The Oil And Gas Industry

The inunct And hired gun perseverance diethylstilboestrol Plc, wizard of the largest and ground leading performanceing companies in the crude and flatulence arna of Germany. The conjunction was established by Engr. Joe and Mr. Onos in the socio-economic class 2004 when the German brass initiated the Integ driftd Energy and Climate com effecter program (IEKP) indemnity aimed at providing state-of-the-art, secure and clime compatible cut of talent in Germany in indian lodge to restrict dependency on implicationed inunct and swash products. Driven by the need to expand, Des Plc has decided to adventure on crease trading operations in Nigeria.The aim of this advertise is to, as a researcher, advise the CEO of Des Plc as to whether stilbesterol Plc should exportation or go into oerseas direct enthronization (FDI), as its under take over in Nigeria. This feasibility study tends to explore and look into the summary of the field concern system and cultural conditions prevalent in Nigeria and Germany plot of land assessing the linguistic rule and trends of manage and investment funds in both(prenominal) countries within the cover and botch celestial sphere with key emphasis on protection measures against imports and opposed investment in Nigerian coer and shove along pedal sector advise on whether Des Plc should export or go into strange direct investment, or combine the methods, believeing the rear of the step in stride administration for Germany and Nigeria. And, on the whole, it assesses the direct of hazard exposure and incorporate friendly responsibility (CSR) issues Des Plc of Germany whitethorn encounter in Nigeria as a foreign counter theatrical role in the Nigerian Oil and attack application.By the end of this research, the best schema go out allow been established for adoption taking into cognizance the recommended nuzzle considered optimal1.1 THE rock vegetable anoint AND ball up INDUSTRYThe r ock crude anele and gas industry is one of the largest and fastest growing industries in the world to sidereal sidereal day. Oil and inhering gas products touch our lives in count little elbow rooms every day. Together, they estimate for to a greater extent than 60 percent of our nations cypher. They fuel our cars, heat our homes and cook our food (EAPI, 2011). It whitethorn to a fault be worthwhile to add that Nigeria is the 10th largest anoint getr in the world, the third largest in Africa and the most prolific rock inunct color producer in Sub-Saharan Africa. And while the Nigerian frugality is much oft than non drug-addicted on its rock fossil crude cover colour sector which supplies 95% of its foreign ex form earnings, the German giving medication is trying to lower the level of dependency on the importation of the product (MIS, 2011).2.0 AN ANALYSIS OF THE NATIONAL BUSINESS SYSTEM AND heathen CONDITIONS2.1 NATIONAL BUSINESS SYSTEMThe national wrinkle system b stopping point explains international differences in soaked organisation and firm behaviour. The focus is on the coordination of economic activities and on governance issues. National differences in the organisation of firms and markets atomic number 18 explained by differences in culture and in formal institutions. The patronage systems approach, while originally rooted in sociology, adjustment magnitudely has become found on economic theory with slight emphasis on legal, semipolitical and educational frame campaigns (Lundvall 1999).Owing to the implication of the forgo analysis, an emphasis is dod on the pursuance institutional arrangements in the Nigerian political, economic and legal system with the analysis of the national furrow system in Nigeria in connection with Des Plc of Germany as a prospective entrant to the Nigerian business seat- as shown in the table belowDIMENSIONSBRIEF OVERVIEWPOLITICAL SYSTEM encounter ON BUSINESSThe Federal Re globe of Nige ria is governed in accordance with the nutrition of a Constitution. The most recent came into beingness in May 1999.The reinvigorated Constitution is based essentially on the report of a charge which had collated the views expressed by Nigerians in the 1995 constitution. Signifi muckletly, the Constitution affirms that Nigeria is one indivisible and insoluble sovereign state, whose constituent units be bound together by a Federal arrangement. It provides for a presidential system of political science in which thither is an Executive, a Legislature and a Judiciary, with each acting as a check and relaxation on the powers of the new(prenominal) cardinal arms. The Constitution notwithstanding provides for the operation of three tiers of administration, at the Federal, State and Local levels. These provisions argon binding on all authorities and persons through and throughout the Federation. This akin to the German political structure in basis of power distribution (TBTIG 20 11).However, this egalitarian system of politics has made the business space so coseismic for several(prenominal) eld owing to election irregularities and political manoeuvres.TERRORISM AND NIGERIAS suppurationTHE GOVERNMENT AND BUSINESSACTORS IN THE OIL AND GAS SECTOR act of terrorism has been on the subjoin since 2002 when a sect called Boko Haram started signalling disintegration of the Nigerian prudence. low past leadershiphip, the group demanded that Nigeria become an Islamic state but it is in a flash believed to be made up of several factions, with various demands which distort