Health, safety and environmental factors rank as the greatest risks facing the oil and gas industries, a study by EY has shown.

The report, titled ‘Business Pulse: Exploring the dual perspectives of the top ten risks and opportunities in 2013 and Beyond’, surveyed industry executives from oil and gas companies around the world. It showed that regulatory compliance, price volatility and the increasing challenge in accessing reserves and markets, followed close behind.

“The oil and gas industry is undergoing an intense focus on safety and environmental risk preparedness and mitigation,” said EY global oil and gas leader Dale Nijoka.

The report pointed out that this risk was expected to top the list for the foreseeable future.

EY Africa oil and gas sector leader Elias Pungong added that the oil industry within Africa was also being tightened up.

“Apart from the government policies they [have to] comply with, international and local companies in Africa often have their own internal health, safety and environmental standards [to] adhere to. This risk has always been there, but it’s become extremely important and more is being done to counter it.”

Further, regulation to stop bribery and corruption and to step-up financial reporting and transparency was also being boosted.

Meanwhile, a new entrant that had, this year, slipped onto the list of the top ten risks facing the oil and gas sector was information technology security – particularly the threat to the operations of companies and their country- and region-wide energy infrastructure.

The EY report stated that companies were realising they needed to do more to protect themselves against data theft and skillful and tenacious cyber attacks, which threaten their intellectual property.

Regulatory headaches also continued to dog the industry, especially in African countries.

The report said supply chains in the oil and gas sector were increasingly interconnected. Managing these against a backdrop of multiple governments with different and changing policies and regulations posed significant challenges.

The chopping and changing of government policy was another problem.

“Traditional risks in Africa, such as uncertain energy policies, still feature quite high in this survey. You still see companies signing contracts, but then having to change them when a new government comes into power. Companies want a framework that’s stable and doesn’t change often. African governments are becoming more aware of these concerns and are working hard at addressing them,” Pungong told Engineering News Online.

Another risk that emerged this year was the increasing scale and complexity of projects. As megaprojects became more common, the industry’s record for delivering on time and on budget was under rising scrutiny.

OPPORTUNITIES
The EY report also considered the best opportunities in the sector.

Emerging market demand now led the opportunity ranking, with China and India, in particular, being hungry for new markets.

Pungong said there was tremendous potential and exploration in oil and gas across the African continent – from Madagascar, Ethiopia and Liberia to Tanzania, Mozambique and South Africa.

Investing in innovation and research and development shot up to the second place on the opportunities list for 2013.

“Technological advancement and regulatory change has never been greater and the need to have a clear view of the risks and opportunities across the oil and gas sector is critical to future success,” said Nijoka.