Экономика и управление в нефтегазовой отрасли

АНГЛИЙСКИЙ ЯЗЫК

ЭКОНОМИКА И УПРАВЛЕНИЕ В НЕФТЕГАЗОВОЙ ОТРАСЛИ

(ECONOMICS AND MANAGEMENT IN

PETROLEUM ENGINEERING)

учебно-методическое пособие

по дисциплине «Профессиональный английский язык»

для студентов III –V курсов и магистрантов ИГНД

 

 

UNIT1

Introduction to Economics and management

Lead-in

Fill in the spidergram with the words associated with Economics and Management

Explain your associations.

Discuss the following questions:

 

1. Why did you decide to be an economist?

2. In your opinion, what does an economist do?

3. Do you know any world famous economists?

1. Do you agree that all human activity is connected with economy?

Terms and Vocabulary

social science to attempt law principle range to deal exclusively with inflation roots tie to distributional justice fair speculation separate discipline namely to explore briefly major division microeconomics macroeconomics functioning behaviour decision making unit household individual business consumer to charge to address wealthy to determine output outside the scope to pay poverty to get paid for to consume scale in its turn

социальная наука стремиться, прилагать усилия закон, правило принцип круг, перечень иметь дело исключительно с инфляция корни, источники связь с справедливость распределения справедливый спекуляция отдельные дисциплины а именно, то есть исследовать кратко основное деление микроэкономика макроэкономика функционирование поведение отдел принимающий решение хозяйство, ферма частнный предприниматель потребитель назначать цену обращать внимание состоятельный определять выпуск, объем производства за пределами чего-либо платить бедность получать плату потреблять масштаб в свою очередь

Exercise 1. Read and remember the pronunciation.

[i:] discipline, principles, briefly, division, decision, deal

[a:] charge, market

[o:] explore

[ou] scope,

[ə:] determine, turn, pursue

[ju:] consumer, produce

[ai] decide, micro-, divide

[æ] macro-

[aiə] tie,

[k] knit, mechanism

 

Exercise 2. Pay attention to the stress in the following words.

 

′separate	′microecon′omics
exc′lusively	′macroecon′omics
′discipline	indiv′idual
distrib′utional	con′sumer

Exercise 3. Before reading the text tick what statement do you think is true:

1. Economics is only the study of money

2. Economics is something government takes care of

3. An economist basically decides how money is spent

Exercise 4. Read the text, do the exercises

WHAT DOES ECONOMICS STUDY?

Economics is a social science studying economy. Like the natural sciences and other social sciences, economics attempts to find laws and principles of economic functioning of society. Most students who take economics for the first time hardly can imagine the range of questions which this science studies. Some think that economics will teach them about the stock market, or what to do with their money. Others think that economics deals exclusively with problems like inflation and unemployment. In fact, it deals with all these subjects but they are parts of a much larger system.

 

Economics has deep roots in and close ties to, social philosophy. An issue of great importance to philosophers, for example, is distributional justice. Why are some people rich and others poor, and whatever the answer, is this fair? A number of nineteenth century social philosophers were trying to solve these questions and out of their speculations a separate discipline was born, namely economics. If you want to get quick idea of what economics studies, you should explore briefly the way economics is organized.

 

First of all, there are two major divisions of economics: microeconomics and macroeconomics. Microeconomics deals with the functioning of individual industries and the behaviour of individual economic decision making units: single business firms and households. Macroeconomics explores the decisions that individual businesses and consumers make. The choices of firms about what to produce and how much to charge and the choices of households about what to buy and how much of it to buy help to explain why the economy produces the things it does.

 

Another big question that microeconomics addresses is who gets the things that are produced. Wealthy households get more output then do poor households, and the forces that determine this distribution of output are outside the scope of microeconomics. Why do we have poverty? Who is poor? Why do some jobs pay more than others? Why do teachers or plumbers get paid for what they do? Think about all the things we consume in a day on the scale of a town, a whole country. Somebody decided to build the factories. Somebody decided to construct roads, build the housing, produce the cars, knit the shirts, and smoke the bacon. Why? What is going on in all those buildings? It is easy to see that understanding individual micro decisions is very important to any understanding of your society. Macroeconomics, in its turn, deals with the functioning of national economic complex and the behaviour of the main classes and social groups.

McConnell C.R., Brae S.L. Economics

Exercise 12. 9 Listening.

Before you listen discuss the following questions with your partner:

- If you live in a modern economy, life is quite easy.

- Before the industrial revolution life was much harder.

- In what ways was life more difficult?

Listen to someone talking about industrial revolution and do the tasks:

- Which of these things are mentioned?

