Page 49 - Pakistan Oilfields Limited - Annual Report 2020

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in relation to the application
and award of exploration
concessions, the Company
may be faced with increased
competition. The Company’s
LPG marketing business may
also be adversely affected
due to increased competition,
decline in margins or disruption
to LPG supply sources. The
Company is in a continuous
process to explore new
opportunities by joining hands
with other E & P companies by
way of farm-in and farm-out
agreements. In LPG marketing
business, the Company has
established a good storage
capacity for continuous supply
to keep margins intact and it
continues to explore sustainable
cost-effective sources of
further supplies.
Information technology failures:
The Company’s operations
may be adversely affected
due to information technology
failures especially in today’s
environment of reliance on
IT systems, regulation and
reporting deadlines. The
company has a separate IT wing
to control and monitor all related
functions especially in relation
to back up policy for continuous
functioning.
Economic and political risks:
Uncertain economic and
financial market conditions
resulting from economic or
political instability.
Joint Venture Partners:
Joint-venture operations are
becoming increasingly common
across E&P companies as
these improve their business
by leveraging the expertise and
resources of other participants.
In particular, when some
fields/blocks are new and too
challenging to be handled
exclusively and the operational
costs are high, then companies
opt to have another partner in
order to have their expertise
and to share the excessive cost.
We are also operating in a joint
venture environment and many
of our projects are operated by
other partners. Our ability to
influence partners is sometimes
limited, due to our small share
in non-operated ventures. Non-
alignment on various strategic
decisions in joint ventures
may result in operational and
production inefficiencies or
delay. We mitigate this risk
by continuous and regular
engagement with joint venture
partners in operated and
non-operated projects and
by providing them necessary
resources/information/
approvals they may require for
steady flow of work.
Terrorist attacks:
A terrorist attack could have a
material and adverse effect on
our business. The company has
taken a terrorist insurance cover
of all its material installations to
mitigate this risk.
Third party liability:
A third party liability could have
a material and adverse effect
on our business. In order to
mitigate the risk, the company
is continuously evaluating the
areas where insurance cover is
required and it has also taken
a third party liability insurance
which covers its drilling
areas, pipelines and material
installations.
Human Resource Risks:
Lack of succession planning
may lead to hierarchical
breakdown. The company
has prepared department
wise organograms and jobs
descriptions. Requisitions for
new positions and replacements
are promptly processed and
advertised accordingly.
Lost in hole/damage beyond
repair:
During drilling costly equipment
are run in the hole for several
jobs at different depths. In
order to mitigate the risk, the
Company maintains strong
control and has also taken
insurance coverage.
47
PAKISTANOILFIELDS LIMITED