Globally, the oil and gas industry is experiencing continued price volatility, significant technology advancements, regulatory changes, and the opening of new exploration areas and new markets. Companies continue to expand internationally via production sharing contracts, mergers, acquisitions, and strategic alliances. The industry faces higher spending requirements for compliance with environmental and safety standards. All of these factors have contributed to creating an environment where risk management can form the basis of an organization with improved ability to compete and deliver shareholder value.
Given market volatilities, energy trading and derivatives pose significant risks for most oil and gas companies, emphasizing the need to identify, measure, monitor and mitigate exposure to commodity price fluctuations. Commodity price fluctuations, including compliance with industry trading standards, directly affect earnings volatility and shareholder value.