Oil Is Here To Stay, But At What Price? Don’t Ditch Hedging!

A collateral consequence of the invasion of Ukraine has been an undeniable demonstration that the world is not yet in a position to abandon fossil fuels. With one face governments are encouraging the oil industry to produce more oil and gas; with the other face they are banging the drum, albeit with increasingly muffled drumsticks, for a zero-carbon future. Why should companies and financial institutions continue to invest in an industry, which is likely to experience falling prices and hostile policy in the future? Investors would be well advised to ensure that any new investment and loan financing is analysed thoroughly and hedged appropriately. Consilience explains its web-based software package that can calculate the right amount of hedging that has to be undertaken to protect the retained revenue stream and underwrite loan financing for oil projects. It calculates the consequences if the state’s official selling price (OSP) diverges from the joint venture partners’ actual sales price. It determines the scaling factor that has to be applied to forecast production when there is unequal tax treatment of physical sales and hedge gains and losses, by adjusting the volume of hedging that has to be undertaken.


Liz Bossley is the CEO of Consilience, which she established in 1999. Liz has a 40-year career in international energy markets, spanning trading, risk management, marketing and extensive experience of contract negotiations. After graduation in 1978 she worked for 7 years as a trader for the British National Oil Corporation negotiating and implementing industry Participation Agreements and trading North Sea oil during the formative years of the forward and futures markets. She was head of trading, risk management and shipping offtake operations for Enterprise Oil plc for 14 years trading North Sea, Mediterranean, Indonesian, Gulf of Mexico and Brazilian oil and implementing risk management strategies using the full range of financial instruments available in the market. For further details, please follow the link.

Tuesday, 04 October 2022

16:00 - 16:45 BST


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    Professor Michael Mainelli
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