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
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