Giant oil and gas extraction projects will be giving oil industry executives headaches to match for the years ahead as delays, cost overruns and increasing risks call for new strategies to manage them.
The sheer scale and complexity of such projects is threatening to outgrow the ability of even the largest oil companies to manage them. They have emerged as the central topic for debate as oil executives gather on the sidelines of the World Economic Forum this week in the Swiss alpine resort of Davos.
Almost all the top companies have seen huge delays and broken budgets at projects ranging from record-breaking Australian liquefied natural gas (LNG) schemes to the enormous and a technically challenging Kazakhstan oilfield in the freezing Caspian Sea.
The subject has elbowed out last year’s hot topic, security, which was forced to the top of the agenda by the attack at a BP and Statoil gas plant in Algeria in January 2013.
“What we see are significant delays in the oil and gas industry as a result of a lack of available skills, bureaucratic barriers and geopolitical challenges,” says Fatih Birol, chief economist at the International Energy Agency.
“We see almost all big projects delayed.”