Energy Risk Management Training Course
Course Highlights and Agenda
Trading has become a key part of successful well established energy companies and in turn often provides a crucial revenue stream. The whole industry as a result has become even more intricate and is flooded with an array of complex financial products which are governed by an ever growing set of regulations which people are finding harder and harder to understand. So not only do you have to understand the industry as a whole, you have to be able to get to grips with the trading, pricing and regulation issues that are so key to your company's risk profile.
In short if you don't have a thorough understanding of the basics you will never have the ability or confidence to acknowledge identify and quantify the risks. This intensive and highly-practical course will give you that thorough understanding so you can do just that.
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Agenda
Day One – The Energy Story
Sources of Energy – An Overview
- What is energy – a brief history
- Primary/secondary energy
- Differences between fuel and energy
- Fossil fuels
- Clean fuels
- Electricity
- Hydrogen
Oil and Gas
- Analysis of world production
- World consumption
- How oil comes to market
- Transportation
- Transmission
- Trading flows
- The importance of LNG markets
Overview of Energy Conversions
- Lack of standardisation
- Volume: imperial/metric
- Energy: power/heat
- Pitfalls
Introduction to Regulatory Issues
- Different types of regulation
- The role of the regulator
- Does the system work?
- Hands-on v hands-off approaches to regulation
- Regulation – what went wrong?
Case Study: An analysis of the Enron scandal and other high profile cases
Current Trends and Developments in Global Energy Markets
- Impact of the Arab Spring on oil markets
- Peak oil – an ongoing phenomenon
- Is it the end of the road for oil?
- Development of North American Shale revolution
- Global surge in LNG
- European long term gas contracts dilemma (oil indexation/market price)
- Nuclear power post Fukishima
- Renewables – obsession with wind!
Day Two – An Overview of Energy Trading
Who’d Want to be a Trader
- Reasons for trading
- Internal set-up
- Instruments of trading
- Contractual and documentation
- Credit and performance risk
- Information / IT
- “Make it happen”
Routes to Market
- Bilateral physical – negotiated contracts
- OTC – standardised contracts
- Exchange trading – futures contracts
Physical/Financial
- Futures
- Options
- Swaps and swaptions
Energy Futures Contracts and Exchanges
- Trading mechanics
- Spreads and orders
The Role of the Clearing House
- Initial and variation margining
Critical Concepts
- Transparency
- Reporting
- Liquidity
- Volume
Commodity Pricing
- What’s in a price?
- Backwardation and contango
- Indexation
- Quotes
- Pricing
- Trading terms
- Arbitrage
Market Analysis
- Fundamental analysis
- Technical analysis
Group Trading Game
- Producers – sell production
- Consumers – best quantity / best price
- Speculators – making the money!
Day Three – Risk Hedging and Risk Management
Risk, Hedging and Risk Management
- Risk
- Acknowledge
- Identify
- Quantify
- Hedging
- Practical hedging game
- The theory and explanation of hedging
- Tools and strategies
- Development of a hedging programme
- Risk management
- Getting to grips with the concepts of risk management
- Typical risk management strategies
Security of Supply
- Understanding a changing world order
- The dominance of India and China
- Is there a decline in US influence?
- The important of free markets and trading
Energy and the Environment
- Understanding the “green issues”
- Economics versus politics
- Old world versus new world
- Why we must use less!
Discussion Session: Group discussion on the issues impacting the sector both today and in the future
What You Will Learn
Over the intensive three days you will:
- Examine the nuances of risk in the global energy sector
- Explore the socio-economic issues that impact the industry
- Investigate the current trends to help create a picture of what the future has in store for energy markets
- Gain an appreciation of why and how energies are actively traded around the world
- Grasp the fundamentals of energy trading including
- Routes to market
- Physical and financial trading
- Pricing and market analysis
- Obtain an understanding of risk hedging and risk management strategies and how you can apply them in practice
Reviews
"This is a very, very good course"
"Good overview…course leader was very good and gave a clear introductions"
