Oil and Gas Exploration in Somalia

This assignment explores the complex landscape of oil and gas exploration in Somalia. It delves into the country's significant hydrocarbon potential, outlining both the immense hope it offers for economic development and the considerable challenges hindering its realization. Key issues discussed include the ongoing civil conflict, weak governance structures, and the need for transparent and equitable resource management. The assignment analyzes these factors and their implications for Somalia's future, considering the potential benefits and risks associated with oil and gas exploitation.

To identify different challenges of upstream oil
exploration sector in Somalia

TABLE OF CONTENTS
chapter 1: introduction.....................................................................................................................1
1.1 Background............................................................................................................................1
1.2 Research aim and objectives..................................................................................................2
1.3 Organization (structure) of the study.....................................................................................3
Chapter 2: Literature Review...........................................................................................................5
Literature review..........................................................................................................................5
2.1 Historical context...................................................................................................................5
2.2 Social.....................................................................................................................................6
2.3 Environmental challenges......................................................................................................7
2.4 Federalism..............................................................................................................................9
2.5 Resource Curse......................................................................................................................9
2.6 Economic...............................................................................................................................9
2.7 Technological......................................................................................................................10
2.8 Research gap........................................................................................................................10
Chapter 3: Research Methodology................................................................................................12
3.1 Research Design..................................................................................................................12
3.2 Research strategy:................................................................................................................13
3.3 Data Collection....................................................................................................................13
3.4 Data Analysis and Presentation...........................................................................................14
3.5 Reliability and Validity of Data...........................................................................................15
3.6 Limitations...........................................................................................................................15
3.7 Ethical issues and considerations.........................................................................................16
Chapter 4: Data analysis................................................................................................................17
Data analysis introduction.........................................................................................................17
4.1 Political................................................................................................................................17
4.2 Institutional Challenge.........................................................................................................18
4.3 Resource Curse....................................................................................................................19
4.4 Corruption............................................................................................................................20

4.5 Dutch Disease......................................................................................................................20
4.6 Stability................................................................................................................................21
4.7 Summery..............................................................................................................................21
Chapter 5: Conclusion and Recommendations..............................................................................23
Chapter 6: Reflection.....................................................................................................................26
references.......................................................................................................................................28

CHAPTER 1: INTRODUCTION
1.1 Background
Modern society cannot work smoothly without oil and gas. This is the major reason
behind the increment in demand of oil and gas exploration. There are three types of oil
exploration which are Upstream, Midstream and Downstream sector. Among these, upstream
sector focuses on discovery or exploration of crude oil (Texas, 2013). Downstream sector
includes the process of refining of crude oil which is discovered in upstream sector. The current
research has chosen Somalia for the whole investigation because it is one of the leading countries
of Africa which is exploring crude oil. At present, no industry can operate without
implementation of information technology. Oil industry also uses latest and expensive techniques
for exploring crude oil (Top 10 challenges in Oil and Gas industry, 2016). But, it is associated
with lots of issues that are relevant to management and technologies, increment in production of
liquid fuels, source of crude oil, operational challenges, energy demand and supply,
environmental pollution, fluctuating crude prices, economic uncertainty, shortage of people and
marketing issues, etc. Therefore, all these challenges are also affecting the upstream oil
exploration process of Somalia. So, researcher has decided to conduct study on different
challenges of upstream oil exploration sector in Somalia (Somalia upstream summary, 2016).
Oil and gas exploration is one of the major potential for Somalia which has attracted
large number of investors and oil exploration companies to search for oil and gas. In early 1950s
Italian (Agip) and American (Sinclair Oil Corporation) started research and study on petroleum
geology of Somalia. From 1960 to 1969 most of the companies were coming to Somalia for
exploring oil and gas. Sinclair Oil Corporation drilled 50 wells in South for the purpose of oil
exploration. Similarly Agip worked from mid-fifties to mid-sixties but they were not successful
for providing a commercial delivery of oil but in eighties they also discover 31 block for oil
exploration. According to the history of Somalia first well was explored in 1956 and it is known
as Sagaleh-1. At the end of the 2012 total 63 wells have been drilled (Somali Civil War, 2016).
Somalia has huge potential of oil exploration but there are number of reasons because of
them Somalia was under-explored and neglected for so long. Political reason and instability is
considered as major reasons because in January 1991 Somali government was collapsed and
country needed to face civil war. Due to such kind of political instability most of the oil
companies declared to return back. Including this, boom of oil was already declared in Middle
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East and then West Africa but for exploring oil in Somalia every Oil company needs to have
large number of resources (Somalia Oil and Gas Potential, 2016). These companies were very
busy in West Africa and Middle East and South. So, it was also known as major reason behind
the low under-exploration of oil in Somalia. Including this, low drilling density and well density
is also known as reason of low oil exploration in Somalia because none of these wells have been
successful in commercial manner although some have had shown hydrocarbon shows. Including
this, distance between one well to another is also very long which also affect the exploration
process of number of oil exploration companies. Somali Civil Was which is known as armed
conflicts which is started in 1991 which is also one of the major reason which affect the
government decisions and policies towards the oil exploration. Due to this civil war investors do
not try to invest in Somalia oil exploration process. Including this, Transitional Federal
Government has provided a legal warning to investors and oil exploration firms to not make any
deal until the strong political and social stability in whole country (Somalia Oil and Gas
Potential, 2016). So, it is also recognised as a major reason because of it oil exploration remains
in a controversial stage. Consequently, researcher has decided to conduct investigation on similar
subject.
1.2 Research aim and objectives
Aim:
“To identify different challenges of the upstream oil exploration sector in Somalia”
Objectives:
 To understand the meaning and concept of upstream oil exploration.
 To critically analyse the major issues that may occur at the time of upstream oil
exploration in Somalia.
 To determine different factors which may create different issues in upstream oil
exploration in Somalia. To suggest appropriate solutions to overcome different challenges associated with the
upstream oil exploration in Somalia.
Research questions:
1. What is the meaning of upstream oil exploration?
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2. Which types of issues are faced by oil exploration firms at the time of drilling oil wells in
Somalia?
3. Why political and social instability in Somalia may create challenges for upstream oil
exploration in Somalia?
1.3 Organization (structure) of the study
Accomplishment of the current investigation is not an easy task for researcher. So, for
completing it in an effective manner, author has developed a plan for the structure of research.
