Risk management of large-scale operations: the case of hydrocarbon exploration in Cyprus.
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The exploration for hydrocarbons in the Exclusive Economic Zone of Cyprus is a subject that is dominating the public conversation in Cyprus the last decade. Especially after the economic crisis of 2013, the exploitation of potential hydrocarbon reserves is seen as a solution for the long term economic development of the island. Oil and Gas is an inherently risky industry where Risk Management is imperative for optimising the decision making process which maximise the probabilities of the project success. Environmental disasters such as the Deepwater Horizon on 2010 in the Gulf of Mexico and the crash of the global oil prices we are witnessing the last two months emphasize why the Republic of Cyprus should have in place a comprehensive Risk Management process for the hydrocarbon exploration project. This master dissertation will present the theory of risk, uncertainty, risk management and it will then present the basic concepts of some of the most popular risk management standards and frameworks. A synopsis of the efforts that the Republic of Cyprus have made so far in it’s pursue for exploiting the hydrocarbons in its EEZ. Those efforts include the bilateral and international agreements that have been signed with other countries and oil and gas companies. Also there is a brief presentation of the most important legislations that regulates the hydrocarbon activities in the Republic of Cyprus. With the use of the IRGC Framework this master dissertation attempts to identify, analyse, evaluate and manage the risks for the Republic of Cyprus during the hydrocarbon exploration project. The Risk Management proposed includes a pre-assessment stage, an appraisal stage, a characterization and evaluation stage, management stage and the cross cutting aspects such as communication and stakeholders engagement.