The Mini-MBA for the Oil & Gas Industry

The global Oil and Gas industry presents a constant stream of challenges for all organisations working within it. The markets are undergoing major structural change, there is continual uncertainty and volatility of prices, indecision over integration and the role of the NOCs and the environmental issues brought to the forefront by the recent BP crisis. These are just some of the critical strategic issues facing managers in this transforming industry. If you don’t have the commercial awareness, solid understanding of the business drivers and the decision-making skills necessary to traverse the commercial maze successfully then neither yourself nor your business will survive.

This global Mini-MBA has been designed to deliver the core curriculum from an academic business school programme intertwined with solid, practical and current Oil and Gas Industry know-how. It will provide you with an invaluable understanding of the essentials of working within the industry, while developing your knowledge and capability as a key manager for your organisation.

The industry faces a challenging and competitive time for resources, opportunities, customers, qualified employees and for capital. In order to operate at the top of the field you need to have current industry know-how combined with exceptional business and management skills. This 5-day practical and intensive programme offers just that in a environment away from your organisation that will allow you the space and time to think strategically, and act commercially.

What this programme will do for you

By attending this programme you will:

• SHARPEN your appreciation of the economics of oil and gas to understand the driving forces behind the industry
• REINFORCE your decision-making capabilities through understanding the strategic, commercial and financial aspects of the industry
• UNDERSTAND the financial impact that you can have on your organization and its profitability
• DEVELOP an understanding of the importance of contracts in oil and gas projects
• UNDERSTAND the key questions and areas you should be addressing as a manager who needs to be more commercially aware
• ENHANCE your strategic leadership and people management techniques to allow you to leverage the most out of you, your team and your business partners
• DEVELOP your understanding of the strategic issues for NOC’s and IOC’s

Is this programme for you?

• This programme is suitable for all managers who wish to raise their commercial awareness of the global oil and gas industry
• All managers in the industry who need to see how the whole ‘picture’ of upstream fits together.
• Specialists; geologists, geophysicists, economists, finance, engineering – all those who have managerial roles and need to focus on the commercial success of their projects
• Executives who have worked in other industries that need a good overview of the Oil and Gas industry
• Managers who have worked in Downstream and are now working in Upstream
• Bankers and financiers
• Government representatives in Oil and Gas
• Executives working in NOCs and IOCs

Oil and Gas industry context

This programme has been specifically designed for managers and executives working within the oil and gas industry who want to improve their general management capability and explore what the high achieving executives of the industry are thinking and doing.

Business cases, examples and exercises based on and built around real-life scenarios have been specifically developed for this programme. Participants will work in groups throughout the course applying key techniques learnt in Oil and Gas and, on occasion, comparing the results to real-life outcomes in companies using a unique case study developed solely for this programme.

Module 1 – Economic, commercial and strategic drivers of oil and gas

This module will provide an insight into Oil and Gas, both historically and currently, and how their markets remain clearly in the regulatory and policy spotlight. It will also consider the drivers and nature of the structural change which is transforming international oil and gas which will affect the investment and operating environment. The way in which these
changes will shape the development of the industry needs to be addressed in assessing your organizations commercial and strategic options.

Why Oil and Gas matters

• Petroleum as an industry of feast or famine – the reasons and the consequences
• Oil as a global market and gas as a regional market
• The vertical integration of petroleum companies. How it has changed and why the International Oil Company experience has differed from the National Oil Company experience
• The current and future state of oil prices
• The relationship between oil prices and gas prices
• Developments in international gas markets and the growing role of LNG
• International transport of gas – the issues
• National Oil Company and International Oil Company relations
• Managing oil and gas price volatility

Module 2

Financial management in the oil and gas industry

The Oil and Gas industry is characterized by its high levels of risk investment and the all-too-often time-lag before returns can be generated, if at all. Taking a demystifying and practical approach in this module we analyze the financial fundamentals of the Oil and Gas industry in such a way that you will understand how finance and management accounting departments tackle the main issues involved. You will gain valuable insights into the financial impact you can have on your organization and its profitability.

The Business Model

• How cash ‘flows’ in an organisation
• Equity, debt and leverage
• The difference between turnover, cash and profit
• Capital expenditure (Capex), operating expenditure (Opex)
• Working capital

Financial Terminology and Policies

• Gross and net margins
• Depreciation, depletion and amortisation
• Impairment and decommissioning
• Revenue recognition
• EBIT and EBITDA
• Reserves

Key Financial Statements

• Operating Statement (Profit and Loss)
• Balance Sheet
• Cash Flow Statement

Key Business Ratios

• Specialist ratios that apply to oil and gas operations – reserve cost and reserve value ratios (Case Study: Shell)
• The Profit Improvement Model (Price, volume and cost relationship)
• The Balanced Score Card

Review of an IOC’s financial results.

