Upstream Sector Research Articles

Simulation of Cooperation Scenarios of BRI-Related Countries Based on a GVC Network

The inter-country input–output table is appropriate for presenting sophisticated inter-industry dependencies from a global perspective. Using the above table one can perceive the amount of production resources that sectors obtain from their upstream ones, as well as the number of productive capacities that sectors provide for their downstream ones. In other words, competition/collaboration occurs when sectors share the same providers/consumers because all sectors’ products and services outputted to downstream ones are limited. Thus, inter-industry competition for inputs from upstream sectors, or collaboration on outputs to downstream sectors, may be quantified with input–output matrix transformation. In this paper, a novel analytical framework of inter-industry collaborative relations is established based on the bipartite graph theory and the resource allocation process. The Collaborative Opportunity Index and Collaborative Threat index are designed to quantitatively measure the industrial influence hidden in the topological structure of the global value chain (GVC) network. Scenario simulations are carried out to forecast the potential and trends of international capacity cooperation within Asian, European, and African nations related to the Belt and Road Initiative, respectively.

Sustainable Recovery: Managing Risk, Uncertainty, and Complexity

I was invited to chair an executive panel related to best practices in oil megaprojects at the 2021 World Petroleum Congress in Houston in December. There were outstanding presentations by Petrobras, Equinor, and Chevron related to developing very complex projects in challenging surface and subsurface environments with the required quality and in line with initial cost estimates. Technological evolutions in our industry have allowed such an achievement, which makes me proud to belong to this industry. If I were to characterize the skills that differentiate our oil and gas professionals from most other industries, I would highlight our knowledge of subsurface sciences and the ability to manage large-scale projects that are complex and have significant risks associated with them. The latter refers to a significant deviation from the planned/expected performance of the project due to various factors. SPE has developed over the years several initiatives related to risk management. They span most of the technical disciplines, in particular the Health, Safety, Environment, and Sustainability, and the Management disciplines. Among the latest resources is the Human Factors Technical Section, which has done an outstanding job to deliver valuable information on how to mitigate risks associated with human factors, especially in the case of complex decisions with short-time response required. With the expanding use of artificial intelligence in our operations, there will be more involvement of the Data Science and Engineering Analytics discipline. Other resources include publications about decision analysis, and in particular, the books Making Good Decisions, Introduction to Petroleum Economics, and the still very useful Decision Analysis in E&P. A particular type of risk that our industry faces is the challenging economic environment that has resulted in shorter industry cycles associated with an increased impact on activity (hence employment) in the oil and gas sectors. The activity drop in 2014–2016 led to a decrease of more than 25% in upstream investments, followed by another even larger (30%) decline in 2020. In fewer than 5 years, the upstream sector has seen investments nearly halved. I highlighted in a previous column that the 2022 recovery would depend on the emergence of new variants of COVID-19. The emergence of the Omicron variant and the speed at which it is spreading around the world, with limitations imposed on international travel, has led to new daily cases reaching a (conservative) figure of 3 million daily worldwide. Thankfully, it seems that the severity of the cases is lower than with previous variants such as Delta.

Natural Gas Scarcity Risk for Countries along the Belt and Road

The rapid development of the Belt and Road economics has generated a considerable energy demand. Under the general trend of the global energy transition, natural gas resources are becoming the main driving force. The limited natural gas resources are posing a significant risk to economies, and this risk may also be transferred to other distant regions through economic trade. The aim of this study is to explore the trans-regional (sectoral) transmission pattern of natural gas scarcity risk. The main contribution of this paper is the assessment of the local natural gas scarcity risk (LGSR) and cross-region transfer relationship of embodied natural gas scarcity risk (EGSR), which are evaluated for the BRI economies. In addition, the network amplification effect is considered when evaluating the cross-regional impact of natural gas scarcity risk. The results show that, at the national level, Turkey, Ukraine, and Bulgaria have significant EGSR related to exports activities. The natural gas scarcity risks (GSRs) originating from these countries are mainly transferred to Turkmenistan, Georgia, and Albania, with large EGSR imports. Moreover, by comparing the ranking changes of EGSR imports, EGSR exports, and LGSRs at the national and sectoral levels, countries or sectors with higher LGSRs also have higher EGSR exports. The Top EGSR import and export network consisting of top EGSR flow relationships can well reflect countries’ preferences in choosing EGSR transfer partners. The results suggest that upstream countries and sectors should strengthen cooperation to manage natural gas resources, and provide references for decision makers in highly vulnerable downstream countries and sectors to formulate strategies to avoid the large-scale spread of economic losses caused by natural gas scarcity.

