Managing the external factors

Production levels will be influenced by external factors such as agreed production targets, market demand, the level of market demand for a particular product, agreements with contractors, and legislation. These factors are managed by planning of production rates and management of the production operation. 

The oil company will also be required to periodically submit reports to the national oil company (NOG) or government, and to partners in the venture. These typically include  

Market forces determine the demand for a product, and the demand will be used to forecast the sales of hydrocarbons. This will be one of the factors considered by some governments when setting the production targets for the oil company. For example, much of the gas produced in the South China Sea is liquefied and exported by tanker to Japan for industrial and domestic use the contract agreed with the Japanese purchaser will drive the production levels set by the National Oil Company. 

The demand for domestic gas changes seasonally in temperate climates, and production levels reflect this change. For example a sudden cold day in Northern Europe causes a sharply increased requirement for gas, and gas sales contracts in this region will allow the purchaser to demand an instant increase (up to a certain maximum) from the supplier. To safeguard for seasonal swings, imported gas is frequently stored in underground 

Contracts made between the oil company and supply or service companies are a factor which affects the cost and efficiency of development and production. This the reason why oil companies are revising the types of contract which they agree. Types of contract commonly used in the oil industry are summarised in Section 11.0. 

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