The oil and gas industry is indispensable to endurance of the economic system for different intents. The industry provides energy and chemicals to the economic system vital for conveyance, companies and family in U.K. Through the industry the authorities earn valuable and significant revenue enhancement and export gross to back up the economic system. The figure below Tells it ain narrative:
5 Three quarters of the UK ‘s primary energy.
5 Employment for more than 380,000 people.
V Has invested & A ; lb ; 150 billion over the last 25 old ages.
V Has paid & A ; lb ; 150 billion in revenue enhancements since the 1970s.
V Adds & A ; lb ; 4 billion a twelvemonth to balance of payments.
V Histories for fifth part of UK one-year investing. ( oilcareers.com )
This primary purpose of this study is to see cardinal environmental factors that are presently impacting the industry. This will be done through PEST ( Political, Environmental, Social and Technological ) analysis. This study will besides take into consideration principle of industry and companies chosen for this undertaking, in add-on a figure of fiscal ratios will be considered to find the public presentation of the companies in the industry. This will assist in set uping where each company stands in relation to their rivals ; every bit good leting the strongest and weakest companies to be determined.
RATIONALE FOR INDUSTRY
This Oil and Gas industry contribute significantly to the economic system. The principle based on this industry pick is to derive an penetration to how prepared companies are sing the hazard posed by clime alteration. Harmonizing to a study by Palma ( 200* ) she explored increasing force per unit area in the Oil and Gas industry face from clime alteration. She indentified such hazard as:
Damage to corporate repute: As the apprehension and consciousness of the amendss posed by clime alterations additions and develops, failure to detect and account for the impact of clime alteration on societal and environmental resources is increasingly likely to damage company ‘s position and repute.
Increasing force per unit area on H2O resources: There are turning concerns sing alterations in rainfall forms. This has led to H2O deficits, hapless H2O quality and drouth and implosion therapy has significantly increased the demand for H2O. For companies that rely to a great extent on H2O, addition competition for available resources could make operational jobs for companies.
Drop in value of fiscal assets: In order to run into the economic system increasing demand for energy, oil and gas companies need to procure farther investing for geographic expedition, production, and fabrication. Stockholders are puting more and more importance on the concern impacts of the alteration, as hazard impact cost and gross drivers. It is likely that insurance cost could lift due to greater opportunity of physical works harm because of conditions events.
Covering with such hazard is non every bit easy as it may sound, some companies profit may worsen due to the necessary alterations in order to battle clime alteration. It will take a corporate attempt every bit good as single attempt for the industry to keep its position as one of Britain ‘s strongest industry.
Rationale FOR COMPANY CHOICES
The diagram below shows that the companies are similar in size, employees employed and turnover. This makes is easier for comparison intents in happening out how each company are executing. In add-on all companies chosen are in the FTSE 350.
JKX Oil and Gas
JKX Oil and Gas plc rule activity is developing and bring forthing oil and gas modesty, which is conducted through there subordinate projects. JKX chief rule involvements are located in Ukraine and in Russia, with farther involvement in Georgia, Bulgaria and United States. As of December 31, 2008, the Company drilled two geographic expedition Wellss. As of December 31, 2008, the Company acquired 25 % involvement in the Svidnik, Medzilaborce and Snina from Aurelian Oil & A ; Gas plc.
Cairn energy Company is an independent public oil and gas geographic expedition and production company. Together with its subordinates, the company engages development and the production of oil and gas mostly in states such Bangladesh, India, and Nepal. The company besides operates in Tunisia, Australia, Spain and Papua New Guinea. The company ‘s headquarter is based in the United Kingdom at Edinburgh
Tullow Oil Plc
Tullow Oil plc operates as an independent oil and gas geographic expedition company. The company has over 100 licenses in more than 20 states.
The group accomplished a 77 % geographic expedition success rate with 17 out of 22 successful Wellss in 2008. Presently in 2009, Tullow has drilled 12 successful Wellss out of a sum of 14.
FINANCIAL RATIO ‘S
Fiscal ratios are calculated to supply a speedy and comparatively easy agencies of mensurating the fiscal well-being of a concern. Ratios aid to foreground the fiscal strength and failing of a concern.
In order to understand factors that affect the industry, the PEST analysis could offer some aid. PEST analysis aid is the analysis of external factors which are beyond the control of the companies and these factors sometimes could be a possible dainty. Furthermore these factors can take to new chances being created for companies to research.
Political determinations made by the authorities will decidedly impact the oil and gas industry in one form or another ( more ( straight or indirectly ) ) . One of the chief political speaking points is the consequence the industry has on clime alteration. Harmonizing to Chapman ( 2009 ) , companies do non truly acknowledge the consequence the industry and company has on clime alteration. Stairss have and are been taking to guarantee that companies recognize alterations in clime. The U.K authorities non long ago, update the Petroleum Act, fastening the jurisprudence on decommissioning, doing it inexorable and compulsory that companies take into history the impact of clime alteration. The authorities realizes that actions and policies are needed in order for the industry to go oning supplying energy for the economic system while the industry reduces the sum of emanation they produce and besides supplying new powerful energy option. In 2000, the royal committee proposed that U.K would necessitate to cut down it emanation of CO2 by 2050 and if possible to cut down it by 80 % by 2100. This was an international understanding proposed in other to forestall concentration of C dioxide from lifting above 550 parts per million in volume. At 2000 it stood at 380 and lifting, furthermore in it would be safe to presume that it has risen significantly.
