Petroleum Glossary
ADO
Automotive diesel oil or diesel fuel.
After –tax price
Prices including tax and duty.
API
The American Petroleum Institute (API) is a United States trade
association that represents 400 corporations in the petroleum
industry.
An economic resource, tangible or intangible, which is expected to
provide benefits to a business.
Asset
ASTM
American Society for Testing Materials. This is the group that
develops products for testing grade of petroleum products.
Aviation gasoline (finished)
A complex mixture of relatively volatile hydrocarbons with or without
small quantities of additives, blended to form a fuel suitable for use in
aviation reciprocating engines. Fuel specifications are provided in
ASTM Specification D 910 and Military Specification MIL-G-5572.
Note: Data on blending components are not counted in data on
finished aviation gasoline.
Backwardation
A market situation in which prompt physical crude or refined product
sells at a premium to forward months’ prices for the same
commodity. An ‘inverted market’. The opposite of contango.
Motored or motor less vessel used to carry oil products, often along a
river. Barges vary in capacity, mainly from 1,000 to 5,000 tons.
Barge
Barrel
A unit of measurement most commonly used for crude oil.
A barrel of crude oil is equal to approximately 42 US gallons or 159
litres.
bbl
bcf
Abbreviation for barrel.
One barrel of oil; 1 barrel = 35 Imperial gallons (approx.), or 159 litres
(approx.); 7.5 barrels = 1 tonne (approx.); 6.29 barrels = 1 cubic metre
Billion cubic feet; 1 bcf = 0.83 million tonnes of oil equivalent.
bcm
Billion cubic metres (1 cubic metre = 35.31 cubic feet).
Bill of lading
Documentation legally demonstrating a cargo has been loaded. The
bill of lading is signed by the captain of the ship and the contract
supplier. Abbreviated as B/L.
Benchmark crude oils are used as references for pricing oils. There are
approximately 161 different benchmark oils, of which the main three
are West Texas Intermediate, Brent Crude, and Dubai Crude.
A light sweet crude oil produced in the UK North Sea; a major
benchmark for pricing of many foreign crude oils.
Benchmark Crude
Brent crude
British Petroleum
British thermal unit (BTU)
The former name of petroleum company currently called BP. It is the
third largest publicly traded oil company in the world with oil reserves
up 18 billion barrels and the annual revenues of $308,000,000,000. It
is headquartered in London, England.
A measure of the heating value of a fuel.
Buying hedge
Bulk sales
Bulk station
Bulk terminal
Also called a long hedge. Describes the buying of futures contracts to
protect against possible increased costs of commodities that will be
needed in the future.
Wholesale sales.
A facility used primarily for the storage and/or marketing of
petroleum products, which has a total bulk storage capacity of less
than 50,000 barrels and receives its petroleum products by tank car
or truck.
A facility used primarily for the storage and/or marketing of
petroleum products, which has a total bulk storage capacity of 50,000
barrels or more and/or receives petroleum products by tanker, barge,
or pipeline.
Capex
Capital expenditure.
C&F – Cost & Freight
Basis for sale of a cargo, in which the price reflects both the cost of
the cargo and the cost of freight to its agreed destination. Title and
risk of loss or damage to the oil passes from the seller to the buyer
when the oil passes the ship’s rail at the load port.
This term refers to a type of sale in which the buyer of the product
agrees to pay a unit price that includes the f.o.b. value of the product
at the point of origin plus all costs of insurance and transportation.
This type of a transaction differs from a "delivered" purchase, in that
the buyer accepts the quantity as determined at the loading port (as
certified by the Bill of Lading and Quality Report) rather than pay
based on the quantity and quality ascertained at the unloading port.
It is similar to the terms of an f.o.b. sale, except that the seller, as a
service for which he is compensated, arranges for transportation and
insurance.
Compressed natural gas used in vehicles and in other applications not
attached to a pipeline.
