Diversification of Russian Oil and Gas Upstream Companies

Olga S. Kirichenko, Alexey A. Komzolov, Yulia A. Nazarova, Natalya S. Shcherbakova and Tatiana V. Kirichenko
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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,

International Journal of Energy Economics and Policy, 2020, vol. 10, issue 3, 112-118

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.

Keywords: Russian Oil and Gas Upstream Companies; Diversification; Indicators of Diversification; Geographical Diversification; Energy Companies; Entropy Index (search for similar items in EconPapers)
JEL-codes: L25 Q32 Q35 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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