the world . Demand of the energy resources doesnt gone down but even through the produc tion goes down .It is reported that world will use 45% of energy by 2030 there may be some challenges which need ultimate solution to the innovation strategical level , some example are invest more money on innovation , a selection fuels like wing , solar ,increase innovation processSustainable Development in Oil and Gas IndustryI am analysing Zadco oil company to examine about the corprote Overview of Sustainable development .It is the second largest oil company in U.A.E. The main objecitive of the Suitable Development of the development of the present generation and meet the development future generationEconomic SustainabilityZadco is producing approximately one by fourth of U.A.E oil , Upper Zakum field which is the fourth largest oil in the field is the main assets of the Zadcos maily depend upon the growthSocial SustainabilityZadco contribute for the social sustainability and some contribution in includes employement opportunity, community welfare project , promation of educa tional institutionEnviromental SustainabilityZadco has strictily maintaint its move to reduce the environment pollution, it also monitor its emission and discharges constantly to to reduce the harmful effect in the ecosystemhttp//www.halliburton.com/AboutUs/default.aspx?navid=973pageid=2305Business Planning Processes The success of an organization depends on how effectively their strategies are implemented and how it works. The main function of the business plan is to identify and develop strategy to support the companys mission and vision. It may be long time or short time. The corporate performance focussing the development of companies in all area.The corporative planning team interfaces every group in the business units. http//www.zadco.com/CMS/AboutZADCO/CorporateOverviewMissionVisionValues/BusinessPlanning/tabid/251/Default.aspx Operation management in oil and gas industry The basic ethics and idea of operation management in the framework of the upstream Oil and Gas business is to enable executives to carry out a decisive evaluation of their concerns contrive and supply chain to comprehend the ways in which strategic goals are interpreted into decision-making. Decipher calculated objectives into rational calculated verdict associated to effective placing, viewed within a global context for the oil and gas sector. pass and converse the relation between manufactured goods and development design, and examine and construct strategies for re-engineering effective and supply chain practices to gather diverse market needs.Evaluate and plump stratagem for facility development and classify deliver chain arrangement and control worth planning, manage and skill management.Competent of effort out troubles relating to strategic operational decisions leading to the achievement of competitive advantage through an effective operational strategy.Characteristics, The model of transformation, how cooperate strategy links with operation strategy, operations by strategic d rives, project appraisal, project management, location of operations, planning capacity, capacity strategies methods of forecasting demand Operational Scheduling aggregate plan formulation capacity strategies get and supply chain strategies, global sourcing and supplier selection inventory management MRP/MRPII/ERP quality and environmental policy quality management quality control and international standards for quality systems environmental policy risk management measuring performance, performance metrics, improvement strategies. Strategies for Facilities Management Total Productive Maintenance (TPM).QUALITY MANAGMENTThe industry handles hazardous fluids and gases through a variety of processes. Considering the personal safety for both staff and public, entertainion of the environment and business continuity (maintenance of revenue streams, both for companies and for national economies) require a high level of operational integrity. A solution element in the reassurance of appro priate products being supplied is the quality management system operated by the goods school principal and service contractor. The experience of previous editions of API Q1 has proven that requirements additional to ISO 90012000 are necessary to provide assurance with high opinion to quality of products and services on a consistent and global basis.It is a collaboration between the American rock oil Institute (API) and ISO technical committee ISO/TC 67, Materials, equipment and offshore structures for petroleum, petrochemical and natural gas industries. accord to John Modine, Director Certification Programs, American Petroleum Institute (API), ISO/TS 29001 is expected to result in Increased international acceptance of time-tested sector-specific quality system requirements on a broad scale for the worldwide oil and gas industry. He defines it as unity industry one standard.We knew that API Spec Q1 (6th Edition) deported extremely worthful quality system requirements for the oi l and gas industry and we wanted to help disseminate those sector-specific quality requirements to the international oil and gas industry. We concluded that the best way to do that would be to draft the next version of API Spec Q1 (7th Edition) with a joint API/ISO committee with the final result being a joint result of API Spec Q1 and ISO/TS 29001. The final goal is to obtain worldwide receipt and use of the standard.The new technical specification aims at the growth of a quality management system that provides for frequent improvement, highlight defect prevention and the reduction of variation and waste in the supply chain and from service providers. Incorporating the requirements of ISO 90012000, ISO/TS 290012003, it also includes detailed, sector-specific requirements for design, development, production, installation and service of products. To assist the user, the requirements of ISO 90012000 are given in boxed text, followed by specific direction and additional requirements for its implementation within the industry. Although some of the supplementary requirements may be viewed as not specific to this industry, they are needed in TS 29001 in order to ensure that the requirement(s) are explicit and can be audited.ISO/TS 29001 is obtainable for use by manufacturers of oil industry utensils and materials (upstream and downstream), service providers to the oil and gas industry, purchasers of utensils, materials and services and organizations who could use the criterion for assessments and certification.Major risks in oil and gas industryOne of the main consideration in any global investment is the political risk .It is principally focus on oil and gas or energy sector. This sector is very large and controversial most of the all countries energy sector is privatized, when Investing money on immaterial country the investor should evaluate the political risks, economical, and geological risks. The oil companies producing the hydrocarbons in reasonable prof it at right time. An contract gestural with the government for crabby time that should be a prolonged time than the present government. A upcoming government strength ready to western companies and allow a more autonomist policy for their general resources. Once geological survey finished the economists will analyze finance budget, i company management will assess the major risk in a new project and resolve that risk in an suitable way,Political risks has been changing