Free Essay on Petroleum and Natural Gas Issues

Published: 2019-02-27
Free Essay on Petroleum and Natural Gas Issues
Type of paper:  Essay
Categories:  Economics Research Energy
Pages: 9
Wordcount: 2229 words
19 min read

Natural oil and gas

Arab Nations produce almost half of the world's natural oil and gas. Well, consider countries like Nigeria, Congo, and Libya. Typically, Islam Nations. It is true to say that these countries produce more oil than any other nation on the continent. Forensic studies indicate religion (Islam) as a factor influencing how the states control their oil reserves. However, if there is no proper monitoring of the reserves, and appropriate management of funds from the sale of the minerals, disputes might occur. Civil wars, rebellions, and secession are some of the results of oil and gas-related disputes. Oil and petroleum producing countries are termed to be rich because of their vast reserves. But who says that resources come for free? We have to pay for these resources to ensure continuity of their flow.

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Take into consideration the consequences of the Gulf War. The war led to a hike in the prices of petroleum and natural gas within just a short period. The Sultan of Saudi Arabia at the time granted the U.S an opportunity to establish a base in the desert country amid protests from the civilians. Of course, countries like Iraq and Libya weren't happy with the Sultan's decision. The tension rose when Israel entered the war as U.S.A ally.

African countries belonging to the Oil Producing and Exporting Countries are no exception either. The war between Nigeria's government and the rebel group, Boko Haram, is a conflict spearheaded by both parties trying to take control of the oil fields. Taking control of the reserves means more income. The many civil wars experienced in Congo is a crisis resulting from an effort by the rebel groups to seize some of the oil-rich reserves.

I did a literature search to analyse the current issues related to PNG. In doing the research, I recognized the need to develop research guidelines and evidence-based practice to guide in the assessment. In developing these guidelines and standards, there is need to adopt research and writing style guides for assessment of the issue. M., D.B. Knight, Northey M. and D. Draper's (2012) Making Sense: A Student's Guide to Research and Writing. Geography and Environmental Sciences 5th Ed proved helpful in guiding me through the research process.

Human beings

Human beings are becoming increasingly dependent on products of crude oil and natural gas refining and extraction. These products form vital necessities of our day-to-day livelihood. However, with threats such as economic recession, civil wars, and depletion of reserves, it is better to develop remedies to ensure continuity in the provision of these resources. This essay will attempt to analyse the emerging issues in the PNG industry while at the same time addressing the necessary actions that should be taken to curb them.

The briefing identifies the key factors responsible for the issues/challenges related to PNG in most countries producing the minerals. For example, in many African communities, the concept of an ecosystem incorporates not only the natural resources but spirits of both animals and human ancestors (Dei, 1993). Most of these communities are deeply spiritual and possess an intimate connection with the environment. The Delta region of West Africa is a unique ecosystem. The region is a reservoir for some of the large PNG mining sites. Its crude oil and gas reserves estimate at approximately 30 billion barrels. The vast reserves have attracted several multinational companies, whose activities have generated negative impacts in the region,

The region is a hotbed of violence with rising cases of crude oil dumping into the black market. Income generated from the sale of oil is not of help to the people but to the wealthy oil tycoons who for centuries have dominated the sector. Rebel groups in countries like Nigeria and Congo are destroying pipes transporting petroleum and natural gas to jeopardize the industry and government activities. The governments of the countries lying within the Niger Delta have come up with policies that oversee that there is no dumping of oil in the black market. Most of these countries have nationalized the oil sector to see that income generated from the sale of PNG is invested in government projects that impact the people's lives. The government of Nigeria has taken an active stand against the rebel group Boko Haram to ensure that its oil reserves do not fall into the wrong hands.

Nationalizing the oil sector

Most countries situated in the Arabian Peninsula have nationalized their oil companies. Nationalizing the oil sector ensures investment of money generated from this in other important governmental projects. However, the countries are not safe from the problems associated with the mineral. These countries amass a lot of wealth from the sale of crude oil and petroleum. However, the money generated mostly benefits the ruling royal families and their close associates.

The August 2, 1990, Iraqi invasion of the neighbouring Kuwait lead to a destruction of over 600 oil well of the tiny nation. Saddam accused Kuwait of slant drilling all though sources claim that the allegation was Saddam's excuse to control the neighbouring country's oil reserves to generate money to pay Iraq's debts. The events came to be known as the first Gulf War. The war had a lot of negative impacts on both the oil sectors of Kuwait and Iraq.

A military intervention by a United Nations-authorized coalition of forces led by the United States drove the Iraqi Army out of Kuwait. The gulf war disrupted the oil sector globally, keeping in mind that most of the countries of the Gulf region produce almost a third of world's oil. The war is the main reason for the rise in the prices of petroleum in the global market.

Since the end of the Gulf War, diplomatic relations between the nations that took part in the war have not been the same. There is always tension between Iraq and her neighbours, especially Iran. Currently, terror groups like the ISIS are a major factor in the decline of oil production in the Gulf region. Intervention by the UN has proved worthless as the war between ISIS, and the Syrian army is at its peak. The UN is, however, making advances in trying to bring peace back in the region. It does this by making efforts in engaging the warring parties in negotiations. However, if negotiations fail, military intervention by the U.S. is seen as the only hope of restoring peace in the region.

