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Diversification of Russian Oil and Gas Upstream Companies

Author

Listed:
  • Olga S. Kirichenko

    (Financial University under the Government of the Russian Federation, Moscow, Russia,)

  • Alexey A. Komzolov

    (Gubkin Russian State University of Oil and Gas (National Research University), Moscow, Russia,)

  • Yulia A. Nazarova

    (Peoples Friendship University of Russia (RUDN University), Moscow, Russia.)

  • Natalya S. Shcherbakova

    (Peoples Friendship University of Russia (RUDN University), Moscow, Russia.)

  • Tatiana V. Kirichenko

    (Gubkin Russian State University of Oil and Gas (National Research University), Moscow, Russia,)

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.

Suggested Citation

  • Olga S. Kirichenko & Alexey A. Komzolov & Yulia A. Nazarova & Natalya S. Shcherbakova & Tatiana V. Kirichenko, 2020. "Diversification of Russian Oil and Gas Upstream Companies," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 112-118.
    • Handle: RePEc:eco:journ2:2020-03-14
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    References listed on IDEAS

    as
    1. Aivazian, Varouj A. & Rahaman, Mohammad M. & Zhou, Simiao, 2019. "Does corporate diversification provide insurance against economic disruptions?," Journal of Business Research, Elsevier, vol. 100(C), pages 218-233.
    2. Garrido-Prada, Pablo & Delgado-Rodriguez, Maria Jesús & Romero-Jordán, Desiderio, 2019. "Effect of product and geographic diversification on company performance: Evidence during an economic crisis," European Management Journal, Elsevier, vol. 37(3), pages 269-286.
    3. repec:eco:journ2:2017-04-01 is not listed on IDEAS
    4. Xiao, Zhijie & Xu, Lan, 2019. "What do mean impacts miss? Distributional effects of corporate diversification," Journal of Econometrics, Elsevier, vol. 213(1), pages 92-120.
    5. Atanasova, Christina & Li, Mingxin, 2019. "Do all diversified firms hold less cash? The role of product market competition," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 59(C), pages 134-152.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Alexey Cherepovitsyn & Aleksei Kazanin & Evgeniya Rutenko, 2023. "Strategic Priorities for Green Diversification of Oil and Gas Companies," Energies, MDPI, vol. 16(13), pages 1-17, June.
    2. Natalya S. Shcherbakova & Yulia A. Nazarova & Olga S. Kirichenko & Oleg A. Gorunov & Andrey V. Dubrovsky, 2020. "Evaluation of Gas Industry Competitiveness in the Foreign Market," International Journal of Energy Economics and Policy, Econjournals, vol. 10(6), pages 272-279.
    3. Ginevičius Romualdas, 2023. "Improving the assessment of the diversification of construction companies," Engineering Management in Production and Services, Sciendo, vol. 15(2), pages 46-54, June.
    4. Khalid Abdullah Alkhathlan & Tarek Tawfik Yousef Alkhateeb & Haider Mahmood & Wardah Abdulrahman Bindabel, 2020. "Determinants of Diversification from Oil Sector in Saudi Arabia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(5), pages 384-391.

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    More about this item

    Keywords

    Russian Oil and Gas Upstream Companies; Diversification; Indicators of Diversification; Geographical Diversification; Energy Companies; Entropy Index;
    All these keywords.

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources

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