Definition: “Upstream” refers to the flow of oil or gas coming up from the reservoir to the surface. By extension “Upstream” has been adopted by the Oil & Gas industry to nominate all activities to pump up the oil and gas. It starts from the exploration to find new reserves onshore or offshore, covers all drilling operations and includes all the surface treatments to make the oil and gas transportable or transformable. For these reasons, “Upstream” is also called “Exploration & Production” or “E&P”.
Comment: Because of the ever bigger challenges to find new reserves of oil and gas, such as the extreme conditions of the new fields (Arctic, Ultra deep water, desert, etc…), the nature of the oil or gas calling for more treatment, the “Upstream” activities require more and more technologies and resources over the years. Since 2010, the total amount per year of capital expenditures in “Upstream” from all the operating companies exceeds $500 billion. From that amount, roughly $360 billion, according to the International Energy Agency, are only to maintain or replace the production from the ageing fields. This massive need of capital expenditures in “Upstream” has pushed most of the “IOCs” to spin off all other transportation or transformation assets.