PETROLEUM INDUSTRY STRUCTURE

Prof. Dr. H.Z. Harraz Presentation
PETROLEUM INDUSTRY STRUCTURE
Hassan Z. Harraz
hharraz2006@yahoo.com
2015- 2016
This material is intended for use in lectures, presentations and as
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Please see hharraz2006@yahoo.com for contact details.

Lectures # 2 & 3
PETROLEUM INDUSTRY
STRUCTURE
© Hassan Harraz 2016

Outline of Lecture
1) INTRODUCTION
1.1) The Oil and Natural Gas Value Chain
2) PETROLEUM INDUSTRY STRUCTURE
3) THE AMERICAN PETROLEUM INSTITUTE CLASSIFICATION OF THE PETROLEUM INDUSTRY
3.1) UPSTREAM OIL AND GAS SECTOR
3.1.1) Business Cycle of Upstream
3.1.2) Components of the Upstream Sector
3.1.3) Upstream Oil Company Targets
3.2) MIDSTREAM SECTOR
3.3) DOWNSTREAM PROCESS AND SECTOR
3.3.1) Distribution of Refined Products
 PETROLEUM REFINING:
Distillation of Crude Oil.
4) PETROLEUM COMPANIES TYPES
4.1) International Oil Companies (IOCs)
4.2) Nation Oil Companies (NOCs)
4.3) Operator Companies (or Exploration and Production (E &P) Companies)
4.3.1) Types of exploration and production companies:
4.4) Service Petroleum Companies
4.4.1) Types of service companies:
5) MAIN PETROLEUM COMPANIES PARTICIPANTS IN THE INTERNATIONAL OIL MARKET
6) SEVEN SISTERS (or ANGLO-SAXON)
6.1) Composition and history
6.2) "New Seven Sisters"
© Hassan Harraz 2016 3

Exploration
Production
Refining
Marketing
 This unit is on the Focus of Industry
 How many – by show of hands - have had some interaction with an oil company –
internship, research funded by, etc.
 Industry’s scope runs from finding oil and gas reservoirs to getting refined products to
our customers

1) INTRODUCTION
 The petroleum industry is quite complicated.
 Part of what makes it so complicated is the fact that most of
the world’s oil supplies are control by state agencies and not
by private corporations.
 In fact, well over half of total world oil reserves are controlled
by state agencies in the Middle East.
 The somewhat complicated and intertwined operations of
these major industry players can make it difficult to
understand why the industry works as it does.

1.1) The Oil and Natural Gas Value Chain
1) Exploration
 Seismic Exploration
 Seismic exploration locates hydrocarbons on land or under the sea
 Seismic waves reflect off rock formations and travel back to hydrophone
receivers.
 Geologists then estimate the structure and types of formations under land by
measuring travel times of the returned energy.
 This tells them where to drill.
2) Preparing the Drill
 Preparing to drill requires:
 Clearing the land and building access roads.
 Have a source of water nearby, or drill a water well.
 Digging a reserve pit for rock and mud that comes up in the drilling process.
3) Drilling:
 Drill to receive the resources
 Drill the surface hole, and after reaching the pre-set depth, cement the casing so it does
not collapse.
 Drilling continues in stages: They drill, then run and cement new casings, then drill
again.
 Run tests to make sure they are at the right depth.
4) Extracting the Oil:
 Remove the drill, and place a pump on the well head. The pump system forces the
pump up and down, creating a suction that draws oil up through the well.
 If the oil is too heavy a second hole is drilled where steam pressure is injected.
 Heat from the steam thins the oil, and the pressure pushes it up the well.
5) Production
 Gas and oil are gathered and transported, through pipelines or ships, to processing
facilities.
 Gasoline and natural gas are used as fuel in the transportation sector.
 Oil can be stored in specially built tanks before being processed into products or
exported.
 Oil and gas can be used as fuel in the generation of electrical power.
 Oil and gas are exported either as refined products or crude oil in specialized tankers.
6) Transport:
 The oil and gas are then transported, either by ship or pipeline, to processing facilities.
Facilities remove impurities and convert oil and gas to refined products and
petrochemicals we use daily.
7) Market- at the gas pump

