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OIL & GAS MANAGEMENT REPORT

OIL & GAS MANAGEMENT REPORT

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Published by magsuarez1
REPORT
REPORT

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Categories:Business/Law
Published by: magsuarez1 on Dec 14, 2012
Copyright:Attribution Non-commercial

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07/28/2013

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THE ROBERT GORDONUNIVERSITY
ABERDEEN
ABERDEEN BUSINESS SCHOOL
MSC PROJECT MANAGEMENT
OIL AND GAS MANAGEMENT – BSM2519
INDIVIDUAL REPORT: CHEVRON-LNOC COLLABORATION
MANUEL SUAREZ1117655
 
MAY 2012
 
WORD COUNT: 3,619MODULE COORDINATOR:
Ian Phillips
 
 
 
SAHARA DESERT ONSHORE GAS FIELDCHEVRON-LNOC COLLABORATION
 
Rev: 14 Ref:O&G-CW
MANUEL ANGEL GONZALEZ SUAREZ1117655
 EXECUTIVE SUMMARY
Within the context of the Chevron-LNOC Production Sharing Contract for the developmentof an onshore gas field in Libya, this report provides an overview of the differentcontractual elements which should be included in the agreement and defines how toaddress some of the key issues related to them.For this purpose, a Base Case was defined taking in account the initial estimationsobtained from the FEED programme, which have been adequately updated due to thecurrent situation of the country and the perceived risks associated to the development of the project. After this, an assessment of the terms of the PSC has been realized to evaluate how their variation could affect to the feasibility of the project and therefore to be able to establishwhich are the drivers for the success of the project and to define priorities.Furthermore, “trigger values” defining acceptable variation limits have been calculated for the most sensible contractual terms, and several options have been included as possiblesolutions to be taken in account for planning a negotiation strategy.In addition, several proposals for the development of Local Content initiatives have beenincluded in this report to enhance the attractiveness of the offer and to demonstratecommitment to the Libyan Government. In this regard, local workforce and supplier development, as well as community focused initiatives have been outlined and costsassociated to them have been estimated.Finally, it has also been undertaken an options appraisal for the selection of the mostsuitable type of contract which could rule the construction of the pipeline from the gas fieldto the coast. In this regard, a weighted system has been created to evaluate the suitabilityof the different types of contracts with the final objective of balancing risks allocationbetween client and contractor.
MANUEL SUAREZ
 
 
SAHARA DESERT ONSHORE GAS FIELDCHEVRON-LNOC COLLABORATION
 
Rev: 14 Ref:O&G-CW
MANUEL ANGEL GONZALEZ SUAREZ1117655
 
3
 
TABLE OF CONTENTS:
 1.
 
INTRODUCTION .......................................................................................................... 8
 
1.1.
 
PROJECT BACKGROUND .................................................................................... 8
 
2.
 
PSC PROPOSAL DEVELOPMENT METHODOLOGY .............................................. 10
 
2.1.
 
KEY FEATURES OF A PSC ................................................................................ 10
 
2.2.
 
METHODOLOGY ................................................................................................. 11
 
3.
 
BASE CASE ............................................................................................................... 12
 
3.1.
 
REVENUES .......................................................................................................... 13
 
3.1.1.
 
Gas Price ....................................................................................................... 13
 
3.1.2.
 
Gas Production .............................................................................................. 13
 
3.2.
 
CAPITAL EXPENDITURE (CAPEX)..................................................................... 14
 
3.3.
 
OPERATING COSTS (OPEX) .............................................................................. 14
 
3.4.
 
PSC TERMS ........................................................................................................ 15
 
3.4.1.
 
Bonus ............................................................................................................. 16
 
3.4.2.
 
Royalties ........................................................................................................ 16
 
3.4.3.
 
Cost Recovery ............................................................................................... 17
 
3.4.4.
 
Profit Share/Profit Oil Split ............................................................................. 17
 
3.4.5.
 
Profit Tax ....................................................................................................... 17
 
3.4.6.
 
 Accounting Standards .................................................................................... 17
 
3.4.7.
 
Foreign Exchange .......................................................................................... 18
 
3.4.8.
 
Export Rights ................................................................................................. 18
 
3.4.9.
 
Duration of Contract ....................................................................................... 18
 
3.4.10.
 
Relinquishment ........................................................................................... 18
 
3.4.11.
 
PSC Terms Resume Table ......................................................................... 19
 
3.4.12.
 
Base Case Financial Results Resume ........................................................ 19
 
4.
 
SENSITIVITY ANALYSIS ........................................................................................... 23
 
4.1.
 
NPV SENSITIVITY DIAGRAM.............................................................................. 24
 
4.2.
 
IRR SENSITIVITY DIAGRAM ............................................................................... 27
 
4.3.
 
PROFIT/INV RATIO SENSITIVITY DIAGRAM ..................................................... 30
 
4.4.
 
RESULTS INTERPRETATION ............................................................................. 33
 
4.5.
 
PSC NEGOTIATING POSITION DEFINITION ..................................................... 34
 
4.5.1.
 
Gas Price ....................................................................................................... 34
 
4.5.2.
 
Contractor´s Share Profit Oil .......................................................................... 34
 
4.5.3.
 
CAPEX (OFC) ................................................................................................ 35
 

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