...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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...Financial Statements Analysis, Free Cash Flow Estimation, Company Valuation, Description of Dividend Policy and Recently Taken Projects For PAO Gazprom Performed by group №___ MiM, cohort II Group members: Supervisor: assoc. prof. Yulia B. Ilina Financial statements analysis This part of analysis will be conducted using financial ratios, percentage change in the balance sheets and income statements, as well as common size balance sheets and income statements for the years 2010 – 2014. Some values of industry averages were found in the Thomson Reuters Eikon database. Missing values were calculated using financial statements of the key players in the industry (ExxonMobil, Shell, Chevron and BP). Financial ratios Liquidity ratios Let us look at whether Gazprom can meet its short-term obligations using the resources it has at the moment. Current ratio measures the firm’s ability to pay its short-term and long-term obligations Current ratio= Current assestsCurrent liabilities. Fig.1 For Gazprom it equals 2,38, while the industry average is 1,16. This means that Gazprom can cover all its current liabilities with its current assets easily. It is higher than the industry average, which indicates that Gazprom can cover its current liabilities with its current assets easier than an average company from the industry. Gazprom can invest in many projects, however a too high CA might appear not liquid. Current ratio has been decreasing over the period from 2010 to 2014...
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...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 for a decent place...
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...they unfairly favoured foreign firms. Khodorkovskii, an opponent of new PSA legislation, was widely known to have lobbied the Duma against PSAs very intensely. In May 2003, the Duma tightened requirements for new PSAs, making them allbut impossible to acquire. Strengths The Soviet Union was endowed with enormous natural gas and oil reserves. Soviet Union was allocated oil and gas by planners at effective prices far below those of the world market. Russia constituted 30% of the world’s total reserves in gas. Great occurrence on the doorstep of Asia. Support both on the island and in Moscow of the late governor, Egor Farkhutdinov and later Ivan Malakhov. Remarkable synergy with the local administration. A strategic alliance with Gazprom, Russian natural gas monopoly. Marketing success. Marketing power and credibility of combination of Mitsubishi, Matsui and Shell. Increasing uncertainty about the other sources: the Middle East and Indonesia. Weaknesses Sacrificing a lot of interests in other projects to buy Marathon’s stake in SEIC. In the beginning – possibility to work only during the summer (during the rest of the year production complex was embedded in ice). Heavy investments of billions of dollars. Harsh weather, uncharted land. Extraordinary technical complexity. Lack of civil service infrastructure to implement the terms of the PSA. Russian firms, who produced many of the goods and services necessary, had little or no experience with offshore production...
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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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...have it. Personally I think that Corporate Social Responsibility is a very important activity nowadays. I want to write about “Gazprom”. “OAO Gazprom” is a global energy company. It has many activities such as exploration, production, transportation, storage, processing and marketing of gas, gas condensate and oil, as well as the production and sale of electricity and heat. “Gazprom” is a very important company and it has many stakeholders around the world, but the main stakeholders are the one from Russia and post-Soviet countries. On the 29 December 2006, “Gazprom's” main shareholders were: Russian Federal Agency for Federal Property Management (Rosimushchestvo) - 38.373% ,”Gazprombank “- 41.235% ,”Rosneftegaz” - 10.74%, “Gerosgaz”- 2.93% and “E.ON Ruhrgas” - 2.5% .The Russian government controls 50.002% of shares of “Gazprom” through “Rosimushchestvo”, “Rosneftegaz”, and “Rosgazifikatsiya”. “Gazprom “owns the richest natural gas reserves in the world. Its share of the world's gas reserves is 18 %, Russian – 70%. “Gazprom” has 15% of the world biggest gas productions reserves and 78% of Russian gas production ones. The Scopes of activities of “Gazprom” are of a strategic importance for the development of the Russian economy; it affects the interests of a large amount of people. This implies a big number of important principles of its activities. “Gazprom” is sensitive to the interests of the society, it fully contribute to socio-economic development of different Russian regions...
