Sustainability in the Oil and Gas Industry

The aim of this report is to explore about the concept of sustainability and the role of the same in the gas and oil industry so that the process of sustainability can be achieved. The aim of oil and gas industry is to provide us benefits by giving us energy and power for the industries, oil for the transportation, and heat for the hoes and to cook food (Markard, Raven, & Truffer, 2012). There are lots of issues faced by the companies related to the sustainability in the oil and gas industry. There are problems related to the global health and sustainability. The oil and gas industry is one of the fastest growing industries in the entire world. Together these industries account for the major shares of most of the countries. It helps to provide fuel to the cares, heat the homes and cook the food (Koohang, & Harman, 2007). The aim of this study is to analyze the features that influence the sustainability in the growth and development in the oil and gas industry.

There are many researchers who claimed that it can be maintained through bringing innovation in the gas and oil industries that are sustainable in nature. There are various types of benefits take place in social and economic factors from the oil and gas industry but the production must be balance with the safety, optimum use, and provides maximum benefits out of them. There must be a sense of sustainability in the growth and development of the oil and gas reserves (Aragon-Correa, 2013). There are various types of commitment that are measured and targeted like regulators by the government, supply chain of oil and gas, government and non-government organizations, and also the largest community of stakeholders.

BHP Billiton is one of the leading companies in the resources industry especially for oil and gas.  This company is a merger of BHP and Billiton Company that brings various elements together like quality, low cost resource assets, etc. The company is doing well in the production of oil and gas products. The company is trying hard and very much determined to manage the assets so that efficiency can be bringing in the company. The BHP Billiton is a world largest company that performs mining work. It is one of the biggest companies of Australia through the capitalization of the market. The company BHP was initiated in the year 1885 while billion was in the year 1860.

BHP Billiton – A Leading Company in the Industry

BHP Billiton is involved in the growth, innovation, promotion and manufacturing of iron ore, silver, coal, zinc, copper, oil and gas, lead, diamonds, and a wide variety of natural resources. BHP Billiton is a company that performs three major functions that is minerals, steel and petroleum the headquarters of the company is in Melbourne, Australia, and the offices are in Perth, London, Johannesburg, Singapore, Huston, Santiago, and The Hague (Akkerman, Farahani, & Grunow, 2010). There are more than 30000 employees of the company around the world. The company is listed in its stock exchange of Australia, Germany, UK, New Zealand, Switzerland, and US.

With the increase in the need of energy, the role of oil and gas industry is also increasing day by day. This has raised the job of the professionals of petroleum, oil and gas engineers.  The global requirement of the oil and gas resources can be fulfill by the worlds’ oil and gas reserves that provides a richest, valuable and densest energy sources to all the countries like Australia.

In Australia, we can find hydrocarbon fuel sources due to which Australia is termed as one of the major player in this industry. They also try to address their engineers in the best way they can. They not only try to combat the national needs but also the international needs by exporting the oil, as petroleum and other reserves to the other countries (Schoolman, Guest, Bush, & Bell, 2012). It helps them to earn foreign direct investments and many other benefits in the country.

In Australia, the major production of oil and gas takes place in the South Australia where the production and supply of oil and gas to the international and domestic market take place. It is happening from the decades since the gas was firstly discovered in cooper basin and then there was a discovery of oil at the same place (Lang, Wiek, Bergmann, Stauffacher, Martens, Moll, & Thomas, 2012).

There are various types of issues faced by the oil and gas industry related to the operations, management, functions, sustainability, global health, and much other risk. Every company has to manage such risk to remain in the markets and industry as there is high competition in all the industries (Reid, Chen, Goldfarb, Hackmann, Lee, Mokhele, & Whyte, 2010). The companies who are dealing in oil and gas industry are facing various types of risk as they have to cope up with the standards of safety, pollution, carbon emission, and many other risks.

