Wood Mackenzie analysts evaluate the competitive position of the three largest Russian oil and gas producers at US$60/bbl oil and their strategic action taken to date.
Last year, the Russian Majors' share price performance was hit harder by the oil price collapse than other peer groups as external pressures compounded by US and EU sanctions made western capital markets virtually inaccessible.
However, the slight rebound in oil prices this year, stronger Russian rouble and higher dividend yields have led to an enhanced performance within the industry peer group in the recent months.
Sanctions on tight oil and deep water technology in Russia are set to drive the Russian Majors’ M&A activity abroad, aimed at boosting their expertise in these resource themes and diversifying the inventory of long-term growth opportunities. Geopolitics will play a key role in this process.
For Rosneft, a lack of access to western capital markets and highly-geared balance sheet will put any large-scale ambitions on hold, albeit the company continues to look for opportunities both in and outside Russia.
Gazprom will seek M&A openings abroad, as it tries to diversify its Russian-focused portfolio. Unconventional, deep water and LNG themes are likely to be core targets, as well as discovered resource opportunities in countries such as Iran.
Finally, Lukoil will look for smaller opportunistic acquisitions both in and outside Russia, with Africa, Latin America and the Middle East likely to be the core target areas.
Copyright 2015. Wood Mackenzie