Petroleum Project Economics & Risk Analysis

COURSE OUTLINE 5 DAYS

Date: 6^th to 10^th July 2026

 

 

Techniques for Opportunity Evaluation and Assessment of Risk and Uncertainty

 

Course Description

 

Petroleum Project Economics & Risk Analysis involves financially evaluating oil and gas ventures by building cash flow models, assessing profitability (NPV, IRR), analyzing fiscal terms (taxes, royalties, PSCs), and quantifying uncertainties (market, technical, political) using techniques like sensitivity analysis and Monte Carlo simulations to support informed investment decisions and optimize project outcomes. It’s about understanding financial viability, mitigating risks, and navigating complex fiscal frameworks.

 

This ALARDI Africa training course will highlight:

 

Key Components & Activities:

1. Economic Modeling & Valuation:

1. • Cash Flow Analysis: Developing detailed models integrating revenues (from production), Capital Expenditures (CAPEX), Operating Expenditures (OPEX), taxes, and royalties.

1. • Profitability Metrics: Calculating key indicators like Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period to gauge project returns.

1. • Discounted Cash Flow (DCF): Applying time value of money principles to project cash flows.

1. Risk Identification & Quantification:

1. • Types of Risks: Identifying market volatility, technical challenges (drilling, recovery), geopolitical instability, regulatory changes, and environmental factors.

1. • Sensitivity Analysis: Testing how changes in key variables (price, production, costs) affect project economics.

1. • Scenario Analysis/Monte Carlo: Using probability to model multiple outcomes and assess the range of potential results.

1. Fiscal & Contract Analysis:

1. • Understanding Regimes: Analyzing different petroleum fiscal systems (concessions, Production Sharing Agreements – PSAs, service contracts) and their impact on profitability.

1. • Negotiation: Evaluating contract terms and economic impacts for negotiation.

1. Decision Making & Strategy:

1. • Investment Justification: Using analysis to support or reject project investments.

1. • Portfolio Management: Integrating project evaluations into broader company strategies.

1. • Risk Mitigation: Developing strategies to manage and reduce identified risks.

Objectives

 

The primary objectives of this training course are to:

• Understand various economic terms used in the Oil & Gas industry
• Understand how to develop economic models of various petroleum fiscal regimes
• Carry out cash flow analysis, different economic analyses for petroleum related project, and determine economic indicators
• Evaluate and quantify risks and uncertainties
• Make the right investment decision in the presence of risk
• Carry out a comprehensive economic evaluation study for any petroleum-related project, including risk analysis and sensitivity study using a spreadsheet
• Contribute to the petroleum project investment within a solid economic system and do a detailed economic evaluation
• Contribute to the decision-making process for any petroleum-related project

 

Training Methodology

The training course approach is based on principles of economic evaluation of petroleum related project with a focus on step-by-step development of economic models, determining economic indicators, evaluating and quantifying risks and uncertainties, and making the right investment decision for the project. To facilitate that, the Microsoft Excel-based economics modules will be built, and all discussions will be provided using high quality power point slides.

 

Organisational Impact

By sending delegates on this ALARDI Petroleum Project Economics and Risk Analysis training course, your organization will benefit by:

• Participants learn about the application of economic valuation and risk assessment processes and techniques within the global Oil & Gas industry
• Help the participants to identify and analyse the risks involved in a petroleum-related project
• Help the participants to apply the decision-making procedures to justify the petroleum projects in terms of profitability
• Help the participants to recognize the uses of options in the ranking criteria to select and execute the highly profitable project
• Putting values to the Oil & Gas companies’ active projects through the interpretation of economic results of applied case studies
• Help participants to recognize and identify the influencing parameters for oil and gas field developments

 

Personal Impact

By attending this course, you will:

• Learn to construct a project cashflow model
• Gain the techniques in project ranking and screening
• Gain the operational decision-making techniques under risk
• Capable of identifying the uncertainties in petroleum related project and how to manage them
• Enhance the participant’s awareness of influential parameters in an oil and gas field development plan

 

WHO SHOULD ATTEND?

This Petroleum Project Economics & Risk Analysis training course is designed to provide technical and practical approaches to executing a petroleum-related project in the upstream sector.

 

This training course is suitable for a wide range of professionals, but will greatly benefit:

• Oil & Gas Field Engineers
• Oil & Gas Managers
• Oil & Gas Auditors
• Oil & Gas Planners
• Financial Analysts
• Project Management Professionals Course Outline

 

DAY 1: Cashflow Analysis

• Familiarization with Economic terms
• Setting up Cashflow Calculation
• Depreciation Methods
• Loss Carry Forwards
• Inflation
• Nominal & Real Cashflow
• Sunk Costs
• Project Financing

 

DAY 2: Economic Indicators

• Economic Indicators Definitions
• Present Value Concept
• Discount Factor
• Net Present Value
• Internal Rate of Return
• Effect of Project Delay
• Payback Period
• Profit / Investment Ratio
• Incremental Projects

 

DAY 3: Risks and Uncertainties

• Risk & Uncertainty
• Expected Value Concept
• Decision Tree Analysis
• Farm-out Decision
• Probability Analysis
• Sensitivity Analysis
• Probability Distribution
• Monte Carlo Simulation

 

DAY 4: Setting up Spreadsheet Calculation

• Introduction to Spreadsheet Calculation
• Simple Cashflow using Excel
• NPV Calculations
• Application of Economic Indicators
• Class Discussion

 

DAY 5: Setting up Oil Field Development Model

• Setting up an Integrated Economic Model of a Typical Oil Field Development
• Project Sensitivity Analysis for the Selected Model
• Introduction to Russell Field Model
• Final Remarks

 

Certificate

• On successful completion of this training course, the ALARDI Africa Certificate will be issued to the participants.

Venue:

 

Kenya-Nairobi                               Cost USD 1800

Spain-Barcelona                            Cost USD 2500

Date: 6^th to 10^th July 2026