3. شکیبا محمود دکتر
مشهد فردوسی دانشگاه
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The modern world is divided into three categories based on development in a
country or region:
➢ Developed
➢ Developing
➢ Underdeveloped
Despite disagreement on a specific set of social and economic criteria to
decide the development level, energy consumption is unarguably one of the
common indicators of progress. Practically all development activities in the
social (domestic, food, water, nutrition, education, and healthcare) and
economic segments (agriculture, transportation, industrialization,
manufacturing, and infrastructure) are energy driven, and that is why the
consumption of energy is one of the leading indices of development.
4. شکیبا محمود دکتر
مشهد فردوسی دانشگاه
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Primary sources of energy include hydrocarbon (crude oil and natural
gas), coal, nuclear, and renewable energy. Presently, crude oil meets
about 33% and natural gas 22% of the world’s energy demand.
(Organization for Economic Co-operation
and Development)
5. شکیبا محمود دکتر
مشهد فردوسی دانشگاه
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➢ Upstream, midstream, and downstream industries are subject to
operational and market risks.
➢ Operational risks are typical of a particular industry. However, market
risks are common to all sectors.
➢ They may arise from social unrest, political turmoil, fluctuations in
interest rates, natural disasters, terrorist attacks, and geopolitical
events or conflicts at a local, regional, or international scale.
➢ Any national or international incidents that can affect the global
balance of demand and supply can trigger market risk.
➢ Chokepoints are narrow maritime seaways that are critical for global oil
cargo.
6. شکیبا محمود دکتر
مشهد فردوسی دانشگاه
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➢ In the age of globalization, where business operations and
infrastructure of oil and gas companies are spread over several
countries, national events have regional and international fallouts.
➢ Profits and losses of the petroleum exporting and importing countries
can soar and slump with the rise and fall in oil prices.
➢ Nearly 60% of the world’s total supplies were routed through the
three famous chokepoints, namely, the Suez Canal, the Suez
Mediterranean (SUMED) Pipeline in the Arabian Peninsula, the Strait
of Bab el-Mandeb, and the Strait of Hormuz.
7. شکیبا محمود دکتر
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➢ Any kind of conflict or tension in the neighboring countries
around these chokepoints can have a devastating impact on oil
prices and the energy security of the consumer nations.
8. شکیبا محمود دکتر
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❖ Because oil is such a vital commodity today, an oil-producing
or consuming nation must be aware of the environment to
maximize benefits.
❖ Oil producing nations focus not only on controlling the cost of
indigenous oil production; they also look for opportunities to
seal the long-term cheap oil deals in the international market.
❖ An oil company’s performance is affected by factors as below:
❑ Internal factors
❑ External factors
9. شکیبا محمود دکتر
مشهد فردوسی دانشگاه
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❖ Expertise
Expertise relates to skills and knowledge in a particular field. It is a game-
changing attribute that has a telling effect on problem-solving and winning the
competition. Expertise exists in a company in the form of the employees’
knowledge and experience about their reservoirs, company strategy, business
guidelines, short- and long-term plans, sources, digital and analog databases,
workflows, processes, and etc. A manager’s challenge is to harness this
knowledge coherently and productively. By working together, it is possible to
identify the Subject Matter Experts (SME) who can expedite decision-making.
An SME is a competent professional who addresses a question with a deep
understanding and wealth of experience in his area of discipline to meet the
project requirement.
10. شکیبا محمود دکتر
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❖ Performance
In the context of an organization, performance means converting a plan into
action and deliver results. Clear and precise communication is the key to
achieve performance targets. The management must align the organizational
vision, mission, values, and aspirations to create a sound performance culture.
The corporate structure should not be a barrier; it should facilitate interaction
and collaboration. Organizational performance is a participative process that
involves teamwork, quality, and cost consciousness, load sharing, and owning
of responsibilities. A fair and consistent performance measurement system
reflects these elements to reward and recognize high achievers. The
organization must prepare a personnel development plan for all staff members
based on identifying their training needs. It will benefit both the organization
and the employees with improvements in the quality of service and results.
11. شکیبا محمود دکتر
مشهد فردوسی دانشگاه
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❖ Cost
Oil and gas development is expensive, and a net positive cash flow may take
several years. The company must have sound financial credentials to sustain
these operations and resilience to absorb setbacks. Cost is an amount of money
that has to be paid or spent to produce oil and gas. However, the word “cost
price” also includes other outlays necessary to produce oil and gas, such as
property costs, materials, power, worker wages, etc. Most companies treat the
cost price as a piece of confidential information for several reasons. It
influences the cost-consciousness of customers who prefer to buy goods or
services within a specific price window. Competitors can strategically
manipulate the price of their goods/services to secure a higher market share to
improve their profitability. Cost price can also determine investors’ profits and
decision making into either buying or selling the tradable securities.
