Russian petroleum industry and globalization - Dissertation Example

4.Functional Structure of Organizations 11 In the petroleum industry, organizations grouped their employees based on their specialization together: Reservoir Engineers together, Production Technologist together, etc., which resulted in a Functional structure. Figure 1 presents an example of a Functional structure in case of an Operating Unit in the petroleum industry (in an oversimplified situation). Because of the grouping of functional activities into specialized departments, the organization is able to support in-depth skill development, which is considered to be one of the key strengths of the functional organization.

However, functional grouping also has its drawbacks; as the environment becomes more uncertain and dynamic, many decisions are pushed to higher hierarchical levels, which slows down the process of decision-making. Price shocks of oil and gas in the 1980s resulted in major cost cuttings between 1982 and 1986, major petroleum companies (except for Shell) announced radical restructuring programs, which included a reformulation of business strategies within core oil and gas businesses and reduction of staff.

Shell did not major restructure its organization, but did reduce staff for ~20%. Although petroleum companies reduced a great number of their staff, the actual amount of work remained the same. 11 5.Russian Petroleum and the Global Scenario 12 5.1.FDI of Russian Companies Globally 13 5.2.Energy as a Strategic Asset 13 5.3.Opportunities for Russia 14 III.Investigation to Support Model 15 1.Sample for Investigation 15 2.Investigation Results in Tabular Form 16 IV.Results of Investigation 21 1.Power distribution on “Exploration processes” and “Business development” 21 2.

Power distribution on “Project Planning” and “Project execution” 22. Over the years, this strategy has been successful and beneficial for the country. Presently, various other factors have come into play such as the need for efficiency, reducing costs and the role of international market forces. The oil prices which reached the peak in 2008 have stabilized over past 3 years. This fact affects the financial results of Russian petroleum companies and Russia GDP. For example EBITDA of the LUK oil has decreased up to 14% since 2008.

Russia government faces new challenges to provide GDP growth. One of the major steps is to find new projects which should be developed. These projects can be in Russian territory or abroad. With the help of secondary research it has been proposed that Russian energy can be used as a strategic resource in establishing a notable presence in the global markets. This paper investigates the path of multinational (MNCs) petroleum companies from national to international markets. My research proposes that the organizational structure of some MNCs operating from Russia can adapt techniques of their global counterparts.

The research describes the variety of models that companies use to manage their international assets. The common models and solutions are recommended to use in case of Russian petroleum companies with respect to cultural differences and administrative heritage. 1.Introduction Russia is the largest country in the world in terms of area; it is also the second largest producer of energy of which about 40% of the production is exported-making Russian the largest exporter of energy in the world. Thus Russia plays a pivotal role in the international oil market with their production of upto 9.

96 million barrels per day (Locatelli & Rossiaud, 2011).