Laws and Policies affecting Oil Gas industry

Laws and Policies affecting Oil Gas patienceEvery vegetable c over and bollocks attention are working according to the inunct colour and squander laws, the law covers every aspects of the cover industry for grammatical case , ranging from licencing, operative issues, junction venture, jump contracts, service contract and construction , disposal, acquisition, farm -in, marketing and gross revenue , oil and muff transportation and diligence work. at that place are lead major laws shown belowdownstream Energy Law and constitutionThe Downstream Energy Law and constitution, the legislation and regulation are implementing implement form _or_ system of brass for down stream energy industries. . The importance of this the constitution decision is to structure the electricity and fumble industries it allow for transfigure the legislation, the approach of regulators. The law shag makes working purlieu betterEnvironmental Law and Policy for born(p) Resources and Ener gyThis policy deals with national and international environmental policy and crease office generation, consumption of natural resources and production. Example there whitethorn be riddle rising in production sector, mining activities, transportation of petroleum, use of brisk clear energy, international climate marrows and air pollution and d ad regulatory systemsInternational and Comparative Petroleum Law and PolicyThis is law and policy implementing in the international petroleum industry, The briny actuate of this law are oil telephoner, investors and host presidency. In this law fiscal investor and international corporate are faced in a ease up and practical charge, The stake holders are very much interested on the financial breeding of petroleum resources .The law fully appriseing the tax income issues in any case solve the variety issues , economic , lawyer , accountants , engineers and geologists in A brief introduction is provided to petroleum taxation issues . hidden and Government PolicySome factors should be considered before deciding to choose a reclusive or government policy.1. Private company wont have a nationality requirement ie not be a citizen of host artless also they provide policy with extinct regard to countrifieds economic ripening take aim or enthronement economic takings.2. Private companies insure some(prenominal) breathing and unseasonedly ones whereas government insure only sore 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 longsighted term(15-20 historic period)whereas insular one write only for short usually three familys basis and is re unseasoneded at the end of each year for an additive year so that there is always a three year basis.Currently semi semipolitical risk insurers provide insurance reportings at a icy rate .Most recently private companies offer coverage up to 15 years4. Government insurance cost is cheaper than private ones.5. Private offers more(prenominal) flexibility and opportunities to flip-flop the conditions of policy whereas government is not willing to change the rules from a standard form6. The government polices inform the host government about the coverage .But private firms forbid the investor from disclosing the information regarding the enthronization because revelation will make the policy invalid.For some investors it is advantageous to use some(prenominal) private and official markets to meet their impoverishments in securing investments. Government insurers much(prenominal) as MIGA and OPIC encourage public private breaknerships and syndicated insurances in cooperation with private companies.http//www.dundee.ac.uk/cepmlp/ pedantic/FT-MBA-Oil%20and%20Gas%20Mgt.php Development strategy achieved by dint of transforming corporate governance I took Halliburton petrol eum industry to analyse the structure, execution of instrument and guidance. It is the one of the richest refinery in US .is the gush responsibility of the Top take directorial board to ensure the benefits of its share holders and the main duties includesThe valuation of the oral sex executive incumbents performance and commitment and to take seemly action which includes dismissal , removal etc.In this main duty of the board in the executive section in each boad meeting 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 ripening ,Integrity,perfomance of the person-to-person margin of credit, informing the board matters that effects that Halliburton and its operation unitThe final evaluation department made by the main director will premise in the honorarium commity after be comm unicated with chief executive officer and the duies if the compensation partnership includes the review of the evaluation of the report and and provide the testimonial for the coming year and Setting the compensation of the chief executive officer.The compensation is made according to the recommendation made by the compensation lodgeThe setting and evaluation of compensation of the executive forethoughtAnnual recapitulation and review of the plans and development program for the executive cautionThe monitoring performance of the corporate against strategy and business plansInnovation Management in oil and gas IndustryInnovation is not simply start the business entirely is a business of creativity ,It has some thing new , it is a new art .Innovation is strongly support the performance of the business ,Innovation is the essence of hard work, efficiency.I choose BP to explain innovation prudence .BP is a UK company based company and it the 4th largest company in the humanity and also largest private energy corporation in the world. progressive characteristicsNow BP is gain an important place in the world oil industry. it was founded by George Reynolds. BP gain momentum in in advance(p) do by in nineties and it has got enough investment and is declaring now but 2001/2000 it was on its apex of the suns way .BP is the biggest 10 company in the world constantly alter its engineering by updating the new and latest .Bp using ultra juvenile technology to keep themselves at top.Innovation Strategy of The Company committal 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 arePerformanceProgressiveHealth and Safety-which ensure no harm to the people of environmentInnovative- transformation new business ,bottom line performance and HSE expect a achievement are I part and factor of innovative processBP achieved innovation by abandonment of usef ul 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 groovy and 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 effectiveness and innovationInnovation requires knowledge of customer and user, BP providing raising programs for understanding the innovation application in their working playing area by this new technology BP achieved performance management, new idea will be a tough factor to companies .Innovation occurs motivation .Innovation need encouragement for the new idea in the driving force for the innovation. BP providing innovation needs, active support to improve employees skills. Innovation is long term process involve spate of money and eon BP investing millions of pounds for theses activ ities2009 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 production 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 strategic level , some example are invest more money on innovation , a alternative 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 spot largest oil company in U.A.E. The main objecitive of the Suitable Development of the development of the give up generation and meet the development future generationstinting SustaunfitnessZadco 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 summations of the Zadcos maily depend upon the returnSocial SustainabilityZadco contribute for the social sustainability and some contribution in includes employement opportunity, community welfare project , promation of educational institutionEnviromental SustainabilityZadco has strictily maintaint its effort 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 find out 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/Busin essPlanning/tabid/251/Default.aspx Operation management in oil and gas industry The basic ethics and idea of operation management in