1. Project Management Principles Understand the business environment Choose the “right” project Understand the energy value chains Identify risks – “hard” vs. “soft” Bring ALL risks close to the project mgt Value of lessons learned – mindful of uniqueness of situations

2. Commercial Framework Commercial Framework Government Investor Consumer

3. Partnering Decision to partner is related to project risk Choose a partner you can work with Choice of operator depends on project requirements and comparative advantage of partners Consider strong local partner if local content rules are strong –Impact of local content rules

4. Petrobras Upstream Project: Investment Decision (unexpected issues/risks to project management) Anticipate license/permitting requirements and incorporate in economic evaluation –Build integrated team that pulls together decision to bid on block with project developers who will obtain license/permits –Include a lawyer! –Consult government agencies on potential rules changes –Survey political risk Include partner

5. Petrobras Upstream Project: Implementation (unexpected issues/risks to project management) Environmental license/permits – process for obtaining –Integrated team for obtaining permits –…. Include partner

6. FLNG Regasification Island Cheniere/FLNG –Tolling facility –COP and DOW – capacity holders “No bid” EPC –Two phases – phase I under construction (current EPC contract) –Potential overlap with phase II

7. FLNG Project: Investment Decision Commercial constraint of intrastate market Probably there was inadequate project mgmt of decision process

8. FLNG Project: Implementation Risks –Weather – hurricane –Technology – equipment prototypes (untested) –Design –Regulatory – compliance with changing regulatory rules Importance of communication between companies and regulator –Commercial – quality of the gas (heat rate)

9. FLNG Project: Implementation Risks, continued –Labor – competition for skilled crafts Change in project mgmt (beneficial!) – length of time for implementation Scheduling –Complicated –Ability to visualize all phases Cost management –Pressure on costs (materials, services)

10. Quality management –Problems with control –Problems with communication Human resources/project team –Intervention of COP, DOW –Inability for COP, Dow to intervene in FLNG-TZS contract Scope –Change in design – problem in communication –Reduced storage capacity to balance phase I and II

11. Solutions Improved communication across all project team functions Better planning to lay out timelines, milestones, etc Critical path scheduling Regulatory approval –Work more closely with regulator to define issues and resolve –Change project team (leadership) if necessary

12. Solutions Adjust design for maximum weather related events

13. Evaluation of Project: Lessons Learned Large scale with challenges and unexpected issues in project management Some cost overruns – cost escalation will increase if phase II developed Ambitious – commercial strategy – LNG supply –Positions of COP, DOW would seem supportive Commercial constraint of intrastate connection relative to project cost and project mgmt demands –Connect to interstate? Or something for better value creation

14. Evaluation: Lessons Learned Lack of participation by COP and Dow in beginning –For both investment decision and early stages of project mgmt –Unusual choice of EPC contractor? Plan when you decide to invest and plan when you implement the investment