Oil and Energy Policy Analysis

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This assignment delves into the intricate interplay between oil industries and government policies. It requires students to examine various historical instances where these sectors have interacted, analyzing the economic consequences and broader implications of such relationships. The assignment encourages critical thinking about the evolving dynamics between governments, oil companies, and global energy markets.

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Running head: Strategic management
BP
Strategic Management

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Strategic management 1
Table of Contents
Introduction.................................................................................................................................................2
Brief Background- BP (Reasons to choose)..................................................................................................3
An Outlook- Oil and Gas Industry (2014-17)................................................................................................4
Challenges at the Hand of BP......................................................................................................................5
Benefits of BP..............................................................................................................................................6
Economic benefits...................................................................................................................................7
Recommendation for Strategic choices.......................................................................................................7
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11
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Strategic management 2
Introduction
BP, formerly known as British Petroleum, has its presence since the discovery of oil in
Persia (1908); The Company started its operation in the year 1908, after discovery of oil in
Persia. Since then, the company has moved through various phases-it was in coal first, then
graduated to oil, further moved to gas, then from onshore to deep water and now it is in the
look out towards a new mix of energy sources as the world moves into a lower carbon
future. The company is led by Mr. Bob Dudley since 2010 (Mikesell, 2016)
The universe is changing fast and so is BP, it produces a mix of energy that provides light,
heat and mobility for billions of people and is shifting towards lower carbon sources, this is
driven by advancement in technology and increasing concerns about the climate change.
BP is among one of the oil and gas companies which are working towards sustainable
development of resources. (Gale, 2015)
BP is present in more than 70 countries across the globe; they are in lookout for oil and gas
from different parts of the world and are also involved with logistics of energy. The
company has been marketing & producing raw material and fuel which find usage in
everyday product (Koziol & Whatley, 2016)
In the report further, we will look at the strategic choices made by BP during the financial
years 2014-17, a close look at the choices to understand the reason and purpose behind
them. BP in the past has faced many challenges leading to its oil spill; explosion in the well,
change in the leadership, organizational changes etc., and still the company has kept its face
strong and put a strong position in front of its stakeholders. Keeping all the points in mind,
the period of 2014-17 is rightly suited to analyze the choices made my BP (Selley &
Sonnenberg, 2014)
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Strategic management 3
Brief Background- BP (Reasons to choose)
The oil and gas industry is changing at a rapid rate; every company is working towards
reducing its carbon footprints and working towards finding a sustainable solution for
energy. Energy resources are depleting day by day, hence it becomes pertinent to
constantly look out for alternate sources of energy in order to satiate the growing needs of
energy. The strategic priorities for BP are to deliver heat, light & mobility solution to the
world (Martinez & Harbaugh, 2013)
BP has multiple brands of its own, but has a unique distinctive style or personality. Some of
the prominent brands of BP are:
Amoco: In October 2017, the company announced reintroduction of its long
standing Amoco brand to the US fuel retail sector.
AMPM: First of its kind, it was opened in order to add value to the gas stations.
Apart from fuelling vehicles, it also treats them with beverages and a service station.
Aral: It is one of the most loyal and trust worthy brand in Germany. The company
follows the same model like AMPM and provides good food and excellent services to
people on the go
Castrol: It is widely seen as the world’s true global lubricant specialist. BP acquired
Castrol brand in the year 2002. Castrol’s motor oils for automobiles and bikes are
known all over the world (Crystal, 2016)
Wild Bean Café: BP identified the motorist culture rising in the states; it hence
came up with the concept of wild bean café, which offers good quality food and
coffee to the motorists on the go.
BP has been in midst of multiple controversy owing to its huge spill on the gulf of Mexico
accidents in its drilling and exploration sites and inefficiency of the top management to
respond to the growing concern related to the safety and concern of the employees and
public outrage. Hence, BP is the perfect company in oilfield sector to be anlyzed during the
period 2014-17 (Onoh, 2017)

