About the Programme
Petroleum is among our most strategically important natural resources. It underpins countless industries - from plastics and petrochemicals to transportation and agriculture. No country can operate its economy independently of petroleum markets.
The oil and gas industry exerts both a direct and indirect impact on domestic and global economies. Petroleum economics is a complex series of political and economic interactions pertaining to the oil industry, requiring familiarity with economics broadly as well as geopolitical history.
This specialised programme brings together practitioners of economics and decision-making, petroleum engineers and geoscientists, covering Economic Modelling, Decision Analysis, Exploration Analysis and the Economics of Unconventional Resources.
Petroleum Industry Overview
Economics drives the entire oil and gas producing industry - almost every decision is made on the basis of an economic evaluation, whether determining reserves, establishing a standardised measure of value, or comparing alternative extraction strategies.
A Petroleum Economist brings together information across the full spectrum - from OPEC policy and UN climate summits to cash flow analysis, price forecasting, cost drivers and risk management.
Programme Objectives
Petroleum Economics is one of the most highly regarded programmes for energy-industry professionals. The AAFM® programme focuses on the economics and business of petroleum, developing skills for complex decision-making in areas such as:
- Economic analysis of the energy industry
- Investment analysis in upstream and downstream ventures
- Government petroleum policies and fiscal regimes
- Decommissioning economics
- Energy demand forecasting and planning
Role of a Petroleum Economist
What do Petroleum Economists do?
Petroleum economists contribute to oil and gas policy-making and assist companies in developing new fields - analysing project economics and assessing related risks. At the outset of any project, they engage key stakeholders including government bodies, development partners, NGOs, financial institutions and contractors.
For every such project, Petroleum Economists should:
- Assume responsibility for reviewing and compiling risk-based business and economic evaluations for new integrated business ventures to support strategic decisions
- Prepare financial and economic modelling of new venture exploration and production (E&P) projects and coordinate project inception through to board approval
- Provide expert financial and economic guidance towards constructing project bids and comprehensive portfolio planning
- Ensure effective and robust due diligence analysis in rollout of acquisition and merger strategies
- Provide economic modelling and sensitivity analysis to understand and implement value drivers that could significantly enhance project returns
- Keep abreast of developments in economic evaluation, taxation and fiscal terms, cost structures, product prices and hydrocarbon availability
- Lead efforts to assure economic, financial and strategic integrity across all resource allocation and investment decisions in multi-disciplinary team environments
- Provide project appraisal services and ensure economic assumptions and forecasts - covering price, inflation, interest, exchange rate and business risk - are regularly updated
An economist also develops estimates for the following:
- Capital cost - production platforms, drilling gear, production facilities such as compressors, pumps, separators and instrumentation
- Operating cost - including maintenance, workovers and environmental compliance
- Personnel needs - workforce size and skills, labour cost and overhead
- Expected revenues from oil and gas sales, tariffs and partner payments
- Financial issues in host government agreements - taxes, royalty rates, royalty payments, financial liabilities and social development obligations
Apart from the above, Petroleum Economists are an integral part of ongoing projects, assisting with:
- Economic analysis, cash flow, risk analysis and valuation in the oil and gas industry
- Conducting micro-economic analysis applicable to all sectors of the oil and gas supply chain
- Analysing tariffs, margins, long-term contracts and market demand forecasts to determine economic viability
- Adjusting cash flow analysis for risk and uncertainty
- Understanding the whole process relating to oil and gas segments - upstream, midstream and downstream
- Understanding hydrocarbon composition, quality standards and economic value
- Identifying marketing and pricing of crude oil and end products
- Conducting upstream feasibility studies and preparing sensitivity and risk analysis reports
- Identifying the midstream segment and its various constituents
- Understanding downstream processes and steps, and conducting downstream feasibility studies
- Applying break-even analysis and understanding its uses
Key Benefits of the Programme
- Attain Super Specialist Status in "Petroleum Economics" with both the knowledge and skill to perform your duties as a Chartered Petroleum Economist
- Understand how the economic attractiveness of upstream oil and gas ventures is evaluated
- Gain expertise in economic decisions covering reserves classification, production forecasts, time value of money, inflation, contractual arrangements, risk and uncertainty
- Identify how to construct cash flow projections for upstream projects
- Determine key elements for making oil and gas investment decisions
- Understand in general how oil and gas is legislated around the world
- Apply economic criteria to evaluate oil and gas projects under various fiscal regimes
- Add a globally recognised professional designation and post-nominal to your resume, business card and email signature
- Access one of the top economic and financial professional networks around the globe, providing the opportunity to network with charterholders throughout the world
- The Chartered Petroleum Economist® certificate is awarded by the American Academy of Financial Management® (AAFM) and is fully recognised in the USA, more than 170 countries and hundreds of institutions worldwide
Who Should Enrol
The programme suits a wide range of professional backgrounds, including:
- Economists and Analysts
- Geoscientists
- Reservoir Engineers
- Production Engineers
- Petroleum Engineers
- Planning and Development Analysts and Executives
- Negotiators and Lawyers
- Financiers and Decision-makers
Educational Requirements
Minimum qualification required to pursue the programme:
- Graduates (Any Stream): Pass Level 1 - Chartered Economist Exam.
- Postgraduates in Economics: Directly pursue the Chartered Petroleum Economist® designation.
Career Opportunities
Career opportunities for Chartered Petroleum Economists span energy markets, project economics and corporate finance:
- Energy Industry Analyst and Market Economist - analysis of oil, gas and electricity markets, short-term and long-term price and trend forecasts
- Project Economist - energy project profitability studies (upstream, downstream) and feasibility analyses
- Trader or Assistant Trader (back, middle or front office) - hedging tools and physical flows management
- Consultant - project studies, integration of environmental constraints in corporate policy, risk management
- Energy Business and Economics Specialist
- Strategic Management and Marketing Analyst
- Management Consulting and Analytics
- Energy Finance, Banking and Trading
Skills Required
Key Skills and Proficiencies of a Chartered Petroleum Economist:
- Analytical Skills: Ability to compile and make sense of large amounts of technical information and data to ensure facilities operate safely and effectively.
- Creativity: Each new drill site is unique and presents new challenges; Petroleum Economists must devise creative solutions to extract oil and gas economically.
- Interpersonal Skills: Projects require highly complex machinery, equipment and infrastructure. Communicating and working well with engineers, geoscientists and oil and gas workers is crucial.
- Mathematical Skills: Petroleum Economists use the principles of calculus and other advanced mathematical topics for analysis, design and troubleshooting.
- Problem-solving Skills: Identifying problems in drilling plans and economic models is critical; issues can be costly and must be addressed promptly and decisively.