Refined Products Pricing and Risk Management

Refined Products Pricing and Risk Management

by | Mar 21, 2023 | HP Slider, TC Refined Products, Training Courses

Course Overview

This 3-day course provides a comprehensive overview of Refined Products pricing and risk management strategies, including LPG, Gasoline, Naphtha, Kerosene, Diesel/Gasoil, Marine Fuels and Intermediate and Residual Products. Each day has a clear focus covering first, the Refined Products risk landscape from the refinery to the consumer; market structure and benchmark pricing methodologies published by S&P Global Commodities/Platts and Argus for price assessments of underlying commodity and derivatives; the availability of hedging instruments; risk management strategies and quantitative tools such as VaR used for risk evaluation, mitigation, monitoring and reporting.

Learning Objectives

  • Understand pricing methodology for each of the main refined oil products
  • Explain how Price Reporting Agencies make assessments in Europe, Asia, Middle East and Americas
  • Understand availability of hedging instruments including swaps, futures and options
  • Learn the basics of putting on a hedge and locking-in a trading margin
  • Know how to develop a risk management strategy based on cash-flow at risk
  • Master calculations that you need to understand volatility and correlation
  • Learn how to implement a risk control strategy
  • Confidently discuss the technical terms, concepts and buzzwords with your peers and clients

Course Modules

  • LPG Pricing and Market Struture
  • Transportation Fuels Pricing and Market Structure
  • Residuals and Intermediates Pricing and Market Structure
  • The Refined Products Derivatives Markets
  • Hedging and Speculation
  • Locking in an Arbitrage
  • Risk management strategy and hedge ratios
  • Volatility and correlation measures
  • Risk Measurement, Monitoring and Reporting

Who should attend?

Refined products marketers, traders; refining industry planners; banking, finance execs; lawyers, accountants; oil company graduate trainees; industrial companies with exposure to oil prices; refined product end-users. Banks with a presence in the commodities markets; swaps sales and marketing staff; regulatory and taxation authorities; oil refiners; National Oil Companies; oil and commodities traders; business development staff at futures exchanges; fund managers; private equity executives.

Course Director

Peter Stewart is a highly experienced analyst in the oil and gas markets. He was a director of the British Institute of Energy Economics (2013-2021) and has written extensively for the Oxford Institute of Energy Studies and the Oxford Energy Forum. He runs the training and consulting firm Resource Economist Ltd, and has worked as associate with a number of large consulting firms including IPA Advisory Ltd and KBC Energy Economics. He has been an expert advisor to the energy ministries of Norway and Angola on oil trading. Peter has many years experience in the trading and pricing of oil and gas, having worked for nearly 20 years with the pricing agency Platts, in London, the Middle East and Asia. Peter is a qualified executive leadership coach and is accredited with the European Mentoring and Coaching Council. Peter has written a number of books with a business focus. He graduated in English and Oriental Studies from Emmanuel College, Cambridge in 1982.

Detailed Scope

This three-day programme provides a detailed knowledge of refined products pricing and risk management.

The basic structures of commodity trading are systematically explained, including physical, forwards, futures, options and swap markets. The course covers physical and derivatives pricing for LPG, gasoline, naphtha, kerosene, gasoil/diesel, marine fuels, and residual and intermediate products.

The course explains how the refined products benchmarks provided by Price Reporting Agencies such as Standard & Poors/Platts and Petroleum Argus are used in settlement of physical and derivative transactions. The drivers of refined product prices are explained, as well as the changing drivers of market volatility for each product group, and how these are relevant to risk management.

 This course provides a comprehensive overview of refined products risk management, including price formation in the underlying markets; price volatility and modelling energy prices; quantitative tools for risk analysis including volatility and correlation measures; hedging strategies and risk-offsetting; liquidity risk management; modelling portfolio risk; Value-at-Risk (VaR) and other risk measures; and market risk reporting. The interaction between the value of the physical refined products, price assessments and instruments that are traded as derivatives is explained clearly.

Course Delivery

The course is delivered over three days and is divided into 9 modules. Each module takes around 1.5 hours to complete, so around 4.5 hours per day of tuition and exercises (3 modules per day). The course can be delivered online or in person at the client’s office. The style of tuition is informal, friendly and highly interactive, with regular recaps of key course material provided. Delegates are encouraged to ask questions at the end of each module. Exercises and questionnaires are provided for overnight scrutiny to allow delegates to consolidate the intensive course materials provided.

