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The oil & gas industry

The oil and gas industry is one of the largest in the world. It is made up of a small number of
conglomerates and a very large number of smaller independent companies. Generally speaking, the
industry is divided into two areas. Upstream operations involve exploration and production, often
known as E&P, while downstream operations involve transportation, refining and sales of products to

Relationships between companies can be very complex, with large companies owning multiple
subsidiaries around the world. In some cases, they compete for market share, in others they can be
suppliers and customers of one another. They make joint ventures with other large companies for
specific projects and there are frequent mergers and acquisitions.

Oil and gas production takes place onshore and offshore. Oil and gas companies are engaged in a
constant search to discover new reserves and to obtain extraction rights for proved reserves.
Construction of drilling wells and rigs is an enormous risk and companies need to calculate supply and
demand in order to be certain that an operation will be profitable before it comes on-stream.

Getting the facts straight

Read these extracts from Internet websites relating to the oil and gas industry. Which of these
statements are:

a purely factual?

b intended to show the importance of the oil and gas industry to the global economy?

intended to promote one particular oil company?

As the global economy evolves and expands, it presents enormous opportunities for the energy
industry. We estimate that the worlds oil and gas needs will grow 40% by 2030 (Rex W. Tillerson,
Chairman and CEO, ExxonMobil).
Proved reserves of oil are generally taken to be those quantities that geological and engineering
information indicates with reasonable certainty can be recovered in the future from known reservoirs
under existing economic and geological conditions
Without oil and natural gas, quality of life would decline and people in developing nations would not be
able to improve their standard of living.
Strong demand from oil and gas producers has pushed rates for offshore drilling rigs to record highs,
prompting many companies to build new rigs to meet the strong demand .
Shell E&P is engaged in the upstream activities of acquiring, exploring, developing and producing oil and

Website accuracy

In many online encyclopedias, readers can edit information themselves if they believe the information is
false. The following facts were correct in October 2008. Use a search engine, such as Google, to check
and update any information which is incorrect or out of date.

1 The world produces and consumes 75 million barrels of oil a day.

2 The USA consumes 25% of the worlds supply of oil.

3 China is the second largest consumer.

4 Sixty-eight per cent of the worlds oil reserves are in the Middle East.

5 The price of a barrel of oil quadrupled from US$3 to $12 in the 1973 oil crisis.

6 The Thunder Horse platform in the Gulf of Mexico was hit by two hurricanes in 2005.

7 The biggest oilfield in the world is in Venezuela.

8 Oil and gas conglomerates employ 70% of their resources in upstream operations.

1. Demand ____ oil will continue to increase until 2015.
A of
B with
C by
D for

2. Reserves ______________ natural gas are being found almost daily.
A of
B for
C off
D from

3. Drilling __________ oil and gas is a major part of our upstream operations.
A of
B for
C through
D between

4. The market ______________ liquefied natural gas is growing steadily.
A with
B for
C up
D of

5. The supply _____________ North Sea oil can be maintained until around 2024.
A for
B above
C of
D under

6. The extraction __________ oil at the Burgan field began in 1946.
A in
B off
C for
D of

7. Transportation ____________oil presents many security risks.
A for
B with
C of
D by

8. Consumption_____________ fossil fuels has declined slightly in recent years.
A on
B for
C of
D at

9. Exploration ___________ oil and gas has been going on for over a hundred years.
A for
B by
C of
D on

10. Production ____________ gas from deep-water reserves is our main area of expertise.
A from
B of
C for
D over