SMU ACADEMY

PROFESSIONAL

Hedging and Management of Energy Price Risk

Risk Management – Art or Science?

In the wake of the sharp plunge in oil prices and the ensuing period of

volatility, many players face potential losses if they are on the wrong side of

trade. Given the complexity of energy trades, professionals involved in the

trading and financing value chain need to possess vital knowledge to

manage risk exposures and ensure sustained profitability.

The 2-day intensive workshop aims to impart practical approaches to

identify, manage and hedge energy price risks in real life situations.

Participants will analyze cases involving oil producers, refiners and

consumers, and trade simulation exercises to gain hands-on experience.

Highlights

Understand market dynamics of physical & paper trades

Know about hedging tools for protection & opportunities

Explore instruments to manage flat price, spreads & basis risk

Learn about hedging strategies, risk & limitations

Gain hands-on experience via simulation exercises & case studies

Programme Fee Programme Date For Enquiries

S$1,926(incl GST) 11 & 12 Jul 2019 Jaclyn Mah | +65 6828 0254

Programme Code: CRS-N-0045005 Diane Sew | +65 6808 5117

Net fee payable

Singaporeans and PRs: S$577.80

Singaporeans aged 40 years and above: S$217.80

SkillsFuture Credit may be used. T&Cs apply.

Oil Markets, Supply Chains & Risk Management

Risk management: art or science? Behaviours & biases The VULCA effect Market structures & price discovery

What Is Hedging?

Two dimensions: protection & opportunity Hedging in oil supply chains Producers: sell side hedging Refiners: margin hedging Consumers: buy side hedging

Oil Prices, Benchmarks & Hedging

Spot markets & price benchmarks Oil price sources & methodologies Trouble with the Curve & forward values Flat price, spreads & basis risk

Oil Price Hedging Strategies

Futures, forwards, swaps & options BFOE & Singapore MOC window Hedging with EFP, EFS, CFD & DFL Hedging strategies in practice Supply chains & price discovery

academy.smu.edu.sg | fti@smu.edu.sg | +65 6828 0563

Trainer’s Biography

John Driscoll spent nearly 40 years in the US and Singapore energy sector, with senior managementexperience in supply, trading, energy publishing and price reporting for companies like Maxus, Tosco, Tomen& Ultramar, Mobil Asia and Argus. John retired in 2012 to engage in advisory, coaching and training.

Who Should Attend

Energy traders, corporate treasurers, finance directors keen to learn about hedging and risk management Relationship managers, corporate bankers and trade specialist who advise energy trading companies Professionals in middle and back office of banks and corporate, in functions such as credit, risk, audit

and operations, who are responsible for risk management of energy trades

Curriculum

Hedging in Contango Market Structure

Locking in forward premia Contango carry & space arbitrage Optimal hedging strategies Cost factors: the 4D’s and 5I’s

Paper vs. Physical Contracts for Oil

Counterparty risks OTC swaps & trade clearing Lesson in history: risk management limits Errors, misquotes & disputes Physical & paper pitfalls Risk breakdowns

Market on Close (MOC) Window

Real time trading, pricing & hedging Calculating MOPS values & strips Backwardation & supply squeezes Simulated MOC Window trade

Trends & Outlook

Use of technology to manage VULCA Structural changes & implications CTRM platforms and solutions Impacts of regulations & government oversight