Petroleum world Needs

Petrol and Oil Company History

2010-06-15T10:26:00.000-07:00

The economic growth of the industrialised world is due in no small part to the use of fossil fuels, and arguably no fossil fuel has had more impact than oil.

During the development of the combustion engine the inventors quickly identified that fuels based on hydrocarbons were the most suitable, and with the growth in popularity of the automobile a rapidly expanding industry was created almost overnight.

The rush was on, not only to locate the necessary reserves of oil, but to refine and improve the quality. The first iterations of petrol were based on coal tar distillates and distillation of crude oil, the latter being used to power the first four-stroke cycle spark-ignition engine in 1884.

At the time, petrol was considered an undesirable by-product from the manufacture of kerosene, the latter being used extensively for lighting and other commercial and domestic purposes. As the proliferation of cars grew during the first few decades of the twentieth century, demand for petrol would see its profile as a fuel source rise, quickly surpassing the once mighty kerosene.

Thermal cracking was introduced in 1913 to convert a larger fraction of petroleum into petrol - earlier investigations had shown that the heating of crude oil caused a split-up of molecules, thus increasing the proportion of volatile fractions suitable for petrol manufacture (thermal cracking required elevated pressure for the process).

The 1920’s were a time of great innovation in the automotive world, and oil companies needed to invest heavily in refining techniques to ensure their petrol would meet the ever more exacting standards being required to run the latest engines. During that time it was found that certain silica/alumina-based catalysts accelerated the reaction rate to the extent that high pressure became unnecessary. The advantages of catalytic cracking over thermal cracking were a higher petrol yield and a better quality of product. Then, in 1926, lead was used as an anti-knock agent.

Next came a breakthrough in the catalytic cracking process, the initially developed fixed-bed catalytic process was replaced by a fluid-bed process, which allowed for excellent control of temperature and reaction, in the process providing better yields of petrol from the refineries.

The introduction of the catalytic cracking process and catalytic reforming in the 1940’s was significant for the manufacture of high-octane petrol components. During the 1950’s automobile manufacturers started to increase the compression ratios in their engines, resulting in higher octane ratings, lead levels, and vapour pressure.

Minor improvements continued to be made to petrol formulations to improve yields and octane, including the introduction of so-called performance additives such as “Platformate” and “Activate”. From the 1970s petrol underwent a slow evolution, most evident to the classic car enthusiast being the phasing out of leaded petrol (unleaded fuels were introduced to protect the exhaust catalysts that were being introduced for environmental reasons).

What Fuels Are Made From Crude Oil?

2010-06-10T11:09:00.000-07:00

After crude oil is removed from the ground, it is sent to a refinery by pipeline, ship, or barge. At a refinery, different parts of the crude oil are separated into useable petroleum products. Crude oil is measured in barrels (abbreviated "bbls").

A 42-U.S. gallon barrel of crude oil provides slightly more than 44 gallons of petroleum products. This gain from processing the crude oil is similar to what happens to popcorn, which gets bigger after it's popped. The gain from processing is more than 6%.

One barrel of crude oil, when refined, produces about 19 gallons of finished motor gasoline, and 10 gallons of diesel, as well as other petroleum products. Most petroleum products are used to produce energy. For instance, many people across the United States use propane to heat their homes.

Other products made from petroleum include:

Ink
Crayons
Bubble gum
Dishwashing liquids
Deodorant
Eyeglasses
CDs and DVDs
Tires
Ammonia
Heart valves

Refining Process. How Crude Oil Is Refined into Petroleum Products

2010-06-10T11:06:00.000-07:00

The world uses gasoline and petroleum products to move merchandise and people, help make plastics, and do many other things. At a refinery, different parts of the crude oil are separated into useable petroleum products. Today, some refineries turn more than half of every 42-gallon barrel of crude oil into gasoline.

How does this transformation take place? Essentially, refining breaks crude oil down into its various components, which then are selectively reconfigured into new products.

All refineries perform three basic steps:

Petroleum product

2010-06-10T10:56:00.000-07:00

Petroleum products are useful materials derived from crude oil (petroleum) as it is processed in oil refineries.

According to crude oil composition and demand, refineries can produce different shares of petroleum products. Largest share of oil products is used as energy carriers: various grades of fuel oil and gasoline. Refineries also produce other chemicals, some of which are used in chemical processes to produce plastics and other useful materials. Since petroleum often contains a couple of percent sulfur, large quantities of sulfur are also often produced as a petroleum product. Hydrogen and carbon in the form of petroleum coke may also be produced as petroleum products. The hydrogen produced is often used as an intermediate product for other oil refinery processes such as hydrogen catalytic cracking (hydrocracking) and hydrodesulfurization.

Major products of oil refineries

Liquefied petroleum gas (LPG)
Lubricating oils
Paraffin wax
Tar
Petrochemicals (see discussion at end of next section)

Engineering Scholarships

2010-06-10T10:53:00.000-07:00

Find Money to Become a Petroleum Engineer

Students pursuing the field of Petroleum Engineering will receive basic curriculum in general engineering before launching into the more specialized topics of oil and natural gas. Where the resources are found, how they are located, and via what methods they are removed from the earth and transported, are all part of the course work.

In the field, a gas or petroleum engineer will use increasingly sophisticated methods to extract
and transport oil and natural gas as well as utilize innovative methods for discovery. While we are still a world reliant on fossil fuels the demand for Petroleum Engineers will remain strong.

Government Funding

The U.S. Department of Energy sponsors the Mickey Leland Energy Fellowships. The awards give minority students pursuing a major in petroleum and natural gas engineering and related programs a generous opportunity to work in the confines of an internship with the U.S. government. Recipients must be considering future careers with the Department of Energy.

College Scholarships

Students enrolled in the Petroleum and Natural Gas Engineering major at West Virginia University may qualify for scholarships directly from the College of Engineering and Mineral Resources.

Texas A&M University sponsors the B.D. O'Neal '53 Scholarship for students studying in the Petroleum Engineering program.

University of Pennsylvania College of Earth and Mineral Sciences offers students majoring in the Petroleum and Natural Gas Engineering program the following scholarship opportunities. Awards may be between $500 and $6,000:

Luther Bissey Memorial Scholarship is open to academically outstanding undergrads.
Richard P. and John N. Davis Memorial Scholarship is awarded to students with proven academic talent combined with financial need. Eligible applicants will be undergraduates in the program.
Students with demonstrated economic disadvantage may qualify for the Edwin Drake Memorial Scholarship.
Robert Hawk Scholastic Achievement Award is based on just what it says: academic merit of the highest order. Juniors are eligible to apply.
Fred Kumpf Memorial Scholarship is open to students. Awards are based on academics and financial need.
Applicants for the John Leone Scholarship must be at least in their junior year and not only enrolled in the P&N program, but also studying business courses.
Freshmen enrolled in the program may apply for the Richard and Dorothy Lesher Scholarship. Students must have outstanding academic records to be considered.
C. Drew Stahl Award is applicable to undergraduates who have an uncanny aptitude in the major.
George Trimble Scholarship is awarded based on a combination of criteria including talent in the major and financial need.

