ESC - Economics of the Oil Supply Chain
** Supply & Trading, Refining, Shipping & Distribution **
Course Dates : 18th - 22nd April and 10th - 14th October 2016
Møller Centre, Churchill College, Cambridge, UK
Course fees: UK Pounds £3,300 plus VAT*only applicable to UK residents
You will examine the economic forces which drive the oil supply chain. By exploring the main areas of risk and opportunity you will learn the fundamentals from the crude oil supply terminal, transportation, refining and trading right through to the refined product distribution terminal.
During their time at Invincible delegates will learn about the quality aspects of product supply. They will study refinery process economics and the effects of upgrading. Blending to meet quality requirements at optimal cost will be examined. Delegates will construct and negotiate a processing deal. They will then follow the crude oil to and the refined products from the refinery and look at the economics of various alternatives. International markets and international trading will be studied, together with the various methods of price risk management.
This course is the essential foundation for people entering the oil industry or for those with single function experience looking to broaden their knowledge. It also forms the basic building block for the other Invincible courses.
The work on twelve exercises is performed in syndicates, with comprehensive debriefs studying the consequences of the decision made. The course expects a high degree of participation from delegates and there is a high staff to pupil ratio.
Day 1 Crude oils and their evaluation; world crude oil and refined product markets; supply and demand and how they determine international oil prices; how to use Worldscale; freighting and freight costs.
Day 2 Chartering ships; refining - distillation and reforming processes; quality and specifications of refined products; international oil trading; crude oil pricing; crude oil scheduling.
Day 3 Refining - treating, blending and conversion processes; refinery economics and optimisation; processing arrangements; negotiating a processing deal and calculating its profitability.
Day 4 Pricing refined products; mechanics of trading and contracting in the international markets; trading costs; the principles of identifying and managing price risks.
Day 5 Derivative markets; the mechanics of basic hedging techniques.
What will you learn?
By the end of the course you will be able to:
- Value different types of crude oils
- Calculate freight costs using "Worldscale"
- Assess the economics of refinery upgrading
- Perform blending calculations on all main fractions
- Construct and negotiate a processing deal
- Calculate a trading margin
- Carry out basic hedging
- Construct a purchase and sale contract
You will understand:
- How world oil markets operate
- The principles of chartering a ship
- The principles of oil refining
- Refinery economics and margins
- Product quality
- The economics of blending
- Physical and paper oil markets
Who should attend?
Anyone who needs an understanding of the structure and economics of the oil supply chain including those:
- New to the downstream oil industry
- With single function experience in supply, transportation, refining or trading
- In the E&P Finance, downstream marketing or IT departments of oil companies
- Working in energy-related government departments
- Writing about the industry
- Bankers, accountants, auditors and others associated with oil companies and oil financing