Bridging Petroleum Industry Value Chain Contractual & Fiscal Terms - An Analysis of Global Practices & Harmonization of Nigerian Fiscal Regimes Under PPT & PIA
Course Description
This course evaluates petroleum economic fundamentals that underlie optimal E&P investment decisions, strategy, profitability, risk and uncertainty. The course also analyses oil and gas fiscal regimes underlying petroleum exploration and production operations worldwide with special attention to Nigeria.
Flowing from the above and adopting a practical and hands-on approach, this course presents how the economic value of oil and gas ventures and businesses can be determined, and used in decision-making and crafting strategy. Furthermore, the course explains why global oil and gas prices, international fiscal and taxation policy, and environmental regulations are important in petroleum E&P business decisions and in corporate strategies.
With inputs from industry experts, this unique and insightful course also covers a comprehensive comparative analysis of global practices in upstream sector contractual and fiscal regimes with special reference to Nigeria’s transition from PPT to PIA – and how to reconcile the resultant royalty gaps in its implementation with a view to eliminating double taxation.
Finally, our experienced facilitators will roll out this course using an interactive practicum on the use of spreadsheet modelling tools to manage risk and uncertainty in the oil and gas business. Facilitators are, therefore, required to attend the program with their computers/laptops. These personal computers should be Microsoft Office enabled.
Course Objectives
At the end of this course, participants should be able to:
- Understand the importance of economic decision variables such as oil and gas prices, reserves, production profiles, taxation and fiscal policies, and the environment in petroleum exploration and production decisions.
- Bridge and reconcile fiscal and royalty issues associated with the transition from PPT to the PIA regime.
- Learn and apply principles of petroleum economics and the commonly used economic decision methods to facilitate the ability of E&P business to generate profit and grow business.
- Calculate several key indicators from the stream of net cash flow.
- Understand approaches to qualify uncertainty and risk in petroleum business decisions using spreadsheets.
- Setting up own economic models
- Discuss terms like NPV, ROR, Hurdle Rate, Real Rate, Mid-Year Adjustment, Money-of-the-Day, etc.
- Understand the risks in projects and tools to handle these risks.
- Describe contract terms and conditions.
- The opportunity for practical application of the knowledge gained through specially designed exercises.
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Venues |
Dubai |
Dublin |
Edmonton |
Ghana |
London |
Nigeria |
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Dates |
TBD |
TBD |
TBD |
TBD |
TBD |
TBD |
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Cost |
$4,500 per participant (USD) |
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For Whom
This course is suitable for anyone wishing to learn about the economic aspects of petroleum. This course will benefit staff members of oil and gas companies involved in upstream and midstream businesses, petroleum business development, operational managers, and government and parastatal officials involved in policy, monitoring and regulation of petroleum enterprises.
- CEOs and Directors
- Senior and Middle-Level Managers
- Planning, Operations and Forecast Managers
- Supply Chain and Logistics Executives and Managers
- Oil Service Operators in both Up and Down Stream
- Relevant Stakeholders
Requirements for Participation
Participants are expected to attend with their laptops as the course involves lots of hands-on and individual practical exercises.
Course Takeaways
Apart from enhancing their knowledge base and skills in financial modelling in Excel, delegates to this course will:
- Be provided with course manuals, including all examples of Excel files.
- Get free assistance in future for any Excel/fiscal regime/financial modelling queries
Snapshot of Course Contents
Module 1 – The Oil & Gas World
- Structure of the Industry and Background
- Historical background
- Sectors of the Oil and Gas Industry
- Reserves and Production
- World energy supply and demand
- Oil and gas supply and demand
- Oil pricing and market issues
- Alternative Fuels
- Non-conventional oil, gas and renewables
Module 2 – Understanding the Petroleum Industry
- Value Chain and its Interactions
- Partnering (Developing Projects Jointly with Competitors)
- Environmental Issues
Module 3 – Understanding Company Economics
- Differences between Project & Company Economics
- Company Statement of Financial Position
- Company Income Statement
- Cashflow Versus Profit
- Money of the Day & Real Rate (RR)
- Concept of Depletion, Depreciation & Amortisation
- Understand the System of Depreciation
- Depreciation Methods and Its Impact on Economics
- Depreciation & Capital Allowance and Tax Implication
- Understand the Principles of Revenues and Cost Streams
- Classification of Reserves
- Ceiling & Impairment Test
- Reserves Valuation Methods & Reporting
Module 4 – Understanding Petroleum Project Economics
- Basics for Project Economics (Revenues, Cost, Cashflow, NPV, IRR)
- Economic Indicators Definitions
- Time Value of Capital
- Present/Future Value Concept
- Discount Factor & Mid-Year Adjustment Factor
- Net Cashflow vs. Discounted Net Cash Flow
- Net Present Value (NPV)
- Internal Rate of Return (RoR) & Hurdle Rate
- Profit/Investment Ratio
- Capital Productivity Index
- Evaluating Incremental Projects
- Project Ranking-based on Economic Indicators
- Payback, Financial Exposure and Breakeven Analysis
- Project Lifecycles, Optimum Economic Life and Multi-Year Cashflows.
- Identify critical parameters to project success.
- Understand the importance of structuring a project according to milestones.
- Base Case & Sensitivities
- Impact on Projects
Module 5 – Legal & Contractual Framework
- Overview of Nigeria Petroleum Industry Act 2021
- Upstream contracts and fiscal terms
- Different forms of Upstream Contracts
- Contractual and commercial terms and the impact on the overall project
Module 6 – Fiscal Regimes & Contractual Terms
- Economic Rent Theory and Rent Extraction Spectrum
- The Nature of Bonuses, Rentals, Royalties & Taxes
- Why Fiscal Systems?
- Host Government & Firms objectives
- Features of Concessionary & Contracture Regimes.
- Fiscal Instruments & Contract Terms
- Contracts – JV, PSC, R&T, R-factor
- Designing fiscal terms – what to look for.
- Elements of PSC
- Fiscal system comparisons
Module 7 – Decision Tree Analysis
- Concept of risk and uncertainty
- Inherent risks in the oil and gas industry
- Risk evaluation and risk mitigation techniques
- Real options and its relevance to strategic decision-making
- Concept of decision tree analysis
- Calculation of EMVs (Expected Monetary Values)
- Case Analysis – Development of Decision Tree on Excel Worksheet.
Module 8 – The Future is here.
- The future of oil and gas production globally
- Sustainability
END OF COURSE & WRAP UP