Deloitte: Without proper governance, National Oil Companies face significant challenges
(MENAFN Press) Many developing and emerging economies try to take advantage of the natural resources available in their countries to boost development. National Oil Companies (NOCs) that pursue the Extraction (upstream), Refining & Marketing (Downstream) of oil and natural gas resources are a clear example of this and the role these NOCs play is significant in many regions around the world.
A new Deloitte whitepaper, 'Connecting the bright spots: key components of an oil and gas governance framework', puts forth the establishment and implementation of a governance framework as the common and essential element for all National Oil Companies (NOCs) to ensure maximal results.
"Regardless of the type of NOC set-up, (entirely public, Joint Ventures, or other operating models), they share one element that is common and essential to them all to ensure maximal returns are realized, which is establishing and implementing a governance framework. This Corporate Governance framework should help overcome certain obstacles and yield many benefits" said Rami Wadie, partner, enterprise risk services at Deloitte Middle East.
"Without proper governance, NOCs can face significant challenges in many areas, both external and internal to the organization. As is evident across the region, many of the NOC's are going through leadership and management style change which requires strong and well established governance practices to ensure consistent, controlled and continued operations," he added.
Deloitte experts find that a governance framework that provides transparency and evokes confidence in the controls instituted across the NOC will also provide benefits across the spectrum, as follows:
1.Funders and investors will be more confident that their capital will be employed to the best interests of the organization, leading to lower risk and better returns for them.
2.Internal issues will also be addressed through stringent standards enforced through proper organizational design, delineation of authorities, and detailed policies and procedures that safeguard the well-being of the NOC as a whole.
The Deloitte whitepaper lists the external challenges associated with lack of governance to include difficulty in sourcing funding and attracting investment and a distorted view of earnings and balance sheet performance. When addressing internal challenges, the whitepaper finds they include system inefficiencies in all aspects such as capital deployment, organizational performance and operational issues as well as adverse effects on the NOCs sustainability and social responsibility.
A thoughtfully planned and successfully implemented governance framework can reverse the above-mentioned problems as per Deloitte's whitepaper. It further highlights the characteristics of an effective governance framework with these elements:
Values: set the purpose of the organization and must be clear and understandable
Operating model: provides an explanation of the distinction between operational and functional roles
Management system: includes the set of hierarchically structured policies and procedures for the organization
Governing bodies: provide oversight for the whole governance framework, from the top level board of directors' charter down to executive and non-executive roles and responsibilities
Once the governance framework is developed, Deloitte experts list six critical success factors for effective implementation. These are:
A compelling case “ preparing, agreeing and communicating the benefits for the business, the individual, employees and other stakeholders
Awareness of key challenges “ where will pushback come from, where will apathy exist
A strong and consistent message from all levels of leadership and management
Time “ for awareness and understanding to embed across the region
Two way communication “ process of communication and engagement
A plan “ definitions of success, priorities, review points to assess progress and transition to on-going business environment
"These six elements also rely heavily on the involvement and engagement of stakeholders who understand and support the values of the organization" concluded Wadie.
To read the whitepaper, go to http://bit.ly/147B7lZ
MENA News Headlines
|Dec 13 2013||ME airlines to post USD1.6b profits in 2013 ,MENAFN|
|(MENAFN) Airlines from the Middle East are expected to make a net profit of USD1.6 billion this year,and USD2.4 billion next year, Arabian Business reported.
The International Air Transport ...|
|Dec 13 2013||Qatar's energy sector is main contributor to GDP ,MENAFN|
|(MENAFN) The Qatari energy sector in the past year witnessed many achievements, allowing the hydrocarbon industries' contribution to the country's gross domestic product (GDP) to remain in the range ...|
|Dec 13 2013||Qatar Shell inks deals with 3 local providers ,MENAFN|
|(MENAFN) Qatar Shell inked a deal to add three more local companies to its supply chain for Qatar Shell and their partner Qatar Petroleum at the Pearl Gas to Liquids (GTL) plant, The Peninsula ...|
|Dec 13 2013||Dubai's Kaloti to build USD60m gold refinery ,MENAFN|
|(MENAFN) Dubai's Kaloti Jewellery Group said that it hired a contractor to construct a precious metals refinery, Arabian Business reported.
United Engineering Construction (UNEC) has been hired to ...|
|Dec 12 2013||Exxon offers gasoil contract from Saudi Arabia ,MENAFN|
|(MENAFN) Exxon Mobil Corp. made an offer for gasoil cargoes through a rare term tender from its joint-venture refinery in Saudi Arabia, Arab News reported.