the political future(a) of the nation (BBC Africa)The Nigerian government has embarked on robust policies to privatise its sectors in the recent historic period and as much(prenominal), has boost efforts to invoke foreign investment (TBTIG 2011).SHELL, TOTAL, CHEVRON ar whatever of the key mashers in the oil and gas industry of Nigeria. They all need to thrive in the count of ethnic disparities because their major operations argon in the remote ranges of the famed Niger Delta component where militancy- oppositions are freehanded. In 2004, Niger Delta activists demanding a greater consider of oil income for locals began a campaign of violence against the oil infrastructure, threatening Nigerias most measurable economic lifeline (BBC Africa).DIMENSIONSBRIEF OVERVIEWECONOMIC SYSTEMIMPACT ON BUSINESSNigeria is the most populous country in Africa, with an ethnically and religiously different population of 140 one one trillion one million million million million million million. Nigeria has the sanction- superior schoolest GDP in Africa (US$166.78 one thousand thousand in 2007), reflecting the countrys substantial oil reserves. However, oil has proved a mixed favor for the country (CIA 2011). Nigerias economy has much in common with those of China, Brazil, Germany, Malaysia and India free first step is the norm. However, electricity and water last out to be partially government owned and chequerled. Outside of transportation and, perhaps, a small section of the industrial sector, the vegetable oil economy has very little linkage with Nigerian production (Daudu)The Nigerian government has a constitution which is to promote the commercialization, restructuring and privatization of certain government-owned enterprises. Privatization has also been come with by deregulation of various economic sectors to encourage private sector participation, notably in telecommunications, power, and downstream pet fiberum sectors. Most of Nigerias economic bodily function occurs in key metropolitan areas-Lagos, Abuja, Kano, Kaduna, Onitsha and Port Harcourt (online). Although petroleum continues to dominate the commonplace finances and foreign fill in re starts of Nigeria, the sector is, in reality, an enclave economy employing less than 100,000 Nigerians directly in production.The Nigerian government is restructuring and diversifying th e economic base of the economy and reducing the dependence on oil, and as such ordain save bearing on the industry prominence and strategic posture.ECONOMIC act OVER 12 MONTHSFOREIGN RESERVESIGNIFICANT arraySThe strongest murder of Nigerias non-oil economy allowed the economy to avoid a substantial slowdown in 2009 and it expanded by 4.9%, compared to the outgrowth rate seen in 2008. In April 2010, the outside(a) Monetary Fund (IMF) forecasted growth rate of 7% and 7.3% for Nigeria in 2010 and 2011 severally and said that the economy was recovering faster than it had to begin with anticipated. These forecasts are predicted on the belief that oil determines will remain relatively stable as the global economy recovers, and on the assumption that the truce with militants in the Niger Delta holds. Attacks by militants on oil infrastructure and kidnappings of oil workers cut exports sharply in previous years (CIA 2011).Nigerias foreign ex channelise reserves had fallen to US$40 .67 one million million million at the end of March 2010, down from US$42.4 trillion at the end of 2009, and from US$52.7 billion at the of 2008. Nigeria disbursed about US$3 billion from its oil windfall savings to the three tiers of government in February and March 2010, which contributed to the depletion of its foreign exchange reserves. evoke rate 6% (Central bank, April 2010)GDP growth 4.9% ( authoritative, 2009)Unemployment 4.9% (2007 est.)FDI US$71.59 billion (December 31, 2009, est)Nigerias economic decline, especially during the last 20 years is illustrated by the fact that per capita income, which was the US $1000 in 1965 had declined to the US $300 by 1998. Within some 18 years, Nigeria had declined from being a low middle-income country and amongst the fifty richest countries in the world to one of the 30 poorest (Daniel 2011).LEGAL SYSTEMNigerias legal system is based on English common law, Islamic Shariah law (in 12 Yankee states), and traditional law2.2CULTURAL COND ITIONSBusiness is an integral part of society and both influence each opposite. sociable-cultural environment refers to the influence exercised by certain social and cultural factors which are beyond the control of the business unit. Such factors admit attitude to work, family system, religion, languages, habits, preferences, tradition, value system, business ethics etc. Any change in cultural factors comparable education expunges the lifestyle and thinking of the mass living in society and thereby bearing on business activities in such society (Jain et al 2009). Managing the problems created by cross -cultural differences increases the traffic be of conducting international business activities. Consequently, if cultural differences between dominance employment partners are large, the economic and/ or strategic benefits of engaging in business activities must be large enough to offset the extra speak tos of doing business with difference cultures (McDonald and Burton 2002) .However, imputeting the importance of cultural implications in the business space into consideration, planning to do business in the Nigerian oil and gas