Page 21 - Cost_Competitiveness
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The Institute of Cost Accountants of India
General Classifcation of Up-Mid-Downstream Oil Sector
The value chain starts with the identifcation of suitable areas to conduct exploration
for oil and/or gas. After initial exploration, petroleum felds are appraised, developed
and produced. These activities are generally called Exploration and Production (E&P),
or referred to – analogous to other industries – as upstream oil and gas. Oilfeld services
include a number of auxiliary services in the E&P process, such as seismic surveys, well
drilling, equipment supply or engineering projects. They form an important part of the
overall oil and gas industry (and over the past years and decades have substantially
gained in expertise and importance), but will not be the focus of our overview.
Infrastructure such as transport (pipelines, access to roads, rail and ports etc.) and
storage are critical at various stages in the value chain, including the links between
production and processing facilities, and between processing and fnal customer.
These parts of the value chain are usually referred to as midstream. Oil refning and
gas processing are required to turn the extracted hydrocarbons into usable products.
The processed products are then distributed onwards to wholesale, retail or direct
industrial clients (Refning and Marketing (R&M) is also referred to as downstream oil).
Certain oil and gas products represent the principal feedstock for the petrochemicals
industry, which explains the close historical and geographical links between the two.
www.icmai.in
The Institute of Cost Accountants of India
General Classifcation of Up-Mid-Downstream Oil Sector
The value chain starts with the identifcation of suitable areas to conduct exploration
for oil and/or gas. After initial exploration, petroleum felds are appraised, developed
and produced. These activities are generally called Exploration and Production (E&P),
or referred to – analogous to other industries – as upstream oil and gas. Oilfeld services
include a number of auxiliary services in the E&P process, such as seismic surveys, well
drilling, equipment supply or engineering projects. They form an important part of the
overall oil and gas industry (and over the past years and decades have substantially
gained in expertise and importance), but will not be the focus of our overview.
Infrastructure such as transport (pipelines, access to roads, rail and ports etc.) and
storage are critical at various stages in the value chain, including the links between
production and processing facilities, and between processing and fnal customer.
These parts of the value chain are usually referred to as midstream. Oil refning and
gas processing are required to turn the extracted hydrocarbons into usable products.
The processed products are then distributed onwards to wholesale, retail or direct
industrial clients (Refning and Marketing (R&M) is also referred to as downstream oil).
Certain oil and gas products represent the principal feedstock for the petrochemicals
industry, which explains the close historical and geographical links between the two.
www.icmai.in
