Risk assessment process for the Iraqi petroleum sector

ABSTRACT

Risk management is important for project success as risks in petroleum projects must be minimized to achieve the goals of production. Risk management composes of planning, identification, analysis, and response, which is an important phase. Controlling risks gains the projects the capability to overcome the uncertainty and thus effectively produce the targeted quantities. In this study, four types of risks have been examined in the oil field, and the Iraqi oil exploration company has been taken as a case study. These four types of risks are operational, financial and administrative, economic and political, and potential risks. The effect of these types has been examined by using a closed-type questionnaire form. The questionnaire form was based on the Likert quintet scale, and it contains 114 risk factors distributed in four groups representing the examined four types of risks. Over 170 questionnaire forms have been distributed in the oil field to engineers, managers, experts, and technicians, and 153 forms have been adopted for the analysis. SPSS software was used to execute the statistical analysis concerning statistical mean and relative important index. The most important factors have been found and then validated by using an assessment checklist. It was found that the most factors affecting operational risks are as follows the presence of mines and explosives left over from past wars in areas to be explored and the incorrect storage of flammable materials. Regarding the financial and administrative risks, it was found that the existence of financial and administrative corruption in oil companies and the mismanagement by managers or their assistants have the most effect on this type of risk. For the economic and political risks, it was found that the most important factors are the entry of some companies into the blacklist of major economic countries and decreased global market demand for oil. Finally, regarding the potential risks, it was found that the control of terrorist groups over the oil areas and regions is the most significant risk that the Iraqi oil and gas sector may face. In addition, it was concluded that the spread of Coronavirus disease 2019 and other epidemics should be treated as a potential risk because it has a huge effect on global oil prices.