Risk Analysis of Material Procurement in Oil and Gas EPC Projects in Sudan

Abstract

The rapid expansion of the Sudanese oil and gas industry, driven by rising demand, relies heavily on the Engineering, Procurement, and Construction (EPC) project model. Given that material procurement accounts for over 60% of EPC contract value and faces diverse risks, effective risk management is crucial for Sudanese enterprises engaged in international projects. This paper investigates and assesses the material procurement risks in oil and gas EPC projects, specifically focusing on improving risk management and procurement capabilities for Sudanese firms. The methodology involved first defining EPC concepts and risk analysis methods (identification, assessment, response). A comprehensive risk list for material procurement was constructed and subsequently assessed using the Risk Matrix Method, classifying risks into four levels (A to D). Finally, these steps were applied to a case study project to identify, assess, and propose specific risk-response measures. The results categorize procurement risks into two major groups: external risks (natural, political, social, market, owner, supplier) and internal risks (decision-making, plan, orders, transportation, inspection, inventory). The study concludes that Sudanese oil enterprises face significantly higher external risks than internal risks during material procurement in international oil and gas EPC projects.