International Oil Supply, Transportation, Refining & Trade

What are the Goals?

By the end of this training course, participants will be able to:

• Understand Upstream oil exploration, production & supply principles and practices
• Understand refining process, compute refinery gross and net margins
• Understand LP models, and develop crude oil selection criteria
• Apply petroleum economics, calculate financial benchmarks and prioritize projects  
• Estimate costs, negotiate and compare physical deals and help write contracts for the sale of crude oil and refined products 
• Use Worldscale reference to charter a ship and to calculate the profitability 
• Understand the international markets, their risks and how prices are formed and disseminated
• Understand the hedging instruments, determine the price risk exposure and manage price risk.  
• Acquire legal and regulatory issues relating to the International aspects of oil trading

Who is this Training Course for?

This training course is suitable to a wide range of professionals but will greatly benefit:

• Business Development managers
• Corporate Planning professionals
• Lawyers & law firms’ personnel
• Geoscientists & Engineers
• Refiners
• Bankers, accountants
• Auditors
• Members of Board and Senior Oil Executives 
• Media personnel who interface with traders and trading
• Government regulators
• Tax & finance advisors
• Auditors
• Compliance officers
• Equity & Financial Analysts and Bankers
• Joint Venture officers
• Contract Negotiators

Daily Agenda

Day One: Essential Upstream Practices 

• Introduction to the 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 Indictors, crude oil characterization by Assays
• Crude Oil Distillation – Refined Products
• Oil Industry Units and Conversion factors
• Fundamentals of Oil Economics
• 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 Two: Crude Oil Trading

• The Evolution of International Oil Pricing System – The Big Picture
• Introduction
• Evolution of Crude Oil Pricing System
• The Era of the Posted Price
• The Pricing System Challenged by Independent Oil
• The Emergence & Consolidation OPEC Administered Pricing System
• The Changing Landscape for IOC’s/NOC’s
• The Collapse of the OPEC Administered Pricing – Net Back Pricing
• The Market-Related Oil Pricing System and Formulae Pricing
• Spot Markets, Long Term Contracts and Formula Pricing
• Benchmarks in Formulae Pricing
• Oil Price Reporting Agencies and Price Discovery Process
• The Brent Market and its Layers
• The US Benchmarks
• The Dubai-Oman Market
• Trading Physical Crude Oil and its Logistics – Chap 2 CON
• Trading Fundamentals and Trading Terminology
• Impact of Production Sharing Contracts and its components
• Fiscal Tools
• Cost Recovery Component
• Profit Oil Component
• Royalty and Tax
• Tax Implications – Ring Fencing
• Market Price
• Joint Operating Agreements
• Transportation Agreements
• Tariffs
• Value Adjustment Mechanism
• Terminal Logistics
• Floating Platform Storage Operations
• Crude Oil Lifting Agreements
• Marine Vessel Nomination
• Physical Sales and Purchase Agreements
• Freight Contracts
• Freight Costs
• Laytime
• Demurrage
• The Dissection of Crude Oil Price
• First Component - the Absolute Price
• What are Benchmark crudes
• Brent
• WTI
• ASCI
• Dubai/Oman
• TAPIS
• ESPO
• Criteria for Ideal Benchmarks
• The Regulation of Benchmark Crudes
• Determination of Absolute Value of Crude
• Forwards and Future
• Brent Chains
• Credit Security and Forward Market
• The Futures Market and Absolute Value of Oil
• Initial Margin
• Variation Margin
• Physical Delivery
• Exchange for Physical Delivery
• Hedging the Absolute Value of Crude Oil
• Basic Hedging Theory
• Practical Considerations
• Dated Brent Risk Hedged with Forward Brent Contract
• Floating Priced Hedging
• Speculation
• Oil Price Formula – The 2nd Component - Time Differential
• Arbitrage
• Swap - the “Contract for Difference”
• What is the right time to set the price?
• What goes on when two traders transact a deal?
• CFD and the time value in Oil Price
• Value Fixation
• Floating Fixing or Hedging value of Oil
• Hedging and the Slope of the Forward  Oil Curve
• The Term Contract Pricing of Oil
• Oil Price Formula – The 3rd Component - Grade Differential
• The Crude Oil Grade
• The Crude Oil Quality
• The Crude Discount
• The Refining Assay
• Paraffinic
• Naphthenic
• Refining processes
• The Gross Product Worth
• Location and Freight
• Price Risk Management - Hedging the Crude Oil Price
• The Types of Risks
• The Strategic Hedging
• Operational Hedging
• Risk Management Considerations
• Correlations and Basis Rick
• Tax Basis Risk
• Choosing The Right Tools
• The Company Risk Profile
• The Company Risk Appetite
• Market Price View
• When to Close a Hedge
• When Strategic Hedge Go Operational
• Swaps
• Options
• Premium
• Option Style
• Option Strategy
• The Zero Cost Collar
• Option Valuation
• Summary