Comparing Environmental Financial Guarantee Schemes in Kenya and South Africa

Kenya and South Africa have enacted some laws that inculcate economic incentives schemes as key elements of their environmental regulatory terrain. While Kenya has advanced the use of Environmental Performance Deposits (EPDBs), South Africa has adopted the use of the Financial Provisioning Regulations, applied specifically for the upstream mining sector. This article reviews the use of financial assurance schemes in environmental management and their specific application to the upstream mining sectors in the two countries. The data used in the analysis is from literature review, key informant interviews, interview schedules, and focus group discussions. Results indicate that while the use of financial provisioning is a well-established practice in South Africa, in Kenya only one company has deposited funds to the environmental regulator as a security for good environmental practices. A comparative analysis of the regulatory framing for financial assurance instruments in Kenya and South Africa demonstrates some similarities in terms of requirement for public participation, requirement for periodic review of the bonds, use of the bonds for environmental rehabilitation; and some differences such as requirement for use of cash and/or financial instruments, how to treat the accrued interest from the deposited funds, and how the deposit bond amounts are set. Largely, both countries acknowledge the importance of economic incentives in their environmental management frameworks. The article recommends strengthened regional cooperation to enhance the application of financial assurance in the law for effective environmental management in Africa.

The legal regime for assignment of interests in Nigeria’s upstream petroleum sector: a critique of Moni Pulo vs Brass Exploration, DPR’s 2014 and 2021 Guidelines and the Petroleum Industry Act of 2021

Abstract Nigeria discovered oil in 1956. The Petroleum Act of 1969 that for a long time regulated the upstream petroleum sector was obsolete. This was manifest in respect of the legal regime for the transfer of upstream assets and interests. Under this regime only direct transfer of Oil Licenses or Leases were regulated. Change in control situations of Oil License or Lease holders or a merger/acquisition were not regulated. Unfortunately, Nigeria’s legislative organ, like most of the developing world where there has been political instability due to military intervention, has not been able to respond swiftly to fast-paced developments in the industry. The Petroleum Industry Act has taken some 20 years from conception to passage. In that period, the Department of Petroleum Resources (DPR) that regulated the industry found creative ways to regulate the industry in light of the failure of the National Assembly. This included issuing regulations regarding transfer of interests in the upstream sector. The judiciary was not left out and at least one case came up for determination in this regard. This article argues that case law on this point and DPR’s intervention through regulation are wrong in law and section 95 of the new Petroleum Industry Act has saved the situation.

FOSTERING AN ECONOMIC LINKAGE BETWEEN INDIGENOUS GHANAIAN FIRMS AND LOCAL CONTENT POLICY IMPLEMENTATION: A CRITICAL REVIEW

The desire to use the extractive industry as a catalyst to provide an enhanced and positive economic breakthrough for resource-rich countries continues to be at the forefront of the debate on natural resource abundance and development. After several years of concentrating on fiscal policies as a means for accomplishing positive impact, local content policies (LCPs) have re-emerged as one of the tools that could allow linkages within the extractive sector in developing economies, particularly those in Africa. By integrating extensive literature on the subject under investigation, this paper critically analyses whether Ghana’ LCP implementation has been able to foster an economic linkage between indigenous Ghanaian-owned firms in the upstream sector. Our critique also seeks to ascertain if the development of LCP has been an efficient springboard in leveraging development transformation. Following on from other studies on LCPs, it is widely argued that local content policies can be a useful strategy for resource-rich countries in their quest for economic transformation, but this assertion appears to be vague as local content policy implementation and its cascading ramifications on indigenous businesses have produced mixed results. What this means is that local content policy implementation strategies differ from country to country and so no single policy will fit for all as some countries focus on various areas based on their level of development and economic aspirations. This paper offers observations and insights for rethinking theoretical approaches that can help establish the linkages between local content policy implementation and its implications on indigenous firms.

