RISKS FACTORS & MANAGEMENT IN OIL AND GAS OFFSHORE PLATFORM &

PIPELINES CONSTRUCTION PROJECT

A CASE STUDY OF:

“HAI SU TRANG (HST) FULL FIELD DEVELOPMENT & HAI SU DEN(HSD)

EARLY PRODUCTION SYSTEM DEVELOPMENT”

By

Bui Thanh Nam

Abstract

             

Oil and gas offshore platform & pipelines are generally the most economical way to transport large quantities of oil or natural gas over states or even country. In order to extend its life expectancy, an offshore platform & pipeline construction risk management has become more important nowadays.

Oil and gas offshore platform & pipeline construction risks can be very high. They depend on how effective an organization is in managing its platform & pipeline transmission system. For an example, even the slightest defect on pipeline surface can bring great amount of oil and gas leakage. It will but human lives risk, pollution concern to environment as well as bring damage to millions dollars’ worth of property and asset.

It is definitely a necessity for a platform & pipelines manager to keep learning and be aware of the updated risk management of offshore platform & pipeline construction to ensure a more efficient and safer as well as profitable offshore platform & pipeline construction.

In this report, by the dimension of this study, the author would like to discuss about risk management of oil and gas offshore platform & pipeline construction and some issues of offshore platform & pipeline risk management recommendations in author’s experiences in a case study.

Executive summary

Rationale of research

This research has been conducted to identify risk factors & management in offshore platform & pipeline construction projects.

Objectives of study

To study best practices in international offshore platform construction and to review the case study of Vietnam offshore platform construction.to develop frame work for access and analysis for risk management in offshore platform & pipeline installation and management.

Methodology  

By using exploratory approach, the author will conduct the main contents of platform and pipeline risk management. Hence, the activities of platform and pipeline risk management in a specific project is reviewed and analyzed. Then, the author will propose recommendations and requirements to improve the risk management system of pipeline installation.

Findings and conclusion

This study focuses on risk management in oil and gas offshore platform and pipeline

Installation projects in Vietnam. In this research, list of risks was formed by theories and from real practice of oil and gas risk management by using risk assessment index model.

In addition, a case study was conducted in order to determine the effectiveness of risk management in practice by oil and gas risk manager.

The signed EPCI contract between PTSC - “as Contractor” and its Client - “as Company” stipulated as follow:

“Company reserves the right to require Contractor to pay to Company US $50,000

(United States Dollars Fifty Thousand) per instance if Contractor replaces Key Personnel without Company approval. Such amount is agreed as a genuine pre-estimate of the disruptive effect on the Work due to Contractor’s unauthorized withdrawal of its Key Personnel. This provision shall not limit Company’s other rights under the Contract in the event of recurrent unauthorized withdrawal of Key Personnel by Contractor."

·         However Contractor was not aware about this regulation, they replaced their Procurement

·         Manager and Project Control Manager without Company’s prior approval and later on

·         Company detected this issue and they claimed 100k for these two unauthorized replacements. These problems have not been settled so far.

·         Contractor threatening Client to stop work due to VO not approved or to approve a Cost impact related to a specific additional task.

·         Delay in issuance of shop drawings by design consultant and slow response in capturing design changes and Vendor Data incorporation.

·         Significant design changes made after bid award (Early Gas) resulting in big value VOs

·         Procurement were not done timely as EPC contractors elected to negotiate further cost reductions with the lowest bidder as the price exceeded their original budget. This led to more time required to issue Pos.

·         Limited procurement experience. Most purchases were relying on Client orConsultant’s which at times resulted in backlog

This research has achieved its objectives including:

1.      To study offshore platform and pipeline installation processes and methods and study risks management in installation of offshore platform and pipelines in recent international best practices. 

2.       To review a case study of the platform and pipeline installation risk management practices in a Vietnam pipeline company.

3.       To provide recommendations and propose some key points that can be applied to Vietnam offshore platform and pipeline Operation Company to improve the effectiveness of offshore platform and pipeline installation and management.

Recommendations

·         The above LL shows that if Contractor/Client has perfect Risk Management system/personnel which clearly identify all required contractual issues in early stage, they will not encounter this problem and harm the long term relationship and reputations.

·         Specify in Contract that Contractor shall not threaten to stop the Works i.e. to continue to execute the Works even though any commercial issues regarding any impending VOs have not been resolved yet.

·         EPC Contractor / Design Consultant must have dedicated and full time engineer / designers at all time during the engineering & fabrication phase. Detailed AFC and shop drawings tracking system suggested to be implemented to monitor drawings issuance progress. To avoid this situation if possible, as detailed design and procurement activities were halted impacting project schedule.

·         Obtain ALL cost impacts upfront, including air freighting/ expediting costs. Assist PTSC in identifying the changes to expedite finalization of cost impacts.

·         Obtain partners and PETRONAS buy-in of the changes upfront, or at least notify them first.

·         Avoid award to multiple vendors, if possible and stress that lead time should be the driving factor. These should also be specified in the Contract’s T’s & Cs. Client purchase as many long lead materials as possible.

·         Specifications for LLIs should be delivered by FEED.

·         Insist on experienced procurement personnel at bidding time or indicate in bid specs Client mobilize additional personnel during procurement phase. Document controller to keep track and file paperwork to preserve history in case of technical queries later.