Presentation July 13th Doha Qatar

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Bridging Corporate’ Cultures, Processes & Executives in the Energy Industry

The New & The Old Challenges

Gas Based Projects Development Issues

in

Qatar

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The New & The Old Challenges Overview

• The Project Development cycle in Qatar has always represented a challenging

experience for foreign operators regardless of their size and international

experience

• Throughout Qatar’ history of gas based project development (from the mid

80’s till today ) we can identify a number of key issues around which successes

or failures have developed

•These key issues have been evolving in number, complexity and content over

time in parallel with the market’, the country’ and the organizational/cultural

development of QP

•Key Issues not only have exerted influences over the PDC but also over each

other in a complex net of interactions

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The Old Challenges (mid 80’s) Key Issues

Cultural

(Individuals

&

Corporate)

Political

Organizational

Execution

Project

Development

Cycle

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The Old Challenges Key Issues

Cultural (Individuals & Corporate) :

1. Individuals Business Mentality (stemming from Cultural Background)

2. QP Corporate Culture (challenge of definition)

Political:

1. How the political power influences strategic decisions in the Energy Industry

2. Potential Influences over the Project Execution

Organizational:

1. How the QP organization works. The realities behind the Organization Chart

2. How the Internal balances of power can influence the Decision Making Process.

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The Old Challenges Key Issues

Execution: 1. Matching plans with the industrial reality of the country (poor integrated

industrial infrastructures, lack of local contracting expertise, suppliers),

QUALITATIVE ISSUE

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The New Challenges (mid 2000’s) Key Issues

Organizational

Cultural

Individuals

Cultural

Corporate

Execution

Strategic

Project

Development

Cycle

Market-Domestic

Market-External

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The New Challenges Key Issues

Unchanged

• Cultural (Individuals)

• Organizational

Evolved in Complexity

• Cultural (Corporate)

• Execution into Market Domestic & Market External issues

Evolved in Content

• Political into Strategic issues

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Market Domestic:

• Local contracting resources. Evolution from QUALITATIVE to

QUANTITATIVE issue.

• Market Demand vs. Offer in the engineering & construction market in

Qatar. Competing Developments.

Market External:

• The worldwide Engineering & Construction market Players (EPC

contractors) evolution

• The Market Demand vs. Offer in the engineering & construction market

(GCC countries). Competing Developments.

• The worldwide materials situation

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Political issue have disappeared thanks to:

• Country established long terms strategic guidelines in the Gas Industry

• Isolation of QP from “non energy industry” related political influences

It has however evolved into a Strategic issue which can represent a Powerful

Tools in tackling Market Domestic & Market External issues

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The New & The Old Challenges What the Past Teaches – The Common Approach Factors

From an attentive analysis of the past projects, we can

individuate some “commonalities” in the approach taken

by the successful project developer, these are:

1. Recognition & Acceptance of the existence of key issues

typical to the market

2. Development of an Understanding of the same and of the

impacts on the PDC & PDS

3. Capability to successfully negotiate/mediate acceptable

solutions to meet the ultimate PDC objectives

4. Flexibility of approach, Open Mind

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The New & The Old Challenges The Common Factors of Past Successes - 3 Critical Steps

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The New & The Old Challenges The Dynamics of the Approach to Key Issues Tackling

K.M.A.D.

Understand

through

ANALYSIS

Harmonize

through

DEVELOPMENT

of an

APPROACH STRATEGY

Recognize

through

KNOWLEDGE GATHERING

&

MONITORING

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The New & The Old Challenges The Dynamics of the approach to Key Issues Tackling

K.M.A.D.

Recognize

Understand

Harmonize

Knowledge Gathering & Monitoring •Key Issues

•Trends

•Changes

•Others’ Experiences

Analyze •Impacts on PDC & PDS

•Others’ Successes & Mistakes

Develop Approach Strategy

• To Harmonize Objectives with Realities

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The KEY ISSUES INFLUENCE Areas Matrix®

Issue/PDC

Milestones

Feed-Stock

Agreement

DPSA/JV

Agreement

Marketing

Agreement

PES

Development

Bid/s

Development

Cultural

(Individual) X

Cultural

(Corporate) X

Market

(Domestic) X

Market

(External) X X

Strategic X X

Organizational X

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The New & The Old Challenges KII Matrix® - PDC Areas Analysis

