The international expansion of the company in the downstream sector may be limited to existing projects.
According to the presentation of the strategy of Rosiest, the modernization of Russian refineries will increase their cost by 21 billion dollars. By 2015, oil production will be at 59 million tons, of which 75% light oil. Meanwhile, the company intends to continue to be selective for processing abroad. Focus will be on the synergy of refining crude oil supply, as well as gaining access to growing markets (Rosiest, 2014). SOOT: Opportunities: 1 .Continuous development and implementation of advanced technologies; 2. Increase coefficients of oil extraction through the use of new technologies; 3. Financial assistance from the state if necessary The reads: 1.
Reduction in the medium and long term oil and gas reserves; 2. Depletion Of explored deposits; 3. Development of alternatives-fuel types; 4. Price risks (price reduction possibility). Strengths: . The quality of the resource base; 2. They have their own trade terminals (for export); 3. Transparency and corporate governance; 4.
Continuous development of new deposits; 5. Government support; .Production was increased in the Far East, Eastern Siberia, and also on the shelf of the southern seas of Russia; 7. Capacity of oil production at Banker (Rosiest Info Department, 201 2); 8. Expansion and modernization Of export for the planned export volumes. 9. Create a new large-scale production centers; 10.
Acquirement of land in prospective oil and gas regions; 11. Work to improve the financial and operational flexibility and cost optimization. Weaknesses: 1. High level of investment 2. Control of the government limits the possibility in investment decisions 3. Heavy debt. 1 .
Sales growth of own production to the final consumer, the operational development of trading system and the development of new projects in order to lower the debt burden; 2. Changes in the structure of capital in favor of private investment. 1 .
Avoidance of increasing debt burden; 2. Search and development of new fields. Internationalization Rosiest, by expanding its activities abroad, tries to gain a foothold in the global oil market as the leading player. Most analysts call this planned expansion a “seizure of power”, the goal of which is the domination of the global oil and gas market.Nevertheless, this expansion could be considered as part off global trend.
Since 201 0, the company tried to simultaneously expand the scale of foreign operations in terms of sale and distribution, exploration and production. In October 2010, Rosiest acquired from the Venezuelan pads SST a 50% stake in the German company Our Oil- a corporation, which owned shares in four German refinery syndicates and controlled about 20% of all German refineries. In the same year, Rosiest signed an agreement to build an oil refinery in China (in a joint activity of the Russian company and ZINC). ByJune 201 0, the company engaged in the exploration and production activities in four countries in three different regions: Algeria and the united Arab Emirates (Middle East), Astrakhan (SIS) and Venezuela (Latin America). It is also important that Rosiest is increasingly focused on gaining access to offshore fields, presumably in order to expand their own technical capabilities for their development. In May 2012, for example, the company signed an agreement with Norway Station to jointly develop offshore fields in the Russian part of the Parents Sea, the Sea of Shoots and in the Norwegian art of the Parents Sea (Andrea Knoll, 2014).In this report I will discuss three countries for the business expansion of Rosiest: Japan, Brazil and Malaysia.
Japan is an East Asian country which lacks significant domestic reserves of fossil fuel and imports substantial amounts of natural gas, crude oil and other energy resources (see Appendix 1) (FPC, 2011). Approximately 50% of Japan’s primary energy supply is still oil, and the politically unstable Middle East provides the vast majority (approximately 90%) of imported oil. According to the U. S. Energy Information Administration, Japan is the third most oil consuming and importing country (see Appendix 2) (EIA, 201 14).Brazil is the largest country in Latin America and South America, with a population of more than 200 million. Poverty and corruption levels are very high.
According to “Oil and Gas in Brazil”, Brazier’s 2013 oil reserves reached 15. 6 billion barrels. Moreover, Brazil ranks 15th globally in oil reserves and 1 lath in oil production. Petrol’s is a semi-public NC headquartered in ROI De Jeanine, Brazil, and it is crucially, their production of oil accounts for 92% of Brazier’s total oil production (Export Government, 2014). In addition to the above two states I chose Malaysia as the third country to explore.
