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DOWNSTREAM PROCESS
                    by
        RAGAVENDAR.A & SABARESAN.M
CRUDE OIL                          PRODUCT
EXPLORATION &   REFINING          DISTRIBUTION &
 PRODUCTION                            SALES




                           DOWNSTREAM
   The petroleum industry can be divided into three broad segments:
   Crude oil exploration and production
   Refining &
   Product distribution and sales.

   Crude oil exploration and production is commonly referred to as the
    “Upstream”. Refining and product sales are generally referred to as the
    “Downstream”.

   As the industry is globalising new major companies are being formed,
    particularly in Russia, China, India and Brazil.

   These companies are exhibiting global ambition both in the upstream and
    downstream.
   The petroleum industry can be divided into three broad segments:
    crude oil exploration and production, refining and product
    distribution and sales.

   The downstream oil sector is a term commonly used to refer to the
    selling and distribution of natural gas and products derived from
    crude oil.

   The downstream sector includes petroleum product distribution,
    retail outlets and natural gas distribution companies.
CHARACTERISTICS        UPSTREAM                REFINING           DISTRIBUTION &
                                                                       SALES
SOURCE            RESOURCE                MANUFACTURING          MARKETING
                  EXTRACTION
                  • Revenue depends       • Revenue depends      • Revenue depends on
KEY DRIVERS         on absolute price       on margin              margin
                  • Access to resources   • Location             • Location
                  • Technical skills      • Configuration        • Marketing skills
                                          • Technical skills     • Economy of scale
FINANCIAL         Highly capital          Highly capital         Low capital relative
RESOURCE          intensive               intensive              to other segments

                  Often highly taxed      Subject to corporate   Subject to corporate
GOVERNMENT                                taxes                  taxes. Products
TAXATION                                                         highly taxed in
                                                                 Europe
Crude Oil Distillation

                  LPG                           LPG
              Light St. Run
                                                Gasoline
                Naphtha                         Jet Fuel / Kero

               Distillates                      Diesel /
                                      Further
Crude Oil                            Refining    Heating Oils

                Gas Oils
                                                Bunker/Fuel Oils

                Residual
                (0 - 40%)                       Misc. Products
                                                • Coke (carbon)
                                                • Sulfur
REFINERY
             RETAIL                       RETAIL
                                        (OWN BRAND)



           WHOLESALE
                                          RETAIL
                                        (THIRD PARTY)



                                                COMMERCIAL
                                                FUELS
           INDEPENDENT
           WHOLESALRES/                         AVIATION FUELS
             RETAILERS
                                                INDUSTRIAL
                                                FUELS

                                                MARINE BUNKER
                                                FUELS


              OWN
           WHOLESALRES
                          CARGO SALES
              BULK
                            LARGE
                          CONSUMERS
   There are three main channels of sale for products from a refinery to
    the consumer : Retail, Wholesale and Bulk.

   The wholesale (or distributor) sector supplies to customers in small
    loads either directly from a refinery by truck or from a distribution
    terminal that is fed from a refinery or imports.

   Bulk sales are large volume sales that are generally made directly by
    the refiner or by a large trading company. Typical customers would be
    a petrochemicals plant or nearby power station.
   TAMOIL

   PREEM

   NESTEOIL

   ERG

   Q8
   Refined products are traded in reference to prices at a few key
    locations in the world.

   Their prices are set in relation to supply/demand pressures that
    are specific to the products markets.

   Market prices can be used to set transfer prices between a
    refinery and a distribution affiliate, so as to understand how
    much margin is made in both segments.
Downstream ppt

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Downstream ppt

  • 1. DOWNSTREAM PROCESS by RAGAVENDAR.A & SABARESAN.M
  • 2. CRUDE OIL PRODUCT EXPLORATION & REFINING DISTRIBUTION & PRODUCTION SALES DOWNSTREAM
  • 3. The petroleum industry can be divided into three broad segments:  Crude oil exploration and production  Refining &  Product distribution and sales.  Crude oil exploration and production is commonly referred to as the “Upstream”. Refining and product sales are generally referred to as the “Downstream”.  As the industry is globalising new major companies are being formed, particularly in Russia, China, India and Brazil.  These companies are exhibiting global ambition both in the upstream and downstream.
  • 4. The petroleum industry can be divided into three broad segments: crude oil exploration and production, refining and product distribution and sales.  The downstream oil sector is a term commonly used to refer to the selling and distribution of natural gas and products derived from crude oil.  The downstream sector includes petroleum product distribution, retail outlets and natural gas distribution companies.
  • 5. CHARACTERISTICS UPSTREAM REFINING DISTRIBUTION & SALES SOURCE RESOURCE MANUFACTURING MARKETING EXTRACTION • Revenue depends • Revenue depends • Revenue depends on KEY DRIVERS on absolute price on margin margin • Access to resources • Location • Location • Technical skills • Configuration • Marketing skills • Technical skills • Economy of scale FINANCIAL Highly capital Highly capital Low capital relative RESOURCE intensive intensive to other segments Often highly taxed Subject to corporate Subject to corporate GOVERNMENT taxes taxes. Products TAXATION highly taxed in Europe
  • 6. Crude Oil Distillation LPG LPG Light St. Run Gasoline Naphtha Jet Fuel / Kero Distillates Diesel / Further Crude Oil Refining Heating Oils Gas Oils Bunker/Fuel Oils Residual (0 - 40%) Misc. Products • Coke (carbon) • Sulfur
  • 7. REFINERY RETAIL RETAIL (OWN BRAND) WHOLESALE RETAIL (THIRD PARTY) COMMERCIAL FUELS INDEPENDENT WHOLESALRES/ AVIATION FUELS RETAILERS INDUSTRIAL FUELS MARINE BUNKER FUELS OWN WHOLESALRES CARGO SALES BULK LARGE CONSUMERS
  • 8. There are three main channels of sale for products from a refinery to the consumer : Retail, Wholesale and Bulk.  The wholesale (or distributor) sector supplies to customers in small loads either directly from a refinery by truck or from a distribution terminal that is fed from a refinery or imports.  Bulk sales are large volume sales that are generally made directly by the refiner or by a large trading company. Typical customers would be a petrochemicals plant or nearby power station.
  • 9. TAMOIL  PREEM  NESTEOIL  ERG  Q8
  • 10. Refined products are traded in reference to prices at a few key locations in the world.  Their prices are set in relation to supply/demand pressures that are specific to the products markets.  Market prices can be used to set transfer prices between a refinery and a distribution affiliate, so as to understand how much margin is made in both segments.