Virgil famously wrote “Fortune sides with him who dares”, meaning rewards often go with risk. Today, global energy markets are shifting. Energy price hikes and dives send shockwaves across industry and affect businesses. To make good business decisions, we need to first understand the uncertain energy prices.
This Price Risk Management in the Energy Industry training course introduces the audience to commodity risk management in the energy markets. It highlights the dynamics of oil and gas markets and discusses the insights we gain from these markets to make better business decisions. Our focus would be on key insights that support management of risk for major decisions in the energy business.
This training course will highlight:
- The energy landscape and the dynamics of energy commodities
- Global crude oil market and regional natural gas markets
- Modelling risk and uncertainty in energy prices
- Management of risk and the role of forecasting
- Emerging trends: electricity, weather, and emission markets
To succeed in the energy industry is to create value. The energy commodity markets supply information about the industry trend and the overall activity of its participants. This leads to insights that support risk management strategies and leads to good business decisions. Good project decisions often lead to value creation.
At the end of this training course, you will learn to:
- Understand the trends and challenges of the energy industry
- Appreciate the dynamics of the energy markets and its drivers
- Gain skills in management or price risk using market instruments
- Gain insights from market dynamics to support project appraisals
- Apply the understanding in technical and economic decision making
The instructor uses a proven learning technology that has been implemented with considerable success. The sessions include lectures, discussions, and guided real-world practice. The aim is to develop problem-solvers and effective decision makers rather than merely conveying information.
In this training course, we discuss a global perspective of the energy markets while also highlighting the regional characteristics. We further introduce the audience to effective risk management strategies that would lead to corporate value creation. Such an understanding is vital for project investment decision making. This course trains individuals that;
- Increase organization’s capabilities in analyzing and pricing the uncertain ventures in the energy industry
- Possess knowledge and skills to deal with trading and investment decisions
- Are effective in enhancing value chain through hedging risks and capitalizing on the upsides
- Understand the overall mechanics of the energy markets and appeal of the ventures
- Support the prudent decision-making process in projects
- Open doors to further opportunities and more informed decisions
By Attending this training course will be able to:
- Increase organization’s capabilities in analyzing and evaluating uncertain investments and trades
- Possess knowledge and skills to draw insights from market dynamics and manage risky positions
- Are effective in enhancing the energy value chain
- Have an overview of the energy business and the appeal of the projects
- Support the prudent decision-making process
- Open doors to further opportunities in the energy landscape
The material in this training course will be useful to managers and decision makers in the energy business. The training course is also relevant to analysts, engineers, and consultants that support the process of decision making. Professionals interested in the practice of pricing and risk management also find this course useful.
This training course is suitable to a wide range of professionals but will greatly benefit:
- Managers and decision makers involved in value creation for the energy business
- Commercial staff who would like to gain in-depth knowledge of price risk management
- Decision makers involved in energy investments
- Analysts interested in market insights that support project decisions
- Researchers and practitioners who aim to broaden their knowledge of the business
DAY ONE: AN OVERVIEW OF THE ENERGY INDUSTRY
- A brief history of the energy industry, fossil resources versus emerging renewables
- Energy market dynamics: crude oil, natural gas, and their products
- Other sources of energy: revisiting Fossil fuels versus renewable energy and future trends
- The supply and demand forces in the energy markets
- Reserve estimation and global reserves of oil and natural gas
- Uncertainty and risk in prices of energy commodities
DAY TWO: GLOBAL AND REGIONAL ENERGY MARKETS
- The formation of the energy commodity markets
- The value chain for energy projects
- Price trends and insights for business decisions
- Project value drivers
- Market instruments that support risk management
- Lessons learned from the oil and gas industry
DAY THREE: UNCERTAINTY AND RISK IN ENERGY PRICES
- Introduction to corporate finance and the foundation of value creation
- Comparisons across time (time value of money)
- Comparisons across levels of risk (risk premiums)
- Measures of value
- Sensitivity analysis in project appraisals
- Modeling uncertainty and price risk
DAY FOUR: MANAGING MARKET RISK
- Modeling uncertainty of energy prices
- Uncertainty, risk, and the upside opportunity
- Tools of risk management: insurance and hedging
- forward, futures, options, and other derivative contracts
- Arbitrage opportunities and efficient markets
- Case study: Setting-up a crude oil hedge using forward contracts
DAY FIVE: ANALYTICAL TOOLS AND FUTURE TRENDS
- Implementation of economic thinking in Spreadsheets
- Analysis of cash flows, using risk models to assess the downside
- The markets and the geo-politics of energy
- Practical aspects of petroleum business decisions
- Behavioral aspects of financial decisions
- Heuristics and biases in management decision making
- Emerging trends: environmental concerns and the emission markets, weather derivatives
- Concluding remarks: Does “fortune favor the bold”?