Malaysia is a Southeast Asian country with a developing economy. The population is over 30 million people, and the country has a very high poverty level. Malaysia has a very limited capacity Of oil and natural gas reserves, while the demand for energy is increasing rapidly. In recent years, Malaysia has not revealed any significant reserves thus in order to intensify exploration work, the government decided to reduce taxation in the industry in 1998. This gave a better opportunity for new companies to enter the market (Intel Business Publications, 2013).The Politics and Economy of Japan According to Transparency Internationally survey of corruption, out of 180 countries Japan was ranked the 18th least corrupt nation in the world in 2013. There was a high decrease of corruption in the country, as it ranked 25th in 1999 (Transparency International, 1999-2013). Japan’s political freedom and civil rights are ranked as 1 (free) on a scale from 1 to 7, showing Japan as a very politically free country (Freedom House, 2014).
Japan has high economic freedom and the Government closely cooperates with the producers of economic growth.This contributes to the development of the Japanese economy. The Japanese economy can be characterized by the association of suppliers, manufacturers, distributors, banks, and a comparatively weak international competition in domestic markets. There are also many more social than production agreements such as the guarantee of lifetime employment in large corporations.
Recently, Japan approved reforms, which allow the company to move away from some of the rules in an attempt to increase profits. Japan is a country with low taxes and in which private enterprise dominates.The total amount of taxes is lower than in other major developed economies: in 2012 it constituted 10. 1% foggy (The world Bank, 2012). Only few Japanese employers pay income tax and VAT, and both are very low. Meanwhile, corporate taxes are high. One must not forget that Japan is the second largest country in the world (after the United States) for economic development, having a GAP of approximately 4.
5 trillion dollars, and third in the world (after the United States and China) by consumption and importation of oil (EIA 2014) (See Appendix 3).Social factors of Japan: Japan has a very high quality of life. 71 % of Japanese people between the ages of 1 5 and 64 are employed; this exceeds the average level Of employment in COED countries (COED, 2014).
In addition, Japan is considered to be one of the safest countries in the world. A developed economy, a high level of well- being, a unique culture and a disciplined population: all this forms the basis of the safety of Japanese society. Technological factors of Japan: In the sass, Japan faced the oil crisis against the backdrop of political instability in the Middle East.Not only industry, but also the private and municipal housing sector suffered from the sharp rise in energy prices. As a result, the government and the population have combined their efforts to use new energy technologies. Actively working on new technologies has allowed to create equipment, technologies and system efficiency in terms of energy use. When energy prices were high the stimulation investment programs started working across the whole country. As a result, in about 15 years, since 1 973, the country was able to double its GAP without increasing energy consumption.
To this day, Japan is continuing its efforts to develop and disseminate such energy-saving technologies (Alan Dotty, 2000). The Politics and Economy of Brazil Before the 1 sass, the role of the state in the economy was dominant. The newly adopted constitution in 1988 limited state intervention in the economy. In 1 990 the Brazilian government launched the National Prevarication Program. Over the years it privatized 100 state federal companies.
Prevarication revenues exceeded 80 billion dollars. Most of these companies fell on the field of telecommunications, electricity, finance and metallurgy.After the prevarication the role of the state was reduced to regulating and controlling.
To this end, public national agencies were established, in particular for oil (NAP- National Agency of Petroleum) (Latin American Newsletters Limited, 1990). Despite the decline of the role of state-owned companies in the economy, in some industries, they still play an important role. The petroleum group Petrol’s accounted for 90% of the gross production of the relevant sectors, and the electric power group Latrobe approximately 50%.Moreover, state oil company Petrol’s ranks first among Brazilian exporting corporations and as first place among importers.
(EIA, 2014). Brazilian currency is lately very stable and became more competitive with other currencies, such as, the US dollar. This has increased the purchasing power of foreign investors in the country. Currency exchange of Brazil has a high competitiveness, which means that international businesses from all over the world are willing to establish new businesses in Brazil and can exploit the opportunity to function with far lower overheads, therefore increasing productivity and profits.Social Factors of Brazil There is a high gap be;en the richest and the poorest.
