KPMG<\/a> the complexity and high costs associated with offshore projects combine with constructing LNG trains in remote locations in East Africa and Mozambique pose the following potential top 5 major challenges.<\/p>\nThese problems include: Large number of complex contractual arrangements between partners, contractors and governments results in risk of cost overruns, cash flow forecasting reliability, missing key milestones and may ultimately result in off-take agreement implications.<\/p>\n
Secondly the remote locations without adequate infrastructure results in risk of logistical ineffectiveness, supplier constraints, safety concerns, lack of skilled labour and may ultimately result in unforeseen costs and time delays.<\/p>\n
Multiple stakeholders in Africa projects (government, owners, contractors, workforce etc) place an even greater focus on governance and results in risks that should be carefully managed, for example local content rules, taxation regimes, cost allocations, legal compliance, developing\/changing legislation.<\/p>\n
Sovereign ratings of many emerging African countries are not at investment grade levels resulting in higher financing costs when compared to traditional Western and Middle Eastern projects. Construction of new liquefaction and storage facilities is very costly and requires a stable positive long term investment.<\/p>\n
And finally some countries are still forming policy and governance structures to facilitate the development of their oil and gas assets, this policy vacuum often results in delays in monetising resources.<\/p>\n
To manage this risks KPMG recommends the following five solutions including managing capital projects, contract processes and providing assurance are the focus of our Major Project Advisory group.<\/p>\n
Risks are mitigated through tools and methodologies that address demand planning, supply and inventory management,strategic sourcing and contract management.<\/p>\n
Designing or improving current business processes including implementing technology focussing on logistic, supply chain and procurement management are services our advisory teams have delivered successfully. Implementing appropriate size<\/p>\n
Human Resource strategies along with the right enabling technologies is a key focus area to address labour related risks.<\/p>\n
Environmental and safety are the focus areas of our sustainability teams.<\/p>\n
Management of relationships between international oil companies (IOC) and national oil companies (NOC) is critical to ensure there is a balance between political and commercial objectives i.e. royalty and taxation, security of supply, employment and infrastructure development.<\/p>\n
[twitter-follow screen_name=’oilnewskenya’]<\/p>\n","protected":false},"excerpt":{"rendered":"
[twitter-follow screen_name=’oilnewskenya’] LNG is a key component of the global energy supply mix and it is a core strategic focus area for global oil and gas companies. LNG is seen … Read More<\/a><\/p>\n","protected":false},"author":2,"featured_media":241,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[5,7],"tags":[63,671,1347,1421,1428,1432,1564,1636],"class_list":["post-240","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-new-discoveries","category-oil-politics","tag-africa","tag-east-africa","tag-kpmg","tag-liquefied-natural-gas","tag-lng","tag-lng-train","tag-middle-east","tag-mozambique","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2013\/12\/gasfield.jpg?fit=400%2C267&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p5JWkQ-3S","jetpack-related-posts":[{"id":695,"url":"https:\/\/www.oilnewskenya.com\/index.php\/east-africa-the-newest-lng-frontier\/","url_meta":{"origin":240,"position":0},"title":"East Africa: the newest LNG frontier","author":"Samuel Kamau Mbote","date":"March 12, 2014","format":false,"excerpt":"Story by LNG With extraordinary discoveries of natural gas in the Rovuma Basin, East Africa is emerging as a new LNG frontier. The International Energy Agency (IEA) estimates that Africa holds nearly 74 trillion m3\u00a0of technically recoverable natural gas reserves, nearly 10% of the world\u2019s total, and it is believed\u2026","rel":"","context":"In "News by others"","block_context":{"text":"News by others","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/news-by-others\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":10017,"url":"https:\/\/www.oilnewskenya.com\/index.php\/africa-lng-report-out-now-mozambique-at-forefront-of-global-gas-development\/","url_meta":{"origin":240,"position":1},"title":"Africa LNG Report Out Now: Mozambique at Forefront of Global Gas Development","author":"","date":"March 2, 2021","format":false,"excerpt":"Africa Oil & Power (AOP)\u00a0has launched its\u00a0Africa Energy Series: Africa LNG Special Report 2021,\u00a0dedicated exclusively to Liquefied Natural Gas (LNG) developments and investment across the continent; driven by new discoveries and progressive gas-focused policies, Africa\u2019s LNG consumption and production is set to become one of the fastest growing sub-sectors globally\u2026","rel":"","context":"In "Countries"","block_context":{"text":"Countries","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/countries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/03\/78c065d58bb81a5a0e0bc52629050b06.jpg?fit=800%2C450&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/03\/78c065d58bb81a5a0e0bc52629050b06.jpg?fit=800%2C450&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/03\/78c065d58bb81a5a0e0bc52629050b06.jpg?fit=800%2C450&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2021\/03\/78c065d58bb81a5a0e0bc52629050b06.jpg?fit=800%2C450&ssl=1&resize=700%2C400 2x"},"classes":[]},{"id":1343,"url":"https:\/\/www.oilnewskenya.com\/index.php\/lng-from-east-africa-how-the-odds-are-stacked\/","url_meta":{"origin":240,"position":2},"title":"LNG from East Africa – how the odds are stacked","author":"Samuel Kamau Mbote","date":"July 1, 2014","format":false,"excerpt":"Story by\u00a0lexology.com How much gas? Vast amounts. Mozambique alone is estimated to have gas reserves of up to 150 trillion cubic feet\u00a0 (TCF) and Tanzania potentially as much as 50 TCF (Petroleum-Economist). But in a global economy\u00a0 where commodity prices, consumer demand and 'timing to market' are crucial, there is\u2026","rel":"","context":"In "News by others"","block_context":{"text":"News by others","link":"https:\/\/www.oilnewskenya.com\/index.php\/category\/news-by-others\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/03\/anadarko.jpg?fit=400%2C300&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":1183,"url":"https:\/\/www.oilnewskenya.com\/index.php\/east-africa-lng-projects-likely-to-face-delays\/","url_meta":{"origin":240,"position":3},"title":"East Africa LNG projects likely to face delays","author":"Samuel Kamau Mbote","date":"June 10, 2014","format":false,"excerpt":"LNG production in Tanzania and Mozambique along the East African coast is likely to face delays despite huge finds due to high cost of production, difficulty in access to financing partners as a result of low returns of natural gas. 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