GEOPOLITICAL RISKS IN OIL & GAS MEGAPROJECTS

GEOPOLITICAL RISKS IN OIL & GAS MEGAPROJECTS

Here is a condensed version of the article published in November 2016 issue of “Prakalp” magazine. Available at:
http://www.pmimumbaichapter.org/download/prakalp_nov16.pdf (Page 30)
To commercialise production of Shale gas, Coal seam gas, Light tight oil, LNG liquefaction, Oil sands, Ultra-deep water exploration as well as the Arctic, companies are increasingly engaging into multi-billion-dollar, technically and operationally demanding ventures called MEGAPROJECTS. Hydrocarbons are the fuel that drives the world’s economy. In turn, the global political dynamics and topography as well as natural resources and climate drive the hydrocarbon industry.
64% of MEGAPROJECTS are subject to cost overruns, and 73% report delays in schedules. Studies show that 50% of projects in the Oil and Gas sector are behind schedule and over budget.
This article discusses the 4 main root causes of MEGAPROJECTS deterrents and explains the Geopolitical Risks that could threaten project success.
Inadequate Project Development
Unplanned Project delivery
Regulatory challenges
Geopolitical risksDiplomatic & security risk
Global Economic downturn
Uncertainty in the commodity market
Fluctuations in the exchange rate
Development of new energy sources

The article also discusses risk mitigation measures in the Oil & Gas industry to monitor and control the risks. It asks questions that should be asked periodically to verify that the project is in good standing.
Are the risks well assessed? (Business Analysis)
Are performance metrics biased? (Shareholders’ expectations)
How can money be used optimally? (Cost Efficiency)
Is your project based on lean scoping. (Lean Project Management).
What can you learn from previous projects that you can use in your current project? (Lessons learnt)

Geopolitical risks can be categorized as global occurrences and aspects, but regional impacts are different. Oil & Gas companies must resist the temptation of generalizing and assuming that the behavior of one region will be replicated elsewhere.
GEOPOLITICS HAS A LOT OF ENERGY… ENERGY TO CHANGE OIL & GASS MEGAPROJECTS!
#winningplanforpmp
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