Inevitable Necessity to have “TEFCEL Model” in Practice when managing Oil and Gas Industry Contracts
First, with such uncertainty in today’s economic climate and operational uncertainties, it is no wonder that much scrutiny and time goes into planning and managing potential risks in operating oil and gas contracts. Legal counsels and contract managers are more aware of the need to understand potential TEFCEL elements risks and how to distribute these risks with IOCs and NOCs, contractors & sub-contractors and third parties in the petroleum contracts/agreements.
Secondly, the effective management of contracts helps IOCs and NOCs and other companies to secure maximum value of petroleum contracts, to deal with the disputes in a cost and time efficient manner and to ensure sustainability in the current climate.
Third, due to the new trends in the contemporary petroleum industry, particularly in the complicated upstream projects and as a result of the dynamic changes experienced nowadays in the relationship between different players in the industry such as IOCs and NOCs, companies, clients, investors and contractors, various cooperate formula such as JV, PPP, PA, JOA, Alliances, and Consortium as well as different models of contracts such as EC, EP, EPC, BOT, GC, MC, BB, IPC, PSC, TSA, PSAC, concession and service contracts have been introduced and/or optimized in the nowadays industry.
Forth, to manage the new dynamic petroleum industry, it is not sufficient just to manage the project but a duty of care and great considerations should also be granted to the concerned contract(s). That’s why nowadays the contract management become as prominently important as the project management.
Fifth, this unruly horse of petroleum contract cannot be administered or controlled on a partial basis or timely manner without having a proper vision and mission for its lifecycle management and chain of activities. Without being engaged in the strategic and tactical issues of the petroleum industry contracts, and without implementing a long term A-Z comprehensive contract management plan, every efforts of the conventional approach of project management will be regretfully destined to the total failure.