Introduction
The appetite for Engineering, Procurement and Construction (EPC)
contractors accepting project and contractual risks fluctuates with
supply and demand in the market. In recent years, as project
sponsors have found it challenging to attract financing for
downstream oil and gas projects in emerging markets and the
transaction pipeline has slowed, EPC contractors have been asked to
shoulder greater risks in order to win major downstream oil and gas
project work in those markets.
This is particularly the case for projects in challenging
jurisdictions where "first of a kind" transactions
introduce a higher level of completion risk and where project
sponsors wish to limit the extent of the completion support given
to their project finance lenders. In extreme cases, without a
marked shift in risk allocation to the EPC contractor, certain
emerging-market downstream oil and gas projects would not have been
able to attract finance and proceed.
