(EnergyAsia, September 20 2011, Tuesday) — Access to reserves has overtaken uncertain energy policy as the biggest risk facing oil and gas companies today, according to Ernst & Young’s latest Top 10 ranking of industry risks.

In releasing its report, “Turn risks and opportunities into results”, Sanjeev Gupta, Asia-Pacific Oil & Gas Leader for Ernst & Young, said:

“While limits on access are not new, a combination of factors has pushed this to number one: political unrest in North Africa and the Middle East; high oil process and the growth of new government-backed rivals.”

While pushed to number two, uncertain energy policy remains a significant risk across the world, said E&Y. As an example, companies continue to face the consequences of last year’s oil spill in the Gulf of Mexico which is affecting regulations on deepwater operations.

A new entrant to the top ten risks this year, at number five, is health, safety and environmental risks. This reflects both an increased focus of oil and gas companies on a more sustainable and robust operating model and the fact that the industry is facing more complex operational challenges than ever before. It also reflects the rising power of local community stakeholders.

For the first time, the report also looks at the top ten opportunities for the sector, with “frontier” acreage ranked number one. Areas previously regarded as too difficult, too expensive, or too politically unstable to justify operations have become more economically viable, given expectations of high energy demand and advances in technologies and business processes.

Similar factors are also driving the opportunity ranked number two: unconventional sources, such as shale gas, oil sands and coalbed methane gas. Growing energy demand alongside a tightening of access to conventional supply and advances in technology, are making unconventional sources more commercially viable.

Other opportunities in the top 10 include rising emerging market demand, investing in innovation, alternative fuels and building regulatory confidence.

Mr Gupta said: “The oil and gas sector is undergoing the most significant changes that we have seen for many years with new business models, companies and sources of energy emerging. Those organisations that can successfully manage the complex, evolving risk landscape and take advantage of emerging opportunities will be the key players of tomorrow.”

The top 10 risks:
1.    Access to reserves: political constraints and competition for proven reserves
2.    Uncertain energy policy
3.    Cost containment
4.    Worsening fiscal terms
5.    Health, safety and environmental risks
6.    Human capital deficit
7.    New operational challenges, including unfamiliar environments
8.    Climate change concerns
9.    Price volatility
10.    Competition from new technologies

The top 10 opportunities:
1.    “Frontier” acreage
2.    Unconventional sources
3.    Conventional reserves in challenging areas
4.    Rising emerging market demand
5.    NOC-IOC partnerships
6.    Investing in innovation and R&D
7.    Alternative fuels
8.    Cross-sector strategic partnerships
9.    Building regulatory confidence
10.    Acquisitions or alliances to gain new capabilities