...Russian Energy Strategy in Natural Gas Sector By Vlad Ivanenko1 December 2006 Abstract: Gazprom, one of the least reformed and most successful Russian companies, is largely responsible for defining national energy strategy. The consumers of Russian gas – the EU and post-Soviet countries – pay increasing attentions to the ways this company operates. This paper outlines the constraints faced by the Russian government and Gazprom management and lists options that these two players can employ transforming Russian energy might into economic benefits. PhD economics (University of Western Ontario) and senior trade analyst (Ottawa). E-mail: ivanenko60@yahoo.com 1 1 Introduction The natural gas sector is the least reformed and, apparently, the most successful industry in the Russian economy. Unlike the oil extraction sector –which was broken up and privatized in the early 1990s – natural gas production and distribution networks were preserved, with few exceptions, in the state-controlled monopoly Gazprom. Correspondingly, the Russian gas industry avoided ruinous warfare that the oil barons – former insiders and well-connected newcomers – waged fighting for control, ownership, and export quotas. Likewise, the natural gas sector was largely spared the troubles that befell on some oil majors (e.g. on YuKOS) which did not fall in line after the state changed its policy on energy resources in 2003. It is unsurprising that Gazprom is at the spearhead of the current Russian search...
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...The year 2011 will go down in global corporate history as the year when one of the world’s largest energy companies, BP, and the Russian state company, Rosneft, unsuccessfully attempted to form a strategic partnership on Arctic development. This failure was caused by the contractual and legal objections of the AAR consortium - BP’s partners in the Russian oil company TNK-BP. In 2003-5, BP and the AAR consortium led by three billionaires with Russian connections - Mikhail Fridman, Len Blavatnik, and Viktor Vekselberg - merged their Russian oil corporate assets - TNK, Sidanko, and Onako and their subsidiaries - under the umbrella of TNK-BP.2 This joint venture was established on a 50/50 basis, the operation of which required mutual joint decision making. The partners also signed a shareholding agreement on TNK- BP’s right of first refusal in relation to potential future oil and gas projects offered to BP or AAR in Russia and Ukraine. This agreement was subsequently used by AAR to stop the BP-Rosneft deal in international courts. Unfortunately, this was not the first time that BP had been unable to change the way it conducted its business in Russia. The first example occurred in 2007-8 when BP was reported to be keen on having Gazprom as a partner instead of AAR. This move would have transformed the TNK-BP joint venture into Gazprom-BP. This did not transpire. Second, in the spring-summer 2008, there was a turbulent ‘misunderstanding’...
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...Geopolitical analysis of Gazprom INTRODUCTION Open Joint Stock Company Gazprom is the largest extractor of natural gas and one of the largest companies in the world. Gazprom was created in 1989 when the Ministry of Gas Industry of the Soviet Union transformed itself into a corporation, keeping all its assets intact. The company was later privatized in part, but currently the Russian government holds most of the control in its hands. The major parts of Gazprom’s production fields are located around the Gulf of Ob in the Yamalo-Nenets Autonomous Okrug in Western Siberia, while the Yamal Peninsula is expected to become the company's main gas producing region in the future. Gazprom possesses the largest gas transport system in the world, with 158,200 kilometres of gas trunk lines. Major new pipeline projects include Nord Stream and South Stream. In this report, we are going to analyze the International environmental of Gazprom by using SWOT analysis. We will detail the relationship between Gazprom and other neighboring countries; such as Ukraine. We will figure out what’s the benefit for Gazprom based on the International environmental and what will be harmful the Gazprom if there are some disputes. The main reason we chose Gazprom as our research target is, as we mentioned before, that Gazprom is a company which is currently controlled by Russian government. Most of decisions that Gazprom took are showing the attitude of Russian government. As we know, Russia is the biggest...
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...1. Introduction Russia holds the world’s largest reserves of natural gas, the second largest coal reserves, and the eighth largest crude oil reserves. Russia recent years has become the world’s top gas exporter, mainly to Europe. At the time of fast growing electricity demand, when consumption significantly rise with development of new technologies, gas as a source of electricity become more and more important issue. Topic will discuss natural gas industry in Russia and Russian Company Gazprom. Gazprom is a peculiar corporate giant in gas industry. It is most internationally oriented company in Russia. 2. The role of geography Sitting astride the Eurasian landmass and occupying a territory of 17,098.2 thousand square kilometers, and spanning 11 time zones from Kaliningrad in the west to Kamchatka in the east, Russia is the largest state in the world in terms of territorial extent. Its northern shores wash against the Artic Ocean, while the southern resort region of Krasnodar enjoys a Mediterranean climate. Today Russia’s population is 142.2 million, and the average population density is 8.3 persons per square kilometers (1). However, this hides considerable regional variation: the average population density in the Central Federal District, which includes Moscow, is 57.7 persons per square kilometer, while in the Far Eastern Federal District it is only 1.1 persons. The Central Federal District occupies 3.8 per cent of Russia’s territory and was home to 26.2 per...
