Long Oil Trading Manual

A Comprehensive Guide to the Oil Markets
1. Auflage 1995
ISBN: 978-1-85573-852-2
Verlag: Elsevier Science & Techn.
Format: EPUB
Kopierschutz: 6 - ePub Watermark

E-Book, Englisch, 825 Seiten

The Oil Trading Manual (OTM) provides a unique and comprehensive reference source to the latest developments in the structure and conduct of the international oil markets including: - Physical characteristics and refining - Oil pricing arrangements - Physical oil markets - Forward and futures contracts - Options and swaps - Operations and logistics - Accounting and taxation - Controlling financial risk - Legal and regulatory controlOTM provides a unique and comprehensive reference source to the structure and conduct of the international oil markets. The manual covers all the major oil trading instruments and their applications; the trading centres, contracts, uses and users of both the physical and the terminal oil markets, and their administrative, management, tax, and accounting implications. It also includes vital information on changes to the international legal and regulatory structures. The manual is divided into three complementary parts; Characteristics An introduction to oil and oil trading, and includes material on the nature of oil as a commodity, refinery processes and the different ways in which oil is priced. Instruments and markets Deals with the oil market itself taking each segment in turn, explaining how the various trading instruments work and describing the markets that have evolved to trade them. It starts with the physical oil markets, moving on to forward and futures markets, followed by options and swaps. Administration Covers the essential 'back-room' activities without which oil trading could not continue. It includes practical material on operations and logistics, credit control, accounting, taxation, contracts and regulation, and controlling financial risk, providing a unique guide to the subject. Compiled from the contributions of a range of internationally respected professionals, it is the indispensable practical companion for all those involved with trading in this complex commodity. Revised and updated 2003

Autoren/Hrsg.

