Abstract

This case study focuses on a $380 million project involving the development of eight new offshore fields in Block 2 Angola, which became a success story despite facing major obstacles during early phases of the project. This study highlights how a multi-dimensional approach to managing risk and uncertainty, coupled with excellent cooperation with Partners and government, can lead to an economic success.

With the interruption of the Angolan peace process in 1992, Block 2 became directly affected during the construction phase of the project. For a two year period and until the signing of the Lusaka Peace Accords in 1994, which reestablished a cease-fire in Angola, mitigation of risk and uncertainty became the primary driver in completing this project. As a minority shareholder in Block 2, Texaco - Angola (Texaco Panama Inc. - Angola) as Operator needed to gain consensus among all its Partners and government for a revised development plan, taking into account some very divergent views of the risks facing the partnership. Ensuring the security of personnel, continuity of income, and maintaining sound project economics were required to gain the consensus needed to move ahead. A complete re-design of the development concept ensued while in the construction phase. The result was that this project was completed some 3 years later with acceptable economics.

Unconventional and innovative design, financial hedging and project management solutions will be highlighted to illustrate how this was accomplished.

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