Implication Of Integration And Diversification On Oil And Gas Industries

Discussion

Discuss about the Implication of Integration and Diversification.

This editorial essay aims to analyze the current situation of an OECD (Organization for Economic Co-operation and Development) country, which has recently found out the oil reserve in the remote frontier. This editorial essay is written for The Voice of Enterprise. This is a pro-business daily new publication, which is very famous in the international market, for its commerce and finance journalism.

As per the current situation, the country has discovered oil reserve in its remote frontier territories. The government of the country believes that if they use the new oil reserve, then the country will not require importing oil from the foreign countries. At the same time, the export of the country will increase. Therefore, it can be said that the government of the country has good opportunity of improving the economic condition of the country. The newly discovered oil reserve will help the country improving the standard of living of the people in the remote area.  This is because if the government builds new oil station at that place, then employment opportunity will be generated and the income level will grow up. As a result, the living standard will be improved (Nowosiwsky et al., 2016).

If the scenario is analyzed from the country’s overall financial point of view, then it can be identified that by utilizing this particular new oil reserve, the country can enhance its level of exports. Increase in export level means the income of foreign currency of the country will also increase (Do, Bhatti & Shahbaz, 2016). As most of the imports of the country in current years is related to the oil, the invention of the new oil reserve will decrease the import level. Increase in export and decrease in import will help the government of the country maintaining the balance in the economy. The government will have enough financial backup for further development of the country (Nowosiwsky et al., 2016).

However, in the current scenario, the government of the country wants to allow only the major oil companies to access the reserve. If this happens then it is possible that the competition among the companies will increase (Paramati, Apergis & Ummalla, 2017). At the same time, if the government will allow only the major oil corporations for the access of the new oil reserve, the small oil corporation will face huge loss. This will negatively affect the financial health of the small oil corporations. Ultimately, the people or employees, who work at the small oil corporations, will suffer from scarcity of income.

Conclusion

In the above analysis, it has been identified that the new oil reserve will help the country developing its employment rate and balance of payment. Along with that, for major oil corporations, the new oil reserve will be very profitable. The major oil companies can easily increase their revenue as well as profit level by increasing the production. However, there will be negative impact of this particular discovery because the small oil companies in the country will not get much scope to access the new oil reserve. Hence, it can be recommended that the government can proceed to the project but it must provide the scope to the small oil companies to extract oil from the new reserve.

This particular editorial essay concentrates on the recent situation of the OECD country, which has discovered the new oil reserve (Refers to appendix 1). The essay is written on behalf of the editor of The Age of Reason. The Age of Reason is a popular news publication, which focuses on different social, ethical and environmental activities and issues.

The OECD country, which has recently discovered the new oil reserve in its remote frontier, is till now dependent on the Middle-East and OPEC as well as non-OPEC countries for the oil import. The government of the country has identified that if they can use the new oil reserve, then the country will be able to export the oil for next 15 to 20 years. However, the main problem in utilizing the new oil reserve is establishing the pipeline to ship the crude to the refineries. The government has identified that if the pipeline is established, then that will negatively affect the life of the native indigenous people.  It has been found out that if the pipeline is constructed, then the heritage sites, where the native people come for different festivals, ceremonies and prayers, will be destroyed.

From the ethical point of view, it can be said that the implementation or construction of the new pipeline is not right because it will destroy the heritage of the place (Kriegler et al., 2016). However, if the matter is analyzed from the social point of view, then it can be said that the native people in that place, who are very poor, will get the employment opportunity. The new employment will improve their standard of living. Moreover, as the government has promised that the native people will get better place to live, scope of education, safety and security, healthcare opportunities and a modern life style, the new pipeline construction can help the people having a better standard of living (Al-Maamary, Kazem & Chaichan, 2016). However, the government must consider the views and ideas of the native people and nothing should be done forcefully. If the government listens the views of the native people, then the government can better understand the actual problems that the native people will face if the pipeline is established.

Reference list

Apart from the social and ethical point of views, the situation can also be analyzed from the environmental point of view. If the situation is analyzed from the environmental point of view, then it can be said that the establishment of the new pipeline and oil station, will require destroying the greenery in the place, which may destroy the balance in natural environment (Saboori, Sapri & Bin Baba, 2014). Moreover, after the establishment, different activities related to the oil drilling and refining will take place, which may again negatively affect the natural environment (Reboredo & Rivera-Castro, 2014). However, if the government of the country can introduce such an advanced technology that can reduce the level of pollution and environmental de-gradation, then the new oil reserve can be helpful for the overall development of the country (Raufflet, Cruz & Bres, 2014).

Conclusion

The analysis in the essay has indicated that from the ethical point of view, developing the new oil reserve and pipeline will not be acceptable. However, as the people in that place are very poor, the government can improve their lifestyle by providing them new employment opportunities and modern lifestyle through the establishment of the new oil station and pipeline. So, from the social point of view, the project is acceptable. On the other side, the possibility of environmental de-gradation is there in the new project, which can be handled if advanced technology is used. Hence, it is recommended that the government can establish the pipeline and start the oil extracting after discussing the situation with the native people. The government must consider the benefits of the native people and must use advanced technology for extracting the oil and establishing the pipeline.

Reference list:

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Al-Maamary, H. M., Kazem, H. A., & Chaichan, M. T. (2016). The impact of oil price fluctuations on common renewable energies in GCC countries. Renewable and Sustainable Energy Reviews.

Do, H. Q., Bhatti, I., & Shahbaz, M. (2016). The Implication of Integration and Diversification on'Oil and Gas' Industries Among ASEAN Countries.

Kriegler, E., Bauer, N., Popp, A., Humpenöder, F., Leimbach, M., Strefler, J., ... & Mouratiadou, I. (2016). Fossil-fueled development (SSP5): an energy and resource intensive scenario for the 21st century. Global Environmental Change.

Nowosiwsky, A., Moore, J. D., Hancock, D., Balge, M. Z., & Krieger, G. R. (2016, April). Development of an Integrated Community Health Program for a Large Oil and Gas Project. In SPE International Conference and Exhibition on Health, Safety, Security, Environment, and Social Responsibility. Society of Petroleum Engineers.

Paramati, S. R., Apergis, N., & Ummalla, M. (2017). Financing clean energy projects through domestic and foreign capital: The role of political cooperation among the EU, the G20 and OECD countries. Energy Economics, 61, 62-71.

Raufflet, E., Cruz, L. B., & Bres, L. (2014). An assessment of corporate social responsibility practices in the mining and oil and gas industries. Journal of Cleaner production, 84, 256-270.

Reboredo, J. C., & Rivera-Castro, M. A. (2014). Wavelet-based evidence of the impact of oil prices on stock returns. International Review of Economics & Finance, 29, 145-176.

Saboori, B., Sapri, M., & Bin Baba, M. (2014). Economic growth, energy consumption and CO 2 emissions in OECD (Organization for Economic Co-operation and Development)'s transport sector: a fully modified bi-directional relationship approach. Energy, 66, 150-161.

Schneider, L., Haberle, S. G., Maher, W. A., Krikowa, F., Zawadzki, A., & Heijnis, H. (2016). History of human impact on Lake Kutubu, Papua New Guinea: The geochemical signatures of oil and gas mining activities in sediments. Chemosphere, 148, 369-379.