Capital Projects

• The principles of investment appraisal
• The key methods (payback period, net present value and internal rate of return)
• Uncertainty and risk

Module 3

Regulatory and Contractual Systems for Oil and Gas Production

This section will examine the regulatory and contractual structures of the upstream oil and gas industry. The sector is different from most others given the level of government intervention and control even in countries where there is little or no state ownership. The level of production, and the precise work programme under which oil will be produced, is controlled by government.

This section examines how governments implement their policy choices through licensing, production sharing, and other methods. It looks at how investors (and state companies) proceed to allocate costs and benefits under the concession/licence/ production sharing arrangement, and the role of the commercial contracts needed to bring reservoirs into production.

• Contracts with government – licensing and production sharing
• Role of the state company
• Contracts with co-venturers
• Operatorship
• Function and purpose of commercial contracts
• Allocation of risk and reward under contracts
• Stability and certainty over time

Module 4

Strategic Issues for IOCS and NOCS

NOCs are becoming the main industry players with their control of over 70 percent of proven oil reserves. At the same time, there is growing concern over the future of the IOCs as they struggle to generate sufficient shareholder value to ensure their survival.

Both have differing management objectives and strategies. This module will consider the strategic issues facing both types of company and also consider their future roles, both individually and collectively.

• The financial strategy of the IOCs
• Why the IOCs have been struggling to generate shareholder value?
• What are the future strategic options for the IOCs?
• What are the prospects for another round of IOC mega-mergers?
• What are the different types and strategies of NOCs?
• How to measure the performance of NOCs?
• What is the “national mission”?
• What future directions might the NOCs take?

Module 5 – Leadership and Change

Oil and Gas organisations face many strategic challenges including what type of organisation to be, where to compete, how to position against competition. However, implementing any strategy successfully requires a careful mix of leadership and management techniques throughout the organisation. Recent cases have highlighted that trade-offs need to be made and choices clearly communicated in all areas, but especially in the key challenges between safety, environmental and profitability issues. Add to that the challenge of working across cultures and different drivers being a leader in this industry becomes complex. This module will enable you think through these issues and to create some action plans for yourself and your real team members.

• What are the main challenges in leading and managing people?
• Leadership versus management – where should we invest our time?
• The inevitability of change – how to keep focused on the changing environment
• Creating the culture – demonstrating through action the balance between safety environmental and profit issues
• How communication really happens
• Working with different cultures
• Action Planning

Module 6 – Negotiation Skills

Negotiation happens all the time, not just around commercial issues. Understanding your habits and choices in negotiation situations will help you to be more effective in building good relationships and creating solid agreements which benefit you, your colleagues, your company, your customers and your suppliers.

• Principled negotiation (The Harvard Negotiation Project)
• The negotiation range and establishing a strategy
• Emotional Intelligence and handling dirty tricks
• Identifying tradeable variables
• Linking concessions – “if you… then we”
• Your negotiation habits and your other options
• Role play and feedback
• Action Planning

Module 7 – Long Term Issues for Oil and Gas

This will identify and discuss the key elements determining the international Oil and Gas operating environment in the next 20 years. In particular it will focus on the major structural changes which are taking place in terms of oil demand, supply and pricing as well as environmental drivers. In addition it will address issues arising from the shifts in relative power between the producers and consumers; East and West. What are the implications for your organisation?

• Oil prices and the market – what happens next?
• Is the supply squeeze real – can it be avoided?
• How will oil demand adapt to supply limitations?
• How will the industry structure change in the context of IOC/NOC relations
• The growing internationalization of gas markets
• Prospects for Oil and Gas in low carbon transition

Business Case Presentations

This module will run throughout the programme and is the opportunity for participants in small project teams to present a business case to a panel. Individuals will be encouraged to draw on the insight and learning from each of the preceding modules to inform thinking in formulating their business cases. The panel will be invited to listen to the final business case presentations from the project teams, question their thinking and then provide feedback and evaluation.

