Unit 2013: Petroleum Economics

1. Introduction to Petroleum Economics

• Definition and scope of petroleum economics
• Role of economics in the oil and gas industry
• Key economic principles relevant to petroleum sector
• Importance of economic decision-making in exploration, production, and marketing

2. Supply and Demand in the Oil Market

• Fundamentals of supply and demand theory
• Factors influencing oil supply (e.g., production capacity, technological advances)
• Factors influencing oil demand (e.g., economic growth, alternative energy sources)
• Price elasticity of supply and demand in petroleum markets
• Impact of geopolitical events on oil prices and market stability
• Case studies of supply-demand shifts and price fluctuations

3. Cost Analysis in Petroleum Production

• Classification of costs: operating costs, capital expenditures (CAPEX), lifting costs
• Fixed vs variable costs in petroleum production
• Cost drivers and their influence on production decisions
• Techniques for cost estimation and cost control
• Role of cost analysis in optimizing production efficiency and profitability

4. Investment Decision Analysis

• Overview of investment appraisal in oil and gas projects
• Net Present Value (NPV): concept, calculation, and interpretation
• Internal Rate of Return (IRR): definition and application
• Discounted Cash Flow (DCF) analysis: methodology and use cases
• Sensitivity and scenario analysis in investment decision-making
• Practical examples of investment evaluation in petroleum projects

5. Risk and Uncertainty in Petroleum Economics

• Types of risks in petroleum economics: market risk, operational risk, political risk
• Methods for risk identification and assessment
• Risk management strategies and mitigation techniques
• Impact of uncertainty on project valuation and investment decisions
• Use of probabilistic models and decision trees

6. Taxation and Fiscal Regimes in Oil-Producing Countries

• Overview of taxation systems applicable to the petroleum sector
• Royalty regimes and their economic implications
• Production Sharing Agreements (PSAs): structure and fiscal impact
• Tax incentives and their role in attracting investment
• Comparative analysis of fiscal regimes across key oil-producing countries
• Implications of fiscal policy changes on petroleum economics

7. Oil Price Forecasting

• Importance of accurate oil price forecasting for strategic planning
• Methods and models for forecasting oil prices:
  • Supply-demand balance models
  • Econometric and time series models
  • Geopolitical and qualitative analysis
  • Market speculation and futures markets
• Challenges and limitations of oil price forecasting
• Application of forecasts in corporate strategy and investment planning