So, whole structure of the current research study is described as under: Chapter 1 – Introduction: It is one of the important chapters which will help in providing
brief introduction about the whole research. It will help in understanding the research
problem of study. Further, it will communicate the major aim and objectives of current
investigation (McMillan and Schumacher, 2014). This chapter will also involve the
structure of whole dissertation that will be followed by researcher at the time of
conducing investigation on different challenges of the oil exploration upstream sector in
Somalia. Overall, it will provide a brief plan for the investigation. Chapter 2 – Literature review: For understanding the research problem effectually,
author will review available literature on similar subject which will be included in this
chapter. Therefore, it is a chapter which comprises of information of historical research
on similar subjects. It helps in getting insight to understand the research problem and
make assumptions for further research (Intawong and Berryman, 2015). This chapter will
determine the research gap which will play an important role in formulating the research
aim and objectives. Literature review will be completed by using different sources such
as website of company, journals, books, articles and blogs. These sources will be
effective for collecting the past information about research subject. Chapter 3 – Research Methodology: It is one of the most important chapters which play
an important role in conducting investigation effectually. It comprises of different tools,
techniques and methods for resolving the research issue and getting appropriate solution
(Devine and Severova, 2015). Researcher will involve different methods such as
philosophy, approach design and techniques with appropriate justification for the
selection. Including this, study will also include suitable methods of data collection on
the challenges of oil exploration upstream sector in Somalia. Therefore, it will prove to
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be very helpful in getting facts and determining appropriate results for the current
investigation. Chapter 4 – Data analysis: This chapter is effective for including interpretation of the
data analysis. Therefore, it will involve the actual findings and results that will help in
determining the solution of current research. Further, it will include information about the
suitable data analysis method for current study such as thematic or statistical analysis
(Wilson, 2016). Along with this, this chapter will take into account the information about
findings of research which will help in determining challenges of the oil exploration
upstream sector in Somalia. Chapter 5 – Conclusion: After analysing facts and figures by using appropriate data
analysis method, author will move towards making appropriate and meaningful
conclusion for the current investigation. So, this chapter will include final results and
conclusion of the whole study. In short, it will include all those challenges which are
faced by Somalia at the time of oil exploration (Gay, Mills and Airasian, 2011).
Framework and analysis:
For conducting this investigation, researcher will use different research methods which
will help in completing investigation in an effective manner. Positivism research philosophy will
be used by the researcher because it will focus on major objective such as challenges for
upstream oil exploration in Somalia (Garner and Scott, 2013). Further, study will focus on
descriptive research design because it plays a crucial role in completing both qualitative as well
as quantitative research. Qualitative research techniques will help in understanding the subjective
information and relevant theories and controversies which will play important role in
understanding research issues. On the other hand, quantitative research techniques will be
effective for resolving research issues using numerical information and analysis. Further,
research will use secondary data collection methods for obtaining facts and figures about the oil
exploration in Somalia. It will help in getting insights to understand different issues associated
with this process. Along with this, secondary data collection will be effective for collecting
historical information about Somalia and its oil exploration process. Afterwards, author will use
thematic analysis method for analysing the facts and figures. Overall, all these methods will be
very useful for completing the whole research study in an appropriate way (Creswell, 2013).
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CHAPTER 2: LITERATURE REVIEW
Literature review
Literature review can be defined as a process of obtaining historical data about the similar
research subject from all those research papers which have conducted by researcher in the past. It
helps in getting insights to understand the research problem in effective manner by which author
can easily develop appropriate hypothesis or solution of every research question. The current
research project focuses on different challenges which are associated with the upstream oil
exploration process in Somalia (Chengzao, Zheng and Zhang, 2012). So, for understanding the
research issue author will focus on different process of oil exploration in Somalia such as
upstream process which is used by number of foreign companies for exploring oil in Somalia.
Along with this, researcher will also review the available literature on different factors which
may create issue and problems in upstream oil exploration in Somalia. Further, for better
understanding study will also include past research studies and their findings for challenges and
problems may occur at the time of upstream oil exploration in Somalia. There are lots of
literature which will help in getting solution of the research question using these types of articles
author will suggest appropriate solutions to overcome different challenges associated with the
upstream oil exploration in Somalia (Davies and et.al, 2014). Therefore, review of literature will
help in determining research gap for the current investigation which will play important role in
deciding research methods and analyzing appropriate facts and figures in effective manner.
There are several reasons due to which oil and gas exploration is not done in Somalia.
Here, investment is done by foreign investor to rebuild and abundant natural resources in
different areas like agriculture, livestock and oil and gas. Somalia is under developed economy in
terms of infrastructure, technology, politics and at economic level. There are number of
challenges that is faced by Somalia which results in underdevelopment. The another reason is
trade difficulties. Somalia has no trade agreement with US and European Union which leads to
facing issues to local firms. At Somalia, the issues related with oil and gas industry is that the
Federal government of Somalia and regional administration has no relation with each other. It
remains unclear messages and information. Technical issues are there at Somalia because the
economy is under developed where infrastructure and technology is not innovative.
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2.1 Historical context
Scholten, 2016 has concluded that “Oil exploration can be divided into three basic sectors
such as upstream, midstream and downstream” (Scholten, 2016). In which upstream stage is also
known and oil exploration and production. Cannon, 2016 has asserted that “Volatility in oil
market is very high so it attracts large number of players in this industry and all these focuses on
reducing the capital investment and operating cost” (Cannon, 2016). Research has reflected that
Somalia has huge scope of oil exploration so, number of market players attract towards this place
to disclosing oil wells. As per this statement at present oil industry of Somalia focuses on
reducing the associated cost in exploration and production process by which investors can get
profitable return for their investment. Vos and et.al, 2016 has concluded that “Upstream
exploration is a very difficult process and therefore requires the service of experts in the field”
(Vos and et.al, 2016). So, Somalia needs to invest huge amount of money for exploring crude oil.
Bast and et.al, 2014 has stated that “at present information technologies play very significant role
in determining the new places and grounds for exploring and searching new places where oil is
located and therefore take advantage of them” (Bast and et.al, 2014). 1950s and 196s was one of
the major era in which Italian and American corporations have tries to explored oil wells in
Somalia. But they needed to invest huge amount of money in technologies for exploring oil and
taking advantages. In contrast, Maina and Lagat, 2015 has concluded that “there are different
operations which needs to be completed at the time of upstream process and these include
searching underwater oil and gas field, drilling of exploratory wells, etc” (Maina and Lagat,
2015). But, all these activities are not so easy because these are associated with the large number
of challenges which may affect the overall upstream process of oil exploration of Somalia and
actually at the time of searching oil wells it was happened. There are number of researcher who
have conducted investigation on similar subjects but no one have considered whole research on
Somalia. So, author has decided to conduct study for the same (Tissot and Welte, 2012).
Brooks, 2013 has concluded that “Upstream oil exploration is facing lots of issues in
current information technology era in Somalis because it was one of the underdeveloped place
and lack of technologies is one of the major issue over there” (Brooks, 2013). These issues
include Management and Information problem, increasing the production of liquid fuels, lack of
Sources of Crude Oil, Operational Challenges and Energy Demand and Supply in Somalia.
