Publications

It is widely accepted that a project is successful when it is finished on time but unfortunately, due to many reasons, in Indonesia, a large number of upstream oil and gas projects failed to meet their original contract time. The success of the delivery of upstream oil and gas projects in particular becomes pivotal as oil and gas production steadily declines each year, and Indonesia’s economy and revenue are highly dependent on the upstream oil and gas sector. For example in 2012, 15 projects with the combined maximum throughput capacity of 1,062 MMscfd and 23,060 bopd were initially expected to go on stream. However due to a number of reasons, 12 out of 15 projects were delivered with the combined maximum capacity throughput of 430 MMscfd and 5,600 bopd only. As mandated by the government, the Special Task Force for Upstream Oil and Gas Business Activities in the Republic of Indonesia (known as SKK Migas*) is responsible for developing upstream oil and gas projects as part of its main function in terms of maximizing national oil and gas production. This paper presents our experience, as a government agency, in managing all upstream oil and gas development projects in Indonesia. This paper also reviews the major project and construction management challenges experienced in Indonesia. All information and data were acquired and gathered throughout a series of intensive monitoring with all Production Sharing Contractors in Indonesia: meetings, discussions, site visits and written reports. All this information was further analyzed and categorized into several main factors that affect the delay of oil and gas development projects based on original Plan of Development and Engineering, Procurement, Construction and Installation contracts. The findings show that the main critical factors that cause delays in Indonesia are contractor performance, logistics, government approval and permit, societal, environmental and commercial issues. In addition, this paper also explores and provides some recommendations to reduce the impact of delays on oil and gas projects in Indonesia. Keywords: Upstream Oil and Gas Projects, Delays Causes, Indonesia