Oil & Gas Industry

Oil & Gas Industry

Q: Discuss the sector and specifically address the relevance of project management in this sector

Introduction

The oil and gas (O&G) industry built up for 200 years ago to meet a regularly mounting requirement for fuel. The key market for oil is transportation vitality (fuel for vehicles and other transportation). Natural gas is basically utilized for electricity and domestic usage. The Oil and gas Industry are a multimillion-dollar industry. Country with huge reserve of oil and gas have regularly been pioneering in the business or even world. The six biggest supermajors organizations are Royal Dutch Shell, ExxonMobil, BP, Total, ConocoPhillips and Chevron/Texaco. These organizations spread all parts of the business aspects from the extraction through distribution. The Malaysia's oil and gas industry, which started over a century back, has thrived throughout the years and become nation most exclusive proprietors of oil and gas reserves, and among the world's biggest manufacturers of liquefied natural gas (LNG). National oil organization Petroliam Nasional Berhad (PETRONAS), which built in 1974 as an overseer for the nation's oil and gas assets, is currently among the biggest companies on Fortune's Global 500 list. Today, employees in O&G industry are researchers, engineers, project managers, development specialists and etc.

Project in this industry is generally megaprojects. Players of this industry discover reserves of the oils in the sea or at ground; build, run, and preserve the rigs or wells that extract the resources; enhance them for use; and then dispense or trade them to vendors, companies, or consumers. According to Patricia (2011), megaprojects is defined with the project which capital expenditure (CAPEX) is more than USD 1 Billion. Nowadays, the trend of this O&G industry is tough and challenging, mainly due to a chronic excess situation, which affected the price of crude oil to fall. Since 2015, the price of oil is dropping rapidly. This price fluctuations lead to problem on downturn, where the company need to be meticulous in handling theirs projects. All main company start to lay off some of their employees and only keep cost-effective projects since 2016. The trends can be seen as Petronas with around 1,000 job cuts in 2016 and Shell Malaysia with a projected 1,300 job cuts within two years. Thus, each of projects need to operate with optimize cost, schedule and scope.

Project Management in Oil and Gas Industry

In every O&G project implementation, a systematic and efficient project management is required in to control the project execution in timely manner and cost effective. Besides it is also to   improve    the    decision-making    process    and    produce high quality result.   According   to   Asrilhant (2005), the   guideline   and requirement of project management in oil and gas industry comprised of:

(1)    emphasis    on    value    adding    opportunity;