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...Gazprom global strategy and Russian Government. First classes on strategic insights, first cases. Nokia case is a recognized business success and an example of cooperation between a government and a company. Can we say the same about Gazprom and Russian Government? In 2005 Russian government has become the major shareholder of Gazprom. (Kazin F 2006) Consequently Gazprom announced its strategic goal to become a leader in oil gas / energy sector (Miller A. 2005). Later Kremlin followed with the announcement saying that Russian Federation will become a leader in the world energy. A very coordinated move. Gazprom and government is a team. The Russian society reacted on the above with the development of two polar positions: the so called “imperialistic”, meaning finally a government and a business work together in order to protect and expand the country’s national interests and the “pessimistic”, meaning that Russian national resources will be sold out to the international businesses. In reality everything is not that black and white. A careful look at the same actions undertaken by Gazprom can be evaluated in the favor of both the above mentioned positions. Gazprom is playing a very complicated and delicate game, the strategic essence of which is to maximize its access to the liberalized European market and its end user, without trading off its monopolian advantages if possible. To reach this goal Gazprom has developed the following strategic concepts forming its general...
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...HERMITAGE CAPITAL MANAGEMENT CASE 1. Give definition of activist investor and discuss pros and cons Shareholder activism, also known as shareholder engagement or share ownership, occurs when shareholders use their ownership rights to monitor and influence how their portfolio companies manage ESG issues. Sullivan and Mackenzie (2006) categorize the activism strategies as (i) dialogue or engagement, in which companies meet with investor to discuss the firm’s strategy, how the firm plans to meet its objectives, issues related to CSR and corporate governance, and so on; (ii) the use of voting and other formal rights, including attending annual general meetings to ask questions, proposing shareholder resolutions, exercising voting rights and calling extraordinary general meetings; (iii) collaboration with other investors through formal coalitions in which investors present a unified voice; (iv) benchmarking, to compare company performance on different ESG issues and encourage companies to improve their performance; (v) media communications to allow investors to communicate their views to company directors and their advisors; and (vi) the ability to influence share price through the buying and selling of shares, as the threat of takeover is recognised as important to focus the management’s attention to shareholder value. Potential advantages of activist investor: * Holding Feet to the Fire Because they often purchase, or have the ability to purchase, (or short)...
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...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’ between BP and AAR, over the corporate governance and future strategy of their joint venture. This led to the removal of Robert Dudley from the helm 1 Shamil Yenikeyeff is a Research Fellow at the Oxford Institute for Energy Studies and a Senior Associate Member at the Russian and Eurasian Studies Centre, St Antony’s College, University of Oxford. Dr Yenikeyeff is the author of...
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...in the change in gas prices and policies with Russian gas giant, Gazprom. In 2009, Gazprom, a state controlled Russian gas company cut supplies to Ukraine in a dispute over unpaid bills and accusations of theft. At that time, Eastern and Western Europe suffered a sharp spike in gas prices, as it is a main supplier to many countries in the EU. After this incident, European utilities and regulatory committees have been intent on reducing the influence held by the company and long standing contracts between countries. Smaller competitors in varying regions are beginning to compete with the company, which has decades-long contracts with many EU members to sell and purchase gas and oil products. Gazprom ships its oil and gas through many miles of territory from the gas producing regions of Siberia to various European nations. They, Gazprom, are able to produce and transport natural gas cheaply to neighboring countries. Gazprom controls the supply and is able to sell at a high price as they are the main producer of gas and oil, though with up and coming nations like Azerbaijan beginning to take small pieces of the market share. Europe has an increasing demand for oil and natural gas with many technologies depending on it for home heating and electricity production. In the graph shown below, the supply amount of Russian originated gas along with the spot price and realized price is shown – typically Gazprom has been earning 5-6% profit off of sales. The amount of spot price...
