Impacts of Oil Production in the Developing World

| December 9, 2015

Impacts of Oil Production in the Developing World
Order Description
M025LON Impacts of Oil Production in the Developing World
End of Module Assessment – Data Response (60% of module mark)
Assessment Brief
Using key topics from this module discuss the impacts of oil&gas production in a developing country of your choice.

Case Study: SanawaOil Ltd
In April 2013 Hazel Akua-Aba, the newly appointed CEO of SanawaOil Ltd was facing a managerial dilemma. SanawaOil, one of the medium-sized fast followers in the global oil&gas industry, had recently enjoyed great success in securing E&P contracts in petroleum-producing developing countries alongside increase in the price of crude oil. Its previous CEO, Silvio De Binti, had, however, been forced to resign in the wake of a scandal after Sanawa’s disclosure that it unwittingly made illicit payments to the government of an unnamed developing country to deploy the military to use force against innocent community groups protesting against the lack of community development projects from oil&gas revenues. At least eight civilians were killed but local people were not aware that military intervention was directly influenced by SanawaOil Ltd. The publication of the incident had seriously affected Sanawa’s share performance leading to a reduction in the company’s market capitalization by several billions.

Hazel had been given the task of restoring the reputation of SanawaOil Ltd, while delivering continued growth. She had been hired from VasiaPetrol, a major competitor, with a reputation for successful E&P projects in developing countries. The Board of Directors of SanawaOil Ltd faced major choices in the near term because of emerging E&P opportunities in developing countries. Four months into her job, Hazel was asked to recommend to the company’s board appropriate strategies for pursuing E&P projects in developing countries.

Hazel decided to engage you, an MBA Student at Coventry University London Campus, to consider the options available in Country X, a developing country, and prepare a Data Response piece of work for her to present to the Board of Directors. In the a briefing meeting she stressed that the strategic objective of SanawaOil ltd is to find new fields to help the company increase the size of its proven reserves, maintain sustained growth and restore the reputation of the company. The E&P opportunities in Country X crystalized the dilemma facing Sanawa: should it continue with its current strategy of forming strategic alliances with oil&gas companies already established in Country X or should it create a wholly-owned subsidiary to serve the country? At the end of the briefing Hazel summarized your consulting assignment as follows:

“I propose that you focus on evaluating our two options for going forward. First consider building our own organization to serve Country X. Second think about forming alliances with players already established in Country X. Based on what you come back with, I’ll face the Board of Directors.”

Required
Select an oil&gas producing developing country (Country X) of your choice (to be approved by the Module Coordinator). Plot the following two sets of variables for Country X on charts using Microsoft Excel:
• Annual rate of growth of greed and grievance
• Annual rate of growth of net import/export of oil and gas

Using the two charts and your study of key theoretical concepts from this module develop a strategy for SanawaOil Ltd to use in pursuing E&P projects in Country X. In developing your strategy you should consider the following:
A. Drawing on the ‘resource curse’ debate, discuss the attractiveness of Country X for a company such as SanawaOil Ltd?
B. Discuss the feasibility of each of the options available to SanawaOil Ltd taking into account the attractiveness factors discussed above, the firm’s strategic objectives and the importance of complying with acceptable global governance standards within the oil&gas industry.
C. Prepare an implementation plan for the successful realisation of your proposed strategy, including measures to be put in place to deal with any challenges to implementation?

Further information:
• Format: Your assignment must be submitted as ONE WORD DOCUMENT file (saved as Surname-FirstNamesInitial-M025LON). Use Arial or New Times Romans, font size of 11 or 12 and include page numbers. Assignments submitted in pdf will NOT be marked. Your assignment should be prepared using the STANDARD TEMPLATE provided.
• Penalty for exceeding word Limit: Your marks will be reduced by 10% for exceeding the word limit: The maximum number of words is 2750 words excluding references and appendices.
• Referencing: Your assignment should include in-text citations and a full List of References. Remember to use CULC’s Harvard Referencing Style Guide.
• Submission: Submit your assignment via the CW2 submission link in Moodle.

Sources of data collection
Data can be collected from the World Bank: World Development Indicators <https://data.worldbank.org/data-catalog/world-development-indicators> and Energy Information Administration <https://www.eia.gov/>. These institutions constantly update data so make sure you use the most updated figures. It is acceptable to use other reliable sources (seek approval from the Module Leader). The nature of data for certain countries may not allow you to conveniently plot more than two or three variables in a single chart. In such a case it is acceptable to create as many charts as feasible. Start from the year closest to 1980 so as to make the discussion historically meaningful.

Marking Criteria
The Data Response will be marked against the criteria listed on the Grademark Rubric which is available in Moodle.

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