Petroleum Engineering Colleges

2010-06-10T10:49:00.000-07:00

A program that prepares individuals to apply mathematical and scientific principles to the design, development and operational evaluation of systems for locating, extracting, processing and refining crude petroleum and natural gas, including prospecting instruments and equipment, mining and drilling systems, processing and refining systems and facilities, storage facilities, transportation systems, and related environmental and safety systems.

Petroleum engineering

2010-06-10T10:48:00.000-07:00

Petroleum engineering is an engineering discipline concerned with the subsurface activities related to the production of hydrocarbons , which can be either crude oil or natural gas . These activities are deemed to fall within the upstream sector of the oil and gas industry, which are the activities of finding and producing hydrocarbons. (Refining and distribution to a market are referred to as the downstream sector.) Exploration , by earth scientists, and petroleum engineering are the oil and gas industry's two main subsurface disciplines, which focus on maximizing economic recovery of hydrocarbons from subsurface reservoirs. Petroleum geology and geophysics focus on provision of a static description of the hydrocarbon reservoir rock, while petroleum engineering focuses on estimation of the recoverable volume of this resource using a detailed understanding of the physical behavior of oil, water and gas within porous rock at very high pressure.

The combined efforts of geologists and petroleum engineers throughout the life of a hydrocarbon accumulation determine the way in which a reservoir is developed and depleted, and usually they have the highest impact on field economics. Petroleum engineering requires a good knowledge of many other related disciplines, such as geophysics, petroleum geology, formation evaluation (well logging), drilling, economics, reservoir simulation, well engineering, artificial lift systems, and oil & gas facilities engineering.

Crude oil price chart

2010-06-09T06:47:00.000-07:00

FROM THE PAPER > Front Page Petroleum prices reduced by up to eight per cent

2010-06-03T11:34:00.000-07:00

Oil marketing companies have also reduced the price of High Speed Diesel (HSD) by Rs1.08 to Rs75.72 per litre. The HSD is the most widely consumed petroleum products, but its pricing is not maintained by Ogra because it is a deregulated product.

Ogra has said that crude oil prices declined in the range of $84.12 per barrel to $70.74 per barrel but the average price of Arabian light crude in May was $77.73 a barrel.

The price of petrol has been reduced by Rs6.04 to Rs69.04 per litre and that of E-10 petrol to Rs66.54 per litre.

The price of HOBC has been reduced by Rs7.15 to Rs82.04 per litre, that of kerosene oil by Rs3.40 to Rs65.49 per litre and of light diesel oil (LDO) by Rs3.15 to Rs62.61 per litre.

LDO is mainly used for operating motors and pumps, largely in rural areas.

The price of JP-1 has been reduced by Rs3.10 to Rs55.36 per litre.

The prices of jet fuel consumed by military aircraft and helicopters have also been reduced. The new price of JP-4 is Rs52.63, a reduction of Rs2.91 per litre and that of JP-8 has been reduced by Rs3.11 to Rs55.08 per litre.

Petrol price down by Rs11.55/litre

2010-06-02T10:14:00.000-07:00

ISLAMABAD - Consequent upon interim order of the Supreme Court of Pakistan, the government on Tuesday revised the prices of petroleum products downward deducting carbon tax out of it.
As directed by the Supreme Court, the Oil and Gas Regulatory Authority late Tuesday night issued a notification to be effective from July 8 (today). According to the latest notification, the price of premium motor gasoline went down from Rs 62.13 to Rs 50.58 by Rs 11.55 per litre or 18.59 per cent. Similarly, the HOBC went down by 16.24 from Rs 78.78 to 62.54 with a decrease of almost 21 per cent. Kerosene oil having least amount of the carbon tax at the rate of Rs 6 per litre had the least advantage as compared to other products. Kerosene was slashed by Rs 6.36 from Rs 59.35 to Rs 52.99 per litre. Although, the diesel was not part of the OGRA notification, the officials said its price has also gone down by roughly Rs 9 per litre.
According to notification of the OGRA dated June 30, 2009, the carbon tax was imposed at premium motor gasoline @ Rs 10 per litre, Rs 8 per litre on diesel, and Rs 6 per litre on Kerosene. Since the apex court has suspended the imposition of the carbon tax till the final judgment in this case, the government was bound to withdraw carbon tax immediately, an official said.
The government was in a fix after the interim order of the court as it had already abolished petroleum development levy, the predecessor of the carbon tax. According to the official who requested anonymity, there was a panic situation in the Ministry of Petroleum and Natural Resources after the interim order as the Advisor to Prime Minister on Finance Shaukat Tarin and Finance Secretary were abroad to attend IMF meeting in Turkey. Since it is the issue of taxation, the Finance Ministry was supposed to find a way out.
According to the official, this immediate implementation of the court’s interim order would definitely provide relief to the public but would also pile up the price differential claim of the Oil Marketing Companies (OMCs).
The official said that the government was determined to fight the case of carbon tax in the apex court. He said that the government was having no fiscal space to pay the price differential claim to the OMCs. He also pointed out that the carbon tax was to generate Rs 122 billion or more depending upon the volume of sale during the year. The official however admitted that the petroleum products were being subjected to double taxation as the General Sales Tax was being levied after including the carbon tax in the taxable sale price.

New Petroleum Prices

2010-06-02T10:13:00.001-07:00

For 1st March, 2010 the government announced new petroleum prices; though this time the government made a sincere effort to show a reduce in pricing but failed miserably. It seems that government has only mastered the act of ridiculing masses and the nation vehemently. In a bid to reduce prices the government only found space of 64 paisa’s to reduce but when it comes to increasing prices the government miserably fails.
The recent reduction in petroleum prices is equivalent to making fun of the misery of this nation. On 31st January, 2010 OGRA (Oil and Gas Regulatory Authority) increased the petroleum price to Rs 71.21. It shows the seriousness of government to provide relief to the masses who are burring in the fire of the inflation, terrorism, nepotism, corruption and shortage in basic life necessities.

Fuel prices in south to be cheaper than north

2010-06-02T10:09:00.000-07:00

KARACHI: Fuel prices in the southern regions of Pakistan will be lower as compared to northern parts because of the abolition of the internal freight equalisation margin (IFEM).

The IFEM is used to maintain uniform prices of fuel across the country. The petroleum ministry, on Pakistan State Oil’s (PSO) recommendation, had asked the Economic Coordination Committee to deregulate the inland freight equalisation margin on petroleum products. PSO is expected to benefit the most from IFEM with the power to set market prices because of its high market share, said BMA Capital analyst Muhammad Ali Taufiq in his research report.

