About the Course

This 5-day highly interactive Petroleum Project Economics and Risk Analysis training course is meticulously designed and aimed at professionals in the oil & gas industry, focusing on the economic evaluation, financial modelling, risk analysis, and strategic decision-making involved in petroleum projects. It begins with an introduction to the fundamentals of petroleum economics, emphasising the importance of understanding key economic concepts, the oil & gas value chain, and the main economic drivers. Delegates will learn to perform cash flow analysis using time value of money principles and to apply major economic indicators like NPV and IRR to evaluate new exploration projects. They will know the progress with an in-depth exploration of cost structures in petroleum projects, including both CAPEX and OPEX and guide them through the construction of detailed financial models. It covers break-even analysis, project valuation techniques, and incorporating fiscal regimes and taxation into project economics, culminating in a practical workshop on financial modelling for development projects. Risk analysis and management form a core part of the program, where delegates are introduced to the principles of risk analysis, including identifying and assessing various types of risks associated with petroleum projects. Through quantitative techniques like Monte Carlo simulation and decision trees, delegates will engage in group exercises to perform risk analysis learning strategies for risk mitigation, transfer, and acceptance.

This training program also focuses on the economic evaluation of petroleum contracts and fiscal systems, examining different types of contracts, such as concessionary systems, PSAs, and service contracts. It explores the economic impacts of different fiscal regimes on project viability and offers insights into negotiating contract terms from an economic perspective, supported by case studies on a global scale. Concluding with strategic decision-making and future challenges, it addresses how to integrate economic and risk analysis into strategic planning, the role of portfolio management, and navigating uncertainty in oil & gas markets. Discussions on future trends, including the impact of renewable energy and climate change policies, prepare delegates to develop comprehensive economic evaluation reports for senior management. Designed for financial analysts, project managers, and professionals involved in the economic aspects of petroleum projects, which equips delegates with the skills and knowledge to make informed decisions, optimise project outcomes, and navigate the complex economic context of the oil & gas industry.

Core Objectives

The delegates will achieve the following objectives:

• Understand the foundational principles of petroleum economics, including key economic drivers and the oil & gas value chain, to inform strategic decision-making
• Develop proficiency in constructing detailed financial models and performing cash flow analyses, applying time value of money concepts to assess project viability
• Evaluate major economic indicators, such as NPV and IRR, to make informed decisions about new exploration projects, understanding their implications on project profitability and risk assessment
• Analyse cost structures, including CAPEX and OPEX, and understand how fiscal regimes and taxation impact project economics, enhancing their ability to incorporate these factors into financial models
• Identify, assess, and manage various types of risks associated with petroleum projects through quantitative techniques like Monte Carlo simulation, developing strategies for risk mitigation, transfer, and acceptance
• Gain insights into negotiating and evaluating different types of petroleum contracts and fiscal systems, understanding their economic impacts on project viability
• Integrate economic and risk analysis into strategic decision-making and portfolio management, preparing for future challenges and trends in the oil & gas industry
• Develop the skills to create comprehensive economic evaluation reports for senior management, addressing the impact of external factors such as renewable energy and climate change policies on project economics

Training Approach

This training course adopts a hands-on, interactive approach, blending theoretical knowledge with practical application through workshops, case studies, and group exercises. Delegates will use real-life scenarios to build and analyse financial models, perform risk assessments using advanced quantitative techniques, and navigate economic evaluations of petroleum contracts.

It emphasises active learning, encouraging delegates to apply concepts and tools directly to their work contexts. By examining global case studies, delegates will gain a broad perspective on how different fiscal regimes and contractual arrangements affect project economics, preparing them for negotiations and strategic decision-making in diverse environments. This comprehensive approach ensures that delegates leave with a solid understanding of maximising project value and mitigating risks in the volatile oil & gas sector.

The Attendees

This training course is designed for professionals involved in petroleum projects' economic evaluation, financial analysis, and risk management aspects. It is ideal for those seeking to enhance their decision-making capabilities in project investment and management within the oil & gas industry.

Likewise, it will be valuable to the professionals but not limited to the following:

• Financial Analysts
• Project Managers
• Economic Analysts
• Risk Management Professionals
• Contract Negotiation and Management Specialists
• Investment Analysts and Portfolio Managers
• Environmental and Policy Analysts

Daily Discussion

DAY ONE: FUNDAMENTALS OF PETROLEUM ECONOMICS

• Introduction to Petroleum Economics: Key Concepts and Importance
• Oil & Gas Value Chain and Its Economic Drivers
• Cash Flow Analysis in Petroleum Projects: Time Value of Money, Net Cash Flow Calculations
• Economic Indicators: Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period, and Profitability Index
• Evaluating the Economics of a New Exploration Project

DAY TWO: COST ANALYSIS AND FINANCIAL MODELLING

• Cost Structures in Petroleum Projects: Capital Expenditures (CAPEX) and Operating Expenses (OPEX)
• Building Financial Models for Petroleum Projects: Assumptions, Scenarios, and Sensitivities
• Break-Even Analysis and Project Valuation Techniques
• Incorporating Fiscal Regimes and Taxation into Project Economics
• Constructing a Financial Model for a Development Project

DAY THREE: RISK ANALYSIS AND MANAGEMENT

• Principles of Risk Analysis in Petroleum Projects
• Identifying and Assessing Risks: Technical, Financial, Political, and Environmental Risks
• Quantitative Risk Analysis Techniques: Monte Carlo Simulation, Decision Trees
• Risk Management Strategies: Mitigation, Transfer, Acceptance
• Performing a Risk Analysis for an Upstream Project

DAY FOUR: ECONOMIC EVALUATION OF PETROLEUM CONTRACTS AND FISCAL SYSTEMS 

• Types of Petroleum Contracts: Concessionary Systems, Production Sharing Contracts (PSCs), Service Contracts
• Economic Impacts of Different Fiscal Regimes on Project Viability
• Negotiating Contract Terms from an Economic Perspective
• Comparative Analysis of Global Petroleum Fiscal Systems
• Economic Comparison of Contract Types in Various Jurisdictions

DAY FIVE: STRATEGIC DECISION MAKING AND FUTURE CHALLENGES

• Integrating Economic and Risk Analysis into Strategic Decision Making
• The Role of Portfolio Management in Maximising Company Value
• Addressing Uncertainty and Volatility in Oil & Gas Markets
• Future Trends in Petroleum Economics: Impact of Renewable Energy, Climate Change Policies
• Developing a Comprehensive Economic Evaluation Report