Owner–Construction Contractor Risk Sharing for Major Oil and Gas Projects in Emerging Economies

The increasing global demand for energy will continue to necessitate the construction of large oil and gas infrastructure. With the exploitation of economic reserves in OECD countries largely in decline, the opportunities available for multinational oil companies and construction contractors are increasingly presenting themselves in non-OECD nations where the nature of non-technical risk is less predictable and less well understood. This paper attempts to outline areas of non-technical risk which should be considered in the formulation of the contracting strategy for large development and infrastructure projects. The non-technical risks described within this paper are a direct result of experiences obtained during the construction and early operations of the BTC and SCP pipelines, from 2003 to the present date. Methods by which these non-technical risks can be recognized and possibly managed will be put forward to ensure that the financial and reputation interests of both the owner and construction contractor can be protected during the execution phase of the project, where the potential for loss is the greatest.