Environmental Performance of Oil & Gas

This assignment focuses on assessing the environmental performance of companies in the oil and gas industry. You will utilize a published integrative environmental performance index to benchmark these companies. The analysis should delve into current industry trends, including sustainability initiatives, waste management practices for used lubricating oil, and the impact of oil price shocks on corporate governance and R&D expenditures.

Introduction to Oil
and Gas Environment

Table of Contents
INTRODUCTION......................................................................................................................4
Q1. Determining the role and activities within downstream division of ENI............................4
Q2 Impact of macroeconomic factors on ENI............................................................................6
Q3. ENI contribution to local community and indigenous people.............................................8
CONCLUSION..........................................................................................................................9
References................................................................................................................................10

INTRODUCTION
The oil and gas industry is considered to be the biggest sector in the world in terms of dollar
value and it is a global powerhouse employing hundreds of thousands of workers worldwide as
well as generating hundreds of billions of dollars globally each year. In context with this
statement, this report will aid in describing the roles and responsibilities of key division in an oil
and gas organisation with reference to ENI. ENI is an Italian company that operates all over the
world. They operate in 73 countries an have 33000 employees in the orgaisation. The managent
has recently develop new sustainability project in Ghana. It is the 11th largest industrial
organisation with a market capitalisation of 68 billion euros. This report will aid in developing
brief understanding about the competitive elements in each department. The contribution to
communities of oil and gas sector activities, the requirements for performance reporting and the
value of branding and marketing will be identified in this assignment. The significance of the
environment to the success of a business will be evaluated in this report.
Q1. Determining the role and activities within downstream division of ENI
The roles and activities within downstream division of ENI is described below:
Figure 1: Downstream division at ENI)
Exploration and Production (E&P)
Exploration and Production are main business of ENI (Business lines. 2018). The
management has established their plant in over 40 countries and mostly concentrate on
producing oil and gas. The role of management is to deliver organic production growth,
leveraging on a high quality portfolio of assets and maintaining effective relationship with
host countries. The management explore oil wells, make deals with other country and
establish their plant in order to deliver oil and gas to different countries (Megginson and
Sitorus, 2017). The major activities appeared during exploration phase includes analysing and
surveying surface and subsurface geologic features in order to identify the areas where oil
and gas may have accumulated. (Qian et al., 2017).
Downstream activities in teh production industry
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Refining and marketing includes the supply, processing, distribution and marketing of
fuel and chemical products. In terms of the path taken by fuel and natural gas, Downstream is
the sector relating to oil refining and processing, the deposit and storage of natural gas and
liquefied natural gas (GNL), the transportation of oil products and the wholesale and retail of
oil and gas products.
Refining Activites
 Distillation: The process where management of ENI sepearte oil products.
 Conversion:: The process that converts heavier and lower value oil parts into smaller
molecules
 Treatments: Process for adjusting oil derivatives.
Gas and Power
Gas and power is another key division of ENI. It engaged in all phases of the gas value chain.
This value chain includes supply, marketing of gas and electricity, trading and liquid natural
gas supply and marketing. More than 60 per cent of the gas has been sold outside of Italy and
ENI leads in the European Gas market. The management due to having immense competitive
advantages, multicountry approach, accessibility to infrastructure, wide range of products,
long term availability of gas and strong customer base able to enhance their profits and
revenue (Frank et al., 2016). The key activities occurred in this phase is supply and marketing
of gas and power delivered by the organisation. The management and marketing personnel
are responsible for promotion and distribution of gas and power in different countries.
In order to distribute oil and gas, ENI has established effective supply chain. ENI supplies
natural gas to national and regional distribution organisations, municipilities and industrial
clients. In order to mainatain long term relationship with the suppliers management of ENI
has formulated security contract in which protection and prevention of rights of both the
organisation and suppliers has been secured.
Refining Marketing
The role of division is to refine market and fuels and other oil components basically in Italy.
The refining marketing and chemical division of the company is relatively small as compared
to competitors. The activities are divided into three categories. The first is distillation. It is the
process of separating oil products. The role management do is heat the oil at high temperature
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until it begins to evaporate (Westgaard et al., 2016). As it begin to cools down the vapour
turns into liquid state and separate container has been set in order to collect oil by-products.
The second activity is conversion. It is the process through which management converts the
heavier and lower value oil parts into smaller molecules which give rise to noblest oil
products. The third activity is treatments. It is the process through management adjusts oil
derivatives as per the needs of the markets (Business lines. 2018).