Along with this, Environmental Pollution, Fluctuating Crude Prices, Economic Uncertainty, The
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People Shortage and marketing are also considered as major challenge for Somalia which uses
upstream process for oil exploration. But, on the other hand, Vos and et.al, 2016 has explored
that “there are some other issues also such as social, Federalism, resource curse, stability,
economic and technological” (Vos and et.al, 2016). Civil war and attraction of oil companies
towards the African oil exploration process were also major challenges for Somalia. All these
issues may affect the oil exploration process in negative manner. So, oil industry needs to focus
on overcoming these challenges in effective manner.
Dirshe, 2013 has stated that “Political conflict in Somalia is known as clan power
struggle which represent collusion between local Politicians and Somalia government”. At the
time of end of cold war 1990 Somalia has experienced extreme “clan” violence which has direct
and negative impact on society and business operations. It ruined the whole development of
Somalia and affect the individuality in negative manner. Therefore, ethnic violence in Somalia is
also one of the major challenge for oil exploration process.
In contrast, Hussein, 2014 has concluded that there are number of investors which have
invested huge amount of money in oil exploration process and they have got petroleum grants
since 1991 but these grants may suffer from the same specific flows. These are associated with
the rules as per this rule government of the Somalia will have very small share of oil reserve
which will reduce the growth and development of the nation.
In Somalia, oil and gas resources are potential since 1920s. Presence of reservoir rock
helps in keeping the oil and gas exist. At Somalia, there are massive reserves where large firms
were exploring the natural resources. But due to lack of proper legislation and political issues at
regional and national level affects the management of oil and gas.. It indicates that the political
parties are corrupted because they provide lands to investors which affects the local public of
Somalia. In context to it, Somalia is purely depends on foreign investments that exploits the local
resources of the country. Somalia's government is not able to take participation in certification
scheme due to which the economy can not offer authenticated documents to sell goods at global
level. It results into fewer developments of the country. It has result in improper management of
policies and regulation Somalia.
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2.2 Social
Kucherov and et.al, 2015 has concluded that “Upstream oil exploration focuses on
investigation and oil field development and production” (Kucherov and et.al, 2015). As per this
statement, in this stage industry needs to complete different activities such as Seismic survey,
exploration drilling, separation and compression, etc. At the time of completing these activities
oil industry needs to focus on society and whole community also else it will create a situation of
social risk. Stephenson and Agnew, 2015 has concluded that “Community health and safety is
one of the major social challenge for upstream oil exploration process of Somalia” (Stephenson
and Agnew, 2015). According to this statement health of individuals of society may affect from
noise, vibration, dust creation, emission air quality and vehicular movement in the whole society
of Somalia. All these are the major drawback of oil exploration stage which can negatively affect
physical and mental health of individuals of Somalia. In contrast, Tissot and Welte, 2012 has
also asserted that “Strain on infrastructure and public nuisance is also one of the major social
problem for Somalia which can be a part of oil exploration results” (Tissot and Welte, 2012). As
per this statement strain on transportation network and local infrastructure may affect the daily
life style of individuals of society of this place. Similarly, Irhoma, Su and Higginson, 2016 has
concluded that “At the time of oil exploration stage there are lots of communicable diseases
which can spread to local/foreign population of Somalia” (Irhoma, Su and Higginson, 2016). It
can affect the health of individuals of the society. Olsen, 2015 has disclosed that “society is very
concern towards the cultural and archeological heritage and oil exploration process can damage
and destruct the site of heritage in Somalia” (Olsen, 2015). Analysis of this statement has
reflected that cultural issues is also one of the major social challenge because upstream process
cam damage and devastation of cultural, historical, archaeological heritage and religious sites of
Somalia (Appiah-Adu, 2016). Therefore, it may have negative impact on social values and
beliefs of individuals of society. Therefore, maintaining social values and beliefs of individuals
and protecting cultural sites are also considered as major challenges for oil industry of Somalia.
Chengzao, Zheng and Zhang, 2012 has asserted that “Oil exploration process means use of land
for investigating and producing oil so, this process may affect the existing land use” (Chengzao,
Zheng and Zhang, 2012). As per this statement, exploration process can affect the quality of
agriculture land, leading to loss of livelihood, changes to access to water resources and affect the
grazing routes, etc. Therefore, all these have negative impacts on lifestyle of individuals of
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society of Somalia. But all these impacts are generally so temporary. Oil industry generally
follow the process of land acquisition which leads loss of land access, crop and nutritious
sources, etc. therefore, all these are also known as social issues which need to be considered by
oil exploration industry of Somalia (Scholten, 2016). Further, Silverstone, 2015 has also stated
that “lack of income and employment are also known as major social challenge which may affect
the social development of this nation” (Silverstone, 2015). Along with this, there are lots of other
problems also which may also affect the society and these are breakdown of the social networks
and structures, social economic exclusion, etc. Therefore, all these are the major challenges
which may affect the social development of community as well as also affect the growth of
Somalia. So, Oil industry needs to manage all these challenges at the time of upstream process of
oil exploration (Oil and Gas Exploration in Somalia: Hope and Challenge, 2016).
Society plays a crucial role in the development of a country. At Somalia, it is necessary
ensure economic benefits and growth of people as foreign direct investment has grown. In this
economy, private sector has taken initiative to offer basic goods and services to the society. In
the absence of government regulations at Somalia, nobody was there to come and provide these
services. People belongs to higher class has somehow managed to get basic amenities. At
Somalia, the main reason behind depreciation of social level is due to low infrastructure and
mismanagement of political parties. The political parties of Somalia, allows foreign investors to
invest in their economy. These foreign investors offer good amount to the government in terms
of corruption due to which public has got exploited.
2.3 Environmental challenges
Vos and et.al, 2016 has asserted that “Oil industry plays very important role in growth
and development of each and every nation but it is associated with number of challenges such as
environmental challenges of Somalia” (Vos and et.al, 2016). These challenges can create a
negative and harmful situation for environment of Somalia. So, these are considered as challenge
for entire industry. Singh, Pandey, Shankar and Dumka, 2015 has stated that “Oil exploration
leads habitat depletion, destruction and humiliation which may also create a negative situation of
land clearance, loss of vegetation corrosion in Somalia etc” (Singh, Pandey, Shankar and
Dumka, 2015). In upstream process whole industry uses different explosive which have most
negative impacts on environment. Along with this, atmospheric emission is also considered as
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environmental issue which may occur due to the emission of vehicular and plan exhaust. Bast
and et.al, 2014 has concluded that “Seismic survey is one of the important stage of upstream oil
exploration and at this stage emission of pollutants, greenhouse gas production may negatively
affect the whole surroundings of Somalia” (Bast and et.al, 2014). Exploratory drilling increase
drill muds and cutting which may affect the land of the nation. In addition, drilling process can
create a risk of natural hazards such as well blow outs, land and water contamination, land
subsidence, etc. Therefore, all these problems may affect the whole environment in negative
manner which will have negative impact on oil issue and its reputation of Somalia. These
environmental challenges may also affect the daily life of individuals (Maina and Lagat, 2015).
