How energy companies can improve global business performance by better managing political risk

October 2006
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How energy companies can improve global business performance by better managing political risk

At a glance

Energy companies understand the business consequences of political change perhaps better than organizations in any other sector. Matching energy demand and supply is, at its very core, a high-stakes geopolitical business endeavor. This is truer today than at any time in the past.

Political change has a greater impact on business performance than ever before

The signs of this abound. National oil companies (NOCs) are expanding at an unprecedented rate. Geopolitical uncertainty, across both producer and consumer countries, is on the rise. At the same time, the industry is coping with a surge in published and unpublished incidents involving business setbacks such as contract renegotiations or cancellation by host countries, increases in taxation driven in part by political agendas, or impromptu exits from countries after significant investment.

What’s different today is an increased level of complexity—and in some jurisdictions, a new urgency—in how global politics impact the energy value chain.