Regulatory issues for oil and gas

It is no more the financial sector alone that shares the burden of stringent compliance and regulations. Though historically, the oil and gas industry has been relatively relieved from any major regulatory and compliance issues, increasing attraction to the energy sector around the globe, as well as its complexities and risks, have pulled the trigger. The past one year or so has seen accelerated focus on green energy and increased activity in the renewable energy regard. Worldwide, this new concept has been sold exceptionally well. However, from coke to fracking, the world still laments a massive regulatory lapse on account of environmental issues. Moreover, financial, business and regulatory practices of the companies mount significant risk to the oil and gas industry now due to high-level persistence of mistrust, corruption and bribery. The drift in the regulatory environment requires the oil and gas companies to manoeuvre their risk management and approach to regulatory compliance. Though many global players are making chunky investments in compliance through a revamped programme and qualified workforce, the anti-trust issues still bog down their productivity. Anti-trust issues have climbed up the risk ladder for many companies, as the energy sector is heavily dependant on joint ventures, partnerships and cross-border mergers and acquisitions. Absence of adequate due diligence policies and framework is another threat that the oil and gas companies face today. Not only the international oil and gas companies are unable to elucidate the rationale behind spending but also the reason for third party involvement. It is important that the company reads out its risk management process candidly as better corporate governance definitely enhances business performance. Though compliance check and balance is a lifeline to the profitability of the oil and gas companies today, these risk and compliance measure sometimes stand as hurdles for prospective investment in future. If some of the regulatory hurdles could be removed, shale gas could provide encouraging opportunity for investors in China and America.