1. length of live

2. housing

3. illnesses

4. work

5. food

6. having children

 

- Mach the description with the numbers.

1. life expectancy   2. number of children who died before they reached five years old   3. number of women who died when they were giving birth   4. years since the industrial revolution

A. about 250   B. 1 in 10     C. 25     D. 1 in 3

Exercise 13. Discussion.

1. Do you sometimes listen to the economy news on TV or on the radio?

2. What do you think of the state of economy in Russia?

3. What do your parents (grandparents) think of economic reforms in Russia? Did they live better or worse before?

4. What type of economy does Russia build?

5. Do you think you have more opportunities to be well off than your grandparents?

Exercise 14. Read the text

Words to Remember

doldrums to recover means goods resource community to allocate entrepreneurship branch to distinguish interaction private hands according to supply demand marketplace hands-off approach to interfere to pursue to afford to be guided by to reject to reduce in essence

спад в экономике восстанавливаться средства товары ресурс общество распределять предпринимательство отрасль, отделение различать взаимодействие в частной собственности в соответствии с, согласно предложение спрос рынок пассивный подход, невмешательство вмешиваться преследовать быть в состоянии, позволить себе быть управляемым кем-либо отклонять, отказываться сокращать, снижать по существу

Exercise 19. 9 Listening

Exercise 22. Discuss.

1. The significance of economics nowadays.

2. The reasons why some people are rich while some are poor.

3. The main types of economic systems.

4. Future of Russian economics.

 

UNIT 2

Finance

Lead-in

Terms and Vocabulary

a deal	дело, сделка, соглашение
to do a deal with	заключать сделку с
a dealer	дилер, агент
financial institutions	финансовые организации
to meet	встречать, встречаться; удовлетворять потребности
to save	спасать, сберегать
savings	сберегательный; сбережения
to loan	ссужать, давать взаймы
a loan	ссуда
mutual	совместный, общий
to invest	вкладывать деньги, капитал
investor	вкладчик
investment	вклад, капиталовложение
private	частный
profit	прибыль
to profit (by)	получать прибыль (с чего-либо)
to serve	служить
service	услуга
to offer	предлагать
to check	проверять
checking account	расчетный счет
broker	брокер
innovation	нововведение
to compete	состязаться, соревноваться
competition	состязание: конкуренция
in the face	перед лицом
deregulation	ослабление ограничений, дерегуляция
to install	устанавливать (техническое устройство)
teller	кассир
key	ключ
debit	дебет
retailer	розничный торговец
point	точка
to allow	позволять
merchant	купец, продавец
to accept	принимать, привлекать
network	сеть
to stimulate	стимулировать
to diversify	здесь: разнообразить услуги
diversification	здесь: разнообразие услуг
all over	по всей (территории)
to handle	проводить, вести, иметь дело (с)
transaction	дело, сделка
to result from	проистекать, происходить (из)
to urge	вынуждать, поощрять (к действию)
to assign	назначать, определять, ассигновать

FINANCIAL INSTITUTIONS

 

Businesses that distribute or deal in money are called finan­cial institutions. New institutions that meet new financial needs are appearing almost every day. The most familiar institutions are commercial banks, savings banks, savings and loan associations, mutual savings banks, credit unions, in­vestment banks and so on.

 

A commercial bank is a privately owned profit-making corporation. It serves both individuals and businesses by offer­ing checking and savings accounts, loans, and credit cards. It also deals in some brokerage, insurance, and financial ad­vice.

 

The commercial bank is the most important source of short term loans for businesses. Sometimes the borrowers pledge collateral to back up the loan. Such loan is a secured loan. Companies with a good financial position are given the prime rate of interest which is the lowest commercial interest rate.

 

The commercial bank offers its customers accounts of two types: demand deposits and time deposits. A demand deposit makes the money in it available to depositors immediately, while a time deposit requires depositors to leave their money with the bank for a stated period of time.

 

Most banks offer their customers various savings certifi­cates, called certificates of deposit. Savers may put their money into thirty day, six month, or two and a half year certificates. The highest interest is paid to the customers who deposit their money for a longer period.

 

Banking services are not free and banks charge fees for them. Many banks assess a service fee if an account balance falls beneath a particular minimum, such as $200.

 

Technological innovations and increased competition in the face of deregulation are changing the face of banking nowadays. Banks and other financial institutions are using com­puter technology now. One of the innovations is the electronic funds transfer which transfers money from individuals to the bank, from bank to bank, and from city to city through an electronic system.

