Abstract
Exploration and production (E&P) companies enter joint-venture partnerships as a way to limit their risks in operations and projects. Over the past few years, most major international oil companies (IOCs) have grown their NOJV portfolios. Production figures from 2012 show that non-operated production accounted for more than 41% of all global production of the supermajor operators (e.g. 22% for Chevron, 40% for Shell, 41% for Eni and 44% for ExxonMobil).
While major E&P companies may employ rigorous systems for managing risks in their own operations, until recently they have largely maintained a "hands off" approach with their NOJVs. Now, in response to concerns over major liability risks, most major IOCs have begun to implement programs to assess and manage risk in their NOJV partners' operations. Many independent E&P companies continue to assess NOJV risk ad hoc or not at all.
This paper describes the challenges faced and the effective strategies discovered by E&P companies implementing risk management programs for their NOJVs. A literature review on the topic identified key limits faced by non-Operators and the opportunities available for managing NOJV risk. Interviews with HSE leaders in a variety of E&P companies (from "supermajor" to small independents) as well as with business and legal consultants revealed best practices and common challenges (e.g. contract restrictions, cultural biases and legal misperceptions). These insights are summarized in a list of successful strategies for NOJV risk management programs, which may be useful for leaders developing, implementing or improving NOJV risk management programs within their own companies.
