Risk management will become increasingly crucial to Iraq’s operations particularly in the oil and gas industry.
Speaking at a presentation at the Iraq Energy Forum which brought together key decision makers from the Iraqi government, IOCs and Iraqi NOCs; Hans van Neus, senior director with Ernst & Young, explained how most of the top 15 oil and gas risks identified by Ernst & Young through a global survey of senior oil and gas executives were relevant to Iraq.
“The behavior – and attitude to risk – of an organization is driven by top management and the board. Although risk appetites and profiles will be different, risk management frameworks are essentially the same for NOCs and IOCs, making them highly significant for mega projects. Relevant information – one line of sight – needs to flow effectively and efficiently throughout the organization to allow those at the top to provide timely support or to intervene,” said van Neus. The country will need to encourage adequate and sufficient preparation prior to project execution in combination with appropriate performance reporting and risk management, he explained
For risk management to be effective, van Neus suggested that it must be embedded in the business and based on a combination of systems and processes, empowering and driven by capable people. van Neus asked whether Iraqi stakeholders had the necessary capability in place in terms of people, organization, processes and procedures to deliver on Iraq’s production targets.
Using the IEA’s recently released Iraq report as a baseline, van Nues highlighted Iraq’s potential but also pointed to the significance of possible deviations of 30% on annual export revenues of $210b till 2035 and the impact this could have on Iraq’s development, including the provision of education where 38% of the population is 13 years old or younger.
van Nues stressed the need for Iraq to address any identified major shortfalls to get the basics right to deliver its potential. “Iraq has unique potential, significant challenges and limited time to deliver the Central scenario for 2020.”