Risks Faced by the Industry

There is a high burden on the government of the countries to manage the earth’s population as it has reached to 7.2 billion and it is increasing day by day which is a major concern (Matos, & Hall, 2007). There are various types of risks faced by oil and Gas Company like

These risks are defined as the risk that takes place due to failure, wrong processes, systems and people and many times due to external events. These types of risk can be legal risk but they cannot reputational risk strategic risk, etc. the risk in the oil and gas industry is totally dependent on the industry and company (Chu, & Majumdar, 2012). There are various types of operational risk like

• Carbon emission
• Land use pattern and biodiversity
• Health and safety risk

It is the second type of risk in context with oil and gas industry which is related to the geography of the country and the suitable circumstances that are required like landscape, earth, region, and other resources for the exploration of the oil and gas. It is also related to the government policy of that particular region and country and the policies made by the same. The geographical risk plays a vital role it helps in promotion of unprecedented poverty environmental stress and massive divisions.

It is one of the major risk and challenge face by the government as well as the company. It is the fact that there is a need to research and find the sources of oil that leads to violence, political instability and corruption in the businesses. There are certain areas that provide various types of stability and strong opportunities of the companies (Meadowcroft, 2009). The major issue is related to the corruption and malpractices present in this industry.

A table showing how these risk and challenges can be address

Risk exposure	Risk management
Carbon Emissions	· Carbon improvement policy
Carbon related risk	· Strategies and completion mechanisms (carbon capture and sequestration, energy efficiency, renewable energy technologies) · The reserves of carbon insecurity · Reduction in flares · Improvement in objective · Indicators  of Carbon Emissions Performance
There is a need to strengthen the regulations for wildlife conservation, biodiversity, etc. for the financial value. There is certain weakness in areas of companies’ proven reserves.	· corporation commitments and practices to reduce interruption
Types of functions and their risks related to the biodiversity and use of land	· programs  related to Land reclamation and other performances · Programs to diminish interruptions · Controversies correlated to unpleasant ecosystem or area impacts.
Standard local safety performance- it helps in wrecked down by proportion of manufacturing in each country	· Strategy and its Governance · Policies and levels of practice · Management systems and documentation · Development of the targets · Performance Indicators · Total Reportable Injury Frequency Rate (TRI), Lost Time Injury Frequency Rate (LTI) and fatality rates · Evidence of safety-related incidents and controversies.
The view of corruption in the nations and the functions is based on Transparency International’s Corruption Perception Index (CPI).	· Company commitments and policies.
There is a Difference in these corruption perceptions between the country of operation and the country of domicile is also based on the CPI.	· Plan to uphold commitments and police
Political uncertainty is related to World Bank’s ‘World Governance Indicators’.	· Feature of community engagement
Government efficiency is also based on World Bank’s ‘World Governance markers	· Evidence of corruption, bribery and human rights abuse

The pestle factors are the external factors that affect the working of the company and they are required to be understood to analyze the company and the markets (Lawrence, Lyons, & Wallington, 2013). It helps to understand the potential in the markets by the growth and decline takes place in the same.

The political factors are related to the external factors and also related to the government of the country. There is a need of stability in the taxation system that is very much required for the certainty of the business (Mukherjee, & Sovacool, 2014). The oil and gas industry like BHP Billiton require stability as it is one of the largest corporation players and also the developed of industry (Hall, Daneke, & Lenox, M. 2010). The recovery and growth in the investor money can take place only in the situation when there is stability in the political factors. Many times, there will be long time stability in the political factors, economies, etc. that help the investors to invest money.  The part of corporation tax is 27 % for the year 201-12 (Vivoda, 2009).

External Factors Affecting the Industry

The best point related to the oil and gas industry is that they provide high number of jobs like 450000 people across the country and more than 10000 businesses that include many multinational and other small companies who are working n this supply chain. There can be reduction in the taxation policy that helps to encourage the companies (Brundiers, Wiek, & Redman, 2010). They also try to bring innovation, and then related to the growth and development in the entire country.

There are situation when certain changes take place in the energy and climate changes by the government (Yusuf, Gunasekaran, Musa, El-Berishy, Abubakar, & Ambursa, 2013). There changes in the oil and gas process result in the changes in the entire economy due to which the government has to take step on the same.

The government wants a control on the security of the supply in which they believe on a low carbon economy   and also to determine the oil and gas price of the economy of the Australia (Kolk, & Van Tulder, 2010).  The health and safety executive of the country said that there are laws, rules and regulations that work to protect the safety, personnel health and welfare.

