International Business House

International Business House is the trusted global provider of business intelligence through conferences and training to the world’s leading OIL & GAS businesses.

 


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COURSE:TRADE FINANCE IN OIL & GAS

30 May — 1 June 2018 Geneva, Switzerland

PROGRAMME

 

Transactional Trade Finance for the Energy markets: The Basics

Description:   

To facilitate their energy trading activities, trading companies actively use all the Trade Finance techniques available in the marketplace today. In this case, Trade Finance refers to the process of financing a company’s activities related to cross border sale of goods. It includes activities such as issuing letters of credit, factoring, consignment, export credit and insurance or lending.
A Trade Finance transaction involves a host of companies, from importers and exporters, financial institutions, alternative financiers and lawyers, to insurers, authorities and other service providers. The main questions are: “How does trade work and how can it be financed?” or “How can you ensure that a transaction turns out to be beneficial for everyone involved?” and “What method of settling payment is best for a certain transaction?”

Learning of: 

In this segment of the course the participants will be going over the basics of Trade and cross border transactions, all to make sure we all speak the same language, the language of Trade Finance.

 

Trade Finance Products

Description: 

This part of the Trade Finance course is dedicated to having a closer look at the different Trade Finance products that are commonly used in the energy sector; understand what they are and when to use them. 

            a)    Supply Chain Finance
            b)    Open Account Sales
            c)    Consignment
            d)    Oil Inventory Finance
            e)    Oil import Finance
            f)     Receivables Finance
            g)    Energy Repos

Learning of:

Each Participant will learn how to decide which Trade Finance product supports a transaction most efficiently. 

In practice:  

in small groups on different case studies, Participants start to appreciate different Trade Finance products and gain understanding about which features of the products are essential for a successful trade transaction.

 

Trade Risk and Mitigation

Description:

Financial risks in cross border energy trade can be divided in different categories, such as, Economic Risks, Political Risk (confiscation, expropriation, nationalization and deprivation - CEND), Country Risk, Commercial Risks and Natural Risks.
The correct assessment of the financial risks involved in an international energy trade transaction plays an important role in deciding the modes of payment to be used for the settlement between buyer and seller. What is possible and necessary in one country may not always be the best solution to mitigate risk in another country.

Learning of:

In this segment of the Trade Finance Course, participants will learn to identify, quantify and understand the major risks involved in a cross border energy trade transaction.            

In practice:         

In groups of 3, Participants will actively examine a real physical trade transaction and decide whether the identified risks can be mitigated to such a level that the trade can be successfully executed and financed.

 

Commodity Trade Finance

Description:

Commodity Trade Finance is a practical form of financing cross border trade flows. It requires a different look at company financials than the traditional balance sheet analysis. In this mode of financing product expertise, market knowledge and trading capability are equally important and some times more important than size and strength of a balance sheet. Why is this view advantageous and how can it be used as a tool to close a cross border trade transaction in the global commodity markets? How can you tap into the right sources of funding, how do you as a trader adapt to the different way financiers look at the business.

Learning of:

In this respect Participants will have a chance to learn about                       

            a)    Transactional Secured Trade Finance
            b)    Insurance
            c)    Borrowing Base Finance
            d)    RCF

In practice:

In a role play Participants will take on the roles of traders, bankers and risk managers to discuss an international oil transaction, structure the trade and finance it using classical commodity trade finance techniques.

 

Structured Commodity Trade Finance

Description:

When speaking about Structured Commodity Trade Finance, banks, commodity producers, trading houses and alternative lenders refer to a set of financing techniques for commodity transactions where the main risk is performance risk. SCTF ensures that a producer has access to the working capital needed to produce commodities, while repayment is envisaged from exports. SCTF is an effective tool to mitigate risk, to enable entry of new markets and protect against supply shocks.

Learning of:

Delegates explore and mitigate risks in a transaction that is like a jigsaw puzzle where many of the different risks need different solutions.

In practice:

Deal or no deal: In small groups, course Participants will identify the risks involved in a specific energy transaction, develop a workable structure for mitigating these risks and debate arguments for convincing financial institutions to successfully finance their deals.

 

The Legal Aspects of Trade Finance

Description:

The legal aspects of Trade Finance have a huge role to play in cross border trade transactions. Not only is the underlying trade transaction important, but also it needs to tie in with the finance transactions.

Learning of:

In this part of the course we will look at

a)    Importance of Documentation
b)    Choice of Law
c)    Choice of Jurisdiction
d)    Arbitration

In practice:

Participants will have an insight look at some real legal and arbitration cases in the energy sector, discuss them and see whether a different choice would have led to a better or worse outcome.

 

Fraud, Money Laundering and Sanctions

Description:

With yearly global exports valued a more than USD15bn fraudulent practices have a significant adverse economic impact on world commerce. Understanding fraud, money laundering and recognising the signs of potential issues is a first step to preventing commercially damaging losses related to cross border trade transactions. Identify patterns and characteristics of commercial fraud and money laundering in trade transactions, get first hand information that shows how fraud can remain undetected and learn which questions to ask to avoid most issues

Learning of:

Sanctions against certain countries come and go. What is possible and what not, what needs to be taken into account and how to protect your business against claims?

In practice:

Participants will take part in solving a major fraud case, come up with solutions and ways to avoid fraud problems in their own business. By comparing these solutions with real fraud cases, we will develop techniques to avoid fraud problems in Participant’s own business.

 

Block Chain: the future of Trade Finance?

The world and global trade are changing constantly and ever faster. Trade finance needs to adapt to the global changes in order to stay relevant. Trade Finance Fintech companies are starting their business on a daily basis with the aim to disrupt the traditional trade finance business. Newly launched trade digitalisation solutions and block chain-enabled transformation in trade finance are in an experimental phase. Are these changes going to happen? How will this impact the world’s trade flows and the ways these trade flows are financed? Do banks need to be worried or can they remain a dominant force in a business that hasn’t changed much in decades.

 

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