Course Description

INTRODUCTION

This   International Petroleum Business training course will highlight the added value in enhancing international petroleum business and in managing decision making.

The business of oil and gas is multifaceted, technically complex, highly capital intensive and often confronted with potential capital risks and price risk uncertainties. Today’s oil companies’ are dealing with ever increasing levels of complexity and competition. The innovative technologies in the recovery of oil are also changing the landscape of petroleum industry. Integration of refining and petrochemicals to achieve greater efficiencies is yet another critical factor in the business. Managing international supplies, refining and trading of oil require several cross-functional skills. To achieve maximum effectiveness, managers and professionals must continually expand their business knowledge and sharpen their skills. Their strategies must include how to achieve the supply chain value maximization, and how to create and manage portfolios that can withstand the price volatility while maximizing profits.  

Objectives

Gain broad perspective of global oil business, supply, and transportation, refining & trading

Boost your understanding of the fundamentals of oil business: quality, blending & valuation of oil for trade, freight and netback calculation & refinery margins calculations, vessel chartering, pipelines & terminals, etc.

Evaluate the technical, commercial, legal, safety and environmental aspects of oil business

Confidently discuss the technical terms, concepts and buzzwords with your peers and clients.

Course Outline

DAY 1

Exploration, Production, Supply and Petroleum Economics

Introduction to the training course

Introduction to How Oil was Formed

Origin, Accumulation and Migration of Petroleum

Essential Requirements For Hydrocarbon Accumulation

Fundamentals of Oil & Gas Geology and Petroleum Engineering

Introduction to Oil & Gas Geology

Simple Anticline Structural Trap

Barrier or Closure – Reservoir Traps - Reservoir Mapping

Oil & Gas Drilling Techniques

Types Of Drilling – Exploration, Delineation, Appraisal, Developmental, Maintain Potential Wells

Drilling Circulatory System – Safety and Environmental Impact

Well Logging and Well Completion

Tools and Techniques for Evaluating Oil & Gas Wells

Open and Cased Well Logs

Functions of Well Casing

Benefits of Horizontal Well over Vertical well - Multilateral Well Completions

Essence of International Oil Supply – Global Reserves, Production & Trade

Introduction to Global Oil Business - Exploration, Extraction, Refining, Marketing, Transportation

Global Oil Resources – World Oil and Gas Reserves, Production of Oil and Gas

Industry units – for the USA, Europe and Asia, Conversion factors

Crude Oil Classifications

Crude Oil Quality Indictors, Crude Oil Characterization by Assays

Crude Oil Distillation – Refined Products

Oil Industry Units and Conversion Factors

Fundamentals of Oil Economics

Delivered Price of Crude Oil – The Concept GPW (Gross Product Worth)

Net Refining Margin Calculation

Value of Crude Oil and the Determining Factors in Crude Selection

Measures of Efficiency –DCFROR, Profitability Index, Unit Marginal Cost

How to Determine Economic Limit of Oil & Gas Fields

Investment Decision-Making Criteria

DAY 2

Transportation, Refining and Marketing

Fundamentals of Crude Oil Transportation – Tankers and Chartering

International Oil Tanker Sizes, Tonnage

Types of Charters and Charter Parties

Freight Payment, Chartering Mechanism, Voyage Charter, Time Charter

Roles of Ship broker, Shipping Agent, Bunkering, Arbitrage, Net Daily Contribution

Basic Principles in Pricing and Overview of Markets

Causes of Oil Price Volatility

The History of Oil Price – Real and Nominal

The Future of Oil Price - Oil Imports & OPEC’s Production, & Consumption

The Future of Oil Price - Global Reserves Replacement Ratio

The Physical and Paper – Oil Markets

Price Markers of the World – Crude Oil Benchmarks: WTI, Brent, Dubai / Oman, ASCI, OPEC Reference  Basket

