Joint ventures for major offshore projects

Course outline

The essence or JV’s for major projects

Dr John Massey   Industry analyst and trainer

Charley Rattan Risk Manager Seagreen JV, involved London Array,  

The philosophy of the JV

  • Why a JV?

Motives and rationale for each partner

  • reasons for partnership reduced risk, learning and sharing   new countries
  • local knowledge

Project governance 

  • dividing the scope

The board of directors

  • Effective control

The Essence of a JV and how to maximize its effectiveness

  • The written agreement:
  • the structure of the joint venture
  • the objectives of the joint venture
  • the financial contributions and people resourcing you will each make
  • assets or employees to the joint venture
  • ownership of intellectual property 
  • management and control,
  • disputes and exit strategy

Structuring the JV  –  Three common models?

  • JM/CR  to research 1
  • JM /CR to research 2
  • JM/CR to research 3

The essence of a successful Joint Venture

  • communication 
  • performance indicators 
  • flexible relationship.
  • agreed dispute resolution procedures

Other more informal models   Alliancing

  • Philosophy
  • Banks like
  • Difficult to work in practice

Three Joint venture major project case studies, (the good, the bad and the ugly!

The good?

Forewind

Amicable JV complementary skillsets

  • SSE
  • RWE
  • Statoil
  • Statkraft
  • Harmonious Project management
  • Procurement
  • Supply chain
  • Implementation

Future JV challenges

  • Asset Snagging and hand over
  • Awaits:
  • Asset management
  • Decommissioning

(also Beatrice is also ‘good’ SSE,Repsol later CIPL)

The bad?

Seagreen

  • Historical Fluor and SSE but fallout over precursor,  Gabbard
  • Project team harmonious enough – but implications for project
  • Separate risk registers  in house
  • JR pushed project back
  • SSE bought Fluor our to succeed
  • joint endeavor
  • SPV

The ugly:

London Array

Shell bailed Contracting strategies – despite Shell centre hosting the project

  • Turbine Supply agreements
  • Project underwriting
  • Contracting strategies, especially on warranties

Financial crash

Long projects

Critical double rocs saved

Reformulating the partnership: Masdar Eon Dong

Project was built out (with a few issues)

Flagship project and ironically Shell back in industry

Should have stayed?

Summary and likely global consolidation

De-risking global projects

Synergies and learning

Administration and unexpected outcomes