Petrochemistry and Chemical Engineering

Upstream/Downstream & Midstream Integration

The oil and gas industry is usually divided into three major sectors: upstream, midstream and downstream. The upstream oil sector is also commonly known as the exploration and production (E&P) sector.

The upstream sector includes the searching for potential underground or underwater crude oil and natural gas fields, drilling of exploratory wells, and subsequently drilling and operating the wells that recover and bring the crude oil and/or raw natural gas to the surface. There has been a significant shift toward including unconventional gas as a part of the upstream sector, and corresponding developments in liquefied natural gas (LNG) processing and transport.

Upstream Industry has traditionally experienced the highest quantum of Mergers, Acquisitions and Divestitures. M&A activity for upstream oil and gas deals in 2012 totalled $254 billion in 679 deals. A large chunk of this M&A, 33% in 2012, was driven by the Unconventional/shale boom especially in the US followed by the Former Soviet Union and Canada.

The aggregate value of Upstream E&P assets available for sale (Deals in Play) reached a record-high of $135 billion in Q3-2013. The value of Deals in Play doubled from $46 billion in 2009 to $90 billion in 2010. With on-going M&A activity the level remained almost the same reaching $85 billion in Dec-2012. However, the first half of 2013 saw approximately $48 billion of net new assets coming on the market. Remarkably, the total value of Deals in Play in Q3-2013 nearly tripled over 2009 at $46 billion, in less than four years.

The oil and gas industry is usually divided into three major sectors: upstream, midstream and downstream. The downstream sector commonly refers to the refining of petroleum crude oil and the processing and purifying of raw natural gas, as well as the marketing and distribution of products derived from crude oil and natural gas. The downstream sector touches consumers through products such as gasoline or petrol, kerosene, jet fuel, diesel oil, heating oil, fuel oils, lubricants, waxes, asphalt, natural gas, and liquefied petroleum gas (LPG) as well as hundreds of petrochemicals.

Midstream operations are often included in the downstream category and considered to be a part of the downstream sector. The petroleum industry is usually divided into three major components: upstream, midstream and downstream. The midstream sector involves the transportation (by pipeline, rail, barge, oil tanker or truck), storage, and wholesale marketing of crude or refined petroleum products. Pipelines and other transport systems can be used to move crude oil from production sites to refineries and deliver the various refined products to downstream distributors. Natural gas pipeline networks aggregate gas from natural gas purification plants and deliver it to downstream customers, such as local utilities.