Long, David

Inhaltsverzeichnis

1;Front Cover;1
2;Oil Trading Manual;4
3;Copyright Page;5
4;Table of Contents;6
5;Contributors;12
6;Abbreviations;20
7;Introduction;24
8;Acknowledgements;26
9;Index;30
10;Part 1: Characteristics;56
10.1;Chapter 1. The trading of oil;56
10.1.1;1.1 Why oil is traded;58
10.1.2;1.2 Trading characteristics of oil;60
10.1.3;1.3 Structure of the oil market;70
10.2;Chapter 2. Physical characteristics and refining;78
10.2.1;2.1 Introduction;80
10.2.2;2.2 Uses of oil products;82
10.2.3;2.3 Pricing;86
10.2.4;2.4 Properties of oil products;90
10.2.5;2.5 Crude oils;98
10.2.6;2.6 Oil refining;104
10.2.7;2.7 Environmental factors;124
10.2.8;2.8 Measurement, sampling and testing;128
10.2.9;Appendix 2.1: Product properties;132
10.2.10;Appendix 2.2: Crude oil distillation yields;134
10.2.11;Appendix 2.3: Crude oil assay;136
10.2.12;Appendix 2.4: Simple refinery flow diagram;140
10.2.13;Appendix 2.5: Complex refinery flow diagram;142
10.2.14;Appendix 2.6: Further reading;144
10.3;Chapter 3. Oil pricing arrangements;146
10.3.1;3.1 Types of pricing mechanism;150
10.3.2;3.2 Fixed prices;154
10.3.3;3.3 Floating prices;162
10.3.4;3.4 Applying pricing mechanisms;168
10.3.5;3.5 Sources of price information;174
11;Part 2: Instruments and markets;186
11.1;Chapter 4. Crude oil markets;186
11.1.1;4.1 Introduction;188
11.1.2;4.2 North Sea;190
11.1.3;4.3 Mediterranean;202
11.1.4;4.4 West Africa;212
11.1.5;4.5 United States;218
11.1.6;4.6 Middle East;226
11.1.7;4.7 Asia Pacific;240
11.1.8;4.8 Latin America;250
11.1.9;Appendix 4.1: Official crude prices, 1993;262
11.1.10;Appendix 4.2: Formula crude prices, 1993;268
11.1.11;Appendix 4.3: Spot crude prices, 1993;274
11.1.12;Appendix 4.4: Further reading;280
11.2;Chapter 5. Product markets;284
11.2.1;5.1 Introduction;286
11.2.2;5.2 Europe;288
11.2.3;5.3 United States;304
11.2.4;5.4 Asia Pacific;324
11.2.5;Appendix 5.1: Spot product prices, 1993;344
11.2.6;Appendix 5.2: Further reading;350
11.3;Chapter 6. Futures and forward contracts;354
11.3.1;6.1 Introduction;356
11.3.2;6.2 What are futures and forward contracts?;358
11.3.3;6.3 The pricing of futures and forward contracts;364
11.3.4;6.4 How are futures and forward contracts used?;370
11.3.5;6.5 Conclusions;380
11.4;Chapter 7. Forward paper markets;384
11.4.1;7.1 Introduction;384
11.4.2;7.2 Structure and organisation;388
11.4.3;7.3 Europe;394
11.4.4;7.4 United States;404
11.4.5;7.5 Arab Gulf and Far East;410
11.4.6;7.6 Future developments;416
11.4.7;Appendix 7.1: Russian gasoil;418
11.4.8;Appendix 7.2: Littlebrook fuel oil;420
11.4.9;Appendix 7.3: Flexi-propane;422
11.4.10;Appendix 7.4: European O/S naphtha;424
11.4.11;Appendix 7.5 Fuel oil domestique;426
11.5;Chapter 8. Oil futures exchanges;430
11.5.1;8.1 Introduction;432
11.5.2;8.2 The oil futures exchanges;440
11.5.3;8.3 Delivery procedures;454
11.5.4;8.4 Options on oil futures;464
11.5.5;8.5 Clearing mechanisms;466
11.5.6;8.6 Future developments;468
11.6;Chapter 9. Optiions;474
11.6.1;9.1 Introduction;476
11.6.2;9.2 What is an option?;478
11.6.3;9.3 Using options;494
11.6.4;9.4 Pricing options;502
11.6.5;Appendix 9.1: Jet fuel option indication, price cap;516
11.6.6;Appendix 9.2: Jet fuel option indication, zero premium collar;518
11.7;Chapter 10. Swaps;522
11.7.1;10.1 Introduction;524
11.7.2;10.2 What is a swap?;526
11.7.3;10.3 Pricing swaps;540
11.7.4;10.4 Using swaps;550
11.7.5;10.5 Future developments;560
11.8;Chapter 11. Long dated oil markets;564
11.8.1;11.1 Introduction;566
11.8.2;11.2 Market participants;568
11.8.3;11.3 Market liquidity;574
11.8.4;11.4 Trading instruments;578
11.8.5;11.5 Pricing models;582
11.8.6;11.6 Contractual issues;590
11.8.7;11.7 Using long dated derivatives;592
11.8.8;11.8 Conclusions;608
11.8.9;Appendix 11.1: Sale of a swap;610
11.8.10;Appendix 11.2: Sale of a min-max swap;612
11.8.11;Appendix 11.3: Purchase of a floor swap;614
11.8.12;Appendix 11.4: Sale of a ceiling swap;616
11.8.13;Appendix 11.5: Collar;618
11.8.14;Appendix 11.6: Producer participation;620
12;Part 3: Administration;624
12.1;Chapter 12. Operations and logistics;624
12.1.1;12.1 Introduction;626
12.1.2;12.2 Scheduling;628
12.1.3;12.3 Bookouts;632
12.1.4;12.4 Nomination and documentation;640
12.1.5;12.5 Inspection;642
12.1.6;12.6 Demurrage;644
12.1.7;12.7 Shipping operations;646
12.1.8;12.8 Terminals, trans-shipment and storage;652
12.1.9;Appendix 12.1: Instruction to inspectors;658
12.1.10;Appendix 12.2 Sample Brent bookout telex;660
12.1.11;Appendix 12.3 Sample letter of indemnity;664
12.2;Chapter 13. Credit control;668
12.2.1;13.1 Why is credit control necessary?;670
12.2.2;13.2 Assessing credit risk;676
12.2.3;13.3 Limiting financial exposure;680
12.2.4;13.4 Methods of credit monitoring;686
12.2.5;Appendix 13.1: Costs of credit control;692
12.2.6;Appendix 13.2: Sample Letter of Credit for a CIF transaction;694
12.2.7;Appendix 13.3: Sample Letter of Credit for a FOB transaction;698
12.2.8;Appendix 13.4: Sample Letter of Indemnity;702
12.2.9;Appendix 13.5: Sample Letter of Intent;704
12.3;Chapter 14. Accounting;708
12.3.1;14.1 Introduction;710
12.3.2;14.2 Accounting guidance;712
12.3.3;14.3 General principles;714
12.3.4;14.4 Futures contracts;716
12.3.5;14.5 Forward contracts;730
12.3.6;14.6 Swaps;734
12.3.7;14.7 Options;742
12.3.8;14.8 Physical hedges;746
12.3.9;14.9 Disclosure requirements;750
12.3.10;14.10 Conclusions;756
12.4;Chapter 15. Taxation of oil trading;760
12.4.1;15.1 Introduction;762
12.4.2;15.2 United Kingdom;764
12.4.3;15.3 United States;774
12.4.4;15.4 Singapore;782
12.4.5;15.5 United Kingdom taxation of trading instruments;792
12.4.6;15.6 The UK PRT nomination scheme;798
12.4.7;Appendix 15.1: Articles from the OECD model tax treaty;802
12.5;Chapter 16. Contracts;808
12.5.1;16.1 Introduction;810
12.5.2;16.2 General;812
12.5.3;16.3 Express terms;818
12.5.4;16.4 Implied terms;864
12.5.5;16.5 Incorporated terms;870
12.5.6;Appendix 16.1: Sample FOB contract (1);876
12.5.7;Appendix 16.2: Sample FOB contract (2);880
12.5.8;Appendix 16.3: Sample CIF contract;886
12.6;Chapter 17. Legal and regulatory issues;890
12.6.1;17.1 Introduction;892
12.6.2;17.2 International;894
12.6.3;17.3 United States;916
12.6.4;17.4 United Kingdom;926
12.6.5;17.5 Singapore;936
12.6.6;Appendix 17.1: Comparison of the procedures and rules of arbitral institutions;938
12.7;Chapter 18. Controlling financial risk;946
12.7.1;Acknowledgements;947
12.7.2;18.1 Why risk control is important;948
12.7.3;18.2 Characteristics of the energy market;950
12.7.4;18.3 Valuation of trading positions;964
12.7.5;18.4 Determination of risk;982
12.7.6;18.5 Operations;996
12.7.7;18.6 Conclusions;1000