Accounting Practices and its Effect on Performance of Oil and Gas Companys in Nigeria

: This work examined the extent to which Accounting practices affect theprofitability of Oil and Gas companies in Nigeria, particularly those in the upstream sector. The Researchers used Stratified Sampling Design approach. The target population comprised of Oil and Gas Companies in Nigeria. A total of 84 respondents were drawn from the population. Both primary and secondary data were used in the study. Primary Data were collected using questionnaires drawn using the Likert’s Scale with five points ranging from very great extent to no extent, while secondary data were sourced from already published materials. Hypotheses were formulated and data were analyzed using SPSS Software and other Descriptive statistical tools such as; percentages and tables. The result of the study showed that accounting practices had a significant relationship with performance of Oil and Gas Companies, particularly, the Return on Assets and Return on Capital Employed. It was recommended that proper and best accounting practices should be adopted by Oil and Gas companies to ensure better performance on one hand and fair, transparent and reliable financial reports on the other hand.

Methane detection and quantification in the upstream oil and gas sector: the role of satellites in emissions detection, reconciling and reporting

Satellites could revolutionise the way global oil and gas methane is reported. There are many barriers to overcome before satellites can play an active role in methane emissions reporting.

The Value-Added and Linkage Effect Analysis of Taiwan’s Agricultural Sector

There is an increasing consensus in Taiwan that for agricultural development and policy planning the traditional production-based agriculture perspective should be replaced with a value chain perspective. Accordingly, when considering the value-added contribution of Taiwan’s agricultural sector, its relation-ship with upstream, midstream and downstream sectors should be considered and estimated altogether. In this study, we use the demand-side input-output (IO) methodology to compute and analyze the value-added and linkage effects of Taiwan’s agricultural sector. We found that if all the contribution along the value chain is considered, agriculture sector accounts for approximately between 10.56% and 11.85% of GDP, which is a sevenfold increase compared to contribution based on its mere production value (i.e., 1.65% - 1.87% of GDP). This study recommends that future agricultural policy planning, in addition to focusing only on the primary production agriculture, should also include the distribution sector and food and beverage services sector, such as regulations for e-commerce sales channels for agricultural products, food hygiene regulations for the food and beverage industry, and cold chain logistics regulations for agricultural products.

The Development of Bali's Cocoa Industry through the Hexagon Model for Local Economic Development (LED): Sorga Chocolate Factory

Local Economic Development (LED) is the foundation for maintaining the national economic cycle and supporting local financial independence. In addition to its tourism sector, Bali has potential in the cocoa industry. In 2009, Bali had 12,850 hectares of cocoa land. Balinese cocoa is also famous for its taste and fermentation quality. Unfortunately, the cocoa industry still has several challenges, such as cocoa farmers being comfortable with the value chain formed by the world's largest cocoa companies, Indonesian cocoa's renowned mixed and low-quality cocoa; access to buyers; different prices between farmers, wholesaler, and lead firms; productivity consistency and quality in the upstream sector; and climate change. This research will examine the cocoa industry in Bali using the Hexagon Model for LED and also analyze the upstream-downstream process of the Balinese cocoa industry. The objective of this article is to examine how the Hexagon model for LED in the Balinese cocoa industry can further activate local economic activities and form a resilient and sustainable local economy. The local government has established regulations for the protection of cocoa farmers in collaboration with Kalimajari and Udayana University, however, optimization in implementing the regulations still need to be done, especially in the government sector

Emissions and Air Quality Implications of Upstream and Midstream Oil and Gas Operations in Mexico

