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Course Code
PMIM-019
Petroleum Project Economics & Risk Analysis
- The course will provide a comprehensive understanding of economic evaluation, financial modeling, and risk analysis for petroleum projects. Participants will learn how to assess project profitability, model cash flows under uncertainty, and make investment decisions in the upstream and downstream sectors.
- The course integrates engineering economics, petroleum fiscal regimes, uncertainty analysis, Monte Carlo simulation, and sensitivity evaluation, emphasizing practical exercises from exploration, development, and production projects.
Learning Outcomes
- Apply economic evaluation techniques (NPV, IRR, PI, Payback Period) to petroleum investment projects.
- Develop and interpret project cash flow models including CAPEX, OPEX, taxes, and royalties.
- Evaluate project profitability under different fiscal regimes (PSC, royalty/tax, concession).
- Conduct risk and uncertainty analysis using sensitivity, scenario, and Monte Carlo techniques.
- Perform break-even and sensitivity studies to identify key project drivers.
- Prepare and present economic justification reports for management decisions.
- Integrate risk management principles (identification, assessment, mitigation) into project economics
By the end of this training course, participants will be able to:
Course Contents
- Introduction to Petroleum Project Economics
- Overview of the oil & gas value chain: exploration, development, production, and refining
- Objectives of petroleum project evaluation
- Key economic concepts: time value of money, discounting, compounding
- Nominal vs real prices, inflation and exchange rate impacts
- Cash flow components: revenues, capital costs, operating costs, abandonment costs
- Economic indicators: NPV, IRR, Payback Period, Profitability Index
- Case Study #1: evaluating a new gas-field development project
- Fiscal Regimes and Cash Flow Modeling
- Fiscal systems in petroleum industry: concession, service, and production-sharing contracts
- Government take, contractor share, and investor perspective
- Taxes, royalties, depreciation, and incentives
- Designing a cash flow model (Excel-based)
- Calculating after-tax cash flows and project profitability
- Understanding project financing, equity vs debt mix, and cost-of-capital (WACC)
- Workshop #1: Building a full-cycle economic model for a small onshore oil project
- Risk and Uncertainty Analysis
- Distinguishing risk vs uncertainty
- Identifying and quantifying risks in petroleum projects
- Probability distributions and expected monetary value (EMV)
- Sensitivity analysis: tornado diagrams and spider plots
- Scenario analysis: optimistic, most-likely, pessimistic cases
- Introduction to Monte Carlo simulation for project evaluation
- Case Study #2: Monte Carlo simulation on offshore field development
- Decision Analysis and Portfolio Optimization
- Decision trees and expected value analysis
- Risk-adjusted discount rate vs certainty-equivalent approach
- Real-option valuation in petroleum investment decisions
- Portfolio evaluation: balancing risk vs return among multiple fields
- Diversification and correlation effects between projects
- Case Study #3: decision tree analysis for exploration drilling options
- Integrated Case Study and Practical Application
- Group exercise: full economic evaluation of a petroleum project from exploration to abandonment
- Incorporating technical uncertainties and cost variations
- Risk mitigation and management planning
- Presenting project economics to management and investors
- Developing executive dashboards for economic indicators
- Final assessment and presentation by participants
Our Methodology
- Make coaching and monitoring innovative and using modern
- Media training also using on the go training by using interactive means and focusing on
- The exercises, practical applications and real situations study
- Live delivery method, instructor-led training
- Experienced consultant, trainers, and professional
- Qualified trainer with high-level experience
Attendance Reports
- Send daily attendance reports to training departments
- Send full attendance report to training dep. by the end of the course
- Attend 100 % from the course days also provide daily
- Issue attendance certificate for participant who attend minimum 80% from the course duration
Pre/Post Reports
- Pre- assessment before starting training
- Post assessment after finishing training
- Full report for the difference between Pre-& Post assessment
Who Should Attend
- Petroleum and reservoir engineers involved in project evaluation
- Financial analysts, economists, and planners in oil & gas organizations
- Project managers, investment officers, and asset managers
- Government officials, regulators, and auditors working with petroleum contracts
- Risk analysts and business development professionals
- Anyone engaged in the economic and risk assessment of petroleum project