Leseproben

Contributors

David Long

David Long is a freelance consultant and writer specialising in the oil market. He writes two monthly newsletters commenting on trends in the oil market, Argus Fundamentals, published by Petroleum Argus Limited and the Monthly Oil Report, published by the Centre for Global Energy Studies (CGES) in London. He is also a regular contributor to the weekly Argus Global Markets and to the bimonthly CGES Global Oil Report. His interests include the development and application of new trading techniques in the oil industry and he has been involved in the preparation of training material on swaps and options and the development of computer software for analysing oil price behaviour.

David began his career with BP in 1977, where he worked in Corporate Planning and Supply Departments. He then spent two years on secondment at the Oxford Institute for Energy Studies, studying the development of forward paper markets in oil, before joining the Institute as a Research Fellow from 1986 to 1989. While at the Institute he took part in research on the oil export policies of the former Soviet Union, the development of the European refining industry, and the behaviour of prices in the physical, forward and futures markets for gasoil in Europe.

Julian Lee

Julian Lee is an oil analyst at the Centre for Global Energy Studies in London. The CGES is an independent energy research centre founded in 1990 by Sheikh Yamani, former oil minister of Saudi Arabia. Julian writes research articles on a wide variety of subjects for the CGES’ publications, and appears regularly on the radio and television. He is particularly interested in developments in the former Soviet Union and is the author of several reports on the subject.

Before joining the CGES in 1990, Julian worked for Zambia Consolidated Copper Mines, where he was involved in work to improve the operations of all areas of the company’s business from extracting ore to exporting refined copper. He has a first class honours degree in Mathematics from the University of Warwick and an MSc in Operational Research from the London School of Economics and Political Science.

Hugh Quick

Hugh Quick is an independent consultant on oil refining and supply. He previously worked for Shell from 1956 to 1987, mainly in the Netherlands and the Far East, where he gained extensive experience of refinery operations and all aspects of refining and supply economics, in particular the planning and development of major projects, the management of the interface between refining and marketing, and refinery performance evaluation.

Since leaving Shell, Hugh has worked as an independent consultant and his main activities have included the evaluation of refineries and sites for owners and potential investors, advice to lenders on major investment projects, and advice on the supply and refining aspects of insurance claims. He studied Chemistry at Oxford University and attended the Harvard Business School.

Catherine Jago (formerly Hamer)

Catherine is a freelance consultant specialising in oil markets and oil trading. She has lectured on oil trading techniques and pricing all over the world and has acted as an oil expert, working with many of the top London firms of solicitors and barristers. Her recent work also includes studies on a variety of oil industry projects for consultants Arthur D. Little, MRC Oxford, Energy Listener and ICIS-LOR.

Catherine has been involved in the international oil industry since 1982. She began her career with BP Oil International in their Trade and Supply Department, where she worked first on forecasting and economic analysis and subsequently on pricing and operations for BP’s Antwerp and Rotterdam refineries. She then moved to London Oil Reports (now part of the ICIS-LOR group) where she set up a new European Products report and also spent time in Houston studying the US crude and oil products markets. After this she joined Poten and Partners in London, working as a broker in the European and trans-Atlantic oil markets until 1989 when she became a freelance consultant.

