Course overview The global Oil and Gas industry presents a constant stream of challenges for all organisations working within it. The markets are undergoing major structural change, there is continual uncertainty and volatility of prices, indecision over integration and the role of the NOCs and the environmental issues brought to the forefront by the recent BP crisis. These are just some of the critical strategic issues facing managers in this transforming industry. If you don't have the commercial awareness, solid understanding of the business drivers and the decision-making skills necessary to traverse the commercial maze successfully then neither yourself nor your business will survive.
This global Mini-MBA has been designed to deliver the core curriculum from an academic business school programme intertwined with solid, practical and current Oil and Gas Industry know-how. It will provide you with an invaluable understanding of the essentials of working within the industry, while developing your knowledge and capability as a key manager for your organisation.
The industry faces a challenging and competitive time for resources, opportunities, customers, qualified employees and for capital. In order to operate at the top of the field you need to have current industry know-how combined with exceptional business and management skills. This 5-day practical and intensive programme offers just that in a environment away from your organisation that will allow you the space and time to think strategically, and act commercially.
What this programme will do for you
By attending this programme you will:
SHARPEN your appreciation of the economics of oil and gas to understand the driving forces behind the industry
REINFORCE your decision-making capabilities through understanding the strategic, commercial and financial aspects of the industry
UNDERSTAND the financial impact that you can have on your organization and its profitability
DEVELOP an understanding of the importance of contracts in oil and gas projects
UNDERSTAND the key questions and areas you should be addressing as a manager who needs to be more commercially aware
ENHANCE your strategic leadership and people management techniques to allow you to leverage the most out of you, your team and your business partners
DEVELOP your understanding of the strategic issues for NOC's and IOC's
Is this programme for you?
This programme is suitable for all managers who wish to raise their commercial awareness of the global oil and gas industry
All managers in the industry who need to see how the whole 'picture' of upstream fits together.
Specialists; geologists, geophysicists, economists, finance, engineering - all those who have managerial roles and need to focus on the commercial success of their projects
Executives who have worked in other industries that need a good overview of the Oil and Gas industry
Managers who have worked in Downstream and are now working in Upstream
Bankers and financiers
Government representatives in Oil and Gas
Executives working in NOCs and IOCs
Oil and Gas industry context
This programme has been specifically designed for managers and executives working within the oil and gas industry who want to improve their general management capability and explore what the high achieving executives of the industry are thinking and doing.
Business cases, examples and exercises based on and built around real-life scenarios have been specifically developed for this programme. Participants will work in groups throughout the course applying key techniques learnt in Oil and Gas and, on occasion, comparing the results to real-life outcomes in companies using a unique case study developed solely for this programme. Programme - Day 1 Module 1
Economic, commercial and strategic drivers of oil and gas
This module will provide an insight into Oil and Gas, both historically and currently, and how their markets remain clearly in the regulatory and policy spotlight. It will also consider the drivers and nature of the structural change which is transforming international oil and gas which will affect the investment and operating environment. The way in which these
changes will shape the development of the industry needs to be addressed in assessing your organizations commercial and strategic options.
Why Oil and Gas matters
Petroleum as an industry of feast or famine - the reasons and the consequences
Oil as a global market and gas as a regional market
The vertical integration of petroleum companies. How it has changed and why the International Oil Company experience has differed from the National Oil Company experience
The current and future state of oil prices
The relationship between oil prices and gas prices
Developments in international gas markets and the growing role of LNG
International transport of gas - the issues
National Oil Company and International Oil Company relations
Managing oil and gas price volatility
Programme - Day 2 Module 2
Financial management in the oil and gas industry
The Oil and Gas industry is characterized by its high levels of risk investment and the all-too-often time-lag before returns can be generated, if at all. Taking a demystifying and practical approach in this module we analyze the financial fundamentals of the Oil and Gas industry in such a way that you will understand how finance and management accounting departments tackle the main issues involved. You will gain valuable insights into the financial impact you can have on your organization and its profitability.