according to their political and socio-economic situation of their own country, For example in1990s Enron Corp in India and1980s Belco Petroleum Corp Peru in both cases present government changed and new government came and adopt new anti foreign investment policies because of that they dropped their project.There are mainly both types of risks one is Country specific political risks and another is firm political risks .Firm specific risks are in a flash connected to the company, for an example government might c hance to cancel the project or terrorist group may decided to attack the Industry. But in the country specific politics risks is not directly connected the firm but it will effect national wide, for example the government decision will effect money fluctuation or gracious warDfferent types of l risks are shown below .Government RisksInstability RisksFirm exact Risksunfair regulationsdamageCreeping expropriationKidnappingsbreak of contractFirm particular boycottsCounty Level RisksMass nationalizationslabour strikesRegulatory changerural riotingRisk ManagementThere are number of essential ways to protect the investment firms from the political risk, economic risks, environmental risks, and technological risks. Assessment factors can strongly influence the companys fiscal performance. Political risk is mainly managed by two ways one is actual political risk insurance and another is De facto insurance. De facto insurance is the protection from strategic partnering and planning. Politic al insurance is covering all part of the investment .In De facto insurances is mainly preventing the outrage in risky areas for example exploration and production , money fluctuations, civil war etc.Two important sections in a political risk policy constitutes event of breathing out and the measure of damages and it wil be as a result of the type of coverage that is purchased. So it is important to understand the types of political risk insurance coverages. These coverages generally includes expropriation, currency inconvertibility, war and civil disturbance, trade disruption and breach of contract.all these should be closely examinedExpropriation coverage protects against patial or total loss of investment caused by host government which eliminates insureds ownership or exercise of its rights with respect to the investment. Coverages can also used against crawl expropriations which had effect of preventing the investor of its ownership.to its investments. The amount of loss wil b e the investments net book nurture.While discussing the amount of loss based on a particular coverage the judgment of book value become important and it determines how much will be recovered in the event of loss For example in US there are two methods of accounting for drilling results. An oil company can either use an accounting under which dry hole costs are written off in the year incurred, or the full cost method of accounting whereby all drilling costs are capitalized and written off over the economic life of the reserve. Both methods will produce different results. So it is important to discuss a definition for net book value that will produce a promising financial result for the insured. Expropriation can take the following formsConfiscation of Fixed Assets and Bank AccountsMany companies have investments in the form of subsidies or joint venture .In order to attract foreign direct investment government will give some concessions or signed placement with the company .But w hen the government changes some changes will happen in investment regulations and the locally held assests will undergo some unfairly actions imposed by the new government which restricts its operations. Share holder loans invested by the companies are at the risk of court-ordered penality. Insurance is needed to protect such loans.Expropriation coverages also include losses due to material change imposed by the host government. The following agreements are mentionedDrilling RightsLong term agreements should contain remedy to protect against future disputes because such licenses may be cancelled later. The contract should significantly relay on qualitity of arbitration provision to secure against legal indebtness through court.Exploration/Exploitation (Production Sharing Agreements)When overseas government attract western companies to share in the travel of discovery of the potential field this agreement will comprise the unfair treatment at the next phase. Thus this agreement wil l identify how the oil revenues are split between the company and the government.At the time of struugle the government will undergo any of these agreements and identify the indebteness of the government and coverage is available on grounds similar to drilling rights be ReserveIn situations where future oil revenues are included in the balance sheet and the underwriters are satisfied with the accounting principles it is possible to include loss of future earnings as a part of net asset value in the event of expropriation by the host government.2. Confiscation of smooth AssetsContractors who take specialized mobile plants or equipments such as barge from overseas will re-export it after the completion of their project. Before re-exporting he needs consent and license from host government. If he refused the permitted the permission he will be exposed to a potential loss caused by confiscation and deprivation.2.Currency inconvertibility coverage helps the investor to meet the loss ar ise due to his inability to convert local currency into the foreign currency specified in the policy, which is usually United States dollars, or the investors denture currency,to transfer aborad. The coverages include excessive delays (usually expressed in terms of a stated time period), adverse changes in local laws or regulations, and an adverse change in the conditions governing the conversion to foreign exchange. The risk of devaluvation is for the insurance company.the investor will pay over the blocked currency to the company in exchange for the foreign currency.3. War and civil disturbance coverage protects against damage or destruction due to war or any other disturbances. This coverage includes revolution, insurrection, coup detats, debauch and terrorism. The damage may not be actual but the investment is considered as a total loss.The measure of loss will be investors net book value of the assets destroyed or damaged. The company also needs a option to replace the destro yed ones or a reasonable cost for the maintenance of the damaged ones.4. Breach of contract coverage protects the host countrys repudiation against investors contract.this coverage will provide a process for resolution of disputed and the investor can obtain an award for damages. If it is not paid with the state period of time, the investor can then demand for net book value of investment under the policy. succeeding(a) loss in profit is not covered5. Project financeMajority of overseas project requires bank finance on a especial(a) or non-recourse basis. Private companies now offer a coverage of 10 years to protect banks giving loans to such projects. . The project sponsors will be desire finance from the lenders where the assets of the project are assigned as collateral and the cash flows derived used to repay financing.6. Border closures, blockades and sanctions will not cause a loss of the local investment Two possible consequences that tailores the insurance programs are lo ss of profit and increase in operating costs.