Climate may also change due to upstream exploration and these include extreme weather,
increment in temperature, lack of water and seal level risks, etc. Shiravi and Majd, 2015 has
concluded that “environmental regulatory risk is also associated with the upstream process of oil
and it occurs because of regulatory burden due to movement from new and more challenging
geographies and lack of awareness about the latest technologies” (Shiravi and Majd, 2015). In
contrast, oil exploration process leads production of sulphur, releasing of hazardous, volatile
gases, greenhouses gases which may affect the air quality and leads climate change of Somalia.
These situation are very risky for environmental safety and cerate very drastic condition for
whole society also. Therefore, above analysis has reflected that oil exploration is one of the
major issue for creating environmental challenges which may affect the daily life of individuals
of Somalia (Jefferson, 2016).
For managing this challenges oil industry needs to focus on protecting the atmosphere,
managing land stability, combating deforestation, sustainable development of mountains, etc.
Along with this, by effective management of biotechnology, protecting oceans, safer and
optimum use of toxic chemicals, management of hazardous wastage are also important ways and
actions for resolving issues associated with environment of Somalia (Environmental and Social
Risk Briefing Oil & Gas, 2016).
2.4 Corruption in Somalia
As per the transparency international report, It is seen that Somalia ranked 167 out of 168
in the ranking of corruption. It has gained 8 percent of share out of 100 percent in terms of
corruption. The economy faces major challenges in terms of corruption which has affected the
image of Federal government of Somalia. It is further done in the absence of Central
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government. For example, A British oil exploration firm has accused of corrupt payments to
government. It shows that political parties are not working properly. The economy is based on
exports and foreign investment from the other countries. These foreign companies offer
corrupted amount to the government due to which local public get exploited. Their share of land
is also taken by the government of Somalia which result into poor relations with the society.
2.4 Federalism
Oil industry is one of the major player for every economy which may affect the economic
position in negative as well as positive manner. So, government of Somalia introduces some
specific rules and regulations for this industry which help in managing different processes of
exploration, refining, etc (Godfrey, 2015). At the time of Civil war government of Somalia has
restricted entry of foreign companies in Somalia. So, it affected the oil exploration in Somalia.
These rules and regulations may affect the business operations and different activities of
upstream oil exploration procedures. So, considering rules and regulations of every nation is a
big challenge for oil industry. Ahmad, 2014 has stated that “Tension between local authorities
and central government’s rules and regulations over oil and mining exploration leads change sin
tax rates which create an unstable tax payment for whole industry of Somalia” (Ahmad, 2014).
Therefore, as per this statement tax payment is one of the major federal issue for upstream oil
exploration process. Along with this, there are different other rules also which creates situation
of Federalism challenge in Somalia. So, oil industry needs to focus on these rules at the time of
developing organizational policies in effective manner (Brooks, 2013).
Federal state of Somalia is an internationally recognized government. It is seen that
federal state has no good relations with the Central government of Somalia. On the basis of
research, it is analyzed that resources are properly allocated to the Federal state. Another reason
is that, Corruption where the political parties of Somalia are corrupted. The federal system of
Somalia is destructive due to civil wars and political issues in the past. After long years,
economy is still not able to overcome political stability. Generally, oil and gas department of
Somalia is run under the Federal government where the relation between federal government and
Central government is not good. Due to which proper allotment of finance and resources is not
done in the economy. It has resulted in weakening the government of Somalia.
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2.5 Resource Curse
Gülen, 2016 has asserted that “Resource curse means paradox of plenty of the natural
resources specifically non-renewable resources” (Gülen, 2016). As per this statement it is one of
the major challenge for oil industry that most of the countries believe that Somalia has huge
amount of oil and other minerals but in reality due to different challenges only few oil well had
been discovered by Agip and American corporations. So, these types of hypothesis increases the
expectation at the time of oil exploration process but actually it affects revenue volatility, human
resources and income and employment of Somalia. Overall, removing the resource curse is one
of the major challenge for oil industry (Shortland, 2016).
Somalia has huge amount of natural resources but the economy is mainly dependent on
exports of livestock and agriculture products. Somalia gains a huge amount of proceeds from
rent instead of broadening the tax base. It has resulted into suffering from negative correlation
between resources and development of economy. At Somalia, the investment are done by the
foreign investors which results in affecting the country's public and places. It has enhanced the
currencies which resulted into increase of real exchange rates. On other side, political factor can
also be a reason of resource curse. Here, corrupted politician affect the economy where
transparency is not maintained.
Ackah, 2015 has concluded that “Somalia is one of the developing nation which i9s
blessed with the huge amount of oil and gas reserve in Eastern part of Africa”. But, there are
number of reasons because of them oil exploration process is become so challenging for all
American and Agip oil companies. These are political upheavals, weak state structures, physical
insecurity, and property rights ambiguities. So, resource curse is one of the major issue of
Somalia which may affect oil exploration process for discovering oil wells (Ackah, 2015).
2.6 Economic
Scholten, 2016 has concluded that “Upstream oil exploration process is associated with
the demand and supply issue” (Scholten, 2016). As per this statement it can be analyzed that
demand for the crude oil is greater that supply so, it leads increment in the total cost of oil. Bast
and et.al, 2014 has concluded that “Population and economic growth is very high from first half
of the century which increases the demand of oil with high rate” (Bast and et.al, 2014). But on
the other hand oil exploration is stable in Somalia due to civil war which affect the demand and
supply ratio in negative manner which leads increment in total price of crude oil. Along with
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this, from last few year economy of each and every nation is also facing the lots of other issues
such as recession, lack of purchasing power of customers, economic instability of Somalia etc. In
addition, sometimes, unfavorable policies towards exploration also affect the whole procedures.
In addition, at present use of latest technologies is become high in upstream oil exploration
process which may increase the technical investment of whole industry which can increase price
of crude oil (Maina and Lagat, 2015). Therefore, economic position of every country is also one
of the big challenge for upstream process of oil exploration in Somalia.
At Somalia, the economy is driven by the private sector when the government was weak
and ineffective for several years. When civil war was occurred, private sector has maintained the
economy. In 2012, a new federal government has emerged and it remained successful in terms of
security front. The economy is purely dependent on imports which has created trade deficit.
Remittance is provided to the economy which assist the country to remain stable. It is seen that
since 2016, poor rainfall and drought condition has raised. Trade disputes is also seen at Somalia
which is affecting the economy badly.
2.7 Technological
Singh, Pandey, Shankar and Dumka, 2015 has asserted that “every country understand
that research and development helps in creating new innovation for each and every industry
which leads growth and success in future” (Singh, Pandey, Shankar and Dumka, 2015).
Technology plays very important role in oil exploration of Somalia without latest technology
now this process cannot completed on time and take long time for completion. But at present
technical investment is because very high for this industry which affect the price of oil in
negative manner. Along with this, technologies are changing day by day which increases the
investment of the oil industry in technology (Irhoma, Su and Higginson, 2016). Therefore,
managing latest technologies in upstream oil exploration process is one of the major challenge
for this industry of Somalia.