Petroleum Argus

Petroleum Argus is one of the leading primary sources of price information on the oil market. Founded in 1970 as Europ-Oil Prices, Argus published the first ever daily crude market wire in 1979 and Argus price reports now cover all the major markets for crude and refined products and are widely used in the oil industry. Petroleum Argus also publishes a wide range of energy market newsletters, including Weekly Petroleum Argus, Argus Global Markets and Argus Fundamentals which explore the wider forces driving the oil market. The front page editorials in Weekly Petroleum Argus and Argus Global Markets have built up a reputation for clear and insightful analysis of industry issues, frequently challenging the conventional wisdom.

Argus was founded by Jan Nasmyth and is published by Adrian Rinks. Weekly Petroleum Argus is edited by Nick Black and Argus Global Markets is edited by Alan Kennington. The Argus contribution to the Oil Trading Manual was prepared by various members of staff, both past and present. The chapter on crude oil markets involved contributions from Isabella Kurek, Marie-Anne Gries, William Harwood, Daniel Massey, Alan McNee, Tim Mingee, Natasha Norton, Scott Nelson, David Pike, Mark Smedley and Emma Wenban-Smith.

Sally Clubley

Sally Clubley is an independent oil consultant specialising in price risk management in the energy industries. She is a faculty member of Invincible Energy, an international training and consultancy company, with whom she is involved in developing and presenting public courses and in-house seminars on all aspects of business risk in the oil, gas and electricity markets. She is the author of Trading in Oil Futures and Options.

David Knox

David Knox is a director of Nations Bank-CRT and is based at their London office. He is actively involved in the options market and specialises in developing new applications for OTC options and swaps.

Frédéric Barnaud

Frédéric Barnaud was responsible for risk management and derivatives research and development for Elf Trading SA in Geneva from 1992 to 1994. He previously spent fifteen months on secondment to the Oxford Institute for Energy Studies, where he conducted research on oil economics, and to the London University City Business School, where he studied financial and commodity markets.

Frédéric qualified as an Ingénieur at the École Nationale des Ponts et Chaussées, Paris where he specialised in civil engineering, applied mathematics and finance.

Philippe Lautard

Philippe Lautard is in charge of energy derivatives marketing for Elf Trading SA in Geneva and deputy manager of Elf Trading’s Hedging and Derivatives Department. He joined Elf Trading in 1988 as a futures and options trader and helped to start up Elf Trading’s OTC activities.

Philippe graduated in Civil Engineering from the École Nationale des Ponts et Chaussées, Paris and Oil Economics from the Institut Français des Pétroles.

Robin Burley

Robin Burley is the founder of Kennet Oil Logistics, an independent consultancy engaged in advising companies on operational procedures and strategy.

Robin has extensive experience of the oil industry, including ten years with British Petroleum and ten years with Gulf Oil. During this time he held various management posts with repon- sibilities for supply economics, oil production joint ventures, supply, trading and operations, ship management, chartering and fleet planning, and logistics, storage and trans-shipment. He has worked abroad in Europe, the US and the Middle East, and has been involved in negotiating supply and logistics arrangements worldwide.

Hanif Barma

Hanif Barma is a Director at PricewaterhouseCoopers in their Global Energy and Mining practice. Hanif’s clients have included many upstream and downstream oil companies, and his work has encompassed their oil trading activities. His work has included audit work, client training and advising clients on a range of due diligence, acquisition and privatisation assignments. Hanif is also responsible for energy industry training at PricewaterhouseCoopers.

Hanif joined Price Waterhouse in 1983 and has specialised in accounting aspects of the oil and gas industry since 1986. Hanif was educated at the City University, London and graduated with First Class Honours in 1983. He qualified as Chartered Accountant in 1986.

Rachel Leigh

Rachel Leigh is a senior manager in the Market Risk business advisory service within the PricewaterhouseCoopers Banking and Capital Markets group. She is closely involved with the capital markets division of the group and has specialised knowledge of derivatives and financial instrument accounting. This knowledge has been applied actively to energy and commodities clients’ trading portfolios for a number of years.

Rachel joined PricewaterhouseCoopers in 1993 and has specialised in the capital markets division from that date. Rachel studied geography at Bristol University and graduated in 1993. She qualified as a Chartered Accountant in 1996.

Matthew Price

Matthew Price is a manager in the PricewaterhouseCoopers Banking and Capital Markets group. He is closely involved with the capital markets division of the group and has...