Unconventional Execution Strategy of a Mega Offshore Project
Introduction
Background

At the turn of the millennium, with demand for oil picking up, & with the price of oil & projected to cross US$ 100/barrel (& even reach US$ 200/barrel by some predictions), all International Oil Companies (IOC's) & National Oil Companies (NOC's) across the globe frantically embarked on production capacity expansion projects.

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    In rushing to launch development projects, the producers

    • resorted to issuing incomplete FEED's, or no FEED at all

    • abridged tenders periods

    • invited sub-par bidders to enter the construction fray

    • insisted on the Lump-Sum Turn-Key (LSTK) EPC concept, practically transferring all risks to contractors

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    In fighting to secure a share of a lucrative, booming construction market, the contractors

    • took high risks on escalating material prices, with commodity prices sky-rocketing as a result of robust & continuous demand

    • competed against new entrants to the oil & gas construction industry

    • were un-able to adequately assess or quantify risks due to a variety of factors (lack of time, lack of proper feed-back from business partners, lack of sufficient resources to simultaneously support tenders & projects...), thereby getting exposed to potentially devastating financial harm

The difficulties faced by the contractors were compounded by a severe shortage of industry qualified professionals, because of historical factors & as a result of large & un-anticipated demand.

The Arabian Gulf was no exception to this worldwide frenzy & several ambitious development projects were simultaneously launched by the oil field operators in the early & mid 2000's.

Among the many developments that were sanctioned in 2005 in Qatar was a mega offshore development of a field operated by an IOC.

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