The abolition of the inland freight equalisation margin will most likely be announced in the national budget on June 5, according to Topline Securities. The IFEM is used for high speed diesel (HSD), petrol, high octane blending component (HOBC), kerosene and light diesel oil. South versus North It is highly anticipated that the deregulation of IFEM will take its toll on high speed diesel and petrol in the initial period.

Such measures will significantly reduce high speed diesel and petrol prices in the south compared to the northern regions due to the following reasons. Imported petroleum products will be cheaper in Karachi as the port is located in the city, which will keep the transportation cost lower as compared to northern parts of the country. High concentration of refineries in the south will further facilitate the availability of petroleum products and achieve synergies with respect to internal freight charges.

Consumption of petroleum products in the south is highly concentrated in the urban areas which are in close proximity to the port and the refineries, compared to the north where consumption is evenly spread over a larger area PSO to benefit the most Deregulation of IFEM will impact different oil marketing companies in different ways in each province. PSO is expected to benefit the most with the power to set market prices because of its high market share, said the analyst.

PSO has the largest retail distribution network in the country representing 56 per cent of the total. PSO holds a market share of 48 per cent in petrol and 61 per cent in high speed diesel. PSO has an 84 per cent share in Balochistan and can make a price monopoly in the region, the analyst said. Leading players in Sindh – PSO, Shell and Caltex – may decide to keep one price in the province and set up barriers for entry of other oil marketing companies. Punjab would continue to remain a competitive region where major players can collectively set IFEM, added the analyst.

Petrol pump price drops in May

2010-06-02T10:08:00.000-07:00

Wellington, June 1 - New Zealand petrol prices fell by almost 5 per cent in May as a result of a large drop in the international price of crude oil.

Monthly figures from AA's PetrolWatch show petrol prices in most centres fell 9c per litre during May, dropping from $1.82 a litre for unleaded 91 to $1.73.

Diesel prices dropped by 5c per litre to about $1.16, depending on location.

The drop in prices came as crude oil prices fell over US$20 (NZ$29.56) a barrel during May, to under US$67.

A much greater drop in the price of petrol would have occurred had it not been for the 6c fall in the New Zealand dollar over the same period, AA PetrolWatch spokesperson Mark Stockdale said.

Real GDP increases 2.9%

2010-05-29T10:25:00.001-07:00

Real GDP rose 2.9% in the third quarter of 2007 (Chart 1). Domestic demand growth remained solid, with real final domestic demand and inventory investment both contributing to the gain. The increase in real final domestic demand outpaced that of real GDP for the 11th time in the last 12 quarters as real imports rose more than real exports.

Consumer spending stays healthy

Real consumer expenditure grew 3.0% in the third quarter of 2007, following a gain of 5.9% in the previous quarter. Spending on semi-durable goods and services (notably net spending abroad) increased, while that on durable goods (especially automotive products) and non-durable goods fell.

Gains in income growth have supported household spending. Personal income increased 1.1% in the quarter. Supported by higher employment, labour income rose 1.9%, albeit a slowdown from 7.2% in the second quarter. This slowing reflected the end of Quebec government pay equity payments and special contributions from the Newfoundland and Labrador government to its Public Service Pension Plan. These factors had boosted labour income in the first half of 2007.

In the third quarter, real personal disposable income rose 2.4% and per capita real personal disposable income increased 1.1%. The personal savings rate was 1.3%, down from 1.6% in the second quarter.

Oil Prices: A Year After a Record $145, Gloom Prevails

2010-05-29T10:20:00.000-07:00

Friday is the one-year anniversary of crude oil’s record close of $145 a barrel. But commodity traders were in no mood for a party.

Oil prices dropped more than $2 a barrel to below $67 in trading in New York Thursday, beaten down by dismal economic news and word that the Organization of Petroleum Exporting Countries discipline is shaky.

First news out of the U.S., the world’s largest consumer of crude oil: the unemployment rate is up to 9.5%, the highest since Ronald Reagan’s first term in office; and the federal government reported payrolls tumbled. Our Dow Jones Newswires colleague noted there were “widespread declines across manufacturing, construction and professional services, a grim reminder that the path to economic recovery will be bumpy.” (Sub. req’d.) The jobless rate in the Eurozone is also at 9.5%, a 10-year high. More unemployment means more insecurity, less spending and less fossil-fuel consumption.

But this might not even be the worst news for oil bulls. Months of big OPEC production cuts have been a primary factor for the sweeping recovery in crude prices. But that hardnosed disciplined is wavering as a steady stream of increased production from some of the cartel’s members quietly enters the market.

A Dow Jones Newswires’ survey Thursday shows output from OPEC’s 11 quota-bound members rose a third straight month in June. Led by Iran and Venezuela, output was up almost 300,000 barrels a day, or 1%, compared with March.

OPEC compliance with a trio of large output reductions announced late last year is now at 76%, down seven percentage points, since March, according to the survey. Some other industry reports though have OPEC compliance near just 70%.

“Creeping OPEC production serves to underscore the underlying weakness (of the market) and that (prices) likely got ahead of themselves,” says PFC Energy analyst David Kirsch.

Moody’s, the credit rating agency, says Thursday its forecast for the global integrated oil industry is “negative” as it expects economic recovery in 2010 to be “slow and painful, crimping worldwide demand for oil and natural gas at a time when inventories are near record highs.”

Of course, it bears repeating that weakness in crude-oil markets doesn’t mean strength for renewable sources of energy. Biofuels as well as wind and solar still need energy prices to be high to help them claw their way to profitability. A collapse in oil prices will be bad news for boosters of carbon-lite fuel.

petroleum

2010-05-18T03:39:00.000-07:00

Natural mineral oil, a thick greenish-brown flammable liquid found underground in permeable rocks. Petroleum consists of hydrocarbons mixed with oxygen, sulphur, nitrogen, and other elements in varying proportions. It is thought to be derived from ancient organic material that has been converted by, first, bacterial action, then heat, and pressure (but its origin may be chemical also).

From crude petroleum, various products are made by fractional distillation and other processes; for example, fuel oil, petrol, kerosene, diesel, and lubricating oil. Petroleum products and chemicals are used in large quantities in the manufacture of detergents, artificial fibres, plastics, insecticides, fertilizers, pharmaceuticals, toiletries, and synthetic rubber.

Petroleum was formed from the remains of marine plant and animal life which existed many millions of years ago (hence it is known as a fossil fuel). Some of these remains were deposited along with rock-forming sediments under the sea where they were decomposed anaerobically (without oxygen) by bacteria which changed the fats in the sediments into fatty acids which were then changed into an asphaltic material called kerogen. This was then converted over millions of years into petroleum by the combined action of heat and pressure. At an early stage the organic material was squeezed out of its original sedimentary mud into adjacent sandstones. Small globules of oil collected together in the pores of the rock and eventually migrated upwards through layers of porous rock by the action of the oil's own surface tension (capillary action), by the force of water movement within the rock, and by gas pressure. This migration ended either when the petroleum emerged through a fissure as a seepage of gas or oil onto the Earth's surface, or when it was trapped in porous reservoir rocks, such as sandstone or limestone, in anticlines and other traps below impervious rock layers.