2) PETROLEUM INDUSTRY STRUCTURE
I) Broad Oil Segments
1) Crude oil exploration and production
segments;
2) Refining segments, and
3) Product distribution and sales segments.
II) The American Petroleum Institute divides
the petroleum industry into five sectors:
1) Upstream sectors (exploration, development
and production of crude oil or natural gas);
2) Midstream sectors;
3) Downstream sectors (oil tankers, refiners,
retailers and consumers);
4) Pipeline sectors; and
5) Service and supply sectors
III) The oil industry can be subdivided into
four major company types:
1) National Oil Companies (NOCs) and
2) International Oil Companies (IOCs).
3) Operator Companies (or Exploration and
Production (E &P) Companies); and
4) Service Companies
IV) main categories of participants in the
international oil market
1) National Oil Companies (NOCs);
2) International Oil Majors Companies (IOCs)
and Their Trading Arms;
3) Independent Oil Trading Companies;
4) Financial houses and non industry
speculators
V) Oil companies used to be classified by sales as:
1) Supermajors Companies (BP, Chevron,
ExxonMobil, ConocoPhillips, Shell, Eni and
Total S.A.),
2) Majors Companies, and
3) Independents (or Jobbers) Companies
The petroleum industry can be divided by five ways, as following:

PETROLEUM
INDUSTRY
STRUCTURE
1) Crude oil exploration and
production segment;
2) Refining segments;
3) Product distribution and
sales segments
1) National Oil Companies
(NOCs);
2) International Oil Majors
Companies (IOCs) and
Their Trading Arms;
3) Independent Oil Trading
Companies;
4) Financial houses and
non industry
speculators
1) National Oil
Companies (NOCs);
2) International Oil
Companies (IOCs);
3) Operator (E & P)
Companies;
4) Service Companies
1) Supermajors Oil
Companies ;
2) Majors Oil
Companies;
3) Independents (or
Jobbers) Oil
Companies
1) Upstream sector;
2) Midstream sector;
3) Downstream sector;
4) Pipeline sector;
5) Service and supply
sector

The American Petroleum Institute divides the petroleum industry into five sectors:
3.1) Upstream sector(exploration, development and production of crude oil or natural gas);
3.2) Midstream sector
3.3) Downstream (oil tankers, refiners, retailers and consumers);
3.4) Pipeline sector; and
3.5) Service and supply sector
3) THE AMERICAN PETROLEUM INSTITUTE CLASSIFICATION OF THE
PETROLEUM INDUSTRY

 Crude oil exploration and production is commonly referred to as the
“Upstream”.
 Refining and product sales are generally referred to as the “Downstream”.
 As the industry is globalizing new major companies are being formed,
particularly in Russia, China, India and Brazil.
 These companies are exhibiting global ambition both in the upstream and
downstream.

3.1) UPSTREAM OIL AND GAS SECTOR
 The upstream oil sector is also known as the
exploration and production (E&P) sector.
 E&P sector: collecting data and drilling wells
 Refers to the searching for and the recovery and
production of crude oil and natural gas.
 Upstream covers everything to getting raw
material to a refinery.
 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.
 The upstream can be further subdivided into 3
main parts: EXPLORATION, DEVELOPMENT
and PRODUCTION.

 Most upstream work in the oil field or on an oil well is contracted out to drilling
contractors and oil field service companies.
 In recent years however, National Oil Companies (NOC), as opposed to International
Oil Companies (IOC) have come to control the rights over the largest oil reserves; by
this measure the top ten companies all are NOC.
 Aside from the NOCs which dominate the upstream sector, there are many IOC that
have a market share.
 For example:
 BG Group
 BHP Billiton
 ConocoPhillips
 Chevron
 Eni
 ExxonMobil
 Hess Ltd
 Marathon Oil
 Total
 Tullow Oil

3.1.1) Business Cycle of Upstream
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
 Geological
Model …(+See
Prospect
evaluation
section in
Lecture #1)
 Infrastructure
set-up .
 Uncertainty
 Analysis of
formations and
hydrocarbon
characteristics
Onshore / Offshore
 Full scale project
Field optimization
Definition of drilling
program and well
profiles
Upstream

3.1.2) Components of the Upstream Sector
 The upstream can be further subdivided into 3 main parts
a) EXPLORATION: One part is focused on finding oil & gas ‘pools’.
 which regions and basins?
 which blocks?
 where on the block?
b) DEVELOPMENT: The second part is focused on how to get oil & gas out
of what has been discovered.
How to Get It Out
 where, in detail, are the reserves?
 what to build (facilities)?
 will it be profitable?
c) PRODUCTION: The mission of the third part is to get the most out of the
ground and to the refinery
From the Ground, to the Refinery
 how to manage the field?
 how to deliver the ‘crude’?

