oil and gas

1. Oil & Gas Industry
Introduction to the Upstream Sector

2. 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 9th, 2011

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

4. OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 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.

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

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

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

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

9. The Industry in Numbers: Reserves
By Company
By Country
Source: BP Statistical Review
Total > 2.7 Trillion Barrels of Oil Equivalent
OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011

10. The Industry in Numbers: Production
• 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 9th, 2011
By Source

11. • 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).
The Industry in Numbers: Production
OPEC Role
OIL & GAS INDUSTRY – INTRODUCTION TO UPSTREAM SECTOR November 9th, 2011

12. 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 9th, 2011

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