HomeMediaLatest NewsDoes Russia's oil and gas industry need mergers and acquisitions?

Does Russia's oil and gas industry need mergers and acquisitions?

Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented on the further consolidation expediency of the oil and gas business in Russia to the Neft and Capital Internet portal.

Alexey Gromov recalled that the economic logic of M&A is to minimize costs and maximize the company's income in difficult times. This is done when the economics of projects are close to their limits and urgent solutions are required.

"But if we talk about the degree of business concentration in Russia, it is already prohibitive in the oil and gas market. We even have a lack of competition in the gas sector, since, in fact, only Gazprom, NOVATEK and, to a lesser extent, Rosneft are present.

There is also a high level of asset consolidation in the oil sector. We went through a wave of mergers and acquisitions back in the 2000s (for example the acquisitions by Rosneft of a number of companies like BP assets, Bashneft)", the expert notes.

According to Alexey Gromov, there are no fundamental conditions in Russia for further consolidation of assets in the oil and gas sector. There is such a need for import substitution and the development of new technologies, when corporations need to create a single technology center for a particular industry. However, this is not directly related to the production processes in the Russian oil and gas industry itself. It does not need a new wave of M&A transactions, which is observed today in a number of countries, and may even harm it.
Gromov Alexey I. Principal Director on Energy Studies, Head of the Energy Department
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