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...OAO Gazprom Annual Report 2014 The Power of Growth OAO Gazprom Annual Report 2014 Note. This Annual Report has been formed on the basis of Resolution No. 1 of OAO Gazprom’s Management Committee On Organization of Work Related to Holding the Annual General Shareholders Meeting dated 29 January 2015. The terms «OAO Gazprom», «Company» used in the Annual Report refer to the parent company of Gazprom Group, i.e. to Open Joint Stock Company Gazprom. «Gazprom Group», «the Group» or «Gazprom» imply OAO Gazprom and its subsidiaries taken as a whole. For the purposes of the Annual Report, the lists of subsidiaries and affiliates were prepared on the basis used in the preparation of OAO Gazprom’s consolidated accounting (financial) statements in accordance with the requirements of the Russian legislation. Similarly, the «Gazprom neft Group» and «Gazprom neft» refer to OAO Gazprom neft and its subsidiaries, «Gazprom energoholding» refers to OOO Gazprom energoholding and its subsidiaries, Gazprom neftekhim Salavat refers to OAO Gazprom neftekhim Salavat and its subsidiaries. In this Report “companies investments to which are classified as joint operations” define OAO Tomskneft VNC and Salym Petroleum Development N.V. The Annual Report also contains information related to Gazprom Group’s business activities in the future, based on the forecast and estimates of Gazprom’s management derived from the current situation. Actual results may differ from the said forecast and estimates due to the effect...
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...of Master of Science in International Management ESADE Business School May 2012 Master of Science in International Management – ESADE Business School i Master of Science in International Management – ESADE Business School Table of Contents Introduction ..................................................................................................................................... 1 Theoretical Background 1. Diversification ......................................................................................................................... 5 1.1 General Observations ........................................................................................................ 6 1.2 Different types of diversification strategies....................................................................... 7 1.3 The costs and benefits of diversification ........................................................................... 8 1.4 Diversification Trends ....................................................................................................... 9 A. The Lack of Significant Relationship ........................................................................... 11 B. The Linear Model .......................................................................................................... 12 C. Curvilinear Models ........................................................................................................ 13 C.1. The Inverted U Model...
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...struggle over energy export routes in Central Asia has taken the form of a new Great Game, one in which Western energy companies (encouraged and assisted by their governments) compete with state owned Russian and Chinese firms for the right to exploit Central Asian resources. The implementation of the Turkmenistan-China Gas Pipeline, which began to pump gas to China in 2010, has been the most significant development of the past five years and signals, more than any other event, the primacy of Chinese influence in the region. Turkmenistan now possesses the proven reserves and a partnership with China that could help it achieve sustainable development, although there are many domestic factors impeding this. As China increases its presence in the region, it seems that Russia and the West are being left behind in the race for Central Asian hydrocarbons. Executive Summary In the complex geopolitical environment of the Caspian region, all the players involved must carefully balance political and economic objectives. Each actor brings its own set of goals for the region, and in the case of the external actors these interests are generally in conflict. While Russia seeks to preserve its hegemony over export routes of Caspian hydrocarbons, Western governments overtly seek to undermine precisely this element of Russian influence. To the East, China has been continuing its resource-based form of checkbook diplomacy in Central Asia in much the same way as it has been aggressively...
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...graduating from Leningrad State University in 1975, he began his career in the KGB as an intelligence officer. He was stationed mainly in East Germany and held that position until 1989. Following the collapse of the Soviet Union in 1991, Putin retired from the KGB with the rank of colonel, and returned to Leningrad as a supporter of Anatoly Sobchak (1937-2000), a liberal politician. After Sobchak won the election for mayor of Leningrad (1991), Putin became the head of external relations for Sobchak in 1994, and after that he held the position of deputy mayor. In 1998, Putin was appointed deputy head of management under Boris Yeltsin's presidential administration. In that position, he was in charge of the Kremlin's relations with the regional governments. Vladimir Putin first appeared heavily under the spotlight in 1998 when former President Boris Yeltsen appointed Putin as the head of Federal Security Services (FSB), the FSB was the successor of the former KGB. Evgeni Primakov was appointed as a prime minister, Primakov later on appointed Yuri Skuratov as a general prosecutor. Skuratov first’s inquiry was within the Kremlin’s wall. His assignment was to investigate the renovation of the Kremlin. Yeltsin was directly involved with this unethical affair where millions of dollars were washed in the renovation of Kremlin. Vladimir Putin as a director of the FSB was asked to take care of the situation and soon enough Putin forced Skuratov to resign. “Skuratov immediately experienced the...
