The Brunt of Increasing Oil Demand, And Inclusive Recession on Oil and Gas Organizations: A Case Study of Shell Corporations

The Brunt of Increasing Oil Demand, And Inclusive Recession on Oil and Gas Organizations: A Case Study of Shell Corporations

INTRODUCTION

Outline of the Study

This study will be based on the analysis of increasing demand of oil and its impact on financial performance and recession of oil and gas organizations. The first chapter discusses in detail the background of the problem, the problem statement, purpose of the study along with research objectives and questions. The second chapter will present a review of relevant literature, highlighting the previous research carried out in this field. The third chapter will cover the methodology for this study.

Background of the Problem

Industrialised countries are trying to reduce the dependence of their economies on oil imports, but still, their share in the energy balance is dominant, especially in such an important sector, such as transport. Despite the jump in prices on world markets, there is a significant negative impact on the environment at all stages of use of oil remains for a long time. Prospects for the oil market depend on the development of alternative energy sources, the possible new discoveries of oil reserves and, to a lesser extent, the increase in efficiency petroleum products. Analysis of current trends shows that oil consumption in Europe much will increase in the next 10-20 years, especially in the candidate countries to the EU, since; they are required to catch up on the transport sector. Depletion of its oil reserves increase Europe's dependence on gas imports, so the supply and oil prices the world will play a major role as one of the key parameters which determine the opportunities for economic development. (International Energy Agency, 2005,pp. 91-110).

Problem Statement

The increasing demand of oil has resulted in recession for oil and gas organizations like Shell. There is a dramatic surge in oil prices. In a time when Iran has threatened to decrease production, and Shell stopped production in Nigeria. Moreover, a barrel of raw material has become the most expensive since September last year; prices are influenced by geopolitical factors. On the other hand, Shell withdrew from the investment in large wind farm in England. Shell decided to sell its stake in the proposed power plant at the mouth of the Thames, which was to provide a quarter of the current population of London (Balson, 2002, pp. 143-159).

On the other hand, currently, over 75% of the world's oil reserves are in the hands of OPEC. However, the production of OPEC is only a 40% more than world's production. With the current analysis the current level of resources of OPEC production would be sufficient to almost 80 years, and the resources located outside the OPEC countries for less than 15 years. Therefore, it appears that the role of OPEC will substantially increase, and may even reach the organization by the second decade of the twenty-first century, almost monopolistic position in the global crude oil ...