Technical barriers at Somalia can raised due to corruption. However, large amount of
money is indulging in corrective activities where the amount is not used in research and
development. There is no proper allotment of resources and money which result in lack of
research. Civil war is the another reason that hampers the process of research and development.
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Basic needs are not even provided to the public. At Somalia, people are less educated which
result into low development level.
2.8 Research gap
Determining associated challenges of upstream oil exploration in Somalia is one of the
major objective of the current research. Review of literature has helped researcher in
understanding the research problem and getting appropriate insights to resolve these issues by
appropriate solution (Chengzao, Zheng and Zhang, 2012). Author has found that number of
researchers have considered the similar kind of research studies on different countries. Along
with this, some author has completed research on all three process which are used by countries in
Oil production. But, author has analysed that there are not a single researcher who have
conducted investigation of challenges of upstream process in Somalia. So, it is a research gap for
the current investigation (Tissot and Welte, 2012). Therefore, for conducting a specific research
on upstream oil exploration process in Somali researcher needs to analyse all collected data in
effective manner. Along with this, after getting appropriate solution researcher needs to suggest
appropriate strategies to overcome these challenges in effective manner (Stephenson and Agnew,
2015).
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CHAPTER 3: RESEARCH METHODOLOGY
Research methodology can be defined as process of collecting data for conducting
investigation on a specific subject and making final conclusion to resolve research problem in
effective manner (Goddard and Melville, 2004). In contrast, it can also defined as a systematic
study of different methods which can be used by researchers for identifying different challenges
which are associated with the upstream oil exploration process in Somalia. Research
methodology plays very important role in developing an entire plan for whole research
investigation in effective manner. Further, it includes description about collection and analysis of
the data for getting appropriate findings. For the current investigation author will assess the
reliability and validity of the data for analyzing that whether collected facts and figures are
actually compatible with the current research purpose or not.
3.1 Research Design
A research design can be defined as a plan of research study which helps in conducting
investigation on the basis of formulated research objectives. In contrast, it can also be defined as
a study that is chosen by researcher to integrate different components of the study in an
intelligible and logical manner. There are three different types of research designs descriptive,
experimental and cause and effect (Whiteley and Whiteley, 2006). For the current research
subject author has decided to use descriptive research design because it is effective to understand
theoretical and subjective concepts. Determining challenges associated with the upstream oil
exploration process is one of the theoretical subject so, author has selected this design. Along
with this, it effectively address the research problem so, researcher has chosen descriptive. It
plays very important role in developing a blue prints for the collection, measurement and
analysis of the data. By which author can easily resolve the research issue (Sobh and Perry,
2006).
It has been chosen by researcher because it helps in providing answers to the research
questions which are relevant to the research problem. It is significant for getting data as per the
current phenomenon. As per the framework and analysis researcher has decided that secondary
research will be perfect for the current subject. So, for analyzing past and historical information
researcher need to analyze data using qualitative tools and techniques. Descriptive research
design can be used by researchers for conducting both qualitative and quantitative analysis
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(Vaivio, 2008). For the current research author will conduct qualitative analysis so, descriptive
research design will be appropriate for whole investigation. Overall, descriptive research design
has appropriate for conducting current research investigation.
3.2 Research strategy:
It is one of the important technique for conducting investigation and resolving research
issue in effective manner. There are number of techniques such as qualitative and quantitative
tools. These are generally selected by researcher on the basis of subject and types of the research
problem. Qualitative research strategy is associated with the subjective concepts and quantitative
strategy is generally used by researcher for collecting and analyzing numerical data. As per the
given research subject researcher needs to determine different challenges linked with the
upstream oil exploration process of Somalia and it is a subjective concepts so, author has chosen
qualitative research strategy. It has been helped in analyzing the research problem and the basis
of the associated subjects such as oil exploration issues, different factors, etc. Along with this,
using this strategy author can use number of theories which can help in analyzing facts and
figures in effective manner. It is also one the appropriate methods for analyzing the secondary
data. So, it is used by researcher for resolving issues of this research.
3.3 Data Collection
Collecting facts and figures is one of the important process for getting answers for every
research question. There are two different methods for obtaining information; these are primary
and secondary data collection methods. Primary data collection methods collects fresh and new
information about the research subject. But on the other hand, secondary data collection methods
help in obtaining past and historical information from all these research studies which have
conducted by other researchers on similar subject (Martin and Guerin, 2006).
As per the discussion of framework and analysis researcher has decided to complete the
whole investigation on the basis of secondary data. Regarding this, author has used different
secondary sources such as websites, annual reports, books, journals, articles blogs and new
headlines, etc. All these sources have helped in obtaining information about the research subject.
Secondary research has provided an opportunity to understand the upstream oil exploration
process in effective manner. It has helped in getting insights to understand research problem in
appropriate way. Along with this, using this source of information author has gathered data about
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major issues which may occur at the time exploring and producing oil in Somalia (Kumar, 2014).
Further, there are number of researcher who have conducted research studies on similar research
subjects on other countries which have helped in determining different factors which may create
issues in upstream oil exploration process in Somalia. Overall, secondary data collection
methods have provided all information about the research subject which can easily provide a
base to resolve research problem (Flick, 2011).
But on the other hand, secondary data collection process is associated with the some
ethical issues such as plagiarism and manipulation of the data. This issue may affect the final
findings and results of the whole research. So, for resolving this issue author has used
appropriate references and citation for all content which have used by researcher from other
research papers. Therefore, this strategy has helped in maintaining research ethics in effective
manner (Whiteley and Whiteley, 2006).
3.4 Data Analysis and Presentation
Data analysis means examining collected facts and figures for making final conclusion
for the whole investigation. It includes different tools and techniques for analyzing facts and
figures in effective manner. There are different methods of data analysis such as qualitative and
quantitative data analysis. Researcher needs to choose data analysis methods as per the types of
research problem and entire research plan (Sobh and Perry, 2006). As per the above discussion
the current study is based on subjective and theoretical concepts regarding challenges in
upstream oil exploration process. So, author has decided to apply qualitative data analysis
methods for examining facts and figures in effective manner. So, researcher has used thematic
analysis for determining issues and associated factors which may create problem in upstream
process of oil exploration. This technique includes number of themes, charts and graphs for
analyzing collected information. But it is effective for conducing in-depth research on specific
subject. Thematic analysis is effective for resolving issues of research as well as provide
appropriate answers of every research question in appropriate way. Researcher has developed
different themes relevant to the issues associated with the upstream oil exploration process and
different factors which create these issues. Including this, author has used thematic analysis
process for determining appropriate strategies for managing all challenges of upstream oil
exploration process in Somalia (Martin and Guerin, 2006). Overall, qualitative data analysis
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methods has helped researcher in analyzing facts and figures and getting appropriate answers for
every research question.