CIF (cost, insurance, freight)
Compressed natural gas
Contango
Contract price
Description for an energy market where the anticipated value of the
spot price in the future is higher than the current spot price. When a
market is in contango, market participants expect that the spot price
will go up. The reverse situation is described as backwardation.
Price of fuels marketed on a contract basis covering a period of one or
more years.
Cpl
Cents per litre.
Crude oil
Liquid petroleum as it comes out of the ground as distinguished from
refined oils manufactured out of it.
Cubic Foot
A standard unit used to measure quantity of gas (at atmospheric
pressure); 1 cubic foot = 0.0283 cubic meters.
Daily Mean of Platts Singapore
Is the average of a set of Singapore-based oil product price
assessments published by Platts on a day to day basis.
Demurrage
The sum agreed by charter to be paid as damages for delay beyond
the contracted time for loading or discharging from a transportation
vessel.
Downstream
DPK
Dubai crude
DWT
Usually refining and the marketing and distribution operations that
occur after refining as opposed to Upstream which covers
exploration, production and transport prior to refining
Dual purpose kerosene (i.e. jet fuel and domestic use).
A high-sulphur sour crude oil which serves, either by itself or
averaged in with Omani crude oils, as the marker grade for many of
the Persian Gulf crudes exported eastward into Asian markets.
Deadweight tonnage.
Economies of scale
Economic functions and results relative to size and the ways in which
economic values change as the size of the economy changes.
ESPO Blend
A light, medium sour Russian crude popular with Asia-Pacific refiners.
API approx 33, sulphur content 0.65-0.75%. Named after the East
Siberian-Pacific Ocean ESPO pipeline.
The largest of the “Supermajors” publicly traded oil companies. It has
reserves of 72 billion barrels of oil and revenue of over
$383,000,000,000. It is headquartered in Huston, Texas.
ExxonMobil
Flash Point
The lowest temperature at which a liquid will generate sufficient
vapor to ignite.
FOB – Free On Board
The basis for sale of a cargo in which the price covers only the cost of
the crude. The seller fulfils its obligation to deliver when the goods
have passed over the ship’s rail at the named port of shipment. The
buyer bears all costs and risks of loss or damage to the oil from that
point.
A term or clause in a contract designed to protect a contracting party
against uncontrollable events such as natural disasters, wars or
climatic conditions that could prevent the fulfillment of some or all of
the terms of the contract.
Force majeure
FPSO
Denotes circumstances beyond the control of a company, which force
the breaking of a contract.
Floating Production, Storage and Offloading vessel. A floating vessel
used offshore for the processing and storage of oil and gas.
Fuel
Any substance that can be burned to produce heat.
Materials that can be fissioned in a chain reaction to produce heat.
Fuel oil
A heavy distillate oil used for power stations, industry and ships
boilers.
Futures contract
When an agreement is made to acquire goods or services on the
futures market, the buyer and seller enter into a futures contract. This
contract assures the seller that the buyer will pay the agreed-upon
price for a predetermined quantity of the commodity. In return, the
buyer can lock in a price for the commodity regardless of the market
price when the commodity is delivered.
Technically speaking, when a purchase is made on the futures market,
the only thing bought or sold is the contract. Since the seller doesn’t
sell the commodity until the date on the contract, no actual
commodity is sold under the contract until that date.
Gallon
Generally accepted across the oil industry to refer to a US gallon.
Gross Tonnage
There are 42 US gallons in a barrel.
There are 3.78541 liters in a gallon.
There are 1.2 US gallons to the British imperial gallon.
The volume of the interior of a crude oil tanker, including all enclosed
spaces except the space between a double hull. It is imperially
expressed in tons per 100 cubic feet.
Used in some markets as a substitute term for diesel.
Gasoil
Gasoline
Medium distillate oil, used to produce diesel fuel and to burn in
central heating systems. It derives its name from its original use in the
manufacture of illuminating gas. The term gas oil is used
interchangeably with No. 2 heating oil.
