Commercial Awareness in the Oil & Gas Industry

What the programme is about

The international oil and gas industry remains one of the most important industries at a global, regional and local level. The discovery and development of oil and gas and their transportation, processing and marketing remain crucial to the world economy and play a key role both for producers and consumers. The industry consists of a series of stages, which collectively create the industry’s ability to add value. Each stage has its own technology and engineering, its own economic dimensions and its own current issues of importance. Understanding all the elements of these stages is crucial to making effective and robust commercial decisions.

This intensive two-day programme has been split into two parts to effectively illustrate the structure of this complex industry and how it links together commercially.

Part 1: The Stages: Each stage of the industry faces it’s own issues and dilemmas from both a technical and economic perspective, this programme will review each stage separately. It will outline the main technical elements of each stage ensuring that all participants are familiar with the technology and its jargon. The technical aspects lay the foundations to understand the economic issues associated with each stage and the consequent general issues providing a comprehensive understanding of the overall industry dynamics.

Part II: The Total Value Chain: Knowledge developed through an enhanced understanding of the stages will then be built on to deliver a complete review of the linkages between each stage, the external forces impacting them and the total value chain.

Why should you attend this programme?

Understanding the industry you work in on all levels is essential when working to improve both personal and business performances. You need to be able to identify opportunities and threats in the market, understand the constraints of colleagues working in and across the business and realise the full impact of your decisions and actions.

Making effective forecasts and decisions in this industry relies on your knowledge of how the industry works, this two-day programme will boost your knowledge in critical areas including:

• The full extent of the risks involved in exploration
• How environmental issues limit opportunity
• The implications of the decline in production curves
• Development as an investment decision
• Future global supply prospects
• The logistical challenges of transportation and the problems with transit pipes
• The constraints of the gas industry
• The profitability of refining and how investment is secured
• What are the margins, what makes a profitable project
• The role of energy in the global economy
• Working effectively in partnership with state oil companies

Who should attend?

This practical and interactive programme is designed for all those involved in the oil and gas industries either within, new to or supplying to, who would like to broaden their knowledge including:

• Managers and key executives
• Engineers, scientists or technical specialists
• Heads of departments/directors
• Project managers

From all areas including production, business development, legal, finance,
commercial, HR, admin support, marketing, sales and licensing.

Delivery style

The programme will consist of a series of lectures, interspersed with syndicate work. Part I will involve lectures which will develop into a workshop situation to allow for increasing discussion when the current issues are discussed. Part II will involve greater discussion plus some syndicate work.

Part One: The Stages

Module One: Exploration

The Technical Dimension

• Oil is concealed and must be discovered
• Survey techniques
• Wildcat drilling

The Economics

• Risk and uncertainty
  • Prospect risk
  • Contract risk
  • Commercial risk
• Division of the economic rent
• Taxes and incentives

The Current Issues

• Competition for acreage
• Access to acreage and resource nationalism
• Competition for oil company investment
• Concerns over environmental impacts

Module Two: Development and Production

The Technical Dimension

• Oil pools
• Gathering systems
• Production decline curves
• Reserves

The Economics

• Development as an investment decision
• Production costs
• The bygones rule
• Technical change
• Fiscal Issues
• Project appraisal and uncertainty

The Current Issues

• Government depletion policies
• Investment options
• The obsolescing bargain
• Peak oil
• Future global supply prospects

Module Three: Transportation

The Technical Dimension

• Tankers
• Pipelines

The Economics

• Economies of scale
• Natural monopolies
• Leads, lags and market implications

The Current Issues

• Environmental implications
• Problems with transit pipelines

Module Four: Gas as a Constrained Industry

The Problems Facing Gas in the Past

• OECD
• Developing countries

The Current Issues

• Gas markets – regional versus international
• Pricing of gas prospects for LNG
• The shale gas revolution
• Future demand for gas

Module Five: Refining

The Technical Dimension

• Primary distillation
• Upgrading capacity

The Economics

• Location
• Cost structures and the security of crude throughput
• Investment and margins

The Current Issues

• Environmental pressures
• Investment requirements
• Refinery profitability
• Future product demand

Module Six: Marketing and Distribution

The Technical Dimension

• Storage
• Transportation

The Economics

• Inventories and incentives
• Margins

The Current Issues

• The role of energy in the economy
• The nature of the energy consumption decision
• Taxation
• Environmental concerns

Part Two: The total value chain

Module 7: Linkages

Linkages – Their Development

• Forms of integration in the international petroleum industry
• Role of markets, horizontal integration and OPEC
• Role of competition
• The vertically integrated structure of companies

Linkages – Their Future

• Private versus state oil companies
• Global versus regional markets

Issues Common to the Chain

• Oil and gas prices
• Sources of investment
• Managing risk

Programme leader

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.

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