The oil and gas industry is one of the largest, most complex, and important global industries. The industry touches everyone’s lives with products such as transportation, heating, and electricity fuels; asphalt; lubricants; propane; and thousands of petrochemical products from carpets to eyeglasses to clothing. The industry impacts national security, elections, geopolitics, and international conflicts. The prices of crude oil and natural gas are probably the two most closely watched commodity prices in the global economy.


In recent years, the industry has seen many tumultuous events, including the continuing efforts from oil-producing countries like Kazakhstan, Russia, and Venezuela to exert greater control over their resources; major technological advances in deepwater drilling and shale gas; Chinese firms acquiring exploration rights at record high prices; ongoing strife in Sudan, Nigeria, Chad, and other oil-exporting nations; continued heated discussion about global warming and nonhydrocarbon sources of energy; and huge movements up and down in crude prices. All of this comes amid predictions that the global demand for energy will increase by 30% to 40% by 2030. In this chapter, we provide an overview of the industry.


We begin with some historical background and key industry concepts. We then discuss the supplies of oil and gas, the major producing nations, and the major industry competitors. We also identify the major segments of the industry and introduce the oil and gas industry value chain. This are organized around the major value chain activities. Each chapter explores a major value chain activity and its competitive dynamics.