Instructions:
This year, U.S. based Black Gold Oil and Gas Corporation (Black Gold) began construction of a pipeline for the transportation of oil from the Prirazlomnoye field. Prirazlomnoye field is an Arctic offshore oilfield located in the Pechora Sea, south of Novaya Zemlya, Russia. The field development is based on the single stationary Prirazlomnaya platform, which is the first Arctic-class ice-resistant oil platform in the world.
Black Gold does not own the oil rig but will co-own the pipeline with the Russian energy company, Gazprom. The pipeline that Black Gold is constructing and operating starts at the off shore rig. From there, the pipeline will cross Russia, passing through Finland and terminate in Stockholm, Sweden. The oil will then be sold on the global market and transported by ship to locations around the world.
There is considerable resistance to the pipeline traversing Sweden. A poll suggests that many Swedes are strongly opposed to the pipeline as are the native Laplanders in Finland. The central government favors the pipeline and it will receive a share of the royalties based upon the volume of oil that will pass through the pipeline. The Swedish parliament will be debating the question of whether the pipeline should cross Sweden. Members of the Swedish Social Democratic Party are undecided on the question, while the Sweden Democrats, the conservative, nationalist party, supports the pipeline construction. The Swedish Green Party is vehemently opposed to the project in any form.
Using these facts, please answer each of these questions as briefly as possible. (NOTE: Black Gold is a fictional company. Therefore, you can base your responses to the following questions by describing hypothetical aspects of the company).
Q1. As described in the readings, how might your understanding of state failure provide a better understanding of political risk for Black Gold as it passes through Russia, Finland and Sweden?
Q2. Give an example of how social amplification of political risk could impact Black Gold in this situation.
Q3. On a country (macro) level, give an example of an external and an internal risk that Black Gold might face in one of the three countries?
Q4. Bremmer and Keats describe a Fat Tail in political risk terms as a high risk, low probability event. Name a possible low probability, high impact event facing Black Gold that could develop into a Fat Tail risk (or reality)?
Q5. How might PRINCE analysis be useful for analyzing a political problem that might arise for Black Gold? Specifically, who are the actors and what is the political question that Black Gold must address? (Note: You do not need to do a PRINCE analysis to answer this question)
Q6. What is one possible human rights risk facing Black Gold in this situation? Conversely, what is a possible human rights impact that might arise out of the company’s activities on this project?
Q7. Describe 2 attributes of Black Gold as a company that matter in the analysis of the political risks facing the company on this project?
Q8. Without any overlap in the two lists, compile a list of three variables each that are important when analyzing (1) macro (country) risk and (2) micro risk for Black Gold’s operations in Russia.
Your answer should list the variables as follows:
Macro Risk:
Micro Risk:
