The Petroleum (Production) Act 1934 in the UK and its Regulations

Running Head:CORPORATE GOVERNANCE AND THE REGULATORY ENVIRONMENT
CORPORATE GOVERNANCE AND THE REGULATORY ENVIRONMENT
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1CORPORATE GOVERNANCE AND THE REGULATORY ENVIRONMENT
Answer 1
The organisations related to the Oil and Gas sector of UK are required to follow various
governmental legislations for the purpose of their business operations in the nation. The
‘Petroleum (Production) Act 1934’ is one of the most important regulations which the different
organisations are required to abide by for the effective drilling of petroleum in the various sites
(Legislation.gov.uk 2019). More importantly, it is seen that this act also offers an overview of
the safety parameters, equipment, ethical considerations and others that the organisations are
required to follow for the purpose of drilling (Oilandgasuk.co.uk 2016). Furthermore, the
organisations also required to follow the precepts of the Health and Safety Executive (HSE) of
the national government to ensure the safety of the workers and also the different property of the
concerned organisation (Hse.gov.uk 2019). Besides this, the government clearly identifies six
different areas of improvements in the form of safety of the environmental management system,
improving the learning culture and process effectively, integration of the regulatory frameworks,
clear organisational structure to formulate the control and command process, business liability
and ability of the organisation and finally open up high scopes and opportunities for the R&D
development (Bradshaw and Waite 2017). Moreover, the organisations also need to have
adequate risk management programs and also needs to abide by the Governance, Risk and
Compliance (GRC) elements of the nation (Bowdler 2017). These in short are some of the most
important regulatory assessment aspects along with others that the regulator will look for before
authorising or giving permission to the organisations.
Elshandidy et al. (2018) are of the viewpoint that the primary purpose of these
regulations is to ensure a safe and secure environment both from the ecological and business
perspective that will help the industry to expand its business steadfastly. Furthermore, these

2CORPORATE GOVERNANCE AND THE REGULATORY ENVIRONMENT
regulations and their effective use also helps the organisations to avert disasters which could
have been avoided and also to offer a safe working environment to the workers. For the conduct
of this assessment, the regulator conducted interviews with the different managers, workers and
other stakeholders of the organisation. The regulator also conducted inspections in the workplace
and the drilling sites of this organisation to ensure that the above mentioned regulations and
others are being followed in an effective manner by the concerned organisation.
Answer 2
As per the Cadbury report of 1992, Corporate governance is a set of rules and guidelines
that the firm is entitled to follow in order to retain its business effectively and successfully
expand its sustainability measures (Bowdler 2017). According to Bell, Filatotchev and Aguilera
(2014), the notion of corporate governance is blended with the practice of balancing the interests
of the stakeholders. The stakeholders are identified in terms of the management, shareholders,
customers, suppliers, financiers, government and community as well. In fact, Krechovskáand and
Procházková (2014) advocated that the principles of corporate governance are also associated
with the objectives of the organisation so that the business companies can grow on the basis of
the corporate governance principles.
It is important for the organisations to deliver such a measure so that the environmental
condition will be balanced. The oil sector has a far-reaching impact on the environment and
escalating trend of politics further perturbs the situation. Therefore, Boatright (2017) ascribed
that good governance plays a pivotal part in order to establish a balance both politically and
environmentally within the industry. In addition to this, good governance also facilitates
transparency initiatives within the organisational framework so that big business houses in the oil

3CORPORATE GOVERNANCE AND THE REGULATORY ENVIRONMENT
sectors of UK can check on sustainability. Corporate governance is also focusing on the
community engagement a development process that will bring more progress in the entire set up.
For the UK oil sector, it is important to focus on some essential factors responsible for
carrying out an effective and transparent mechanism within the entire business practice. For
instance, clarity over the goals and objectives of the Oil companies in the UK is considered to be
an important aspect to solidify the practice of good corporate governance. In association with
this, Amba (2014) opined that putting more emphasis on sustainable development is highly
effectively significant for the organisations in the UK oil sector for its future benefits. The
Cadbury report helps to enact the ‘UK Corporate governance Code’ in 2010. The oil sector is
always questioned the environmental issues; therefore procuring good governance will bolster
the brand image of the oil companies existed in UK. Furthermore, accountability in decision
making is also considered effective enough to set up a plan for further business activities.
Through those factors, the oil sector in the UK can achieve effective corporate governance.
Answer 3
As far as the Oil sector in the United Kingdom is concerned, it can be stated that the UK
oil industry has the largest production capacity across Western Europe and the second largest
after Norway. The government report showed that in the year 2017, the UK oil sector produced
999,000 barrels a day (oilandgasuk.co.uk 2017). However, there is a sharp declination in the
production in comparison to the year 2016 with a percentage of 1.3. Currently, there are six
refineries actively working in the UK with a production volume of 60 million tonnes in 2017
(deloitte.com 2018). However, a large volume of the workforce is associated with the gas sector.