the exemplar of the upstream Oil and Gas business is to enable executives to carry out a decisive evaluation of their concerns contrive and supply string to breed the ways in which strategic aims are interpreted into decision-making. Decipher metrical objectives into rational calculated verdict associated to effective placing, viewed within a world(prenominal) context for the oil and gas sector.Transmit and converse the relation betwixt 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 expand stratagem for deftness development and classify deliver chain arrangement and control outlay planning, manage and skill management.Competent of effort out troubles relating to strategic running(a) decisions leading to the achi evement of competitive advantage through an effective operational strategy.Characteristics, The model of transformation, how cooperate strategy links with operation strategy, operations by strategic drives, project appraisal, project management, location of operations, planning cogency, capacity strategies methods of call demand Operational Scheduling aggregate plan formulation capacity strategies purchasing and supply chain strategies, global sourcing and supplier selection inventorying management MRP/MRPII/ERP choice and environmental policy prime(prenominal) 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 care (TPM).QUALITY MANAGMENTThe industry handles hazardous fluids and gases through a variety of processes. Considering the personal safety for both staff and public, cherishion of the envi ronment and business pertinacity (maintenance of revenue streams, both for companies and for national economies) require a high level of operational integrity. A solution element in the re effrontery of appropriate products being supplied is the quality management system operated by the goods dealer and service contractor. The stick 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 conformable and global basis.It is a collaboration between the American Petroleum constitute (API) and ISO technical committee ISO/TC 67, Materials, equipment and offshore structures for petroleum, petrochemical and natural gas industries.harmonize 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 One industry one standard.We knew that API spec Q1 (6th Edition) contained extremely valuable quality system requirements for the oil 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 adjacent version of API Spec Q1 (7th Edition) with a joint API/ISO committee with the final result being a joint publication 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 betray 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 d esign, development, production, installation and service of products. To service the user, the requirements of ISO 90012000 are given in boxed text, followed by specific focussing 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 getable 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 mainly focus on oil and gas or energy sector. This sector is very large and arguable most of the all countries energy sector is privat ized, when Investing money on foreign country the investor should evaluate the political risks, economical, and geological risks. The oil companies producing the hydrocarbons in reasonable pull in at right time. An contract signed with the government for particular time that should be a longer time than the present government. A upcoming government might ready to western companies and drop out a more autonomist policy for their general resources. Once geological sight 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 ever-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 mai nly two types of risks one is Country specific political risks and another is firm political risks .Firm specific risks are directly committed to the company, for an example government might chance 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 civil warDfferent types of l risks are shown below .Government pretendsInstability RisksFirm exact Risks partial regulationsdamageCreeping expropriationKidnappingsbreak of contractFirm particular boycottsCounty take aim RisksMass nationalizationslabour strikesRegulatory changerural riotingRisk ManagementThere are number of essential ways to nurture the investment firms from the political risk, economic risks, environmental risks, and technological risks. Assessment factors can strongly influence the companys fiscal performance. Poli tical risk is mainly managed by two ways one is actual political risk insurance and another is De facto insurance. De facto insurance is the nurtureion from strategic partnering and planning. Political insurance is natural covering all part of the investment .In De facto insurances is mainly preventing the blemish in risky areas for example exploration and production , money fluctuations, civil war etc.Two important sections in a political risk policy constitutes event of red 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, grapple disruption and breach of contract.all these should be closely examinedExpropriation coverage protects against patial or complete disadvantage of investment ca utilise by host government which eliminates insureds ownersh ip or exercise of its rights with respect to the investment. Coverages can also used against creeping expropriations which had effect of preventing the investor of its ownership.to its investments. The criterion of loss wil be the investments net allow value.While discussing the amount of loss based on a particular coverage the construct 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 mend cost 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. two 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 forms arrogation of Fixed Ass ets 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 commensurateness with the company .But w hen the government changes some changes will pass off in investment regulations and the locally held assests will undergo some below the belt actions imposed by the new government which restricts its operations. Share holder loans invested by the companies are at the risk of legal penality. Insurance is needed to protect such loans.Expropriation coverages also include losses imputable to material change imposed by the host government. The following agreements are mentionedDrilling Rights ample 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/Explo itation (Production sharing Agreements)When overseas government attract western companies to share in the cash in ones chips of discovery of the potential field this agreement will comprise the dirty treatment at the next phase. Thus this agreement will list 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 rightsProven appropriateIn situations where future oil revenues are included in the residue 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 Mobile AssetsContractors who take specialized mobile plants or equipments such as barge from overseas will re-export it after the completion of their project. Before r e-exporting he needs permission 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 arise 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 home currency,to transfer aborad. The coverages include extravagant delays (usually expressed in terms of a stated time period), unbecoming changes in local laws or regulations, and an adverse change in the conditions judicature 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. contend and civil disturbance coverage protects against damage or destruction due to war or any other disturbances. This coverage includes revolution, insurrection, coup detats, subvert 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 destroyed ones or a reasonable price 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 nonrecreational with the state period of time, the investor can then demand for net book value of investment under the policy. Future loss in profit is not covered5. Project financeMajority of overseas project requires bank finance on a limited 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 seeking finance from the lender s 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 loss of profit and increase in operating costs.