Risk Management

Introduction

This report examines the case of BP, a large, international and one of the best balanced turnkey contractors in the oil & gas industry. BP has a strong bias towards oil and gas related activities in remote areas and deepwater and is a leader in the provision of engineering, procurement, project management and construction services with distinctive capabilities in the design and the execution of large-scale offshore and onshore projects, and technological competencies such as gas monetization and heavy oil exploitation. The company headquarter is located in Milan, Italy. (www.BP.com).

This report focus on the “Jasmine Development Project”, a capital project in oil & gas industry undertaking by ConocoPhillips, which will utilise the existing processing capacity on the Judy Platform in North Sea. BP LTD has been awarded the design, fabrication, transportation and installation contract for the Jasmine field development by ConocoPhillips. (Wong & Brewis, 2011)

Since capital construction projects in the upstream oil and gas industry comprise a significant percentage of company spend, there must be a particular focus on predictability, transparency and reliability, including controlling and reducing the costs associated with these projects. Arguably as important, however, is the focus on managing joint venture relationships and overall project risk as it relates to safety, budget, schedule and reputation.

Jasmine Development Project Life cycle

Understanding and managing the capital life cycle is crucial to the long-term success of an upstream capital project. Tremendous effort, time and resources are expended in delivering a project. However, poor decisions today may result in loss of value tomorrow. Despite a host of research, benchmarks and project guidelines, oil and...