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...to Customer- Centric Management at ABB As a global leader in power and automation technologies,ABB serves utility and industry customers across the world. It has 117,000 employees in about 100 countries and generated $31.8 billion in revenue in 2009. It possesses a strong presence in emerging markets,particularly in Asia. ABB was formed as a result of a 1988 merger between two former competitors, the Swedish ASEA AB and the Swiss BBC Brown Boveri Ltd. The Swedish company added its management strength and the Swiss company added its technological and marketing expertise.The new CEO declared that ABB would be “global and local, big and small, radically decentralized but with central control.” To achieve these seemingly competing objectives, ABB’s CEO chose to implement matrix management. Matrix Management Matrix management is an organizational structure that combines two levels of oversight and control. In ABB’s case in 1993, the company was divided into four corporate divisions (Global dimensions) at the same time as it was divided into three geographic regions (Regional dimensions).The Global dimensions were further partitioned into business areas and the Regional dimensions were partitioned into country holdings. See the nearby figure from Germany’s INFO Institut.Thus, employees reported to two superiors, one from their Global Dimension and one from the Regional dimension. Global dimensions were responsible for strategy, distribution, and R&D, whereas Regional dimensions...
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...venture (IJV) formed between British Petroleum (BP) and a group of Russian investors, Alfa Group, Access Industries, and Renova known as AAR. This IJV was formed in September 2003 and was known as TNK-BP.1 TNK-BP’s CEO was Robert Dudley in May 2008. This is when the dispute between the British and Russian shareholders started to escalate. AAR thought that BP was treating TNK-BP as a subsidiary and not a JV. The escalation of the conflict got to the point where BP was seriously considering whether they should walk away from the IJV by selling its stake, acquire AAR’s stake or continue the IJV. This case analysis will explore BP and whether it was a good strategy to enter Russia and pursue an international joint venture with consortium AAR. Next the analysis will look at the evolution of the joint venture and examine the unique challenges faced by the international joint venture. Next the study will detail our recommendations regarding the AAR partnership, their implications and steps to implement this. Lastly the case will be updated to the present time. 1. Did BP pursue the right strategy to enter Russia? There are arguments both for and against BP’s decision to enter Russia. Perhaps the biggest disadvantage to BP’s strategy was the cultural differences they would experience in Russia. In addition to obvious cultural differences between Western and Russian national cultures and between global and regional operations and experience, TNK-BP faced cultural differences...
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...Page 1 of 8 Orica – The Russian Puzzle ------------------------------------------------------------------------------------------------------------------------------------- Orica Limited is a leading publicly-owned company with operations in more than 50 countries and is ranked among the top 40 companies listed on the Australian Stock Exchange. Orica and its growth Orica was formed when British chemical company ICI plc divested its Australian operations in 1997. Since then, Orica has pursued opportunities for organic growth, category expansion, mergers and acquisitions (including the acquisition of the global explosives interests of ICI Plc) that have marked Orica’s transformation into a global company. Orica today pursues a focused strategy targeted at the provision of services to mining, construction and infrastructure industries. It operations are conducted as three separate businesses - Orica Mining Services (OMS), Minova, and Orica Chemicals, each a leader in its chosen market. Orica Mining Services (OMS) is the global market leader in the supply and servicing of commercial explosives and blasting systems to the mining, quarrying and infrastructure sectors. Commercial explosives, initiating systems and Blast-Based Services are its main offerings. The business is run globally with a presence in Australia, Asia, Europe, the former Soviet Union, Africa, the Middle East, North America and Latin America. Mining services contributed to 55% of the 2010 revenues. OMS business...
