Introduction to Oil and Gas Environment

This report provides an introduction to the oil and gas industry, focusing on the roles and activities within the downstream division of ENI. It also discusses the impact of macroeconomic factors on ENI and examines ENI's contribution to local communities and indigenous people. The report highlights the importance of the environment to the success of the business.

Introduction to Oil
and Gas Environment

Table of Contents
INTRODUCTION......................................................................................................................1
Q1. Determining the role and activities within downstream division of ENI............................1
Q2 Impact of macroeconomic factors on ENI...........................................................................3
Q3. ENI contribution to local community and indigenous people.............................................4
CONCLUSION..........................................................................................................................5
References..................................................................................................................................6

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. 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:
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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). This is done in order to enhance their productivity and profitability. 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. Gathering seismic data in order to evaluate geologic formation to determine
whether oil and gas can be producible in sufficient quantity or not. The role of engineers and
experts is to analyse the data and provide best and precise results. Another activity done by
management of ENI is to drill the exploration and delineation wells in order to identify the
presence of oil and gas (Qian et al., 2017). The activity related with production phase
involves pumping hydrocarbons to the surface. Whilst doing this, additional well is drilled in
order to enhance the recovery of hydrocarbons. Other activities such as production
enhancement, well workover and well services occurred during production phase.
Gas and Power
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Exploration
and
Production
(E&P)
Refining
Marketing and
Chemical
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.
Refining Marketing and Chemical
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
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.
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 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
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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.
2. Economic Factors: 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.
3. Social 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.
4. Technological Factors: 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.
5. Environmental Factors: Every country has different norms and environmental
standards which have to be followed by every organisation. Environmental protection
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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.
6. Legal Factors: 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.
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
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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
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
From 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. 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
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Emissions for Oil & Gas Logistics In: Offshore Mediterranean Conference and
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Cavani, F., Albonetti, S., Basile, F. and Gandini, A., 2016. Chemicals and fuels from bio-
based building blocks. John Wiley & Sons.
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Operating Conditions on the Selection of the Hammerschmidt Constant In: Offshore
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Frank, A.G., Dalle Molle, N., Gerstlberger, W., Bernardi, J.A.B. and Pedrini, D.C., 2016. An
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Westgaard, S., Osmundsen, P. and Frydenberg, S., 2016. Oil and Gas Risk Factor
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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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