 

Large banks are installing automatic teller machines out­side their buildings. A customer can get cash, make loan pay­ments, or transfer money from one account to another at any time of the day or night. The key to the automatic teller machine is a debit card which helps to make transfers directly to and from a customer's checking account.

 

Some large retailers are installing point-of-sale terminals which allow a retail customer to transfer funds from his bank account to the merchant's account.

Electronic funds transfer is making it easy for commercial banks to accept deposits outside their home states. Groups of banks are setting up automatic teller machine networks for the customers to use their debit cards to withdraw cash, transfer funds and check balances in other states.

 

Nowadays the banking industry is becoming less regulated. This process is stimulating the diversification of banks, and service and price competition. Financial supermarkets are ap­pearing all over the United States. These new financial institu­tions are handling all types of financial transactions. They are selling life insurance to their customers, buying and selling their homes and are lending them money in addition to the traditional services of stock and bond transactions.

 

The competition that results from deregulation is urging the banks to offer more and better services to their customers.

V. Milovidov «English for Financial

Management Experts»

Exercise 8. Listening.

Exercise 14. Read the text

FINANCIAL MANAGEMENT

 

In the past, financial management was not a major concern for a business. A company used toestablish relations with a local bank. The bank handled the financing and the company took care of producing and selling.

 

Today only a few firms operate in this way. Usually busi­nesses have their own financial managers who work with the banks. They negotiate terms of financial transactions, compare rates amongcompeting financial institutions. Financial manage­ment begins with the creation of a financial plan. The plan in­cludes timing and amount of funds and the inflow and out­flow of money. The financial manager developsand controls the financial plan. He also forecasts the economic conditions, the company's revenues, expenses and profits.

 

The financial manager's jobstarts and ends with the company's objectives. He reviews them and determinesthe funding they require. The financial manager compares the ex­penses involved to the expected revenues. It helps him to pre­dict cash flow. The available cash consists of beginning cash plus customer payments and funds from financing.

 

The financial manager plans a strategy to make the ending cash positive. If cash outflow exceeds cash inflow the company will run out of cash. The solution is to reduce outflows. The financial manager can trim expenses or ask the customers to pay faster.

 

The financial manager also chooses financing techniques. One of them is short-term financing. Another is long term financ­ing.

 

Short-term financing. The seasonal financial needs of a company may be cov­ered by short term sources of funds. The company must pay them off within one year. Businesses spend these funds on salaries and for emergencies. The most popular outside sources of short term funds are trade credit, loans, factors, sales finance companies, and government sources.

 

About 85 percent of all US business transactions involve some form of trade credit. When a business orders goods and services, it doesn't normally pay for them. The supplier provides them with an invoice requesting payment within a settled time pe­riod, say thirty days. During this time the buyer uses goods and services without paying for them.

A company can use the trade credit as a source of savings. A typical trade arrangement is 2/10, net 30. If a buyer pays within 10 days instead of 30, he gets a 2 percent discount. The savings a buyer obtains can be used as a source of short term funds.

 

Commercial banks lend money to their customers by direct loans or by setting up lines of credit. A line of credit is the amount a customer can borrow without making a new request, simply by notifying the bank. If the business doesn't pledge collateral when it borrows, the loan is an unsecured loan. Only customers with an excellent credit rating can get an unsecured loan. They usually repay it within a year's time. When a company wants to borrow a large amount of money it pledges collateral to back up the loan. Such a loan is a secured one.

 

Sometimes a company might sell its accounts receivable to a special financial broker: a factoring company, a factor. The factor immediately pays the firm cash, usually 50 to 80 percent of the value of the accounts receivable. When customers make the pay­ments on their accounts, the money goes directly to the factor.

Some big firms obtain funds by selling commercial paper. Because commercial paper has no collateral behindit, only firms with a good financial reputation can sell it. In special cases, a business may obtain short term funds from the federal govern­ment.

Long-term financing. When a business needs funds to construct a new assembly line or to do extensive research and development which may not begin to bring in revenues for several years, short term fi­nancing wouldn't work. In this case, business will need long term sources of funds.

 

Firms may meet long term needs by increasing the company's debt either by getting loans or by selling bonds.

A long term loan is a loan that has a maturity of from one to tenyears. Within this period of time the firm pays interest on the debt. Sometimes the lender protects its financial position by re­quiring that the company obtain the lender's permission before taking on any additional long term debt. If the loan is particu­larly risky, the lender may even require the firm to limit or elimi­nate dividends to stockholders.

 

If the firm wants to be free of lender's restrictions, it may issue bonds. These are long term debts with a maturity date of 20 to 30 years in the future. Governments issue government bonds. Corporations issue corporate bonds which may be se­cured or unsecured.