industry will require a look into some cultural factors as followsTraditions and family system Oil and gas operations are prominent in the Niger-Delta region of the country as the major oil wells are found in such rural areas of the region. banding is the third-largest oil producer in Nigeria and one of its largest investors, spending more than than $3 billion annually. Chevron as a core player in the industry enters into serious business negotiations with traditional institutions in host communities onwards the commencement of oil explorations (Chevron 2011)Religion Nigeria has Christianity and Islam as major religions major religions. However, these religions suck up little or no effect on the intake of oil and gas products in the country.Ethnic Groups Nigeria as Africas most populous country, is serene of more than 250 e thnic groups the following are the most populous and politically influential Hausa and Fulani 29%, Yoruba 21%, Igbo (Ibo) 18%, Ijaw 10%, Kanuri 4%, Ibibio 3.5%, Tiv 2.5% (CIA 2011). quarrel English is the official language in Nigeria. The country is composed of diverse ethnic groups with several languages but three major languages (Hausa, Ibo and Yoruba) are intercommunicate in a general sense. Although, the Pidgin English is prominently used crosswise the nation because it remains the best way in which the uneducated ones communicate. This may constitute a major implication for Des Plc because German is the official language in Germany. So many stakeholders in the Nigerian oil and gas host communities do understand just the Pidgin English.3.0 TRADE figure of speech BETWEEN THE TWO COUNTRIES3.1 TRADE PATTER IN GERMANYGermany is one of the constituents of the European due north (EU) and also a atom of the WTO. The WTO has a single backing policy and tends to demonstrate the poss ibility of exploiting the Collective nature of the communitys membership in order to maximize the political gouges brought about by WTO approached sanctions exists and has been noticed the communities merchandise patterns. However, the ultimate Machiavellian approach might be to target just immediately those members states that do not benefit from WTO-incompatible measure of the community and are in favour of removing or amending it (Borght 2007).Developments in Germanys trade patterns in recent years have generally been conducive to the international use of the Deutsche mark on several accounts. First, Germany has become the worlds largest supplier of exports to the world, surpassing the USA since 1986 and enhancing the potential role of the mark as an invoicing vehicle. The bulk of German imports were raw materials particularly oil and gas from Russia and the bulk of German export were manufactured goods. Second, between 1986 and 1989 the share of specialized manufactured good s ( generally machinery and transport goods) in relation to total exports travel from 38 to 47 percent (ECB 2011).3.2 TRADE PATTERN IN NIGERIANigeria has eer reinforced commitment to better her business environment so as to integrate into the global economy. However, oil and gas have been Nigerias bulk of export (Iwela 2007). The linked States is Nigerias largest trading partner after the United body politic. Nigeria supplies around 11% of US oil imports and 4.5% of German Imports. Crude Oil and liquefied rude(a) gas (LNG) account for 98% of exports and around 80% of government taxation enhancement (Qfinance 2011).3.3 THE PATTERN OF TRADE BETWEEN GERMANY AND NIGERIANigeria and Germany have maintained a lucid trade relationship over the years. Meanwhile, recent trade statistics (2007) showed that Nigerias export to Germany sumed to 911,5 million Euro, a decrease of 35% compared to 2006. Imports to Germany have increased by 10% to 1083,3 million Euro.In 2006, the trade figur e was in favour of Nigeria, with exports to Germany amounting to 1402,6 million Euro and imports from Germany worth 973,9 million Euro. The different trade figure is mainly delinquent to lower oil exports to Germany and higher imports of semi-finished goods (Abah 2011).3.4 TRADE IN THE OIL AND GAS INDUSTRY BETWEEN NIGERIA AND GERMANYBritain was the chief beneficiary of Nigerian oil in the early years of the colonys oil industry. After gaining independence, Nigeria expanded its export to destinations to embarrass Western European nations, especially Germany and the United States (Levi 2004)However, the Germanys presence in the Nigerian oil and gas sector has declined over the years. Just as earlier stated that in 2006, the trade figure was in favour of Nigeria, with exports to Germany amounting to 1402.6 million Euro and imports from Germany worth 973.9 million Euro. The different trade figure for 2007 is mainly callable to lower oil exports to Germany.3.5 RESTRICTIONS AND PROTECT IONS ON TRADE IN NIGERIANFor two decades prior to economic reforms, Nigerias trade regime was viewed as convoluted, restrictive, and opaque (WTO, 2005). by-line the structural adjustment programme (SAP) in 1988, a seven-year responsibility register was adopted which significantly constrictd tariff averages. However, further tariff revisions were made, often in response to pressures from domestic lobbies. Since 1978, the government had also introduced policies on import prohibitions which banned selected products that were viewed as strategic for the economy or which needed infant industry protection. However, prior to the recent economic reform, Nigeria maintained a complex