Global economic crisis

Global economic crisis can sometimes lead to the collapse of oil prices, disrupting the sector. For instance, consider Indonesia, a nation known to be one of the key contributors to the oil and gas industry. However, the country's crude oil production is on the decline due to natural maturing of the oil fields, slower replacement of reserves and insufficient investment in exploration of new oil fields. In mid-2008, Indonesia oil sector experienced a drastic resurgence in investment coinciding with the run-up in crude oil prices that were at the peak at the time. However, the sector fell off the grid of the world market with the onset of the 2008 global financial crisis at the end of that year.

The beginning of 1991 saw the adjustment of product prices by the Korean government to ensure profitability of the oil and gas industry so that sector could compete internationally prior to deregulation. In 1996, the government abandoned the formal price controls and replaced it with the Singapore pricing system. The Singapore system was competitive globally as compared to the formal Korean system. The Korean government deregulated the prices in 1997 but the impact of the deregulation was negligible. Despite all the efforts by the government to make the industry competitive in the international market, not much was achieved, and the sector still couldntt cope with the stiff competition.

Over the decades, the government of Indonesia has put effort into increasing the nation's oil and gas production by attracting investment from new and existing players. It does this by making an effort in maintaining consistency in the policies and vision for the industry through the Ministry of Energy and Mineral Resources, Ministry of Industry and Ministry of Finance. However, the concerned parties and bodies have not done enough to ensure that elimination of these problems. For instance, the country lacks a single body to resolve government disputes across various departments and agencies. Also, confusion over Law No.22 and its implementing regulations are still confusing to the public and companies.

Over the decades, technology has been changing dramatically. It is high time the oil and natural gas sector embrace technology to assist in solving the challenges faced by the industry. Oil and gas companies should employ International Business Machines (IBM) solutions for intelligent oil fields to provide solutions that enable them to evaluate and execute drill programs to facilitate better management of the oil fields and maximize profits. IBM technology prepares and routes incoming data from deep in the mines for analysis and event recognition.

Players and Interests

When it comes to matters relating to PNG, the whole world watches keenly, and this is the reason as to why the sector has many players whose interests have to be satisfied. Recent studies in the petroleum and gas industry show that attainment of high capital value can is possible by managing those resources on demand. Today, most gas and oil companies have integrated their enterprises with the key partners, distributors, and suppliers. Forming such partnerships enable the companies to respond quickly to changes occurring in the sector. These companies deal with such changes by reducing complexity and cutting operational costs. By doing this, they can monopolize the industry and extract value from the data they generate.

One of the key players in oil and gas industry are the physical planners. The role of the principal stakeholders is to take part in the socioeconomic assessment. These planners engage in public consultations and engineering processes as far as crude oil routes are concerned. John (2007) asserts that urban-regional planning is a profession that puts the welfare of the people as the priority. This essay identifies three specific areas of specialization for the physical planners namely route planning, impact assessment, and monitoring and enforcement.

The growing supply and demand for oil and gas calls for the adoption of new global and trading patterns. New global trading patterns are key players in the oil and gas industry. U.S.A, Canada, and Mexico are increasingly operating as a self-sufficient trading block. The driving forces for this development include the rise in unconventional oil and gas in the United States, the lessening of regulatory restrictions in Mexico and the high cost of exporting Canadian oil. Strengthening of the block will result in economic growth and strength of the three countries.

The trading pact between Russia, China and India will lead to an enormous contribution to the oil and gas sector. May 2014 saw the signing of a $400 billion deal between Russia's Gazprom and China's CNPC. The agreement will see 38 billion cubic meters of natural gas inflow to China via pipeline over a 30-year period.

The Organization of Petroleum Exporting Countries is a major global contributor to oil and gas industry. The organization looks to expand its share of Western European countries. Having exported almost 60% of its crude oil to Asia in 2013 alone, the organization seeks to expand its market base. As Western Europe tries to free itself from overdependence on Russia, it is possible that the block could turn to OPEC for energy supplies.

Of course, we cannot forget the contribution of Arab nations to the oil and gas sector. For instance, in an attempt to win European market share, Saudi Arabia's "Saudi Aramco Oil Company," cut the official selling price (OSP) in Northwest Europe by $1.50 per barrel for February 2015.

Mozambique should also not be discounted. The country's offshore Rovuma oil field reserve is estimated to contain around 180 trillion cubic feet of gas. This presents the nation with an opportunity to engage in partnership with other foreign companies. Foreign companies like India's Bharat Petro Resources, ONG Videsh, and Oil India bought a combined 30% stake in the offshore Rovuma Area-1 from US-based operator Andariko. CNPC of China has too invested in the region. The company recently bought a 20% stake in a block operated by Italy's Eni.

The oil and gas industry continues to be one of the most critical and dynamic industries in work. We cannot do without products coming from these resources. We use vehicles, gas cookers, paraffin, in our everyday life. Imagine getting up one morning only to find that the world's oil reserves have been depleted. It means that you will have to take a walk to school or wherever you are supposed to go, you will have to stay in darkness the whole night, among other unimaginable stuff. Surely, we might just wake up to these horrors one day if the pressing challenges facing the PNG industry are not addressed. It is on the key players in the sector to oversee that these problems are worked on and their root causes eliminated.


Amnesty International (2009) Catch of the Day: Oil Spill in the Niger Delta Cost Lives, Niger Delta, September 2009. Accessed at http://catch of the day news. blogpost. com/2009/09/oil spills-in-Niger-delta-cost-lives-html on 05-10-2010.

Northey, M., & McKibbin, J. (2007).T Making sense: A student's guide to research and writing. Don Mills, Oxford University Press.

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