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...Q1. Use the Porter’s National Diamond Framework to assess the power industry in Russia. Land, location, natural resources, labour and population are the determinants in the competitive advantage of any industry in a particular country. The Porter’s National Diamond Framework uses a more proactive approach in considering the factors such as: * The firm strategy, structure and rivalry * Demand conditions for products * Related supporting industries * Factor conditions The Diamond Model demonstrates that countries can become competitive regardless of whether they possess natural factor endowments such as land and natural resources. In the Diamond Model, the role of government is to encourage and push organizations and companies to a more competitive level, thereby increasing performance and ultimately the total combined benefit. Figure I: Porter’s Diamond Model 1. Factor Conditions After the breakdown of Soviet Union, Russia was still a closed economy. The power sector was mostly owned by the state. There was no competition and thus the following consequences: * Technological innovation was languished * No increase in efficiency * No investment in the sector * Irrational Consumption * Prices, annual production, assignment of quotas to individual producers and consumers were administered by a national regulator. * Natural Gas was the main component in the production of electricity and its price was regulated. * Due to the above...
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...Vladimir Vladimirovich Putin was born in Leningrad (now St. Petersburg), Russia, on October 7, 1952. After 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...
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...The key differences between the natural gas markets in Asia, Europe and North America November 2012 Table of Contents Summary 3 Overview 4 Conclusions 8 References 9 Summary The major difference of the natural gas market, which sets it apart from the truly global oil market, is that the former has historically been developed with respect to the regional supply bases. This was primarily defined by existing technology for natural gas transportation and availability of other energy resource: primary oil and coal. Sharp increase of oil prices and global concern with availability of oil reserves; growing awareness of the fossil powered industry influence on the environment, introduction of LNG and GTL technologies had significant impact on the natural gas market share, demonstrating recently double digit grows in consumption for all regions except Western Europe. This script will address the key differences between the natural gas markets in Asia, Europe and North America. Overview 25% average share of natural gas in the global energy balance is distributed unevenly throughout the regions: 35% of energy consumed by Europe, 27% by North America and only 11% by Asia-Pacific come...
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...Title: JOURNEY TO SAKHALIN: ROYAL DUTCH/SHELL IN RUSSIA (A) CASE STUDY REPORT Contents Page 1. Executive Summary……………………………………………………………….…………………..3 2. Introduction…………………………………………………………………………….………..……….3 3. Analysis…………………………………………………………………………………..…………….……3 3.1 Foreign Direct Investment…………………..…………………………………….……………...3 3.2. Sakhalin………..……………………………………………………………………………………….…..4 3.3. Production-Sharing Agreement……………………………………………………………..….4 3.4. Approvals-TOEC…………………………………………………………………………………..…….5 3.5. NGO’s and the Environment………………………………………………………………..…...5 3.6. SEIC’s strategic moves……………………………………………………………………..………..6 4. Recommendations……………………………………………………………………………..……..7 1. Executive Summary: In the following report the case study titled “Journey to Sakhalin: Royal Dutch/Shell in Russia” will be examined. A summary of the main issues that SEIC came across with, is analyzed including issues with the PSA and the political usage of Sakhalin II project, as means to an end. Other issues including late approvals, TOEC acquisition and nongovernmental organizations’ influence to potential buyers and lenders are also mentioned. Conclusively a recommendations section is created for the future of Sakhalin II project, that emphasizes on the PSA matter and the TOEC acquisition. 2. Introduction In the period of 1997-1999 Russia faced a great economic decline with a massive fall in GDP...
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...“WHAT IS THE RELATIONSHIP BETWEEN DIVERSIFICATION AND PERFORMANCE, PARTICULARLY IN EMERGING ECONOMIES? WHAT ARE THE FACTORS WHICH ARE RELEVANT FOR SETTING THE CONTENTS OF THAT RELATIONSHIP?” By João de Almeida Frazão Caro de Sousa Master Thesis Submitted to ESADE Business School in fulfilment of the requirements for the Degree 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 ................................
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