Contents. Introduction Course Overview Program Outline Who Should Attend? Course Leaders Background Contact & Booking Information.

Transcription

1 Energy Markets & Pricing UNIST 2014

2 Contents Introduction Course Overview Program Outline Who Should Attend? Course Leaders Background Contact & Booking Information Slide 2

3 Introduction Energy Markets & Pricing Course facilitators will present a comprehensive overview of energy markets and pricing, starting with the evolution of oil prices up through the advent of major oil companies, OPEC, energy futures exchanges, brokers, Price Reporting Agencies, Over the Counter markets and derivatives. The module will focus on the primary sources of crude oil and product prices including energy futures, forwards, swaps and options, outlining the key properties and distinctions of each instrument, forward market curves and price structure. The course will highlight different methodologies and valuations used in setting oil prices and benchmarks including gross product values, netback prices, Official Selling Prices and Market on Close pricing. Course facilitators will guide enrolees through various trading strategies used by key market players including system-based optimization, arbitrage, speculation and hedging. The course will offer practical examples of how oil is transacted in physical and paper markets and how price risks are managed. Slide 3

4 Modules Available Energy Markets & Pricing The Evolution of Pricing Oil Pricing Benchmarks Basic Paper Instruments Futures Swaps Options Advanced Paper Instruments EFP EFS Forward Markets 25-day BFOE CFD, DFLs Price Reporting Agencies Methodologies Market on Close Market Participants & Strategies Trading Hedging Speculation Slide 4

5 Program Outline The Evolution of Pricing How are prices for energy products established? This is the main question that will be addressed in this module. During this course participants will gain an understanding of the factors that are taken into account in the price formation of crude oil, refined products and natural gas. During the course attendees will: Trace the historical background and evolution of oil pricing Identify the main sources for prices within global energy markets Review the various calculations used in energy price formation Understand the different types of prices used in energy markets Distinguish between futures-based and reporting-based pricing Investigate the inter-relationships between global energy prices and the distinctions across geographical boundaries Slide 5

6 Program Outline Oil Pricing Oil pricing is a constantly evolving work in progress. From the 1950s when price setting was dominated by a handful of players to the freely traded international future exchanges of today, oil prices and the mechanisms and methodologies used to derive them are under constant scrutiny. This module introduces participants to crude oil pricing essentials and the key elements involved. During the course attendees will: Learn about the key global crude oil price benchmarks Identify the characteristics of a good benchmark Gain insight into the physical streams behind international markers Investigate the forces driving WTI s global disconnection Understand the role of Price Reporting Agencies (PRAs) Examine the pros and cons of official selling prices (OSPs) Discuss the tools available to hedge against crude price volatility Slide 6

7 Program Outline Basic Paper Instruments This module focuses on the basic derivative instruments for trading in the paper market. Participants will investigate the principles behind swaps, options and futures and how they are used for hedging risk positions. During the course attendees will: Investigate the roles of energy futures and forward markets Learn about OTC swaps and how they work Review basics of exchange-traded and OTC options Practise the application of basic derivative instruments Analyze the different properties of futures, forwards, swaps and options in trading and risk management Slide 7

8 Program Outline Advanced Paper Instruments This module elaborates further on specialised paper market instruments available for trading and hedging. During the course attendees will: Understand Exchange of Futures for Physical (EFPs) Become familiar with Exchange of Futures for Swaps (EFS) Examine the use of Forward Freight Agreements (FFAs) Review OTC structures, 3 ways, collars, put/call spreads Study the potential risks of option writing Slide 8

9 Program Outline Forward Markets The Brent market is one of the most heavily traded energy markets in the world and is increasingly taking on a greater role in the formation of oil prices around the globe. In this module participants will learn more about the role played by Brent in the global market and become familiar with the mechanism for trading 25-Day Brent and Dated Brent. During the course attendees will: Examine the differences between 25-Day BFOE and Dated Brent, spot vs. forward markets Trace the evolution of the 25-Day BFOE contract Identify BFOE crude streams and roles in price formation Review Dated to Frontline (DFL) and Contracts for Difference (CFD) Investigate mechanisms for trading Brent in spot, futures and forward markets Slide 9

