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Managing Mega Oil & Gas Projects

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The global Oil & Gas sector has been witnessing a string of mega projects - high risk, capital intensive projects that face unique challenges (managing science, technology and engineering functions along with addressing quality, scheduling, and cost issues) in the last few decades. Again, while rolling out mega projects, safety is paramount, and each project is faced with the daunting task of complying with environmental guidelines, and convincing various stakeholders. - Jess Potts

The global Oil & Gas sector has been witnessing a string of mega projects - high risk, capital intensive projects that face unique challenges (managing science, technology and engineering functions along with addressing quality, scheduling, and cost issues) in the last few decades.


Again, while rolling out mega projects, safety is paramount, and each project is faced with the daunting task of complying with environmental guidelines, and convincing various stakeholders (shareholders, regional authorities, regulators, environmental activists, and members of the community).


Project Managers leverage the latest project management techniques - work breakdown plans, design-to-cost and make-or-buy decisions to facilitate decision making.


The projects are increasingly moving to offshore locations, and there are several factors that are contributing to the increase in cost and complexity of the projects including:


• Variations in exchange rates
• Adverse economic conditions impacting the feasibility of the projects - from fluctuations in commodity prices to changes in regulatory requirements
• Increase in competition for labour across industries leads to rising labour costs


Therefore, the Oil & Gs conglomerates are having a rethink on pursuing mega projects, they are willing to abandon or delay costly projects, and reduce exposures that are perceived to be risky.


This is a paradigm shift in a sector that has been driving production growth irrespective of the cost.


Firms such as Total, BP and Royal Dutch Shell are looking at ways to reduce costs, sell assets to improve their finances.


The major Oil & Gas firms want to avoid risky investment decisions based on rising prices.


If this trend of moving away from mega projects continues, it would mean the availability of less oil in the market over a period of time, which will result in an increase in prices that would be detrimental to the global economy.


According to industry experts, the period of “easy to find, easy to extract, easy to process oil” is over. Hence, the Oil & Gas firms must develop projects incrementally to reduce costs.


- Jess Potts

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