The Structure of the Oil and Gas Industry
The emergence of the latest trends in the post era of globalization has fundamentally reshaped the oil and gas industry. Moreover, such trends are even focusing forward to bring more changes and advancements in next few years. The volatile pricing structure of the oil and gas is creating more investment challenges and transformation from a low carbon to an efficient energy world (Bergh et al. 2014). Government controls and triggers the supply constraints of the energy products including oil and gas. The study would explore the history and structure of the emerging trends in the oil and gas industry. The diverse roles of National Oil Companies, International Oil Companies, and Government Sponsored Enterprises would be explained in this study. Furthermore, the study would present the comparison and contrast of the different journeys of petroleum products and natural gas products. In addition to this, the supply chain process of the upstream, downstream, and midstream process would be analyzed to understand the demands of the oil and gas products.
The oil and gas industry has the long history. The industry has been evolving over time and the uses have expanded considerably. In today’s world, oil and gas industry has become an integral part that contributes to the global economy. Coal replaced the use of oil eventually and became the primary source of the industrial power in the early twentieth century (Demski, Poortinga and Pidgeon 2014). However, oil and gas resources still have remained as the critical fuel source for the transportation and the energy industry. In ancient culture, crude oil had been extensively used as the substance for binding materials (Kern, Kuzemko and Mitchell 2014). The Romans used such oil and gas for flaming the weapons of war. However, the current oil and gas industry was emerged in the late 19th century. The first oil and gas company was then established in US and it was known as Pennsylvania Rock Oil Company.
In describing the structure of the oil and gas company, it is noted that the oil and gas industry is divided into three major segments, upstream business, midstream business, and downstream business (Tang, Snowden and Höök 2013). The exploration and production of the crude oil and natural gas belong to the upstream business whereas the recovered products from the upstream business move to the midstream business. The final market stage of the oil and gas industry is the downstream business in which the natural gas and oil turn into the marketable petroleum products. Within these three business types, the oil and gas sector is segregated sequentially, which is presented below:
The Diverse Roles of National Oil Companies, International Oil Companies, and Government Sponsored Enterprises
The structure indicates the source of power generation before distributing the products at the end. The effective operational process undertaken by the national, international, and government sponsored oil and gas companies is strengthening the position of the industry in this competitive landscape (Fidler and Nobl 2012). However, the impacts of the higher demands and the rapid growth sometimes affect the structure much considerably.
- International Oil Companies (IOCs)
The International Oil Companies (IOCs) have been much opportunistic in this sector due to the adequate supports from the investors and development of the advanced technologies. In current situation, it is reported that the IOCs can access only 14% of the proven global reserves (Loc.gov 2018). It poses many challenges for the international oil companies as they face difficulties in acquiring thee oil and natural gas reserves. It is notable that in order to increase the global economy, it is essential to ensure higher investments on this particular industry (Tang, Snowden and Höök 2013). The international oil companies thus have been paying attention towards higher investments on the oil and gas sector to build advanced infrastructure. Moreover, the international oil companies provide the skilled manpower and machinery facilities for the development of profitability level.
- National Oil Companies (NOCs)
The operational process and size of the national oil companies contributes extensively on the global economy. The national oil companies maintain a good balance of global energy for stabilizing the market return (Tang, Snowden and Höök 2013). The national oil companies have the access to the natural oil and gas reserves due to which these companies formulate a greater impact on the operational process. Moreover, the NOCs help in developing the accumulation of the wealth and extending the financial and administrative structures for increasing the revenues. It is reported that the national oil companies collectively own almost 65% of the world’s oil and gas output that is much anticipating the strengthened and expected growth of the oil and gas assertor in future (Gasandoil.com. 2018).
- Government Sponsored Enterprises
It is noticed that government sponsored enterprises are not much competitive and it is mainly based on the financial service corporation. These enterprises enhance the flow of the credit by targeting the economy sector (Yusuf et al. 2013). It is noticed that these companies always have the huge risks of losing the capitals.
The development of the supply chain process of the petroleum products has to pass through several segments and processes. The crude oil is one of those petroleum products that are supplied from larger oil and gas suppliers. The journey of the crude oil supply chain passes through four different stages, such as exploration, production refining, and marketing (Fidler and Nobl 2012). These products are firstly explored through the geophysical, geological, and seismic operational process. With the help of the engineering process, the products are drilled and reserved for the use. In order to refine the products, the complex operational process is undertaken that result greater output in the market (Tang, Snowden and Höök 2013). Finally, the product is sold as gasoline, engine oil, and other refined products.
The Journey of Petroleum Products and Natural Gas Products
On the contrary, the journey of Natural Gas consists of three major stages, such as processing of the production, transmission, and distribution of the stored products. Production processing method concentrates on the completion of drilling process, gathering the lines, producing the wells, gathering the stations, and then processing the gas plant (Tang, Snowden and Höök 2013). In the second stage the transmission storage process determines the transmission of the compressor stations, transmission of the pipelines, and storage of the products at the underground level (Dholakia et al. 2015). The final stage is distribution process, which includes the validations of the regulators and distribution to the market.
The above analysis indicates the journey of the petroleum products and the oil products is different to each other. The diverse supply chain process is necessarily needed to be concentrated for making more improvements in the operational process (Fidler and Nobl 2012).
Oil and gas sector has been rapidly changing in many developing and developed countries. Natural gas has become the appropriate energy source for the generating power in the industry. The wider extension of the oil and gas sector is much sophisticated and contributing to the global economy (Shuen, Feiler and Teece 2014). Similarly, the crude oil is also widely used by the industry worldwide. However, the effects of the consumer demands and seasonality on the pricing structure in the oil and gas industry are much recognizable. Majority of the effects is shown in this pricing structure that may affect business distribution process (Tang, Snowden and Höök 2013). However, oversupply fundamentals associated with this industry are quite higher (Fidler and Nobl 2012). In fact, due to higher demands of the oil and gas products, the companies are making changes in their distribution process. It helps them in gathering more responses for the future prospects.
Conclusion
Oil and gas industry is commendably contributing to the global economy. Especially, in producing the energy resources, the role of the oil and gas industry is remarkable. The structure highlights the source of power generation prior to distribute the products at the end. The commendable role of National oil companies, the international oil companies, and government sponsored companies is strengthening the position of the industry in this competitive landscape. The international oil companies are focusing towards higher investments on the oil and gas sector to build advanced infrastructure. The national oil companies have the access to the natural oil and gas reserves due to which these companies formulate a greater impact on the operational process. Government controls and triggers the supply constraints of the energy products including oil and gas. In fact, the rapid expansion in the oil and gas sector is providing the opportunities to the developing countries to develop better distribution process and earning more profits for the future.
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