Day Three: Refined Products Trading 

• The Trading Refined Products
• Light Distillate
• Middle Distillate
• Fuel Oil
• Other products
• Participants in Refined Products Trading
• Arbitrage
• The 24/7 Market
• The Roll of Traders
• The importance of Location
• Transportation and Operations
• Pricing and the Netback War
• Pricing Policies Latest Trends
• Price Fixing
• Storage
• Types of Oil Products
• Supply/Demand Balance
• Production, Consumption and Refinery Capacity
• Light Distillate

o     

• Middle Distillate
• Fuel Oil
• Other products
• Future Trends
• Environmental Products
• Refining I – Basics
• Simple Chemistry for Non-Chemists
• Paraffin
• Olefins
• Napthenes
• Aromatics
• Catalysts
• Crude Oil Properties
• API and Sulfur
• Acid
• Salt
• Water
• Metals
• Other
• The Crude Oil Assay
• Basic Refining Processes
• Separation
• Treatment 
• Upgrading Conversion
• Blending Refinery Economics
• Gross Product worth
• GPW and refiner Margin
• Team Work
• Refining II – Conventional Refinery Upgrading
• Cat Cracking
• Hydrocracking
• Visbreaking
• Coking  
• Oil Products and their Qualities
• Physical Oil Products and the Grade Value of  Crude
• Quality
• Petroleum Gases
• Methane
• Ethane
• Propane
• Butane
• Light Distillate
• Naphtha
• Gasoline
• Middle Distillate
• Kerosene
• Gas Oil
• Diesel
• Fuel Oil
• Straight Run Fuel
• Cracked Fuel Oil
• LSWR
• Bunker Fuel Oil
• Specialty Products
• Lubes
• Waxes
• Bitumen
• Coke/Carbon Black
• Oil Logistics and the Art of Trade
• Delivering Oil Products
• Shipping
• Pipeline
• Rail Car
• Road Truck
• Delivery Term 
• Other Pricing Bases for Refined Products
• Oil Contracts
• Split Weekends
• Counterparties
• Grade/Quality
• Quantity
• Delivery
• Price
• Payment Clause
• Irrevocable Documentary Letter of Credit
• Standby Letter of Credit
• Parent Company Guarantee
• Open Credit
• Dispute Resolution
• Nominations
• Vetting
•  Storage 
• The Price of Refined Oil Products
• History of Oil Prices and How the Benchmarks evolved
• The Components of the Oil Price
• The Absolute Value of Products Price: the Role of Benchmark
• The Characteristics of Bench Marks
• Choosing the Right Benchmark: Price Reporting Agencies
• The Bid-Offer Spread
• Regulatory Oversight?
• The Regulatory Investigation
• The Time Differential Value of Product Price
• Bulls and Bears
• The Contango Arbitrage
•  Trading the Time Spread: Contango without Getting Physical
• The Value of Product Grade Differential

Day Four: The Risk Management

• Oil Products Price Risk Management
• Measuring Risk
• Strategic Hedging
• What is a Hedge
• What is a Hedge Loss
• Hedging and Speculation Compared
• The Role of Risk Manager
• Operational Hedging
• The Long and the Short of it
• Opening and Closing Hedges
• Basis Risk
• The Forward Market
• The Future Market
• The Swaps Market
• The Options
• The Size of the Premium
• The Option Style
• The Zero Cost Collar
• Crack Spreads

Day Five: Legal and Regulatory

• Legal and Regulatory Issues
• Contractual
• Regulatory
• International
• International Aspects of Oil Trading
• Special Trade Terms
• Standardization of Terms
• International Sales of Goods
• General Trade Laws
• World Trade Organization
• Financial Issues
• Banks’s Role
• Shipping Laws
• Marine Insurance
• Dispute Resolution
• Impact of National Laws
• US an UN Trade Sanctions
• Sovereign Immunity
• United States
• Oil Trading in the US
• General Commercial
• Anti-Trust Legislation
• Sovereign Immunity Act
• Foreign Corrupt Practices Act
• Commodity Trading Law
• Specific Contracts
• Futures & Options Contracts
• Exchange of Futures for Physical (EFP)
• Swaps
• United Kingdom
• Oil Trading in the UK
• General Commercial Law
• Competitive Law
• Finance and Banking Law
• Protection of Trading Interest Act
• Financial Services Law
• International Petroleum Exchange
• Singapore
• Oil Trading in Singapore
• Singapore Exchange
• Comparison with London and New York
• Controlling Financial Risk
• What is trading Risk?
• Other Potential Sources of Loss
• What are Characteristics of Energy Markets
• Determination of Risk
• Operations
• Conclusions