Foundations of Energy Risk Management E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Finance Editions
• Sprache: Englisch

Seitenzahl: 163

Veröffentlichungsjahr: 2008

Beschreibung

GARP's Fundamentals of Energy Risk Management introduces investors to the basic components and some of the basic terminology used in the energy industry. It covers the commodity cycle, energy use and sources, and various risk types, various energy products and the markets where energy is traded. It also introduces certain risk management fundamentals and real option thinking. The book is GARP's required text used by risk professionals looking to obtain their Certificate in Energy Risk Management.

Leseprobe

Table of Contents

Title Page

Copyright Page

Introduction

CERTIFICATE IN ENERGY RISK MANAGEMENT

GARP’S FOUNDATIONS OF ENERGY RISK MANAGEMENT COURSE SPECIFICATION

SYLLABUS AND LEARNING OUTCOMES

USER GUIDE

CHAPTER ONE

1.1 Introduction

1.2 Exploration

1.3 Production or Extraction

1.4 Processing

1.5 Transportation and Storage

1.6 Refining

1.7 Distribution

1.8 Integrated and Specialty Companies

CHAPTER TWO

2.1 Overview

2.2 Market Risk

2.3 Credit Risk

2.4 Operational Risks

2.5 Liquidity Risk

2.6 Political or Regulatory Risk

2.7 Price Risk and Credit Risk

2.8 Integrated vs. Specialty Companies

2.9 Common Risk Management Tools

2.10 Volatility and Energy Risk Management

CHAPTER THREE

3.1 Overview

3.2 Energy Intensity

3.3 Energy Consumption by End-Use Sector

CHAPTER FOUR

4.1 Overview

4.2 World Crude Oil

4.3 World Natural Gas

4.4 World LNG

4.5 Coal

4.6 Power / Electricity

CHAPTER FIVE

5.1 Introduction

5.2 The Physical Markets

5.3 The Financial Markets

5.4 The Relationship between the Physical and Financial Prices

5.5 Emission Trading

CHAPTER SIX

GLOSSARY

INDEX

Acknowledgements

Creating a culture of risk awareness.™

Copyright © 2009 by Global Association of Risk Professionals.

All rights reserved.

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eISBN : 978-0-470-44782-6

INTRODUCTION

In 2006, daily global energy use exceeded 212 million barrels of oil, an increase of 6 million barrels per day compared to 2004. Energy demand is projected to remain very strong well into the future.

During the period from 2008 to 2030 energy demand is projected to reach 702 QBtus (Quadrillion British Thermal Unit1), a 1.8 percent average annual growth rate, based on global economic growth averaging 4.1 percent per year over the same period.2

While growth estimates will differ depending on who is making the forecast and the assumptions used, there is unanimous agreement that energy usage will increase dramatically over the coming years. Large-scale investments will be required, and the use of technology will be vital to meet future energy demands.

One result of this growing energy demand is an increasing interdependence among countries driven by their demand for energy. For example, Russia is now a major global supplier of natural gas. Yet until fairly recently, if there had been a disruption in its natural gas supplies, only Russian consumers would have been affected because trading was restricted to within its own borders. However, Russia is now a super-regional supplier of natural gas. Its recently built pipeline allows it to export gas to several European countries, and as a result there is a growing dependence on Russian gas supplies well beyond its borders. While a disruption in Russian natural gas supplies a few years ago would have had only a “local” impact, today it would be felt throughout a large part of Europe.

In the mid to longer term, developing countries such as China and India are expected to drive enormous increases in energy demand and consumption. Demand for energy in non-OECD3 (Organization for Economic Cooperation and Development) countries is expected to increase an average of 3 percent through 2030, compared with an estimated 1 percent in industrialized countries.

Oil price increases have also had a direct effect both on the demand and production of natural gas and coal. Worldwide natural gas demand is expected to increase by an average of 2 percent per year through 2030, with natural gas consumption rising to 163 trillion cubic feet per year in 2030 from 105 trillion cubic feet in 2006.4

Power consumption is expected to more than double by 2030 to 30,364 billion kilowatt hours from 16,424 billion kilowatt hours in 2004. Again, non-OECD countries are expected to drive that growth, averaging 3.9 percent per year.5

Although these expectations are estimates, based on a number of varied underlying assumptions, it is clear that the ongoing development of global energy resources will be a key factor in meeting global growth demands. The energy industry is global, rapidly expanding and becoming increasingly interdependent. Energy use is behind virtually everything a person does or touches. In developed countries, the increase in energy consumption indicates a reliance on energy and its related products for continued economic growth and development. At the same time, developing countries are reliant on the development of energy resources to drive their growth.

A global energy trading marketplace has also developed along with the growing worldwide demand for energy. Exchanges around the world are adding new energy trading products at a record pace. Many of these newly launched products help energy companies to offset various risks with each other. Individual energy firms are expanding their energy trading and risk management activities not only to help ensure continued and uninterrupted supplies of energy products for their consumers, but also to protect against economic shocks and political unease in some parts of the world.

Historically, there has been minimal interaction between energy commodities, physically or geographically. While it is natural to consider that the production of oil or natural gas would include certain common business processes, ranging from extracting the commodity from the ground to distributing it to the ultimate customer, the relationships between the various energy products as they moved downstream6 were not necessarily linked. That has changed with the advent of the Internet, which increased price availability and transparency. Instantaneous global communication, and the ever-increasing demand for energy also contributed to the development of the global commodity trading marketplace.

Because of these changes, a common trading and marketing language to facilitate transactions around the world has become necessary. This requires a comprehensive understanding of the upstream and downstream segments of the industry, the individual energy commodities that make up the energy industry, how they relate to each other and how the industry’s participants operate.

In addition, increasingly active shareholders of energy companies are driving the need to focus more stringently on asset valuations, cash flows, earnings measurements and sound control environments to maximize shareholder value.

GARP’s Fundamentals in Energy Risk Management is an integral part of GARP’s Certificate in Energy Risk Management program. This program was developed in response to the needs of the expanding, and increasingly interdependent, global energy marketplace.

CERTIFICATE IN ENERGY RISK MANAGEMENT

The ability to meet rapidly expanding global energy needs and more vocal shareholder demands will increasingly depend on quality decision making from properly trained employees of energy companies. GARP’s Certificate in Energy Risk Management is designed to provide these employees—candidates—with a practical understanding of the energy industry and the risks associated with its various products to create a culture of risk awareness among all employees within an energy organization.