The modern oil industry originates in the discovery of oil in western Ontario in 1857 followed by Edwin Drake's discovery in Pennsylvania in 1859. Drake used a steam engine to drive a punching tool to 21 m/68 ft below the surface where he struck oil and started an oil boom. Rapid development followed in other parts of the USA, Canada, Mexico, and then Venezuela where commercial production began in 1878. Oil was found in Romania in 1860, Iran in 1908, Iraq in 1923, Bahrain in 1932, and Saudi Arabia and Kuwait in 1938.

The USA led in production until the 1960s, when the Middle East outproduced other areas, their immense reserves leading to a worldwide dependence on cheap oil for transport and industry. In 1961 the Organization of the Petroleum Exporting Countries (OPEC) was established to avoid exploitation of member countries; after OPEC's price rises in 1973, the International Energy Agency (IEA) was established in 1974 to protect the interests of oil-consuming countries. New technologies were introduced to pump oil from offshore and from the Arctic (the Alaska pipeline) in an effort to avoid a monopoly by OPEC. Global consumption of petroleum in 1993 was 23 billion barrels.

As shallow-water oil reserves dwindle, multinational companies have been developing deep-water oilfields at the edge of the continental shelf in the Gulf of Mexico. Shell has developed Mars, a 500-million-barrel oilfield, in 900 m/2,940 ft of water, and the oil companies now have the technology to drill wells of up to 3,075 m/10,000 ft under the sea. It is estimated that the deep waters of Mexico could yield 8–15 million barrels in total; it could overtake the North Sea in importance as an oil source.

Petrol prices hit record high and could increase even more

2010-05-18T03:33:00.000-07:00

Petrol prices look set reach £6 per gallon, and rising. Photograph: Graham Turner

The following correction was printed in the Guardian's Corrections and clarifications column, Tuesday 13 April 2010

This sentence read as though it was expressing national totals: "Supermarkets operate just 1,200 of the 10,000 petrol stations in the UK, but they account for an average of 12m litres of the 14.5m litres of petrol sold each year." What the writer meant was that each of the 1,200 supermarket sites sold an annual average of 12m litres, and the others each sold 2.5m litres a year

Petrol prices reach £5 a gallon

2010-05-18T03:28:00.000-07:00

The average motorist could soon be paying more than £2,600 a year to fill up their car, swallowing almost 15 per cent of the average take-home pay, a survey predicted.

Figures compiled by the AA showed that on Tuesday the national average price for a litre of unleaded petrol rose to 110.2p, or £5.01 a gallon. Diesel now costs 120.51p, or £5.48 a gallon.

Edmund King, the president of the AA, described the record high as "the latest milestone along a miserable road of increasing fuel prices this year".

Soaring costs of crude oil, caused by increased demand from developing countries such as China and India, have pushed up petrol prices by almost 20p a litre since this time last year.

Meanwhile, oil companies have been accused of ripping off motorists after BP and Shell announced record profits totalling more than £7 billion for the first three months of this year.

But a comprehensive study by uSwitch.com, the comparison website, suggests much worse is to come. Many analysts have suggested that by next year petrol could cost 150p per litre, meaning the average car would cost £84 to fill, compared with £49.22 last year.

For a motorist driving 12,000 miles a year, that equates to £2,636 in annual fuel bills – £706 more than this year.

Even smaller cars, such as Ford Fiestas, would cost £1,792 a year to fill up, while a luxury saloon such as a Mercedes C-Class would cost £4,190.

The average net salary in 2009 is predicted to be £19,167, meaning the average car will guzzle 14 per cent of take-home pay in fuel bills alone.

Ann Robinson, of uSwitch.com, said: "Unfortunately the outlook for drivers is bleak. This latest blow could be enough to force some drivers off the road altogether. As a direct result of these price hikes, it would be no surprise to see more motorists leaving their car at home and using other methods of transport.

"However, drivers who are reliant on their cars for business or live in remote areas will be hardest hit - for them, leaving the car at home is not an option."

Gordon Brown is under increasing pressure to scrap a 2p increase in fuel duty planned for October or even to cut fuel duty after hauliers warned that hundreds of companies would go out of business if the price rises continued.

Petrol Prices

2010-05-18T03:21:00.000-07:00

Since March 1983 I have kept a detailed record of fuel prices and fuel consumption, spanning fourteen different cars, both privately-owned and company. This table records the movement in fuel prices over that period, taking in each year the first fuel purchase in March. Prices are for leaded 4-star up to 1988, and unleaded thereafter. This roughly corresponds to the point when unleaded took over from 4-star as the standard fuel.

The table shows that the price of fuel in real terms is now 15% higher in March 2010 than in 1983, the oil price having risen steadily since March 2009, and the price also having been affected by the weakness of the pound against the dollar. The real terms price is now a record for the period covered, and is over 50% higher than in 1990. During the period covered by the table, "real" fuel prices fell between 1983 and 1992, encouraging a boom in road traffic, but then rose sharply due to the "fuel duty escalator", resulting in the fuel protest of 2000. At this time, fuel prices had risen by over 50% in five years, which undoubtedly caused much hardship.

Petrol Prices 1983-2010
Year	Price per Litre (p)	Price per Gallon (£)	Retail Prices Index	Petrol Price in constant terms (1983=100)	5-year % increase ¶
1983	36.7	1.670	83.1	100.0	-
1984	38.7	1.759	87.5	100.0	-
1985	42.8	1.946	92.8	104.3	-
1986	38.2	1.737	96.7	89.4	-
1987	37.8	1.719	100.6	85.0	-
1988	34.7	1.578	104.1	75.4	-5.5
1989	38.4	1.746	112.3	77.4	-0.7
1990	40.2	1.828	121.4	74.9	-6.1
1991	39.5	1.796	131.4	68.0	3.4
1992	40.3	1.832	136.7	66.7	6.6
1993	45.9	2.087	139.3	74.6	32.3
1994	48.9	2.223	133.1	77.6	27.3
1995	50.9	2.314	147.5	78.1	26.6
1996	52.9	2.405	151.5	79.0	33.9
1997	57.9	2.632	155.4	84.3	43.7
1998	60.9	2.769	160.8	85.7	32.7
1999	61.9	2.814	164.1	85.3	26.6
2000	76.9	3.496	168.4	103.3	51.1
2001	77.9	3.541	173.1	101.8	47.2
2002	69.9	3.178	174.5	90.6	20.7
2003	77.9	3.541	179.9	98.0	27.9
2004	77.9	3.541	184.6	95.5	25.8
2005	79.9	3.632	190.5	95.0	3.9
2006	88.9	4.041	195.0	103.2	14.1
2007	87.9	3.996	204.4	97.4	25.6
2008	103.9	4.723	212.1	110.9	33.4
2009	89.9	4.087	211.3	96.2	15.4
2010	111.9	5.087	220.7	114.8	40.1

The table also does not show peak prices in my local area, which were 224.6p/gallon (49.4p/litre) in October 1990, following the Iraqi invasion of Kuwait, and 390.5p/gallon (85.9p/litre) in June 2000, just before the fuel protest. Around this time I even paid 404.1p/gallon (88.9p/litre) in the Scottish Highlands. It seems that peak prices tend to occur in the autumn, and March, just as winter demand is tailing off, is often a low point in the year.

