Energy midterm questions & answers
rated A+ passed
1. Upstream and downstream in the oil value chain
2. The concept of value chain as applied to the oil industry - correct answer ✔✔ upstream:
exploration and production
downstream: refining, marketing, and distribution
By oil and gas sector value chain we mean the exploration, extraction, processing, refining,
transportation and distribution of hydrocarbons, and the development of industries which make
direct use of the oil and gas sector's output.
To create value along the chain the value of aggregate outputs must exceed the value of
aggregate inputs on a sustainable basis
3. Quality of oil: Sweetness and heaviness. - correct answer ✔✔ The sweetness of oil refers to
the amount of sulfur in the oil. Oil with less sulfur is sweeter and requires less processing
The heaviness of oil refers to its density. Lighter crude can be refined into higher value products,
such as the gasoline (or petrol) used by car owners. Heavier crude flows more slowly and has
more unwanted chemicals that must be refined out. E.g. Azeri Light
4. Proven petroleum reserves and production levels in the Caspian region, Azerbaijan and
Kazakhstan. - correct answer ✔✔ Kazakhstan total petroleum production was 1.698 million
barrels per day (b/d) in 2016 (EIA).
Kazakhstan had proved crude oil reserves of 30 billion barrels the second-largest endowment in
Eurasia after Russia, and the twelfth largest in the world, just behind the United States.
Azerbaijan produced about 850,000 barrels per day (b/d) of petroleum. Crude oil reserves are
estimated at 7 billion barrels.
5. The lifecycle of a typical oil well, and Azerbaijan's "second oil boom" - correct answer ✔✔
Slide 1-11.
,The second oil boom cycle (2005-2014) in Azerbaijan's history generated $125 billion in state oil
revenue
The foundation of this boom was laid in 1994 when, despite resistance from many quarters
Azerbaijan, managed to sign the "contract of the century" with leading oil companies. This
document enabled the start of construction of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline in
2000.
This second oil boom has changed the geopolitical and geoeconomic situation in the South
Caucasus. After the (BTC) oil pipeline, the Baku-Tbilisi-Erzurum gas pipeline was laid. Now the
Baku-Tbilisi-Kars railway, which will link China and Paris, is under construction. In terms of
geopolitics, these projects open new opportunities for Euro-Atlantic integration. In terms of
geoeconomics, they strengthen globalization, bringing continents closer and improving Europe's
energy security.
6. Key actors in the world's oil production and trade: national oil companies, international
companies and service providers. - correct answer ✔✔ Oil-producing states
OPEC established in 1960
National oil companies (NOCs), oil companies that are primarily or completely owned by the
government - e.g. Saudi Aramco Revenue: US$311 billion (2011), SOCAR, revenue: AZN 33.1 bn
(2015)
International oil companies are privately owned by shareholders, instead of governments. The
six largest supermajors companies are ExxonMobil, BP, Royal Dutch Shell, ConocoPhillips,
Chevron/Texaco, and Total.
Service providers-provide services for the larger companies, such as rigs, pipes, seismic surveys,
and rig operators e.g. Halliburton, for example, had revenue of $32.9 billion in 2014 and
employs over 75,000 people.
7. Key players in the global mining markets. - correct answer ✔✔ While there are many large
state-owned mining companies, in contrast to the oil and gas sector, the biggest players are
mostly privately held international corporations. Some notable exceptions include state-owned
enterprises like China's Shenhua, India's Coal India Limited, and Chile's Codelco.
International mining majors: BHP Billiton, Rio Tinto
, 8. Variation in market structures: State monopoly vs. competitive market. - correct answer ✔✔
NOC Monopoly --------------- POC Competition
In all countries, except the USA, the subsoil is either state-owned, or the state retains a veto on
its use. Where the subsoil is state-owned, the government can either grant a monopoly right to
one party or develop a licensing system.
9. Different types of state ownership structures and energy strategies pursued by post-Soviet
states. - correct answer ✔✔ N1. State ownership with control. The state owns the rights to
develop mineral deposits and holds the majority of shares (51%+) in production, refining,
Foreign involvement in the mineral sector is limited either to participating in contracts that
restrict their managerial and operational control, such as carried-interest or joint ventures, or to
operating as service subcontractors.
N2. State ownership without control. The state owns the rights to develop mineral deposits and
holds the majority of shares (51%+) in production, refining, and/or export facilities. Foreign
investors are allowed to participate through more permissive contracts, such as production-
sharing agreements (PSAs), which grant them significant managerial and operational control.
P1. Private domestic ownership. Private domestic companies own the rights to develop mineral
deposits and hold the majority of shares (51%+) in production, refining, and/or export facilities.
P2. Private foreign ownership. Private foreign companies own the rights to develop mineral
deposits and hold the majority of shares (51%+) in production, refining, and/or export facilities.
Turkmenistan N1
Uzbekistan N1
Azerbaijan N2
Russia P1
Kazakhstan P2
10. Who controls the world's oil reserves: national oil companies (NOCs) vs. international
majors. - correct answer ✔✔ The 13 largest oil companies in the world, measured by their
reserves, are owned and operated by governments - companies such as Saudi Arabia's Saudi
Aramco; the National Iranian Oil Company; Petroleos de Venezuela, S.A.; Russia's Gazprom and
Rosneft; the China National Petroleum Corporation; Malaysia's Petronas; and Brazil's Petrobras.
rated A+ passed
1. Upstream and downstream in the oil value chain
2. The concept of value chain as applied to the oil industry - correct answer ✔✔ upstream:
exploration and production
downstream: refining, marketing, and distribution
By oil and gas sector value chain we mean the exploration, extraction, processing, refining,
transportation and distribution of hydrocarbons, and the development of industries which make
direct use of the oil and gas sector's output.