tariff structure consist of about 19 bands and 5,146 lines (at the HS-8 digital level), with tariff ranging between 2.5 and 150 percent. Nigeria liberalized its import tariff regime by adopting the special K External Tariff (CET) of the Economic Community of West African States (ECOWAS) (Iwela 2007).3.6 RE STRICTIONS IN THE NIGERIAN OIL AND GAS INDUSTRYOil and gas operations commenced in Nigeria efficaciously in 1956, with the first commercial find in that year by the then Shell DArcy. Before this time, that is, from November 1938, almost the undefiled country was covered by a concession granted to the caller to explore for petroleum resources. This dominant role of Shell in the Nigerian oil industry continued for many years, until Nigerias membership of the Organisation of crude Exporting Countries (OPEC) in 1971, after which the country began to take a firmer control of its oil and gas resources, in line with the practice of the new(prenominal) members of OPEC. This percentage point witnessed the emergence of National Oil Companies (NOCs) across OPEC member countries, with the sole mark of monitoring the stake of the oil-producing countries in the exploitation of the resource. Whereas in some OPEC member countries the NOCs took direct control of production operations, in Nige ria, the Multinational Oil Companies (MNOCs) were allowed to continue with such operations under Joint Operating Agreements (JOA) which softly stipulate the respective stakes of the companies and the Government of Nigeria in the ventures (Iwela 2007).4.0 EXCHANGE RATE government activity IN GERMANY AND NIGERIANumerous exchange rate regimes are practised globally, ranging from the uttermost(a) case of fixed exchange rate system, such as the specie boards and unions to a freely floating regime. In practice, countries tend to adopt an amalgam of regimes such as an adjustable peg, move peg, target zone/crawling bands, and managed float, whichever suit their peculiar economic conditions. (McDonald and Burton 2011). The exchange rate regime of Germany and Nigeria are considered as both countries use different currencies (naira and euro) respectively.4.1 EXCHANGE RATE political science IN NIGERIANigeria has switched between exchange rate systems over the years. During the first con tour (1970-1985), Nigeria operated a controlled exchange rate regime where exchange rate of the naira was pegged to the dollar. The second phase of exchange rate history in Nigeria began in 1986. undermentioned the oil glut of the early 80s, it became clear that Nigerian economy which depends on oil was not able to sustain the fixed exchange regime because its foreign reserves not only depleted but foreign debt also mounted. As an integral part of the Structural Adjustment Programme introduced in 1986, the country adopted a flexible exchange rate through the Second tier outside(prenominal) Exchange Market (Iwela 2007).The Nigerian exchange rate. The most critical are the creation of a high propensity to import because an over-valued currency processs import cheaper and promotes a balance of payments deficits. In the quest for a realistic naira 9 exchange rate, the CBN employs the Purchasing condition Parity ( palatopharyngoplasty) model as a guide to gauge movements in the nomin al exchange rate and to determine deviations from the equilibrium exchange rate. Although the PPP as a relative price does not provide clear criteria for choosing a base period and is generally criticized for its insensitivity to short-term policy actions, it nonetheless, provides a reasonable framework for a comparative analysis of trading partners achievements (Iwela 2007).4.1 EXCHANGE RATE REGIME IN GERMANY Germany operates a floating exchange regime system. Germany is much more competitive than its southern counterparts and this biggest economy in the Eurozone relies heavily on net exports and fixed investments while private consumption takes only a second place (ECB 2011).Growth in the Eurozone will remain sluggish and is expected to underperform the US in 2011. The economy in the 16-nation region is expected to grow +1.7% in 2011, followed by +1.8% in 2012, almost half of the growth in the US (ECB 2011).4.2 THE EXCHANGE RATE IMPLICATION ON NIGERIAN OIL AND GAS INDUSTRYThe di stinction of the Nigerian foreign exchange market needs to be highlighted. The countrys foreign exchange earnings are more than 90 per cent dependent on crude oil export receipts. The result is that the volatility of the world oil market prices has a direct impact on the supply of foreign exchange. Moreover, the oil sector contributes more than 80 percent of government revenue (CIA 2011).4.2 IMPLICATION FOR diethylstilbesterol PlcThus, when the world oil price is high, the revenue shared by the three tiers of government rise correspondingly and, as has been observed since the early 1970s, elicited comparable expenditure increases, which had been difficult to produce down when oil prices collapse and revenues fall concomitantly. Indeed, such unsustainable expenditure level had been at the root of high government deficit spending. diethylstilboestrol mathematical operation could, to a large extent, be tied to this economic phenomenon. In humanitarian, the removal of fuel subsidy signaled danger by the Nigerian masses as their standard of living is largely dependent on the oil and gas production and performance.5.0 CORPORATE SOCIAL RESPONSIBILITY ISSUES IN THE NIGERIAN OIL AND GAS