Considered to be the biggest sector in the world in terms of dollar value, the oil and gas industry is a global powerhouse employing hundreds of thousands of workers worldwide as well as generating hundreds of billions of dollars globally each year. In regions which house the major NOCs, these oil and gas companies are so vital they often contribute a significant amount towards national GDP.
In this introduction to oil and gas industry we provide a snapshot of the petroleum sector.
The oil and gas industry can be broken down into three key areas: Upstream, midstream and downstream.
The Upstream component is also refereed to as the E&P (exploration and exploration). This involves search for underwater and underground natural gas fields or crude oil fields and the drilling of exploration wells and drilling into established wells to recover oil and gas.
Downstream refers to the filtering of the raw materials obtained during the upstream phase. This means refining crude oil and purifying natural gas. The marketing and commercial distribution of these products to consumers and end users in a number of forms including: natural gas, diesel oil, petrol, gasoline, lubricants, kerosene, jet fuel, asphalt, heating oil, LPG (liquefied petroleum gas) as well as a number of other types of petrochemicals. Midstream is generally classified under the downstream category.
The largest volumes of products of the oil and gas industry are fuel oil and gasoline (petrol). Petroleum is the primary material for a multitude of chemical products, including pharmaceuticals, fertilizers, solvents and plastics. Petroleum is therefore integral to many industries, and is of critical importance to many nations as the foundation of their industries.
In recent years there has been a growing negative sentiment towards the oil and gas industry and “big energy”. Major environmental disasters such as the Deepwater Horizon Gulf Of Mexico Oil Spill have cast a negative spotlight up on the industry. The trend towards Renewable and Alternative energy is also another threat to traditional oil and gas companies. Coupled with the rise in pro-eco legislation and governmental pressure has meant the oil and gas industry is under more scrutiny than ever.
However the Oil and gas industry is still extraordinarily successful and still experiences massive growth. It’s estimated that 30 billions barrels are consumed globally each year – primarily by developed nations. Oil also accounts for a significant percentage of energy consumption regionally from 32% for Europe and Asia, 40% for North America, 41% for Africa, 44% for South and 53% for the Middle East.