Mexico approved amendments to its constitution in December 2013 that initiated transformational changes to its energy sector. This study developed a 2016 bottom-up emissions inventory for volatile organic compounds (VOCs), nitrogen oxides (NOx), sulfur dioxide (SO2), carbon monoxide (CO), and fine particulate matter (PM2.5) from upstream and midstream sector sources, including onshore and offshore well sites, gas flaring, natural gas processing facilities, and natural gas compressor stations, throughout Mexican basins. Crude oil storage tanks at onshore oil well sites and venting and fugitive sources at offshore oil production sites were the primary sources of VOC emissions. Key contributions to NOx, CO, and PM2.5 emissions were from internal combustion engines at offshore oil well sites and midstream operations. SO2 emissions were associated with onshore and offshore gas flaring and boilers and process heaters at natural gas processing facilities. Application of the inventory with the Comprehensive Air Quality Model with Extensions (CAMx) indicated that oil and gas production operations could contribute to ozone and PM2.5 concentrations in Mexican and U.S. states under favorable transport patterns. This study provides a foundation for assessing the implications of Mexico’s future energy policies on emissions and domestic and cross-border air quality and public health.

Organic matter processing through an estuarine system: Evidence from stable isotopes (δ13C and δ15N) and molecular (lignin phenols) signatures

This study unraveled the origin, fate and accumulation of organic matter (OM) of surface sediments, spread between the fresh and marine end members of Guaratuba Bay (SE- Brazil). Sedimentation rates were obtained through the 210Pb sediment dating method, biogenic element accumulation (C-organic carbon, N-nitrogen, P-phosphorus, and lignin phenols) and stable isotopes of organic carbon (δ13C) and nitrogen (δ15N) were measured along the well-defined salinity gradient (0–35). The higher C:N ratios and lower δ13C values signatures indicate major terrestrial contribution in regions dominated by fluvial inputs, while the contributions from autochthonous primary production and mangrove forests were greater in the middle and outer estuarine sectors. A stable isotope mixing model showed that the material contribution from rivers and mangroves in surface sediments ranged from 80 to 90% in the upstream sector, 50–70% in the central sector and 25–50% at the outer region, whereas this contribution decreased to 15–20% in the adjacent ocean. Ratios between phenolic groups indicated material deposited from predominantly woody angiosperms. Vertical CNP deposition, accumulation rates and lignin phenol concentrations along the sedimentary profiles indicated three phases: Phase I, the more recently deposited sediments, which contained the highest CNP sedimentary fluxes; Phase II, dated to be from 1960s to 1990s, was characterized by changes related with increasing deforestation associated to fires; Phase III from the 1920s–1960s, exhibited four-fold lower C, N and P concentrations compared the more recent rates. Along the estuarine gradient, the C accumulation was found to be related to specific sources as indicated by the lignin's, stable isotopes as well as C:N ratios. Furthermore, the vertical accumulation of OM in sediments concomitantly with geochronology showed the recent anthropogenic perturbations in the estuary. This study highlights the land-ocean sedimentary continuum of which are poorly studied with respect to the transport of C, N and P in estuarine systems, reinforcing the presence of a marked land-ocean gradient. Knowledge of isotopic fractions, as well as lignin phenols, for different areas along the estuarine gradient is important as sampling along coastal areas can represent a bias in understanding the transport and cycling of OM to the sea if gradients and specific regions are not taken into account.

Performance of asphaltene stability predicting models in field environment and development of new stability predicting model (ANJIS)

