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=IPI Glossary=

Resource Curse
Sometimes referred to as the 'paradox of plenty', this is the paradoxical situation in which an abundance of natural resources can in fact result in negative development outcomes for producing countries. This is often said to be the result of weakened government institutions, neglect of other key sectors of the economy (known as 'Dutch Disease'), increased risk of corruption, an inadequate income distribution framework and environmental pollution.

''In action: "The resource curse is not inevitable. What's needed is transparency and accountability." (Petroleum Economist 2011). ''

See also: Dutch Disease, oil rents

Depletion policy
The policies put in place to manage a set of oil resources once oil production at a field, or in a producing region, passes peak production and recoverable resources become exhausted, causing production levels to fall.

In action: ''"The most important depletion policy instruments have been the frequency in licensing rounds, awards of licenses, and use of the fiscal system." (Chatham House)''

See also: oil field depletion, Peak Oil

'Profit' oil
Under a production sharing contract, profit oil is the portion of revenues which is divided up between the participating parties and the host government once the operator has recovered its investment by deducting cost oil production.

In action: As the profit oil is split between the companies and the state, the cost of “allowable expenditures” is passed on to the state in the form of reduced profit oil (Civil Society Coalition on Oil in Uganda 2010) 

See also: 'cost' oil, production sharing contract

'Cost' oil
The portion of profits from oil produced at a field that a company is entitled to in order to cover its investment sunk into the project, detailed in a production sharing contract.

In action: Royalties and taxation are statutorily imposed while cost oil and profit oil may be subject to negotiation (Dundee University).

See also: production sharing contract, profit oil

Sovereign Wealth Fund (SWF)
Sometimes referred to as a 'stabilisation fund', sovereign wealth funds (SWFs) are investment funds separate from a government's general budget, where a nation's budgetary surplus is held. In many cases this surplus results from natural resource revenues. The rationale behind such funds in the case of commodity-based funds is to better manage a nation's non-renewable resources by investing rather than spending, in order to benefit future generations. In this sense, they are intended to shield against the effects of the resource curse. Some examples from oil-producing countries include the State Oil Fund of Azerbaijan (SOFAZ), the Libyan Investment Authority (LIA), and the Nigerian Sovereign Investment Authority (NSIA). In 2012 it was estimated that over US$ 5 trillion in assets were held globally in over 50 SWFs.

In action: Although sovereign-wealth funds hold a bare 2% of the assets traded throughout the world, they are growing fast (Economist 2008).

See also: resource curse, 

Dutch Disease
Joint Operating Agreement

Joint Bidding Agreement

Cost recovery
This is an avenue for sunk investment which is not considered under a system of concessions

In action:

See also: 'profit' oil, 'cost' oil

Operator

Local content

The 'Energy Mix'

Meterage

Environmental Impact Assessment

Work Program

Commercial discovery

Development plan

Force majeure

Proven reserves- 1P

Unproven reserves

Probable reserves- 2P

Possible reserves- 3P, or P10

Contingent resources

Prospective resources

Oil in place (OIP)

Recovery rate

Peak Oil 

Environmental Impact Assessments (EIA)

OPEC

Reserves-production ratio

Service contracts

Signing Bonus

Subsoil rights?

'Landman'

Public-Private Partnerships (PPP)

Asymmetric Information

Technical Terms
Petroleum Products

Well Logging

Liquefaction

Fractional Distillation

Gas flaring

Unitization

Heavy Oil

API Gravity

Upstream

Downstream

Midstream

Pipeline

Barrels per day (bpd)

Barrels of oil equivalent (boe)

Oil Equivalent Volume

British thermal unit (BTU)

Shale gas

Unconventional Energy Sources

Hydraulic Fracturing (fracking) 

Blow-out

Enhanced Oil Recovery (EOR)

Completion

Horizontal Drilling

Liquefied Natural Gas (LNG)

Liquid Petroleum Gas (LPG)

