Posted: May 24th, 2022

Risk Management in Petroleum Industry

Risk management in petroleum industry: case study Libya’s National Oil Corporation (LNOC)

Libya’s National Oil Corporation (LNOC) is a Libyan owned oil corporation that carries out the exploration, production and distribution of both crude and refined oil. LNOC also engages in the oil production and sharing agreement with specialized international companies. Typically, L NOC is the biggest oil producing company in Africa and controls 70% of Libya oil. While LNOC is very rich in oil reserve, however, the company is encountering various risks, which it is having challenges to manage. (World Bank, 2006).

Complex investments are commonplace in the petroleum industry and they are generally characterized by high-automated infrastructure and processes. Petroleum industry is generally characterized with expensive items which include pipeline, oil tankers, drilling rigs, transport equipment and other expensive items. (World Bank, 2008). With expensive capital equipment to run the business, petroleum industry generally encounters lot of risks at micro and macro levels, which could ultimately escalate into industry-wide crisis. (Fernandes et al. 2010).

More importantly, petroleum industry faces waves of unprecedented challenges because of the constant added costs and regulatory protocols that the industry needs to comply in their business process. The issues make petroleum industry to face several risks factors which include commodity price volatility, oil and gas price movements and risks of oil leakages that could lead to the loss of billion of dollars. Since petroleum industry is characterized with capital-intensive projects, the industry always implements the mega project which is difficult to manage. Petroleum industry is also increasingly engaging in mega-projects where development of project costs may run into billion of dollars. Such projects generally entail enormous challenges in planning, logistics, scheduling, data management and communication. “As expanding project scope becomes bigger challenges to manage project risk grow bigger.” (Oracle, 2011 P. 2). With increase in the project scope, creating a new risk management also become challenging.

Similar to the risks associated to petroleum industry, LNOC encounters various risks while implementing its business operations, which the company is encountering challenges to manage. (Energy Information Administration, 2012).

1.2: Problem Statement

Risk is a state of uncertainty which could lead to a negative outcome. “Uncertainty and risk are everywhere in the petroleum industry.” (Nolan & Thurber 2010 P. 9). Within the last few decades, Libya’s National Oil Corporation has faced various risks during its business operations. Exploration risks are the major risks that the company is facing. Moreover, the corporation faces series of and non-quantifiable risks that impede its operations and some of the quantifiable and non-quantifiable risks are as follows:

Quantifiable Risks

Non-quantifiable Risks

Financing/financial risk

Operational risk

Market/price risk

Legal risk

Modeling/valuation risk

Political risk

Business continuity risk

Technological risk

Credit/default risk

Strategic/franchise risk

Volumetric risk

Staffing/organization risk

Operations risk

Regulatory risk

Financial reporting risk

Environmental risk

With complexity of multiple risks facing the company, LNOC has not yet devised a valid and reliable methodology to manage these risks. Thus, LNOC requires a sophisticated and comprehensive risk management approach to manage the risks.

1.3: Dissertation Aims & Objectives

To develop a risk management methodology in petroleum industry: Case study of Libya’s National Oil Corporation (LNOC).

1.4: Dissertation Hypothesis

Risk management is very complex to implement within the petroleum industry. Fluctuation in market price is one of the risks that LNOC is encountering in its operations. Since the company is largely dependent on government, the company lacks effective methodology to manage the risks facing the company. While LNOC is envisaging in risk management plan, choosing the right methodology to manage the risks has become challenging for the company. Nolan, et al., (2010) argues that project could be accomplished with minimal risks if an organization:

chooses a project carrying lower uncertainty

Estimating the project uncertainties before project implementation,

Reducing capital that would be invested in a project with higher uncertainties.

HI: Effective methodology for Libya’s National Oil Company to manage the risks is by conducting a project risk feasibility plan to identify the risks and identify the method to control the risks before embarking on the project.

Ho: Effective methodology for Libya’s National Oil Company to manage the risks is not by conducting a project risk feasibility plan to identify the risks and identify the method to control the risks before embarking on the project.

1.5: Dissertation Methodology

Research methodology is a method this study will use in carrying out the data collection. The research will collect both primary and secondary data to complete the study. The quantitative statistical method will be used in collecting and analyze the data. The study will use descriptive statistics for data analysis and to summary all the data collected. This study prefers quantitative technique because it provides a reliable and valid method to test the significant of the chosen methodology to manage the risk within oil industry with special focus in Libya’s National Oil Corporation. (Tewksbury, 2009).

The study will also collect secondary data from several academic databases which include Science Direct, Sage Publication, Wiley, EBSCOhost and Emerald Insight. The chosen database contains several research articles and journals that would be used to complete the project.

