Regulatory compliance in the oil and gas industry makes for a unique set of demands, and due to the large upfront costs, a heavy investment is required. On top of which, a thorough understanding of regional regulations and tax standards is crucial. The combination of the two creates an environment that requires quick political maneuvering in the geopolitical, environmental, and energy sectors. This is made further complicated by the numerous stakeholder and business relationships. Accordingly, oil and gas companies need a complete energy-compliant solution that addresses the intricacies of the various regulatory regimes in different regions.
In a recent survey conducted by Aberdeen Group, the three top pressures driving oil and gas companies to focus on product compliance have equal weight (42%), compliance to regulations (42%), and responding to customer demand and product sales in global markets (42%). Understandably, these three categories are top pressures for oil and gas companies. By the very nature of their product, oil and gas companies must sell to different markets where regulations will vary even from state-to-state and country-to-country. More interesting to note, is the difference in pressures between oil and gas companies and companies outside of the oil and gas industry. Oil and gas companies are 27% more likely to face customer demand of more environmentally minded products as a reason for product compliance over companies that are not in oil and gas.
Passages of the legislation, such as the 1990 Clean Air Act and its subsequent amendments, have forced public sentiment on oil and gas companies to create a cleaner more eco-friendly product in a manner that keeps social responsibility mandated and involuntary (see social responsibility 9% to 19%, oil and gas versus non-oil and gas).
For all companies in oil and gas, all levels and functions impact product development, be it directly or indirectly. Meeting the challenges of regulatory compliance requires establishing a top-down strategy across the entire enterprise.
