The oil and gas industry is divided into three major sectors, that is, upstream, midstream and downstream. The Upstream sector is also commonly known as the exploration and production (E&P). This sector entails searching for potential underground or underwater (offshore) crude oil and natural gas fields, drilling exploratory wells, and subsequently drilling and operating the wells that recover and bring the crude oil and/or raw natural gas to the surface. There has been a significant shift toward including unconventional gas as a part of the upstream sector, and corresponding developments in liquefied natural gas (LNG) processing and transport.
The Midstream sector involves the transportation (by pipeline, rail, barge, oil tanker or truck), storage, and wholesale marketing of crude or refined petroleum products. Pipelines and other transport systems can be used to move crude oil from production sites to refineries and deliver the various refined products to downstream distributors. Natural gas pipeline networks aggregate gas from natural gas purification plants and deliver it to downstream customers, such as local utilities.
The Midstream operations are often taken to include some elements of the Upstream and Downstream sectors. For example, the Midstream sector may include natural gas processing plants that purify the raw natural gas as well as removing and producing elemental sulphur and natural gas liquids (NGL) as finished end-products.
The Downstream sector commonly refers to the refining of petroleum crude oil and processing and purifying of raw natural gas, as well as the marketing and distribution of products derived from crude oil and natural gas.
This sector reaches consumers through products such as gasoline or petrol, kerosene, jet fuel, diesel oil, heating oil, fuel oils, lubricants, waxes, asphalt, natural gas, and liquefied petroleum gas (LPG) as well as numerous petrochemicals.
The Upstream Sector in Kenya
The Upstream sector in Kenya essentially deals with hydrocarbon (Oil and Gas) exploration, both onshore and offshore within the four sedimentary basins in Kenya (Anza, Lamu, Mandera and Tertiary Rift), with a total area of about 493,000 square kilometres. The Upstream Division also deals with licensing of International Oil Companies (IOC’s), monitoring of exploration activities, development and production, transportation and export of crude products.