From Operator to Steward
Explore how the right framework can help non-operating LNG JV partners safeguard investments and create project value.
The shift that changes everything
The risk no one names
In today's landscape of significant oil & gas disruption—marked by the US planning to essentially double export capacity to 36 bcf/d by 2030, the severe disruption of two out of three major global gas supply routes over the past three years, and an environment where EPCs are taking less risk while tightening contracting terms—the pressure to execute on complex joint ventures (JV) is more intense than ever. Furthermore, severe supply chain constraints, a lack of trade-skilled workers, and shifting energy security priorities are causing countries to rethink their LNG contract strategies entirely.
This creates an unspoken tendency for every party to lean toward operational execution. It feels productive. It feels necessary. However, it creates a quiet but profound risk: when everyone acts like an operator, no one is truly focused on capital efficiency, risk management, commercial optimization, and governance discipline. This erodes value just as these specific market instabilities create new threats and contracting implications. No one is truly protecting the capital.
A different posture: Steward of capital
To counter this, KPMG differentiates itself by moving beyond advisory and implementing a Capital Stewardship Framework designed for non-operating partners. This is our answer to the 'so what' factor. We advise you to adopt a different posture, guided by the core principle: Influence without day-to-day execution responsibility. This means stepping back not to disengage, but to elevate your impact. Your role is defined not by what you build, but by what you protect and enhance.
Our stewardship is grounded in three truths:
- Execution does not equal value. Value is in the integrity of the investment structure.
- Oversight, or a ‘cold eyes review,’ must remain independent to be effective.
- The greatest risks, and opportunities, are often the least visible.
Precision over control
Stewardship does not require blanket control; in fact, broad control dilutes effectiveness. It requires precision: the discipline to secure targeted governance rights at key inflection points. This is where Independent Project Assurance (IPA) plays its role, not as a parallel organization, but as a truth mechanism. A function designed to continuously challenge assumptions rather than just accept initial plans. This is where we can leverage KPMG's proprietary AI tools to analyze contract compliance and invoice payments, providing a layer of automated, data-driven oversight that traditional methods miss. It’s about asking the questions others cannot and validating what others assume.
Where the real value lives
For a non-operating stakeholder, the highest-value contribution is not in execution but in challenging the integrity of the plan itself. This is where independent commercial, schedule, and risk reviews become critical. The goal is twofold: not only to probe for risks but also to glean insights into new opportunities and possibilities that may have been overlooked by an execution-focused team.
We probe into:
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In these moments, the role is clear: not to manage, but to probe, test, validate, and unlock hidden value while ensuring the project moves forward on a foundation that can hold.
Where strategy becomes value
Protecting capital is only the beginning. This is where KPMG helps you lead. Value is created through intentional choices that shape the project's commercial architecture. This is where a non-operating partner must own the commercial and market-facing value levers. This is how we begin leading the client on a broader level. Long before first gas, the project’s returns are determined not in the field, but in the structure of:
Liquefied Natural Gas (LNG) offtake structuring (term vs. spot, destination flexibility), potentially stablishing a differentiated trading hub.
Shipping strategy (FOB vs. DES, chartering, pooling).
Feed gas supply strategy and hedging.
Carbon strategy (offsets, Carbon Capture and Storage (CCS) alignment, emissions reporting)
The steward’s role is not just to validate these decisions but to actively shape them, ensuring the commercial strategy is as disciplined as the capital behind it. This provides a stronger POV that leads into clear market trends and directly supports strategic authoring of the project's future.
Eliminating the element of surprise
If one principle defines effective stewardship, it is this: there should be no surprises. Surprises are rarely sudden; they are unaddressed signals, often born from a lack of continuous challenge to initial assumptions. We will work with you to establish a clear 'no-surprises' change management framework, building a culture where deviations are surfaced early and transparency is expected, not negotiated.
Clarity created speed
When roles are blurred, decisions slow and accountability is diluted. Effectiveness hinges on the discipline to define a clear interface with the Engineer, Procure, and Construct (EPC) and Operator, using a RACI discipline. When roles are clear, execution accelerates because everyone understands: the EPC executes, the Operator delivers, and ConocoPhillips, as the Steward of Capital, ensures every action remains anchored to the investment case.
Measuring what matters
Ultimately, stewardship must be visible in outcomes. This requires anchoring the strategy in JV value protection metrics, enhanced by data-driven insights from our compliance and monitoring tools. This provides a clear, consistent view of performance through signals that tell the story of project health:
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The role only one party can play
In every LNG project, there are many contributors. However, there is only one role responsible for ensuring that the promise of the investment is fully realized. That role cannot be outsourced, diluted, or reactive. It must be intentional, disciplined, and independent, because success is not just about delivering an asset. It is about delivering the value behind it, and that responsibility belongs to the Steward of Capital.
How KPMG can help
Understanding the principles of Capital Stewardship is just the beginning; operationalizing them in today's constrained market requires a deliberate partner. We do not just advise on these frameworks; we deploy the teams, the AI-driven compliance tools, and the global tax/transfer pricing capabilities required to enforce them.
Based on KPMG's legacy expertise in navigating complex LNG environments, the next step is a targeted, collaborative engagement. We propose a diagnostic workshop with your JV leadership to:
- Map your current governance rights against our Capital Stewardship Framework.
- Identify key risk, commercial, and tax inflection points specific to your upcoming FID or NTP milestones.
- Draft a clear, actionable operating model to formally establish your role as the definitive Steward of Capital.
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