Q2 Impact of macroeconomic factors on ENI
Macroeconomic factors include the external environment surround ENI such as political,
economic, technological, social, legal and environmental factors affecting the productivity
and profitability of the organisation (Mannino et al., 2015). These factors influence all sectors
including oil and gas industries. In order to cultivate growth and development, the
management of ENI has to deal with these factors while doing daily business activities. The
ways these factors influences the success of ENI is described below:
1. Political and economic Factors: ENI is global oil and gas corporation with oil
reservoirs in more than 40 countries. Every country has different political
environment which effects on the exploration and production activity of the company.
These factor plays prominent role in determining the success of the organisation
(Cavani et al., 2016). The management has to deal with political instability in while
operating in countries like Mozambique, Libya, etc. Furthermore, there is risk of
military invasion, especially countries in Middle East. Country’s level of corruption,
legal framework, wage legislation, taxation policies, etc. is other political factors that
influence the company’s success greatly. Economic factors can either boost up the
company’s revenue or drag the profits of company’s down. These factors include
inflation rate, interest rates, saving rates, foreign exchange rate, demand and supply,
competition level, etc. While doing business in different country, the management of
ENI has to deal with the kind of economic system in specific country and need to
analyse the stability of economy. For example, the current economic stability of UK
got tremor due to BREXIT impact (Antonakakis et al., 2018). Thus, market become
volatile and becomes difficult to do business there. Further, other economic factors
such as financial markets, labour costs, discretionary income, unemployment rates
also impacts on the success of the company.
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2. Social and technological Factors: The culture of society impacts on the corporate
culture. ENI has branches in different countries with having different cultures. These
factors greatly influence the growth and development of the organisation. Shared
beliefs, values and attitudes of natives of host countries play prominent role in how
marketers at ENI S.p.A will comprehend the clients of given market and how do they
design commercial message in order to gather their attraction (Bigoni et al., 2017).
Social factors include skill level and demographic level of natives, power structure,
class and hierarchy in the society, attitudes, purchase behaviour, etc. Technologies is
rapidly disrupting several sectors across the board. In order to exemplify the impact of
technologies, transportation industries can be a good example (Hassanain et al.,
2017). Over last decade, there has been significant improvement in transportation of
oil and gas from country to country. ENI has been greatly benefited with the rise of
advance technologies. This not only aid in surveying of oil reservoirs but also helps in
exploration, drilling, production and distribution. Though in order to survive in
competitive environment, the management of ENI has to focus on these technological
factors that can affect their business. Such as recent tech modification done by
competitors, cost of technology, training to staff, etc.
3. Environmental and legal Factors: Every country has different norms and
environmental standards which have to be followed by every organisation.
Environmental protection is become key issue since the increase in global warming,
ice melting and emission of greenhouse gases in the environment (Carpi et al., 2017).
Thus, in order to do business in different countries, the management of ENI has to
follow certain environmental norms and factors such as climate change, waste
management, protection of natural habitat, CSR activities in order to safeguard
environment, etc. In numerous countries especially in developing countries the legal
framework are not robust enough to safeguard the intellectual property rights of an
organisation. In order to enter in different market, the management of ENI has to
focus on various factors otherwise it can negatively impact on the organisation
(Tjaaland et al., 2015). Furthermore, it is important for management to follow host
countries rules in order to prevent any legal uncertainties. Laws such as data
protection, discrimination, equality, consumer protection, employability rights etc.
must be followed accordingly.
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Q3. ENI contribution to local community and indigenous people
“One of the key factor of success is the ability to maintain long term relationships
with the Countries where management of ENI operates through implementation of actions
and plans which aim at development of local community. For ENI a responsible and
sustainable relationship with the communities and people who live in the territories is a
dimension of its way of doing business since its origin.” The management of ENI is
responsible and committed towards development of local communities and indigenous people
in the counties where they operate. Below are some examples which justifies that
management of ENI has been working ceaselessly in order to raise the standards of local
communities and indigenous people (Kang et al., 2017). Congo: Development at Hinda district in order to improve living condition of
natives. Mozambique: Provided education, water and health in the province of Cabo Delgado. Nigeria: Provided basic services for the improvements of local communities living at
Niger Delta.
 Ecuador: Provided educational and health facilities in Villano area.
Above were some examples of countries where the management of ENI has contributed in
order to improve the standards and living conditions of local communities (Local
communities development. 2018). There are many more contributions which have been done
by the organisation so that the welfare of the community as well the country can be enhanced.
Around the world the management initiated various projects that foster development and
which are designed to meet the needs of local communities which eventually creates a
positive long term relationship (Di Lullo and Hester, 2017). The management also made
certain community agreements to local organisations in Ghana and Kazakhstan in order to
enhance the livelihood of the local communities (Eni’s relations with local communities.