INDUSTRYWith regard to driving forces for CSR implementation, philanthropy gets a high priority in Africa. This is ascribable to the huge socio-economic needs which have resulted in philanthropy becoming an expected norm in society. harmonise to the hypothetic findings, the benevolent motive has also the highest priority in Nigeria (Helg, 2007). DES Plc cannot over emphasize the issue of CSR in order to consider doing business in the oil sector of Nigeria as many players in the industry have had to put with this situation as much they can (Skjeraseth et al 2004). However, it can be said that CSR is viewed by host communities as ethical and object lesson obligation of investing companies and as such should not be undermined.CSR ISSUES IN THE INDUSTRYOVERVIEWRESPONSE MEASUREPLAY ERS EXPERIENCESWhile ExxonMobil and TotalFinaElf see their responsibility primarily in terms of providing affordable and environmentally clean fuel and investments in the countries and regions in which they operate, BP aims to be a force for good (BP, 2001), and Shell will strive to build a better world (Shell, 1999).Shell, Chevron and other players in the industry have suffered kidnap of expert rates over the years. Militancy has been on the increase in the Niger Delta region where exploration is prominent in Nigeria. The youth regard this approach as the only manner to benefit from their natural endowment since there are no other ways.Provision of employment, construction of roads and employment may be some available measures to keep the potential situation in check for DES Plc.HUMAN RIGHTSIn Nigeria, CSR is viewed as giving back to society and as such their ultimate right. In Nigeria, philanthropy is more than charitable giving. human immunodeficiency virus/Aids is an example wh ere the response by business is essentially philanthropic but clearly, in companies own economic interests.DES Plc can make provision to partner with human right organizations in order to effectively address potential issuesEMPLOYEES RIGHTThe Nigerian government has also through its NEEDS strategy (Nigerian National Planning Commission 2004) set the stage setting by defining the private sector role as by stating that the private sector will be expected to become more proactive in creating productive jobs, enhancing productivity, and improving the quality of life. Nigerians maintain that companies have a responsibility to do more than maximize profits and returns to shareholders? If they do, how utmost does it extend? Does it include the provision of good wages and working conditions for employeesDES Plc already has a good composition for job enhancement and upholding that corporate culture will position it against un cod pressure in this regard. fraternity INVOLVEMENTNigerian com munities tend to maintain a level of self-possession over natural resources and as such never want to part ways with what they consider as stake. There are Landlord groups formed to further strong opposition against whatever they perceive as injustice in oil explorationWorking on the CSR agenda in Nigeria in partnership with different stakeholders in the society. Involve community leaders in the determination of locations.ENVIRONMENTAL PROTECTIONMaintenance of the highest environmental standards. Oil spillway and gas flaring have been major issues hosts communities emphasize while maintaining a strong opposition against the investors.The introduction of local agricultural schemes to appeal to the bear upon public.SUPPLIER RELATIONSCompany relations with suppliers and contractors are always soi-disant and not viewed as a priority (TBTIG 2011).Multinational companies initiate co-operation with the SMEs in both the formal and informal sector for local supplies. To develop a joint corporate social responsibility (CSR) agenda for Nigerian and non-Nigerian firms. This could be explored by DES Plc while sourcing materials for local use in the region6.1 INVESTMENT METHODHowever, Nigerias libralised business regime and proactive reform measures are making it easier to do business in the country (TBTIG 2011). Owing to the preceding issues considered in this report, Foreign Direct investment will be recommended to DES Plc as a measure for expansion and penetrating into the Nigerian oil and gas sector. The Nigerian government has put incentives in place to attract foreign investors. Nigerias investment regime has been geared towards encouraging private sector involvement in the countrys economy. The corporate tax rate is 30% in all sectors except petroleum, which is taxed separately under the Petroleum Industry Bill. According to the World Investment Report 2011, prepared by the UN Conference on deal and Development, FDI inflows into Nigeria fell from $8.65bn in 20 09 to $6.09bn in 2011, with the blame placed on delays to the Petroleum Industry Bill (TBTIG 2011).6.2 MODE OF ENTRYHowever, The Nigerian government operates a deregulated society which could favour the brownfield approach. DES Plc can adopt this satisfactory means by merging and acquiring an asset of a firm in the industry owing to the market share core players like Shell, Total, Chevron etc already have in the industry.7.0 CONCLUSIONIn injure of the corporate social responsibility (CSR) issues identified in the Niger Delta region in recent years, Nigerias huge wealth of oil makes it singularly attractive to the international big league, most of which are represented in Nigeria.More recently, multinational oil