 

If a company wants to sell bonds it can offer some collateral. Itis difficult, if not impossible, to find investors who are willing to buy bonds which are not backed up by collateral. Only huge corporations such as AT&T can successfully issue unsecured bonds, which are called debentures.

 

Most bonds carry a face value of $1000 and pay a predeter­mined interest rate (the coupon rate). The company pays this interest regularly according to the indenture agreement which specifies the terms of a bond issue. The company may retire bonds before they mature if the indenture agreement contains a call provision. In this case the firm pays the bondholders a redemption premium.

 

Another flexible feature in some agreements is the conver­sion privilege. It allows bondholders to convert their invest­ment into a stated number of shares of common stock. If the price of the company's common stock is going up, the investors can profit from conversion. Convertibility makes the bond issue more attractive to potential investors.

V. Milovidov «English for Financial

Management Experts»

Words and expressions

concern	забота, беспокойство
to negotiate	вести переговоры, обговаривать
timing	согласованность действий, операций
to flow	течь
inflow	приход, вход
outflow	выход
to forecast	прогнозировать, предсказывать, предвидеть
revenue	доход, доходные статьи
expenses	расходы
to compare	сравнивать
to involve	привлекать, вовлекать, втягивать
to expect	ожидать
to predict	предугадывать, предвидеть
available	имеющийся в наличии, доступный
to exceed	превосходить
to run out of	лишиться, истощить (запас)
solution	решение (проблемы)
to cover	покрывать
emergency	экстренная необходимость
trade	торговля
factor	фактор; агент, занимающийся
	скупкой неоплаченных долгов
invoice	квитанция
to settle	устанавливать, устраивать
to arrange	организовывать
arrangement	сделка
net	чистый (вес, стоимость и т. д.)
line of credit	открытый кредит, кредитная "линия'
to notify	извещать
unsecured loan	необеспеченный кредит
secured loan	обеспеченный кредит
receivables	неоплаченные счета
commercial paper	простой или переводной вексель
assembly line	конвейер
extensive	широкий; основательный
maturity	срок платежа, срок действия долгового обязательства
permission	разрешение
particular	особенный
to eliminate	отменять, исключать
restriction	ограничение
debenture	облигация без обеспечения
face value	номинальная стоимость
predetermined	заранее определенный
coupon	купон
regular	регулярный
according to	в соответствии с чем-либо
indenture agreement	контракт, оговаривающий обязательства эмитента и права держателя облигации
to specify	уточнять
to retire	отзывать
call provision	право эмитента выкупить по
	обусловленной цене облигации до
	истечения срока выкупа
to redeem	выкупать, возвращать
redemption	выкуп
flexible	гибкий

Exercise 18. Listening

UNIT 3

STOCK

Lead-in

Terms and Vocabulary

 

primary	первичный
secondary	вторичный
previous	предварительный
to negotiate	вести переговоры
underwriter	поручитель
intermediary	посредник
membership	членство
“Big Board”	“Большое табло”
approximately	приблизительно
to list	здесь: регистрировать на бирже
pretax	до обложения налогом
tangible	реальный (осязаемый)
to qualify	квалифицировать(ся), законно претендовать
over-the-counter market	рынок без посредников
to be located	находиться, располагаться
screen	экран
up to date	в курсе
option	опцион

SECURITIES MARKETS

 

Securities are bought and sold at two types of securities mar­kets: primary markets, which issue new securities, and second­ary markets, where previously issued securities are bought and sold. If a company wants to sell a new issue of stock or bonds it usually negotiates with an investment bank, or underwriter, who sells the securities for it. The underwriter buys the securities from the corporation and resells then to individual investors through the secondary market.

 

Organized security exchanges have developed to make the buying and selling of securities easier. The securities exchanges consist of the individual investors, brokers, and intermediaries who deal in the purchase and sale of securities. Security exchanges do not buy or sell securities; they simply provide the location and services for the brokers who buy and sell.

 

Stock transactions are handled by a stockbroker. A stockbro­ker buys and sells securities for clients. Stockbrokers act on the clients' orders. Stockbrokers receive a fee and are associated with a brokerage house. To trade on the exchange, a "seat" must be purchased. A seat is a membership. The members represent stockbrokers. When a stockbroker calls in an order to sell, the member representing that broker looks for a buyer at the price requested. When a broker calls in an order to buy, the exchange member looks for a buyer at the price offered.