1.6: Dissertation Scope and Limitations

This dissertation will focus on a development of risk management methodology in petroleum industry: A case study of Libya’s National Oil Corporation (LNOC). While the study will explore various methodologies to manage the risks in petroleum industry, however, the dissertation will identify a specific risk management methodology that could be applicable to Libya’s nation Oil Corporation. Although, the research aims to complete this study within 12 months, however, inadequate data on Libya’s National Oil Corporation may impede the timely completion of the project. Moreover, budget constraints may also affect the timely completion of the dissertation.

1.7: Dissertation Structure

The dissertation will be organized in seven chapters and it will be structured in the following format:

Chapter (1) provides the introduction to the project, which will provide the project’s background, research problem, dissertation aims and objective, dissertation scope and limitations, project’s hypothesis and project’s structure.

Chapter (2) will provide the literature review which will explore various past studies related to the project. The review of the literatures will explore various techniques used in the management of risks within the oil industry, and a suitable methodology that could be effective for management of risks within the Libya’s of National Oil Corporation.

Chapter (3) will focus on the research methodology, which will cover method of data collection.

Chapter (4) will provide the data analysis to enhance data integrity and validity.

Chapter (5) will explore the case of Libya’s National Oil Corporation (NOC) and the risk management methodology suitable for the company.

Chapter (6) will deliver the research findings and,

Chapter (7) will provide conclusion and recommendations.

8: Dissertation Expected Duration

The dissertation will take approximately 12 months to complete. The bar chart in Fig 1 illustrates the expected duration of the dissertation.

Fig 1: Bar Chart Illustrating Expected Duration of the Dissertation

Conclusion

This study focuses on the methodology to manage the risks within the petroleum industry with special focus on Libya National Oil Corporation. The business operations of oil industry are specially characterized with various risks. More importantly, the LNOC encounters lots of risks in its operations which the company is unable to manage. This project will identify and explore a reliable risk management methodology that would assist the LNOC to manage various risks facing the company.

List of References

Fernandes, L.J. Barbosa-Povoa, A.P. & Relvas, R. (2010). Risk Management Framework for the Petroleum Supply Chain. 20th European Symposium on Computer Aided Process Engineering — ESCAPE2

Oracle (2011). How to Reduce Costs and Manage Risk in the Upstream Oil & Gas Industry with Enterprise Project Portfolio Management Solutions. An Oracle White Paper.

Energy Information Administration (2012). Libya: Country Analysis Brief. USA.

Nolan, P.A. & Thurber, M.C. (2010).On the State’s Choice of Oil Company: Risk Management and the Frontier of the Petroleum Industry. Working Paper Program #99 on Energy and Sustainable Development.

Tewksbury, R. (2009). Qualitative vs. Quantitative Techniques: Understanding Why Qualitative Methods are Superior for Criminology and Criminal Justice. Journal of Theoretical & Philosophical Criminology: 1 (1).

World Bank (2006). Libyan Arab and Jamahiriya: Economic Report, Social & Economic Development Group: MENA Region.

World Bank (2008). A Citizen’s Guide to National Oil Companies. Parts A and B. The World

Bank Group and Center for Energy Economics, University of Texas at Austin.

---

Get Professional Assignment Help Cheaply

Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?

Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.

Why Choose Our Academic Writing Service?

• Plagiarism free papers
• Timely delivery
• Any deadline
• Skilled, Experienced Native English Writers
• Subject-relevant academic writer
• Adherence to paper instructions
• Ability to tackle bulk assignments
• Reasonable prices
• 24/7 Customer Support
• Get superb grades consistently

 

Online Academic Help With Different Subjects

Literature

Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.

Finance

Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.

Computer science

Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!

Psychology

While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.

Engineering

Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.

Nursing

In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.

Sociology

Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.

Business

We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!

Statistics

We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.

Law

Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.

What discipline/subjects do you deal in?

We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.

Are your writers competent enough to handle my paper?

Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.

What if I don’t like the paper?

There is a very low likelihood that you won’t like the paper.

Reasons being:

• When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
• We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.

In the event that you don’t like your paper:

• The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
• We will have a different writer write the paper from scratch.
• Last resort, if the above does not work, we will refund your money.

Will the professor find out I didn’t write the paper myself?

Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.

What if the paper is plagiarized?

We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.

When will I get my paper?

You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.

Will anyone find out that I used your services?

We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.

How our Assignment  Help Service Works

1.      Place an order

You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.

2.      Pay for the order

Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.

3.      Track the progress

You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.

4.      Download the paper

The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.

PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!

---