This document is a student assignment on legal aspects and risk management in the oil and gas industry. It discusses the three main sectors of oil and gas production - upstream, midstream, and downstream. The upstream sector involves exploration and extraction. Risk management is important for assessing risks during exploration and production activities. Key players in the industry include national oil companies, international oil companies, and other stakeholders. The document recommends improving security and ensuring political stability to attract more investment in exploration activities.

1. Module Name: Legal Aspect in Oil and Gas
Module Code: POG220
Course Assignment: PSA and Risks Management
Student name: Steve Odigie
Student Id: 31120
Level 5

2. The Aim and Objective of this Essay:
The main aim and objective of this project work is to produce
unanimousunderstandingabout oil and gas explorationand
its challenges in Oil and Gas operations. It also highlightsan
establishment of responsibilitylevels, Standardsto be used
and procedures to be established and followed to ensure
safe and environmentallyacceptableoperationsof Oil and
Gas.
Abstract:
An oil and gas exploration portfolio contains a multitude
of data on potential hydrocarbon accumulations(leads
and prospects). Majorchallenges in managing such a
portfolio are that of ensuring data is kept up-to-date, a
consistent evaluationwith a clear audittrial is applied
throughout and that data are availablefor the ongoing
lead/prospect evaluation.

3. Introduction
The Oil and Gas industry comprises three parts: „upstream‟
which deals basicallywith the explorationand extraction
sector; „midstream‟ involvesthe transportation of crude oil
by tanker ships from rigs to the refinery and the
downstream‟ which deals with refining and processing of
crude oil and gas products, includingtheir distributionand
marketing. Our Concentrationis basicallyon the exploration
for crude oil. In order to appreciate the origins of oil
development upon the environment, it is important to
understand briefly how oil and gas forms.
By the words Oil and Gas, we are actuallyshortening the
words, Crude oil and NaturalGas. Also closely linked to these
words is the term petroleum. The Word Petroleum comes
from the Greeks. Petra means rock, and oleum means oil. In
its strictest sense, petroleum includes only Crude oil. By
usage, however, petroleum includes both crude oil and
natural gas.
Oil and Gas are products of plantsand animalremains or
organic materials. For the most part, these plants, corals
and animals lived in seas. Over millionsof years, the
remains settled on the ocean floor together with

4. sediments which washed down from exposed earth and rock
In later periods, these layers of organic material and
sediment were covered by more sediment which, as a
result of time, heat and pressure, these remains
converted, first into a waxy material known as kerogen, and
then into liquid and gaseous hydrocarbons in a process
known as catagenesis.
These then migrate through adjacent rock layers, until
they become trapped underground in porous rocks most
often in sedimentary rocks called reservoirs, forming an oil
field, from which the liquidcan be extracted by drillingand
pumping. Oil and Gas exploration and Discovery, the
initial search for oil is carried out mostly by geologists.
Their task is to find the right conditionsfor an oil trap, the
right source rock, reservoir rock and an entrapment.
The Upstream petroleum industry is mainly divided into
exploration and extraction. Exploration can be Offshore or
Onshore. Onshore exploration is the type that occurs on
land as opposed to offshore explorationthat takes place
subsea. Engineer are making sure to apply a proper before
oil exploration.Years a go, engineers conducted soe of the
researched in the project area probablywhere there’s some
rock, soil types, and perhaps some small core samples
obtained by shallow drilling.

5. Main Body:
PSC:
The international oil and gascompanies are the main in
charge of productive activitiesand the costs. At the
beginningof the activities, international oil company andthe
host government share responsibilities, which risks are
mainly taking by the international oil andgas companies and
safety are takin by the host government. The oil stream is
first of all divided into two parts: Cost oil and Profit oil. In this
agreement all the risks is bearby the internationaloil
company, includingthe investment. The government don’t
have to spend any investment for the project.
Risk Management for oil and gas exploration:
The oil and gas is a vulnerableRisks in petroleum industry
and affecting internationaloilcompany during exploration
and productionactivities. Risks need to be access by the
firms before any activities commenced, Quantitativeand
qualitativerisk management (RM) assist to know the impact
of Risks in the environmentand how much it will cost the
firm to reduce those risks. Risks must look after properly

