The oil and natural gas industry comprises several business units, all of which are closely interlinked and mostly under one ownership. A few large corporations dominate the market and serve all business areas from research to sales.
Unlike gold or silver, for example, private investors cannot invest directly in the natural fuels oil or gas. In the natural gas sector, therefore, the major gas producers and knowledge of their operations are of greatest interest to investors.
In addition to the large corporations, there are numerous smaller companies involved in individual business segments related to natural gas production. Here, too, there are interesting investment opportunities for investors.
Like the petroleum industry, the natural gas industry comprises several business segments that are closely interrelated and can be divided into the three major business areas of upstream, midstream and downstream.
Upstream – more than just conveying
The upstream business in the oil and gas industry comprises all business activities related to the exploration and production of crude oil or natural gas.
Beginning with geological surveys and other activities designed to locate and explore oil or gas deposits, upstream also includes anything called production. Production equally includes drilling and also the actual production of the oil or gas to the surface.
Midstream – everything to do with transport and storage
The midstream business covers everything needed to transport and store crude oil or natural gas before the natural raw materials are refined and further processed.
The midstream segment therefore also includes pipelines and the necessary infrastructure to transport the oil or gas over long distances. The complete infrastructure for transportation can include pumping stations as well as tankers or transcontinental tankers.
Downstream – the most comprehensive sector
Crude oil and natural gas are not only processed into the obvious products such as heating oils and fuels or gas for heat generation. For example, certain hydrocarbons contained in oil and natural gas are used in the production of fertilizers, synthetic rubbers, various plastics or preservatives, and are generally used in a variety of ways, especially in the chemical industry.
For example, crude oil and natural gas are also necessary for the production of paints, certain fibers for clothing and many other things, as well as for products such as hearing aids or prostheses.
Due to the versatile uses of crude oil and natural gas, investors will find a variety of investment opportunities, especially in the downstream sector.
However, if you want to focus your investment primarily on the upstream and midstream segments, you will find not only the major oil and gas producers but also numerous smaller companies in these areas that specialize in producing the necessary equipment or providing services related to these business areas.