Petrochemicals

Seismic Testing

Oilfield Services

Floating Liquefied Natural Gas (FLNG)

Land rigs

Jack-ups

Drill Ships

Appraisal well

Development well

Injection well

Stockpiling

Drilling muds

Groundwater

Gusher

Spudding

Tight hole

Viscosity

Nodding donkey (pumpjack)

Oil Field Depletion

Geological Terms
Anticline

Cap rock

Fault line

Source rock

Coal Bed Methane (CBM)

Associated Gas

Non-associated gas

Natural Gas Condensate

Hydrocarbons

Wet gas

Kerosene

Sedimentary Basin

Cracking

Grades of crude

Crude blends

Mud logging

Oil Sands

Super-giant field

Financial Terms
SWF-to-Foreign Exchange Ratio

Project Financing

Seven Sisters

Spot market

Futures Contract

Production Sharing Contract (PSC)

Cost Recovery

Farmout (?)

Licensing Round

Production Service Contracts

Royalties

Working Interest

Concession

Back In

Integrated Energy Company

Dayrates

LIBOR

West Texas Intermediate (WTI)

Brent crude

Dubai crude- Fateh

Benchmark crude

Oil-backed loans

A
API: Perhaps the most complicated way of classifying different variants of oil that America could think of. Named after the American Petroleum Institute who came up with it, the formula is

{API gravity} = \frac{141.5}{\text{SG}} - 131.5

A measure of just how powerful America is that the rest of the world still bothers to go through the same calculations for their oil too...

AROMATICS:

ASSOCIATED GAS: Gas that "comes with" oil. Nearly all oil does come with some gas and in fact most of the accidents on oil rigs are from the gas rather than the oil, which expands massively as it rises from the depths of the earth and blows out pipelines etc. A lot of associated gas is reinjected back into the ground to keep pressure up in the oilfield. Companies used to flare it off but that's frowned on now because of climate change.

B
BIG OIL: Those oil companies we all love to hate...destroying the climate, funding rebel militias; you name it, they've done it. Doesn't stop us from buying their oil though.

BPD:

C
CIVIL SOCIETY: A benign myth. In the lore, Civil Society slays Evil Kleptocrats with her sword Transparency, shielded by Freedom of Information armour.

CHINESE, WHAT ABOUT THE: A general all-purpose rebuttal of the need for any change in the way things are done, ever.

CONCESSION AREA: Designated area at an oil field selling chips, shawarma and frozen lemonade, behind which host governments often hide exclusive licenses for international oil companies to explore and develop their oil.

CORPORATE GOVERNANCE: Whether an oil company is actually capable of doing what it says it will, or in fact is just two geezers who left their jobs, a post box and some fancy literature. As in Shady Oil's share price dipped on investor concerns over corporate governance Concerns about corporate governance are increased by the SKILLS GAP

CRUDE OIL: A double entendre which was genuinely entertaining about 350 documentaries and books ago.

CORPORATE SOCIAL RESPONSIBILITY (CSR): Marketing by photo-opp. Picture an executive in standard casual khaki slacks and open blue shirt, smiling in the middle of a group of people of colour while he cuts a tape in front of a non-descript grey building that the caption tells us is a clinic but which shortly afterwards is used by local teenagers to smoke in peace.

D
DEADWEIGHT:

DEEP OFFSHORE:

DEMAND DESTRUCTION: The oil producers' view of how the post-carbon economy looks. Things like fuel efficiency and economic recession "destroy" demand for oil.

DRY HOLE: Oops. An exploratory well that produces no oil, despite pricey exploratory projects. Happens to the best of us.

E
EITI:

ENERGY SECURITY:

ENERGY REVOLUTION: What the Industrial Revolution should have been called to create a correct balance of the advantages and disadvantages of high energy use, especially since the steel, machinery and textiles industries were all born out of the realisation that the Original Hydrocarbon - Coal - could be used to create heat on a tremendous scale to smelt and manufacture industrial quantities of commodities. As in the entire world's standard of living improved unimaginably after the Energy Revolution began in the eighteenth century.