F the richest people in Brazil have access to more than 40% of the state’s income. In contrast to that, the poorest 10% have access roughly to 1% of the income (Brazil Org. , 2014). Despite the fact that most major cities in the world experience some form of crime, Brazil is very susceptible to this social issue. Robbing, kidnapping, and mugging are the most common forms of crime. In Brazil, corruption is a pervasive problem throughout the political system.
It permeates all levels of government (federal, regional, municipal) and all branches. Despite the measures taken at the national level, the problem of sighting corruption remains urgent. Technological Factors of Brazil Brazil has very advanced and progressive deep-water and ultra deep-water technologies in exploration and production of oil. Petrol’s has spent equal to million dollars in 2006 on research and development over the past five years, and its research center Of development continues its work on developing new technologies (Simons Goldberg, 2007).The Politics and Economy of Malaysia Malaysia is a unique country with its unique form of governmental structure. An elected sultan leads the country.
In less than 50 years of independence room Britain, Malaysia has made great progresses in its economic and political fields, and turned from a colony into a developed independent country. In 2014 its GAP is 498. 5 billion dollars (30th place in the world), and in terms of per capita -16,922 dollars (57th place).
While many Western countries are in a stagnancy state, Malaysia is developing rapidly (Heritage Organization, 2014).Malaysia has achieved these results by building upon the distribution of export products. One of the most important export commodities is natural gas and oil. However, one of the main problems of the oil industry of is Appleton. In recent years, no significant reserves of the deposit have been discovered in Malaysia (See Appendix 4).
In order to intensify exploration work, the government in 1 998 decided to reduce taxation in the industry (U. S. Department Of State, 2001).As the exchange rate of the Malaysian ringing against the dollar is fixed, the main instrument of macroeconomic policy is fiscal. In practice, both direct and indirect taxation are widely used.
The use of direct taxes has the following features: – Corporate tax is set at 28% (for Seems – 20%). However, it has a large number of benefits. For example, newly established enterprises are either fully or partially exempt from it for a period of 5-10 years (depending on the scope of activities), Enterprises that produce high-tech products can also fully exemplify themselves from this tax.Benefits for corporate income tax is so much that most of the production companies practically exempt from it. – Income tax is progressive and will be charged at the rates of 1-28%. Oil producers pay a tax on oil at the rate of 38%.
Indirect taxes also play a significant role: – Import tariffs are set from 2-300%. Most goods are taxed at a rate of up to %. Raw materials, machinery and equipment, basic food, medicine import duties are not assessed. – Taxes on services are paid for all kinds of services at the rate of 5%.Revenues from services related to export are not subject to this tax (for example, insurance of goods in transit) (KEMP, 2013).
Social Factors of Malaysia The level of corruption was significantly reduced due to a unique governmental system in Malaysia, where the ruler is elected by Sultans and Raja, who head nine states. A democratically elected parliament and government carry out the main function of governance. This clearly attracts foreign investors and gives a guarantee to them that their business is protected by legal regulation mechanism.Despite the fact that a minority of Indian and Chinese people lives in harmony with a majority of Malay, these little communities interact. Income distribution is uneven; the poverty rate varies in different ways in different states. Due to the government’s program the poverty was reduced within Malay ethnic groups (making up 60% of the population). At the same time, these groups accumulate only 19% of the country’s economy. The main point f this program is that the 30% of the service sector industry should belong to the Malay ethnic group or to the local population.
The government plans to abolish the ban in many service industries, including tourism. Many ethnic groups have responded positively to this change. This innovation will make it much easier for foreign investors to invest in Malaysia (Freedom House, 2014). Conclusion In the previous section, I have discussed three countries based on their political, economic, social and technological factors.
According to the political factors, as already explained, Japan is a country that has a stable and reliable lattice structure.In comparison to that, I have discussed Brazil, which has a comparably high level of bureaucracy, taxes, crime and corruption. The last country that was discussed is Malaysia, with a politically stable environment, an open market and low taxes. However, the Malaysian oil market loses its turnovers due to its lack of oil reserves. In contrast, Japan is the third country in importing and consuming oil, which means a very high demand and very high competitive market. Japan is an economically stable country with low taxes. Japan is a good opportunity for Rosiest to enter the Eastern oil market.