 

The largest and best known exchange in the USA is the New York Stock Exchange (NYSE) also called the "Big Board". There are 1,300 seats on the NYSE and approximately 2,000 stocks and 3,400 bonds are traded daily. In order to be listed on the NYSE, a firm has to meet the following requirements:

 

1. Pretax earnings of at least $2.5 million in the previous year.

2. Tangible assets of at least $16 million

3. At least 1 million shares of stock publicly held, and others.

 

The second largest stock exchange in the USA is the Ameri­can Stock Exchange (AMEX). It is located in Manhattan and has about 500 full members and 400 associate members. AMEX oper­ates in much the same way as NYSE, but smaller companies may qualify for listing. There are also regional stock exchanges that serve regional markets.

 

The over the counter market (OTC) sells and buys unlisted securities outside of the organized securities exchanges. About 5,000 brokers of OTC are scattered all over the country. They trade unlisted stocks and bonds by phone and keep in contact with each other.

 

The prices of the securities are established by supply and demand. Electronic screens in the offices of the brokerage firms display OTC transactions, so brokers continually keep cus­tomers up to date on the latest prices.

 

Options are traded on the major stock exchanges, but also on a special market for options, the Chicago Bond Options Ex­change (СВОЕ).

America's Financial Markets / The Economist, 2000. November 24.

Words and expressions

 

to glow with delight - светиться от радости

to do away with - избавиться от чего-либо

database - банк данных

to dismiss - увольнять

to hook (v) - зацеплять; соединять

crash (n) - крах, катастрофа

to a great extent - в большой степени

flaw (n) - ошибка, промах; изъян

to make a mess (of something) - все испортить

to bet - биться об заклад

 

 

Exercise 11. Read the text

TRADING STOCKS

Trading stock begins with an investor placing an order that is informing the stockbroker as to what stock and how much he wants the broker to buy or sell. An order to buy or sell stock at the best possible price at the present time is called a market order. The broker conveys the order to an exchange member on the trading floor, who attempts to get a better price for the buyer by offering a little less. For example, the broker might offer 47 1/8 ($47.12.5) for the stock with a current price of 47 1/4 and see if someone will sell at this price. If the investor were selling, the broker would attempt to get a slightly higher price by offer say, 47 3/8.

 

The final sale will then be electronically relayed to the bro­ker who placed the order. The investor might also place a limit order which specifies the highest or lowest price at which the broker may buy or sell. If the investor can't be accommodated immediately, the broker places the order in a sales book and then tries again in order of priority. If an investor wants to keep the order on the books he can issue an open order which instructs the broker to leave the order on the books until it is executed or canceled.

 

Sometimes the investor might give a discretionary order which allows the broker to exercise judgment in making money. The investor leaves it up to the broker to decide when and at what price to buy or sell.

 

An odd lot is any number of shares less than 100. One hun­dred shares comprises a round lot. Brokers usually trade shares in lots, odd lots being combined with a series of other small orders to form a round lot. A purchase of 10,000 shares is some­times called a block sale. In addition to the price of the stock, the investor pays the broker a commission for buying or selling the securities.

 

Sometimes investors pay less than the full amount when they buy stock. This is called margin trading. The FRS determines the minimum margin required. In recent years the stock margin has been approximately 50 percent. Fearing that the investor might sell the stock and abscond with the funds, the broker keeps stock certificates of margin accounts at the brokerage as collat­eral. If the stocks were to plummet, the broker would call the investor and request that he put up more money or have the stock sold.

 

Active buyers of stock are called bulls. They believe that the prices of stocks are going to rise. During the mid 1980s, the US witnessed a very long bull market. At the 1987 crash even bulls became bears. A bear is an investor who makes a profit when the prices are going to fall. Selling short is a high risk strategy which bears use in order to do that. They sell borrowed stock in the hope of later buying it on the open market at a lower price.

 

Options are contracts that allow an investor to either buy or sell a security at a predetermined price within a certain time. Depending on the investor's expectations, he may buy a put option or a call option. A put option grants the owner the right to sell a security. Believing that the price of certain shares will drop over some period of time an investor might buy an option and benefit from selling the shares at the option price to the person who sold the options. A call option grants its owner the right to buy a certain amount of stock at a predetermined price within a fixed period of time.

America's Financial Markets / The Economist, 2000. November 24.