A light fraction of petroleum distillation commonly used as a motor
fuel in internal combustion engines. Gasolines are complex mixtures
of relatively volatile hydrocarbon liquids, with or without small
quantities of additives, which have been blended to form fuels
suitable for use in spark-ignition engines. Also known as motor
gasoline, mogas or petrol.
Heavy Crude
Heavy crude oil has an API gravity of less than 20. The largest deposits
of heavy crude are found in Canada and Venezuela.
Hedge accounting
The practice of deferring gains and losses on financial market hedges
until the corresponding gain or loss in the underlying exposure is
recognised. Allows companies to incorporate the cost of hedging into
the cost of the exposure. Gains are thereby offset against losses. This
reduces the volatility of earnings.
A type of contract used to establish a predetermined price that will be
paid for a given amount of electricity regardless of what the actual
market value of that energy might be at the time it is delivered to the
customer. This type of contract provides the purchaser with the
certainty of a fixed price for the commodity and ensures a guaranteed
sale price for the seller.
Taking a derivatives position that is equal and opposite to a physical
position with the sole aim of controlling price risk.
The delivery point for the largest NYMEX natural gas contract by
volume. Henry Hub is in Erath, Louisiana, and is a large system of
pipeline interconnects.
The ratio, determined by the option’s delta, of futures to options
required to establish a position that involves no price risk.
Hedging contract
Hedging
Henry Hub
Hedge ratio
High Sulphur Diesel (HSD) fuel
Diesel fuel containing more than 500 parts per million (ppm) sulphur.
Hormuz
The Strait of Hormuz is the sea-passage out of the Persian Gulf
between Iran on the eastern shore and the UAE and Oman on the
west.
High Sulphur Fuel Oil.
HSFO
landed cost
The total cost of oil off-loaded at a port, including duties, fees and
taxes.
light crude oil
Has an API gravity higher than 33 degrees. The higher the API gravity,
the lighter the crude oil.
Integrated hedge
A hedge that combines more than one distinct price risk. For example,
crude oil is usually priced in US dollars. A producer of crude oil whose
home currency is the Deutschmark would be exposed to both US
dollar currency risk and crude oil price risk. A possible integrated
hedge would be a quanto product, which would hedge the price of
crude oil in Euros.
The National Oil Company of Iraq. It was founded in 1966 and is
capable of production capacity of three million barrels of oil per day.
Iraqi National Oil Company (INOC)
Jet fuel
A quality fuel in the kerosene boiling range, used primarily in
commercial aircraft. It needs to satisfy strict international regulations
and usually has a freezing point of lower than -40°C to cope with cold
temperatures at high altitude. It is similar to diesel fuel. Aircraft
operated by piston engines run on a different fuel – Aviation gasoline
(avgas).
Kerosene
Medium-light oil used for lighting, heating and aircraft fuel.
KI
Kilolitres (thousand litres).
Kuwait Petroleum Corporation
The state oil company of Kuwait. It is proven reserves of 111 billion
barrels of oil and estimated revenue of $67,000,000,000.
Landed price
The actual delivered cost of oil to a refiner, taking into account all
costs from production or purchase to the refinery.
Light Crude
Light crude is any crude with and API gravity of greater than 31. It is
valued for the ease with which it can be converted to gasoline.
Liquefied natural gas (LNG)
Natural gas (mainly methane) that has been liquefied for ease of
storage and transportation. The gas is liquefied either by reducing the
temperature or by increasing pressure.
This is a type of refinery gas, mainly propane and butane liquefied
under pressure or refrigeration. Often known as bottled gas. LPG can
be used to run vehicles such as lorries and buses, and for domestic
cooking and heating in remote areas that lack alternative fuel
sources.
A measure of capacity in the metric system.
Liquefied petroleum gas (LPG)
Liter
LR
Large/long range tanker, 45,000-159,999-dwt. Divided into LR1
(45,000-79,999-dwt), and LR2 (80,000-159,999-dwt)
LSFO
Low sulfur fuel oil, usually 1% sulfur or less.
Lubricants
Substances used to reduce friction between bearing surfaces, or
incorporated into other materials used as processing aids in the
manufacture of other products, or used as carriers of other materials.
