The petroleum industry is a sector of high-importance for a fact that the business needs of Oil & Gas industry are fulfilled by it. The incrementing consumption of Oil & Gas in its different producible forms requires the worldwide oil & gas companies to remain engaged in the production works (Jafarinejad 2016). However, safety issues have always remained a concern for the petroleum industry and also remained in continuous criticism for producing the adverse impacts on communities where the businesses happen (Oladeji, Ikpefan and Olokoyo 2015). This study is aimed at identifying the significance of safety needs within the downstream division of the petroleum industry. It also reviews three important factors of PESTLE and its impact on ‘Saudi Aramco’. It also identifies the key areas to address in context to the health, safety and environmental issues of the indigenous people and their communities.
The significance of ensuring Health and Safety during activities within the downstream division
The whole supply chain in the petroleum industry is divided mainly in three parts such as upstream, midstream and downstream. In the downstream, businesses such as refining, logistics and retail & distribution are taken care of. Once, oil & gaseous products are ready to serve to its end-user, it is being transferred to the distribution and retail facilities either through pipelines and shipping. Shipping itself is done by various means such as different kind of ships, oil tankers and others. The end-user receives the different forms of petroleum products in petrol stations, convenience stores and other formats of retailing (Ambituuni, Amezaga and Werner 2015). Petrochemical plants, retail stores and other facilities are generally the part of a downstream business. Hence, those who are living close to the gasoline stations and the transport area are at danger. They do not also have the safety measures with them which could protect from any unpredicted blasts or accident cases.
Health and safety issues are the very common concerns on the different levels of the downstream division. It is because of the flammable chemicals, powerful equipments and processes that are conducted at high pressures. Such practice can potentially lead to deadly and hazardous incidents. All who are working on sites, facilitating the transport, living near to petrochemical plants and visiting the petrol stations are in danger (Abdel-Shafy and Mansour 2016). In fact, addressing the potential incidents has always remained a biggest challenge to the petroleum industry. The types of casualties can be of different forms which also require the effective repairs to be done on each level. For example, transportation is one the zones which is at the maximum possibilities for fatal accidents. Transportation is facilitated through the shipments of oil and natural gas to the distributors and retail stores. The next severity level is the contact injuries where indigenous people living close to the petroleum sites and also the workers are commonly at threats. The third most severity level zones are the petrol and gasoline stations. It is followed by exposure to hazardous environments, falls and others (Boughaba, Hassane and Roukia 2014).
The severity level is so high that it is important to adopt the safety measures and implement it appropriately to have a fight against the levels of severities. However, it does not look easies due to the overlapping between institutions and laws.
A detailed review of 3 PESTLE factors and their impact on the success of Saudi Aramco
Several factors can affect the success of ‘Saudi Aramco’; however, this section is mainly aimed at dealing with three of PESTLE in detail.
Reviewing the factors
Political: The lower prices of per unit barrel of oil which lasted until recently had affected the NOCs especially the Saudi Aramco. The US emerged as the new largest producer of oil & gas due to the implementation of latest technologies. Consequently, largest exporting countries such as the Kingdom of Saudi Arabia and Venezuela were being affected massively due to the reduced oil prices (Fesharaki and Isaak 2016). One of the major reasons for the fact is the political strategies of Mr. Trump which caused a shift in price to the North (Bjola and Manor 2018). It is already stated that an overlapping of institutions and legal policies have so far affected the petroleum industry’s capability to improve its safety measures. An unclear collaboration between the federal and state level governments has also remained a reason for it (Cheon, Lackner and Urpelainen 2015).
Technology: The resurgence of the United States as the largest supplier of petroleum products is because of its advancements in terms of major shale fields and the use of advanced technologies in drillers. It used technologies to squeeze out oil and natural gas from the rock formations. The capacity to pump a number of barrels of crude oil a day has consequently increased (Kuppusamy et al. 2017). On the other hand, the demands for crude oil and natural gas have increased in recent times which mean a possibility for a reduction in the supply chain operational costs (Dreger et al. 2016). It also means that countries with larger production capabilities will be in more advantage. Few of the latest technologies such as ‘Artificial Intelligence’, 3D-scanning technology, the Internet of Things (IoT), ‘Cloud Computing’ and ‘Advanced Robotics’ are the emerging trends (Yao et al. 2018). These are some really good opportunities for firms like ‘Saudi Aramco’ to have a resurgence which until recently had been affected from the oil-price drops.
Environmental: The downstream petroleum division has always remained associated with a several environmental issues. Distribution activities rely heavily on fossil fuels which are a good resource to the greenhouse gas emissions. The list of emissions includes sulphur oxides (SOx), carbon dioxide (CO2) and nitrogen oxides (NOx). The emission is responsible for some occasional hazardous substances such as the groundwater contamination or solvents from the production and transportation. Gasoline and Petrol stations are notorious for releasing the volatile organic compounds (Jafarinejad 2016). These all suggest that person in danger will be those working at the various Gasoline & Petrol stations and also those residing by the nearby areas of petrochemical & refinery plants.
Impact on the success of Saudi Aramco
The surge in oil price can positively impact Russia and China. Russia will have the benefits from international markets. China can buy the crude oil at better deals from Iran and act as insulate to the trade after the secondary American sanctions. Saudi Arabia can also now rely on increasing the exports of crude oil and related products to the international markets (Fang and You 2014).
‘Saudi Aramco’ is into the transformation process to attain more agility and responsiveness into the process. Knowledge management and technologies are the emerging concerns. Downstream business will be boosted with strong R&D efforts. New business lines will be developed through a number of acquisitions and investments (Arab News 2018). The changes are expected to enhance its ability to produce much and perform better at both the upstream and downstream divisions. Business at the international markets will also improve. An economic instability will expectedly be attained which will positively impact Aramco in years to come.
