Thread by @Jarushub

Understanding Oil & Gas Industry II

(Part 1 in earlier thread below)

2.0 MIDSTREAM

The keyword in upstream is "extracting" or "exploratn & productn". It is the process of finding and bringing out the resources in raw state from their natural formation point called reservoir

https://twitter.com/jarushub/status/1376092543981649922

But crude oil or crude gas themselves are not so useful. They need to be converted into forms that can be used. You can't use crude to power your car, your equipment, etc You can't use crude gas to power your cooking gas, or your turbine, or to generate electricity

The raw oil or gas needs to be PROCESSED. The processing activities are called MIDSTREAM. So refining, which is the process of converting crude oil into different products, is a midstream activity.

Gas processing is also midstream. Activities around infrastructure - like processing plants and pipelines - are also classified as midstream. In the most layman analogy, see upstream as harvesting yam with all dirts and muds, midstream as cleaning and dressing it.

Like I earlier said, in the broadest sense, midstream is not seen as a separate sub-division. Usually seen as part of downstream. In fact, the Nigerian Petroleum Act, the principal law guiding O&G activities in Nigeria, does not make a single mention of the word "midstream".

So most of the rules that apply to midstream are sourced from downstream. For example, the income tax rate that applies to midstream business is simply that of downstream. Upstream income has a separate tax regime.

Until very recently, Nigerian laws don't recognize midstream as a separate activity. This is why FIRS and DPR simply have Upstream and Downstream divisions. PIB will be the first law to elaborately delineate midstream and downstream activities.

See Downstream in Part 3