Unocal
SUMMARY
Union Oil Company of California (Unocal) is a company founded in 1890 in USA. It has since expanded into a global energy conglomerate by 1997. John Imle, President of Unocal is faced with contending with the challenge of the $1.2 billion Yadana Project that is caught in the crossfire of political unrest both within Burma as well as with the United States. If implemented, this project can fetch an estimated 12 billion dollars (400 million x 30 year contract), over the next 30 years, to be split within the 4 participating conglomerates.
OPTIONS
Imle is about a year away from the completion and the full operation of the Yadana project. By 1998, the entire project would be operational. Imle have 2 options. Either, to continue with the Yadana project despite the mounting political challenges that is associated with it, or discontinue the project and withdraw from the project. By continuing with the project, Imle may face the following outcomes.
The best-case scenario is to complete the project and reap the benefits. The worst-case scenario is to pull out from the project. This way, Unocal would not only lose the Yadana project but risk losing the rest of it’s current investments in Burma (73 million barrels of oil equivalent) and possibly losing some of it’s investments in Thailand as well (since it borders Burma). Not to mention, losing out in the lucrative growth opportunities of Southeast Asia. However, he has to keep in mind the completion of the project is just the first step, these challenges will continue as long as Unocal has a presence in Burma.
Decision
In valuating the above possibilities, my recommendation is for Imle to strive towards finishing the Yadana project. However, in the event the project fails, Unocal should concurrently step up expansion opportunities in their existing markets like Indonesia, Philippines, Thailand, Vietnam and explore other potential markets across Southeast Asia. He can also consider other
Union Oil Company of California (Unocal) is a company founded in 1890 in USA. It has since expanded into a global energy conglomerate by 1997. John Imle, President of Unocal is faced with contending with the challenge of the $1.2 billion Yadana Project that is caught in the crossfire of political unrest both within Burma as well as with the United States. If implemented, this project can fetch an estimated 12 billion dollars (400 million x 30 year contract), over the next 30 years, to be split within the 4 participating conglomerates.
OPTIONS
Imle is about a year away from the completion and the full operation of the Yadana project. By 1998, the entire project would be operational. Imle have 2 options. Either, to continue with the Yadana project despite the mounting political challenges that is associated with it, or discontinue the project and withdraw from the project. By continuing with the project, Imle may face the following outcomes.
The best-case scenario is to complete the project and reap the benefits. The worst-case scenario is to pull out from the project. This way, Unocal would not only lose the Yadana project but risk losing the rest of it’s current investments in Burma (73 million barrels of oil equivalent) and possibly losing some of it’s investments in Thailand as well (since it borders Burma). Not to mention, losing out in the lucrative growth opportunities of Southeast Asia. However, he has to keep in mind the completion of the project is just the first step, these challenges will continue as long as Unocal has a presence in Burma.
Decision
In valuating the above possibilities, my recommendation is for Imle to strive towards finishing the Yadana project. However, in the event the project fails, Unocal should concurrently step up expansion opportunities in their existing markets like Indonesia, Philippines, Thailand, Vietnam and explore other potential markets across Southeast Asia. He can also consider other