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An Outlook- Oil and Gas Industry (2014-17)
Sharp fall in oil & gas prices- after rapidly falling by over 50% , oil prices remain
volatile in the $50 per barrel range, LNG prices also fell due to weak demand and
rising supplies.
Oil demand response is limiting stock builds-Global oil demands have picked up
significantly in recent months- with Asia and the US becoming strong markets.
Stocks were still building but not as it were expected to rise (Hakansson, 2015)
Oil and gas producers responding to lower prices- Prices of US rig numbers have
fallen, despite producer hedging, with even some of the best shale players testing
breakeven. Prices still below the levels needed to justify investments in many parts
of the world (Sovacool, 2014)
Slowdown of Non-OPEC supplies- US output, is always the first to respond to falling
prices, but it hasn’t been in a position to react since a long time. Record investments
which are driven by high prices temporarily reversed the declines across non-OPEC
supplies outside the US (Warner & Sullivan, 2017)
Two –tier OPEC not in a mood to cut its output
Lower prices adding to the existing geopolitical issues- Lower revenues fuel the
political and security issue that are already disrupting the output in countries like
Libya. A large number of militant groups are also spreading across various regions,
limiting energy investments (Noreng, 2016)
China’s increase in demand for petroleum is draining the economy and further
forcing the prices to be volatile.
Asia Pacific is well known for its demand growth. In between 2012 and 2035, Asia
Pacific has world’s demand growth in liquids and it is expected to be about 72%.
The European Union with an intention to increase their share of alternative fuels in
energy supply portfolio which ultimately meet the severe emission targets
(Anderson, 2014)
In East the consumption is on rise, mainly in China & India, and this increase in
consumption lead to attract imports and oil supplies.
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It can be easily said that the oil and gas industry has taken quite an international approach
in its behavior and attitude, and the years ahead suggests to do the almost the same, which
is going to generate the high levels of inter-dependence and connectivity, Leading the
world to be a safe place for it (Kelly, 2015)
Challenges at the Hand of BP
Dealing with the 3D effect-It is a known fact that existing wells are drying up
rapidly, and the demand for the oil is increasing, hence meeting this demand supply
gap is one of the biggest challenge at the hand of BP. Businesses these days are
finding new sources but at the same time the sources are proving to be extremely
hard to access and requires deep underground cutting tools and a very rich
manpower. All this comes at an additional cost. With the problem happening at the
time when the demand of oil and gas is at the highest is putting too much pressure
on BP(Miller, 2015)
Handling Government Pressure-Increasing carbon footprint is a source of big
concern, hence government all over the world is trying hard to reduce the carbon
footprint and curb down the greenhouse emissions, and this is putting businesses
under a lot of pressure. Recently BP has to shut down two if its refinery owing to
excessive emission of carbon. It has also been seen in reports that oil and gas has
now overtaken transportation as leading producer of greenhouse houses (Robinson
& Morgan, 2016)
Attracting Investments- After the slump in productivity in the year 2011, the
sector has not yet fully recovered; this has made investors rethink before investing
money and hence comes a cash crunch. BP is facing big issues in attracting
investment, as it is under pressure to show consistent performance, which they
have not entirely lived up to the expectations of its shareholders in the recent
past(Draper, 2017)
Improving Safety Standards- Oil being the most important natural resource and
probably one of the costliest and also with the highest hazard causing capacity.
Hence it’s extremely important to work towards the safety standards. In the year
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2013, EU has asked the companies to maintain the highest safety standards. A lot of
oil spills in the Gulf Ocean etc., have made it mandatory for all oil firms to keep their
workforce and the environment safe. This puts additional pressure on BP, as they
have to rework on its entire plan according to the new standard of safety (Cohen,
2015)
Benefits of BP
BP sees trading benefits from oil boom in the USA
BP is expecting its trade operations to boom because of the growing global crude oil
demand from Canadian, Brazilian, The USA and the growing demand rise in Asian markets.
The company is keen to expand BP’s trading activities using long term deals on third party
oil products. BP employees more than 1800 people in oil trading, trades over 5 million
barrels per day of oil and refined products; it’s only succeeded by its longtime rival shell.
The benefits the company is deriving out of its Atlantic basin refineries are less
sophisticated than modern Asian and middle eastern plants, which can deal with more
complex grades of crude. This will also help in boosting price of heavier fuel. It has also
been observed that the global demand for distillates is growing faster than that of gasoline.
Economic benefits
The economic benefits provided by BP to the nation’s economy are far outstripped its
earning. It has created spur in the economy by providing thousands of jobs in the years of
its growth. In the past year this industry has delivered, if roughly estimated equivalent to
60 percent of the government package to the US economy. The benefits in taxes and
royalties has also seen a rise, company pays billions of dollars as taxes to government of US
and by another way collect royalties which benefits financially to the economy These taxes
and royalties paid by the company to government help in paying the services provided by
government named as health care, education and infrastructure which ultimately benefit
people living in US. The investment made in this industry by way of mutual funds and other

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funds results into higher profits and also it supports other businesses and job in the
economy (Sanders & Houghton, 2016)
Recommendation for Strategic choices
Fit for the future
The oil and gas industry is changing; all the forms of energy are becoming less and less
abundant in nature. With the evolution of new technology, BP is also evolving and moving
away from natural resources and working towards reducing the carbon footprint (Hollick,
2017)
Figure 1 Safety events (BP website)
Shift to gas and advantaged oil in the upstream
The strategy is to invest in large scale gas projects, pursue quality oil projects in core basins
and seek out new opportunities in selected region. Around 75% of the company’s planned
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projects are gas projects, all these projects are at lower costs. Working towards maximizing
the recovery, managing the decline in falling prices and extend the life of the existing
projects. At the same time BP is doing investment in the priority sector and disinvestment
from the projects which are not yielding much value to the company (Robinson & Morgon,
2016)
Figure 2: Safety improvement in upstream (BP website)
Market led growth in the downstream
Strengthen the competitiveness of the refineries and petrochemical plants. Grow the fuel
marketing and the lubricant business in the existing and new markets. Creation of new
fuels, lubricants and petrochemicals offers to meet the evolving needs of the customers and
partners. And finally develop and prove new business models through partnership with
vehicle manufacturers and others (Mitchell, 2014)
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Strategic management 9
Venturing and low carbon across multiple points
Reducing carbon footprint is most essential for the oil and gas industry. At BP the Research
and development team is consistently working on finding new and innovative solution to
reduce the carbon emissions. The company is teaching its partners and customers the
harmful effects of carbon emissions, conducting various workshops as well. The company is
focused on deepening its understanding of future and the new generation technology
(Uldam, 2016)
Modernizing the entire group
The company is tirelessly working on simplifying its organizational structure; the ease in
the structure will get more transparency and ease of working in the system. It is also
incorporating digital solutions in its marketing and business strategy to make it accessible
to its target audience. BP is focused on transforming the way people feel when they work
with them, by motivating them. It is also on a mission to improve the safety of its workers
in the drilling oil fields (Tedlow, 2014)
Safe, reliable and efficient execution
Operational excellence is essential to every organization, but it becomes excessively
important in the oil and gas field as the lives of the employees working in the oil field is at
stake. Hence, in order to achieve operational excellence, the team at BP has set up six sigma
quality and safety methods to be implemented to ensure the safety of its employees and
provide an atmosphere of operational excellence.
Conclusion
BP has come out strongly from its disaster of oil spill and corporate mismanagement, the
changes the company has brought in its management policies has brought stability to the
group. Company is focused on developing new and innovative solution for the world; it is
working towards a futuristic approach towards energy sector. The company believes that
the future of oil and gas industry is towards finding a sustainable solution towards it,
because the depleting resources are a cause of concern. BP had major issues related to the

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safety of its employees, the company has faced a lot of flak from public related to its
employee’s turnover, and the company has come up with special training for its employees
which is directed towards their safety and establishing safety standards for them. The CEO
Mr. Dudley is doing a terrific job in acquiring various projects of drilling and oil exploration
and has stuck ties with the USA and Asia for sustainable energy projects. Therefore, it is for
certain that the strategy company has adopted now will surely work in its favor.
References
Mikesell, R.F., 2016. Petroleum company operations and agreements in the developing
countries. Routledge.
Gale, G., 2015. International directory of company histories. Saint James Press
Kozioł, M.J. and Whatley, F.R., 2016. Gaseous air pollutants and plant metabolism.
Butterworth-Heinemann.
Selley, R.C. and Sonnenberg, S.A., 2014. Elements of petroleum geology. Academic Press.
Martinez, P.A. and Harbaugh, J.W., 2013. Simulating nearshore environments (Vol. 12).
Elsevier.
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Crystal, J., 2016. Kuwait: The transformation of an oil state (Vol. 11). Routledge.
Onoh, J.K., 2017. The Nigerian oil economy: From prosperity to glut. Routledge.
Hakansson, H. ed., 2015. Industrial Technological Development (Routledge Revivals): A
Network Approach. Routledge.
Sovacool, B.K., 2014. What are we doing here? Analyzing fifteen years of energy scholarship
and proposing a social science research agenda. Energy Research & Social Science, 1, pp.1-
29.
Warner, M. and Sullivan, R. eds., 2017. Putting partnerships to work: Strategic alliances for
development between government, the private sector and civil society. Routledge.
Noreng, O., 2016. The oil industry and government strategy in the North Sea (Vol. 11).
Routledge.
Anderson Jr, I.H., 2014. Aramco, the United States, and Saudi Arabia: A study of the dynamics
of foreign oil policy, 1933-1950. Princeton University Press.
Kelly, S., 2015. Buraimi. The Struggle for Power, Influence and Oil in Arabia, by Michael
Quentin Morton/British Policy in the Persian Gulf, 1961–1968. Conceptions of Informal
Empire, by Helene von Bismarck: London and New York, IB Tauris, 2013. Pp. 286,
bibliography, index, plates.£ 22.50 (hardback) ISBN 978 1 84885 818 3/Basingstoke,
Palgrave Macmillan, 2013. Pp. 269, bibliography, index.£ 55.00 (hardback) ISBN 978-0-
230-24650-8. Middle Eastern Studies, 51(4), pp.674-680.
Miller, A.D., 2017. Search for security: Saudi Arabian oil and American foreign policy. UNC
Press Books.
Draper, T., 2017. American business and public policy: The politics of foreign trade.
Routledge.
Cohen, B.C., 2015. Press and foreign policy. princeton university press.
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Hollick, A.L., 2017. US Foreign Policy and the Law of the Sea. Princeton University Press.
Sanders, D. and Houghton, D.P., 2016. Losing an empire, finding a role: British foreign policy
since 1945. Palgrave Macmillan.
Robinson, C. and Morgan, J., 2016. North Sea Oil in the Future: economic analysis and
government policy. Springer.
Mitchell, T., 2014. Economentality: how the future entered government. Critical
Inquiry, 40(4), pp.479-507.
Uldam, J., 2016. Corporate management of visibility and the fantasy of the post-political:
Social media and surveillance. New Media & Society, 18(2), pp.201-219.
Tedlow, R.S., 2014. The Rise and Fall of Mass Marketing (RLE Marketing) (Vol. 25).
Routledge.

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