Oil & Gas Industry Supply Chain Analysis

This assignment delves into the complexities of the oil and gas industry supply chain. It examines the division of the industry into upstream, midstream, and downstream sectors, highlighting the roles of companies like NOCs, IOCs, and governmental enterprises. The analysis aims to understand how petroleum products reach end users through different stages of the supply chain.

Understanding Oil and Gas
Spring 2017

Table of Contents
INTRODUCTION...........................................................................................................................1
1. BRIEF HISTORY AND STRUCTURE OF OIL AND GAS INDUSTRY................................1
2. DIFFERENTIATE BETWEEN THE SUPPLY CHAIN OF PETROLEUM PRODUCTS AND
NATURAL GAS.............................................................................................................................3
3. CHARACTERISTICS OF NATIONAL OIL COMPANIES, INTERNATIONAL OIL
COMPANIES AND GOVERNMENT SPONSORED ENTERPRISES........................................3
CONCLUSION ..............................................................................................................................4
REFERENCES ...............................................................................................................................5

INTRODUCTION
The current status of petroleum industry is not a recent origin but petroleum undertakes a
key component of politics, society and technology has its roots in 20th century. Oil and gas
industry in Ukraine possess long history and thus it identifies the different petroleum products
such as crude oil, gaseous fuels, liquid fuels, lubricants and paraffin wax, petroleum coke and
petrochemicals etc (Doukas and et.al., 2010). Report also discusses about the main differences
that has been identified from supply chain for petroleum products from that for natural gas.
There are different companies involves in oil and gas industry such as National Oil Company,
International Oil Company and Government Sponsored Enterprises and assess their
characteristics in order to obtain desired results.
1. BRIEF HISTORY AND STRUCTURE OF OIL AND GAS INDUSTRY
In the past 19th century it was the period of great change and rapid industrialization.
Through introduction of iron and steel industry it helps in providing new construction materials,
railroads which are connected with the country helps in discovering of oil products which are
considered as the new source of fuel. It also helps in attaining huge growth in the oil industry and
therefore, companies providing such fuel became the dominant fuel of the 20th century and an
integral part of American economy (Ekins, 2002). Also, petroleum is considered as an unrefined
state which has been utilized through human being for over 5000 years. Oil is considered as the
main element and thus could be used since early history petroleum industry involves the global
processes of exploration, extraction, refinery and transportation as well as marketing of products.
This, industry is generally divided into three different parts i.e. upstream, downstream and
midstream. However, midstream operations are usually included within the downstream category
(Elbanna and Gherib, 2012).
Petroleum is considered as the crucial industry and thus its significance for the
maintenance of industrial civilization helps in improving the oil and petroleum products in
market. There are several governments which provides heavy public subsidy to petroleum
companies and thus breaks the virtual stages of oil extraction and thus involves all the costs of
oil field leases and drilling tools (Feenstra, 2002). The industry structure of oil and gas is divided
into three different sectors i.e. upstream, midstream and downstream. Within upstream it consists
that oil companies are required to be classified as the sales to be supermajors i.e. BP, Chevron,
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ExxonMobil, Shell etc. In the current time, National Oil Companies are opposed to International
Oil Companies and thus they control the rights over the largest oil reserves through measuring
the top listed oil and gas companies within NOC. However, most of the upstream work in the oil
field or oil well considers that drilling contractors and oil field service companies are required to
enhance the international companies and possess high market share (Howari, 2004).
Further, midstream operations are considered as effective and thus sometimes classified
within the downstream sector. However, all such operations are required to compose a separate
sector within petroleum industry. There are different midstream operations and processes that are
as follows-
 Gathering- Within such process it helps in employing narrow, low pressure pipelines to
be connected with oil and gas producing wells so that proper facilities are being provided.
 Processing/refining- Further, processes and refining operations are required to turn crude
oil and gas into marketable products. While, in case of crude oil such products involves
heating oil and gasoline so that better services could be provided (Humphries, 2010).
 Transportation- Oil and gas are being transported to processing facilities and then it could
be used by consumers. In this it involves different modes such as pipeline, tanker, truck
and rail.
 Storage- Here, midstream service providers focuses upon storage facilities at terminals so
that oil and gas could be distributed in an effective way (Ihantola and Kihn, 2011).
 Technological applications- Midstream service providers helps in applying technological
solutions in regard to improve efficiency during midstream processes. Also, technology is
being used in regard to compressing the fuels and carry out easy flow through pipeline in
regard to detect the pipelines and thus use appropriate equipment in regard to monitor the
same (Inkpen and Moffett, 2011).
While, the downstream sector commonly refers to the refining of petroleum crude oil and
thus process and purify the raw materials of natural gas. It could be reached through involves
different sectors and could be easily reached to consumers with the help of products such as
gasoline, kerosene, jet fuel, diesel oil and fuel oil and natural gas (Kasai and et al., 2002).
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2. DIFFERENTIATE BETWEEN THE SUPPLY CHAIN OF PETROLEUM