3.5 Reliability and Validity of Data
Validity means degree the research reflects the given research problem and reliability
means how consistent a set of dimensions are. Each and every research needs to focus on
reliability and validity of the data. There are different hypothesis test which can be applied by
researcher for checking reliability and validity of primary data. But, in case of secondary data
collection method author cannot apply any hypothesis test. So, for maintaining reliability and
validity author has decide to use inclusion and exclusion criteria. As per the inclusion criteria
author has used only those research papers which have included key words of the current
research title. Along with this, all those research papers which have published after 2010 have
included in the data collection process (Vaivio, 2008). So, it has increased the validity of the
data. Including this, for maintaining reliability researcher has chosen research papers from
authentic online libraries only which have their own copyright. All these things increase the
reliability of the data. In contrast all those research papers which have not fulfilled all these
criteria were excluded by the researcher. Therefore, author has applied appropriate strategy for
maintaining reliability and validity of the data. Overall, collected information has helped in
resolving research problem and getting appropriate answers of every research question (Kumar,
2014).
3.6 Limitations
Accomplishment of the research is not an easy task for researcher because it is associated
with lots of limitations which may affect the final findings and results of the current study. So,
author needs to consider these limitations for getting most appropriate findings. The current
investigation in based on secondary data collection methods, so, major limitation of this research
was lack of time and cost. For managing time researcher has developed an appropriate plan
which has comprised each and every activity and time which is required for completing them in
effective manner. Therefore, forecasting timescale for entire research is one of the important
strategy for managing this limitation. Including this, for managing cost researcher has decided
budget for the whole investigation (Flick, 2011).
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Lack of availability of content was also one of the major limitation which has been faced
by researcher. As per the above discussion author has used only secondary data for getting
appropriate results. But, upstream oil exploration process is one of the rare topic of research but
it is quite interesting topic and has wide scope of investigation. So, for overcoming this
limitation author has used advanced search option which and subscription of lots of online
libraries. This strategy has helped in obtaining information in effective manner.
At the time of conducting investigation researcher has only theoretical knowledge about
the research papers and upstream oil exploration process. Therefore, lack of research experience
was also considered as one of the major limitation of the current research. Author has used
advance search option and in-depth analysis of the research process and current subject. It has
helped in getting more and more knowledge about the way of research (Irhoma, Su and
Higginson, 2016). So, it has increased knowledge and experience of the researcher which have
helped in overcoming this limitation and completing investigation in appropriate way.
3.7 Ethical issues and considerations
Research ethics is one of the major requirement of each and every investigation. At the
time of completing a study author needs to consider different aspects for resolving ethical issues.
The current research project is based on secondary data so, plagiarism, manipulation of data and
copy and paste are the major issues which may create ethical issues for secondary data. But for
resolving this issue author has developed the whole project report in own language. Along with
this, study has used appropriate references and citations of all those research papers which have
used by researcher for attaining aim and objective of the current investigation. Therefore, these
ethical considerations have helped in completing whole study in effective manner.
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CHAPTER 4: DATA ANALYSIS
Data analysis introduction
It is one of the important process for getting solution of the research problem. It includes
the examination of the collected facts and figures using different tools and techniques of the data
analysis. It plays very significant role in getting answers of the each research question. There are
two types of data analysis methods qualitative and quantitative data analysis. For the current
investigation author has used only theoretical information so, it has included thematic analysis
for examining obtained information. It is the best method for analyzing subjective information
about the challenges associated with the upstream process of oil exploration in Somalia. Number
of charts, graphs and themes can be used by researcher for analyzing collected data. It has helped
researcher in making meaningful conclusion for the current research.
4.1 Political
Political risks is one of the major challenge for oil exploration industry of Somalia. It
may affect the whole procedures of oil industry. As per the literature review findings researcher
has analyzed that oil and gas industry of Somalia has covered by a range of regulations that
create a limit for different function such as where, when and how the extraction process will
complete. Therefore, these regulations may decline the opportunity and scope for oil industry
Somalia. Along with this, interpretation of laws and legislations are different from one state to
another. So, generally political risks may occurs for all those foreign organizations of oil industry
which are starting or running their operations in Somalia. So, it is one of the bigger challenge for
multinational organization.
Collected data and information have reflected that oil and gas industry tend to prefer all
those companies which have stable political systems because it will help in developing
appropriate organizational policies for oil exploration process of the firm. Along with this, Oil
companies of Somalia tries to grant and enforce lease of land for long term. But, political issues,
regulations and laws create problems in getting long term lease for a same land. Therefore, it
may affect the upstream oil exploration process for organization. Including this, there are
numerous issues which may arise from the political situation of /Somalia. These include sudden
nationalization and shifting political winds which may affect the entire regulatory system of the
country. It may affect the rules and regulations of oil industry also. Therefore, it may also have
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negative impact on business operations of oil industry of Somalia. As per the collected facts and
figures only starting oil exploration or production process is not a successful task for oil industry
because changes in government may affect the profitability of the whole oil industry.
Along with this, Somalia government has introduced different rules and regulations about
maintaining strong and sustainable relationship with its international oil and gas partners. It may
affect the long run planning of Oil and gas industry. Overall, political situation, rules and
regulations have direct impact on business operations of the firm. Political challenges also
include different changes in policies which are introduced by the government. In addition,
changes in exchange rates and interest rates are also one of the major part of political risks which
may create a negative situation for oil industry of Somalia. Rules and regulations of government
may influence price, output, activities, remittance restrictions and changes in currency rates. All
these have direct impact on business operations and procedures of oil industry of Somalia.
Overall, there are lots of negative changes which needs to be done by oil and gas organizations
for managing political changes and running business operation at this time.
Collected facts have reflected that political risks may arise because of number of reasons
such as was, revolution, terrorism, labor strike and extortion, etc. So, for managing political
challenges oil and gas industry needs to resolve all these issues in effective manner. Political risk
may also affect the import and export transactions which will have direct impact on overall
business operations of the firm. So, for managing business operations oil industry of Somalia
should focus critically analyze the level of political risks in effective manner.
4.2 Institutional Challenge
Analysis of the current research project and data has reflected that there are number of
institutional challenges which may occur due to the different reasons. These include lack of
resources, lack of technology, inappropriate skills and experience, labor problem, natural
disasters, etc. All these have negative impacts on oil industry of the nation. Internal and external
issues associated with the organizational changes affect the oil exploration process of Somalia.
Along with this, Somalia is one of the underdeveloped nation so, oil organizations cannot get
appropriate skilled and experienced labor for completing business operations in effective
manner. It also affect the oil production. If organizations does not have proper information in
regard to the technology then it will affect the overall outcome in diverse manner. It is significant
for businesses to ensure that the all these aspects are properly maintained so that issues can be
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overcome. Cultural issues is also one of the major social challenge because upstream process
cam damage and devastation of cultural, historical, archaeological heritage and religious sites.