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...Neftyanaya Kompaniya, Tyumen Oil Company), used to be a one of the biggest vertically integrated Russian oil company, which had its headquarters in Moscow. It was rated Russia’s third largest oil producer, in addition it was amongst the top 10 largest private oil companies in the whole world. However, it was bought by another Russian oil company known as Rosneft, in 2013. History of TNK-BP It was confirmed by DeGolyer and MacNaughton that since 31 December 2009 all of TNK-NP’s proved reserves added up to 11.667 million barrels which is the equivalent to 1.8549×109 m3 oil, applying PRMS criteria. The proved reserves account for a total PRMS reserve replacement of 329%. BP and a group of Russian businessmen, whom were represented by the AAR, announced a strategic partnership which was designed to jointly hold their oil assets and the creation of TNK-BP in Russian and the Ukraine, on 1st September 2003. AAR’s holdings in TNK international, ONAKO, SIDANCO, RUSIA Pretrolum; whom held license for Kovytka and Verkhnechonsk fields), and Rospan field located in West Siberia, were all contributed towards TNK-BP. On the other hand BP’s holdings in SIDANCO, RUSIA Petroleum and its BP Moscow retail network, all contributed towards TNK-BP. BP and AAR reached an agreement to consolidate AAR’s 50% stake in Slavneft and into TNK-BP, in January 2014. ARR and Sibnett (now known as Gazprom Neft) previously joined Slavneft. Slavneft has operations in Russia and Belarus. Production...
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...the energy equation, the continuous fighting and rising ethnic and sectarian tension in Iraq, and the diplomatic confrontation over Iran’s nuclear programme, have intensified concern over the stability of supplies from the Persian Gulf. On the demand side, China’s and India’s skyrocketing energy consumption and their efforts to secure supplies have intensified global competition over scarce hydrocarbon resources. These changes in the landscape of the global energy market, in conjunction with diminishing refinery capacity, shrinking spare capacity and a low level of investment, have driven oil and natural gas prices higher. Currently, the European Union’s oil bill (for imported and domestically produced oil) stands at around €250 billion a year, or roughly 2.3 per cent of gross domestic product (GDP).1 These soaring prices have exerted tremendous pressure on European economies and underscored the need for a common European energy policy. The dispute between Russia and Ukraine over natural gas prices in January 2006 further highlighted the risks of dependence on a few energy suppliers. In early 2005 the Russian state monopoly, Gazprom, announced plans to start applying ‘market rules’ in its gas dealings with former Soviet republics. That meant that buyers would lose the heavily subsidized prices they had previously enjoyed and instead would have to pay similar prices to those charged to west European customers. It also meant that all bills would have to be settled in cash instead of through...
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... Vytautas Magnus University students: Povilas Brilius Žygintas Dovydėnas Karolina Mališauskaitė Table of contents Introduction 3 Key aspects of the Baltic States’ energy companies 3 Common situation 5 Context of the European Union 7 Conclusions and recommendations 8 References 9 Introduction Recent events in global and local spheres are important to Baltic States’ energy economics. Among those are a) late collaboration initiatives between Baltic States’ governments to endorse regional projects in order to get connected into the EU energy network b) new EU regulatory frameworks, in particular applying to Baltic States energy markets situation c) the declining EU position in terms of energy sector competitiveness. These facts require deeper and more thorough investigation into Baltic energy market players and their abilities to meet demands of changing environment. Authors of this short paper seek to discuss and propose ways for Baltic States’ energy companies to retain and increase competitiveness in the changing economical and political situation. Firstly, authors discuss key aspects of Baltic States’ energy companies. Secondly...
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...[pic] ConocoPhillips – Final Report MBA 808 – Moscow May 1, 2008 Scott Legler Erin Osborn Greg Whitehorn Introduction The ConocoPhillips and LUKOIL joint venture provides great insight into doing business in Russia. The Russian economy continues to grow as companies domestically and internationally find success in an emerging market once filled with corruption and instability. Through an analysis of the ConocoPhillips and LUKOIL joint venture one can see the opportunities available for those companies who are able to enter this market. ConocoPhillips provides lessons learned and a six-step approach for a successful joint venture business in Russia. ConocoPhillips also provides insight into many of the challenges still facing those who desire to do business in Russia. They prove that with a will to confront and determination to overcome these challenges, business in Russia can prove to be quite profitable. Background ConocoPhillips ConocoPhillips is the third largest energy company in the U.S. Based on market capitalization; it is surpassed in size only by U.S. oil giants Exxon Mobile and Chevron. ConocoPhillips is headquartered in Houston, TX and employees over 32,000 people worldwide in forty countries. According to its website “ConocoPhillips is known worldwide for its technological expertise in reservoir management and exploration...
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