Fundamentals of Petroleum Economics and Risk Management

Course Overview:

The Fundamentals of Petroleum Economics course is designed to provide in-depth knowledge and practical skills for analyzing complex economic factors within the petroleum industry. The course covers methodologies, financial modeling techniques, risk assessment, and decision-making strategies crucial for effective decision-making in the dynamic energy sector.

Course Objectives:

• Understand various economic terms used in the oil & gas industry.
• Understand how to develop economic models of various petroleum fiscal regimes.
• Carry out cash flow analysis and determine economic indicators.
• Carry out different economic analyses for petroleum-related projects.
• Evaluate and quantify risks and uncertainties.
• Make the right investment decision in the presence of risk.
• Carry out a comprehensive economic evaluation of any petroleum-related project including risk and sensitivity analyses.

Who Should Attend?

Oil & gas professionals such as Engineers, Geoscientists, Economists, Accountants, Production operators, and Technicians need to learn how to conduct economic evaluations and understand the role of petroleum economics in investment decision-making. This course is also recommended for Supervisors, Team leaders & Managers in the Planning, Exploration, Production, Projects, Finance, and Asset Management of Oil & Gas Companies.

Day 1: Introduction:

• Overview of the energy industry, sources, and market dynamics.
• Historical and future global energy supply and demand.
• Global petroleum reserves and production.
• Accessing opportunities for investment in the E&P sector.
• Understanding risks associated with oil and gas investment.
• Overview of discounted cash flow analysis and economic indicators.

Day 2: Reserves, Production, and Risk Assessment:

• Petroleum reserves formation and estimation.
• Estimating ultimate recovery (EUR) from petroleum reserves.
• Oil and gas production forecasts, and economic limits
• The role of strategic oil reserves.
• Risk analysis and uncertainty in petroleum exploration and development
• Evaluating the impact of geopolitical, regulatory, and market risks on project economics.
• Impact of oil price instability in petroleum project economics.

Day 3: Petroleum Regulation, Fiscal System and Financing:

• Ownership of petroleum assets.
• Regulatory and contractual frameworks
• Fiscal regimes – royalty and taxes applicable in the industry
• Evaluating investment opportunities in the exploration, development, and production of petroleum projects.
• Financing oil and gas projects
• Oil and gas asset acquisition and divestiture

Day 4: Discounted Cash Flow and Economic Indicators:

• Time value of money (cost of capital).
• Cash flow techniques in evaluating field development opportunities.
• CAPEX, OPEX, Abandonment costs, etc.
• Project economic indicators: Net Present Value (NPV), Payout (P/O), Rate of Return (ROR), Profitability Index (PI), Return on Investment (RI), Unit Technical Cost (UTC).
• Project economic sensitivity analysis and scenario planning.

Day 5: Emerging Trends and Future of Investments in Petroleum Assets

• The future energy outlook in 2024 and beyond.
• Strategic planning frameworks for portfolio management and resource allocation.
• Evaluating long-term investment strategies in the context of energy transition and sustainability.