Petroleum lubricants may be produced either from distillates or
residues. Lubricants include all grades of lubricating oils, from spindle
oil to cylinder oil to those used in greases.
mmcf
million cubic feet
mmcfd
million cubic feet per day
mmscfd
million standard cubic feet per day
mmmcf
billion cubic feet
Mean of Platts Singapore (MOPS)
MOPS is an acronym that stands for the Mean of Platts Singapore,
and typically refers to any contract mechanism that derives its value
by referencing the average of a set of Singapore-based oil price
assessments published by Platts.
Metric Ton
The time frame can be over a week, a month, or any agreed period of
time.
Measurement equal to 1000 kg or 2204 pounds
Middle Distillate
Heating oil, diesel fuels, and kerosene fill this category, which
constitutes the elements of crude with medium density.
Mogas
Used in some markets as a substitute term for gasoline/unleaded.
MRT
Medium Range tankers, generally 20-30,000 metric tonnes
Natural Gas
Gas, occurring naturally and often found in association with crude
petroleum.
Natural gas liquids (NGLs)
The portions of gas from a reservoir that are liquefied at the surface
in separators, field facilities, or gas processing plants. NGL from gas
processing plants is also called liquefied petroleum gas (LPG).
The National Oil Company of Iran with oil reserves of 138 billion
barrels and revenues of $78,000,000,000. It has a production capacity
of four million barrels of crude per day.
Any oil company controlled by a state and which is not publicly
traded.
National Iranian Oil Company (NIOC)
National Oil Company (NOC)
National Oil Corporation (NOC)
Nigerian National Petroleum
Corporation (NNPC)
The state oil company of Libya. It controls reserves of 50 billion
barrels of oil. Annual revenue is estimated at roughly
$45,000,000,000.
The state oil company of Nigeria. It controls oil deposits of 64 billion
barrels and earned roughly $12,000,000,000 in profit and in 2006. It
has production capacity of 2.39 million barrels of oil per day.
Octane number
A measure of the detonative quality of gasoline, or otherwise
expressed its tendency to cause "engine knock."
The higher the octane number, the higher the resistance to engine
knock.
Oil Tanker
OPEC
Opex
Oseberg
Octane numbers come in two forms: Research octane number
reflects fuel performance under moderate driving conditions, while
the tests for motor octane number reflect high speed driving
conditions. Tests for both numbers are in fact performed in the
laboratory.
Ships used for transporting petroleum across water. Oil tankers can
be double-hulled or single-hulled. Oil tankers, the variety of sizes
ranging from a those that can safely carry tens of thousands of barrels
of oil to those that can carry over two million barrels of oil.
The Organization of Petroleum Exporting Countries is an
intergovernmental organization of 12 nations that export oil. The
countries that make up OPEC are: Algeria, Angola, Ecuador, Iran, Iraq,
Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates,
and Venezuela. OPEC is headquartered in Vienna.
Operating expenditure.
Day-to-day costs of doing business.
Primarily of labour costs and costs for fuel used in energy production.
Operating costs do not include interest and debt payments; these are
considered to be fixed costs.
An internationally traded Norwegian sweet crude oil. API approx.
37.3, sulphur content 0.24.
Pacific- wide
All surveyed Pacific Island countries (excluding Australia and New
Zealand)
Pacific Energy South West Pacific
Limited
Pacific Energy South West Pacific Limited was formerly known as BP
South West Pacific Ltd. As a result of the acquisition of BP South West
Pacific Ltd. by Pacific Petroleum Company SA, BP South West Pacific
Ltd.'s name was changed. The company was founded in 1948 and is
based in Suva, Fiji. As of May 25, 2010, Pacific Energy South West
Pacific Limited operates as a subsidiary of Pacific Petroleum Company
SA.
The state owned petroleum company of Venezuela. It has 77 billion
barrels of conventional crude oil and an estimated 235 billion barrels
of extra-heavy crude.
