Marsh Survey of National Oil Companies Finds Increased Risks

A new report published by Marsh examines the possible consequences of the current state of the petroleum industry. Marsh identified “limited oil and gas resources; the recruitment and retention of a qualified workforce; and, energy price volatility as the most critical risk issues currently facing the world’s national oil companies (NOCs).”

The suvey – Marsh Oil and Gas Risk Report: 2008 – “also identifies a gap between the importance of these risks and how well they are managed.”

Marsh prepared the report from the results of a survey of NOCs conducted at the Marsh National Oil Companies’ conference in Dubai earlier this year. Over 400 delegates were asked to rate the relevance of risks identified by the World Economic Forum and how effectively they felt they were managed by their firms.

Participants ranked the top five risks, in order, as:
— Availability of oil and gas resources
— Recruitment and retention of a qualified workforce
— Energy price volatility
— Environmental impact of operations
— Political/regulatory risk issues

“The survey found that the overall level of risk facing the industry had increased from 2007,” said the bulletin. “Marsh’s NOC Risk Index score rose from 4.49 out of a possible 6 in 2007 to 4.51 in 2008. By contrast, the Risk Management Effectiveness Index score was put at 3.8. On the topics, availability of oil and gas resources as a risk issue was rated at 5.3 out of a possible 6. It was also the top-ranked risk in 2007 but with a rating of 4.9.”

Andrew George, Marsh’s Energy Practice Leader for Europe, the Middle East and Africa, commented: “It is no surprise that our survey has found that National Oil Companies are facing a riskier business environment. However, of more concern is the gap between the importance of the risk and how well it is managed. As the custodians of 90% of the world’s oil reserves, it is vital that these companies develop strategies that deal effectively with most important risks facing their business.

“While the relationship between the importance of the risks and management’s effectiveness in tackling them has remained relatively stable between 2007 and 2008, this gap is increasing in some instances, most notably among those risks identified as the most critical.”

Source: Marsh – www.marsh.com