 

Words and expressions

to place	размещать
to convey	передавать (сообщение, информацию)
floor	пол, площадка
to attempt	пытаться
current	текущая, существующая
slightly	немного, слегка
to relay	передавать, сообщать
to accommodate	здесь: оказывать услугу
to execute	выполнять
priority	приоритет, первенство
order of priority	в порядке очереди
to cancel	отозвать; отменить
discretionary	представленный на усмотрение, дискреционный
judgment	суждение, оценка, суд
odd	неполный, нечетный
round	круглый, полный
commission	комиссионный
to fear	опасаться, бояться
to abscond	сбежать с деньгами
to plummet	здесь: резко падать в цене
bull	бык
bear	медведь
short	короткий, кратковременный
to sell short	продать на срок без покрытия
predetermined	заранее установленный
put option	опцион продавца
call option	опцион покупателя
to grant	гарантировать
to drop	падать

 

Exercise 15. Listening

Listen to the text and complete the notes:

 

Other names: (1)………… (2)…………

Main trading centres: (3)………… (4)………… (5)…………

Most traded currencies: (6)………... (7)………… (8)…………

Amount traded daily: (9)…………

Trading hours: (10)…………

Main traders: (11)………… (12)………… (13)………… (14)………...

Exercise 17. Read the text

Words and expressions

 

to hang on to something)	держаться (за что-либо)
to succeed	иметь успех
opportunity	шанс, возможность
to implement	приводить в исполнение
to subscribe to	подписываться на...
to stick to something	придерживаться чего-либо
over the long run	здесь: на протяжении долгого времени
rumor	слух, сплетня
tip	совет
to predict	предсказывать
to chart	изображать в виде графика
behavior	поведение
random	случайный, беспорядочный
at random	наугад
contrarianism	от contrary - противоположный

 

UNIT 4

Lead-in

Terms and Vocabulary

oil-extracting reserve hydrocarbon raw materials to explore exploitation to possess gas-bearing internal external persistent field in accordance with long-term perspective shelf capacity in terms of to estimate deposit resources autonomous unit resource (второй раз) to be under production to be worked out depths usage to stipulate procedure issuing license to render despite prolonged unevenly to a great extent gas condensate infrastructure objective profitable consumption share

нефтедобывающий запас сырое углеводородосодержащее сырье разведывать разработка, эксплуатация владеть газоносный внутренний внешний стабильный, настойчивый месторождение в соответствии с, согласно (было уже) долгосрочный перспективный пласт мощность в каком-либо выражении оценивать залежь, месторождение запасы автономный, самостоятельный область запас производиться разрабатываться использование недр ставить условием, обуславливать процедура, порядок имеющиеся лицензии представлять несмотря на продолжительный неравномерно в большей степени газоконденсат инфраструктура (было) объективный прибыльный, рентабельный потребление акция, доля

Exercise 7. Talking Point.

a) Think and say. Do you find the speech of the Minister optimistic? Pick out some facts and prove that the future of oil and gas industry is favourable.

If you don’t share the optimism of B.A. Yaskevich, explain why. What are the negative effects of oil and gas production?

b) Pair work.

You are a foreign journalist of “The Economist” Mr.Yaskevich is giving a press conference. Ask him questions about oil and gas development prospects in Russia.

Three ages

In 1956 M.King Hubbert, an American scientist, made the prediction of oil production in the USA. His predictions were based upon the production life of oil fields and they are still true. Using the Hubbert curve, we have divided the life of the oil industry in the U.S. into three ages. Each age lasts approximately 35 years. The first age, when the oil industry was “young”, lasted from 1918 to 1953. The industry’s “middle age” lasted from 1953 to 1988. The “mature” stage will last from 1988 to 2023.

From ages to stages

The production life of the field can be divided into three stages corresponding to the industry’s ages. The first, exploration, coincides with the industry’s youth. This stage favors the major oil companies, with their vast financial and human resources. The main players are geologists and geophysicists. During this stage, large risks are taken. The stage coinciding with the middle age is exploitation, when the large fields discovered during the exploration stage are waterflooded. Again, it favors the major oil companies because they own the large fields and have the financial and human resources to install and operate large waterfloods. The principal players in this stage are engineers. Large risks are taken during this stage, but not as large as risks of the exploration stage.

 

The depletion stage occurs during the mature age. At this stage, current fields are worked on by plugging back or deepening wells to new producing zones, and by infill drilling. Fields smaller than the discoveries of the exploration stage are found, and waterfloods begin in fields smaller than those waterflooded in the exploitation stage. Depletion is a stage of innovation, where many ways are found to do things cheaper and more efficiently. During this stage we see the widespread application of new technology such as 3D seismic, horizontal drilling, and СО2 flooding. This is the first stage that does not favor the major oil companies. Their large financial and human resources are better adapted to exploring for and exploiting large fields. Depletion favors independents, with their much lower overhead. And it favors two types of independents: the exploitationist and the depletionist.

Independent types

The exploitationist has a full staff of engineers, geologists, landmen, and accountants. He is familiar with and has participated in most of the new technology: 3D seismic, horizontal drilling, CO2 flooding, and so forth. In addition, he is capable of drilling wells very cheaply and has very low overhead. I like to think that my company, Henry Petroleum Corp., is an exploitationist. The exploitationist is willing to take some risks but does very little pure exploration.

