Profitability Analysis of Downstream Investment Projects


Who should attend?

  • This course provides a better understanding of the concepts underpinning the capital budgeting theory, helping improving the economic analysis of investment projects. A number of exercises and computer case studies will be treated all along the course to apply the theoretical principles that are presented, which makes the course a very practical one.
Public :
  • Staff involved in capital investment decisions. Project managers, engineers, commercial staff and support functions. Decision makers wishing to better understand analyses carried out by project teams.

Level :Skilled

Prerequisite :
  • Basic notions of technical and economics in refining, Microsoft Excel basic notions.

Course Content


      • Introduction.
      • Brief refresher on financial statements. Key performance ratios at company level.
      • Value creation and cost of capital (WACC). Gearing impact.
      • Discounting principles: time value of money, corporate discount rate.

      • Constructing a project’s cash flow schedule: profit and loss account vs. cash flows, dealing with taxes, working capital impact, and economic life.
      • Calculating and understating the key economic analysis criteria: Net Present Value (NPV), Internal Rate of Return (IRR), payback time, financial exposure, profitability index.
      • Considering monetary erosion: nominal and real term values concepts. Impact on projects’ profitability.
      • Economic cost/breakeven.
      • Working with several currencies.

      • Identifying risks and taking them into account in the economic analysis (Pestle analysis, risk premium).
      • Sensitivities (Tornado chart, Spider diagram), scenarios, decision trees.
  • GEARED CASH FLOW ANALYSIS - Duration : 0.5 Day

      • Project financing and equity profitability.
      • Participants will be asked to work on various exercises and case studies along the course such as:
      • Calculation of the ROCE and ROE of an Oil & Gas company.
      • Computation of the cost of capital of an Oil & Gas company.
      • Impact of working capital on a polypropylene plant project.
      • Isomerization vs. alkylation project.
      • Profitability of a hydrocracker project.
      • Sensitivity calculations for a refinery construction project.
      • Gas pipeline geared profitability.
      • The list of exercises and case studies above may be adapted by IFP Training at the time of the course to best suit the participants’ profile and learning objectives.

Learning Objectives

  • Upon completion of the course participants will be able to:
  • Develop a computer model for the economic evaluation of downstream projects,
  • Compute and analyze the key economic evaluation criteria (NPV, IRR…),
  • Include the risks and uncertainties of Downstream projects in their economic evaluation.

Ways & Means

  • Exercises and case studies on Microsoft Excel including.
  • Quiz.

Learning assessment

  • Participants will be evaluated during the training through exercises, case studies and quizzes.


Coordinator :In-house or contracted IFP Training trainers with expertise and experience in downstream investment projects’ economic evaluation.

To French entities : IFP Training is referenced to DataDock ; you may contact your OPCO about potential funding. Please contact our disabled persons referent to check the accessibility of this training program :