Generic term for fluid (gaseous or liquid) hydrocarbons.
Petroleos de Venezuela (PDVSA)
Petroleum
Pipeline
Pipelines are used to transport a number of substances including
natural gas, fuels, hydrogen, water, and petroleum.
Platts
Platts is a leading global provider of energy, petrochemicals, metals
and agriculture information, and a premier source of benchmark price
assessments for those commodity markets. Since 1909, Platts has
provided information and insights that help customers make sound
trading and business decisions and enable the markets to perform
with greater transparency and efficiency.
Physical market
ppm
The forum for the trading of oil with specific loading or delivery dates,
loading up to 21 days’ time. Producers and refiners are the primary
participants in this market. Also known as wet or dated market.
Parts per million. Typically used to designate amount of metals or
other impurities in refined oil products.
Premium
An additional amount agreed between buyer and seller over and
above an existing benchmark. Also, the price paid by an option holder
to an option grantor.
Quatar Petroleum (QP)
The state oil company of Quatar with total recoverable reserves
capacity of 170 billion barrels of oil and production capacity of one
million barrels per day. Profits of roughly nine billion dollars.
Rate of return
The percentage of an investment that can be recovered or returned
as profit in a given amount of time, usually a year.
Reference month
The calendar month and year to which the reported cost, price, and
volume information relates.
Refiners Margin
Refiners margin is the value differential between crude oil and refined
petroleum fuels and is an indication of the relative supply demand
balance between fuels that are co-produced from crude.
A plant where crude oil is separated into various components such as
usable products or feedstock.
Refinery
Residual fuel oil
Retailer
RON
Saudi Aramco
Saudi Aramco Contract LPG price
Sour Crude
South Pacific Oil LTD (SPOL)
A general classification for the heavier oils, known as No. 5 and No. 6
fuel oils, that remain after the distillate fuel oils and lighter
hydrocarbons are distilled away in refinery operations.
A firm (other than a refiner, reseller, or reseller/retailer) that carries
on the trade or business of purchasing refined petroleum products
and reselling them to ultimate consumers without substantially
changing their form.
Research octane number. See octane number.
The largest oil company in the world and perhaps the world’s most
valuable privately held company with an estimated total worth of 2.2
27 trillion in U.S. dollars. It has total estimated petroleum reserves of
260 to 303,000,000,000 barrels of oil and production capacity of 8.3
million barrels per day. Revenue has been estimated at
$233,000,000,000 per year.
Price of Butane and propane that is set by State-run Saudi Aramco.
The prices provide a benchmark against which Middle East sales of
liquefied petroleum gas (LPG) to Asia are priced
Sour crude has a sulphur content of greater than 0.5% by weight.
SPOL purchased Shell Pacific's business and assets in Solomon Islands
in 2006 and is 100% owned by the Solomon Islands National
Provident Fund.
SPOL supplies Aviation and Marine Fuel, Petroleum, Oils and
Lubricants in Solomon Islands.
Spot purchases
Storage capacity
Sulphur
Sweet Crude
Tankers
A single shipment of fuel or volumes of fuel, purchased for delivery
within one year. Spot purchases are often made by a user to fulfil a
certain portion of energy requirements, to meet unanticipated energy
needs, or to take advantage of low fuel prices
The amount of gas or fuel that can be stored to cover peak demand.
An element that is present in crude oil and natural gas as an impurity.
The greater the percentage of sulphur the more “dirty” the fuel is
considered.
Sweet crude has a sulphur content of less than 0.5% by weight.
Size is typically measured in deadweight tonnes (cargo capacity for
carrying water).
Here are tanker sizes and typical abbreviations (in deadweight
tonnes)
GP General Purpose 16,500 - 24,999
MR Medium Range 25,000 - 44,999
LR1 Large/Long Range 45,000 - 79,999
LR2 Large/Long Range 80,000 - 159,999
VLCC Very Large Crude Carrier 160,000 - 319,999
ULCC Ultra Large Crude Carrier 320,000 - 549,000
Tanker and barge:
Also:
Handysize 35,000
Panamax 65,000
Aframax 80,000
Suezmax (Million barrel) 130,000
Capesize: Any vessel, usually carrying dry bulk cargoes, that is too big
to navigate the Panama or Suez Canals.