To create value along the chain the value of aggregate outputs must exceed the value of
aggregate inputs on a sustainable basis
3. Quality of oil: Sweetness and heaviness. - correct answer ✔✔ The sweetness of oil refers to
the amount of sulfur in the oil. Oil with less sulfur is sweeter and requires less processing
The heaviness of oil refers to its density. Lighter crude can be refined into higher value products,
such as the gasoline (or petrol) used by car owners. Heavier crude flows more slowly and has
more unwanted chemicals that must be refined out. E.g. Azeri Light
4. Proven petroleum reserves and production levels in the Caspian region, Azerbaijan and
Kazakhstan. - correct answer ✔✔ Kazakhstan total petroleum production was 1.698 million
barrels per day (b/d) in 2016 (EIA).
Kazakhstan had proved crude oil reserves of 30 billion barrels the second-largest endowment in
Eurasia after Russia, and the twelfth largest in the world, just behind the United States.
Azerbaijan produced about 850,000 barrels per day (b/d) of petroleum. Crude oil reserves are
estimated at 7 billion barrels.
5. The lifecycle of a typical oil well, and Azerbaijan's "second oil boom" - correct answer ✔✔
Slide 1-11.
,The second oil boom cycle (2005-2014) in Azerbaijan's history generated $125 billion in state oil
revenue
The foundation of this boom was laid in 1994 when, despite resistance from many quarters
Azerbaijan, managed to sign the "contract of the century" with leading oil companies. This
document enabled the start of construction of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline in
2000.
This second oil boom has changed the geopolitical and geoeconomic situation in the South
Caucasus. After the (BTC) oil pipeline, the Baku-Tbilisi-Erzurum gas pipeline was laid. Now the
Baku-Tbilisi-Kars railway, which will link China and Paris, is under construction. In terms of
geopolitics, these projects open new opportunities for Euro-Atlantic integration. In terms of
geoeconomics, they strengthen globalization, bringing continents closer and improving Europe's
energy security.
6. Key actors in the world's oil production and trade: national oil companies, international
companies and service providers. - correct answer ✔✔ Oil-producing states
OPEC established in 1960
National oil companies (NOCs), oil companies that are primarily or completely owned by the
government - e.g. Saudi Aramco Revenue: US$311 billion (2011), SOCAR, revenue: AZN 33.1 bn
(2015)
International oil companies are privately owned by shareholders, instead of governments. The
six largest supermajors companies are ExxonMobil, BP, Royal Dutch Shell, ConocoPhillips,
Chevron/Texaco, and Total.
Service providers-provide services for the larger companies, such as rigs, pipes, seismic surveys,
and rig operators e.g. Halliburton, for example, had revenue of $32.9 billion in 2014 and
employs over 75,000 people.
7. Key players in the global mining markets. - correct answer ✔✔ While there are many large
state-owned mining companies, in contrast to the oil and gas sector, the biggest players are
mostly privately held international corporations. Some notable exceptions include state-owned
enterprises like China's Shenhua, India's Coal India Limited, and Chile's Codelco.
International mining majors: BHP Billiton, Rio Tinto
, 8. Variation in market structures: State monopoly vs. competitive market. - correct answer ✔✔
NOC Monopoly --------------- POC Competition
In all countries, except the USA, the subsoil is either state-owned, or the state retains a veto on
its use. Where the subsoil is state-owned, the government can either grant a monopoly right to
one party or develop a licensing system.
9. Different types of state ownership structures and energy strategies pursued by post-Soviet
states. - correct answer ✔✔ N1. State ownership with control. The state owns the rights to
develop mineral deposits and holds the majority of shares (51%+) in production, refining,
Foreign involvement in the mineral sector is limited either to participating in contracts that
restrict their managerial and operational control, such as carried-interest or joint ventures, or to
operating as service subcontractors.
N2. State ownership without control. The state owns the rights to develop mineral deposits and
holds the majority of shares (51%+) in production, refining, and/or export facilities. Foreign
investors are allowed to participate through more permissive contracts, such as production-
sharing agreements (PSAs), which grant them significant managerial and operational control.
P1. Private domestic ownership. Private domestic companies own the rights to develop mineral
deposits and hold the majority of shares (51%+) in production, refining, and/or export facilities.
P2. Private foreign ownership. Private foreign companies own the rights to develop mineral
deposits and hold the majority of shares (51%+) in production, refining, and/or export facilities.
Turkmenistan N1
Uzbekistan N1
Azerbaijan N2
Russia P1
Kazakhstan P2
10. Who controls the world's oil reserves: national oil companies (NOCs) vs. international
majors. - correct answer ✔✔ The 13 largest oil companies in the world, measured by their
reserves, are owned and operated by governments - companies such as Saudi Arabia's Saudi
Aramco; the National Iranian Oil Company; Petroleos de Venezuela, S.A.; Russia's Gazprom and
Rosneft; the China National Petroleum Corporation; Malaysia's Petronas; and Brazil's Petrobras.
