Russian Gas Companies’ Financial Strategy Considering Sustainable Growth

Abstract

Over the past ten years, an ambiguous situation concerning Russian gas companies has been observed. On the one hand, companies' reports represent conservative policies and sustainable growth in the coming years. On the other hand, companies' fi nancial performance suggests another situation because of the insuffi cient level of fi nancial indices that refl ect the inconsistency of existing sustainable growth approaches. This situation indicates the relevance of the research concerning Russian gas companies' fi nancial sustainable growth in the conditions of the global economy, "economic sanctions" and investment policy implementation. The primary purpose of the research is to analyse Russian gas companies' fi nancial growth strategy employing Geniberg Z-matrix as well as enhanced fi nancial sustainability indicators system indices by identifying which indicators have a greater infl uence on sustainable growth rate. We found that return on fi xed assets ratio, net profi t growth ratio, debt equity ratio infl uence on Russian gas companies' sustainable growth rate and recommended for the system of fi nancial sustainability indicators (FSIS) usage. We associate the concept of Russian gas companies' fi nancial sustainable growth with environmental protection, energy savings, and social factors. Thus, we added to the fi nancial model non-fi nancial factors. As a result of the analysis, we have obtained the dependence of Sustainable Growth Rate to Environmental Ratings as well as Return on social responsibility costs. We recommend paying more attention to the energy, social, environmental, and economic determinants that could contribute to sustainable growth. We also found that Russian gas market companies could improve Financial Strategies according to sustainable growth point of view. We suggest ways to enhance the fi nancial strategy of Russian gas companies.

Financial Strategy considering Sustainable Growth: evidence from China and Russia gas market companies

“…However, at the same time, there may be a risk, for example in the event that a rise in sales could lead to profit increase, while the growth also requires increases in assets for increasing production volume. For sustainable growth, Gazprom must increase assets, because additional sales requires more labour and other investments [32]. If companies are not able to increase their growth, it may be because they do not have a material base for this (limited production capacity, limited financial resources or limited qualified labour resources).…”

“…Russian gas companies tend to pay particular attention to social benefits for staff. An employee could ostensibly feel that the company's management takes care of personal needs and thus be motivated to work more efficiently [32].…”

“…Data was collected from the annual reports of the three biggest Russian gas market companies (Gazprom, Novatek) [5,6,28] and (Rosneft) [29], for the year 2016. The market share for these companies is 88.6% [31] of the total Russian natural gas market [31][32] (see Fig 2 (a)). Similarly, data was collected from the annual reports of the three biggest Chinese gas market companies Sinopec, CNPC, CNOOC [33-35] (see Fig 2 (b)).…”

“…We consider the most comprehensive method for Russian gas companies' Financial Sustainable Growth Strategy analysis is the methodology referenced at [22,32]. The main aspect of the theory of Ivanova, Geniberg, and Polyakova is the emphasis on a distinction between financial policy and funding [1], using the interrelation scheme of assets' profitability, products' profitability and the "Du Pont" model.…”

Financial Sustainable Growth Theory as a Result of Interaction with Energy, Environmental and Social Processes (Evidence from Oil and Gas Industry)

“…Углублено понимание сущности устойчивости финансового роста с позиции системной парадигмы развития ассоциативных экономических субъектов, операционный портфель которых достаточен для сохранения природных ресурсов, технологического развития народного хозяйства и качества социальной среды общества. Обоснованы возможности ис- ние на том, что нефтегазовые компании должны быть примером социальной ответственности перед обществом [18].…”