6. before anything start in the project area, Risks are the key in
the petroleum industry and this risks has the link between
Risk Management concept, the firm risks strategy
management , outsource and service level. All risk are under
the manufacturing activities which is refining, distributions
and sales of crude oil after been transformed in the suppliers
channel.
UPSTREAM SECTOR:
The upstream sector refers to the search for, followed by
production,and recovery of, crude oil and naturalgas, it is
also widely known as the exploration and production.Mostly
affecting the environment with air pollution becauseof
drillingexploration, and the government need to make sure
that IOC will be able to user highest technology so that the
environment will not be polluted(
MIDSTREAM SECTOR:
This sector dealswith the transportation, refining and
processing of oil and gas. The midstream progressions and
supplies, marketplaces and transportationsof oil and gas,
normal energy and the variousnatural gas liquidslike

7. ethane, butane and propane. Oil and gas turns up to an
industrialized procedure plant and is converted into a variety
of more suitable fuel products.
DOWNSTREAM SECTOR:
The crude oil activities normallycarry out after manufacture
phase then sale follows. Downstream processes carry out
together with filtering of crude oil and dispensingfinal
product to retailers. Key Players in the 3 sectors Of Oil and
Gas Production; This will vary dependingon the type of
ownership operated where such oil and gas is found. Where
oil and gas is privately owned, definitely productionat all
stages will be run privately, any involvementof the
government or any other company will be based on
contracts between the parties. However under the leasehold
ownership, which is operated in Nigeria, the government
issues licenses ( production sharing contracts, to explore,
develop and produce its oil and gas resources, which are
typicallyadministered by the oil ministry. In Nigeria NNPC is
the Nationaloilcompany, and it enters into different
contractual agreements with stake holders doing oil and gas
business in Nigeria. Examples of such stake holders are
Chevron, Conoiletc. Therefore the key playersare The
NationalOil Company,Multinational OilCompanies,
InternationalOil Companiesand any other stakeholders.
Summary/Conclusion;This brief paper has shown us that
crude oil goes through 3main stages of production;upstream

8. which deals with exploration,midstream which dealswith
refining and processing, and finally downstream dealingwith
marketing and distribution.
In Nigeria, these stages have suffered little problems such as
price fluctuationdue to the influence of government,
therefore, a commercializationof the NationaloilCompany
(NNPC) and a deregulationof the downstream sector is
advised to solve most of the problem oil and gas production
faces in Nigeria, and this is what the Petroleum IndustrialBill
(PIB) seeks to achieve amongst others.
Recommendation:
Which are aimed at attracting investors and accelerating
upstream activities in any oil producing country. The first is
the aspect of Improvements of Security Situation.Whatever
other conditionsare; any country can attract investment in E
& P sector providedits security situationimproves
significantly.
Although Government must put in place all possible efforts
to control the menace of terrorism and other security issues.
However, it is recommended that Government should bring
all stakeholderson board, formulate an aggressive policy to
curb the elements creating law and order situation in
country and then execute the policy in letter and spirit

9. without any exception. Otherwise the exploration of huge
Gas and Oil Reserves shall remain a dream.
Second important aspect is to Ensure PoliticalStability.It is
now time for politicalleadershipof Pakistan to take all
possible measures to ensure that Pakistan forgets the traces
of past and becomes a politicallystable state. Political
stabilitynot only means that the democratic process
continues but also that the policies, which are in best
interest of country, are sustained to get confidence of the
investors. Otherwise merely having five yearly polling
process will not bring any change.
Conclusion:
Oil and Gas industry can be more powerful on channelsof
importing by creating or put in place new technology on
manufacturing clean gas, with adequate transportationfor
crude oil from the site project to the world. Thisproblem in
oil and gas sector to invest more by enquiring infrastructure
from abroad and proper storage, which it will be more
convenientfor the environment, and finding the way of
reducing gas emission by using renewable energy. United
Kingdom energy policy security can implement new strategy
for the country, the only strategy planis energy efficiency

10. plan, that it will be reduce oil and gas to destruct the
environment, when there’s a lack of proper storage.
References:
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Wesley, 5th edition,1995) Pg 89. b.Wright, P., Prungle, C.,
Knoll, M., Strategic ManagementText and Cases (United
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obligatorystock holdingrequirements in the UK: A report for
the department of Trade and Industry (DTI) (New Cavendish
street: United Kingdom, 2006) g.Thompson and Martin,
Strategic Managements(Awareness and Change) 5th.ed.
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