AbstractAsphaltene Precipitation is a major issue in both upstream and downstream sectors of the Petroleum Industry. This problem could occur at different locations of the hydrocarbon production system i.e., in the reservoir, wellbore, flowlines network, separation and refining facilities, and during transportation process. Asphaltene precipitation begins due to certain factors which include variation in crude oil composition, changes in pressure and temperature, and electrokinetic effects. Asphaltene deposition may offer severe technical and economic challenges to operating Exploration and Production companies with respect to losses in hydrocarbon production, facilities damages, and costly preventive and treatment solutions. Therefore, asphaltene stability monitoring in crude oils is necessary for the prevention of aggravation of problem related to the asphaltene deposition. This study will discuss the performance of eleven different stability parameters or models already developed by researchers for the monitoring of asphaltene stability in crude oils. These stability parameters include Colloidal Instability Index, Stability Index, Colloidal Stability Index, Chamkalani’s stability classifier, Jamaluddin’s method, Modified Jamaluddin’s method, Stankiewicz plot, QQA plots and SCP plots. The advantage of implementing these stability models is that they utilize less input data as compared to other conventional modeling techniques. Moreover, these stability parameters also provide quick crude oils stability outcomes than expensive experimental methods like Heithaus parameter, Toluene equivalence, spot test, and oil compatibility model. This research study will also evaluate the accuracies of stability parameters by their implementation on different stability known crude oil samples present in the published literature. The drawbacks and limitations associated with these applied stability parameters will also be presented and discussed in detail. This research found that CSI performed best as compared to other SARA based stability predicting models. However, considering the limitation of CSI and other predictors, a new predictor, namely ANJIS (Abdus, Nimra, Javed, Imran & Shaine) Asphaltene stability predicting model is proposed. ANJIS when used on oil sample of different conditions show reasonable accuracy. The study helps Petroleum companies, both upstream and downstream sector, to determine the best possible SARA based parameter and its associated risk used for the screening of asphaltene stability in crude oils.

Organizational Structure and Technological Investment*

We analyze firms’ decisions on their vertical organization, taking into account the characteristics of both the final good competition and the R&D process. We consider two vertical chains where upstream sectors invest in R&D. Such investment determines the production costs of the downstream sector and has spillovers on the production and the investment costs of the rival. In a general setting, we show that the equilibrium organizational structure depends on whether the situation considered belongs to one of four possible cases. We study how final good market competition, R&D spillover, and R&D incentives interact to determine the equilibrium vertical structure.

The influence of volcanic supply on the composition of modern river sands: the case study of the Ofanto River, southern Italy

Abstract The Ofanto River drains volcanic rocks from the Monte Vulture, lacustrine–fluviolacustrine deposits associated with the same volcano and sedimentary deposits of the Southern Apennines and the Bradanic foredeep sequences. Comparing the modal composition of river sands and the outcrop area of different lithologies in the different sub-basins, an over-concentration of the volcaniclastic fraction, mainly represented by loose crystals of clinopyroxene, garnet and amphibole, is shown. This has been related to the preferential erosion of pyroclastic deposits, characterized by high production of sand-sized loose minerals, together with the carbonate lability and the low sand-sized detritus production from claystones and marls. The occurrence of volcaniclastic components upstream of Monte Vulture can be explained as a contribution from the lacustrine–fluviolacustrine deposits cropping out in the upstream sector or from pyroclastic fall deposits of Monte Vulture and/or Campanian volcanoes. This research shows that the volcanic record in the fluvial sands of the Ofanto River comes from weathering and sorting processes of volcaniclastic deposits rather than of the lavas building the main edifice. Therefore, caution must be taken during palaeoenvironmental and palaeoclimatic reconstructions when relating the type and abundance of the volcanic component in sediments to the weathering stage and evolutionary history of the volcano.

Economic Efficiency of the Main Oil Producing Countries in Upstream Sector in the Period 2010-2017

This work aims to calculate the economic efficiency of the main upstream oil producing countries in 2010-2017, using the Data Envelopment Analysis (DEA) methodology. In the begining the technical efficiency is determined, next allocative efficiency is calculated to finally obtain the economic efficiency. The countries analyzed were: United States, Russia, Canada, China, United Arab Emirates, Kuwait, Brazil, Kazakhstan, Mexico, Angola, Venezuela, Algeria, United Kingdom, Holland, France and Spain. It can be seen from the results that no country was efficient in economic terms. However, Russia had the highest levels of economic efficiency, on the opposite side, France has the lowest values in this indicator. It is recommended to establish strategies in the sector to avoid economic vulnerability in some countries. The main limitation is the availability of the data. The originality of the research consists in obtaining economic efficiency in this industry, since there are no studies with these specific characteristics. It is concluded that in terms of economic efficiency, there was no adequate use of resources in the upstream oil industry.