 

The second type of company, the depletionist, is much different from the exploitationist. A depletionist has virtually no technical staff. With his low overhead he is able to operate wells much cheaper than either the major oil companies or the exploitationist. He will nurse wells along and pay close attention to them but does not have the technical staff to operate waterfloods and CO2 floods or to conduct 3D seismic. The depletionist is risk-averse. Independent operators must decide whether they will be exploitationists or depletionists. There is little room for compromise between the types. You can be either an exploitationist with a large technical staff or a depletionist with very little, if any, technical staff; you can’t be both.

O&G Journal, November 2007

Words and expressions

trend to prosper to wither on the vine to reflect cycle mature low-return properties to shift core properties division void long-running curve approximately to coincide to favor to waterflood to install depletion plugging efficiently widespread to be adapted to overhead landmаn virtually nurse risk-averse

направление, тенденция преуспевать, процветать остаться нереализованным отражаться цикл высокоразвитый   менять, перемещать основная собственность отдел, подразделение пустота долго играющий кривая приблизительно совпадать помогать, содействовать заводнять устанавливать уменьшение, истощение (ресурсов) тампонирование, закупоривание эффективно, рационально широко распостраённый быть адаптированным к чему-либо отбираемый с верха (колонны); надземный (о трубопроводе) рабочий фактически, в сущности экономно вести хозяйство; беречь не расположенный к риску

Exercise 14. Quick reading

International spending

The surveyed companies said they plan to increase their international E&P spending by 13% to $200 billion in 2007, after a 28% growth in 2006 US spending will grow by 5.1% to $ 75 billion in 2007, following a 40% boost in 2006.

 

Canadian spending will be down 8% next year however, compared with a 19% increase in 2006. “ Deteriorating economics are more pronounced in Canada”, Grandell said. He also noted “the impact of Anadarko [Petroleum Corp.] leaving the region” and “ relatively large declines ” in the operations of other large companies such as Apache Corp. Canadian Natural Resources Ltd. recently agreed to buy Anadarko Canada Cоrр. for $4.24 billion, but Anadarko maintains interests in the Mackenzie Delta and other Canadian arctic frontier, properties (OGJ Online, Sept., 14, 2006). In 2005 Apache and ExxonMobil Corp. completed a series of agreements for transfers and joint ventures across a broad range of properties in Western Canada, the Permian basin, Louisiana, and the Gulf of Mexico Outer Continental Shelf.

 

Companies significantly overspent their budgets in 2006; particularly on international projects, where 60% of the surveyed companies said they spent more than 10% over their original E&P budgets. National oil companies will lead the 2007 increase in international spending with the largest spending growth among the Russian companies, Crandell said. The five largest Russian companies are expected to hike their international spending by an average of 42% to $24.3 billion, he said.

 

Other companies estimated to have double-digit gains in international E&P spending include: Chevron Corp., up 34%; Apache, up 20%, India’s, state-owned Oil & Natural Gas Corp. and Petroleos Mexicanos, up 11% each; Petroleo Brasileiro SA (Petrobras), up 18%; Repsol YPF SA, up 19%; Woodside Petroleum Ltd., up 62%, PetroChina Co. Ltd., Statoil ASA, and Royal Dutch Shell PLC each up 10%. However, several other companies are moderating those international gains with “either small declines or small increases”, Crandell said Among those are: Anadarko, flat, BHP Billiton Ltd., up 4 %; BP PLC, down 2%; ConocoPhillips, up 5%; ЕххоnМоbil, up 7%; Eni SPA, up 8%; Petroleos de Venezuela SA, up 1%; and Total SA, up 7%.

US spending

The surveyed companies plan a substantial slowdown in the growth rate of their US E&P expenditures in 2007 due to concerns about cash flow and perception of lower gas prices. Companies responding to the survey said their plans are based on an average gas price of $ 6.72/Mcf in 2007, “and that’s going to increase concern regarding project economics”, Crandell said.

 

RepsolYPF, Eni, Murphy Oil Corp., and Quicksilver Resources Inc. will be making some of the larger cuts in US E&P spending, he said. Other companies indicating “above-average declines” in US spending include Anadarko, Cabot Oil&Gas Marathon Oil Corp., Newfield Exploration Co., and Plains Exploration & Production Co. Drilling economics are seen as attractive in the industry but the percentage is down from last year, said Lehman Bros, analysts. “For the long term, E&P companies were very positive on the outlook for oil and natural gas. Over half view the longterm real price, of oil at $ 50-70/bbl, with half expecting the рricе to be $ 50-70/bbl for the long term and half expecting crude to be $ 60-70/bbl. Companies also are overwhelmingly bullish on natural gas with roughly 85% of respondents saying longterm outlook for natural gas drilling is good or excellent” Sedita said.