3. 1.3) Upstream Oil Company Targets
 To maintain a healthy petroleum company, one would want to:
 Replace production (what you take out of the ground) with new reserves:
Exploration Finds  Volumes Produced
 Keep finding costs below $1 per barrel
 Exploration Costs
 New Barrels
< $1/barrel
 Oil companies, and each of their departments, establish certain targets
 For example, these might be some targets within an exploration group/company:
 To replace production with new reserves on a yearly basis – like a bank
account where to be financially healthy you want deposits > withdrawals
 To keep the finding costs below a target, such as $1/barrel – sum of all
exploration costs divided by total number of discovered barrels on a
yearly basis
 Development and Production departments would have similar targets.

3.1.4) We Need to Drill Wisely
 We always need to drill wisely.
 Wells can be very expensive, some > $200 million, a lot even for a major oil company.
Such as ExxonMobil or Shell.
 Well placement and well path can be critical to success.
 We want to place each well in the best possible location - we can’t afford to trust in
‘dumb luck’.
 Many times the oil & gas occur at several depth levels. We are not limited to drilling
straight holes.
 So we also need to carefully design the well path so that we can tap into several ‘pools’
in the best possible locations.
 Much of the technical work done in the upstream is directed towards determining where
to drill and predicting what we will find BEFORE we start drilling.
How can we determine where to drill and predict what we will find BEFORE we start
drilling?
This leads to the need for geologists, geophysicists, and other specialists focused on
imaging and interpreting the subsurface
 This leads to the need for all types of scientists and engineers working in the
Upstream.
 Their goal is to image and interpret the subsurface so we can maximize oil & gas
production while minimizing costs.

3.2) MIDSTREAM SECTOR
 Midstream operations are sometimes classified within the downstream
sector, but these operations compose a separate and discrete sector of the
petroleum industry.
 Midstream operations and processes include the following:
a) Gathering: The gathering process employs narrow, low-pressure
pipelines to connect oil- and gas-producing wells to larger, long-haul
pipelines or processing facilities.
b)Transportation: Oil and gas are transported to processing facilities,
and from there to end users, by pipeline, tanker/barge, truck, and rail.
Pipelines are the most economical transportation method and are most
suited to movement across longer distances, for example, across
continents. Tankers and barges are also employed for long-distance,
often international transport. Rail and truck can also be used for longer
distances but are most cost-effective for shorter routes.
c) Storage: Midstream service providers provide storage facilities at
terminals throughout the oil and gas distribution systems. These
facilities are most often located near refining and processing facilities
and are connected to pipeline systems to facilitate shipment when
product demand must be met. While petroleum products are held in
storage tanks, natural gas tends to be stored in underground facilities,
such as salt dome caverns and depleted reservoirs.

3.2) MIDSTREAM SECTOR (cont.)
d) Technological applications: Midstream service
providers apply technological solutions to improve
efficiency during midstream processes. Technology
can be used during compression of fuels to ease flow
through pipelines; to better detect leaks in pipelines;
and to automate communications for better pipeline
and equipment monitoring.
 While some upstream companies carry out
certain midstream operations, the midstream
sector is dominated by a number of companies
that specialize in these services.
Midstream companies include:
Aux Sable
Bridger Group
DCP Midstream
Enbridge Energy Partners
Enterprise Products Partners
Genesis Energy
Gibson Energy
Inergy Midstream
Kinder Morgan Energy
Partners
Oneok Partners
Plains All American
Sunoco Logistics
Targa Midstream Services
TransCanada
Williams Companies

3.3) DOWNSTREAM PROCESS AND SECTOR
 Downstream is everything from refining to
sales.
 The refining, processing, marketing, and
distribution of refined petroleum products.
 Processing / refining: Processing and
refining operations turn crude oil and gas
into marketable products. In the case of
crude oil, these products include heating oil,
gasoline for use in vehicles, jet fuel, and
diesel oil. Oil refining processes include
distillation, vacuum distillation, catalytic
reforming, catalytic cracking, alkylation,
isomerization and hydrotreating. Natural gas
processing includes compression; glycol
dehydration; amine treating; separating the
product into pipeline-quality natural gas and
a stream of mixed natural gas liquids; and
fractionation, which separates the stream of
mixed natural gas liquids into its
components. The fractionation process
yields ethane, propane, butane, isobutane,
and natural gasoline.
 It is a term commonly used to refer 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.