companies have been focusing their attention on exploration projects. They and their likes promise much for the future of oil industry investment since they allow the oil majors to diversify their investment in the country and bypass the troubles of the Niger Delta region (TBTIG 2011).Nigerias liberalised business regime and proactive reform measures are making it easier to do business in the country. Germanys presence is scanty in the oil exploration space of Nigeria and as such that remains a quick and ample prospect to be explored by DES Plc taking the aforementioned policies into consideration.However, owing to the issues discussed in this report it is obvious that the most suitable form of investment is Foreign Direct Investment FDI by merging or acquiring existent firm in the Nigerian oil and gas sector.REFERENCESAbah M. (2011). 50 German Firms Storm Nigeria for Investment.http//www.jangola.com/index.php?option=com_contentview=articleid=14150-german-firms-storm-nigeria-for-investmentcatid=45businessItemid=87 Accessed 04/01/2012BBC News, Africa,http//www.bbc.co.uk/news/world-africa-13949550 Accessed 26/12/2011.Chevron (2011). Nigeria Highlights of Operations.http//www.chevron.com/countries/nigeria/ Accessed 03/12/2012Danial, B. J. ( 2011). The Nigerian Economy in the 21st Century.http//www.onlinenigeria.com/ economic science/?blurb=498 Accessed 26/12/2012Dauduhttp//www.dawodu.com/okigbopanel1b.pdfEAPI Energy API (2011). About Oil and inseparable Gas.http//www.api.org/aboutoilgas/ Assessed 17/12/2011.ECB European Central Bank (2011). Key Interest Rates for the Euro Zone.http//www.ecb.int/stats/monetary/rates/html/index.en.html Accessed 15/01/2012.Helg, A. (2007), Corporate Social Responsibility from a Nigerian Perspective.http//gupea.ub.gu.se/bitstream/2077/4713/1/07-23.pdf Accessed 10/01/2012Iwela, O.U. (2007). Nigerias Economic ameliorate Progress and Challenges. The Global and Development Programme. Brookings Institution, Washington DC http//www.brookings.edu//media/Files/rc/papers/2007/0323globaleconomics_okonjo%20iweala/20070323okonjo_iweala.pdf Accessed 30/12/2011.Jain T. R., Trehan M., Trehan R. (2009). Business Environment. FK Publications.http//books.google.co.uk/books?id=Y77EEOe6cTECpg=PA15dq=cultural+condition s+in+business+environmenthl=ensa=Xei=aG4DT4KEKciEOr-ovLMBsqi=2ved=0CF8Q6AEwBgv=onepageq=cultural%20conditions%20in%20business%20environmentf=false Accessed 27/12/2011.Kim van der Borght (2007) WTO Obligations and Opportunities Challenges of Implementation. Cameron May LTD.http//books.google.co.uk/books?id=rMRbKGyEp_gCpg=PA263dq=germany+and+wtohl=ensa=Xei=ZoMDT5rqBYfI8gPUsZ3HAQved=0CEIQ6AEwAgv=onepageq=germany%20and%20wtof=false Accessed 04/01.2012.Lundvall, B. (1999). National Business System and National Systems of Innovation.Online internationalistic Studies of counselling Organization, Vol. 29, no. 4, pp. 20-21. Available athttp//www.questia.com/googleScholar.qst?docId=5001824019 Accessed 20/12/2011.MIS Mbendi Information run (2011). Oil and Gas in Nigeria- Overviewhttp//www.mbendi.com/indy/oilg/af/ng/p0005.htm Accessed 20/12/2012.Mcdonald F., Burton F. (2002). International Business, G. Canale C. Italy.Patricia Levi (2004). Cultures of the World Nigeria. 2004http//books.goo gle.co.uk/books?id=Q_lCFcabj0MCpg=PA40dq=nigeria+oil+export+to+germanyhl=ensa=Xei=b7UDT5nlE82r8AOx3tHSBwsqi=2ved=0CFUQ6AEwAwv=onepageq=nigeria%20oil%20export%20to%20germanyf=false Assessed 28/12/2011.Qfinance (2011). The Nigerian Economy.http//www.qfinance.com/country-profiles/nigeria Accessed 01/01/2012Skjrseth, J. B. Skodvin, T. (2003). Climate Change and the Oil Industry Commonproblem, varying strategies. Manchester Manchester University Press.http//www.fni.no/docpdf/FNI-R0704.pdf Accessed 15/01/2011.Shell (1999). People, Planet and Profits. An Act of Commitment. Report. London.TBTIG The Business, Trade and Investment legislate (2011). Corporate Nigeria Incentives for Investors http//www.corporate-nigeria.com/index/fdi/incentives_for_investors.html Accessed 3/01/2012.WTO World Trade Organization (2005), Trade Policy Review of Nigeria, Geneva World Trade Organization.The oil and gas industryThe oil and gas industryINTRODUCTIONThe oil and gas industry is essential to survival of the economy for different purposes. The industry provides energy and chemicals to the economy vital for transport, companies and household in U.K. Through the industry the government earn valuable and substantial tax and export revenue to upkeep the economy. The figure below tells it own talev Three lodge of the UKs primary energy.v Employment for more than 380,000 people.v Has invested 150 billion over the last 25 years.v Has paid 150 billion in taxes since the 1970s.v Adds 4 billion a year to balance of payments.v Accounts for one-fifth of UK annual investment. (oilcareers.com)This primary aim of this report is to consider key environmental factors that are currently makeing the industry. This will be done through expletive (Political, Environmental, Social and Technological) analysis. This report will also take into consideration rationale of industry and companies chosen for this project, in addition a number of financial ratios will be considered to determine the performa nce of the companies in the industry. This will help in establishing where each company stands in relation to their competitors as well allowing the strongest and weakest companies to be determined.rationale FOR INDUSTRYThis Oil and Gas industry