«Problems of economics and management of oil and gas complex»

The economic efficiency improvement of EPC-projects in the oil and gas industry by means of a systematic approach to the contract strategy development

UDC: 338.45
DOI: -

Authors:

¹ National University of Oil and Gas "Gubkin University", Moscow, Russia

Keywords: economic efficiency, large capital projects, contract strategy, EPC-contracts, project management, international oil and gas companies, value engineering practices, investment attractiveness

Annotation:

The relevance of the article is caused by the necessity of improving the economic efficiency of large capital projects (LCP) implementation by large international oil and gas companies (IOGC) in the oil and gas complex due to the systematic approach to the contract strategies development. In the context of a challenging economic situation and limited access to international subcontractors, the adaptation of proven global practices to national realities becomes particularly important. The purpose of the study is to analyze the factors of projects economic efficiency in the context of selecting and implementing a contract strategy. The authors of the article consider in detail various contracting models (EPC, EPCM, hybrid forms), their advantages and disadvantages as well as their impact on projects key parameters: cost, timing, and implementation reliability. Special attention is paid to practical instruments of contract strategies development, including the methodology for conducting specialized value engineering practices using S-curves to assess "optimistic" and "pessimistic" scenarios. Based on the real project examples (Hibernia, Hebron, Liza-1) implemented by international oil companies, the evolution of contract strategies is illustrated depending on projects scale, complexity of the production system and contractors, capabilities. The economic value factors of various contract strategies and their impact on the efficiency of oil and gas companies’ activities is comparatively analyzed. The material of the article is based on the authors’ personal experience gained during their direct participation in the implementation of LCP by major Russian and international oil and gas companies. The research results can be used in the practical activities of Russian oil and gas companies to improve the efficiency of managing LCP.

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