Oil and gas exploration and production is the most important and key segment in the whole business chain of the petroleum industry. Therefore, oil companies always put much emphasis on making scientific and reasonable decisions about investment scale and structure in the upstream sector, so that they can minimise business risks and obtain high returns. According to the system dynamics theories and methods and based on the actual results from an oil company’s practice in China, a system dynamics model is built in this paper for analyzing and forecasting the upstream investment scale and structure for an oil company. This model was used to analyze the investment effect of a large oil company in China, and the results showed that the total upstream investment scale will decline slowly in a short period and the investment proportion of different parts should be adjusted if some influencing factors are taken into account. This application practice was compared with the actual data and indicated that the system dynamics (SD) model presented in this paper is a useful tool for analyzing and forecasting of upstream investment scale and structure of oil companies in their investment decisions.