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political risks facing foreign oil companies operating in the Niger delta.

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I need help to answer following questions.

1. Assess the political risks facing foreign oil companies operating in the Niger delta. Should they shut down operation in the area until security improves?

2. What is the responsibility of Western oil companies like Royal Dutch Shell and Chevron to the local community?

3. What responsibility does a company like Fred Olsen Energy have to its employees? In the case of kidnappings motivated by profit, should a company pay ransom?

4. Is the discovery of oil a blessing or a curse?

I need to come up with one small paragraph for each question.

Thanks!

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Question: Assess the political risks facing foreign oil companies operating in the Niger delta. Should they shut down operation in the area until security improves?

The recent developments in the Niger delta clearly indicates that oil companies operating in the region have to overcome major political risks in order to attain desired business goals and objectives. According to Utomi (2010), frequent violence by militant groups has created an unhealthy business environment. Despite the Nigerian federal government's efforts to curtail criminal activities by the militant groups, protests and the threat of outright rebellion against the state are now ubiquitous. The issues in the region have attracted international attention due both to the growing security it portends on the Nigerian state and impact on international oil prices. The issues in the region provoked policy responses and proposals from various countries, for example British Prime Minister Gordon Brown recommended aggressive military action to curb insurgent activity in the region (Utomi, 2010).Brown, made the recommendation at the recent G-8 summit held in Japan and received overwhelming support from G-8 member countries.

According to economic analysts, the political crisis in the Niger Delta can be attributed to six major factors: 1) The challenge of minority rights in a multi-ethnic country; 2) a ...

Solution Summary

This solution discusses questions associated with oil extraction and oil companies.

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International Finance Statements

1. Political risk management strategies should be managed carefully and integrated with other risk management structure. Who in your point of view should be in charge of the political risk management and how should that strategy be handled?
2. Once a project is accepted, country risk analysis for the foreign country involved is no longer necessary, assuming that no other proposed projects are being evaluated for that country. Do you agree with this statement? Why or why not?
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