What does the energy industry’s jargon really mean?

There will be a flurry of activity on the energy front in the UAE capital this week with ministers, energy executives and analysts looking to complete agreements and brainstorm over the future direction of the industry. Here is our breakdown of the sector’s complex jargon.

What is upstream?

This refers to the first link of an energy company’s value chain. It focuses on the exploration and production of hydrocarbon resources.

What is a concession or a block?

Each refers to a stretch of land or acreage that is appraised to contain potential reserves of oil and gas. Governments and national oil companies often tender these in licensing rounds.

What is a licensing round?

It is not too dissimilar to a tender, whereby a national oil company or a government authority offers seismic data. Energy companies will purchase the data on reservoirs and appraise the land by spudding or drilling wells to gauge the potential for a field to contain extractable levels of oil or gas.

So what is downstream?

This refers to the second segment of the energy value chain, which involves refining the oil that spurts out of the ground into crude grades that can be sold in oil markets. Refineries separate unwanted elements in oil, such as sulphur.

What are the common products of refining?

Petrol, diesel and jet fuel. Refineries are huge feats of engineering with massive capacities built in the energy-hungry nations of India and China. The world’s largest refinery is the 1.24 million barrels per day facility at Jamnagar in India, the scale of which is so big that if all the pipes were laid one after the other they would connect all of India from north to south.

What are petchems?

Products such as naphtha, a crude oil product, and ethane, a gas, are used as feedstock or ingredients to create polymers or plastics. Since consumption of plastics is rising in Asia, the production of compounds such as ethylene and propylene – the building blocks of the polymers sector – are in high demand.

What is midstream?

Midstream refers to the segment of the energy value chain that looks after the transportation of oil, gas, and products via pipeline, tankers, barges, rail or even lorries.