Implementing ERM at Qatargas The journey, challenges and lessons Kuwait Enterprise Risk Management Conference, Kuwait 26 November 2012 Rahat Latif Head of Enterprise Risk Management
Implementing ERM at Qatargas
1.
Why ERM
2.
Basic building blocks
3.
Some outputs
4.
Key lessons and WIP
Page 2
Qatargas Established in 1984, Qatargas is recognised worldwide as a secure and reliable supplier of energy
In July 2005 the Qatargas Operating Company Ltd. was formed to operate and maintain the assets of Qatargas 1, Qatargas 2, Qatargas 3, Qatargas 4, Laffan Refinery and other assets on behalf of the shareholders. QG1, QG2, QG3 and QG4 – a total of 7 LNG trains With the start of production from its seventh train in February 2011, Qatargas achieved a production capacity of 42 mtpa of LNG, to be shipped to markets across Europe, Asia and North America.
3
25 November 2012
Qatargas Assets Venture
Qatargas 1
Qatargas 2
Qatargas 3
Qatargas 4
Laffan Refinery
Qatar Petroleum (65%) ExxonMobil (10%) Total (10%) Mitsui (7.5%) Marubeni (7.5%)
Train 4
Qatar Petroleum (68.5%) ConocoPhillips (30%) Mitsui (1.5%)
Qatar Petroleum (70%) Royal Dutch Shell (30%)
Qatar Petroleum (51%) ExxonMobil (10%) Total (10%) Idemitsui (10%) Cosmo (10%) Mitsui (4.5%) Marubeni (4.5%)
Capacity
Three trains of 3.3 mtpa each
Two LNG trains of 7.8 mtpa each
One LNG train of 7.8 mtpa
One LNG train of 7.8 mtpa
146,000 BSPD of condensate feed stock
1st Production
1996
2009
2010
2011
2009
Ships
11 ships, 135 km3 capacity each
14 state‐of‐the‐art large LNG carriers
10 state‐of‐the‐art large LNG carriers
8 state‐of‐the‐art large LNG carriers
None, FOB
Main Markets
Japan, Spain
United Kingdom, Europe and Asia
North America, Asia, Europe
North America, Asia, Middle East
Asia, Middle east
Downstream Owners
Page 4
Qatar Petroleum (70%) ExxonMobil (30%)
Train 5 Qatar Petroleum (65%) ExxonMobil (18.3%) Total (16.7%)
Why ERM ?
Page 5
•
Multiple stakeholders..
•
Rapid growth..
•
Multiple locations..
•
Desire to be the best..
•
Changing international environment..
•
Meeting customer expectations..
•
Mitigating threats and maximising opportunities..
ERM History
Period
Stage
May 2010
Project kick off
Mid 2010 – Dec 2010
As‐is assessment, develop and build fundamentals
Jan 2011
ERM procedure published
Jan 2011 – Jan 2012
Training and roll out to all of QG departments
Mid 2011 ‐ present
Reports & outputs generated
2012 – future
Improve & embed ERM process Integrated BCM Procure ERM database system
Page 6
Building blocks
Org’n framework Initial training & roll out Tools
Report templates Project Governance
Metrics
Reporting cycle Policy & Procedure
Page 7
Risk R & R ‘s
Project Governance
Group
Purpose
ERM Working Group
Develops, manages and delivers the different aspects of the program. Reports progress to Steering Committee.
ERM Steering Committee
Provides direction & oversight. Approves development, implementation, and outputs of Working Group
Who Core – plus ad‐hoc contributions from SMEs
Senior / board members
ERM Working Group Charter
Scope Responsibilities Meetings/process Members
ERM Steering Committee Charter
Scope Responsibilities Meetings/process Members
Key considerations • Steering Committee contains key decision makers, and meets at key milestones / decision points • Working group contains key subject matter experts and users of RM from around QG • Hire of consultants vs in‐house development? • Even if in‐house, maintain in‐house PM and project governance structure as above
Page 8
Organisational Framework What are the units for capturing risks ? •
Functional ?