Course Director

Professor Paul Stevens has been involved with the International oil and gas industry for over 35 years. In March 2009 he was presented with the OPEC Award in recognition of an outstanding contribution to the understanding of the international oil industry. He was educated as an economist and as a Middle East specialist at Cambridge University and the School of Oriental and African Studies in London. He has successfully combined an academic career with extensive consulting activity. He has taught at the American University of Beirut in Lebanon, the University of Surrey in England, Imperial College London and the IFP in Paris. He has been the professor of Petroleum Policy and Economics at the Centre for Energy Petroleum and Mineral Law & Policy, University of Dundee, Scotland, since BP created the Chair in 1993 and its currently Senior Research Fellow (Energy) at Chatham House (The Royal Institute of International Affairs) in London.

Paul has acted as a consultant to numerous clients including BP, Shell, Saudi Aramco, The World Bank, The Asian Development Bank the EU, and on a governmental level with China, Colombia, Japan, Lebanon, Papua New Guinea, Peru, Qatar, Romania and Saudi Arabia. He has also had considerable experience in running professional training courses, including those linking economic concepts with the practicalities of the international petroleum business and the impact of political factors. Such courses have been run in the US, UK, Netherlands, UAE, Papua New Guinea, Peru, Romania and Venezuela.

Course Presenters

Stephen Dow is lecturer in energy law at the Centre for Energy, Petroleum and Mineral Law and Policy at the University of Dundee. A qualified lawyer, he teaches upstream oil and gas law, together with downstream (gas and electricity regulation and contracts) and legal mechanisms for project financing especially in the energy sector. His research interests are in hydrocarbon regulation and contract issues, and electricity market structures and contractual implications. He has published on energy issues, and given lectures and conference presentations on upstream and downstream issues in numerous countries round the world. He has also advised governments, state companies, and investors on energy issues and market structures.

George Fildes specialises in financial training and consultancy. With over twenty years experience in general management, George’s experience spans business management, logistics, customer operations and financial management. He has been involved with mature, turnaround and start-up companies. George’s works globally with organizations he has developed a series of tailored business improvement programmes focusing on financial understanding for clients who include: SASOL, BBC, Exel, Thames Water, Portakabin, Calor Gas, Pfizer, Toshiba, 3M and HBOS.

George is a charted management accountant (FCMA) with a Cranfield MBA. He also has a Diploma in Marketing and an accredited finance tutor for the Chartered Institute of Management Accountants (CIMA), Chartered Institute of Marketing (CIM) and Derby University.

Paul Blackhurst is a consultant, speaker, trainer, coach and facilitator. He has worked in four continents in 45 countries and has a track record of designing and delivering successful consulting and development projects for blue-chip clients. Paul has a rare mix of background and education which helps him to combine the hard aspects of strategic choice and analysis with the “softer” aspects of change management, leadership and people management. He has worked successfully with several clients in the Oil and Gas Industry including designing a major leadership programme for BP. Prior to in-house roles with MCE/AMA, Paul worked in a series of executive positions in multinational organisations such as SKF, Milacron and GTE. Paul has a BSc. degree from the University of Birmingham and an MBA from Bradford University. He has also pursued Doctoral studies at Henley Management College. In addition to his academic qualifications, Paul holds an Advanced Diploma in Management Consultancy from Henley Management College, a Diploma in Organisational Development from NTL (USA) and a Diploma in Marketing.

The Mini-MBA

Understanding, Negotiating and Drafting Oil and Gas Industry Contracts

Joint Ventures & Other Collaboration Agreements for the Oil & Gas Industry

Commercial Awareness in the Oil & Gas Industry

The Successful Management of Major Oil and Gas Projects – Avoiding Distress

This course qualifies for the following CPD programmes:

• Cert: 23.00 hours

• Agip Kazakhstan North Caspian Operation Company NV
• Aurora Petroleum Logistics Ltd
• Azerbaijan (Shah Deniz) Ltd
• Bernhard Schulte (Hellas) SPLLC
• Booz & Company
• BP Egypt Co
• Catholic University of Angola
• CB&I UK Ltd
• CEPSA EP, SA
• Cockett Marine Oil Ltd
• Dolphin Energy Ltd
• Eni Australia Ltd
• EON Ruhrgas UK E&P Ltd
• Greenray Turbines (Lincoln) Ltd
• International Labour Office (ILO)
• Kuwait Petroleum Corp
• Nigeria Sao Tome & PrIncipe (Joint Development Authority)
• NNPC
• Oil Search Ltd
• OMV Aktiengesellschaft
• Petroleum Geo-Services
• Qatar Petroleum
• Safat Energy Holding Co
• Société Nationale des Pétroles du Congo
• South Atlantic Petroleum Ltd
• Sterling Energy (UK) Ltd
• Tullow Ghana Ltd
• Universidade Catolica de Angola
• Ward Howell International
• Wintershall Noordzee