Managing operational and legal risks in oil and gas projects: An insight into the contractual approach.

Oil and gas projects are inherently complex and volatile in nature. These projects expose to risks in all phases and milestones commencing from the feasibility phase to the operational stage, where there is a tendency that the operations will not run efficiently and does not turn out exactly as planned. In this regard, the project risk relates to the prospect of uncertainties of the technical, schedule, and cost outcomes of the project where these risks have a direct impact on the project schedule, cost and performance. On the other hand, since the oil and gas projects involve with volatile hydrocarbon, they are exposed to extremely high legal risks and repercussions. Hence, risk management is a significant part of project management in the oil and gas industry. The process would be carried out by identifying, assessing, mitigating and allocating the prospects of risk associated with each activity of the project. While most of the previous studies have given emphasise on quantitative risk management, this paper aims and rather focusing on the qualitative risk management. In this regard, it is proposed that the operational and legal risks in the oil and gas projects could be managed and allocated using contractual terms to overcome exposures and uncertainties in their operations. The methodology employed in this paper will be a qualitative study - a combination of both doctrinal and case studies which will be carried out in a descriptive, analytic and prescriptive manner