Table 3: Characteristics of Downstream Process and Sector
Characteristics Upstream
Downstream
Refining
Distribution &
Sales
Source Resource Extraction Manufacturing Marketing
Key Drivers
Revenue depends
on absolute price
Access to
resources
Technical skills
Revenue depends
on margin
Location
Configuration
Technical skills
Revenue depends
on margin
Location
Marketing skills
Economy of scale
Financial
Resource
Highly capital
intensive
Highly capital
intensive
Low capital relative
to other segments
Government
Taxation
Often highly taxed
Subject to corporate
taxes
Subject to corporate
taxes. Products
highly taxed in
Europe

Major Companies Involved in Downstream
 TAMOIL
 PREEM
 NESTEOIL
 ERG
 Q8

3.3.1) Distribution of Refined Products
 Refined products are traded in reference to prices at a few key locations in the
world.
 Their prices are set in relation to supply/demand pressures that are specific to the
products markets.
 Market prices can be used to set transfer prices between a refinery and a
distribution affiliate, so as to understand how much margin is made in both
segments.
 There are three main channels of sale for products from a refinery to the
consumer :
i) Retail (or Own Brand),
ii) Wholesale (or distributor), and
iii) Bulk sales.
 The wholesale (or distributor) sector supplies to customers in small loads
either directly from a refinery by truck or from a distribution terminal that is
fed from a refinery or imports.
 Bulk sales are large volume sales that are generally made directly by the
refiner or by a large trading company (e.g., Cargo Sales and Large
Consumers). Typical customers would be a petrochemicals plant or nearby
power station.

Figure : Production adding value

PETROLEUM REFINING
 Crude oil must be refined before it can be optimally used.
 Crude oil from the field is a mix of hydrocarbons of different molecular length (all
hydrocarbons contain carbon and hydrogen, but in different compositions).
 Refining is the process through which the various components of crude oil are
separated.
 Crude oil must undergo several separation processes so that its components can
be obtained and used as fuels or converted to more valuable products.
 The process of transforming crude oil into finished petroleum products (that the
market demands) is called crude oil refining.
What is a refinery?
 A refinery is a plant where crude oil is boiled and distilled to separate the
individual components.
 Atmospheric distillation is the essential process from which refining starts.
It is normally followed by further stages:
Vacuum distillation,
Cracking: thermal or catalytical,
etc.
 The objective is to increase the output of light products, which are more
valuable and reduce residuals, which constitute a problem

What is Oil Refining ?
Is an industry which refine crude oil into more useful petroleum products, such as
gasoline, diesel fuel, asphalt base, heating oil, kerosene, and liquefied petroleum gas
by fractional distillation.
 We can separate the components of crude oil by taking advantage of the
differences in their boiling points. This is done by simply heating up crude oil,
allowing it to vaporize, and then letting the vapor to condense at different levels
of the distillation tower (depending on their boiling points). This process is
called fractional distillation and the products of the fractional distillation of
crude oil is called fractions
 A fraction from crude oil can be categorized into two categories:
 Refined Product: A crude oil fraction which contains a lot of individual
hydrocarbons (e.g. gasoline, asphalt, waxes, and lubricants)
 Petrochemical Product: A crude oil fraction which contain one or two
specific hydrocarbons of high purity (e.g. benzene, toluene, and ethylene).
Distillation of Crude Oil

Typical Fuels Refinery

Petroleum Refining Process
Content of a Typical Barrel of Crude Oil
Gasoline 25%
Kerosine 12%
Distillate Fuels
25%
Residual Oil
39%
From Distillation Only
Gasoline 58%
Kerosine 8%
Distillate Fuels
24%
Residual Oil 10%
From Modern Refining Process

Refineries upgrade crude oil to higher value products
What is in a Barrel of Crude Oil?

