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Managing the wave of gas investment – Australia needs to lead and learn


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7 April 2014:  Successfully managing the development and execution of Australia’s mega gas projects infrastructure will require a strong focus on innovation and best industry practice.

Speaking in the lead up to the APPEA 2014 conference in Perth, Deloitte’s National Leader Oil and Gas, Mike Lynn, said Australian investors and operators could learn from what was happening overseas but, more importantly, needed to drive innovative approaches to issues and risks around project development and execution, contractor management, regulation and talent acquisition and retention.

“Australia is incredibly well-placed when it comes to the global gas demand and supply equation. We have $200 billion worth of new infrastructure under construction and due to come online by 2017, while a further $180 billion in gas projects are under consideration,” Mr Lynn said.

“At the same time, oil and gas project development in the likes of the United States, Africa and the Middle East is adding to the global investment and production pipeline and competing when it comes to execution, innovation, knowledge, talent and, ultimately, success.”

Deloitte in the US has released a report, The challenge of renaissance: Managing an unprecedented wave of oil and gas investment, that outlines a range of challenges that need to be addressed if that country is to realise the potential of the North American energy renaissance.

“The issues covered in the report are equally relevant to the Australian context. The sheer number of concurrent megaprojects around the world is unprecedented, and the US clearly sees itself competing with the likes of Australia and projects that are larger and more technically complex than ever,” Mr Lynn said.

“We should be prepared to learn from overseas experience, but also be resolute in our focus on innovation and cost control and challenge traditional capital project development and execution strategies at every opportunity.”

Companies need to explore key issues such as:

  • Project development and execution: How can the industry project development and execution process be adapted to better reflect megaproject complexity?
  • Contractual models: How should contractual models evolve to allow owner/contractor project teams to adapt efficiently to changing circumstances while minimising commercial conflicts?
  • Incentives: How can contractors be incentivised to innovate and manage to project outcomes rather than to delivery of requirements?
  • Knowledge: How can project data be captured, analysed, reused, and shared between owners and contractors to provide quicker and better insight into real-time project performance and potential problem mitigation?
  • Integration: Should contractors become more integrated and retain larger and more permanent
    engineering and fabrication capability?
  • Talent: How can talent processes be changed to better manage the retention and quality of skilled workers and engineering/technical talent

Mr Lynn concluded: “As the oil and gas industry, both in Australia and globally, looks ahead and responds to both the opportunities and challenges presented by the unprecedented wave of oil and gas investments, it will be critical to explore the optimal blend of innovative approaches with leading industry practices.”

NB: See our media releases and research at www.deloitte.com.au

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Contacts

Name:
Mike Lynn
Company:
Deloitte Australia
Job Title:
Partner, National Oil & Gas Leader
Phone:
Tel: +61 8 9365 7125
Email
mlynn@deloitte.com.au
Name:
Warrick Hazeldine / Casey Hockey
Company:
Cannings Purple
Job Title:
Phone:
M: +61 417 944 616 / +61 433 922 575
Email
whazeldine@canningspurple.com.au, chockey@canningspurple.com.au

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