In 2005 there was a marked rise in the international price of oil, leading to a peak price of 426.9p/gallon (93.9p/litre) in September and October. Also since the beginning of March 2008 there was a further sharp spike in the international oil price, with unleaded reaching a startling peak in July of 540.5p/gallon (118.9p/litre). Recently, the price has continued to increase after the beginning of March, with my most recent fill-up having been at a personal record of 545.1p/gallon (119.9p/litre).

Is petroleum price too high in Pakistan?

2010-05-18T03:17:00.000-07:00

Whether petrol prices are too high or not is a matter of common debate. In the recent past the prices of petrol are frequently changing, sometimes increasing and at other times decreasing though by a margin of Re. 1/2 to 1 Re. on either side, but generally the prices have arranged around Rs. 30-33/ liter.

Importance of petrol in daily life is quite apparent. Petrol is a strategic fuel for economic life line. Its price affects cost of production in a variety of ways as with the increase in its prices, cost of transportation of import, export and goods for local consumption goes up. Besides air, rail, road and sea transportation rates rise with the escalation in the price of petroleum.

This article examines the question whether the price of super petrol which has been fixed by the govemment till recently and now by the petroleum cos. is too high in Pakistan in comparison with other countries keeping in view their respective per capita incomes.

For this study, we have relied on figures available for the World Bank, "2001 World Development Indicators" and World Development Report 2000-2001 for GNP per capita measured at purchasing power parity rate basis in $ for 1999 and super petrol price in $/liter for Pakistan and other selected countries.

RATIO BETWEEN PETROL PRICES AND PER CAPITA INCOME (of 10 Lowest Oil Price Countries)
.	Country	Petrol prices ($/liter)	Pakistan rupees @ Rs. 60/$	Per capita income at PPP (PCI)	PCI equivalent to liters petrol	How many times is the price of petrol more expensive in Pakistan
	Pakistan	0.53	31.80	1757	3315	—
1.	Turkmenistan	0.02	1.20	3099	154950	47
2.	Iraq	0.03	1.80	NA	NA
3.	Iran	0.05	3.00	5163	103260	0.31
4.	Vietnam	0.12	7.20	1755	14625	4
5.	Indonesia	0.17	12.00	2439	14347	4
6.	Ghana	0.20	12.60	1793	8965	3
7.	Kuwait	0.21	12.60	NA	NA	—
8.	Yemen	0.21	12.60	688	3276	0.98
9.	Saudi Arabia	0.24	14.40	NA	NA	—
10.	UAE	0.25	15.00	NA	NA	—
Source: "2001 World Development Indicators", World Bank.

In order to work out how much oil is more or less expensive in Pakistan than other countries, we divide per capita income by petrol price (in $) to arrive at the quantity of petrol liters which can be purchased.

The above-mentioned countries are the countries with the least expensive petrol in the world ranging between $ 0.02 to 0.25 per liter which means the prices of petrol in Pakistan are more expensive by 27 times to 2 times without regard to their purchasing capacity, i.e. their per capita income. If their per capita incomes are taken into account, the prices of petrol in Pakistan would became still more expensive to a ratio between 47 times for Turkmenistan and 31 times for Iran.

Many of the above mentioned 10 countries are also petroleum producing countries and hence could afford to keep prices down. The petrol price in Turkmenistan is only 3.77% of the price of in Pakistan with due weight given to their respective per capita incomes or Pakistan petrol price is 47 times more expensive than in Turkmenistan.

In the following table the price of petrol in Pakistan is compared with the top ten most expensive fuel countries along with their per capita incomes.

RATIO BETWEEN PETROL PRICE AND PER CAPIA INCOME (with 10 Most Expensive Petrol Countries)
.	Country	Average Fuel Price $/Liter	In Pakistan Rupee@ Rs. 60/$	Per capita income at PPP	PCI equivalent to petrol (litres)	Times Petrol more expensive in Pakistan
	Pakistan	0.53	31.80	1757	3315	—
1.	Hong Kong	1.46	87.60	26522	14341	4.33
2.	Norway	1.19	71.40	20939	22287	6.72
3.	Uruguay	1.19	71.40	8280	6958	2.09
4.	UK	1.17	70.20	20883	17840	5.38
5.	Israel	1.14	68.40	NA	NA	NA
6.	Argentina	1.07	64.20	11324	10583	3.19
7.	Finland	1.06	63.60	21209	20008	19.27
8.	Japan	1.06	69.00	24041	22680	6.84
9.	Netherlands	1.03	31.80	23052	22380	6.75
10.	Burunai	1.01	60.60	553	547	0.16

The price of petrol between Pakistan and other most expensive fuel countries is higher 100-175% but if the per capita income is taken into account, the difference goes up. It is estimated that the petrol price in Pakistan is worked out to be as expensive as 6.64 times in Japan, 6.75 times in Norway, and about 5.38 times in UK if per capita incomes are considered.

Source: 1. 2001 World Development Indicators, World Bank.

2. World Development Report, 2000-2001, World Bank.

The following table compares petrol price in Pakistan vis-a-vis other income group countries.

PETROL PRICES AND GNP PER CAPITA IN PAKISTAN AND OTHER INCOME GROUP COUNTRIES
Region	Fuel price $/liter	In Pakistan Rs./liter@ Rs. 60/$	Per Capita Income	PCI equivalent to petrol (litres)	Times petrol price higher in Pakistan
Pakistan	0.53	31.80	1757	3315	—
World	0.54	32.40	6490	12019	3.62
(Medium)
Low income	0.49	29.40	1790	3653	1.10
Middle income	0.48	28.80	4880	10166	3.06
High income	0.86	51.6	21763	25306	7.63
Europe EMU	1.04	62.40	NA	NA	NA
Source: "2001 World Development Indicators", World Bank

The above table reveals that although the price of petrol in terms of dollars is quite comparable with most of the rest of the world ranging around $0.50/litre, yet the cost is too high if the per capita income of Pakistan is taken into account.

While a Pakistani can buy 3315 liters of petrol based on his per capita income/ year, a high income and middle country man can buy 25306 and 10166 liters of petrol with his income which are 7.63 and 3.06 times higher than Pakistan. If comparison is made between the world average and Pakistan, the ratio roughly is 3.62 times higher. However, for low income countries the average price is $0.49 /liter, a little less than Pakistan and GNP per capita of $410, and thus Pakistan is slightly better off.

