Health, safety and environmental (HSE) concerns remain at the top of the oil and gas industry’s risk agenda, according to the ‘Business Pulse: Exploring the dual perspectives of the top 10 risks and opportunities in 2013 and beyond’ report, released by advisory firm Ernst & Young last month.

The research shows that HSE issues, regu- latory compliance, price volatility and the increasing challenge of accessing reserves and markets are the top risks identified by oil and gas industry executives.

“HSE risks have always been important to the oil and gas industry, but it is interesting that, this year, it ranked top of the list,” Ernst & Young Africa oil and gas sector leader Elias Pungong tells Mining Weekly.

He adds that this ranking is probably a result of HSE risks currently being a high-profile issue.

“One of the main concerns of hydraulic fracturing, or fracking, for shale gas in the Karoo is the impact it will have on the environment.

“Similarly, the Gulf of Mexico oil spill on the Deepwater Horizon drill rig in 2010 focused a lot of attention, in the US and globally, on environmental matters, which impacts on the risk ratings,” he explains.

Pungong adds that the recent publicity on illegal oil refineries that are contaminating the environment, in Nigeria, also added to the perceived severity of HSE risks.

Companies need to take these risks seriously and invest in mitigating these risks to deal with them effectively; companies also need to ensure that they comply with industry safety and environmental standards, he says.

However, government also has a role to play, as it has to put the correct legislative and control measures in place and ensure that guidelines are adhered to.

Other prominent risks faced by oil and gas companies in Africa include uncertainty pertaining to energy policies.

“Governments keep changing the rules that govern energy and natural resources when they want to make more money from oil and gas activities, which leads to uncertainty.

“Further, while it is understandable that African governments increasingly want a larger percentage of oil revenues, they should take care to strike the right balance between getting a percentage of the revenue and encouraging investment into the country,” Pungong explains.

Companies planning to do business in Africa need to assess these risks and ensure they have the right strategies in place to mitigate them before they start operations.

Meanwhile, a new entrant to the top ten risks this year is information technology (IT) security and, specifically, the threat of cyberattacks or cybertheft of intellectual property to companies’ operations or to regional and countrywide energy infrastructure.

“The risk of IT security is emerging as the oil and gas industry is growing and becoming more established, which goes hand in hand with sophisticated technology systems that come with IT risks,” Pungong says.

Additionally, another risk warranting its own category is that of increasing project scale and complexity. As megaprojects become more common, the industry’s record for delivering on time and within budget is under increasing scrutiny.

“There is renewed focus on the complete capital project life cycle. Poorly managing these issues reduces the ability to positively affect project performance and value. Aligning operations through performance management is crucial,” says Ernst & Young’s global oil and gas advisory leader John Avaldsnes.

The Ernst & Young report further highlights that increasing emerging market demand is leading the opportunity ranking, which has moved up three places since its 2011 report. Continued growth of the world’s emerging economies will drive energy demand in these countries and will increase the opportunities for oil and gas companies to expand in these markets.

Additional new entrants in the opportunity ranking list this year include new infrastructure to gain access to or connect resources and markets, safety and risk management used as a partnership enabler and new or expanded markets for natural gas.