Diversification of Russian Oil and Gas Upstream Companies

Abstract

The quantitative assessment of the degree of company's diversification as the basis of strategic planning becomes relevant in the context of instability of world oil prices. The largest companies of the oil and gas industry develop their strategies taking into account diversification of both activities and sales markets. The need for diversification is confirmed by the carried-on qualitative analysis of the activities of Russian and foreign companies in the oil and gas industry. The authors propose indicators of quantitative assessment of the degree of diversification, which can be applicable for companies of the energy sector: entropy index and indicator of geographical diversification. The study concluded that it is advisable to use the entropy indicator of diversification for strategic planning due to the need to optimize activities; focus on the production of high value-added products; relevance of risk reduction in case of instability of world energy prices volatility; strengthening the position of a multi-industry company. An indicator of geographic diversification may be used when there is a necessity of market control; access to new markets; strengthening positions in current markets. The practical application of the results of this study is possible in the field of strategic planning for oil and gas upstream companies.

The impact of diversification of the oil and gas complex on economy of the national Kazakhstan

“…Kalinenko [1], M. Smith, M. Whalen, A. Hussan [2], U. Shahzad, D. Ferraz, B .Dogan, do Nascimento Rebelatto [3], I. Filimonova, I. Provornaya and others [4], O. S. Kirichenko, A. A. Komzolov and others [5], V. P. Klepikov [6], Al Janabi, Ammar N Avda [7], A.Yu.Perezhogin [8]. The development of the oil refining sector of the economy of Kazakhstan is studied by Kazakh scientists: O.I.…”

Strategic Priorities for Green Diversification of Oil and Gas Companies

“…The studies are generally of a selective nature and do not include analyses of the motivation behind and efficiency of diversification. Kretzschmar and Sharifzyanova analyzed the effects of international diversification on global asset ownership and control [50]; Antonakakis et al proved the relationship between oil prices and the stock value of oil and gas companies [51]; Pickl [10], Oberling et al [11], Hartmann et al [12], and Hunt J et al [52] studied the efficiency of investing in the clean power sector; and Kirichenko [53] offered a methodology for qualitatively assessing the diversification level. Thus, there is a need to expand the scope of theoretical research on the diversification process and its outcomes in the oil and gas sector.…”

Innovation and modernization of the Russian energy sector

“…Moreover, Russia is the world's secondlargest exporter of oil and gas after the United States. Russia's main oil and gas fields are depleted, but Russia continues to expand its oil and gas production and receives government revenues in the short term [11]. Figure 1 that follows reports Russian total energy supply for the past 18 years divided by source.…”