The Downstream Oil Industry Sector

The Oil Downstream Sector

Petroleum is very vgasoline-tanks-978248ital to many industries.  Its industry is one the largest in the world which involves global processes of exploration, extraction, refining, transporting and marketing.  By and large, the oil or petroleum industry may be divided into 3 sectors: the Upstream, Midstream and the Downstream.

The upstream sector includes searching for potential underground or underwater crude oil and natural gas fields, drilling exploratory wells, and subsequently drilling and operating the wells that recover and bring the crude oil and/or raw natural gas to the surface. There has been a significant shift toward including unconventional gas as a part of the upstream sector, and corresponding developments in liquefied natural gas (LNG) processing and transport. (From Wikipedia)

The midstream sector is commonly associated as the downstream.  Technically, the midstream sector is the transportation and shipping of crude oil at processing plants.  Oil may be transported by pipeline, barge, oil tanker or truck.

The Oil Downstream Sector

The downstream sector is the one closest to the consumers.  This sector involves the actual processing, selling and distribution of the natural gas and oil based products.   This is the stage where petroleum crude oil is refined and the raw natural gas are processed and purified.

Products of the downstream sector reach the consumers in the form of:

  • Liquefied Petroleum Gas (LPG)
  • Liquefied Natural Gas (LNG)
  • Gasoline
  • Diesel Oil
  • Jet Fuel
  • Heating Oil
  • Other Fuel Oils
  • Propane
  • Asphalt

  • Synthetic Rubber
  • Plastics
  • Petroleum Coke
  • Lubricants
  • Phramaceuticals
  • Antifreeze
  • Fertilizers
  • Pesticides

Being the sector that is closest to the consumer, the downstream sector has also played an important role in fueling the different industries.  The fuel produced by this sector runs the transportation and power industries.  Not known to many, the downstream sector also plays a vital role in pharmaceutical, packaging and manufacturing industries.  The sector also supports the agricultural sector through the production of fertilizers and pesticides, not to mention the importance of fuel to run various agricultural machineries and equipment.

The Philippine Downstream Oil Sector

The country’s downstream sector is regulated through the Republic Act No. 8479, AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY AND FOR OTHER PURPOSES.  The deregulation law calls for a truly competitive market – fair prices, adequate supply of environmentally clean and high quality petroleum products.  It also created a free market atmosphere encouraging other players and investors to join the downstream oil sector.  Know more about the Philippine Downstream Sector HERE.

Under RA 8479, the Department of Energy is tasked to, among others:

  • Monitor and publish daily international crude oil prices and the movement of domestic oil prices (create link to Oil Monitor)
  • Monitor the quality of petroleum products and compliance with the national standards of quality
  • Monitor refining and manufacturing processes of local petroleum products to ensure clean and safe technologies are applied
  • Maintain a periodic schedule of present and future total industry inventory of petroleum products to determine level of supply

Currently, the country has various players in the downstream sector.  The six member companies of PIP are important industry players and provide significant contributions in meeting the local demand for petroleum products in compliance to regulatory requirements set by the government. Chevron, Isla LPG, Petron, PTT, Total, Shell – have significantly contributed to the development of the sector not only in meeting the supply requirement, but also serving as valuable resource on issues of health, environment, safety and quality.  PIP member companies have also played significant roles in the development of various legislations in promoting safety, and exchanges of best practices.

Know more about our member companies, click HERE.