PTQ Q2 2026 Issue

The key differentiator is integration and flexibility. A pure fuels refinery is more exposed to transportation fuel demand shifts, whereas an integrated fuels-and-petro- chemicals complex has greater product optionality and resilience in evolving markets. In summary, multi-million-dollar projects often pre- serve competitiveness, while billion-dollar mega projects redefine it. A Sanjay Bhargava, Senior Vice President, Global Process Optimization Solutions, KBC (A Yokogawa Company), Sanjay.Bhargava@kbc.global Multi-million-dollar projects are typically undertaken to improve current margins by optimising existing assets, revamping and debottlenecking. Typically, they are approved at the company level. Financing comes from com- pany Capex budgets and cash flow, and the work sched- ule can be managed with less difficulty. They have simpler organisational structures, including a company project team, front end engineering design (FEED), and engineer- ing, procurement, and construction (EPC) (see Figure 4 ). Costs and schedule overruns are more manageable. Change orders later on (FEED and post-FEED) in the project are more manageable and less costly. They are more likely to go from feasibility to FEED to the construction phase. The internal rate of return (IRR) on these projects can be better in most cases. Companies are more willing to exe- cute multi-million-dollar projects due to time risk, economic volatility, political party changes, and government priority shifts. These are also popular with financers looking for an immediate return on investment. Billion-dollar projects are more strategic in nature and can be driven by government policies. They are transforma- tional, and approval is at very high levels across the board, governments, and financers. Financing usually comes from several sources and needs more management. These proj- ects require complex organisational structures, including the owner’s project team, licensors, project management consultancy (PMC), FEED, EPC, and the owner’s technical advisor. The owner’s technical advisor plays a critical role, rep- resenting the owner throughout all phases of the project. They also have multiple external stakeholders, including the government and local communities, with a focus on non- financial considerations, such as environmental, social, and governance (ESG) and sustainability. These projects are riskier and require higher contingen- cies. Projects can fail for non-financial reasons and may not be completed. Costs and schedule overruns are common in the oil and gas industry. It is very critical to get more things right at the pre-feasibility and feasibility stages. Recycle of work from the latter stages (FEED and post- FEED) is one of the main reasons for cost and schedule overruns. Critical paths can change due to the complexity of the project, resulting in significant changes to project cost and schedule. Project integration becomes a critical suc- cess factor. The time horizon of these projects spans across several years; economics can change and result in a very different net present value (NPV) than originally envisaged.

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