ASSESSMENT OF RISK MANAGEMENT STRATEGIES ON PROJECT SUCCESS OF OIL AND GAS UPSTREAM COMPANIES IN RIVERS STATE, NIGERIA

Abstract

The oil and gas business is mostly based on time/cost and therefore, efficiency is highly dependent on successful completion of the various small projects at the earliest time and cost with minimum risk. To achieve this, risk management strategy has become a very important factor to be considered by oil and gas project managers if high performance level that is geared towards achieving the firm’s shareholders’ objective must be achieved. The main aim of this study is to establish the assessment of risk management strategies on project success of oil and gas upstream companies in Rivers State, Nigeria, by looking at the level of implementation of risk management strategies, the factors influencing risk analysis/ evaluation and effects of project risk management strategies in optimizing oil and gas production projects. The independent variables are the risk management strategies and dependent variable was the project success. A descriptive research design was adopted and data collected by means of structured questionnaires. The population of the study was taken from the department of petroleum resources registered oil and gas upstream companies in Rivers state, Nigeria, with sample size of 263 personnel comprising risk managers and projects engineers with 258 (98%) responses. Data was analyzed using descriptive statistical tools such as mean and standard deviation for the objectives and inferential statistical tool such as regression analysis for the hypotheses. Reliability test obtained was 0.698 which is considered okay. Risk managers and professionals most strongly indicated that prior analysis and assessment are the risk management strategies often implemented (M=3.97, δ=0.677) and holds that implementation strategies help eliminate the root causes of risk rather than symptoms. The study established that risk management strategies (M=3.82, δ=1.01) contributed positively to the success of optimizing production projects in oil and gas upstream companies in Rivers state. The study finds that pollution and safety policies (Mean= 4.21, δ= 0.704); sub-contractor related risks factor (Mean= 4.03, δ=0.854); and physical risks factors such as unforeseen site condition, surface and subsurface geological condition are top-rated factors that influences risk analysis/assessment. It was further established that success of risk management strategies in optimizing projects is cost effectiveness with a mean score of 3.93 (δ=0.4619). According to the findings on the course of the study, necessary measures need to be put in place to manage safety and social risks, subcontractor related risk and physical risks. It was recommended that Risk Managers should pay adequate attention to risk success planning strategies (t-tabulated 2.409, p-value 0.02760) adopted, in order to achieve project success, as relates to effectiveness in costs, time and quality of implementing a project.