WHAT ARE OIL COMPANIES?
 Companies are the main protagonists in the International oil and gas
Industry.
 Companies are living organisms that take time to develop and grow,
acquire a specific know-how and develop their own culture.
4) PETROLEUM COMPANIES TYPES
The Petroleum industry can be subdivided into four major categories:
i) National Oil Companies (NOCs) and
ii) International Oil Companies (IOCs).
iii) Operator Companies (Exploration and Production Companies)
iv) Service Companies

i) International Oil Companies (IOCs)
 International Oil Companies (IOCs) include familiar names like ExxonMobil and Royal Dutch
Shell.
These are publicly traded corporations that function like any other corporation except
that the product the deal in is petroleum.
IOCs all have long histories that generally date back to the late 19th century when they
were formed.
Most IOCs in the United States arose from the break-up of Standard Oil, which was the
dominant oil corporation until 1911.
 Several terms are often associated with IOCs. “Supermajor” is the most often used and it
refers to the 6 largest publicly traded oil companies in the world.
Supermajors have gone through many changes since the 1990s as a result of mergers
and acquisitions secondary to market forces, the introduction of NOCs, and depression
in oil prices in the early 1990s.
As a group, supermajors control 6% of the world’s oil. Comparatively NOCs control
88% of the world’s oil.
The six supermajors are as follows.
Name Location Revenue (Billions
of Dollars)
Reserve Size in
Billions of Barrels
ExxonMobil Texas – United States 383 72
Royal Dutch Shell The Hague – Netherlands 368 20
BP/Amoco London – United Kingdom 308 18
Total SA Paris – France 229 10.5
Chevron California – United States 204 10.5
ConocoPhillips Texas – United States 198 8.3

4.1) International Oil Companies (IOCs)
 Reserve size is not the only way to divide the industry. It seems that reserve size is
most often used in reference to NOCs while reserve size and industry segment are
both used to describe IOCs. The American Petroleum Institute divides the industry
into five categories based on function. These divisions help to explain why having
large petroleum reserves does not automatically translate into large revenues and
why the supermajors, despite their relatively small reserve sizes in comparison to
NOCs, dominate the market. The industry segments are:
Category Function
Upstream Exploration and development of crude
Downstream Tankers, refineries, and consumers
Pipeline Any hazardous pipeline, including petroleum, liquid CO2, etc.
Marine For transport by water of petroleum
Service and Supply
(General)
Equipment manufacturers, consulting firms, etc.
Most supermajors are referred to as “Vertically Integrated” This means that divisions of the company
specialize in various segments of the industry like upstream, downstream, and marine. While all
supermajors participate in upstream and downstream operations, some do not get involved in pipeline or
marine segments. Most have some involvement in service and supply.
The upstream segments of most supermajors are their primary income divisions. For instance, Royal
Dutch Shell make 2/3 of its profits from exploration and development of crude. Because supermajors have
been in the petroleum business the longest, they have developed the necessary expertise to find and
develop crude. This makes them indispensible to the industry, even to NOCs. As a result of market
dominance in this segment, the supermajors do the majority of the upstream work in the industry and thus
derive most of their income from providing these services both for their own oil reserves and to others.

4.2) Nation Oil Companies (NOCs)
 State agencies are called National Oil Companies (NOC) and are set up much like any International Oil
Company (IOC). The major difference is that IOCs release earnings reports and have stock holders. In
the early history of oil, IOCs were the major producers. In recent decades, NOCs have been organized
in most countries with large oil reserves. This trend has occurred for two reasons.
 The first reason for the rise of NOCs is political change. Countries in which large oil reserves can be
found have slowly wrested away the rights of IOCs that initially controlled the oil. Many military dictators
in the Middle East have come to power in part because of their support for NOCs, which promised to
return oil income to the people rather than seeing it go to IOCs. Of course, in many instances, these
promises were not followed through on.
 The other reason for the rise of NOCs is the industrial progress. Many of the oil-rich nations have
leveraged their tremendous natural resources to negotiate profitable contracts with IOCs for extraction
and development. The creation of OPEC was a direct response to the bargaining power of the IOCs.
Like a giant union, OPEC has allowed oil rich countries to put more pressure on IOCs to offer price
concessions. The development of their own means for extracting and refining oil has also allowed
NOCs to reduce their reliance on IOCs.
 The top ten largest NOCs in the world, in terms of reserve size, are in the following table. It is important
to note that the numbers in the table below are for liquid petroleum and do not include such things as
extra heavy petroleum, oil shale, etc. Most of these countries do not reveal earnings, so judging them
based on income is relatively difficult. However, comparing the size of their reserves to those of IOCs
should offer a rough estimate of their potential revenues.