 

Questions

1. What is the main tendency of global exploration and production spending?

2. Will growth rate be quicker or slower in 2007 as compared to that one in 2005 and 2006?

3. Who made E&P Spending Survey?

4. Does Canada keep to this growth tendency?

5. What companies will have the largest spending growth?

6. What companies showed insignificant change in E&P spending?

7. Why will US E&P expenditures slow down in 2007?

8. What is the expected oil price range?

Words and expressions

 

global exploration production spending emphasis semiannual surveyed boost in deteriorating to be pronounced impact relatively decline to maintain interest frontier transfer joint venture to hike double-digit gain to moderate substantial slowdown cash flow perception to respond crude overwhelmingly bullish roughly

мировое исследование, разработка затраты на проризводство внимание, ударение полугодовой проанализированные повышение в, подъем ухудшение быть резко выраженным влияние относительно спад сохранить интерес граница передача в собственность совместное предприятие внезапно подниматься двойная выручка сдерживать, уменьшать существенное замедление движение денежной наличности восприятие отвечать сырой, неочищенный очень, чрезвычайно играть на повышении приблизительно, ориентировочно

 

Exercise 15. Talking Point

Imagine that you are an oil and gas analyst. Prepare a short report on the problems and perspectives in oil and gas industry development.

Exercise 16. 9 Listening

Exercise 17. Discuss.

 

1. What well-know foreign oil and gas companies have you heard of? Can you give any names? What countries were they set up? What countries do they operate in?

2. What Russian oil and gas companies do you know? What regions of the country do they operate in? What are their main activities? Do you know any facts from their history?

 

Key words: global energy provider, listed company, shareholder, petroleum refining, drill bit, down hole tool, joint venture, lubricant, cost-cutting program, licence, stake, proven reserves.

Exercise 18. Read the text.

Total

Total at a Glance (2005 figures)

A global multi-energy provider

• World’s fourth-largest integrated listed oil and gas company

• Largest market capitalization on the Paris Bourse and the Euro zone: 130.5 billion at December 31, 2005

• 95, 000 employees (1)

• Operations in more than 130 countries

• Exploration and production operations in 41 countries

• Producer in 29 countries

• More than 500,000 shareholders

• 2005 sales: ˆ143.2 billion

 

Total’s operations span the entire oil and gas chain, from exploration, development and production to midstream gas, refining and marketing, and crude oil and petroleum product trading and shipping. Total is also a world-class chemicals producer, as well as having interests in coal mines, cogeneration and power generation. In addition, Total is helping to secure the future of energy through its commitment to developing renewable energies, such as wind, solar and photovoltaic power.

 

A leader in each of the core businesses: 2005 key indicators

 

• Exploration & Production: - Production: 2.49 million barrels of oil equivalent per day - Reserves: 11.1 billion barrels of oil equivalent as of December 31, 2005

• Refining & Marketing: No. 1 European Refiner-Marketer and No. 1 in Africa- Refining capacity: approximately 2.7 million barrels per day- Retail network: nearly 17,000 service stations - Sales: approximately 3.9 million barrels per day - Brands: TOTAL, Elf, Elan, AS 24

• Chemicals: Total is one of the world’s largest integrated producers and a European or global leader in each of our markets - Petrochemicals and Fertilizers, Specialties.

Shareholder base

• Predominantly European (75%), held in particular by investors from France (33%), the United Kingdom, Germany, Switzerland and Belgium. Strong shareholder base in North America.

• Institutional shareholders (87%), employees (4%) and other individual shareholders (9%).

• Total S.A. is a French société anonyme (limited company) created in March 1924.

• Total is listed on the CAC 40, Dow Jones Stoxx 50, Dow Jones Euro Stoxx 50

and Dow Jones Global Titans 50 indices and the FTSE4Good, DJSI World, DJ STOXX SI, FTSE ISS CGI and ASPI Sustainable Development and Governance indices.

Words and expressions

integrated listed market capitalization shareholder to span midstream gas trading shipping commitment renewable photovoltaic power key indicator approximately fertilizer predominantly limited company

объединенный, единый перечисленный рыночная капитализация акционер охватывать газ в середине потока торговля транспортировка обязательство возобновляемый, заменяемый фотоэлектрическая энергия основной критерий оценки приблизительно