Petroleum Economics: Fundamentals

This course covers the essential aspects of petroleum economics, including exploration, production, and financial analysis. It is designed to help participants grasp the economic factors influencing the petroleum industry, from capital expenditure considerations to revenue generation and profitability.

Who Should Attend

New entrants to the oil and gas industry, particularly those in finance, business development, and operations roles.

Professionals from other industries considering a transition into the petroleum sector.

Technical staff needing a foundational understanding of the economic aspects of their projects.

Students and academic professionals interested in petroleum economics.

Objectives

Understand the economic fundamentals that drive the petroleum industry.

Learn the basics of project evaluation techniques such as NPV, IRR, and payback period.

Gain insight into cost structures, pricing mechanisms, and economic risks associated with petroleum projects.

Develop an understanding of fiscal systems and their impact on project economics.

Acquire foundational knowledge in market analysis and forecasting in the oil and gas sector.

Course Outline

Introduction to Petroleum Economics

Overview of the oil and gas industry and its economic significance.
Key economic concepts relevant to petroleum exploration and production.
The lifecycle of oil and gas projects from exploration to decommissioning.

Cost Structures and Economic Modeling

Understanding the types of costs involved in petroleum projects (capital, operational, sunk, and intangible costs).
Basics of economic modeling and cash flow analysis in petroleum projects.
Simple tools and techniques for economic evaluation.

Project Evaluation Techniques

Introduction to the valuation of petroleum investments.
Detailed explanation of Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period.
Practical exercises to apply these techniques to hypothetical petroleum projects.

Fiscal Regimes and Their Impact

Different types of fiscal arrangements: royalty systems, production sharing contracts, and tax-and-royalty systems.
Analysis of how different fiscal regimes affect project economics and investment decisions.
Case studies illustrating the impact of fiscal policies on project viability.

Market Dynamics and Price Forecasting

Basic principles of supply, demand, and pricing in the oil and gas market.
Tools for forecasting petroleum prices and understanding market trends.
Discussion on the impact of geopolitical and environmental factors on petroleum economics.

Competencies

Fundamental understanding of petroleum economics.

Ability to perform basic economic evaluations and investment analysis.

Knowledge of cost management and fiscal regimes in the oil and gas industry.

Insight into market dynamics and the external factors influencing the industry.

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