In the following table, the per capita income (at PPP basis) and petrol price in Pakistan vis-a-vis other major selected countries have been compared:

PER CAPITA INCOME AND PETROL PRICE (times higher or lower than Pakistan)
Country	Per capita income $ (PPP)	Times higher than Pakistan	Super fuel price $/liter	Times higher than Pakistan
Pakistan	1757	—	0.53	—
Hong Kong	20939	11.92	1.46	1.75
Norway	26522	15.09	1.19	1.24
Uruguay	8280	4.71	1.19	0.24
UK	20883	11.88	1.17	1.21O5
Israel	NA	—	1.14	1.15
Argentina	11324	6.45	1.07	1.02
Finland	21209	12.07	1.06	1.00
Japan	24041	13.68	1.04	0.96
Netherlands	23052	13.12	1.03	0.94
Burunai	553	0.31	1.01	0.91
World average	6490	3.69	0.54	0.02
Low income	1790	1.02	0.49	(0.08)
Middle income	4880	2.78	0.48	(0.09)
High income	21763	12.39	0.86	0.62
European	NA	_	1.04	0.96
EMU
India	2149	1.22	0.60	0.13
Bangladesh	1475	0.84	0.46	(0.14)
China	32912	1.88	0.40	(0.25)

The composite table shows that the countries with the highest fuel prices have around 100-125 % higher prices than Pakistan while their per capita incomes are much higher by average 3 to 12 times. However, in comparison with low income countries, fuel prices are lower by about 8% vis-a-vis Pakistan with per capita income higher by only 2%, which shows that petrol prices are high. If you look at China, India and Bangladesh, the fuel prices in Pakistan are cheaper in China and Bangladesh but less expensive than in India.

For which data are available, there are 158 countries having per capita income, on purchasing power parity basis, higher than Pakistan out of 206 countries. In case of fuel prices, Pakistan is 59th amongst the highest fuel price countries, as given in the table ahead.

PAKISTAN'S RANKING: PER CAPITA INCOME AND PETROL PRICE
.	Per Capita Income ($)	Fuel price $/liter
Pakistan (No.)	1757 (159th)	0.53 (7 countries) 59th
No of countries	158	3
higher than Pakistan
No of countries	47	58
lower than Pakistan

Petrol price in Pakistan is $0.53 per liter with the per capita income of $ 1757 at PPP. On the basis of world average per capita income of $6490 and the petrol price of $0.54 /liter as against Pakistan's per capita income of $1757, the price of petrol should have been $0.15 or about Rs. 9 liter as against about Rs. 31/litre about 3.4 times more. There are 7 countries with the same petrol price in dollar, i.e. $0.53.

On the basis of both petrol price per capita income and the quantum of petrol that could be purchased with the per capita income, the following 10 countries have been listed with the lowest and highest petrol prices.

REVISED LIST OF LOWEST AND HIGHEST OIL PRICE COUNTRIES
A 10 Lowest Countries	B 10 Highest Countries
1. Turkmenistan	l. Burundi
2. Iran	2.Tanzania
3. Austria	3.Zambia
4. Singapore	4.Malavi
5. New Zealand	5. Mali.
6. Switzerland	6. Madagascar
7. Australia	7.Niger
8. Canada	8.Chad
9. Venezuela	9.Ethopia
10. USA	10. Bulkina Fasu

Out of 124 countries for which data of both petrol price and per capita income are available, Pakistan is ranked at 33rd with highest price of oil and 91 countries with lower petrol price through this methodology which takes into account both the factors simultaneously. Most of these countries with higher petrol prices belong to Africa or have smal1 economies.

Increasing role of China in the oil market

2010-05-17T05:02:00.000-07:00

At present, China is the fourth largest oil producer in the world

China, it seems, is everywhere. In what has become a routine, not a day passes without a mention of China in the news, in everyday conversations and predictions. As the next superpower, the country is wielding clout in every sphere possible. The growing influence is felt even in the oil market where the Asian giant is one of the biggest players.

Iraq's oil field is just emerging from the ravages of oil, but China is already there. PetroChina Co. has already got development projects for Halfaya and Rumaila Oilfield in Iraq. The company has also signed agreements for co-cooperation in the oil field with companies in Turkmenistan, Kazakhstan, Uzbekistan and Russia. Last year Chinese companies spent more than $32 billion to secure oil, metal, coal fields in Asia, Africa and Australia. The Chairman of PetroChina Co. has said that the company was planning to invest at least $60 billion for foreign acquisitions in the next decade.

Seemingly, at present, China is the fourth largest oil producer in the world. Last year oil output was put at 189.49 million tons, (3.79 million barrels a day) a fall by .04 percent than expected. According to the National bureau of statistics, China produced about 15.11 million tons of oil in the month of February. But, the country consumes oil many times more. As a result of which imports contribute to as high as 52 percent of the oil consumed.

Indeed, China became an oil importer only in 1993 but has come a long way since. China's oil imports could reach a record 210 million tonnes this year, up by 5.5 %. So how does China go about for energy? Let's see:

In one of the largest export deals for Australia, China National Offshore Oil Corp has decided to buy LNG from BG Group Plc's proposed export terminal in Queensland. Based on the deal signed, China would get 3.6 million metric tons of LNG yearly for the next twenty years from 2014. The deal is estimated to be worth more than $80 billion. Last August PetroChina Co. signed an agreement worth A$50 billion ($46 billion) with Exxon Mobil Corp. to buy 2.25 million tons of LNG with Chevron Corp.-led Gorgon LNG venture.

Of course, this is despite the tensions on the political front. One would remember the Rio Tinto trial where an Australian citizen and three of his colleagues were standing trial (since given 7-14 years of prison sentence) on charges of bribery and for infringing on commercial secrets. Anyway, the trial didn't stand in the way of growing trade relations with China. Also, PetroChina Co., and Royal Dutch Shell agreed to a $3.44 billion deal to buy most of the Australian assets of Arrow Energy Ltd., the coal seam gas producer.

"Australia's trading relationship with China is healthy and mutually beneficial" says Australian Energy Minister Martin Ferguson, "Australia is committed to strengthening that relationship and being an important partner in our region's economic growth."

In other deals, China's largest oil and gas producer, PetroChina Co., which holds about 7.5% stake in China Petroleum Finance decided to raise its holdings to 49%. The move made possible by buying stakes from the parent company China National Petroleum Corp. Thus, PetroChina Co. gets better returns on investment, as it gets finance quite easily.

