Indiana Wesleyan University
29 April 2014
I have read and understand the plagiarism policy as outlined in the syllabus and the sections in the Student Bulletin relating to the IWU Honesty/Cheating Policy. By affixing this statement to the title page of my paper, I certify that I have not cheated or plagiarized in the process of completing this assignment. If it is found that cheating and/or plagiarism did take place in the writing of this paper, I understand the possible consequences of the act/s, which could include expulsion from Indiana Wesleyan University.
When considering the entrance into any of the Asian oil markets one has to be mindful of several dynamics that can and will influence the viability of this prospect. One is that you will be competing with national owned companies also known as NOCs.
One could surmise that these NOCs, no matter their size, have to influential organizations within their respective nations. You have to remain mindful of the fact that these State Owned Enterprises (SOE) and NOCs exist to service specific needs of the nation (Jiang, J., & Sinton, J., 2011). Examples would be generating jobs to stave off unemployment, controlling inflation and improving if not maintaining a decent standard of living for its citizens.
In addition to this monumental responsibility governments allow international companies to operate within their borders. The revenues generated from taxation and tariffs serve as an additional source of revenue for the host government. Often corruption runs rampant in these regions. Government officials will use their position to essentially extort money from, what is perceived as outsiders, pillaging their countries people and resources.
Now let’s take a look at two Asian oil producing countries that present a significant potential opportunity. We have selected Kazakhstan and Iraq as two potential nation markets to enter. These both are high-risk markets, but remember high risk comes with high reward. We feel these two markets represent a manageable level of negative risk and the preliminary "cost to benefit" analysis indicated a positive marginal return on investment (ROI) of 1.6835 percentage points, far exceeding any conventional markets. These are largely untapped markets and the competition from other IOCs is negligible.
We will discuss each country in alphabetical order starting with the Government of Iraq (GoI). Following the start of the U.S. led Operation Iraqi Freedom Iraq has been slow at re stabilizing. Mid-market rates: as of 2014-04-30 18:35 UTC have the Iraq Dinar currency trading at 1,163 to 1USD (IQD - Iraqi Dinar, 2014). The primary reason for this slow economic recovery is due in part to overall security concerns relative to terrorist operating within Iraq, and in part to rampant corruption on an industrial scale. It has been reported by reliable first hand persons of interest that this corruption start with high level government officials and stem all the way down to local Sheiks and Provincial Governors. Often bribes have to be paid, to several parties, in order to obtain permits and or to be awarded contracts.
Now moving on to Kazakhstan, this region is much more stabile. Oil was discovered in early 2000 and, although this oil reserve is massive, it is largely