PRODUCTS AND NATURAL GAS
It can be assessed that differences have been identified within the upstream and
downstream of supply chain of petroleum products and natural gas in regard to deliver the same
to end users. There are different ways through which petroleum products are delivered to
consumers using, rail, tankers, trucks etc. while natural gas is being delivered to end users
through pipelines (Oil and Gas Pollution. 2014). The oil and gas supply chain involves upstream
companies and identify the oil and natural gas deposits and involve in the extraction of these
resources from underground. However, such firms are often termed as exploration and
production companies. While, supply chain of natural gas are totally different and thus it affects
the operations of firm in market. There are varied large upstream operators and thus it is being
diversified within oil and gas firms such as Exxon Mobil. While, carrying out supply chain
through midstream operations helps in linking the same through involving resource
transportation and storage such as using pipeline, other gathering systems (Oil and Gas
Production Phase Impacts. 2014).
Further, the supply chain of oil and natural gas could be assessed as complicated and
sometimes it involves different products or services. There are different supply chain models
created for both oil and natural gas in regard to communicate the information in simple terms.
The supply chain system involves different steps such as development, production and
distribution that helps in consumption of natural energy. Thus, there are varied differences within
petroleum products and oil and gas (Doukas and et.al., 2010). Upstream and downstream supply
chain involves petroleum products and natural gas which is different and therefore, it is essential
for firm to extract natural gas from deposits and explore oil and gas so that services and products
could be delivered directly to consumers. Midstream operations majorly involves resource
transportation and storage such as pipelines and collecting systems.
3. CHARACTERISTICS OF NATIONAL OIL COMPANIES,
INTERNATIONAL OIL COMPANIES AND GOVERNMENT
SPONSORED ENTERPRISES
Here, it provides the role and characteristics of oil and gas companies, that helps in
increasingly come into flavours. It also helps in surveying different types of oil and gas
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companies and thus involves national oil companies, international oil companies and government
sponsored enterprises (Ekins, 2002). Due to continuous rise of NOC it helps in increasing the oil
prices and thus need to maintain balance between world's hydrocarbon resources and technical
services directly within oil field market. Another characteristics of NOC is that it is traditionally
viewed as custodians of their country's natural resources while IOC are inviting firms to make
joint ventures or partnership with them and thus increases competition in market. They seek
international upstream and downstream acquisition and asset targets. Majorly all the oil
companies possess similar characteristics of delivering oil and gas products to consumers. The
only difference that lies is in their prices and thus it creates problems that need to be directed
towards developing a solution so that issues could be overcome (Elbanna and Gherib, 2012).
There are different characteristics found within IOC, NOC and Governmental bodies so
that it helps in evaluating the differences related to environmental friendly methods so that safe
environment could be created. Also, price need to be maintained in regard to improve the
operations of firm and thus maintain oil prices so that government need to ensure that both public
and private partnership and tus maximize the industry efficiency (Feenstra, 2002).
CONCLUSION
It can be concluded from the report that supply chain of petroleum products and natural
gas are different in nature and thus it could be assessed that it is being divided into upstream,
midstream and downstream. Thus, oil and gas companies are extracting oil and gas products and
thus delivering the same to end users. Further, there are different companies such as NOC, IOC
and Governmental Sponsored Enterprises that possess different characteristics so that best
outcomes could be attained. Through identifying the petroleum products it helps in evaluating
the supply chain structure and thus assess the way through which products could be reached to
end users.
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REFERENCES
Books and Journals
Doukas, H. and et.al., 2010. Web tool for the quantification of oil and gas corridors' socio-
economic risks: The case of Greece. International Journal of Energy Sector Management.
4 (2). pp.213 – 235.
Ekins, P., 2002. Economic Growth and Environmental Sustainability: The Prospects for Green
Growth. Routledge.
Elbanna, S. and Gherib, J., 2012. Miller's environmental uncertainty scale: an extension to the
Arab world. International Journal of Commerce and Management. 22 (1). pp.7 – 25.
Feenstra, G., 2002. Creating Space for Sustainable Food Systems: Lessons from the Field.
Agriculture and Human Values. 19(2). pp. 99–106
Howari, M. F. 2004. Investigation of Hydrocarbon Pollution in the Vicinity of United Arab
Emirates Coasts Using Visible and near Infrared Remote Sensing Data. Journal of Coastal
Research. 20(4). pp.1089-1095.
Humphries, M., 2010. U. S. Offshore Oil and Gas Resources: Prospects and Processes. DIANE
Publishing.
Ihantola, E. and Kihn, L., 2011. Threats to validity and reliability in mixed methods accounting
research. Qualitative Research in Accounting & Management. 8(1). pp.39–58.
Inkpen, A. C. and Moffett, M. H., 2011. The Global Oil & Gas Industry: Management, Strategy
& Finance. PennWell Books.
Kasai, Y. and et al., 2002. Predominant Growth of Alcanivorax Strains in Oil-contaminated and
Nutrient-supplemented Sea Water. Environmental Microbiology. 4(3). pp.141-47.
Online
Oil and Gas Pollution. 2014. [Online]. Available through: <
http://www.earthworksaction.org/issues/detail/oil_and_gas_pollution#.U_WVIaObeAc >
[Accessed on 21st April 2017].
Oil and Gas Production Phase Impacts. 2014. [Online]. Available through: <
http://teeic.indianaffairs.gov/er/oilgas/impact/prod/index.htm > [Accessed on 21st April
2017].
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