1 - 5 Jun 2025
Cairo (Egypt)
Hotel : Holiday Inn & Suites Cairo Maadi, an IHG Hotel
Cost : 3900 € Euro
The petroleum industry is one of the most important, highly capital-intensive, and risky businesses. Global exploration and production spending in 2013 was $644 billion, up 7% from $604 billion the year before. In 2014, the exploration budget reached $654 billion but this fell to $521 billion in 2015 and in the following year, 2016, there was a further decline of 27%. This year’s global exploration and production spending is expected to increase by 7%. The upstream sector’s profit margins are under real pressure from many factors such as higher costs of developing new reserves, less oil, and gas found per foot of exploration drilling, rising inflation, global oversupply, and price volatility. Competition for investments, acreage/concessions, aging of existing reservoirs, and the unconventional oil and gas revolution all contribute to business risk and uncertainty. Petroleum industry projects are by their very nature risky, the challenge however is in assessing, managing, and mitigating this risk proactively. The three biggest planning challenges are predicting costs, assessing profitability, and risk management. All these tasks occur in the early stages of capital planning and failure to adequately evaluate these elements can lead to heavy losses.
Identification of the stages required in the risk analysis process, i.e., preparing, modeling, and running risk analysis
Development of the risk model, assessing probabilities to various variables, risk analysis and exploring the impact of uncertain variables
Enable the participants to create reports such as tornadoes diagrams, scatter plots, and cumulative probability functions, using Excel
Application of decision trees and Monte Carlo-based simulations to generate profitability indicators
Enable the participants to develop probabilistic cashflow reports along with probabilistic profitability indicators for decision-making
Learn how to handle uncertainty in petroleum projects
Understand different economic terms used in the oil & gas industry
Understand the expected value concept and learn its impact on decision tree analysis
Learn expected theory concepts and attitudes toward risk, risk aversion, and risk premium
Acquire spreadsheet skills including simulation software RISK
Carry out cashflow analysis, for a petroleum-related project and use common economic indicators to evaluate between competing alternatives
Carry out a comprehensive economic study evaluating petroleum-related projects using risk and sensitivity analysis using spreadsheets
Planning Managers
Oil & Gas Engineers
Project Managers
Analysts
Commercial Managers
Economists
Government Officials
Geologists
Business Advisors
Asset Managers
E&P Managers
Product Managers
Project Management Professionals
DAY 1
Development Economics
A brief history of energy usage
Principles of development economics
Understanding of economic terms
Inflation and its impact on nominal & real cashflows
Project financing
DAY 2
Uncertainty in Investments
Handling uncertainty in capital projects
Understanding probability concepts
The expected value concept: features and pitfalls
Expected Monetary Value (EMV)
Expected Profitability Index (EPI)
Expected Opportunity Loss (EOL)
DAY 3
Risks and Uncertainties
Risk & uncertainty
Risk aversion and risk premium
Exploration of project threats and opportunities
Economic decision criteria
Decision tree analysis
Probability distribution
Monte Carlo simulation
DAY 4
Setting-up Spreadsheet Calculations Using Excel
Spreadsheet Calculations
Cashflow analysis
Sensitivity analysis calculations
Tornado diagrams
Introduction to Monte Carlo simulations using Risk
Setting up an oil field project
DAY 5
Practical Use of the Risk add-on: Oil Field Development Model
Developing an integrated economic model of an oil field development
Developing and using a Risk Model Analysis
Project sensitivity analysis utilizing data from the Risk Model
Training course final review and close