Table shows top 10 LARGEST WORLD OIL COMPANIES by RESERVES AND PRODUCTION
Total energy output, including natural gas (converted to Bbl of oil) for companies producing both.
Rank Name of Company
Worldwide Liquids
Reserves (109Bbl)
Worldwide Natural
Gas Reserves
(1012ft3)
Total Reserves in
Oil Equivalent
Barrels (109Bbl)
Company
(Production)
Output
(Millions
Bbl/day)
1
Saudi Arabian Oil Company
(Saudi Aramco)
260 254 303 Saudi Aramco 12.5
2
National Iranian Oil Company
(NIOC)
138 948 300 NIOC 6.4
3 Qatar Petroleum (QP) 15 905 170 ExxonMobil 5.3
4 Iraq National Oil Company (INOC) 116 120 134
PetroChina Company
Limited (PTR)
4.4
5 Petróleos de Venezuela, S.A. (PDVSA) 99 171 129 British Petroleum (BP) 4.1
6
Abu Dhabi National Oil Company
(ADNOC)
92 199 126
Royal Dutch Shell
plc (RDS.A)
3.9
7 Kuwait Petroleum Corporation 56 102 111 Pemex
3.6
8
Nigerian National Petroleum
Corporation (NNPC)
36 184 68 Chevron 3.5
9
National Oil Corporation Of Libya
(NOC)
41 50 50
Kuwait Petroleum
Corporation
3.2
10
Société Nationale pour la Recherche,
la Production, le Transport, la
Transformation, et la
Commercialisation des Hydrocarbures
s.p.a.- Algeria (Sonatrach)
12 159 39
Abu Dhabi National Oil
Company (ADNOC)
2.9

Company Country Market value ($m)
Gazprom (OGZPY) Russia 91,289.40
Exxon Mobil Corp. (XOM) US 422,098.30
BP plc (BP) UK 147,771.10
Chevron Corp. (CVX) US 227,014.70
PetroChina Company Limited (PTR) China 220,893.70
Royal Dutch Shell plc (RDS.A) UK 238,993.50
Total S.A. (TOT) France 155,984.80
China Petroleum & Chemical Corporation, or
Sinopec Limited (SHI)
China 96,667.80
Petróleo Brasileiro S.A. or Petrobras (PBR) Brazil 88,517.80
ConocoPhillips Co. (COP) US 86,358.30

 Companies that decide where and how to drill for hydrocarbons, and own the
rights once produced.
 Examples: BP, Chevron, ExxonMobil, Shell, ConocoPhillips, Anadarko, Apache,
Devon, Hess, Occidental Petroleum, Noble Energy, Marathon, Southwestern,
EOG, …etc.
4.3) Operator Companies (or Exploration and Production (E &P) Companies)
Types of exploration and production companies:
Integrated/Supermajors (upstream and downstream):
 It is one that does everything - from finding oil & gas reserves to sales to customers.
 Examples of a fully-integrated companies are: BP, Chevron, ExxonMobil, Shell, and
Total.
 It break up the entire process into two main stages:
 Upstream covers everything to getting raw material to a refinery
 Downstream is everything from refining to sales
 Easy question: Where (which stage) do we employ geoscientists? Obviously in the
Upstream
Exploration and Production/Independents (just upstream): ConocoPhillips, Anadarko,
Apache, Noble Energy, EOG Resources, Marathon Oil, Hess Corporation, etc..
National Oil Companies (NOC): Ecopetrol, Gazprom, PEMEX, Petrobras, Petronas, PDVSA,
Rosneft, Sinopec, Sonangol

Integrated/Supermajors (upstream and downstream):
Getting Refined
Products to
the Consumers
Getting Raw
Oil & Gas to
the Refinery
Refinery
http://www.npl.co.uk/upload/img_400/oilrig.gif
A Fully-Integrated Oil Company
(Example: ExxonMobil)

Example: Shell Gas Integrated Value Chain
Shell Gas Integrated Value Chain

4.4) Service Petroleum Companies
Types of service petroleum companies:
Diversified: Schlumberger, Halliburton, Weatherford,
Baker Hughes.
Equipment: National Oilwell Varco, Cameron.
Seismic acquisition: ION, CGG, Spectrum, TGS, PGS.
Drilling rigs: Transocean, Noble Corporation, Hercules
Offshore, Nabors Industries.
 Companies which provide technical services to operating companies,
but do not own the hydrocarbons that are produced
 Examples: Baker Hughes, Cameron, CGG, Core Lab, Fugro,
Halliburton, ION Geophysical, National Oilwell Varco, PGS,
Schlumberger, Spectrum, Technip, Transocean, Weatherford, etc.

