tnk-bp (russia) 2008 pestle

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PART II– Situational AnalysisA. General External

Environment

CASE ANALYSIS : TNK – BP (RUSSIA) 2008

Situational Analysis - General External Environment

POLITICAL/LEGAL

SOCIO-CULTURAL TECHNOLOGICAL

Centralized Power by

President Putin

Energy Policy of Russia

-energy superpower

Russia’s Relation with

European Union

-diversify export market

and favorable customers

Russian Tax Policy

-tax exemption on

Greenfield provinces

General Rule: Russian

language is a MUST

Russians took duality to

greater extremes than

other nationalities

Loose hierarchical

structure in Russia

Environmental concern

(Green):

-Hybrid Car

Fossil oil technologies

Renewable energy

technologies

-Oil Drilling Using Floating

Nuclear Power Plants

-Use of ISOJET Perforation

Technology

Building up capacity to

deliver a new generation of

Greenfield projects


DEMOGRAPHIC ECONOMIC GLOBAL

Russia ranks 178th in

population density

2008: Average real

wages and real disposable

incomes increasing by

13.1% and 11.8%

respectively

Fastest-growing income

and consumption [growth]

rates

Global economic crisis and

resulting recession in 2008

-Rapid decline in world oil

prices

Rising inflation and fuel

prices

Russian Economy and Oil

Price Volatility

Impact of Fluctuating

Exchange Rates

-decline in Russian Rubble

Russia had 20% world’s

large reserves of : oil

production and natural gas

Russia industrialized and

inherited most of the

defence industry from

Soviet Union

Major contributor to

global ozone depletion

Corruption remained

serious issue

PHYSICAL

-Oil :limited supply -Natural conditions -Infrastructure -Transportation


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PART II– Situational AnalysisB. Industry Analysis


Situational Analysis - Industry Analysis

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THREATS OF NEW ENTRANTS/

BARRIERS TO ENTRY

BARGAINING POWER OF SUPPLIERS

BARGAINING POWER OF

BUYERS

PRODUCT SUBSTITUTES

INTENSITY OF RIVALRY AMONG

COMPETITORS Low

- Number of main oil companies that

canexplore and mine oil

field are limited

- BP, world’s third-largest oil and gas

supermajor.

-High Capital Requirement

- High level of technical

knowledge & technology

requirement

High-Suppliers for BP

are countries that have oil

reservoirs and oil fields

(Russia) and other

countries (Arab,

Norway, Iran, Iraq)

- OPEC controls 40% of world’s

supply of oil and, thus,

has a strong influence on the price of

oil.

Low- Buyers of

crude oil, market price

is determined

by the demand

- Buyers do not have other alternatives

(high demand)

Low- Minimal

substitute for natural resources

(petroleum/gas)

- Crude oil cannot be

substituted

- Other sources :

Biogas /biodiesel/ synthetic oil/solar

energy/nuclear energy ( not cost effective)

High- Competition from

local oil producers/miners

in Russia and globally

- Gazprom, Rosneft, Surgutneftegaz, Tatneft (Russia)

- Exxon Mobil, Shell, Petronas, Arab Oil

Companies, National Iranian Oil

Company (NIOC) (Global)

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PART II– Situational AnalysisC. Competitive Environment

Analysis


Situational Analysis - Competitive Environment Analysis

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TNK- BP LUKOIL GAZPROM TNK-BP Holding OAO (TNK-BP

Holding OJSC) is a Russia-based vertically integrated oil company.

The Company is involved in the exploration and production of crude oil, as well as distribution and marketing of oil and petroleum products.

TNK-BP Holding OAO is active on the territory of various Russia's hydrocarbon regions in the West Siberia, Volga-Urals, East Siberia and the Far East.

The Company operates through five refineries and has a retail network of approximately 1,400 sites spread across Central region of the Russian Federation, as well as Ukraine.

The Company sells its products, on the domestic market, as well as exports them to Europe and the Commonwealth of Independent States (CIS) countries.

Neftyanaya Kompaniya LUKOIL OAO (NK LUKOIL OJSC or Lukoil OAO) is a Russia-based integrated oil and gas company.

The Company is engaged in the business of oil exploration, production, refining, marketing and distribution. It is an owner of refineries, gas processing, petrochemical plants and gas stations network located in Russia, Eastern and Western Europe.

The Company’s petroleum products are sold in the Russian Federation, the Commonwealth of Independent States (CIS) countries, Eastern and Western Europe and United States.

Lukoil OAO operates through numerous subsidiaries and affiliated companies in eight business segments: Oil and Gas Production, Petrochemicals, Oil and Gas Refining, Petroleum Products Marketing, Services and Others, Financial Activity, Electric Power Generation and Banking. As of May 7, 2010, the Company’s major shareholder was The Bank of New York International Nominees.

OAO Gazprom, and its subsidiaries, operate gas pipeline systems. The Company is also a supplier of gas to European countries.

The Company is engaged in oil production, refining activities, electric and heat energy generation.

The Company and its subsidiaries are involved in exploration and production of gas, transportation of gas, sale of gas within Russian Federation and abroad, gas storage, production of crude oil and gas condensate, processing of oil, gas condensate and other hydrocarbons, and sales of refined products, and electric and heat energy generation and sales.

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ROSNEFT

Open Joint Stock Company (OJSC) Oil Company Rosneft is engaged in exploration, development, production and sale of crude oil and gas, and refining, transportation and sale of petroleum products in the Russian Federation and in certain international markets. It has three business segments.

The exploration and production segment is engaged in field exploration and development, and production of crude oil and natural gas.

The refining, marketing and distribution segment is engaged in processing crude oil and other hydrocarbons into petroleum products, as well as the purchase, sale and transportation of crude oil and petroleum products.

Its primary investment in production sharing agreements (PSA) is through the Sakhalin-1 project (PSA 1).


Situational Analysis - Competitive Environment Analysis

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PART II– Situational AnalysisD & E. Environmental Trends

&Attractiveness of External Environment


Environmental Trends

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Globalization – BP’s joint-venture with TNK in Russia to accommodate increasing oil and gas production and replacing reserves

Outsourcing – Russia, world’s largest natural gas producer and second-largest crude oil producer

Expansion – Russia’s proven reserves ranked number seven in the world, huge opportunities for further exploration

Strategic Alliance – BP and AAR combine their interests in Russia to create the country’s third largest oil and gas business, in which both parties have a 50% stake (TNK-BP)

Expatriation – Globalization created a global market for skilled professionals and levelled the income of skilled professionals relative to cost of living

Summary : Attractiveness of External Environment

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Globalization and outsourcing trends by customers have created boundless opportunities for a company like BP : ExpansionGlobal networkingStrategic alliance with local partnerExpatriation

The Mining/Crude-Oil industry, Petroleum Refining, and Chemicals industries as a group are very attractive because the :Threat of new entrants is lowBuyer power is lowSupplier power is high (which is good because most of the big industry players are both suppliers and buyers) The threat of substitutes is lowThe attractiveness of the industry is reduced because business rivalry is high

tnk-bp (russia) 2008 pestle

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