Oil and Gas in Indiana

2010-05-14T11:52:00.000-07:00

Following the news of the success of Colonel Edmond Drake's oil well in Titusville, Pennsylvania in 1859, oil exploration moved westward into Ohio and Indiana. Between 1862 and 1869, wells were drilled in Pulaski County and Vigo County and gas and oil were discovered but not further developed. Gas was discovered in what would become the Trenton Field near Eaton in Delaware County in 1876. Beginning in 1886 and continuing into the first decade of the 20th century, gas and then oil were discovered and developed in east central Indiana. A wild untethered boom ensued that ultimately resulted in thousands of wells being drilled; this was America's first giant oil field (greater than 100 million barrels of oil). The gas was used to attract and then fuel numerous industries in the region. In fact, the existence of Muncie, Anderson, Marion, and Kokomo as manufacturing centers can be directly attributed to the development of the Trenton Field. In addition to these industrial complexes, the oil boom led to the development of refining and petrochemical industries in the Calumet region. The boom quickly ended in the beginning of the 20th century because wasted resources and unregulated drilling practices caused a precipitous drop in production. Unfortunately much of the resource was wasted or lost through the burning of gas at the surface and the contamination of oil by fresh water within the subsurface reservoir.

Southwestern Indiana

As gas and oil production quickly declined in northern Indiana, new discoveries were being made in the southwestern part of the state known as the Illinois Basin. Production from fields in Vigo and Pike Counties was rapidly followed by new discoveries in Sullivan and Gibson Counties. Unlike the single field of northern Indiana that produced from a single reservoir, these new discoveries produced from many smaller fields and a variety of different reservoirs at different depths. Also, unlike the Trenton Field, the Illinois Basin fields produced mostly oil, not gas. Soon all the counties located in the southwestern part of the state were contributing to oil production. Production peaked in 1956 at over 12 million barrels for the year. Since that time both the number of holes drilled and the production for the state have declined.

Current Activity and Future Prospects

Since the early 1960s, the amount of oil produced in Indiana has declined. Close examination of this decline reveals that changes in the price of oil are directly related to the number of wells drilled and consequently, the volume of oil produced. For instance, the reversal of the steep decline in the 1960s and 70s can be attributed to increased drilling in response to the energy crisis of 1973 and Iranian crisis of 1979. After 1986 a steep declined resumed, resulting from a dramatic lowering in the price of crude oil. In this same time frame, the number of holes drilled within the state declined from more than 1,200 per year in the early 1980s to around 200 per year by 1997. While most new holes are drilled as development wells in existing fields, a low level of "wildcat" exploration still takes place within the state. With oil prices approaching $100 per barrel in 2007, exploration for new reserves has resulted in an increase in the number of holes drilled.

The current hot play is the New Albany Shale gas play which is utilizing state of the art completion technologies to access and produce natural gas from this unconventional reservoir. Renewed interest in the New Albany began in the mid-1990s and related drilling has accounted for nearly 500 wells since that time. Initially focused in Harrison County, where New Albany gas production was discovered in the late 1800s, successful exploration has more recently expanded to several other counties in southwest Indiana. Although wells with initial production test rates (IPs) typically range from 20-400 MCFPD (thousand cubic feet gas per day), some wells northern Daviess and in southern Sullivan Counties are rumored to have tested more than 1 MMCF (1 million cubic feet of gas per day). Many of the New Albany wells are being drilled with one or more horizontal boreholes that extend outward from the surface drill-site over a distance of one-half mile to nearly a mile. In Harrison County, the New Albany occurs at depths ranging from 500-1200 ft.; in some of the newly-drilled areas the New Albany is encountered at greater depths, around 2,000 ft. in Daviess County, for example. Additionally there is significant interest and development work ongoing in the coal measures of the southwestern part of the state. Here shallow drilling is tapping unconventional gas known as “coal bed methane” or CBM.

There is a fair potential for the discovery of significant new reserves in the state. Much of the state has been thoroughly drilled; however, this drilling reached only the first few thousand feet of depth. A considerable portion of the subsurface remains unexplored, and many thousands of feet of potential reservoir exist, especially in the southern portion of the state. Although the deep subsurface geology of this region is thought to be similar to northern areas of the state, details of thermal maturity, migration pathways, and trapping mechanisms are unknown. In addition to untested geology, the application of new technologies to explore for and produce oil and gas could hold the key to unlocking some of Indiana's resource potential. These new technologies, some of which are being used in the development of the New Albany Shale as an unconventional gas source, include the application of advanced seismic acquisition and processing techniques, new drilling technologies including horizontal drilling, and complex completion techniques such as CO2 stimulation.

Petroleum industry is too profitable, so what?

2010-05-13T03:51:00.000-07:00

Petroleum is even more profitable than finance. Do you need a proof ? This post is extracted from the longer (too long?) post revenues per employee sum up world’s troubles. First, I give you again the chart of revenues and profits per employee of a few top companies

But, maybe you do not believe me when I say that oil is more profitable than finance. Indeed if you look closely at the chart, the profits per employee of Goldman Sachs are 380k$/E while it is only “379.18k$/E” for Exxon. That it is about the same, but still, finance wins.
So, to support my point, let me add other data: (from Fortune 2008 and 2009 - though notice that the results do not change much between both years)

List of the industries generating most revenues per employee
List of the 10 highest paid CEOs Ok the first one is from a finance company (Blackstone), the second one is from a software company (Oracle) but, be seated, “The next seven highest paid CEOs all helm energy companies: Ray Irani of Occidental Petroleum (OXY, Fortune 500), John Hess of Hess Corp (HES, Fortune 500), Michael Watford of Ultra Petroleum (UPL), Aubrey McClendon of Chesapeake Energy (CHK, Fortune 500), Bob Simpson of XTO Energy (XTO, Fortune 500), Mark Papa of EOG Resources (EOG, Fortune 500) and Eugene Isenberg of Nabors Industries (NBR).” (CNNMoney) Shouldn’t we feel sorry for traders who are not working in the oil industry?
25 top-paying companies First one is a law firm (Bingham McCutchen), second one is a Medical Doctor firm (Lehigh Valley Hospital & Health Network), interestingly, the 3rd, 4th, and 5th company are also law firms (Orrick Herrington & Sutcliffe, Alston & Bird, and Perkins Coie). And the 6th one at last is an oil company: Devon Energy “The largest independent oil and natural gas producer in the U.S., Devon pumps half a million barrels of oil a day” (CNNMoney). One word about lawyers and MD: I am really not shocked to see them first because a lawyer or a MD has much more responsibility than an engineer. So even if their job may be in some cases less complex (does not mean easy obviously) than engineering, it is definitely worth more money per person. Back to our subject, Goldman Sachs is only 11th, behind, another oil firm (EOG Resources) and behind sofware companies (among other Adobe Systems).
Best big companies to work for The first one is… an oil company: Valero Energy the Largest oil refiner in North America! And the second one is nothing else than Goldman Sachs! However, notice that the ranking puts a high weight on the size of the company because else in the ranking of the best companies to work for Goldman Sachs is before Valero and that the first company is Google (2007).

