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The oil and gas industry is divided into three broad segments that describe different stages of the value chain. Upstream refers to exploration and production: activities involved in finding oil and gas reserves and extracting them from the ground. Upstream companies conduct geological and geophysical surveys, acquire exploration acreage, drill exploration and appraisal wells, and develop discovered reserves into producing fields. Midstream refers to transportation, storage, and processing: the infrastructure that moves oil and gas from the wellhead to markets. Pipelines, floating production storage and offloading (FPSO) vessels, gas processing plants, LNG liquefaction facilities, storage tanks, and tanker ships all fall into the midstream category. Downstream refers to refining crude oil into consumer and industrial products, and distributing processed fuels and gas to end users. Refineries, petrochemical plants, fuel retail networks, and gas distribution utilities are downstream assets. Many large integrated oil companies operate across all three segments, while smaller companies typically focus on one.

Oil and gas exploration involves a systematic process of identifying and assessing potential reservoir formations below the Earth's surface. The process typically begins with regional geological studies and analysis of existing well data and rock samples. Seismic surveying, which involves generating sound waves and recording how they reflect off underground rock formations, is the primary tool for mapping subsurface geology and identifying potential reservoir structures. Two-dimensional (2D) and three-dimensional (3D) seismic surveys provide increasingly detailed images of subsurface formations. Based on seismic interpretation, exploration companies identify drill targets and acquire exploration licences from governments to test them. Exploration drilling is the only definitive way to confirm whether hydrocarbons are present in a potential reservoir, and it carries significant financial risk: most exploration wells do not result in a commercial discovery. If hydrocarbons are found, appraisal wells are drilled to define the size and characteristics of the discovery before a development decision is made.

Oil prices are driven by the interaction of global supply and demand, with OPEC+ production decisions, geopolitical events, US shale production growth, and macroeconomic conditions all playing significant roles. OPEC (the Organization of the Petroleum Exporting Countries) and allied producers including Russia coordinate production levels to influence prices, and their decisions can have immediate market impacts. Geopolitical events affecting major producing regions, including conflicts, sanctions, and political instability, can disrupt supply and trigger price spikes. US shale oil production has become a significant swing supply factor over the past decade, with US producers able to increase output relatively quickly when prices are high enough to justify drilling. Global economic growth drives oil demand, as transportation fuel consumption is closely tied to economic activity. Natural gas prices are more regionalised, driven by local supply-demand conditions, seasonal heating and cooling demand, LNG trade flows, and the price competitiveness of gas versus other fuels for power generation.

Crude oil is processed in refineries through a series of separation and conversion processes to produce a range of petroleum products. The most significant by volume is diesel fuel (gasoil), used in trucks, buses, trains, ships, and industrial machinery, as well as heating in some markets. Petrol (gasoline) is produced for passenger vehicles and light commercial vehicles. Jet fuel (kerosene) powers commercial aviation. Heavy fuel oil, the least refined fraction, is used in large marine vessels and industrial boilers. Liquefied petroleum gases (LPG), including propane and butane, are used for heating, cooking, and as a vehicle fuel. Naphtha is a key petrochemical feedstock used to make plastics, synthetic fibres, and many other chemical products. Bitumen (asphalt) is used in road paving. Lubricating oils are refined from specific crude fractions for use in engines and machinery. The proportions of each product produced depend on the crude oil's characteristics and the refinery's configuration and conversion units.

Australia is a significant oil and gas producer in Asia-Pacific terms, though it accounts for a modest share of global production. In natural gas and LNG, Australia's position is much more prominent: Australia has been the world's largest or second largest LNG exporter in recent years, with exports primarily directed to Japan, South Korea, China, and other Asian markets from projects in Western Australia and Queensland. Australian domestic gas production from the Cooper Basin and offshore fields is substantial, though the eastern Australian domestic gas market has experienced supply tightness as LNG exports have grown. Australian crude oil and condensate production is more modest, with Bass Strait production declining over decades as fields have matured. The Carnarvon Basin produces crude oil and condensate as part of integrated LNG projects. Australia imports a significant portion of its liquid fuel requirements, primarily petrol and diesel, creating a domestic fuel security consideration that has attracted policy attention.