Fundamentals Of Oil And Gas Business

Assignment

Submitted By-

Madhur Chopra,Roll No-39,MBA Oil And GAs Management

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The world Bank should say YES to the deal because of the following reasons-

Oppurtunities

Oppurtunity to eleviate the poverty of chad

Chad has detroriated over the past few decade.And this investment provides a oppurtunity to elevate the
economic status of Chad.

Social and enviornmental issues have been Adequately addressed

There are 19 volumes of environmental assesment of documents and hundered of meetings with
environmentalists and indigenious people.

The revenue management plan will work

-The RMP has built in auditing and oversight mechanism which will helpfunding for Chad.

The Volume of the reserves is very large and the profit one can earn over 32 yr period is quiet high
looking at the NPV which is approx $73 million.

Risks

Key participants have trouble some records

- Exxon-Chairman spoke against environmental impacts in developing countries

-World Bank-has it's past record of failures in developing oil boom

-Chad and president Deby- Chad itself had a history of political unrest,dictatorship and
Opression and the president itself was not trustworthy as the part of revenues was used to buy weapons .

Invasion of sovereign rights

How high can the discount rate go before NPV turns negative

The volatility of price of oil

When it comes to IPI pieline it's quiet risky to invest and the project doesn't seem to be a success for
the following reasons-

Russia-Russia influences Iran to send Gas to East rather than West to protect their own Interest and
Economy

China-India's terms with China are not great and China itself wants their economy to flourish more
than it's competitors like India.

Iran-Gas is the economic lifeline of Iran and a major driver of Economy,and is widely influenced by
other countries.Iran had a history of terrorism and there is a possibilty that the revenue might be
used to develop nuclear weapons.

US-The Superpower itself tries to control the project in its hands.Us wants to keep Iran away from the
project as allowing pipeline woul encourage Iran to defy International community,develop nuclear
weapon.They think that the investment is inadequate to supply gas to Indai and Pakistan.Pipline
passes through areas of Balucistan which is inhabited by Militants.