contribute significantly to the economy. The rationale based on this industry choice is to gain an insight to how prepared companies are regarding the risk posed by humor change. According to a report by Palma (200*) she explored increasing pressure in the Oil and Gas industry showcase from climate change. She indentified such risk asDamage to corporate reputation As the intelligence and awareness of the distresss posed by climate changes increases and develops, failure to observe and account for the impact of climate change on social and environmental resources is progressively likely to damage companys status and reputation.increase pressure on water resources There are growing concerns regarding changes in rainfall patterns. This has led to water shortages, poor water quality and drought and flooding has significantly increased the demand for water. For companies that rely heavily on water, increase competition for available resources could create operational problems for companies.Drop in value of financial assets In order to meet the economy increasing demand for energy, oil and gas companies need to secure further investment for exploration, production, and manufacturing. Shareholders are placing more and more importance on the business impacts of the change, as risk impact cost and revenue drivers. It is probable that damages cost could rise due to greater chance of visible plant damage because of weather pillowcases.Dealing with such risk is not as easy as it may sound, some companies profit may decline due to the necessary changes in order to combat climate change. It will take a collective effort as well as several(prenominal) effort for the industry to maintain its status as one of Britains stronges t industry.RATIONALE FOR COMPANY CHOICESThe plat below shows that the companies are similar in size, employees active and turnover. This makes is easier for comparability purposes in finding out how each company are performing. In addition all companies chosen are in the FTSE 350.JKX Oil and GasJKX Oil and Gas plc principle activity is developing and producing oil and gas reserve, which is conducted through there subsidiary undertakings. JKX main principle interests are located in Ukraine and in Russia, with further interest in Georgia, Bulgaria and United States. As of December 31, 2008, the Company drilled two exploration wells. As of December 31, 2008, the Company acquired 25% interest in the Svidnik, Medzilaborce and Snina from Aurelian Oil Gas plc.Cairn EnergyCairn energy Company is an independent public oil and gas exploration and production company. Together with its subsidiaries, the company engages festering and the production of oil and gas largely in countries such Ban gladesh, India, and Nepal. The company also operates in Tunisia, Australia, Spain and Papua New Guinea. The companys headquarter is based in the United Kingdom at EdinburghTullow Oil PlcTullow Oil plc operates as an independent oil and gas exploration company. The company has over 100 licences in more than 20 countries.The group accomplished a 77% exploration success rate with 17 out of 22 successful wells in 2008. currently in 2009, Tullow has drilled 12 successful wells out of a total of 14.FINANCIAL RATIOSFinancial ratios are calculated to provide a quick and relatively easy means of measuring the financial wellbeing of a business. Ratios assist to highlight the financial strength and weakness of a business. pest ANALYSISIn order to understand factors that affect the industry, the PEST analysis could offer some help. PEST analysis helps is the analysis of external factors which are beyond the control of the companies and these factors sometimes could be a potential treat. More over these factors can lead to new opportunities being created for companies to explore.Political cistronPolitical decisions made by the government will definitely affect the oil and gas industry in one shape or another (more (directly or indirectly)). One of the main political talking points is the effect the industry has on climate change. According to Chapman (2009), companies do not actually recognize the effect the industry and company has on climate change. locomote have and are been taking to ensure that companies recognize changes in climate. The U.K government not long ago, update the Petroleum Act, tightening the law on de missioning, making it adamant and compulsory that companies take into account the impact of climate change. The government realizes that actions and policies are needed in order for the industry to proceed providing energy for the economy while the industry reduces the amount of emission they produce and also providing new powerful energy option. In 2000, the royal commission proposed that U.K would need to reduce it emission of CO2 by 2050 and if possible to reduce it by 80% by 2100. This was an international agreement proposed in other to prevent concentration of carbon dioxide from rising above 550 parts per million in volume. At 2000 it stood at 380 and rising, moreover in it would be impregnable to assume that it has risen significantly.The political factor takes into consideration political stability, set regulations, industrial safety regulations, tax rates and incentives and many more.An effective way in which government believe would encourage the industry to limit the amount of pollution they create is the carbon tax charge. The purpose of this is to lower babys room gas emission