This document specifies requirements for and gives guidance on the application of life cycle costing
to create value for the development activities and operations associated with drilling, exploitation,
processing and transport of petroleum, petrochemical and natural gas resources. This document
covers facilities and associated activities within different business categories (upstream, midstream,
downstream and petrochemical).
The life cycle costing process as described in this document is applicable when making decisions
between competing options that are differentiated by cost and/or economic value. This document is not
concerned with decision-making related to the economic performance of individual options or options
differentiated by factors other than cost or economic value.
Guidance is provided on the management methodology and application of life cycle costing in support
of decision-making across life cycle phases. The extent of planning and management depends on the
magnitude of the costs involved, the potential value that can be created and the life cycle phase. It also
provides the means of identifying cost drivers and provides a cost-control framework for these cost
drivers, allowing effective cost control and optimization over the entire life of an asset.