Making joint ventures work
David Ibels A , Marc Van Grondelle A , Jonathon Peacock A and Jonathan Smith AKPMG.
The APPEA Journal 53(2) 464-464 https://doi.org/10.1071/AJ12075
Published: 2013
Abstract
No LNG capital project in Australia can survive without excelling in joint ventures; yet, the practicalities of them are often overlooked. The Australian oil and gas market has some of the most complex joint-venture arrangements in the world, and there is much we can learn from a global perspective about how to make them work.
Too often, joint ventures are forced marriages between two or more parties who misunderstand each other and have widely differing aims. Organisations often rely too much on the joint-venture agreement, devote too few resources to the venture itself, and pay scant attention to any warning signs of trouble.
The authors see that international oil companies typically have about 30–40% of their portfolios tied up in joint ventures. This is set to grow to about 70–80% during the next 5–8 years as they enter new territories in the hope of securing new resources.
Although joint ventures are familiar ground for oil and gas companies, such operators often struggle to make them work. Cost overruns, schedule delays, compliance issues, renegotiations, and erosions of value are common.
There are, however, ways to make joint ventures work more effectively, including:
-
knowing what is expected of all parties and monitoring these expectations;
-
improving transparency of information between joint-venture parties;
-
ensuring expectations are realistic and continuing to validate them;
-
paying particular attention in the first year of a joint venture;
-
proactively strengthening existing joint ventures; and,
-
staffing and resourcing joint ventures with care.
David is a director at KPMG’s management consulting business based in Brisbane. He is focused on addressing operational challenges in the oil and gas industry, including cost management, upstream delivery, joint-venture management, and operational readiness. He has more than 12 years of experience in advising clients about energy and natural resource sector in Australia, Europe, North America, and the Middle East. |
Marc is an expert in the creation, (re)structuring, governance, and practical implementation of joint ventures, partnerships, and alliances. He has deep expertise in global venture operation, business risk management, and performance enhancement for joint ventures varying from $600 million to more than $40 billion in asset value. As head of KPMG’s joint-venture practice, he has created services that enable the successful implementation, delivery, and governance of complex multinational joint ventures in services and industry. He draws upon an intensive 20-year career in the international development of joint ventures around the world, including the Middle East Africa, Australia, the FSU region, and India. |
Jonathon is a partner with KPMG’s management consulting business in Brisbane and leads the Queensland oil and gas practice. He has more than 30 years of strategy, operational, and project-management experience as a consultant, general manager, and chief operating officer in Australia, southeast Asia, and North America. |
Jonathan Smith leads KPMG’s management consulting oil and gas practice. He has more than 20 years of experience in business change and improvement. He has led transformation, operating model, cost management, cost allocation, tax implementation, and process improvement projects in the onshore and offshore oil and gas industry in Australia. |