ENHANCED RECOVERY:

ENVIRONMENTAL CONCERN: The solemn pledge of every captain of the oil industry. Not to be confused with CLIMATE CHANGE which may now, OK, alright, if you must, but shhh, keep it down, exist, but should never be referred to by name because every time you say it it makes it worse! It's those Greens who are sinking the Maldives because they keep saying climate change, climate change. The C word also invokes the Terrible CARBON TAX.

F
FLARING: Neither so visually spectacular nor appetizing for consumption as the juggling, flipping and flaming of cocktail 'flairing', but rather a bit of a cop-out for getting rid of pesky 'unwanted' gas that so rudely leaks out with the prized black gold. Speciality of international oil companies in the Niger Delta.

A lesser of two evils compared to its uglier cousin 'venting', but still a bit lazy frankly.

FRACKING: Abbreviating wordy 'hydraulic fracturing' to 'fracking' mainly serves as the ideal excuse for angry environmentalists to kindly request policy makers to 'frack off' outside conferences.

FRACTIONAL DISTILLATION

G
THE GANG OF THREE:: The concept that for any country in the world a sustainable energy policy must rely on at least one of: foreign imports, often necessitating military projection and making nice to dictators; home production which raises Macondo-like fears of Biblical pestilence; and less which would be ideal were it not for the fact that in most places it would make people poorer and put them out of jobs. Take your pick. Many commentators often ignore the law of the Gang of Three, particularly if they float on a higher moral plane than the common herd of humanity, choosing to point out the many and obvious shortcomings of a particular policy without suggesting a viable alternative. This is known as Headinthecloudism.

GIANT FIELDS:

GRAVITY: A measure of how serious an oil executive can be; the higher their gravity, the more likely they are to reach the position of CEO. Alternatively, a measure of the density of oil.

H
HEAVY OIL:

HUBBERT'S CURVE: The main illustration of the famed Peak Oil Theory - a bell shaped curve with little scientific analysis behind it. Looks pretty though, no?

HYDROCARBON: A match made in petro-head heaven - 'hydrogen' and 'carbon' atoms, whose bonds break to release a blast of energy to make our car wheels spin. The holy grail of the energy world and those fun things your chemistry teacher used to make out of plastic.

HYDRAULIC FRACTURING:

I
IOC:

J
JOINT VENTURE:

L
LIGHT OIL

LICENSING ROUND

LIQUEFACTION:

LIQUIFIED NATURAL GAS: After being converted to liquid form for transport, LNG takes up about 1/600th of the volume of the gas it came from, a neat trick once the powers that be start investing in an application of the technique for packing our holiday suitcases. Unfortunately, at about $100/tonne of capacity, it's no pocket money.

As you might imagine, the shale gas revolution and it's game-changing potential is making those who have piled their dollars into LNG plants twitchier by the minute.

M
MIGRATION: The bane of drilling geologists' lives. The phenomenon by which oil can travel underground from where it is produced, to where it ends up a few million years later...now you see it, now you don't!

MORAL IMPERATIVE: The oil industry's answer to the Green lobby's accusations that they are evil. As in Shell CEO Peter Voser's statement we have a moral imperative to produce energy for all. Often accompanied by protestations of political interference in oil markets, and the existence of irksome things like corporate tax, which are just plain unfair.

N
NO COMMENT: The ritual incantation of an oil executive in re-negotiation of an existing contract, when he thinks he's probably on safe legal ground but doesn't want to jinx it by saying anything at all which a clever lawyer could construe as breach of confidentiality.

NATIONAL OIL COMPANY:

O
OAPEC:

OFFSHORE:

OPEC:

P
PRODUCER CONSUMER DIALOGUE: An occasional pass-time for international civil servants from OPEC and Western countries, who every few months sit in a room and try to scare each other into believing that unless the price of oil immediately soars/dives they are immediately going to give up buying or selling oil, so there. Usually ends in a draw.

