Mega-Project Strategy
A major US oil company was wrestling to determine what near-term investments it should make in Central Asia to keep the longer-term pipeline option open. The opportunity was enormous, and would be far and away the largest value creation opportunity in the entire corporate portfolio. But if the corporation invested near-term and the pipeline fell through, the financial impact could be catastrophic.
SDG led the evaluation of the company's $2.5 billion pipeline investment in Central Asia. We began by clearly defining what the near-term options were, when decisions needed to be made, and how each option affected the longer-term probability of the pipeline moving ahead. A particular challenge was to define and quantify the political risks inherent in reaching a sustainable agreement with dozens of entities, each with its own objectives.
Insights from this effort led to changing ownership of the pipeline to align the interests of critical players. Our analysis also provided the client with the information needed to effectively negotiate with the country’s government over fiscal terms and the timing and structuring of the near-term investments.