For full details and a list of course modules please click on the link below:

Refined Products RM – course outline

 

 

 

LPG Pricing, Trading and Valuation

LPG Pricing, Trading and Valuation

by | Mar 21, 2023 | HP Slider, TC Gases and LNG, TC Refined Products, Training Courses

Course: LPG Pricing, Trading and Valuation

Course Overview

This 4-day course provides a comprehensive overview of the LPG market, trading, pricing, valuation and the opportunities for risk management. Each day has a clear focus covering:

  • the LPG value chain and sectoral use of LPG in the petrochemical sector, heating and residential use of LPG, and LPG in transport and industry;
  • the pricing methodologies and contractual structures used in LPG trading; including Contract Prices and how Argus benchmarks are used in settlements of spot and term contracts, and derivatives;
  • the trading and transportation of LPG by region (Middle East/Asia, the Americas and Europe/Africa),
  • the impact of the Energy Transition on LPG use, and how risk management and hedging can be used to mitigate price volatility.

Each of the four days is sub-divided logically into manageable sub-topics to facilitate retention of the knowledge imparted during the course.

Learning Objectives

  • Understand price formation in the underlying markets that drive the value of LPG
  • Know the pricing structures used in each of the main LPG trading regions
  • Understand the use of Contract prices and PRA benchmarks in the pricing of LPG
  • Quantify the sectoral use of LPG in each geographical region, and in the Middle East
  • Know regional trading patterns and how LPG is transported in and between regions
  • Learn some tools for valuation of LPG when specific PRA prices are unavailable
  • Understand how the availability of competing petrochemical feedstocks affects LPG prices
  • Do basic calculations of LPG value against naphtha, crude oil and heating fuels
  • Know how to model LPG prices and hedge during periods of market volatility
  • Have an opinion about how the Energy Transition will affect LPG demand and prices

Course Modules (12 modules over 4 days)

LPG Value Chain and Sectoral Use

  • LPG Value Chain and Market Structure
  • Introduction to LPG Regional markets
  • Sectoral Use of LPG by Region

LPG Pricing and Commercial Structures

  • LPG Pricing structures: Contract prices, Assessments
  • LPG Contractual Structures: Spot and Term
  • LPG Transportation and Freight

 

LPG Regional Trading and Pricing

  • Middle East and Asian LPG Markets
  • LPG in the Americas and the Shale Revolution
  • LPG Market in Europe, Africa and Turkey

LPG Opportunities and Competitors

  • LPG Price Exposure and Risk Management
  • Emerging Trends in Global LPG Markets
  • LPG and the Energy Transition

Who should attend?

LPG traders and trading analysts; petrochemical feedstock analysts; treasury and financial control managers with IOCs and NOCs; regulators and taxation bodies; industry analysts with exposure to LPG prices; energy portfolio strategists; industry planners; banking, finance executives; lawyers, accountants and other advisors; utility and end-user groups exposed to the price of LPG.

Course Director

Peter Stewart is a highly experienced analyst in the oil and gas markets. He was a director of the British Institute of Energy Economics (2013-2021) and has written extensively for the Oxford Institute of Energy Studies and the Oxford Energy Forum. He runs the training and consulting firm Resource Economist Ltd, and has worked as associate with a number of large consulting firms including IPA Advisory Ltd and KBC Energy Economics. He has been an expert advisor to the energy ministries of Norway and Angola on oil trading. Peter has many years experience in the trading and pricing of oil and gas, having worked for nearly 20 years with the pricing agency Platts, in London, the Middle East and Asia. Peter is a qualified executive leadership coach and is accredited with the European Mentoring and Coaching Council. Peter has written a number of books with a business focus. He graduated in English and Oriental Studies from Emmanuel College, Cambridge in 1982.

Detailed Scope

This four-day programme provides a detailed knowledge of the LPG value chain and the associated risk landscape.

 The LPG value chain from field or refinery to the final consumer is fully explained. The course provides in-depth analysis on the sectoral use of LPG in each of the main geographical regions.

 The basic commercial structures of LPG trading are outlined systematically, including fixed price and floating price trading and contract prices. The course explains how benchmarks provided by Price Reporting Agencies such as Argus Media are used in the settlement of physical and derivative transactions.

 The course provides a comprehensive overview of LPG trading by region and by sector, focussed on Middle East and Asia, the Americas, and Europe and Africa. Inter-regional flows between these three main regions are explained.

The course ends with a broad discussion of the risks and opportunities in LPG trading, focussed on how the Energy Transition will affect the use of LPG and regional trade flows, and how hedging can be used to mitigate price exposure.

The course simplifies and explains the jargon and technical terms used in the LPG market. This is a highly interactive course which uses hands-on exercises and visual aids to help delegates retain what they learn.

Course Delivery

The course is delivered over four days and is divided into 12 modules. Each module takes around 1.5 hours to complete, so around 4.5 hours per day of tuition and exercises (3 modules per day).

Exercises and questionnaires are provided in the classroom and for overnight scrutiny to allow delegates to consolidate the intensive course materials provided. Delegates are fully supported by the course instructor to successfully complete the various exercises and assignments.

The course can be delivered online or in person at the client’s office. The style of tuition is informal, friendly and highly interactive, with regular recaps of key course material provided. Delegates are encouraged to ask questions at the end of each module.

Outline_LPG Pricing, Trading and Valuation