Oil and natural gas remain the world's leading fuels, accounting for nearly 55% of global energy consumption

Oil and natural gas are formed from decaying plant and animal remains that became buried within layers of the earth and subjected to heat and pressure over millions of years. These two types of fossil fuels have been the world’s primary sources of energy for decades. They have enabled advances in quality of life and in all sectors of the economy, from residential lighting, cooking and heating to transportation and industrial manufacturing. However, the low carbon transition has put the oil and gas industry under pressure as these fuels are two of the main sources of greenhouse gases. The industry is associated with environmental disasters such as oil spills, and the prices of the two fuels – especially oil – are highly volatile with fluctuations directly impacted by political and socioeconomic events. Nevertheless, more than 100 countries currently produce oil and/or natural gas and the two fuels are expected to maintain their importance across the energy sector for many decades to come.

The production of oil and natural gas are often coupled as the two are typically found together in nature. The industry is commonly divided into three main operational sectors: upstream, midstream and downstream. The upstream sector incorporates the exploration and extraction of crude oil and natural gas reserves, while midstream focuses on transporting and storing the extracted products. The oil and natural gas then reach downstream processing facilities where they are refined, distributed and sold to the end customer. The product that reaches the end customer can take a number of forms including natural gas, liquefied petroleum gas (LPG), petrol, diesel fuel, jet fuel, heating oil, kerosene, asphalt and other petrochemicals. Several trends are currently impacting the future outlook of the oil and gas industry. The use of natural gas has increased across all economic sectors over the last few decades since natural gas – often viewed as a bridge fuel towards a low carbon energy system – burns cleaner than oil or coal for electricity generation. The switch to natural gas is becoming more widespread with the proliferation of the technology to liquify it (to LNG) for transport. Developments in shale gas and oil production have also greatly increased supply in the US, which has had implications in global oil, and increasingly LNG markets. Given a growing world population and continued demand for oil and gas products, discoveries of new deposits and advances in production technology will determine availability of supplies. Developments in carbon capture, use and storage (CCUS) will also impact the position of oil and natural gas in the long-term energy mix.

You can further explore the three sectors by clicking the links below:

Learn more about oil and gas extraction by exploring records published on our Energy Matrix.

For the latest news and articles on exploration and production read Petroleum Review.

Find the latest oil and gas consultations and policies in our Policy Milestones Calendar.

What's new?

Energy transition could push oil majors to sell or swap oil and gas assets of more than $100bn

The global energy market is on the brink of a major transition to cleaner sources of energy. To adjust and transform, the world’s largest oil and gas firms are revising their long-term oil price and demand outlook and need to streamline their portfolios significantly to improve cash flow, cost effic...

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Oil and gas markets brace for impact of pandemic’s second wave

The coronavirus pandemic has already had far-reaching consequences for global energy demand. Lockdown measures imposed around the world shuttered businesses and severely curtailed freedom of movement. The impact on consumption of fossil fuels and power demand was immediate. As lockdow...

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Global oil and gas project sanctioning in 2020 set to fall by more than 75%

Global project sanctioning is set for a staggering decline this year of over 75% from 2019 levels, as the COVID-19 epidemic has caused E&P spending to drop much lower than what was expected at the beginning of the crisis, reports Rystad Energy. The market analyst estimates total sanctioning valu...

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Oil and gas drilling set for at least a 20-year low

The COVID-19 pandemic has stymied oil and gas activity, a phenomenon which has now affected the drilling market both in terms of wells drilled and in terms of related demand for drilling equipment. A Rystad Energy analysis shows the number of drilled wells globally is expected to reach around 55,350...

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Transparency on oil and gas sector impacts

A proposed sustainability reporting standard for oil and gas companies identifies climate change as the single biggest challenge facing the sector.A 90-day public comment period has launched for the draft GRI Oil and Gas Sector Standard, with input invited from around the world. The Standard id...

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Events and training

Optimizing Project Risks, Costs and Safety in Electrical System Protection

An EIC Live webinar discussing power system protection and regulations.

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EI LIVE free webinar | Energy Systems and Digital Technologies

Responding to the climate emergency while meeting the energy needs of the world’s growing population is one of the greatest challenges of our age.

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The Energy Transition – How Does the UK’s Oil & Gas Industry Achieve Net Zero Emissions by 2050

The webinar is organised by the World Petroleum Council Young Professionals Network UK.

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Oil and Gas Mergers & Acquisition: Acquiring and Divesting Assets and Companies - October 2020

This 3-day training course focuses on integrating an understanding of Mergers & Acquisition (M&A) activity trends, the process involved in conducting M&A activity and and the skills that requires. This includes presentations, case studies, exercises and discussions.

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Decommissioning Awareness - October 2020

This intensive 2-day training course will provide delegates with a comprehensive understanding of the key aspects of decommissioning. The course will be delivered by Ian Prince who is a recognized expert in the field of decommissioning.

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Technical guidance publications

Decommissioning within the offshore UK oil and gas industry: a practical guide to worker health protection

The primary focus of this technical publication is to highlight and describe the potential health hazards and risks to workers involved in the decommissioning of offshore oil and gas structures, and explain how these risks are potentially magnified during decommissioning. Health planning, management...

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Guidelines for the management of access fittings for pressurised systems

This guidance provides principles and good practice associated with the integrity management of intrusive access fittings. The document covers the life cycle from the design, application, registration and safe handling of the different types of fittings through to abandonment/removal. The types of d...

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Report 454: Human factors engineering in projects

This publication is free to download for registered users of this siteThe publication was jointly developed by the Energy Institute (EI) and International Association of Oil and Gas Producers (IOGP), and supersedes the first edition of IOGP 454 Human factors engineering in projects.This publication ...

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EI Research report: Measures and key performance indicators to manage maintenance in upstream petroleum production

This research report details the findings and recommendations of a research project into maintenance performance measures for the upstream oil and gas industry. The aim of the research was to explore the practicalities of reporting maintenance management measures.The industry scope was upstream petr...

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Guidelines for the management of safety critical elements

The purpose of this technical publication is to provide industry guidance for the management of safety critical elements (SCEs) throughout the life cycle of a facility from conceptual design, through the operate phase, to changes such as life extension and decommissioning. An SCE is any part of a fa...

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