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Case Study

Outsourcing in the oil & gas contracting industry: The Snorre B project

By Thomas E. Vollmann, Carlos Cordon and Denyse Julien

20 pages

August 1999

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Reference: IMD-6-0214

The case is based in the Oil & Gas Contracting Industry and uses a particular project; ‘The Snorre B Project’ as the vehicle to explain the outsourcing trends in this industry. The Snorre B project involves the design and construction of a semi-submersible oil platform for insulation in the North Sea on the Norwegian Shelf. The project represents the first experience for both the operator – SAGA Petroleum, and the contractor – Kvaerner Oil & Gas (KOGAS) Norway to work with the new type of EPCI (Engineer, Procure, Construct, and Install) contract. In essence the contractor assumes the responsibility for managing all the phases of the project, as compared to the more traditional approach where different contractors were responsible for the engineering, procurement, construction and installation of the platform. The case highlights some of the challenges of outsourcing the management of a project of this magnitude, and also the importance of getting the contracts right so as to ensure a common goal among the partners. In particular the case deals with the management and allocation of risk between the partners.

Keywords

Outsourcing, Risk Management, Production Management, Operations Management

Settings

Norway
1998-1999

Type

Field Research

Available Languages

English

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