Middle East’s Energy Firms Are ‘Highly Adept’ At Risk Management

Middle East’s energy management firms are ‘highly adept’ at responding to the evolving risk landscape in the region, according to a new study by global risk management firm Marsh.

The study, which gauged the comparative risk quality of the Middle East’s oil and gas companies to more than 500 similar facilities worldwide, found that the region’s energy firms have an above-average approach to risk management compared to their global counterparts.

The report added that hardware is a key strength for Middle East firms due to land availability, substantial capital investment and the development of modern facilities.

“The Middle East is playing an increasingly critical role in world energy production,” said Andrew George, chairman of Marsh’s global energy practice.

“Significant investment in the region and expanding facilities necessitate that the industry fully understands and addresses the unique landscape of risks involved.

“The relative performance of the region in its approach to hardware, in particular remote isolation and flare design, demonstrates that companies are persisting in their efforts towards creating safer installations, improving loss prevention and driving operational excellence,” he said.

However, the report also identified areas that require improvement, which includes software and emergency control systems that determine the overall risk quality of the region.

Marsh said that significant improvement can be achieved in the management of change (MoC), which is the industrial practice of changing processes and systems without introducing new hazards or eliminating existing ones.

Despite an increasing number of challenges, George said that regional energy firms are taking steps to improve their risk management.

“These improvements will be reflected in future benchmarking scores,” he added.

“Improving risk quality has advantages for both clients and underwriters. High-quality risks tend to produce fewer losses and are more attractive to underwriters, generally resulting in better rates and capacity in the insurance market.”

Home to some of the largest oil reserves in the world, the Middle East’s oil and gas sector is estimated to require a total of $1.6 trillion of new investment over the next 25 years, according to an International Energy Agency (IEA) report.