International Energy Policy
The world is endowed with abundant natural resources in different quantities. However, there is a huge inequality in the distribution of these natural resources such that some regions have more deposit than other regions. This makes it complicated to formulate an energy policy that is acceptable by all stakeholders. Energy and climate policies are somehow interrelated, since energy uses have a direct impact on the greenhouse gas emissions and environmental pollution. Energy policies are being implemented at both local and international level due to heightened awareness of the negative impact of environmental degradation. The energy regulation policies are drawing up the framework for production, regulation, and distribution of safe energy that is sustainable in the long run.
Factors affecting the content of International Energy Agreements
Due to the high stakes involved, International Energy Agreements are not made in a vacuum since a number of factors always come into play. The safety of the people is always given the first priority since it forms the basis of the existence of such agreements (Yi & Richard, 2014). In addition, the safety is also determined by how a particular government addresses the issue of the energy development, which is accompanied by its consumption, distribution and production within their local energy policy. The factors that surround International Energy Agreements are mainly focused on energy, security, economic development, and environmental protection.
There are various factors that accompany a national energy policy, such as the extent of the energy self-sufficiency and the economy of a particular region (Vijjhala, 2006). Another factor is the consequences that will be evident in the future following the foreign policies that are embraced in the country together with the security in the nation. There ought to be specific mechanisms that need to be put in place to implement the total policy like the incentives, manufacturing standards and the taxes charged to help the policy imposed to work out as required (Yi & Richard, 2012). How a national policy drives province and the municipal functions inside it is another factor that is within the energy policy that needs to be considered during policy formulation (Stoutenborough& Mathew, 2008). The safety of the environment is always given priority since no generation want to bequeath a bad environment for the future generation. How future energy will be consumed is another factor that is highly considered within an energy policy since, it aid s in giving the calculations of the population fraction that will be necessary and accepted to endure energy poverty. The place where the future energy will be derived is an energy policy factor that has been put in the front line because it gives the statistics on the usage of the future energy among many sectors of the given country (Shipan& William, 2001).
Framework for energy policies
According to Rabe (2004) and Menz (2005), the framework for energy policies is closely tied with the factors affecting climate change. Therefore, the framework for energy policies are highly determined to make the economy and the energy system more competitive, secure, and sustainable in order to bequeath no harm to the present and coming generation. The European Union is one of the organizations that have been in the forefront in formulating energy policies for its stakeholders (Radolph& Gilbert, 2008). An integrated energy framework developed by the EU is designed to coordinate the energy approach to all its members’ states so that they can be energy efficient by the year 2030. Most of the energy frameworks are highly concerned with the low carbon economy by focusing on the use of renewable sources of energy (Newel et al, 2006). Therefore, these frameworks are designed to build a competitive and secure energy system that creates new opportunities for reliable and increased security for energy products. One of the binding targets of the EU energy policy is to reduce the greenhouse gas emissions by about 40% by 2030 and to about 80% by the year 2050 (Lyon &Hitao, 2010). This regulation is a cost-effective method that will ensure that coal dependency is maximally reduced. Under this arrangement, renewable energy will take the center stage in the transition towards a more secure and sustainable energy system that can be depended on with less environmental risks. The energy efficient directive ensures that proposed new buildings reduce their original energy consumption by 50% than they did in the last three decades (Kemfert, et al, 2014). In this regard, buildings should be designed such that they utilize more of natural light in order to conserve on energy usage. The energy policies also propose a new governance framework that is based on the national plans for competitive, secure, and sustainable energy utilization in order to reduce the negative impact to the environment. Energy policies are also effective in promoting low carbon investment by promoting the use of ecofriendly sources of energy (Kahn, 2000).
Challenges and issues facing oil and gas industry
Political risk is a challenge that is highly evident in the oil industry and this happens because; the oil company is known to be covered by a number of regulations, which limit where and when the oil extraction is done (Hughes, 2010). Countries whose political systems are very stable are at high preference by the oil company despite them sometimes going to countries where oil is available, even though they are not stable in their governance. This may lead to nationalization issue and the shifting of the political ideas, whichmay contribute to the good will of the government changing its policies. Oil Company is also known to well carry out in countries that have a reputable history of granting and enforcing long-term leases in the industry.
Geopolitical risk is another challenge that is very evident in the oil industry, which implicates the difficulty of the oil distraction and the possibility of its access (Fabrizio, 2012). There is fear of smaller deposits in the reserves which is created by the geological risk: hence, geologists work really hard to minimize the risk. They are required to test often so as to ensure that the risk is maximum reduced so as to be able to reserve the level of estimates and be able to express the level of confidence in the findings.
