Oil Gas Industry Introduction to the Upstream Sector

Oil & Gas Industry Introduction to the Upstream Sector

Agenda • Oil & Gas Industry Segmentation: upstream and downstream • Business Cycle • The Industry in Numbers: reserves, production, consumption • Useful sources of information OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9 th, 2011

Before we start… This is an informal discussion!!! Powerpoint is just to organize it OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9 th, 2011

Oil & Gas Industry Segmentation Upstream Refers to the searching for and the recovery and production of crude oil and natural gas. The upstream oil sector is also known as the exploration and production (E&P) sector. The upstream sector includes the searching for potential underground or underwater oil and gas fields, drilling of exploratory wells, and subsequently operating the wells that recover and bring the crude oil and/or raw natural gas to the surface. Downstream Refers to the refining of crude oil, and the selling and distribution of natural gas and products derived from crude oil. Such products include liquified petroleum gas (LPG), gasoline or petrol, jet fuel, diesel oil, etc. The downstream sector includes oil refineries, petrochemical plants, petroleum product distribution, retail outlets and natural gas distribution companies. OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9 th, 2011

Oil & Gas Industry Segmentation Upstream Sector OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9 th, 2011

Business Cycle Licensing -Negotiation with Governments / Individuals (US) - Different types of contracts: royalties, PSA, service contract, etc Prospect Exploration Production Drilling - Geological characteristics - Infrastructure setup. - Seismic evaluation -Uncertainty - Analysis of formations and hydrocarbon characteristics Downstream - Full scale project -Field optimization -Definition of drilling program and well profiles Onshore / Offshore OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9 th, 2011

Business Cycle – Actual Case: Exploration OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9 th, 2011

Business Cycle – Actual Case: Development (*) Floating, production, storage and offloading vessel OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9 th, 2011

The Industry in Numbers: Reserves By Country By Company Source: BP Statistical Review Total > 2. 7 Trillion Barrels of Oil Equivalent OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9 th, 2011

The Industry in Numbers: Production By Source • The three fossil fuels are converging on market shares of 26 -27%. Increasing importance of natural gas. OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9 th, 2011

The Industry in Numbers: Production OPEC Role • The importance of OPEC is expected to grow. As per BP’s projections, OPEC’s share of global production would increase from 40% in 2010 to 46% in 2030 (a level not reached since 1977). OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9 th, 2011

The Industry in Numbers: Consumption Global Consumption • Oil and Gas accounted for 33% and 23% of global energy consumption in 2010. OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9 th, 2011

Useful Sources of Information • BP’s Statistical Review and 2030 Energy Outlook http: //www. bp. com/sectionbodycopy. do? category. Id=7500&content. Id=7068481 • Schlumberger’s Oilfield Glossary http: //www. glossary. oilfield. slb. com/ • International Energy Agency http: //www. iea. org/ • Baker Hughes’ Rig. Count http: //investor. shareholder. com/bhi/rig_counts/rc_index. cfm OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9 th, 2011