WalMarts sells
An impossibly large
multinational corporation
corporation intent on world
domination.
This company that only
cover certain components
e.g., WalMarts sells, but
does not explore or refine

5) MAIN PETROLEUM COMPANIES PARTICIPANTS IN
THE INTERNATIONAL OIL MARKET
According to the main petroleum companies types that participants in
the international oil market; Petroleum industry divides into four types,
as following:
i) National Oil Companies (NOCs);
ii) International Oil Majors Companies (IOCs) and Their Trading
Arms;
iii) Independent Oil Trading Companies; and
iv) Financial houses and non-industry speculators

Table 5: shows main categories of participants in the international oil market.
Examples Participation in the market
National Oil
Companies (NOCs)
Saudi Aramco,
INOC, PDVSA,
KPC, etc
 NOCs mostly sell under term contracts (NOCs account for 70% of
world production and for most of the OPEC production).
 Limited number of term contracts prevent re-selling to third
parties.
International Oil
Majors and Their
Trading Arms
ExxonMobil,
Total, Chevron,
ConocoPhillips,
BP, Shell, LUKOIL ,
etc
 Privately owned international majors are large vertically
integrated companies that are present in all the activities along
the supply chain (upstream exploration and production, refining,
trading, downstream distribution and marketing through fuel
distribution networks).
 Majors do not trade all of their production, because an important
part of it is devoted to the needs of their own supply chain system
 Majors have a risk aversion corporate profile that discourages
high levels of exposure to price risks and the resulting
“speculation”.
Independent Oil
Trading Companies
Vitol, Glencore,
Sempra,
Trafigura, etc
 Trade energy and other commodities while holding few or no
production assets.
 Actively trade in spot physical and derivatives markets.
Financial houses and
non industry
speculators
Morgan Stanley, J.
Aron, hedge
funds, etc
 Trade a wide spectrum of commodities while offering other
financial products and services.
 Have a controlled speculative exposure in oil derivatives markets,
similar to other financial markets.

6) SEVEN SISTERS (or ANGLO-SAXON)
 The Seven Sisters is a term to describe the shadowy oil cartel, which tried to eliminate competitors and
control the world’s oil resource.
 The "Seven Sisters" was a term coined in the 1950s by businessman Enrico Mattei, then-head of the
Italian state oil company Eni, to describe the seven oil companies which formed the "Consortium for
Iran" cartel and dominated the global petroleum industry from the mid-1940s to the 1970s.
 The group comprised:
a) Anglo-Persian (or Anglo-Iranian) Oil Company (now BP);
b) Gulf Oil,
c) Standard Oil of California (SoCal),
d) Texaco (now Chevron);
e) Royal Dutch Shell;
f) Standard Oil of New Jersey (Esso)
g) Standard Oil Company of New York (Socony) (now ExxonMobil)
 Prior to the oil crisis of 1973, the members of the Seven Sisters controlled around 85 % of the
world's petroleum reserves, but in recent decades the dominance of the companies and their
successors has declined as a result of the increasing influence of the OPEC cartel and state-
owned oil companies in emerging-market economies.

The Eight Majors’The Eight Majors’
Market Share,Market Share,
19701970
Exxon
Texaco
Gulf
Socal
Mobil
Shell
BP
CFP
altri
15,7%
8,3%8,3%
6,6%
5,4%
13,0%
10,4%
3,2%
29,1%
Exxon
Texaco
Gulf
SocalMobil
Shell
B P
CFP
altri
12,4%
6,4%
4,1% 4,1%4,6%
11,9%
5,4%
1,9%
49,3%
Production
Refining
Exxon
Texaco
Gulf
Mobil
Shell
BP
CFP
altri
14,2%
7,3%
4,2%4,8%
5,4%
13,1%
5,4%
2,0%
43,7%
Products Sales
(in percent)
Socal

