TRENPETROTM mainly focuses on Midstream, Downstream along with Service & Supply to Upstream operations. Here, we would like to provide a wide range of complete information to clients regarding petroleum industry, services and commodities in general.
Petroleum industry includes the global processes of exploration, extraction, refining, transporting (often by oil tankers and pipelines), and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics. The industry is usually divided into three major components: upstream, midstream and downstream. Midstream operations are usually included in the downstream category.
Petroleum is vital to many industries, and is of importance to the maintenance of industrialized civilization itself, and thus is a critical concern for many nations. Oil accounts for a large percentage of the world’s energy consumption, ranging from a low of 32% for Europe and Asia, up to a high of 53% for the Middle East. Other geographic regions’ consumption patterns are as follows: South and Central America (44%), Africa (41%), and North America (40%). The world consumes 30 billion barrels (4.8 km³) of oil per year, with developed nations being the largest consumers. The United States consumed 25% of the oil produced in 2007. The production, distribution, refining, and retailing of petroleum taken as a whole represents the world's largest industry in terms of dollar value.
A widely traded group of spot, forward and futures markets in North Sea Brent crude oil that emerged in the early 1980s. They are used as a key source of international oil price risk management and as a benchmark for crude oil pricing under both term and spot transactions. Forward trading extends several months ahead with supplies becoming "wet" at least 21 days prior to loading. A parallel futures market in Brent also exists on London's ICE Futures Exchange.
Petroleum Industry Structure
The American Petroleum Institute divides the petroleum industry into five sectors ; upstream, downstream, pipeline, marine and service & supply. The petroleum industry is usually divided into three major components: upstream, midstream and downstream, though midstream operations are usually included in the downstream category.
The upstream oil sector is a term commonly used to refer to the exploration, development and production 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 exploration 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 midstream industry processes, stores, markets and transports commodities such as crude oil, natural gas, natural gas liquids (LNGs, mainly ethane, propane and butane) and sulphur.
The downstream oil sector 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, other fuel oils, asphalt and petroleum coke. The downstream sector includes oil tankers, oil refineries, petrochemical plants, petroleum products & their distribution, retailers & retail outlets and natural gas distribution companies. The downstream industry includes consumers through thousands of refined petroleum products such as oil, diesel, jet fuel, heating oil, asphalt, lubricants, synthetic rubber, plastics, fertilizers, antifreeze, pesticides, pharmaceuticals, natural gas and propane.
Pipeline transport is the transportation of goods through a pipeline. Most commonly, petroleum products in the form of liquid and gases are sent through these pipelines, during transportation of these liquids and gases, pneumatic tubes that transport solid capsules using compressed air have also been used. As for gases and liquids, any chemically stable substance can be sent through a pipeline.
Crude oil quality is measured in terms of density (light to heavy) and sulfur content (sweet to sour). Density is classified by the American Petroleum Institute (‘API’). API gravity is defined based on density at a temperature of 15.6 ºC. The higher is the API gravity, the lighter the crude will be. Light crude generally has an API gravity of 38 degrees or more, and heavy crude an API gravity of 22 degrees or less. Crude with an API gravity between 22 and 38 degrees is generally referred as medium crude. Sweet crude is commonly defined as oil with a sulfur content of less than 0.5%, while sour crude has a sulfur content of greater than 0.5%.
The quality of crude oil and other feedstock dictates the level of processing and conversion necessary to achieve what a refiner sees as an optimal mix of products. Light, sweet crude is more expensive than heavier, sourer crude because it requires less processing and produces a slate of products with a greater percentage of value-added products, such as gasoline, diesel, and aviation fuel. Heavier, sourer crude typically sells at a discount to lighter, sweeter grades because it produces a greater percentage of lower value-added products with simple distillation and requires additional processing to produce lighter products.
The petroleum industry uses geographical locations to classify crude oils, such as North Sea Crude and Persian Gulf Crude. Oil from different geographical locations has its own unique properties, and varies in consistency from a light volatile fluid to a semi solid state. The types of oil differ from each other in their viscosity, volatility and toxicity. Viscosity relates to the oil's resistance to flow. Crude oil with high viscosities are more difficult to pump from the ground and also to transport. Volatility refers to how quickly the oil evaporates into the air. Toxicity refers to how toxic the oil is to people, animals and other organisms.
API gravity is an arbitrary scale expressing the gravity or density of liquid petroleum products devised jointly by the American Petroleum Institute and the National Bureau of Standards. The measuring scale is calibrated in terms of degrees API. Oil with the least specific gravity has the highest API gravity. The formula for determining API Gravity is as follows: Degrees API Gravity= (141.5 Specific Gravity at 60 Deg. F) - 131.5
Sulfur content is the measure of the presence of sulfur in crude oil, which is a key determinant of quality. Sulfur content is measured as the percent of sulfur by weight in the crude oil. Crude oil grades that are high in sulfur are referred to as sour crudes, and those that are low in sulfur are referred to as sweet crudes.
The three most quoted oil products are North America's West Texas Intermediate Crude (WTI), North Sea Brent Crude, and the UAE Dubai Crude, and their pricing is used as a barometer for the entire petroleum industry, although, in total, there are 46 key oil exporting countries. Brent Crude is typically priced at about $2 dollars over the WTI Spot price, which is typically priced $5 to $6 dollars above the EIA's Imported Refiner Acquisition Cost (IRAC) and OPEC Basket prices.
Although crude oil assays evaluate various chemical properties of the oil, the two most important properties determining a crude's value are its density (measured as API specific gravity) and its sulfur content (measured per mass). Crude oil is considered "heavy" if it is high in wax content, or "light" if low in wax content: an API gravity of 34 or higher is "light", between 31-33 is "medium", and 30 or below is "heavy". Crude is considered "sweet" if it is low in sulfur content (< 0.5%/weight), or "sour" if high (> 1.0%/weight). Generally, the higher the API gravity (the "lighter" it is), the more valuable the crude.
Benchmark crude oil that is traded so regularly in the spot market that its price quotes are relied upon by sellers of other crude oils as a reference point for setting term or spot prices. Brent, West Texas Intermediate and Dubai are all benchmark crude oils.
Heavy crude has API gravity lower than 28 degrees celcius. The lower the API gravity, the heavier the oil shall be. It usually contains high concentrations of sulfur and several metals, particularly nickel and vanadium (high amount of wax). These are the properties that make them difficult to pump out of the ground or through a pipeline and interfere with refining. These properties also present serious environmental challenges to the growth of heavy oil production and use.
Light crude has API gravity higher than 33 degrees celcius. The higher the API gravity, the lighter the crude oil shall be. Light crude is defined as having a low concentration of wax. This classification of oil is easier to pump and transport.
Sweet crude has small amounts of hydrogen sulfide and carbon dioxide, and is used primarily in gasoline. Sweet crude is usually a crude oil that has a sulfur content that is 0.5% or less by weight. Lower sulfur content improves the quality of the resulting refined products, and sweet crudes do not require as much processing as sour crudes. They are referred to as sweet because of the absence of an unpleasant sulfur smell.
Usually a crude oil that has sulfur content that is greater than 0.5%. This higher sulfur content affects the quality of the resulting refined products and sometimes means extra processing is required. It is referred to as sour because of the unpleasant smell of the sulfur.