PEAK OIL THEORY: The doomsayer's prediction of the end of the world as we know it. Uses slightly dodgy analysis to back up the theory that the world's oil supplies peaked years ago and now production is ever-decreasing. For a factual counter-argument, read The Myth of the Oil Crisis by Robin Mills.

PETROCHEMICAL

PRODUCTION SHARING AGREEMENT:

PROFIT OIL

PETRO-: A prefix applied to connote moral corruption in the following noun. As in: petro-dictator, petro-dollar, petro-middle class, petro-doggy style etc.

R
RESOURCE NATIONALISM: The utterly unreasonable desire of people in resource-dependent poor countries to own the resources and develop the skills to produce them themselves. Often coterminous with socialism and a lamentable lack of cosmetic surgery.

RESOURCE DIPLOMACY: The never-ending noble effort by kind, rich people to show ignorant, poor people just how misguided RESOURCE NATIONALISM is and relieve them of some of those resources for a very fair price.

REGASIFICATION TERMINAL:

REFINERY:

RESERVES:

RESERVE REPLACEMENT:

ROYALTY:

S
SKILLS GAP: The fact that for the last 20 years far fewer people have wanted to work in the oil industry because it's uncool, resulting now in a huge shortage of skilled staff in the 30 to 50 age bracket.

SANCTITY OF CONTRACTS: A point much insisted on by companies who dropped tens of millions of dollars on the best lawyers to run rings round the valiant efforts of a developing country government to negotiate from a position of parity. Applies in a purely rhetorical sense if the resource in the ground is big enough and the host government seems to have a firm grip on the country. As in ''Oil companies cannot be expected to operate in conditions of uncertainty, which do not respect sanctity of contracts. Except if it's Libya''

SENSIBLE: Industry codeword for adherence to received wisdom and orthodox thinking, in contrast to being emotional, a characteristic of activists. For example: ''Smithers might feast on his own toenails and yelp uncontrollably during presentations. But at least his views on the SANCTITY OF CONTRACTS are sensible''

SEISMIC EXPLORATION:

SEVEN SISTERS: Not to be confused with Stalinist skyscrapers (although equally monolithic in scale in their time), these 'ugly sister' oil majors ruled the roost in the early days of the oil industry but began to look increasingly miffed when the younger 'Cinderella' of OPEC came along and wooed the world of petroleum. How the tables turned....

SHALE GAS REVOLUTION

SOUR OIL:

STATE-OWNED OIL COMPANY:

SUPERGIANTS

SUBSIDY:

SWEET OIL: Petroleum that has a low sulfur content (below 0.5%) and is highly sought after because it is easy to refine and contains high volumes of the fractions used to process gasoline, kerosene and diesel. The stuff actually tastes sweet, too, according to prospectors in the nineteenth century who would taste oil to determine its quality. Modern technology has made this unnecessary, however; these days, oil prospectors sample their crude simply for their own enjoyment.

SWING PRODUCER:

T
TAR SANDS: Found in Canada, the Athabasca tar sands are a huge source of controversy between those who want to make tar-sandcastles, and those who want to use it to 'mine' the oil out of it, which would require a lot more energy.

U
UNCONVENTIONAL OIL

UNLOCK: The oil industry's verb of choice to describe deep offshore and other extreme exploration and production activities, as it sounds clever, benign and, by invoking the image of keys, cunningly evokes a paradigm of keyhole surgery, predicting a modest environmental footprint. As in We need to unlock the Arctic Not at all like 'plunder' 'pillage' or 'desecrate'.

V
VENTING: An even lazier option than flaring for those looking to offload the associated gas that 'comes with' the black stuff when extracting oil.

W
WINDFALL: A huge pot of money created by a surge in the price of oil. A windfall is the just reward of companies who have risked (other people's) capital to make oil production happen, except when a government decides to get in on the act and impose a windfall tax which is mean and communistic. Said tax often leading oil companies to insist on the SANCTITY OF CONTRACTS.

WELL KILL