10 Program Outline Price Reporting Agencies This module provides an overview of the major Price Reporting Agencies (PRAs) that perform a critical role in the assessment of prices in the physical and paper markets for energy. The broad diversity of crudes and product qualities across the globe requires diligent, rigorous scrutiny to facilitate price discovery, trade liquidity,transparency and effective risk management. During the course attendees will: Become familiar with the leading price reporting agencies Examine the different methodologies employed by each PRA Note PRA challenges: liquidity, transparency, quality, volume Study major PRA-produced crude and product benchmarks Review ICE/Platts e-window and Market on Close pricing Practice the Platts forward strip and daily price calculations Slide 10

11 Program Outline Market Participants & Strategies The oil industry supply chain includes participants from the upstream (producers), midstream (traders, shippers) and downstream (refiners, customers). Many entities such as National Oil Companies and integrated major oil companies integrate these functions. Collectively, the market is populated by a diverse range of players, each with a distinctive asset profile, risk tolerance and trading agenda During the course attendees will: Analyze the categorization of industry participants Understand the trading exposures and risks faced by each Identify strategies associated with different market players and the different roles they perform in markets Examine recent trends in industry restructuring and trading regulation Assess potential scenarios for energy markets and prices Slide 11

12 Who Should Attend? Energy Markets & Pricing is ideal for students who want to understand how oil and gas markets work and to pursue a career in the industry. The course has been designed to prepare students for a challenging and prosperous future in the below professions. Oil or Gas Trading Marketing Market & Financial Analysis Strategic Planning Risk Management Trade Finance Managers Operational Personnel Slide 12

13 Course Leaders Principal Consultants Richard Gorry is a director of JBC Asia (Singapore). Richard has been providing consulting and advisory services to the world s leading oil and gas companies for almost 8 years. Richard began his career as an oil and gas analyst with PVM Vienna contributing his insights into a range of reports covering crude oil, refined product and natural gas markets. He later went on to become the Senior Consultant at JBC Energy with particular focus on supply, trading and risk management in the oil and gas industry, before moving to his current position in Singapore. Richard continues to provide his insight and analysis in a wide range of consulting projects and at conferences and workshops throughout Asia and the Middle East. Richard is a guest lecturer at the Ulsan National Institute of Science & Technology, South Korea. John Driscoll has worked nearly four decades in the US and Singapore, holding senior management posts in supply, trading and price reporting. After graduating from Stanford University in 1976, John began his career with ARCO in Los Angeles as a political analyst before shifting to product operations. In 1984 he moved to Singapore with Maxus, an Indonesian oil producer. He ran trading offices for Tomen, Tosco and Ultramar before joining Mobil Asia in 1997 as Team Leader, Fuel Oil. After the Exxon takeover, John ran Argus Asia for 5 years. In 2004 John returned to trading with Korean refiner GS Caltex, handling product trading, risk management and market analysis. Joining JBC Asia in 2013, John brings a wealth of experience to the Company s training, development and consulting business. He also serves as an Adjunct Lecturer at Singapore Management University. Slide 13

14 Background Since its establishment in 1994, JBC has been providing participants with the knowledge and skills they need to perform in an ever-changing high risk environment. Our hands-on experience and expert content guarantees that our courses will meet the requirements of all participants who want to further their commercial understanding of the energy business. JBC has trained hundreds of senior executives, traders, analysts, operational and finance personnel in the world s largest energy companies. JBC also offers courses in Physical Oil Trading, Oil Market Analysis and Refining. Slide 14

15 For booking information/course schedules please contact Ms Seyoung Moon School of Technology Management UNIST (Ulsan National Institute of Science and Technology) Tel. : Fax : nycall109@unist.ac.kr