Petroleum industry is way too profitable, so what?
Petroleum industry is the most profitable because oil is the most useful thing around. Oil is energy and the world needs energy. There is a high demand for energy so energy should be expensive. OK but this does not explain why oil companies revenues per employee (and wages) and profits are so high.
In fact, wages and profits should be greatly lowered by the expected high cost for unextracted crude oil. Cost of crude oil should appear in the balance sheet of an oil drilling company, and then in all the supply chain. Well, crude oil costs do appear in terms of concessions. But they are way undervalued. As an approximation you can neglect these costs. You can think that current cost of unextracted crude oil is ZERO$. That exactly means that nobody owns it and that reserves are unlimited. In my opinion everybody owns it, just like every natural resource, and it is limited. The market of natural resources (oil among others) should take into account in its pricing process all the natural reserves and not only the extracted reserves.
And to pronounce a taboo word : taxes. Profits from petroleum companies should be more taxed because these profits are not merited. They are not justified by an extraordinary complexity or by an extraordinary innovation. The useful innovation would be to find substitutes to petroleum.
Maybe if, like many, you really hate taxes, one other solution would be to force petroleum companies to highly invest in fundamental research for new energies.

Petrol station market continues to attract investors

2010-05-07T09:55:00.000-07:00

Petrol station market continues

to attract investors

Property services group Barber Wadlow, which specialises in petrol and service stations, has teamed up with Experian Catalist to publish a list of value indices for independently owned sites

These account for 63% of the UK’s petrol stations, and are the only vacant sites in the country that are “actively” traded.

The value of “mid-range” dealer sites — sites with average levels of trading performance — has fallen by 28% in the last 12 months, and by 36% since the peak of the market in 2007. But trading levels for these sites are still low in comparison with “top-end” sites — the top quarter of sites in terms of trading performance — where values have only fallen by 14% since the start of 2009.

The fall in values is primarily because purchasers cannot access finance. However, there are some well-funded investors who are continuing to buy up sites, and some of these are new entrants to the market.

Ownership is still fragmented, and the top 10 traders only account for around 10% of independently owned petrol stations. Investors are focusing on the better-performing sites, which account for 23% of the network.

Last year, planning or procurement issues meant that only 24 new petrol stations were developed. The supply of good sites without planning constraints therefore remains limited.

There was exceptional growth in values between 2000 and 2007. The prices of “top-end” sites rose by 66% and the average value of “mid-range” sites increased by 137%. By comparison, the IPD Retail Property Index increased by 65% over the same period.

The rise in value on “mid-range” sites was caused by the closure of poorly performing sites. Since 2000, almost a third of all sites have been closed, and this has driven up the trading performance of the remaining mid-range petrol stations. Fuel sales have risen by 40% and sales on forecourt shops have more than doubled.

The improvement in trading is also the result of better facilities — 25% of forecourts now have an off licence and 40% have cash machines. There is, however, scope for further investment as only 15% of sites provide a convenience store.

Retail sales at petrol stations have remained strong. Although fuel sales are down by 10%-20%, sales at forecourt stores have been steady. The latter provide gross profit margins of 20% to 25%, compared with fuel margins of between 3% and 6%. As a result, estimated rental values have fallen by just 3% for “top-end” sites and by 14% for “mid-range” sites.

Barber Wadlow expects the value of sites to rise, but the funding crisis will continue to limit price inflation.

2010-04-04T06:35:00.000-07:00

LUKOIL is one of the world’s leading vertically integrated oil & gas companies. Main activities of the Company are exploration and production of oil & gas, production of petroleum products and petrochemicals, and marketing of these outputs. Most of the Company's exploration and production activity is located in Russia, and its main resource base is in Western Siberia. LUKOIL owns modern refineries, gas processing and petrochemical plants located in Russia, Eastern and Western Europe, near-abroad countries. Most of the Company's production is sold on the international market. LUKOIL petroleum products are sold in Russia, Eastern and Western Europe, near-abroad countries and the USA.

LUKOIL is the second largest private oil Company worldwide by proven hydrocarbon reserves. The Company has around 1.1% of global oil reserves and 2.3% of global oil production. LUKOIL dominates the Russian energy sector, with 18% of total Russian oil production and 19% of total Russian oil refining.

LUKOIL proven reserves at the beginning of 2009 were 14,458 mln barrels of crude oil and 29,253 bcf of natural gas, totaling 19,334 mln boe.

LUKOIL has an outstanding portfolio of production assets. The main production region for LUKOIL Group is Western Siberia. LUKOIL is carrying out international exploration and production projects in Kazakhstan, Egypt, Azerbaijan, Uzbekistan, Saudi Arabia, Colombia, Venezuela, Cote d’Ivoire, Ghana and Iraq.

With putting into operation the Nakhodkinskoye gas field in 2005 the Company started its gas program which targets at a rapid growth of gas production in Russia and abroad and increase in the share of gas to a third of total hydrocarbon production by LUKOIL. The key regions for development of LUKOIL gas production are the Bolshekhetskaya Depression, the Northern Caspian and Tsentralno-Astrakhanskoye field in Russia as well as the Kandym – Khauzak – Shady project in Uzbekistan (put into production in 2007) and the Shakh Deniz project in Azerbaijan. LUKOIL owns significant oil refining capacity both in Russia and abroad. In Russia the company owns four large refineries at Perm, Volgograd, Ukhta and Nizhny Novgorod. Total capacity of LUKOIL facilities in Russia is 44.7 mln tons of oil per year. LUKOIL also has refineries in Ukraine, Bulgaria, Romania, and a 49% stake in ISAB refining complex (island of Sicily, Italy), with total capacity of 21.8 mln tons per year. In 2008 LUKOIL refined 56.28 mln tons of oil at its own refineries and ISAB complex, including 44.18 mln tons at its Russian refineries.

LUKOIL created a new business sector in 2008: Power Generation. Creation of the new business sector is a part of the Company’s Strategic development program for 2008–2017. By the end of 2008, LUKOIL’s Power generation business sector included UGK TGK-8 (acquired during the year), the Company’s own power generating facilities at oil & gas fields, and also a number of power generators in Bulgaria, Romania and Ukraine. Output of electrical energy during 2008 by LUKOIL organizations was in excess of 16.2 billion kilowatt-hours, output of heat energy – more than 18.1 million Gcal (UGK TGK-8 accounted for 90% and 85% of the total, correspondingly). At the beginning of 2009 the Company's marketing network encompassed 25 countries, including Russia, the near-abroad and European countries (Azerbaijan, Belarus, Georgia, Moldova, Ukraine, Bulgaria, Hungary, Finland, Estonia, Latvia, Lithuania, Poland, Serbia, Montenegro, Romania, Macedonia, Cyprus, Turkey, Belgium, Luxemburg, Czech Republic, Slovakia, and Croatia) as well as the USA and includes 204 tank farm facilities with total capacity of 3.06 million cubic meters as well as 6,748 filling stations, including franchises