This is often referred to as “the world’s costliest oil.” It comes from a
single field in Malaysia and has an API gravity of 45.2° and a sulfur
content of 0.0343%, making it an exceptionally light and sweet.
An installation used by trunk and gathering pipeline companies, crude
oil producers, and terminal operators (except refineries) to store
crude oil.
Vessels that transport crude oil or petroleum products.
tcf
Trillion Cubic Feet (of gas).
Thermal cracking
A refining process in which heat and pressure are used to break
down, rearrange, or combine hydrocarbon molecules. Thermalcracking includes gas oil, visbreaking, fluid coking, delayed coking, and
other thermal cracking processes (e.g., flexicoking).
The fourth largest publicly traded oil company in the world with oil
reserves of 10.5 billion barrels and revenue of $229,000,000,000. It is
headquartered in Paris, France.
A refinery is said to be "in turnaround" when it is taken out of service
of maintenance, usually planned.
Tapis
Tank farm
Total SA
Turnaround
ULCC
Ultra large crude carrier; with a capacity of 320,000-600,000 dwt.
ULP
Abbreviation for unleaded petrol.
Upstream
Oil and gas exploration and production, as opposed to downstream,
which covers the areas of refining and marketing.
Unit price
Total revenue derived from the sale of product during the reference
month divided by the total volume sold; also known as the weighted
average price. Total revenue should exclude all taxes but include
transportation costs that were paid as part of the purchase price.
Any private company, publicly-owned organisation or other regulated
entity that provides an essential service in a given area directly to
end-use customers, and that has exclusive rights to provide that
service or acts as a natural monopoly in the region it serves. Gas,
water and electric companies all qualify as utilities.
Utility
Variable cost
VITAL FSM PetroCorp
VLCC
Costs that vary. Includes costs of fuel, operating expenses, equipment
and facility maintenance charges, and depreciation from wear and
tear on equipment among others.
VITAL FSM PetroCorp is located in the Federated States of Micronesia
(FSM). It was formed after it acquired the terminal facilities of Mobil
Oil Micronesia Incorporated (MOMI) in the States of Chuuk, Yap, and
Pohnpei in 2008, and in 2009 assumed operations in Kosrae and Yap
Aviation.
Very large crude carrier; with a capacity of 200,000-320,000 dwt.
Volatility
A measure of the variability of a market factor, most often the price
of the underlying instrument.
WACOG
Weighted average cost of gas.
West Texas Intermediate (WTI)
US crude oil used as a benchmark for pricing much of the world’s
crude oil production. WTI is light, sweet crude with and API gravity of
39.6° and a sulphur content of 0.24%.
The sale of any commodity to a party who intends to resell that
commodity to other parties is referred to as a wholesale transaction.
Wholesale
Working storage capacity
The difference in volume between the maximum safe fill capacity and
the quantity below which pump suction is ineffective (bottoms).
Xetra
The Xetra system is one of the trading systems used on the EEX Spot
Markets.
Zeebrugge
Belgian port. The terminus point of The (European) Interconnector, a
gas line linking to the UK to continental Europe, and thus a major
European gas delivery hub.
References:
Information for the glossary was sourced from the following websites:
1. file:///C:/Users/pritanshus/Desktop/Petroleum%20-%20Glossary.html
2. file:///C:/Users/pritanshus/Desktop/Glossary%20-%20Oil%20&%20Gas%20UK.html
3. file:///C:/Users/pritanshus/Desktop/Glossary%20%20U.S.%20Energy%20Information%20Administration%20(EIA).html
4. http://www.platts.com/glossary
5. https://www.pwc.com/gx/en/energy-utilitiesmining/pdf/eumcommoditiestradingriskmanagementglossary.pdf