ТОП 10:

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 needsare appearing almost every day. The most familiar institutions are commercial banks, savings banks, savings and loan associations, mutual savings banks, credit unions, in­vestment banksand so on.

 

A commercial bank is a privately owned profit-makingcorporation. 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 termloans for businesses. Sometimes the borrowers pledge collateralto back up the loan. Such loan is a secured loan.Companies with a good financial positionare given the prime rateof interest which is the lowest commercialinterest rate.

 

The commercial bank offers its customers accountsof two types: demand depositsand time deposits.A demand deposit makes the money in it availableto depositors immediately, while a time deposit requiresdepositors to leave their money with the bank for a stated periodof time.

 

Most banks offer their customersvarious 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 freeand banks charge feesfor them. Many banks assess a service feeif an account balancefalls beneath a particular minimum,such as $200.

 

Technological innovationsand increased competition in the faceof deregulationare 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 tellermachines out­sidetheir 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 keyto the automatic teller machine is a debitcard which helps to make transfers directly to and from a customer's checking account.

 

Some large retailersare installing point-of-saleterminals which allowa retail customer to transfer funds from his bank account to the merchant'saccount.

Electronic funds transfer is making it easyfor commercial banks to acceptdeposits outside their home states. Groups of banks are setting up automatic teller machine networksfor 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 stimulatingthe diversificationof banks, and service and pricecompetition. Financial supermarkets are ap­pearing all overthe 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 resultsfrom deregulation is urgingthe 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 concernfor 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 termsof financial transactions, compare rates amongcompeting financial institutions. Financial manage­ment begins with the creationof a financial plan. The plan in­cludes timingand amount of funds and the inflowand out­flowof 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 involvedto the expectedrevenues. It helps him to pre­dictcash flow. The availablecash consists of beginning cash plus customer payments and funds from financing.

 

The financial manager plans a strategyto make the ending cash positive. If cash outflow exceedscash inflow the company will run outof cash. The solutionis to reduceoutflows. The financial manager can trimexpenses 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 cov­eredby 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 settledtime 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 notifyingthe 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 securedone.

 

Sometimes a company might sell its accounts receivableto 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 lineor to do extensiveresearch and development which may notbegin to bring in revenues for several years, short term fi­nancing wouldn't work. In this case, business will need long termsources of funds.

 

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

A long term loan is a loan that has a maturityof from one to tenyears. Within this period of time the firm pays interest on the debt.Sometimes the lender protectsits financial position by re­quiring that the company obtain the lender's permissionbefore taking on any additional long term debt. If the loan is particu­larlyrisky, the lender may even require the firm to limit or elimi­natedividends to stockholders.

 

If the firm wants to be free of lender's restrictions,it may issuebonds. 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 valueof $1000 and pay a predeter­minedinterest rate (the couponrate). The company pays this interest regularly according tothe indenture agreementwhich specifiesthe terms of a bond issue. The company may retirebonds before they mature if the indenture agreement contains a call provision.In this case the firm pays the bondholders a redemptionpremium.

 

Another flexiblefeature 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 potentialinvestors.

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: primarymarkets, which issue new securities, and second­arymarkets, where previouslyissued securities are bought and sold. If a company wants to sell a new issue of stock or bonds it usually negotiateswith 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 intermediarieswho 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 approximately2,000 stocks and 3,400 bonds are traded daily. In order to be listedon the NYSE, a firm has to meet the following requirements:

 

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

2.Tangibleassets 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 qualifyfor listing. There are also regional stock exchanges that serve regional markets.

 

The over the countermarket (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 supplyand demand.Electronic screensin the offices of the brokerage firms display OTC transactions, so brokers continually keep cus­tomers up to dateon the latest prices.

 

Optionsare 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 placingan 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 conveysthe order to an exchange member on the trading floor, who attemptsto 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 currentprice 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 slightlyhigher price by offer say, 47 3/8.

 

The final sale will then be electronically relayedto 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 accommodatedimmediately, 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 executedor canceled.

 

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

 

An oddlot is any number of shares less than 100. One hun­dred shares comprises a roundlot. Brokers usually trade shares in lots, oddlots 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 commissionfor 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. Fearingthat the investor might sell the stock and abscondwith 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 shortis 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 predeterminedprice within a certain time. Depending on the investor's expectations, he may buy a put optionor a call option.A put option grantsthe owner the right to sell a security. Believing that the price of certain shares will dropover 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







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