Oil & Gas Going Global: Identifying Risk and Reward
Friday April 21, 6:00 am ET
Ernst & Young's Energy Center Polls In-Country Oil and Gas Professionals to Determine Greatest Areas of Opportunity and Risk for Exploration and Production
HOUSTON, April 21 /PRNewswire/ -- Oil and gas companies are facing unprecedented pressure to explore and produce new reserves. With demand at an all-time high and increasing pressure to spend profits, companies are looking around the world for opportunities. Ernst & Young conducted a study of 10 oil- and gas-rich countries -- all of which are regarded as top prospects for energy investment -- to examine the greatest areas of risk and reward for new U.S. exploration and production projects.
Ernst & Young professionals in each country surveyed answered a series of questions in the following categories:
* Economic stability and tax administration, * Government structure and accessibility, * Legal and regulatory systems, * The infrastructure in place to support oil and gas operations, and * The availability of skilled workers.
Countries surveyed included: Canada, China, India, Indonesia, Nigeria, Norway, Qatar, Russia, Saudi Arabia, and the United Arab Emirates. The questions were scored on a 100-point scale, and, based on these totals, were assigned a red, yellow, or green light.
"We're constantly meeting with clients to explore their plans for global expansion," said Rob Jessen, global leader of the oil and gas industry practice at Ernst & Young, LLP. "So we decided to poll other Ernst & Young in-country leads on some of the critical criteria that inform clients' investment decisions. The results are intended as a starting point or overview of the potential opportunities and obstacles for these countries."
The majority of the countries examined were given the green light, meaning that there appear to be few legal, regulatory, economic, or other barriers to foreign investment. Those countries include Norway (100), Canada (92), Qatar (84), India (84), and the United Arab Emirates (80).
Three countries were issued yellow lights, meaning foreign investors should probably proceed with caution. China (76), Saudi Arabia (72), and Russia (70) had some barriers to foreign investment, primarily with respect to legal/regulatory systems and workforce availability.
Nigeria (56) and Indonesia (48) were issued red lights, meaning foreign investment may present challenges at this time. Some of the common barriers in these countries include:
* An instable economy, * A lack of channels for reporting unethical behavior, * Complex or bureaucratic government that is difficult to navigate, and * Unreliable or under-developed electric, communications and IT infrastructures.
"Engaging in-country counsel to navigate political, regulatory, tax, and legal systems will help companies entering these countries for the first time," said Jessen. "With proper planning and the right team, it is possible to be successful in even the most challenging environments."
Source: Ernst & Young
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