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Course Level
Introduction
Delivery Method
Classroom Instructor-Led Course
Professional Development Credit Hours
24
Pre-requisites
There is no pre-requisite for this course.

"This was a great class. The two instructors, are so knowledgeable that it was almost unbelievable that they teach and share/transfer their knowledge base." Chevron


Faculty

Robin A Burley is principal consultant with Kennet Oil Logistics, a company established in 1990 providing expertise in the international supply, trading and transportation sector. During his 30 years experience in the oil industry he has worked with BP including Marine and Supply Departments, and Gulf Oil including Trading and Transportation, Refining and Marketing functions. Besides the day-to-day management and negotiation of oil supply, trading and transportation deals, he has been involved in a variety of oil logistics projects throughout the world. He has lived in the USA, Europe and the Middle East, and is a contributing author to the Oil Trading Manual (pub. Woodhead 1995).


Accreditations

CPD Certification Services: The CPD Certification Service works with Mennta Energy Solutions to ensure valuable knowledge is structured to complement the universal guidelines of Continuing Professional Development. Mennta Energy Solutions courses are approved by CPD at one credit per training hour.


Principles of International Oil Trading (CLASSROOM) - TR0


Course Summary

Principles of International Oil Trading is an instructor-led oil trading course presented by the energy training experts at Mennta Energy Solutions. This course covers the basic principles of international oil trading and the allied fields of supply, transportation and refining. Through the medium of a case study, delegates will address day-to-day problems and will understand the relevant commercial driving forces in this area. Much of the work will be carried out in syndicate groups where teams will simulate real in-company practice, working with other delegates drawn from a wide background of disciplines in the industry. Delegates are introduced to the key elements affecting the international market of oil trading. Crude valuation, ocean tanker transport and freight are explored together with a basic overview of terminals and pipelines. The structure of a refinery will be explained in the context of the need to produce marketable products. Aspects of product quality will be covered together with the key refining processes needed to achieve them.

After reviewing the background of supply, refining and transportation, the course focuses on the key markets, pricing and the mechanisms involved in international oil trading. Aspects of the various exposures encountered in trading are covered together with an introduction to price risk management. Syndicate exercises will address each skill required. Additionally, during the week, delegates are given the opportunity to trade in the current market via a simulation of live trading. There are no pre-requisites for this course, nor is any advanced preparation required.

What you will learn

  • The structure of the oil markets - physical and paper
  • Knowledge of freight costs key to trading
  • How to evaluate spot tanker freight costs
  • How oil and tankercontracts are structured
  • How a refinery is configured
  • Key points on product quality
  • How key specifications are met
  • How crudes and products are priced
  • How to value crude oil based on product market prices and netbacks
  • How and why trading is carried out
  • How to execute a trade
  • The essentials of constructing purchase/sale contracts
  • Contract exposures and costs
  • The use of hedging
  • Basic tools available for hedging and position management

Who Should Attend?

Personnel who are entering the international trading market and staff who interface with the trading sector and require a better understanding of trading practice such as management accounting, controllers, treasury or supply functions. Also, those in the legal and banking fields who want a better understanding of trading practice and managers changing disciplines into supply and trading as well as professional personnel inside and outside oil companies interfacing with supply, refining, trading and transportation functions and who need an overview of this sector - such as legal, banking, insurance, finance and production.


Course Content

Introduction

  • Terms used
  • Units used

Crude Oil and Product Markets

  • Why trade?
  • Supply/demand
  • How the markets work

Crude Oil

  • Types
  • Assay
  • Yield
  • Crude value
  • Calculation of gross product worth and netback

The Refinery

  • Structure of simple, upgrading and complex refineries
  • Refinery margins
  • Processing deals

Product Quality

  • Key specifications for main grades
  • How quality specifications are achieved
  • Cost implications of quality

Shipping and Freight

  • Freight and Worldscale
  • Main terms
  • Demurrage
  • Tanker characteristics

Primary Logistics

  • Pipelines, terminals
  • Losses

Contracts

  • Oil contract terms
  • Tanker contracts (charterparty)

Oil Markets and Price Risk

  • Location and nature of pricing
  • Crude oil

Products

  • Forward markets
  • Futures markets
  • Derivatives
  • Liquidity, open interest, margin
  • Price reporting
  • Pricing mechanisms

Other Risks and Exposures

  • Credit control and exposure

Bills of lading and letters of indemnity

  • Letter of credit
  • Non performance
  • Demurrage
  • Inspection and loss
  • Brokerage
  • Insurance

Product Trading

  • How to sell a cargo
  • Brokers and traders
  • Position keeping
  • Mark to market P&L
  • Trading strategies
  • World product markets
  • Arbitrage
  • Product specs and quality
  • Implied values of quality
  • Intermediate valuation

Crude Trading

  • The world crude oil markets and how they work
  • Trading strategies, putting on a position/taking it off
  • Hedging and basis risks
  • Pricing techniques
  • Arbitrage
  • Term deals

Futures Markets

  • Their operation and use
  • Margins
  • Delivery - ADP, EFP

Introduction to Advanced Instruments

  • Options
  • CFDs and swaps
  • Spreads and basis trading

Case Studies and Exercises Include:

  • Gross product worth
  • Freight
  • Refining margin and processing, Netback
  • Contracts
  • Quality, blending and value
  • Handling quality change
  • Handling operational risk
  • Negotiating a term crude oil deal
  • Hedging of term deals

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