Oil exploration process means use of land for investigating and producing oil so, this process
may affect the existing land use. It is necessary for organizations to ensure that they are having
effective design of activities so that issues can be resolved in appropriate manner.
Oil industry plays very important role in growth and development of each and
every nation but it is associated with number of challenges such as environmental challenges.
These challenges can create a negative and harmful situation for environment of the nation. So,
these are considered as challenge for entire industry.dri8lling process can create a risk of natural
hazards such as well blow outs, land and water contamination, land subsidence, etc. therefore, all
these problems may affect the whole environment in negative manner which will have negative
impact on oil issue and its reputation. For managing this challenges oil industry needs to focus
on protecting the atmosphere, managing land stability, combating deforestation, sustainable
development of mountains, etc. Along with this, by effective management of biotechnology,
protecting oceans, safer and optimum use of toxic chemicals, management of hazardous wastage
are also important ways and actions for resolving issues associated with environment.
4.3 Resource Curse
Many of the countries make poor use of their resources which is one of the major
drawback which affect the overall oil industry and upstream process of oil exploration. Major
reason behind the resource curse are corruption, undetermined and inclusive economic growth,
conflict and damage the environment, etc. due to all these reasons Somalia’s oil industry cannot
use its available resources in effective manner. So, for improving the overall performance of the
industry and nation government needs to focus on optimum utilization of resources. Including
this, technologies are changing day by day but Somalia is an undeveloped nation where
government of the nation is not capable enough to adopt latest technologies also. So, it is also
one of the major drawback which affect the use of available resources of the country, if oil
industry uses its natural resources in effective manner them this country can produce more and
more oil for whole world which can develop this nation in very effective manner. Overall,
analysis of the secondary data collection has reflected that assumption about the available
resources is not enough for starting any business. Because in Somalia every some knows that
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they have lots of resources for producing oil but this nation is not able to use these resources in
effective manner. So, it resources curse is considered as major challenge for oil industry of
Somalia.
4.4 Corruption
Corruption is one of the major reason behind the problems in running oil industry and
other business operations in Somalia. Analysis of the collated facts and figures have reflected
that due to corruption government of the nation cannot invest resource revenue into development
of the nation such as infrastructure, education, mining resources, etc. Politician put all money in
their own pockets. It has negative impact on development of the nation so, reduce the attraction
of foreign companies. Overall, corruption is also one of the major challenge which affect the oil
industry and its development. So, for improving upstream oil exploration process oil industry
needs to reduce the level of corruption it will help in improving the business performance of oil
industry of Somalia. Industry needs to complete different activities such as Seismic survey,
exploration drilling, separation and compression, etc. At the time of completing these activities
oil industry needs to focus on society and whole community. If proper monitoring is not present
then it might be possible that the issue in regard to corruption can be occurred. It will have direct
negative impact on the organizational needs and process. It is significant for businesses to make
sure that the government policies are being followed by oil sector in appropriate manner. It is
beneficial to overcome the issue of corruption which facilities in meeting goals and objectives.
Other than this, oil projects demand a high ratio of permissions so that operational
activities can be accomplished. It is means the political factors has great involvement in it. In
respect to permission the political parties demand for extra charge so that their personal needs
can be meet in desired manner. It clearly indicates that the management need to consider it in
appropriate manner so that goals and objectives can be accomplished effectively. By having
proper understanding and consideration of guidelines the license and permission can be attained.
It has been identified that the corruption issue can be overcome effectively by the management
through considering key aspects of ethics.
4.5 Dutch Disease
Analysis of data has reflected that Resource-rich countries are plagued by a phenomenon
called "Dutch disease". It is also one of the major challenge which may affect the oil industry
exploration process of Somalia. Because whose exports of natural resources of this nation led to
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foreign exchange inflows which drove up the value of the currency. Therefore, discovery of large
oil reserve leads the increment in the currency value but it may decline the value of other
products in international market. Therefore, Dutch diseases may affect the overall economic
position of the nation. It has been noticed that the Dutch diseases has direct negative influence
on the economic conditions so it is significant for business entity to ensure about it in appropriate
manner. By having effective reference of framework the issue of Dutch diseases can be
overcome in desired way. In this respect, the factors that provide better to have improvement in
foreign currency are beneficial to have sustainable development. It means the economic
conditions can be improved by having effective discovery of large level of oil reserves. In
addition to this, it has been interpreted that the currency inflows lead to currency appreciation,
making the country's other products less price competitive on the export market.
4.6 Stability
It is also significant for business to consider stability as a essential factor. It is because if
market does not have stability then the overall processing of organization can be get influenced.
It clearly indicates that the business firm can have understanding about market conditions in
order to ensure that stability aspects are well maintained. Demand and supply of key resources
may also affect the stability. It means the stability is one of critical issue that may influence
overall working and lead business to impressive level of success. Political and economic stability
also need to be referred in appropriate manner so that issues can be overcome.
4.7 Summery
As per the above discussion author has used the thematic analysis of the data which have
helped in attaining aim and objectives and resolving research problem in effective manner. As
per the qualitative analysis author has disclosed that there are number of social challenges which
may affect the growth and development of the oil industry in negative manner. On the other
hand, oil exploration process affect the health and safety of individuals of Somalis which affect
the labor union of the nation. In case of lack of labor oil exploration process cannot get
appropriate success. Along with this, due to the oil exploration land emission is also one of the
major challenge which affect the farming process of individuals of society. So, social challenge
is also known as major challenge for the oil industry of Somalia.
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Analysis of the data has also reflected that environmental issue is also one of the major
problem for oil industry of Somalia. This problem has lots of negative impacts on surroundings
such as leads habitat depletion, destruction and humiliation atmospheric emission, emission of
vehicular and plan exhaust, emission of pollutants, greenhouse gas production, etc. all these
problems have negative impact on health and safety of individuals of the nation. Inappropriate
health may have negative effects on employment of the nation. So, oil industry needs to focus on
reducing the environmental harm. Along with this, data analysis have reflected that rules and
regulations are also considered as major challenge for oil industry of Somalia. Because these
have negative impact on organizational policies of entire oil industry. Due to these reason
companies needs to changes their business operations which affect the upstream process of the
nation. On the other hand, there are different economic challenges also which may also affect the
overall currency and financial stability of the entire nation. These challenges include changes in
demand and supply of crude oil, lack of purchasing power of customers, recession, economic
instability, unfavorable policies of government, etc. these issues affect the oil exploration process
of the entire nation. Along with this, thematic analysis has reflected that there inappropriate
technology is also one of the major reason behind the problem in oil exploration process of
Somalia. Oil industry of this nation is not as advanced as compare to another nation. So, it affects
the overall production and operation process of the industry. Overall, analysis have reflected that
major challenges of upstream oil exploration process are social, economic, technological,
resource curse, federalism and environmental issues. These have negative impact on oil
exploration process. So, oil industry should focus on resolving these issues.