Methods of Sale – Spot, Term

Regional Pricing – North America, Europe & Asia

Price Reporting Methodology – Price Report

Crude Oil Markets

History of Crude Pricing

Location of Pricing

Marker Crudes

Refined Products Quality

Crude Oil Refinery – Size and Configuration – Skimming, Catalytic, Thermal Cracking

Refinery Yields by Crude Type, Refinery Margin Calculation, and Factors affecting Profitability

Key Refinery Products and Specifications

Need for Blending and Blending Exercise

Prices at Pump, Oil & Gas Earnings Versus Other Industries, Return on Investments

Refined Products Market

Product Pricing Determinants

Product Pricing Quotations

Product Pricing Spec-base

Product Pricing Assessments

Fundamentals of Product Trading

DAY 3

Contracts, Sales and Marketing Logistics

Essential Elements in Crude Oil Sales Contracts

The Objective, The Parts of Contract, and Contract Confirmation

Attributes and Buyer / Seller Responsibilities with INCO Terms – FOB, CFR, CIF, DES

Important Oil Contracts Clauses

Payment and Security

General Terms and Conditions

Basic Refining II – Conventional Refinery Upgrading

Cat Cracking

Hydrocracking

Visbreaking

Coking

Basic Refining III – Sulfur Reduction

Sulfur Reduction Methods – Lighter Compounds and Heavier Compounds

Hydroprocessing

Sulfur Reduction Measures

Other Sulfur Reduction Processes

Contracts – Elements of Risk

Identify Areas of Risk

Credit Performance Risk – LOC, Standby LOC, Parent company Guarantee

Operational Risks - Vessel nominations, Quantity and Quality, etc.

Charter Party Risks

Basic Refinery IV – Economics & Environmental Aspects

Yields for Different Configurations

Value Contributions for Different Configurations

Investments Costs

Environmental Considerations

Primary Logistics

Pipeline Transfers - Advantages and Disadvantages

Pipeline Scheduling

Pipelines Investment Considerations - Tariffs and Operating Economics

Major Pipelines of the World

Storages

Losses – Net loss, In-Transit Loss, Inturn loss, Outturn Loss

DAY 4

Market Structures and Trading

Introductory Concepts in Oil Trading

Players in the Oil Market

Success factors in Trading

Risk Factors in Trading

Trading Objectives and Price Movements

Market Structures – Contango and Backwardation

Interface with Retailers

Competitive Marketing – Primary and Secondary Supply

The Value Chain – E&P to the Customer

The Retail Market Place

Fully Vertically Integrated Oil Company Model

The Essential Success factors in Retailing  

Downstream Supply Chain Management

The Essential Success Factors in Supply Management

Total Barrel Economics

Measures of Profitability

Net Marketing Revenue – Refinery Netback

The Cost of Supply and Total Barrel Margin

Transfer price – An Alternate Value

Typical Oil Company, Distribution and Marketing Costs

Maximizing Corporate Profits

Oil Markets – Futures

Market Differences – Forwards and Futures

Characteristics of Futures Contract

What is Futures Market?

What is Margin Money?

How Futures are used?

Price Exposure

Trading For Profit

Taking Buy or Sell Position – Long vs. Short

Priced vs. Unpriced Exposure

What is Unpriced Purchase and Unpriced Sale?

DAY 5

Petroleum Dynamics and Risk Management

Hedging – Risk Management

Use of Futures and Forward Markets

Example of Hedging

Removal of Absolute Risk – Introduction of Basis Risk

Pricing Management

What is Price Management?

Price Management Example

Price Management Outcome

Derivatives

What are Swaps?

Example of Swap Transactions

What are Options?

Example of Option Transactions

Attributes of Swaps and Options in Oil & Gas Industry

Examples of Oil & Gas Futures Contracts, Swaps, and Options

Common Mistakes by Oil & Gas Companies in Hedging

A Guide To Developing A Corporate Fuel Risk Management Policy

Challenges to Petroleum Industry and Trends in New Technology

Legal and Regulatory Issues