Question 1:The following question concerns the roles of the various organisations involved in the oil & gas industry.
You are a small company making speciality oil field chemicals and services selling directly to both Oil majors (like Shell, BP, Exxon, etc) and their major contractors (like KCA Deutag, Halliburton, etc ). Your product is seen as ‘routine’ and you have many competitors. At the moment all your contracts are lump sum. You want to expand your business (volume, stability and geography) and think that introducing other contractual arrangements and relationships with your customers might help achieve this.
- What type of contractual arrangements would you ideally prefer and why? (15%)
- How might you achieve this transition? (15%)
Question 2: The following questions concerns petroleum economics and taxation regimes, legal arrangements and contractual relationships.
- Prepare an analysis for the investment manager of a major oil & gas company outlining the differences between the mechanisms which govern Concession, PSA and Joint Venture regimes (in which a company or consortium of companies enters into a JV with the government) and which you would recommend as best suited to investment in a country with no previous oil and gas industry presence. (30%)
- Using the evaluation model provided, identify the range of outcomes (measured in terms of NPV and IRR) for oil production rate changes of +/- 20%, gas production rate changes of +/- 30% and an increase to 15% or decrease to 5% in the oil production decline rate. (Vary each of these individually, not all at once.) Indicate why you think the results follow the observed patterns and suggest what actions the company and the government might consider taking based on these observations. (10%)
Question 3: The following question concerns the risks faced by the industry and means of identifying and managing them.
An oil & gas company signs a reimbursable contract with an EPC contractor, requiring the contractor to engineer, procure, install and commission an oil production platform. The oil & gas company has a target price for the project of $250 million. What risks might cause the final cost to be more or less than this target price? (15%)
Question 4: The following question concerns future oil and gas sources, social responsibility and climate change issues.
The BP Statistical Review shows that, despite growing annual consumption of oil and gas, the remaining recoverable reserves have consistently grown each year. Explain the concept of the widely used terms of “carbon budget” and “un-burnable carbon”, and discuss the effect that these concepts will have on the remaining recoverable reserves. (15%)
Please use 12pt Arial font.
Your assignment submission must include
The Module reference number (BSM2519).
The Module title (Oil and Gas Management).
Your name and student number.
The word count of the main body of the finished report.
The Turnitin “Similarity Score”.
- A Contents page - setting out the structure of the report by showing the appropriate headings and subheadings that reflect the different sections.
- Clear Headings – so it is obvious which part of your answer relates to each question. Do not repeat the entire question as part of your answer.
- Page numbers at the bottom of each page.