The political factor takes into consideration political stableness, pricing ordinances, industrial safety ordinances, revenue enhancement rates and inducements and many more.
An effectual manner in which authorities believe would promote the industry to restrict the sum of pollution they create is the C revenue enhancement charge. The intent of this is to take down nursery gas emanation produced by the industry. Similar to this charge is the clime alteration levy ( referred to as revenue enhancement on energy ) . This was put in topographic point on the 1st of April 2001. The importance of the revenue enhancement is to promote alteration in the industry. This has persuaded the industry to get down looking new renewable energy beginning or hazard holding to pay extra cost of the levy on their energy measure. The levy applies to electricity, oil and gas industry, if a company produces the energy the usage from renewable energy beginning they will be exempt from this levy. Furthermore companies that agree to the authoritiess ‘ emanation mark will be given an 80 % price reduction.
The economical factor takes in consideration of such issues as exchange rates, economic growing rate, unemployment rate, rising prices rate and monetary value in oil and gas. The Oil and Gas industry is one that holds a fastness in the universe and the U.K economic system and it provided 450,000 occupations in UK in 2009. It diagram below an addition in employment from 2007 and to 2008. Unfortunately the addition from 2008 to 2009 could non be shown has it had non been inputted. But from the diagram, it shows marks of betterment since 2004 to 2008.
The economic system in U.K receives a monolithic encouragement when there are addition of activity drill in regard to Oil and Gas. As by ( ======== ) Oil and gas production contributes massively to the authorities through revenue enhancement grosss with a study & A ; lb ; 271 billion being paid over the last 40 old ages ( 2008 money ) . Unfortunately high monetary value for oil in the modern twenty-four hours is major job for economic systems around the universe ( both rich and hapless ) . The world is that in many states including UK, oil is going unaffordable for more and more people. In the fiscal last twelvemonth ( 2008-2009 ) & A ; lb ; 12.9 billion was contributed by the industry in footings of revenue enhancement gross, this was likely due to high oil and gas monetary values. If oil and gas monetary value continue to increase this could alter the balance of trade between states and exchange rate. This addition would do a diminution in the balance payment of net oil-importing states thereby seting downward force per unit area on exchange rate therefore import become more expensive and export less valuable which leads to a bead in national income.
There different societal factor affect the industry such as client purchasing forms, ethical issues and the environment. Due to really nature of the industry, the environment in existent danger from boring and transit procedure. The chemical used in boring can be harmful to the environment. The combustion of oil as fuel creates devastation, whereby it contributes to such jobs as planetary heating and acerb rain. In add-on, forest are now at major hazard as there are increase force per unit area applied by the oil and gas industry leaders forcing for new boring in sensitive and parts which were one time protected
Two chief factors affect the industry are major event and consumer attitudes and sentiment. Consumer attitude and sentiment are altering in the modern twenty-four hours environment. More and more people are traveling to solar energies alternatively of utilizing fuel or gas, this is called the “ Green CULTURE ” . There are more concern for the environment now than of all time, motivating the hunt for options. The authorities intend to hold in topographic point coal and gas fired and atomic power in topographic point by mid 2020 as options.
Furthermore, employees ‘ wellness and safety is another political speaking point. Due to the volatile conditions in which employees have to work in and besides sub standard physical plus could potential hold a negative impact on the wellness and safety of the employees which would hence compromise the employer and public liability insurance screen.
Technologies are indispensable to oil and gas industry, due to the harsh and demanding environment we presently live in ; the industry leads in technological invention in order to get the better of challenges of retrieving oil and gas from hard reservoirs and deeper Waterss. For the industry, the demand of demand engineering is need in order to detect new ways of cut downing production cost, bettering public presentation and doing fringy Fieldss economic to develop. The attempt put in by the industry to develop new engineerings for turn uping and bring forthing oil and gas has led to assorted innovations and proficient progresss that have been used elsewhere.
An country in which the authorities and the industry highlight as possible growing country is in the field of Carbon Capture and Storage. European Union aboard with other states has recognised this possible and statute law have been put in topographic point and support made available in order to finance presentation works in Britain and other states. The industry ‘s cognition of submarine geology, reservoir direction and grapevine conveyance will doubtless play an of import function in doing this fledgling engineering work efficaciously
Advantages of Plague
- Easy to make
- The analysis provides a deeper apprehension of the wider concern environment in which they operate.
- Provides an apprehension of the wider concern environment.
- Raises possible menaces to a undertaking
- Through this analysis administration can anticipate future troubles and take a class of action in order to understate their consequence
- It could assist a company realise chances and use them
Disadvantages of Plague
- Could take considerable clip to make
- Variable gait of alteration could do it hard to foretell development which may impact a company in the hereafter
- The analysis might be based on baseless hypothesis