Course Description

INTRODUCTION

The Oil and Gas operations are multifaceted, logistically complex, highly capital intensive, and often confronted with potential risks and uncertainties. Today’s oil companies are dealing with ever-increasing levels of complexity and competition. Innovative technologies in the recovery of oil are also changing the landscape of the petroleum industry. Integrating refining and petrochemicals to achieve greater efficiencies is another critical factor in business profitability. Managing global supplies, refining, and oil trading requires several cross-functional skills. To achieve maximum effectiveness, managers and professionals must continually expand their business knowledge and sharpen their skills.

Objectives

At the end of this Commercial Oil Operations and Logistics training course, participants will be able to:

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

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

Master the Total barrel economics, oil market futures, hedging & futures, and price management considerations

Assess the technical, commercial, legal, safety, and environmental views/aspects of the oil business

Confidently and positively discuss the technical terms, concepts, and buzzwords with your colleagues and clients

Course Outline

DAY 1

Exploration, Production, Supply and Petroleum Economics & Logistics 

Introduction to 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 Indicators, crude oil characterisation by Assays

Crude Oil Distillation – Refined Products

Oil Industry Units and Conversion Factors

Fundamentals of Oil Economics

The 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

DAY 2

Transportation, Refining, and Marketing

Fundamentals of Crude Oil Transportation – Logistics of Tankers and Chartering

International Oil Tanker Sizes, Tonnage, and

Types of Charters and Charter Parties

Freight Payment, Chartering Mechanism, Voyage Charter, Time charter

Roles of Shipbroker, Shipping Agent, Bunkering, Arbitrage, daily Net 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 – Commercial and Logistics

History of Crude Pricing

Location of Pricing

Marker crudes

Refined Products Quality - – Commercial and Logistics

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

Refinery Yields by Crude Type, Refinery Margin Calc., and factors affecting Profitability

Essential 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

Commercial Contracts, Sales, and Marketing Logistics

Essential Elements in Crude Oil Sales Contracts

The Objective, the parts of the Contract, and the 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, Oil Trading and Logistics 

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

Maximising Corporate Profits

Oil Markets – Futures

Market differences – Forwards and Futures

Characteristics of Futures Contract

What is the Futures Market?

What is Margin Money?

How are Futures 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 the Options?

Example of Option Transactions

Attributes of Swaps and Options in the 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