Identifying the critical paths and sectors for carbon transfers driven by global consumption in 2015

Climate change caused by carbon emission threatens human well-being, and global trade drives the transfer of carbon emission between consumers and producers. Thus, quantifying global carbon transfer paths is important. Based on multi-regional input–output tables, we used structural path analysis to decompose the carbon emission processes embodied in trade to analyze the tier structure at multiple scales, and traced critical carbon transfer paths to dissect their distributions. We developed a sectoral importance indicator to consider both the amount of carbon transfer and frequency of sectors to identify key sectors. The first four tiers dominated the embodied carbon emission (>70%) at global, national, sectoral, and national-sectoral scales. Among the critical paths, basic industries (Electricity, Gas, and Water; Petroleum, Chemical and Non-Metallic Mineral Products; Transport), Construction and Services were responsible for the most embodied carbon emission, with the former having prominent direct emission, and the latter sectors having prominent carbon transfers from upstream sectors. The Construction and Electrical and Machinery in China and Services in the United States were key final production sectors; Electricity, Gas, and Water in China and the United States were key primary and final production sectors, and Petroleum and Chemical and Non-Metallic Mineral Products in China was a key primary production and reprocessing sector. Identification of key paths and sectors provides scientific guidance for formulating and adjusting global emission reduction policies.

Political and economic determinants of export restrictions in the agricultural and food sector

AbstractUtilizing a rich export restriction database that covers 527 agricultural products at the six‐digit Harmonized System (HS) code level in 168 countries from 2005 to 2015, this article investigates the political and economic determinants of countries’ export restriction decisions. Empirical analysis shows that a one standard deviation increase in a commodity's market power increases the probability of an export restriction on that commodity by 5.5%, and a one standard deviation increase in a country's number of Regional Trade Agreement (RTA) partners decreases the probability of an export restriction by 6.0%. There is also evidence that higher market power of the downstream sector, which purchases inputs from the upstream sector, leads to a higher probability of export restrictions in the upstream sector. Macroeconomic variables, including urbanization rate, agricultural land per capita, and weather variables, are also important determinants of export restrictions. This article highlights the potential role of RTAs and competitive market structure in both the sector of interest and its downstream sector in disciplining export restrictions.

The competitiveness of Indonesia’s pepper export and its challenges

Indonesia is the second-largest pepper (Piper Nigrum L) producer country after Vietnam and followed by India, Brazil, and Malaysia. While Vietnam is the largest black pepper producer, Indonesia is recognized as the largest white pepper-producing country. With the increasing market competition among them in the international market, Indonesia has to increase the market competitiveness of its pepper exports against its competitors. This study aims to analyze the competitiveness of Indonesian pepper exports in the international market by using secondary data from various sources, including from the Indonesian Ministry of Agriculture and the International Pepper Community for the year 2018. It focuses on Pepper beans (HS 0900411) and Pepper Powder (HS090412) and uses two methods, namely Revealed Comparative Advantage (RCA) and Export Products Dynamic (EPD). The RCA analysis shows that Indonesia has a comparative advantage as a pepper exporter on the international market, both for pepper beans and powder. However, the results of the EPD analysis revealed that such an advantage is declining. For example, the study revealed that the export of pepper beans from Indonesia to the United Stated is in the lost opportunity position, and to Vietnam and Singapore are in the falling star position. A similar situation occurs for pepper powder where Indonesia’s export to Japan, Netherlands, and Germany are all in the falling star position. Such situations are caused by some challenges Indonesian pepper exports face, including the fulfillment of the good agriculture practices (GAP) in the upstream sector and compliance to international standards.

Rethinking the ‘patron–client’ politics of oil block allocation, development and remittances in Nigeria

ABSTRACT This research adopts qualitative method and patron–client analysis to underscore the political economy of oil block allocation, development and receipts/remittances in Nigeria. It contests Wilson’s (1961) and Scott’s (1972) claims on the superiority of the patron over clients, and argues that ‘clients’ in Nigeria (indigenous oil block awardees) maintain some degree of control over the patron (ruling elite), enjoy more economic returns/oil rents, and possess some leverage over the patrons’ decision-making power. The ruling elite’s personalisation of oil block allocation/rents results in poor development of the upstream oil sector by ‘clients’, defaults in oil remittances and a consistent decline in oil production. The author recommends that the bidding process for oil block allocation be carried out in a more transparent and competitive manner.