The energy sector is one known for its philosophy of high risk and high reward. However, in some cases firms decide to opt for a strategy of co-operation with other operators to enter into a Joint Venture agreement. Joint venture strategies bring with them their own challenges and benefits for the firms involved in the agreement.
The oil and gas industry is a prime example of the growth of JV arrangements, where our study of 365 megaprojects showed as much as 71% of upstream investment is spent through alliance or JV relationships. The participants in these relationships (as in other industries) contribute assets, capital, unique expertise or labour to access diverse advantages such as scale, risk sharing, market entry, optionality, tax benefits and access to others unique capabilitiesâ€. (Joint ventures for oil and gas megaprojects, EY.com,2015)
Write a report critically analysing one joint venture from the energy sector. Your report should consider the following:
· The motivations behind the joint venture ï‚· Evaluate the challenges and benefits of your chosen energy sector joint venture.
. Your report should include appropriate energy related examples about the chosen joint venture
. Provide recommendations as to how the joint venture can be improved.