1. Context – industry value chain
An overview of the oil and gas industry is best provided with reference to the industry value chain. The value chain is used to identify each distinct segment of oil and gas activities that create value and includes upstream, mid-stream and downstream activities, as shown in the diagram below.
Context – industry players
Activities within the value chain can be undertaken by one or a consortium of different companies, who can be classified as follows:
Petroleum industry players: Quick facts
Context - Global economy
Traditionally there has been a direct proportion between a country’s gross domestic product (GDP) and its energy consumption. The International Energy Agency (IEA) however notes in its 2016 World Energy Outlook that among the OECD group of economies, higher GDP translated to lower energy consumption. Despite this, when the world-wide GDP and energy consumption is concerned, the predicted rise in world population from 7.3 billion in 2015 to 9.2 billion in 2040 and increase in GDP at a rate of 3.4% per year will translate into higher demand for energy.
According to the 2016 World Energy Outlook, the future growth of GDP, will have a higher impact on petroleum consumption, taking into consideration the forecast expansion of industrial output, especially in energy-intensive sectors, such as iron and steel, cement or petrochemicals.
The following sections cover the upstream, midstream and downstream components of the sector value chain.