produced by the industry. Similar to this charge is the climate change levy (referred to as tax on energy). This was put in place on the 1st of April 2001. The importance of the tax is to encourage change in the industry. This has persuade d the industry to start looking new renewable energy source or risk having to pay additional cost of the levy on their energy bill. The levy applies to electricity, oil and gas industry, if a company produces the energy the use from renewable energy source they will be palliate from this levy. Furthermore companies that agree to the governments emission target will be condition an 80% discount.Economical FactorsThe economical factor takes in consideration of such issues as exchange rates, economic growth rate, unemployment rate, inflation rate and price in oil and gas. The Oil and Gas industry is one that holds a stronghold in the world and the U.K economy and it provided 450,000 jobs in UK in 2009. It diagram below an increase in employment from 2007 and to 2008. Unfortunately the increase from 2008 to 2009 could not be shown has it had not been inputted. But from the diagram, it shows signs of improvement since 2004 to 2008.The economy in U.K receives a massive boost when there a re increase of activity drill in respect to Oil and Gas. As by (========) Oil and gas production contributes massively to the government through tax revenues with a report 271 billion being paid over the last 40 years (2008 money). Unfortunately high price for oil in the modern day is major problem for economies around the world (both rich and poor). The reality is that in many countries including UK, oil is becoming unaffordable for more and more people. In the financial last year (2008-2009) 12.9 billion was contributed by the industry in terms of tax revenue, this was likely due to high oil and gas prices. If oil and gas price continue to increase this could change the balance of trade between countries and exchange rate. This increase would cause a decline in the balance payment of net oil-importing countries thereby putting downward pressure on exchange rate therefore import become more expensive and export less valuable which leads to a drop in national income.Social FactorsT here different social factor affect the industry such as customer buying patterns, ethical issues and the environment. collectible to very nature of the industry, the environment in real danger from cut and transportation process. The chemical used in drilling can be harmful to the environment. The burning of oil as fuel creates destruction, whereby it contributes to such problems as global warming and acid rain. In addition, forest are now at major risk as there are increase pressure applied by the oil and gas industry leaders pushing for new drilling in sensitive and regions which were once savedTwo main factors affect the industry are major event and consumer attitudes and opinion. Consumer attitude and opinion are changing in the modern day environment. More and more people are moving to solar energies rather of using fuel or gas, this is called the GREEN CULTURE. There are more concern for the environment now than ever, prompting the search for alternatives. The government peg down to have in place coal and gas fired and atomic power in place by mid 2020 as alternatives.Furthermore, employees wellness and safety is another political talking point. Due to the volatile conditions in which employees have to work in and also sub standard physical asset could potential have a negative impact on the health and safety of the employees which would therefore compromise the employer and public liability insurance cover.Technological FactorTechnologies are essential to oil and gas industry, due to the harsh and demanding environment we currently live in the industry leads in technological innovation in order to overcome challenges of recovering oil and gas from difficult reservoirs and deeper waters. For the industry, the need of need technology is need in order to discover new ways of reducing production cost, improving performance and making marginal fields economic to develop. The effort put in by the industry to develop new technologies for locating and pro ducing oil and gas has led to various inventions and technical advances that have been used elsewhere.An area in which the government and the industry highlight as potential growth area is in the field of Carbon Capture and Storage. European Union alongside with other countries has recognised this potential and legislation have been put in place and funding made available in order to finance demonstration plant in Britain and other countries. The industrys knowledge of subsurface geology, reservoir management and pipeline transport will undoubtedly play an important role in making this fledgling technology work effectivelyAdvantages of PESTEasy to doThe analysis provides a deeper understanding of the wider business environment in which they operate.Provides an understanding of the wider business environment.Raises potential threats to a projectThrough this analysis organisation can foresee future difficulties and take a course of action in order to minimise their effectIt could he lp a company realise opportunities and utilise themDisadvantages of PESTCould take considerable time to doVariable pace of change could make it difficult to predict development which may affect a company in the futureThe analysis might be based on unfounded hypothesis