•
Process / task based ?
•
Project based ?
Page 9
x
y
z
Strategic and Operational risk registers Strategic risk register contains: • • •
Current ‘corporate’ level risks Key future emergent risks (med‐long term) Major risks from operational level
MLT (Management Leadership Team) Manages strategic risk register • Each risk ‘owned’ by member of MLT • Regularly reviews top risks from operational level •
Consolidated Operational risk register •
Shows QG operational risks in priority order
Regular reports from each entity highlight : •
• • • • •
Page 10
Key risks, controls and actions Progress on actions Risk movements New risks / closed risks Risk events that have occurred Proposals for escalation of risks to Strategic level
Ownership & Responsibilities Strategic Risk Register • Owned by the MLT • Strategic Risk Champion – CEO Operational Risk Registers • Risk Champions: Heads of Group/Asset/Project/Departments • Risk Management Coordinators: Assigned by Risk Champions •
Risk owners and Action Owners on all risk registers
Page 11
Metrics Issues • •
Require consistent impact measures across organisation However…..differing requirements, e.g • IT: integrity, reliability , availability • EHS: safety, environment, health • Projects: schedule, cost, quality • Finance: $$ • Etc
• Capturing threats and opportunities ? • Consequence thresholds (appetite)
Page 12
Tools Spreadsheets or database system ?
Page 13
Risk review cycle
Page 14
Formalise
Page 15
Risk reports Group risk reports contain • Top ten risks • Key risk movements in last quarter • New risks, closed risks in last quarter • Risks proposed for escalation to strategic register • Risks proposed for transfer to other registers • Risks occurred in last quarter Risk Category Level 1 Breakdown 1, 6%
Financial People & Organisation Technical
2, 12% 1, 6% 1, 6% 1, 6%
Page 16
11, 64%
Interfaces (Internal) Budgets
Risk trends
Quarterly strategic risk profile arrived at after • Each Group risk review • Interview with each COO • Final interview with CEO before strategic risk workshop • Strategic risk review workshop
Page 17
The Launch
Page 18
Training & competency building
•
Identified Risk Management Coordinators across company
•
Roll out to every Group / Department by Q1 2012
•
Initially three stage process for each Group: 1. 1st day ‐ Training 2. 2nd day ‐ Risk identification, evaluation & ownership 3. 3rd day ‐ Risk Actions
•
Risk coordinators conference (Dec 2011, Nov 2012)
•
Further formal training for RMC’s
Page 19
ERM share point site
Page 20
Business Continuity Management
Preventive
Page 21
Work in progress • • •
• • • • •
ERM system platform Integrate with BCM Enhancing reports o Consolidation of and analysis of risk data o Cross communication, escalation, delegation, transfer of risks Link to organization unit KPI’s. Development of KRI’s Benchmark – risk maturity Formalize link to personal objectives Formal training (IRM) Harnessing value o Specific areas – HSE, incident management, process safety, insurance, strategic planning, projects
Page 22
Some benefits… •
Increased conversations about risks within and between departments & broken down silos
•
Helped us to focus on the key strategic and operational risks / issues and in their timely mitigation / management
•
Built a network of RMC’s (Risk Management Coordinators) across the organisation who are risk intelligent
•
Helped people to appreciate cross departmental processes and the impact of their role
Page 23
Influencing behaviors
Perceptions: how I see things… Attitudes: what I do about what I see…
Page 24
Key lessons • • • • • • • • • •
ERM is a major culture change program – don’t treat it any other way Top level mandate is key Set realistic expectations of investment and effort required Be sure that you are doing it because it makes sense to do so Have a strategy and program, and communicate this Network of champions and coordinators who see it as beneficial to their business as well as to them personally Involve business and technical experts Regularly review objectives and progress ERM program has been a vehicle for culture change .. but…….awareness, education, training, buy‐in is key !
Page 25