Exxon Mobil offered up to 6 million ...|
|Dec 12 2013||Construction projects worth USD159b in KSA ,MENAFN|
|(MENAFN) The construction sector in Saudi Arabia is a key component of the country's economy development as projects worth a total of USD159 billion are underway or in the planning, Arab News ...|
|Dec 12 2013||Poland eyes investments from Qatar ,MENAFN|
|(MENAFN) Qatar and Poland looked at opportunities to sustain cooperation in and improve trade ties between the two, The Peninsula reported.
Polish President met officials from Qatar Chamber and ...|
|Dec 12 2013||Qatar becomes pioneer in helium exports ,MENAFN|
|(MENAFN) Qatar has become the the world"s largest helium exporter as with the inauguration of the Helium 2 plant, The Peninsula reported.
The plant incorporates the largest refining facility and ...|
|Dec 12 2013||Etihad to decide on Alitalia investment soon ,MENAFN|
|(MENAFN) Abu Dhabi-based Etihad Airways is looking at the data room of Alitalia and is expected to decide on whether to invest in the Italian carrier by the end of the year, Arabian Business ...|
|Dec 12 2013||Habtoor Leighton to build USD395m residential towers ,MENAFN|
|(MENAFN) Habtoor Leighton Group announced that it had won a contract with the Al Habtoor Group worth USD395 million for a residential towers project, Arabian Business reported.
Al Habtoor ...|
|Dec 12 2013||Emaar signs first deal for Expo 2020 project ,MENAFN|
|(MENAFN) Emaar Properties signed a memorandum of understanding with Dubai World Central for an urban centre and golf destination at the home of the Expo 2020 site, Arabian Business reported.
|Dec 12 2013||Dubai Economy Advances in 2013 ,Qatar News Agency|
|(MENAFN - Qatar News Agency) The year of 2013 will be remembered as a breakthrough year for Dubai as the emirate won the bid to host World Expo 2020, while witnessing strong backwinds in the field of ...|
|Dec 12 2013||UAE - Man shoots his wife over family dispute in Ras Al Khaimah ,Khaleej Times|
|(MENAFN - Khaleej Times) The 55-year-old man opened fire after a heated argument with his wife at their house at about 10.30pm.
An Emirati man shot and wounded his 47-year-old wife following a ...|
|Dec 12 2013||UAE - Cruise control fails at 140kmph, woman driver rescued ,Khaleej Times|
|(MENAFN - Khaleej Times) She was unable to bring the vehicle to a stop and called the Fujairah Police Operations Room for help.
An Emirati woman was rescued by Fujairah cops after the car's ...|
|Dec 12 2013||Police deny report of assault at Dubai airport ,Khaleej Times|
|(MENAFN - Khaleej Times) The Dubai Police have denied the news in some sections of the media regarding an alleged assault of a Saudi national at the Dubai International Airport.
A top police ...|
|Dec 12 2013||Ozonegroup plans to open office in Dubai ,Khaleej Times|
|(MENAFN - Khaleej Times) The increasing demand from the UAE and Gulf-based NRIs for the Ozone brand projects in India will be catered through the presence of Ozonegroup's local office.
|Dec 12 2013||UAE - Etisalat launches new mobile packages for high data users ,Khaleej Times|
|(MENAFN - Khaleej Times) Users with either voice Data only SIMs can now take advantage of a completely unlimited mobile data package for Dh999, which is not capped at a maximum usage amount. Postpaid ...|
|Dec 12 2013||New season to bring 75 cruise ships to Abu Dhabi ,Khaleej Times|
|(MENAFN - Khaleej Times) The Abu Dhabi Tourism and Culture Authority (ADTCA) sees these passengers as future tourists for the emirate. Mohammed Al Dhaheri, strategy and policy director at ADTCA, ...|
|Dec 12 2013||Islamic finance to drive next phase of growth in Mena region ,Khaleej Times|
|(MENAFN - Khaleej Times) Rapidly-growing Islamic-based finance will drive the next phase of economic growth across the Middle East and North Africa (Mena), financial leaders have said at the ...|
|Dec 12 2013||Dubai to hostâ€¨ 11 international congresses ,Khaleej Times|
|(MENAFN - Khaleej Times) Dubai World Trade Centre, or DWTC, is set to welcome 11 international congresses in 2014, spanning a number of strategic industry sectors, which is expected to deliver an ...|