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مشهد فردوسی دانشگاه
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❖ Supply
The word supply of oil and gas is an overarching function that includes oil and
gas production at the in-country point of export/sale and then further
transportation to the consumer country by rail, road, ships, or pipeline. Oil and
natural gas are extracted from individual reservoirs and wells. It is then brought
to gathering centers, processed to separate oil from gas and water, and other
impurities. Crude oil should conform to agreed specifications of bottom
sediment and water (BS&W), crude API, and sulfur content at the export/sale
terminal. Natural gas should be free from heavier hydrocarbons and meet the
heating value specifications. Heavier hydrocarbons removed from the gas, also
known as natural gas liquids (NGL), can be sold separately or mixed with crude
oil. The natural gas supply must comply with emissions regulations and
pipeline gas specifications in terms of water content, H2S, CO2, O2, N2, gross
heating value, and delivery temperature and pressure.
13. شکیبا محمود دکتر
مشهد فردوسی دانشگاه
حداقل وجود
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کانی درصد
سنگ در رسی
ترکیبات وجود
نفت در قطبی
وجود
دو هاییون
ظرفیتی
محیط در
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❖ Demand
Price plays a significant role in the profitability of an oil and gas company. It is
controlled by several factors that include demand and supply, production cost,
world crises arising out of political events, pandemics, and natural calamities.
Over the past decade, oil prices maintained a bullish streak between 2011 and
mid-2014, with a high of $112 per barrel in 2011 over threats to choke the
Strait of Hormuz. A crash in oil prices followed this period due to the oil glut in
2014 with the lowest price of $29 in Feb 2016. Oil prices rallied back to $76 in
October 2018 before steadying up at an average of $55-56 per barrel. The
recent dramatic impact of COVID-19 on oil demand and resulting oil prices
slump to $20 a barrel in April 2020 is fresh in everyone’s memory. The
equation of demand and supply is a crucial price determinant. The oil price
goes up as the demand for oil increases, and supplies are inadequate or at risk.
The oil price is lower if the supply is assured, and it exceeds the demand.
14. شکیبا محمود دکتر
مشهد فردوسی دانشگاه
حداقل وجود
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کانی درصد
سنگ در رسی
ترکیبات وجود
نفت در قطبی
وجود
دو هاییون
ظرفیتی
محیط در
نفت شرایط
خنثی یا دوستی
مخزن سنگ
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❖ Market Share
Market share is a big deal for the oil- and gas-exporting countries. It is also in
the interest of the importing countries that wish to make long-term
arrangements for energy supplies. Usually, the companies that hold a high
market share are more profitable than their competitors. These companies can
make higher profits from the bulk procurement of materials and operational
cost savings if they manage well. They also gain a bargaining advantage over
their competitors based on their market position and network.
15. شکیبا محمود دکتر
مشهد فردوسی دانشگاه
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❖ Competition
Businesses cannot escape competition-the competition forces organizations to
innovate and be more cost-effective. The objectives of energy security and
profitability drive both NOCs and IOCs to compete for acquiring oil and gas
properties in foreign countries and integrating their operations across the supply
chain. The competition also introduces threats to a business. The first and
foremost is the threat of new entrants into the market with possibly higher
talent, desire, and capability to compete. However, the new entrants have to
overcome resource-ownership barriers, large capital requirements, and scale of
operations that come in their way of success.
16. شکیبا محمود دکتر
مشهد فردوسی دانشگاه
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❖ Competition
Another risk to oil and gas comes from disruptive technologies. Disruptive
technology is a concept, invention, product, or technology that disrupts
conventional paradigms. It is an “out of the box” idea that can develop into a
new commercial product or industry.
Oil price shocks and climate change initiatives have forced the world to
expedite alternative energy methods. The fuel cell, solar, wind, geothermal, and
other technologies are being tested and expanded. The oil and gas companies of
today are aware of these challenges. They evaluate the potential of the new
technologies to diversify their portfolio with an eye on the future.
17. شکیبا محمود دکتر
مشهد فردوسی دانشگاه
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❖ Oil Price
It is essential to understand the microeconomic and macroeconomic
implications of oil prices. Microeconomics is a study of the behaviors and
interactions of individuals and companies as scarce resources get reallocated
under the new price regime. The common man feels the first impact of higher
oil prices in the form of increased gasoline prices. Gasoline prices affect the
supply cost because transportation and distribution of goods become costly. On
the other hand, higher oil prices tend to increase production costs because
operations and services become expensive. Macroeconomic factors deal with
the health of national or regional economies defined by gross domestic product,
inflation rate, unemployment rate, and etc. An increase in oil price is generally
associated with a higher inflation rate due to an increased cost of goods and
services. It reduces economic activity and growth. Thus it can be concluded
that a sustained increase in oil prices suppresses the economy.
