Introduction into Oil and Gas Industry
OIL: Part 1
Fidan Aliyeva
MBA in Oil and Gas Management, GradEI

Introduction into Oil and Gas Industry
(1) Formation, Characteristics and different types
(2) Oil as a trading commodity
(3) Why it is a burning issue of a day
(4) OPEC
(5) Oil Majors/International Oil Companies and
National Oil Companies
www.petroleumanalytics.com

Introduction into Oil and Gas Industry
Oil Formation
Oil was formed from the remains of animals and plants that lived
millions of years ago in a marine (water) environment before the
dinosaurs. Over the years, the remains were covered by layers of
mud. Heat and pressure from these layers helped the remains turn
into what we today call crude oil . The word "petroleum" means
"rock oil" or "oil from the earth."
www.petroleumanalytics.com

Introduction into Oil and Gas Industry
Scientific definition
Oil and Gas are called Hydrocarbons because they
are compound of atoms of hydrogen and carbon.
Depending on the mixture of HC molecules, oil
differs in colour, composition, consistency
H
H H
H
www.petroleumanalytics.com

Introduction into Oil and Gas Industry
Depending on the mixture of hydrocarbon molecules, crude oil varies
in colour, composition and consistency. Different oil-producing areas
yield significantly different varieties of crude oil. (slide 8)

Introduction into Oil and Gas Industry

Introduction into Oil and Gas Industry
Different types of oil By geographical locations

Introduction into Oil and Gas Industry
Price differences of the same type of oil due to
geographical areas.
Source: International Energy Agency, Oil Market Report, 13 Sept. 2011

Introduction into Oil and Gas Industry

World Leading Crude
Oil Brokers

Source: International Energy Agency, Oil Market Report, 13 Sept. 2011

Introduction into Oil and Gas Industry

Introduction into Oil and Gas Industry
The oil-exporting countries - large positive ratio of next oil exports to
GDP.
The oil importers - this ratio is negative.
Source: IMF, Working Paper/11/194, Oil Shocks in a Global Perspective: Are they Really
that Bad?, August 2011

Introduction into Oil and Gas Industry
Large oil price increases can have more adverse
consequences on world economy. There is a non-
linear relationship between oil prices and economic
outcomes, where large upward price increases have a
disproportionately negative impact.
Source: IMF, Working Paper/11/194, Oil Shocks in a Global Perspective: Are
they Really that Bad?, August 2011

Introduction into Oil and Gas Industry
Source: International Energy Agency, Oil Market Report, 13 Sept. 2011

Introduction into Oil and Gas Industry
World Oil Reserves
BP Statistical Review, June 2011
World proved oil reserves in 2010 were sufficient to meet 46.2 years of
global production

Introduction into Oil and Gas Industry
Production vs. Consumption
BP Statistical Review, June 2011

Introduction into Oil and Gas Industry
World Oil Reserves
BP Statistical Review, June 2011

Introduction into Oil and Gas Industry
Organization of Petroleum Exporting Countries
Mission:
to coordinate and unify the petroleum policies of its Member Countries
and ensure the stabilization of oil markets in order to secure
an efficient, economic and regular supply of petroleum to consumers,
a steady income to producers and a fair return on capital for those
investing in the petroleum industry.
Key Facts:
- is a permanent, intergovernmental Organization, created at the Baghdad
Conference on September 10–14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and
Venezuela.
- today comprises of 12 Member Countries with HQ in Vienna, Austria
- more than 80% of world production of the world's proved oil reserves are located in
OPEC Member Countries, with the bulk in the Middle East
- Due to significant additions to oil reserves in recent years, OPEC's oil reserves
currently stand at well above 1,190 billion barrels.
www.opec.org

Introduction into Oil and Gas Industry

Introduction into Oil and Gas Industry
Source: International Energy Agency, Oil Market Report, September 2011

OPEC continues to increase its capacity to ensure that the world
economy benefits from secure oil supplies. About 140 projects with
an overall estimated cost of $155billion, are being undertaken by
OPEC Member Countries, exlc. other energy infrastructure projects:
pipelines, export terminals etc.

In order to educate
stakeholders about the
distribution of oil
revenues, OPEC
provided an illustrated
explanation of exactly
who gets what from the
price paid for each
barrel of oil.
Source: OPEC web-site
http://www.opec.org/opec_web/static_files_project/media/downloa
ds/publications/Whogetswhat2010.pdf

Introduction into Oil and Gas Industry
Oil Companies
International Oil Companies
Majors: ExxonMobil, Total, BP, Royal Dutch
Shell
Independent: Oxydental, Nations Energy, Talisman
Energy
National Oil Companies
Petrobras (Brasil), SOCAR, Sonatrach (Algeria), NNPC
(Nigeria)

Introduction into Oil and Gas Industry
Oil Majors
February, 2008
Source: http://en.wikipedia.org/wiki/File:Big_Oil.svg