Price risk is another challenge experienced in the oil company whose primary factor is to decide whether a reserve is economically feasible. In the case where the project has just begun, then the price risk is a constant companion because unconventional extraction costs more than a vertical drill down to a deposit (Delmas& Maria, 2011).
A lot of capital has to be invested in an ongoing operation for it to be able to work out well whereby, when the price changes, then there is a lot of difficulties which are experienced at the given time. However, it is economically friendly to ensure that all financial crises are avoided at all cost together with the macro economic factors which negatively affects capital. In a case like this, the company is affected as an individual entity and the usual prices tend to be interfered with.
In any company there are obviously the best and qualified workers whom the company can’t afford to lose them. The retaining of such workers by the industry, lead to the rise in cost as they struggle to add another cost to the overall picture in the outside business world. This also contributes to the industry having few workers all time following the issue of cost which is capital-intensive. If a company has got enormous regulations and a difficult drill, then the project becomes more difficult to handle since, the cost incurred is too high to be sustained. The worldwide production of oil is beyond a company’s control following the costs that have to be incurred in the production process.
SWOT analysis of the Hindustan Company (India)
One of the greatest strength of this oil and gas exploration company is their strong collaboration with their partners, which enables them integrate their activities and increase their success in terms of oil exploration. In these collaborations, this company and other companies within the same industry are able to share technical know-how and increase their expertise in the management of oil and gas exploration. The Hindustan oil and gas exploration company also has a very strong financial base that enables them to finance and carry out their exploration without any financial let down. Due their strong financial bases and brighter prospects in their duties, this company is in a strong position to get financial credit from various sources that puts them in a good financial position (Carley, 2009). Hindustan Oil and Exploration Company also have a record or heavily investing in the Corporate Social Responsibility (CSR) activities that puts them in good relationship with their surrounding communities. These CSR activities prevent any possible rebellion from their surrounding communities and this makes them able to carry out their financial obligations with a lot of ease. In addition, Hindustan Oil and Exploration Company have a strong brand name and reputation due to its success in the exploration industry over the years. Such a good brand enables them to get bigger contracts that in turn enable them to fetch good revenues from such contracts. Hindustan Oil and Exploration Company is a pioneer in high technology and offshore drilling that further enables them to get very big contracts both at home and at international levels. Strength of Hindustan Oil and Exploration Company is that it is a leading company in the 3D seismic data exploration that puts it a step ahead of its peers in the industry.
One of the biggest weaknesses of Oil and Gas Exploration Company is the excessive dependence on one single asset, which is oil and gas that is constantly depleted with time. Therefore, the future of this company and other related company seems uncertain these natural resources may be depleted with time (IEA, 2012). Another weakness of this company is that lots of capital is needed to finance the high initial labor and machinery required during the exploration process.
New opportunities keeps merging for oil and gas exploration companies since driller are always finding new basins rich with these natural resources. These new basins provide more jobs for such companies to continue reaping big profits after scooping such contracts. Since most countries are embracing industrialization, the future of oil and gas exploration companies looks brighter since more energy, in terms of oil and gas, will be needed to finance such industrialized states. Currently, there is a big gap with respect to demand and supply of the oil and gas resources and this means that more works still needs to be done by these companies to meet such growing expectations.
Most of the oil and exploration activities are carried out in countries with greater political instability; the success of such exploration is likely to be tampered with before the end of their contracts. Due to high stakes involves, there is always a high probability of conflicts arising from oil and gas exploration activities and this may threaten the success of such companies. In addition, the price of oil and gas products are highly tied to the economic stability and fluctuations in the global prices and this has a direct impact on the profitability realized from the exploration of these minerals. Recently, there have been heightened environmental concerns both at national levels and international levels. Therefore, this is likely to affect the oil and gas exploration since most initiatives by the government are headed to providing subsidies on renewable energy sources. This is likely to reduce the demand of these commodities, which will ultimately result into reduced profitability by these companies.
Due to increased environmental concerns, there is a considerable increase in energy relatedpolicies at both national and international levels. The SWOT analysis of the Indian exploration company shows that the energy exploration activities are constantly under threat, despite the opportunities represented by the new exploration sites. This is because most environmental policies are geared towards the increased introduction of environmentally friendly sources of energy that I sustainable in the long-term.
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