The Business Model
How cash 'flows' in an organisation
Equity, debt and leverage
The difference between turnover, cash and profit
Capital expenditure (Capex), operating expenditure (Opex)
Financial Terminology and Policies
Gross and net margins
Depreciation, depletion and amortisation
Impairment and decommissioning
EBIT and EBITDA
Key Financial Statements
Operating Statement (Profit and Loss)
Cash Flow Statement
Key Business Ratios
Specialist ratios that apply to oil and gas operations - reserve cost and reserve value ratios (Case Study: Shell)
The Profit Improvement Model (Price, volume and cost relationship)
The Balanced Score Card
Review of an IOC's financial results.
The principles of investment appraisal
The key methods (payback period, net present value and internal rate of return)
Uncertainty and risk
Programme - Day 3 Module 3
Oil and gas contracts - What you need to know
This module will consider the contract matrix that makes up an oil and gas project, ask what the contracts are designed to achieve and consider the key principles that underpin the contracts. It will also review how the contracts seek to allocate and control risk and allocate reward.
The role of the State in the contract matrix is also discussed particularly looking at issues such as the renewed instability of the underlying legislative regime, calls for nationalisation and renegotiation and how they might be managed.
The Contract Matrix
Who are the parties to oil and gas projects
Why do they work together
The role of parastatal enterprises
What contracts make up the matrix
What are the contracts designed to achieve
Principles Underpinning the Contracts
Allocation and Control of Risk
The role of the operator
The Operator/Non-operator relationship
Contracting with third parties
Non-performance and liability
Allocation of Reward
Receipts by the operator
Benefit of contracts entered into by the operator
The right and obligation to take production in kind
Arrangements to lift and/or take production
The Role of the State
Programme - Day 4 Module 4
Leadership and Change in Oil and Gas
Oil and Gas organisations face many strategic challenges including what type of organisation to be, where to compete, how to position against competition. However, implementing any strategy successfully requires a careful mix of leadership and management techniques throughout the organisation. Recent cases have highlighted that trade-offs need to be made and choices clearly communicated in all areas, but especially in the key challenges between safety, environmental and profitability issues. Add to that the challenge of working across cultures and different drivers being a leader in this industry becomes complex. This module will enable you think through these issues and to create some action plans for yourself and your real team members.
What are the main challenges in leading and managing people?
Leadership versus management - where should we invest our time?
The inevitability of change - how to keep focused on the changing environment
Creating the culture - demonstrating through action the balance between safety environmental and profit issues
How communication really happens
Working with different cultures
Day Four - Module 5
Strategic Issues for IOCS and NOCS
NOCs are becoming the main industry players with their control of over 70 percent of proven oil reserves. At the same time, there is growing concern over the future of the IOCs as they struggle to generate sufficient shareholder value to ensure their survival. Both have differing management objectives and strategies. This module will consider the strategic issues facing both types of company and also consider their future roles, both individually and collectively.
The financial strategy of the IOCs
Why the IOCs have been struggling to generate shareholder value?
What are the future strategic options for the IOCs?
What are the prospects for another round of IOC mega-mergers?
What are the different types and strategies of NOCs?
How to measure the performance of NOCs?
What is the "national mission"?
What future directions might the NOCs take?
Programme - Day 5 Module 6
Long Term Issues for Oil and Gas
This will identify and discuss the key elements determining the international Oil and Gas operating environment in the next 20 years. In particular it will focus on the major structural changes which are taking place in terms of oil demand, supply and pricing as well as environmental drivers. In addition it will address issues arising from the shifts in relative power between the producers and consumers; East and West. What are the implications for your organisation?
Oil prices and the market - what happens next?
Is the supply squeeze real - can it be avoided?
How will oil demand adapt to supply limitations?
How will the industry structure change in the context of IOC/NOC relations
The growing internationalization of gas markets
Prospects for Oil and Gas in low carbon transition
Business Case Presentations
This module will run throughout the programme and is the opportunity for participants in small project teams to present a business case to a panel. Individuals will be encouraged to draw on the insight and learning from each of the preceding modules to inform thinking in formulating their business cases. The panel will be invited to listen to the final business case presentations from the project teams, question their thinking and then provide feedback and evaluation.