Commercial Fundamentals of the Upstream Oil & Gas Industry Training Course

This course is unique in offering a complete understanding of all the commercial elements of the entire upstream business, to a wide ranging background of professionals who need to equip or enhance their upstream core commercial and management skills and competencies.

The intensive two-day programme provides participants with a practical, thorough and in-depth understanding of how upstream commercial works and how each part of the value chain should be tackled.  It will enable participants to gain an insight into the approaches of all the players in the industry.

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The Upstream Commercial Environment

Introduction to the Upstream Oil & Gas Industry

• Exploration, development and exploitation/production
• Cost and value drivers; shareholder expectations
• The value chain: from wellhead to burner tip
• Players: Governments, NOCs, IOCs, banks and insurers etc

Why Commercial Aspects are so Important

• Overview of upstream commercial arrangements
• Project development: upstream to midstream to market
• Commercial structure in exploration, development and production
• Exploration & production licenses (farm out and unit agreement etc.)
• Who has an interest

Key Upstream Joint Venture & Licence Agreements

Upstream Fiscal & Licence Agreements

• Fiscal & legal regimes worldwide
• Production sharing arrangements
• The license agreement

Upstream Joint Venture Agreements

• The joint venture agreement
• Shareholder agreements
• Confidentiality agreements

Key Upstream Product Sales & Transportation Agreements

Product Sales – Oil, Gas Liquids, Gas / LNG

• The market for crude oil
• The market for gas; pipeline  supplies; regional characteristics; regulatory considerations
• Heads of Agreements; MoUs; LoIs
• The pipeline gas sales agreement
• LNG sales; the market for spot LNG
• Gas processing
• Sale of LPG and condensates

Oil, Gas and LNG Transportation

• Oil and gas transportation agreements
• Pipeline use agreements
• LNG import terminals

The Financial Aspects of Upstream Commercial

Key Project Value Identification

• Understanding the fundamental commercial drivers for project and company success

Technical Factors

• Reserves definitions
• Reserves certification

Project Economic Evaluation

• Economic evaluation – conceptual, pre-feasibility and feasibility
• The economic model

Project Financing

• Financial structures in the upstream
• The key value drivers in upstream financing
• An overview of financing options: from the balance sheet to project financing

Mergers & Acquisitions

• Stock purchase and asset sales
• The data room
• The sale and purchase agreement

The Upstream Core Commercial Skills & Competencies

Market Evaluation

• Where and who is the market for oil, gas (incl. LNG) and condensates/NGLs
• Market opportunity: identification and evaluation
• Development, capture and management
• Growth and changes in markets

Asset Management

• The project life cycle, value optimisation, commercial operations, technical issues outside of the contract terms
• Contract management
• Operational crises and the contractual implications

Upstream Risk Management and Disputes

Risk Management in Upstream Developments

• Identification of key project risks and mitigation strategies
• The Risk Matrix
• Risk factors in upstream and midstream
• Spreading the risk through partners
• Analysing and managing risk in upstream developments

Price Risk Management

• Short and long term price risks in crude oil and gas
• Hedging
• Netback – retaining the value in the upstream
• Price re-openers

Disputes

• Arbitration
• Expert determination
• Reserves redeterminations

Case Study Exercise - The Composite Upstream Case Study

Course participants will, in workshop mode, look at a composite case study that will address most of the issues seen during all the previous modules. This case study will address the development of a hypothetical offshore oil & gas project, and will lead towards the participants building a typical commercial structure to address the principal contractual arrangements and scheduling (covering the main risks) seen in project development.

The Case Study project will be a new upstream gas development located in an imaginary remote country. The study will cover the entire supply chain from gas exploration and field development through gas sales into an expanded LNG plant and LNG sales and transportation to Europe with throughput in a new LNG import terminal. Participants will be asked to build the commercial structure, analysing it from the point of view of all the parties involved, including developers, host governments, financiers, insurers and constructors.

The course is highly practical with all key points illustrated throughout by examples of real life projects, case histories and situations.

Attend this intensive two day course and gain:

• An appreciation of the relationships between all elements of the commercial structures and the different players within the industry
• A thorough understanding of the complex financial aspects relevant to the upstream industry including project finance and M&A
• Key skills and knowledge needed for successful commercial management
• A theoretical and practical grasp of the key elements of the main agreements and structures widely used within the industry
• An understanding of how commercial contracts are central to risk management
• Crucial techniques needed for dispute management and resolving issues that arise when commercial agreements go wrong