Risk Mitigation Using Joint Venture Agreement in the Upstream Petroleum Industry

Topics: Petroleum, Risk, Joint venture Pages: 46 (15312 words) Published: June 25, 2013
RISK MITIGATION USING VENTURE AGREEMENTS IN THE UPSTREAM INDUSTRY (A CASE STUDY AND MODELLING APPROACH)

BY

SODE ADESOJI O.
(51124473)

AUGUST 2012

A Dissertation Presented In Partial Fulfillment Of The Requirements For The Degree Of
MSc. International Business Energy And Petroleum
At
The University Of Aberdeen

DECLARATION
I declare that this thesis has been composed by myself, that it has not been accepted in any previous application for a degree, that the work of which it is a record has been done by myself, and that all quotations have been distinguished appropriately and the source of information specifically acknowledged.

Signed:………………………………………………………..

Name:………………………………………………………..

Date:…………………………………………………………

ACKNOWLEDGEMENT
While this thesis is entirely my own work, many others have contributed to it and shaped the end result in their own unique and special way and I would like to take this opportunity to appreciate them. Ultimate thanks to God Almighty for the wisdom and knowledge he has bestowed upon me and my Pastor Dapo Olanrewaju of the Redeemed Christian Church of God Aberdeen for spiritual guidance throughout. Appreciation goes to my sponsors, the Petroleum Trust Development Fund (PTDF) of the Nigerian Government for this profound opportunity and a chance to participate in the ever booming Nigerian Oil and Gas Industry. To my lecturers and tutors especially Professor Euan Phimister and my esteemed supervisor Professor Alexander Kemp, for the professional advice throughout my dissertation and for lending his wealth of experience from which I gained tremendous knowledge and a structured approach to complete this dissertation. To the University system for making available a world class library with all the relevant literatures from which I was able to improve on my existing knowledge. Appreciation to my Family, My Mother, Mojisola Ogundipe, my expectant Wife, Adeola Sode, our baby girl, Iyinoluwa Sode and my wonderful siblings, Omotara and Oluwabusayo Ogundipe for the much needed love. Finally to all my IBEP colleagues for challenging me with their wealth of knowledge and diversity.

ABSTRACT
The effective selection of investment projects is very important in the oil industry. This is because of the risks inherent in petroleum operations. Investors have sought to find improved ways of doing business in the industry such that the risks can be managed as much as possible. Joint venture partnerships and agreements are methods employed by companies to share risks and rewards and it has constituted a major part of upstream activities for a long time. This study will focus on expatiating on the risks in the upstream industry, types of joint venture agreements and its contribution to risk mitigation. A case study review will examine practical joint venture agreements. The purpose is to examine both failed and successful agreements while emphasising the contribution of the risks to the failed ventures. A model will be used to describe a joint venture partnership valuation of an upstream development project under different scenarios to demonstrate the impact of the joint venture at managing risks.

CONTENT
Declaration
Acknowledgements
Abstract
Content
List of figures
List of tables
Abbreviations
Chapter 1: Introduction
1.1 Background
1.2 Motivation & Conceptual Framework
1.3 Research Questions
1.4 Significance Of Study
1.5 Scope And Limitation
1.6 Outline Of Dissertation

Chapter 2: Literature Review
2.1Background
2.2Joint Venture – An Introduction
2.3Types of Joint Venture
2.4Choice of Joint Venture
2.5Joint Venture relationships in the oil industry
2.6Risk Analysis of the Upstream Industry
2.6.1Oil Price Risk
2.6.2Political/Regulatory Risk
2.6.3Geological Risk
2.6.4Access to Reserves
2.6.5Environmental Risk
2.6.6Cost Related Risk
2.7Risk...
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