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Project Management Principles
• Understand the business environment
• Choose the “right” project
• Understand the energy value chains
• Identify risks – “hard” vs. “soft”
• Bring ALL risks close to the project mgt
• Value of lessons learned – mindful of uniqueness of situations
Commercial Framework
CommercialFramework
Government
Investor Consumer
Partnering
• Decision to partner is related to project risk
• Choose a partner you can work with
• Choice of operator depends on project requirements and comparative advantage of partners
• Consider strong local partner if local content rules are strong– Impact of local content rules
Petrobras Upstream Project: Investment Decision
(unexpected issues/risks to project management)
• Anticipate license/permitting requirements and incorporate in economic evaluation– Build integrated team that pulls together decision to
bid on block with project developers who will obtain license/permits
– Include a lawyer!– Consult government agencies on potential rules
changes– Survey political risk
• Include partner
Petrobras Upstream Project: Implementation
(unexpected issues/risks to project management)
• Environmental license/permits – process for obtaining– Integrated team for obtaining permits– ….
• Include partner
FLNG
• Regasification• Island• Cheniere/FLNG
– Tolling facility– COP and DOW – capacity holders
• “No bid” EPC– Two phases – phase I under construction
(current EPC contract)– Potential overlap with phase II
FLNG Project: Investment Decision
• Commercial constraint of intrastate market
• Probably there was inadequate project mgmt of decision process
FLNG Project: Implementation
• Risks– Weather – hurricane– Technology – equipment prototypes
(untested)– Design– Regulatory – compliance with changing
regulatory rules• Importance of communication between companies
and regulator
– Commercial – quality of the gas (heat rate)
FLNG Project: Implementation
• Risks, continued– Labor – competition for skilled crafts
• Change in project mgmt (beneficial!) – length of time for implementation
• Scheduling– Complicated– Ability to visualize all phases
• Cost management– Pressure on costs (materials, services)
• Quality management– Problems with control– Problems with communication
• Human resources/project team– Intervention of COP, DOW– Inability for COP, Dow to intervene in FLNG-TZS
contract
• Scope– Change in design – problem in communication– Reduced storage capacity to balance phase I and II
Solutions
• Improved communication across all project team functions
• Better planning to lay out timelines, milestones, etc
• Critical path scheduling• Regulatory approval
– Work more closely with regulator to define issues and resolve
– Change project team (leadership) if necessary
Solutions
• Adjust design for maximum weather related events
Evaluation of Project: Lessons Learned
• Large scale with challenges and unexpected issues in project management
• Some cost overruns – cost escalation will increase if phase II developed
• Ambitious – commercial strategy – LNG supply– Positions of COP, DOW would seem supportive
• Commercial constraint of intrastate connection relative to project cost and project mgmt demands– Connect to interstate? Or something for better value
creation
Evaluation: Lessons Learned
• Lack of participation by COP and Dow in beginning– For both investment decision and early stages
of project mgmt– Unusual choice of EPC contractor?
• Plan when you decide to invest and plan when you implement the investment
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