The Moral Dimension - The Global Political Risks for Small International Oil Companies

The oil and gas industry went through enormous shifts in recent years regarding their business environment.From the extreme demand decline during the COVID-19 pandemic to massive spikes in crude oil prices after the start of the Russian-Ukraine war, the oil industry had to adapt to a more volatile business environment, based on an increasing number of changing geopolitical factors.In addition, the industry faces great challenges in reducing its environmental impact while conducting upstream exploration and production (E&P) activities to mitigate increasing public hostility.E&P has become a highly politicized topic in recent years, involving multiple international governmental and non-governmental entities acting as unwanted stakeholders.These developments have influenced the strategic management considerations for international oil companies (IOCs).For smaller IOCs, the difficulties of implementing their strategic management considerations are especially hard to overcome since many mitigating strategies need further financing in an already capital-intensive industry.In addition, the strategies cannot guarantee an easing of political pressures.While the overall business environment recovered and oil prices stabilized after the COVID-19 pandemic above the recent average, the political risk of the industry leaves the question: Which political risks will have the biggest effect on the already existing business risks of smaller IOCs?