Issue/PDC

Milestones

Feed-Stock

Agreement

DPSA/JV

Agreement

Marketing

Agreement PES Development

Bid/s

Development

Cultural

(Individual)

Pricing

Escalation

Capex

Penalties

PDP

Interfaces

Approvals

Pricing

Fees

Partners

Rights

Interfaces

Licensors

Risk Sharing

LLI Strategy

Contractual

Scheme

Contract T & C

Sole Sourced

Items & Services

Cycle

Leadership

PQR

Bid Slate

Risk Balance

Eval. Criteria

Procedure

Evaluation

Negotiation

Strategy

Selection

Approval

Cultural

(Corporate)

Market

(Domestic)

Market

(External)

Strategic

Organizational

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The New & The Old Challenges KII Matrix® - Issues Analysis

Issue/PDC

Milestones

Feedstock

Agreement

DPSA/JV

Agreement

Marketing

Agreement

PES

Development

Bid/s

Development

Cultural

(Individual)

Value of Personal Relationships, Family Ties

Creation of Internal Alliances

Cultural

(Corporate)

Entrepreneurial mark

Strategically Focused

Prideful

Exercise Control

Conservative toward innovative solutions, operates by Benchmarking

Strong drive toward maintaining competitive environment

Market

(Domestic)

Previously negotiated agreements

(Benchmarks)

Contracting resources

(Construction)

Market Demand (Qatar),

Competing Development

E&C Market Evolution (Qatar)

Previous Execution Schemes

(Benchmarking)

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The New & The Old Challenges KII Matrix® - Issues Analysis

Issue/PDC

Milestones

Feedstock

Agreement

DPSA/JV

Agreement

Marketing

Agreement

PES

Development

Bid/s

Development

Market

(External)

E&C Market Evolution

Market Demand, Competing

Development (GCC)

Material Market

Strategic

Gas Resources

Exploitation =

Primary

Strategy

Bi-

Polarization of

Producers in

LNG

Organizational A 5 families business (Jaida, Emadi, Kaabi, Attiyah, Suwaidi)

Other Power Lines behind the Organization Chart

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The New & The Old Challenges Support Areas – K.M.A.D.

•As the PDC progresses into the execution phase Areas of

Influences of Critical Issues stack-up

Knowledge Gathering &

Monitoring Analyze Develop Approach Strategy

Key Issues Impacts on PDC & PES Harmonize Objectives with

Realities

Trends Others’ Experiences

Changes

Others’ Experiences

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The New & The Old Challenges Support Areas – K.M.A.D.

Knowledge

Gathering &

Monitoring

(KG-M)

Analyze

(A)

Develop Approach

Strategy

(DAS)

Cultural

(Individual) KG A RB (Relat. Bldg.)

Cultural

(Corporate) KG A DAS

Market

(Domestic) KG-M A DAS

Market

(External) M A DAS

Strategic KG A DAS

Organizational KG-M A DAS-RB

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The New & The Old Challenges Outputs (Typical)

Contracting Strategy

Analysis

Negotiation

Strategy

Development

PQR-Evaluation Criteria

Development-Analysis

Impact

Analysis

Competing

Development

Monitoring

Organizational

Development

Monitoring &

Analysis

Contracting

Environment

Monitoring, Sensing &

Analysis

Past

Development

Analysis

Relationship

Building Support

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The New & The Old Challenges A Good Blend of Experiences, Expertise & Relationships

Local Relationships

Past Direct Involvement in

Manufacturing, Technology, EPC

Established Relationships

in the Industry

Long time presence

in the market (past 24-30 years)

Multicultural

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The New & The Old Challenges The Learning Curve’ Time - Cost Diagram

Potential $

impact

of

Un-Informed

Decisions

PDC – Time

Completion Low

High

Start

DPSA (including PDP) or PES on JV

MOU

Marketing Agreement

Feedstock

Construction

H.R.D. = High Risk Decision

HRD Gap

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The New & The Old Challenges Conclusions

• Gas Based Projects Development in Qatar presents a set of Peculiar Issues

which heavily influences the PDC & PES.

• Recognition, Knowledge, Consideration & Analysis & of these Issues

have made the difference between successful & sour projects. This area is

where H can provide support to tackle the challenges ahead.

• The Measure of Success has been proved to be:

How Timely & Painlessly We Achieve Project Objectives

• Recognizing that eventually we will get there anyway……….

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Thank You

Documents

Presentation July 13th Doha Qatar