6.1) "New Seven Sisters"
Now we used the label the "New Seven Sisters" to
describe a group of what it argues are the most
influential national oil and gas companies based in
countries outside of the Organization for Economic Co-
operation and Development (OECD.
This group comprises:
1) Saudi Aramco (Saudi Arabia)
2) China National Petroleum Corporation
3) Gazprom ((OGZPY) Russia)
4) National Iranian Oil Company (NIOC)
5) PDVSA (Venezuela)
6) Petrobras (Brazil)
7) Petronas (Malaysia)

“Big Oil"
 Chart of the major energy companies dubbed "Big
Oil" sorted by latest published revenue.
 The sheer size of the extractive industry economy
often out shadows the size of the economy of
sovereign countries
Source: from the wikipedia:

Exxon Mobil
• Engaged in
 exploration and production, refining, and marketing of oil and natural gas.
 The company is also engaged in the production of chemicals, commodity
petrochemicals, and electricity generation.
• Exxon also set an annual profit record by earning $40.61 billion last year.
 nearly $1,300 per second in 2007.

Saudi Aramco
 One of the largest integrated oil companies in the world.
 State Owned:
 The company, as a state-owned entity, does not publish
its financial statements.
 Operations in:
Exploration, production, refining, marketing, and
international shipping.
 The company has approximately one fourth of world oil
reserves
 The company is head quartered in Dhahran, Saudi Arabia
and employs about 52,100 people.

National Iranian Oil Company (NIOC)
 State Owned:
 The company, as a state-owned entity, does
not publish its financial statements.
 Operations in:
 Involved in: exploration, refining, and
transportation of oil, gas, and petroleum
products.
 The company primarily operates in Iran where it is
headquartered in Tehran, Iran.
 NIOC produces more than 3.9 million barrels of
crude oil per day from its 138.4 billion barrels of
reserves.

Egyptian Petroleum Sector
Ministry of Petroleum
Egyptian
General
Petroleum
Corporation
(EGPC)
Egyptian
Natural Gas
Holding
Company
(EGAS)
Egyptian
Petrochemical
Holding
Company
(ECHEM)
Ganob El-Wadi
Petroleum
Holding
Company
(GanoPe)

The Restructuring Process
 The restructuring included establishing 3 new Holding Companies
in addition to the Egyptian General Petroleum Corporation
(EGPC), namely:
 The Egyptian Natural Gas Holding Company (EGAS),
 The Egyptian Petrochemicals Holding Company
(ECHEM), and
 Ganoub El Wadi Petroleum Holding Company (GANOPE).
 EGPC: Exploration, production, transportation, refining, distribution
and marketing of crude oil and petroleum products.
 EGAS: Exploration, production, transportation, treatment,
processing, distribution and marketing of natural gas.
 ECHEM: All petrochemical activities in Egypt.
 GANOPE: All oil and gas activities in Upper Egypt.

Oil & Gas Industry in Egypt
Egypt Concession Agreements & Commitments
• 171 signed concession agreements with 50
international petroleum companies represent 29
nationalities with financial commitments 11 billion
dollars & to drill 494 wells.

Upstream
Investments
 Egyptian Ministry of Petroleum
has been successful in attracting
more international oil and gas
companies.
 Upstream Investments has more
than doubled during the past
decade compared to the eighties
and nineties.
 Oil and gas investments account
for 76% of total foreign
investments in Egypt.
427
New Discoveries
Were achieved
During the Period
from
1999 to 2009
271 Oil discoveries
&
156 Gas discoveries
Exploration

Egypt’s Petroleum Wealth Map

Reserves
Hydrocarbon Reserves
have increased steadily
in the past few years
Proven Gas Reserves
have more than doubled
from 36 tcf in 1999 to 78
tcf in April 2010.
Oil & Condensates’
Reserves have raised
from 3.8 billion barrels in
1999 to 4.4 billion barrels
in 2009.

Production
 Total Production of
Hydrocarbon grew from 1.1
million barrels equivalent in
1999 to 1.8 million barrels
equivalent in 2009.
 Gas Production has risen
three‐fold from around 18
bcm in 1999 to 61 bcm in
2009.
 In 08/09, Production of Crude
Oil & Condensate increased
by 6% more than 07/08 after
declining all the way from
94/95 till 05/06.
 Egypt Among the First
Twenty Countries in the
World In Natural Gas
Production.

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