2018). The CSR policies formulated by the top management of ENI have a clause states the
development of local communities and indigenous people living in the countries where the
organisation operates. The management donate ample amount of funds to the local charities
and schools so that they can redevelop efficiently (Tjaaland et al., 2015). Due to this gesture,
the local communities also support the management by participating in the events organised
by the organisation. ENI provides employment opportunities to the natives, youths and
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skilled people living in host countries eventually helps in boosting up their economy (Ribeiro
et al., 2017). Thus, it implies that ENI management is committed towards growth and
development of local communities.
CONCLUSION
the above report, it can be understood that oil and gas sector plays humongous role in
the growth and development of the national economy. In this context, the report helps in
understanding the key divisions and activities in oil and gas industry with the reference to
ENI. It is one of the largest oil and gas corporation in Europe. Exploration and Production are
main business of ENI (Business lines. 2018). The management has established their plant in
over 40 countries and mostly concentrate on producing oil and gas. The role of management
is to deliver organic production growth. There were several macroeconomic factors that
affect the productivity and profitability of the company and some of them has identified in
the report. Eventually, the role of company in development of local communities and
indigenous people has been assessed in the report.
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References
Antonakakis, N., Cunado, J., Filis, G., Gabauer, D. and De Gracia, F.P., 2018. Oil volatility,
oil and gas firms and portfolio diversification. Energy Economics. 70,pp.499–515.
Bigoni, F., Francesconi, A., Tarantini, V. and Marino, R., 2017. Faster Reservoir Simulation
Allows Multi-million Cells Models-Are Fine Grids Requiring Fine Reservoir
Geologist? In: 79th EAGE Conference and Exhibition 2017.
Carpi, D., Zanibelli, A. and Tramontano, V., 2017. Monitoring and Reduction of CO2
Emissions for Oil & Gas Logistics In: Offshore Mediterranean Conference and
Exhibition. Offshore Mediterranean Conference.
Cavani, F., Albonetti, S., Basile, F. and Gandini, A., 2016. Chemicals and fuels from bio-
based building blocks. John Wiley & Sons.
Di Lullo, A. and Hester, K.C., 2017. Revisiting the Hammerschmidt Equation: Effect of
Operating Conditions on the Selection of the Hammerschmidt Constant In: Offshore
Mediterranean Conference and Exhibition. Offshore Mediterranean Conference.
Frank, A.G., Dalle Molle, N., Gerstlberger, W., Bernardi, J.A.B. and Pedrini, D.C., 2016. An
integrative environmental performance index for benchmarking in oil and gas
industry. Journal of Cleaner Production. 133,pp.1190–1203.
Hassanain, E.M., Yacout, D.M., Metwally, M.A. and Hassouna, M.S., 2017. Life cycle
assessment of waste strategies for used lubricating oil. The International Journal of
Life Cycle Assessment. 22(8),pp.1232–1240.
Kang, W., de Gracia, F.P. and Ratti, R.A., 2017. Oil price shocks, policy uncertainty, and
stock returns of oil and gas corporations. Journal of International Money and
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Mannino, I., Ninka, E., Turvani, M. and Chertow, M., 2015. The decline of eco-industrial
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296.
Megginson, W.L. and Sitorus, R.E., 2017. 1.2. CORPORATE GOVERNANCE IN THE
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Vincenzo Capizzi.,p.35.
Qian, B., Zhu, J., Yang, H., Shi, X. and Li, J., 2017. Hydration improves Longmaxi shale
fractures. Oil & Gas Journal. 115(12),pp.54–59.
Ribeiro, E.P., de Almeida, W.F. and Bone, R.B., 2017. Stock Market Firm Value Effects of
Research and Development Expenditures in the Oil and Gas Industry In: Engineering
Systems and Networks. Springer, pp. 61–67.
Tjaaland, S.H., Westgaard, S., Osmundsen, P. and Frydenberg, S., 2015. Oil and gas risk
factor sensitivities for US Energy Companies. The Journal of Energy and
Development. 41(1/2),pp.135–173.
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Westgaard, S., Osmundsen, P. and Frydenberg, S., 2016. Oil and Gas Risk Factor
Sensitivities for US Energy Companies.
Online
Business lines. 2018 [Online]. Available through:< https://www.eni.com/en_IT/results.page?
question=where+are+the+key+activities+for+eni%3F>
Eni’s relations with local communities. 2018 [Online]. Available through:<
https://www.eni.com/en_IT/sustainability/local-development/eni-s-relations-with-
local-communities.page>
Local communities development. 2018 [Online]. Available through:<
https://www.eni.com/en_IT/sustainability/local-development/local-communities-
development.page>
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