IDEAS home Printed from https://ideas.repec.org/a/eco/journ2/2020-03-14.html
   My bibliography  Save this article

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
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijeep/article/download/9194/5003
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijeep/article/view/9194/5003
    Download Restriction: no
    ---><---

    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

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. 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.
    3. 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.
    4. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Benkraiem, Ramzi & Lakhal, Faten & Zopounidis, Constantin, 2020. "International diversification and corporate cash holding behavior: What happens during economic downturns?," Journal of Economic Behavior & Organization, Elsevier, vol. 170(C), pages 362-371.
    2. 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.
    3. Likitwongkajon, Napaporn & Vithessonthi, Chaiporn, 2022. "Internationalization, foreign exchange exposure and firm risk," International Review of Financial Analysis, Elsevier, vol. 83(C).
    4. Almaghrabi, Khadija S., 2023. "Local product market competition and investment home bias," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    5. Puhr, Harald & Müllner, Jakob, 2022. "Foreign to all but fluent in many: The effect of multinationality on shock resilience," Journal of World Business, Elsevier, vol. 57(6).
    6. Quang Trinh, Vu & Elnahass, Marwa & Duong Cao, Ngan, 2021. "The value relevance of bank cash Holdings: The moderating effect of board busyness," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 73(C).
    7. Ali Shaddady, 2022. "Business environment, political risk, governance, Shariah compliance and efficiency in insurance companies in the MENA region," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(4), pages 861-904, October.
    8. Xiao, Zhenxin & Yang, Bin & Dong, Songting & Chuoyan Dong, Maggie, 2024. "B2B strategies for surviving global crises: A resource dependence perspective on the COVID−19 pandemic," Journal of Business Research, Elsevier, vol. 172(C).
    9. Ren, Yangqiu & Hu, Guoliu & Wan, Qing, 2024. "Environmental Protection tax and diversified transition of heavily polluting enterprises: Evidence from a quasi-natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 1570-1592.
    10. Pinar Sener & Fatma Didin Sonmez & Elvin Tigrel, 2022. "The impact of economic policy uncertainty on corporate diversification: evidence from Latin american emerging economies," Economics Bulletin, AccessEcon, vol. 42(2), pages 1110-1123.
    11. Bai, Min & Fu, Yumei & Sun, Mingwei, 2023. "Corporate diversification and labor investment efficiency: Evidence from China," Economic Modelling, Elsevier, vol. 127(C).
    12. Chung, EunYi & Olivares, Mauricio, 2021. "Permutation test for heterogeneous treatment effects with a nuisance parameter," Journal of Econometrics, Elsevier, vol. 225(2), pages 148-174.
    13. Yannis Caloghirou & Ioannis Giotopoulos & Alexandra Kontolaimou & Aggelos Tsakanikas, 2022. "Inside the black box of high-growth firms in a crisis-hit economy: corporate strategy, employee human capital and R&D capabilities," International Entrepreneurship and Management Journal, Springer, vol. 18(3), pages 1319-1345, September.
    14. Gusnawan Adi Putra & Sri Mulyantini & Dianwicaksih Arieftiara, 2021. "Business diversification of coal mining companies as a strategy facing coal price volatility: The effect on company performance and share prices," International Journal of Business Ecosystem & Strategy (2687-2293), Bussecon International Academy, vol. 3(4), pages 38-50, October.
    15. Salama, Feras M. & Samet, Anis, 2022. "The impact of CEO inside debt on the coinsurance effect and excess value of diversification," International Review of Economics & Finance, Elsevier, vol. 81(C), pages 58-74.
    16. Zúñiga-Vicente, José Ángel & Benito-Osorio, Diana & Guerras-Martín, Luis Ángel & Colino, Alberto, 2019. "The effects of international diversification on the link between product diversification and performance in a boom and bust cycle: Evidence from Spanish firms (1994–2014)," Journal of International Management, Elsevier, vol. 25(4).
    17. 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.
    18. Andrés, Pablo de & Fuente, Gabriel de la & Velasco, Pilar, 2021. "Exercising a firm’s growth options: A portfolio approach," Journal of Business Research, Elsevier, vol. 132(C), pages 571-585.
    19. Hsiao, Ching-Yuan & Shiu, Yung-Ming, 2023. "Risk-sharing function in internal capital markets: Evidence from intragroup reinsurance activities," International Review of Financial Analysis, Elsevier, vol. 87(C).
    20. Nguyen, Lan Thi Mai & Cheong, Chee Seng & Zurbruegg, Ralf, 2022. "The heterogeneous impact of industry concentration on analyst performance," Advances in accounting, Elsevier, vol. 59(C).

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ2:2020-03-14. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.