The current geopolitical and macro-economic environment has created both new challenges and new opportunities for O&G industry participants. The structure of the Russian petroleum sector could undergo sweeping changes in the near future, while M&A deals could act as the main driver for paradigm shifts in the industry due to declining oil prices, the rising cost of bank loans and limited access to Western technology used in hydrocarbon production. 

A number of Russian companies, which have encountered sundry difficulties amid the new economic conditions, have been forced to downsize their asset portfolios, divesting unprofitable assets both in Russia and abroad. Western companies that operate in Russia are also winding down their operations under joint projects and could even abandon their Russian assets in case the present situation persists. 

On the other hand, the current state of the market opens up new opportunities for the large players to snap up attractive assets and could speed up the market consolidation process. As foreign investment in Russian oil and gas projects declines, the leading domestic players are likely to take advantage of the prevailing situation in order to purchase assets on the cheap. Aggressive expansion on the part of large companies by purchasing smaller players or shares in projects can be expected before long in the key segments of the industry, including the upstream, oilfield services, and downstream. The targets pursued by companies involved in M&A include expansion of the resource base, access to advanced technology, and stronger positions in the oil refining and retail segments. 

What plans do the key O&G industry players have as regards the purchase and sale of assets? Which assets could they buy/sell and for what purpose? What overall effect will this have on the market and the other industry players? These and other issues are addressed in RPI’s new study devoted to the prospects for M&A deals in the Russian oil and gas industry under new economic conditions. 

This report analyzes trends in the development of M&A in the Russian oil and gas industry since 2005, examines asset valuation methods and deal parameters, while assessing the outlook for the M&A market in view of the current macroeconomic and geopolitical factors. A separate focus in the study is on the plans of major O&G and oilfield services companies to buy/sell assets in the near future. 

• Quantitative and cost analysis of trends in the global and Russian M&A deals in the oil and gas industry since 2005

• Special features in the appraisal of assets in Russia across various segments of the oil and gas industry 

• Trends related to change in the value of assets and their analysis by types of companies 

• Assessment of the current situation and prospects for development of the M&A market in the oil and gas industry of Russian in view of the present factors 

• Opportunities and risks related to M&A in the current economic environment 

Optional modules to the basic report address the outlook for M&A deals in three main segments: the upstream, oilfield services and downstream. Each of the three modules provides detailed analysis of trends and scenarios in the development of a specific segment until 2018, while outlining the possible plans of major companies regarding the purchase/sale of assets in the near future. 

1. Scenarios for development of oil and gas production in Russia in view of the current factors and risks 

2. Forecasts of the scope of production for individual companies under various scenarios until 2018 

3. Analysis of mid-term M&A plans by Russian E&P companies with regard to:

• Russian assets 

• Foreign assets 

4. Findings and recommendations

 

1. Scenarios for development of the Russian oilfield services market until 2018 in view of the current factors and risks 

2. Forecast of the scope of the exploration and production drilling market in physical and monetary terms

3. Analysis of mid-term plans by E&P and OFS companies regarding purchase/sale of assets in the oilfield services segment 

4. Findings and recommendations 

1. Trends in development of the Russian downstream segment 

2. Market expansion forecast 

• Forecast of the breakdown of the oil refining market until 2018 

• Forecast of the breakdown of the retail gasoline market between VIOCs and independent players until 2018 

3. Analysis of mid-term plans by E&P companies to buy/sell assets in the downstream segment 

4. Findings and recommendations 

The study could be an important strategic decision-making tool for Russian and foreign companies that operate in Russia or plan to enter the market through M&A of core assets. Major E&P companies, oilfield service contractors and players in the downstream segment have the opportunity to study the M&A plans of their competitors, assess the probable consequences of their actions for the market and adjust their business strategy accordingly. 

The insights provided in the report will also help small and medium-sized independent companies to gain a better understanding of prospects for M&A deals Russia in view of the current factors, to accurately appraise the value of their assets in line with market practice and to pick the right time for possible sale of their business.

Banks and consulting companies that support mergers and acquisitions will also have the chance to size up the outlook for M&A deals based on the according plans of E&P and oilfield services companies, and to identify new opportunities for improving their financial performance. 

2. Quantitative and Cost Analysis of Trends in the Global and Russian M&A Markets Since 2005 

2.1. Global M&A trends 

2.2. Global M&A trends in the oil and gas industry 

2.3. Russian M&A trends 

2.4. Trends in the development of M&A deals in the Russian oil and gas industry 

2.5. Comparison of Russian and global M&A trends in the oil and gas industry 

3.1. Special features in the appraisal of assets in various segments of the Russian O&G industry 

3.1.1. Upstream 

3.1.2. Oilfield services 

3.1.3. Downstream 

3.2. Overview of Major M&A Deals Involving Russian Companies/Assets 

3.2.1. Domestic Russian deals 

3.2.2. Deals involving the purchase of foreign assets by Russian companies 

3.2.3. Deals involving the purchase of Russian assets by foreign companies 

3.3. Current tendencies related to change in the value of assets and their analysis by types of companies 

4.1. Opinions of market participants on the outlook for M&A from 2014 through 2016 

4.2. Factors impacting deal dynamics in the main market segments 

4.2.1. Upstream 

4.2.2. Oilfield services 

4.2.3. Downstream

5.1. Opportunities and risks related to M&A under the current economic conditions 

5.1.1. E&P companies 

5.1.2. Oilfield services companies 

5.1.3. Downstream companies 

5.2. Comparative matrix to gauge the correspondence between risks and opportunities for M&A deals in the Russian oil and gas industry 

1. Scenarios for development of oil and gas production in Russia in view of the current factors and risks 

2. Forecasts of the scope of production for individual companies under various scenarios until 2018 

3. Analysis of mid-term M&A plans by Russian E&P companies with regard to:

• Russian assets 

• Foreign assets 

4. Findings and recommendations 

1. Scenarios for development of the Russian oilfield services market until 2018 in view of the current factors and risks 

2. Forecast of the scope of the exploration and production drilling market in physical and monetary terms

3. Analysis of mid-term plans by E&P and OFS companies regarding purchase/sale of assets in the oilfield services segment 

4. Findings and recommendations 

1. Trends in development of the Russian downstream segment 

2. Market expansion forecast 

• Forecast of the breakdown of the oil refining market until 2018 

• Forecast of the breakdown of the retail gasoline market among VIOCs and independent players until 2018 

3. Analysis of plans by E&P companies to buy/sell assets in the downstream segment 

4. Findings and recommendations