Key areas need to address in regards to health, safety and environmental issues affecting the indigenous people and their communities
The petroleum industry has remained associated with its adverse impact on the indigenous people and their communities. Such an adverse situation is due to the contamination of oil & natural gas with soil and waters. It is impacting their food resources and the health. They have been facing these issues for the last forty years. Amazon is one of the regions which are hardly affected from such adverse impacts. As claimed by the Amazon’s community leaders of the indigenous group, the developments have been done while not caring their rights over the natural resources, lands and their priorities for the development (the Guardian 2018).
Such practices have already produced damages to the health & safety of the indigenous people. They are living in an environment contaminated with polluted elements like greenhouse gas emissions, nitrogen oxides and carbon dioxide. These contaminations are the causes of diseases such as lung damage, chest pain, wheezing, headache, increased fatigue, reduced resistance to infections and others (Héroux et al. 2015). Indigenous people will remain exposed to such threats until and unless the few key areas are put to improvements. One of those areas will be the collaboration between institutions and laws. Effective governance will also be required to ensure that the international standards for accessing the land for the development purpose are effectively followed. An appropriate adherence to the existing policies to reduce the risk factors is also required. Adequate funding will be needed as well for making these changes to happen (Plumlee et al. 2015).
In summary, it can be concluded that the health and safety measures are needed to be implemented in the downstream divisions for preventing on-site accidents and the related casualties. ‘Saudi Aramco’ can have the resurgence due to the radical changes it is going through. Indigenous people will not find a much of a difference from governments, organizations and the other public bodies until and unless the key areas as addressed in this study are fulfilled.
Abdel-Shafy, H.I. and Mansour, M.S., 2016. A review on polycyclic aromatic hydrocarbons: source, environmental impact, effect on human health and remediation. Egyptian Journal of Petroleum, 25(1), pp.107-123.
Ambituuni, A., Amezaga, J. and Emeseh, E., 2014. Analysis of safety and environmental regulations for downstream petroleum industry operations in Nigeria: Problems and prospects. Environmental Development, 9, pp.43-60.
Ambituuni, A., Amezaga, J.M. and Werner, D., 2015. Risk assessment of petroleum product transportation by road: A framework for regulatory improvement. Safety science, 79, pp.324-335.
Arab News. 2018. Saudi Aramco’s transformation is underway. Retrieved from https://www.arabnews.com/node/1126881
Bjola, C. and Manor, I., 2018. Revisiting Putnam’s two-level game theory in the digital age: domestic digital diplomacy and the Iran nuclear deal. Cambridge Review of International Affairs, pp.1-30.
Boughaba, A., Hassane, C. and Roukia, O., 2014. Safety culture assessment in petrochemical industry: a comparative study of two Algerian plants. Safety and health at work, 5(2), pp.60-65.
Cheon, A., Lackner, M. and Urpelainen, J., 2015. Instruments of political control: National oil companies, oil prices, and petroleum subsidies. Comparative Political Studies, 48(3), pp.370-402.
Dreger, C., Kholodilin, K.A., Ulbricht, D. and Fidrmuc, J., 2016. Between the hammer and the anvil: The impact of economic sanctions and oil prices on Russia’s ruble. Journal of Comparative Economics, 44(2), pp.295-308.
Fang, C.R. and You, S.Y., 2014. The impact of oil price shocks on the large emerging countries' stock prices: Evidence from China, India and Russia. International Review of Economics & Finance, 29, pp.330-338.
Fesharaki, F. and Isaak, D.T., 2016. OPEC, the Gulf, and the World Petroleum Market (Routledge Revivals): A Study in Government Policy and Downstream Operations. Routledge.
Héroux, M.E., Anderson, H.R., Atkinson, R., Brunekreef, B., Cohen, A., Forastiere, F., Hurley, F., Katsouyanni, K., Krewski, D., Krzyzanowski, M. and Künzli, N., 2015. Quantifying the health impacts of ambient air pollutants: recommendations of a WHO/Europe project. International journal of public health, 60(5), pp.619-627.
Jafarinejad, S., 2016. Control and treatment of sulfur compounds specially sulfur oxides (SOx) emissions from the petroleum industry: a review. Chem. Int, 2(4), pp.242-253.
Kuppusamy, S., Thavamani, P., Venkateswarlu, K., Lee, Y.B., Naidu, R. and Megharaj, M., 2017. Remediation approaches for polycyclic aromatic hydrocarbons (PAHs) contaminated soils: Technological constraints, emerging trends and future directions. Chemosphere, 168, pp.944-968.
Oladeji, T., Ikpefan, O.A. and Olokoyo, F.O., 2015. An empirical analysis of capital structure on performance of Firms in the Petroleum Industry in Nigeria. Journal of Accounting and Auditing: Research & Practice, pp.1-9.
Plumlee, M., Brown, D., Hayes, R.M. and Marshall, R.S., 2015. Voluntary environmental disclosure quality and firm value: Further evidence. Journal of Accounting and Public Policy, 34(4), pp.336-361.
the Guardian. 2018. Oil industry 'devastating' for Amazon communities, warns UN rapporteur. Retrieved from https://www.theguardian.com/environment/2013/dec/20/oil-industry-amazon-communities-un-rapporteur
Yao, G., Wu, X., Sun, Z., Yu, C., Ge, Y., Yang, X., Wen, L., Ni, C., Fu, X. and Zhang, J., 2018. Status and prospects of exploration and exploitation key technologies of the deep petroleum resources in onshore China. Journal of Natural Gas Geoscience, 3(1), pp.25-35.