what are downstream operations 
downstream operations are the processes involved in converting oil and gas into the finished product these include refining crude oil into gasoline natural gas liquids diesel and a variety of other energy sources the closer an oil and gas company is to the process of providing consumers with petroleum products the further downstream the company is said to be understanding downstream operationsmost large oil companies like exxonmobil are described as integrated because they combine upstream activities which include exploration and production with downstream operations oil and gas operations can be divided into upstream midstream and downstream operations the refining process as well as distribution are considered downstream operations the transportation and storage of oil and gas are considered midstream operations companies in the downstream sector are those that provide the closest link to everyday users after crude oil is discovered and extracted the upstream process it s shipped and transported the midstream process thereafter the oil is refined marketed distributed and sold which is the downstream process downstream business categories mainly include oil refining supply and trading and product marketing and retail types of downstream operationsthe downstream process is the one that provides the most products that are closely linked to consumers and it is the sector of the oil and gas industry that people can relate to the most some of these products include liquefied natural gas gasoline heating oil synthetic rubber plastics lubricants antifreeze fertilizers and pesticides the downstream industry also plays a key role in other sectors and industries of the economy that may not necessarily be obvious to some including the medical field the downstream process has a big influence on some of the products and equipment needed and used by medical professionals similarly the downstream process plays a key role in the agricultural sector because of its relationship to pesticides and fertilizers as well as the fuel needed for farming equipment downstream vs upstreamthe difference between downstream and upstream operations lies largely in the stage of the process of getting crude oil to the hands of the consumer upstream operations include exploring new landscapes for oil potential discovering the crude oil drilling and extracting it and the initial discovery part another name for the upstream oil sector is the exploration and production e p sector meanwhile downstream operations as explored in this article include processes that occur after the production phase all the way up to the point of sale the closer an oil and gas company is to the process of providing consumers with petroleum products the further downstream the company is said to be example of downstream operationsalthough an oversupply of crude oil and lower oil prices may hurt integrated and upstream oil companies downstream companies benefit substantially when crude oil prices fall sharply in a short period petroleum products typically lag crude oil prices since there is a strong demand for refined petroleum products as crude oil prices fall refining margins typically grow however as oil prices increase refining margins may experience declines for example assuming an oil refining company abc inc primarily processes west texas intermediate wti crude oil to gasoline since gasoline experiences seasonality there are periods when downstream companies may only generate low profit margins or operate at a loss if it s during the winter when demand for gasoline is slow but the organization of petroleum exporting countries opec has announced that it would cut production in this example gasoline prices are 2 50 per gallon or 105 per barrel while wti crude prices are 95 per barrel therefore abc inc only has a margin of 10 per barrel 105 95 assume the following year that gasoline prices remain at 2 50 per gallon but wti crude oil prices fall substantially due to a global supply glut the oversupply causes wti crude oil prices to fall to 50 per barrel therefore abc inc has a refining margin of 55 per barrel 105 50 however this margin does not take into account other costs the company may incur as the crack spread just takes into account the costs associated with crude oil downstream faqsin software downstream development refers to designing tools for applications that already exist or are deployed meanwhile upstream refers to source code that is further up into development such as bug fixes and patches in a telecommunications network downstream data is anything that is sent from the network cloud or service provider down to the user for example downloading a video is considered downstream since it s been funneled down from the host downstream marketing focuses on short term sales and increasing revenue through investing with ad dollars social media and direct sales tactics in the meantime upstream marketing is more long term and strategic focused on new product releases in biotechnology downstream processing is the process of taking biological materials from natural sources like animal or plant tissue and purifying the biosynthetic products made from them the bottom linein terms of the oil and gas industry the downstream process can be thought of as the steps closest to the consumer who is ultimately using the oil to fill up their cars power their engines and using it in their daily life though most oil and gas companies are integrated it s important to note that downstream processes indicate when the oil is refined marketed distributed and sold 