The standard approach to compiling ratings of companies is to look at the indicators characterizing their size and financial performance of their business. However, in Russia, what is also important is the usefulness of the Russian vertically integrated oil companies for the economy of the country. Comparing companies by indicators in this category reveals that there are no clear cut leaders in this competition, Analytical Center experts note in their new energy bulletin.
The Russian vertically integrated oil companies are the main source of budget revenue: the five biggest companies account for 70% of the budget revenue from oil and natural gas sales. Rosneft is the undisputed leader here: the company pays RUB 2.6 trillion of taxes to budgets of different levels, which is almost 3 times as much as LUKOIL PJSC, which is in second place.
According to the analysts, the vertically integrated oil companies are also the largest employers in the country, however, given the way the oil industry operates, oil companies do not spend very much on staff. Nevertheless, for companies with similar organizational structures there is significant imbalance in the use of human resources. One of the indicators characterizing labor productivity is revenue per employee, and by this measure LUKOIL is an undisputed leader among the Russian vertically integrated oil companies, the experts conclude.
The analysts believe that in the foreseeable future the oil industry will remain the locomotive of the Russian economy. In this context, it is important to ensure sustainable development of the oil companies. The main indicator characterizing the potential of vertically integrated oil companies is the availability of hydrocarbon resources whose replenishment depends directly on how much the companies are spending on exploration. Here, the correlation is easy to predict: the greater the proved reserves, the less the relative expenses on exploration.
As for Russia's international cooperation in the fuel and energy sector, the analysts believe it keeps expanding despite significant difficulties of several categories. The most visible are political obstacles. But there are also problems stemming from changes in the fuel and energy balances that are taking place as a result of technological progress and climate change policy. There exist certain distribution-related conflicts in the competition between fuels, the transit of energy resources in which business interests are often disguised as political ones and vice versa.
Within the research, the experts also looked at the challenges to the development of coal-fired generation.
For more see the bulletin "Efficiency of Oil Companies".
For other issues of the Energy Bulletin, see the Publications section.