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Joint Ventures and
PSA’s in the Caspian
Opportunities,
Challenges,
….and improvements
Joint Ventures..... From Good Intentions to Joint Operating Success.
Opportunities….
and challenges
■ The Caspian Corridor...
Joint Ventures..... From Good Intentions to Joint Operating Success.
Opportunities….
and challenges
■ But also rich in cha...
Joint Ventures..... From Good Intentions to Joint Operating Success.
Typical Joint Venture Lifecycle
“Key Performance Poin...
Joint Ventures..... From Good Intentions to Joint Operating Success.
Opportunities to improve....
Some classic issues
■ He...
Joint Ventures..... From Good Intentions to Joint Operating Success.
Some options....but every JV is different
Opportuniti...
© 2011 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a m...
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KPMG - Caspian Corridor Conference 2014

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Presentation by Dr Marc van Grondelle at the 2014 Caspian Corridor Conference held at the London Stock Exchange.

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Transcript of "KPMG - Caspian Corridor Conference 2014"

  1. 1. Joint Ventures and PSA’s in the Caspian Opportunities, Challenges, ….and improvements
  2. 2. Joint Ventures..... From Good Intentions to Joint Operating Success. Opportunities…. and challenges ■ The Caspian Corridor is extremely rich in opportunities: ■ Some of the largest oil & gas discoveries of the last 30 years, ■ Major Capital Investment programmes are ongoing (exploration, development, export pipelines). ■ Intense activity from the IOC‟s, and Service Companies. ■ Large number of JV‟s formed between IOC‟s and NOC‟s to deliver a project under a PSA or PSC. ■ Growing number of joint ventures between international (UK) service companies, OEMs and local enterprises – recognising the need and commercial benefits to be gained from local content. ■ Expected trend to see more interest from mid -size IOCs to partner as the region matures.
  3. 3. Joint Ventures..... From Good Intentions to Joint Operating Success. Opportunities…. and challenges ■ But also rich in challenges: ■ Projects are frequently delayed. ■ Several large developments are declared un-economical. ■ Relationships can be challenging. ■ Relationships with regulators can be a „cottage industry‟. ■ Joint Venture structures are not always fit-for-purpose to deal with such set-backs.
  4. 4. Joint Ventures..... From Good Intentions to Joint Operating Success. Typical Joint Venture Lifecycle “Key Performance Points” ■ There are numerous points for value creation and destruction throughout the Joint Venture Lifecycle.
  5. 5. Joint Ventures..... From Good Intentions to Joint Operating Success. Opportunities to improve.... Some classic issues ■ Heavy focus on the legalities of the deal (i.e. voting rights, equity, ownership, board positions etc.) ■ Quick to choose renegotiation if there is under-delivery. ■ This not always helped by legalistic, rigid PSA‟s, PSC‟s and JVA‟s. ■ Limited focus on enabling delivery and smooth implementation. ■ Costly, complex, time-consuming governance. ■ Permits- and-Regulatory Compliance slow and time consuming . ■ Complex, but ineffective JOA‟s („ lots of committees‟, slow decisions‟). ■ Cost recovery delays and disputes. ■ Bringing in new parties to solve delivery issues – „transacting improvements,‟.
  6. 6. Joint Ventures..... From Good Intentions to Joint Operating Success. Some options....but every JV is different Opportunities to enhance NEW ventures ■ Flexible PSA‟s and PSC‟s ….. allowing gentle adjustments. ■ Greater emphasis on practical implementation. ■ Review barriers to implementation shortly after starting the project, and adjust Opportunities to enhance EXISTING ventures ■ Implementation „blocker‟ identification, enabling removal. ■ Fine-tuning a PSA or PSC - „small side-letter adjustment.‟ ■ Cost recovery optimisation exercise. ■ Exercise to streamline decision making,and formalise in a workable „side letter‟, or a „governance refresh‟. …….delivered by a neutral party.
  7. 7. © 2011 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International Cooperative (“KPMG International”).
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