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CHAPTER 5: CONCLUSION AND RECOMMENDATIONS
Identifying different challenges of the upstream oil exploration sector in Somalia is the
major aim of the current investigation. For attaining this aim author has formulated some specific
objectives such as understanding the meaning and concept of upstream process of oil
exploration, determining major issues and factors associated with this procedure, etc. for
attaining all these objectives in effective manner researcher has used a specific process which
have included different chapters such as literature review, research methodology and data
analysis, etc. Findings and results of data analysis has helped in attaining aim and objectives in
effective manner.
Review of literature has provided a most appropriate information about different types of
issues such as social, environmental, federalism, resource curse, economic and technological,
etc. Therefore, all these issues create challenging situation for oil industry of Somalia. Along
with this, research methodology chapter has included different tools and techniques which have
helped in analyzing all information in effective manner.
Findings of data analysis have concluded that upstream exploration is one of the
important process for producing and refining oil from different places of Somalia. It requires
huge amount of investment in latest technologies which affect the cost of oil exploration. But, oil
is one of the natural resources which demand is increasing day by day but supply is low as
compare to demand. So, it influence the oil exploration process and increases the technological
advancement.
Findings have reflected that there are number of challenges which have faced by oil
industry of Somalia. These are associated with the inappropriate management and information
system, high production of liquid fuel, lack of natural resources and operational issues, etc.
Along with this, oil exploration process is also linked with the energy resources. So,
inappropriate management of demand and supply of energy also affect the production of oil in
Somalia. Therefore, acquiring energy for oil exploration process is also one of the major
challenge for this process. Including this, as per the result of the research there are some other
challenges also which may also affect the upstream oil exploration process. These include social
issues such as health and safety, tension on transportation network and local infrastructure, lots
of communicable diseases, damage of cultural and archeological heritage and negative impact on
social values and beliefs, etc. all these are the social challenges which may affect the different
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types of societies and communities of Somalia. Including this, society of the nation may also
affect from loss of land access, crop and nutritious sources which negatively affect the lifestyle
of the whole society. Including this, there are number of environmental challenges also which
may have negative impact on surroundings of the nation. So, maintaining safety of environment
is also one of the major challenge for oil industry. In Somalia, due to oil exploration major
challenges which may occur are habitat depletion, destruction and humiliation, atmospheric
emission, emission of pollutants, greenhouse gas production, risk of natural hazards and
environmental regulatory risk, etc. are major environmental challenges for oil industry of
Somalia.
Including this, government of Somalia has introduced lots of rules and regulations and
legislations for trade of Oil. Along with this, government has also decided some tax payment for
oil exploration which affect the different policies of the whole oil industry. So, federalism is also
one of the major challenge for oil industry of Somalia. Including this, lack of resources and
effective utilization of the available resources is one of the major issues which can affect the
future oil exploration process. Including this, upstream is associated with the use of latest
technologies and other equipments which require lots of monetary investment. It may affect the
economic position of whole industry. On the other hand, there are number of economic policies
which have direct influence on international trades of oil industry of Somalia. Similarly, research
findings have also disclosed that economic recession, GDP, GNP and purchasing power are also
considered as major economic factors which may have direct impact on oil exploration.
Therefore, economic challenge are also known as major challenge which may affect the oil
exploration in Somalia.
Further, research has also disclosed that technologies are changing day by day and use of
latest technology may affect the price of oil which may have direct impact on price of oil in
Somalia and other competitive nation. But on the other hand, high investment in research and
development and technology adoption may increase the cost of upstream and other exploration
process of oil which may have negative impact on overall cost of oil. So, technological
advancement is also one of the major challenge which needs to be considered by oil industry of
Somalia.
As per the above discussion study has described that there are lots of challenges which
may affect the oil exploration process of Somalia. So, Oil industry of this nation needs to use
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appropriate strategy to manage all these challenges in effective manner. For example, oil
industry of Somalia needs to assure about the health and safety of individuals and does not use
those lands which are used by individuals of society for their farms. Along with this, oil industry
of Somalia should use only those chemical and equipments which do not explore harmful
chemicals for environment. Including this, oil industry needs to focus on produce new trees for
reducing the level of pollution. Further, for managing technological and environmental
challenges Oil industry of Somalia needs to invest only those projects which are profit5able for
the whole industry.
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CHAPTER 6: REFLECTION
Oil industry play important role in economic position of every nation. The current
research project is based on different challenges which are associated with the upstream oil
exploration process of Somalia. Accomplishment of the current research was one of the great
experience for me because it has increased skills and knowledge in effective manner. I have
gained lots of information in terms of subject, research methodology, review of literature, data
analysis, etc.
At first, at the time of deciding research subject I understood the importance of the
contemporary research subject and its future scope of the research. Afterwards I have got lots of
information about the different types of oil exploration process and role of upstream in
production of Crude Oil in Somalia. My learnings have increased in terms of complications of
upstream oil exploration process and how to resolve these problems in effective manner. Further,
I have got information about the different challenges which are associated with the oil
exploration process. Now I am aware about that upstream process have lots of challenges such as
social, environmental, technological, cultural, federal, and economic and resources issues, etc.
Therefore, now I am capable enough to analyze all these challenges for different types of oil
industry of different countries also. Including this, study has increased my knowledge in terms of
resolving all these issues in effective manner.
The current research has used the literature review for collecting secondary data about the
research subject. So, at the time of conducting review of literature I have got knowledge about
how to find data and use advance search option for getting relevant data. Along with this, it has
increased my critical analysis skills also. Now I am capable to use the insights of literature for
my own research. Along with this, now I am capable to deciding search terms, analysis of
sources, critical writing, etc. Overall, literature review has increased my knowledge which will
help me in conducting future research.
As per the above research study, I have applied different methods of research
methodology. Before completing this investigation I have just theoretical knowledge of all tools
and techniques of the research. But, after completing this investigation, now I have appropriate
knowledge about the different research methods and their importance at the time of conducting
investigation. Therefore, the current research has augmented the level of research skills which
will play very significant role in future research on similar or other subjects.
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Afterwards, author has used thematic or qualitative analysis method for examining
collected facts and figures in effective manner. Therefore, earlier I was aware about the statistical
and thematic analysis methods but I have never applied any method for such kind of research.
But now I can develop themes as per the research objectives and question. Along with this, it
has increased my analytical skills also. Further, at the time of completing this investigation I
have got lots of knowledge about operating system and hardware and software of computer
system Therefore, it has increased my computer knowledge. Along with this, it has also
augmented skills and acquaintance in terms of writing a report.
At the time of completion of this research I have faced problem in managing time and
cost, getting information, etc. But, I have used appropriate strategies for resolving all those issues
in effective manner. Overall, I have used a very systematic process for competing investigation
on different challenges of upstream oil exploration process. So, I have attained all objectives
which were formulated at the time start of the investigation.
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