The oil and gas industry of BHP Billiton linked with government and many other stakeholders  who collectively try to lower down the emission of carbon  in the environment while production and determination of BHP Billiton oil and gas policy (Stephens, Hernandez, Román, Graham, A. C., & Scholz, 2008).  The austral safety and health executive says that production must be eco friendly and safe for the environment. The role of oil and gas industry is related to the production and exploration of the oil from the natural resources by using the process of the industries which creates a direct and indirect impact on the environment.

The economic report of Australia gas and oil company that the company BHP Billiton  and its company is working hard  and also challenging the environment, in such case the company have to invest n the machines to recover  the factors that were creating pollution in the environment. They invested in updated technologies and try to achieve maximum recoveries by installing them in the company (Clark, 2007). The company has divided the work of recovery into various plants like deep water recovery, complex reservoir recovery, etc.

The oil and gas of BHP Billiton are very complex, economically marginal and small in nature. The latest technology helped the company to revitalize the resources for the better use. The main motive behind this is to bring sustainability in the company and its growth and development. The company also used various types of technology facilitators that help to identify the needs for the collaborative technology (Hopwood, Unerman, & Fries, 2010). It also helps the company to change themselves as technology inventor as they are the first who bring such eco friendly techniques in the determination of oil and gas for the natural resources.

Conclusion

Strengths

• BHP Billiton is one of the famous natural resources company that deals in the production of oil and gas
• It has diversified portfolio of the assets of the company
• The company is also one of the largest supplier of copper, silver, lead, uranium, aluminum, etc. the company is also a sustainable company that focus on the process of sustainability
• The company also offers effective customers services to its customers to promote the portfolio of the products and at the same time there is an increase in the price of the products (Meadowcroft, 2011).
• The company also delivers premium quality to its customers and financial returns by returning the capital to the investors by the aggressive share buyback pram started by the company (Seuring, & Gold, 2013).  This help in maintaining the ratings of the company and also to raise the capital in the global market.

Weaknesses

• BHP Billiton also has many types of projects related to the pipeline execute that are pending
• The company sometimes fails to execute cost effective measures in the company
• The company also needs to strengthen the brand image and band position by using innovative solutions of the marketing and also by using effective tools of media.
• The company is also weak in corporate communications as the staff of the company is not proactive and do not respond to the enquiries sent by the customers on time. The company requires a corporate group   for the purpose of communication with the investors and stakeholders (Jones, Trier, & Richards, 2008).

Opportunities

• BHP Billiton has many types of project related to the pipelines execute projects.
• The company has the opportunity to explore to the new markets
• The company can further promote their

Threats

• There is a reduction in the demand for the exports in many countries as there is trend of in-house consumption and production (Cao, & Bluth, 2013)
• There is an expansion possible for the future related to the coal and copper
• The company can tie up with many other global and multinational companies
• There is an intense competition in the entire industries of oil and gas (Kumar, & Markeset, 2007)

Conclusions

The major conclusion from the present study is that what a company has to perform enough to sustain the needs of the future generations. There is need of sustainable development and that should be changed as universal goals and objective for all the countries. There is a requirement of correlation for the three major components that are environmental needs, social need and economic needs of the sustainable development. The basic need of sustainable development is to solve the problem morally and scientifically. This can be achieved by solving the problems related to economy, social and environment. They all must be achieved to have good governance of the country.

The company like BHP Billiton should do the process of brainstorming to connect the knowledge of the interconnections elated to the government, society, environment and economy. The reason behind the government is emphasizing on the sustainable growth is because the government is not only responsible for the same but also there are organization that are multinational and global who collectively manage the sustainable development. So the parameters of good governance can be earned by collective operations and function of both government and the companies in Australia and all over the world.

The well being of the companies depend on the basis of obeying and adaptability of role and regulations in the company passed by the government of the country. It is very relevant for the companies to follow the laws and developing policies suggested by the government in their business and operations. But due to the corruption and malpractices the companies bend the rules and regulations according to their favors. There is a prosperity that comes in the company due to oil and gas industry, the government try to help and provide benefits to such companies so that they can work better for the betterment in the country.

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