Open AccessOIL SECTOR COMPANIES IN THE PERIOD OF THE OIL CRISIS – 2020
Author(s) -
Р. Р. Ахунов,
M.Sh. Valiev,
Rishat I. Nizamutdinov
Publication year - 2020
Publication title -
vestnik ugntu. nauka, obrazovanie, èkonomika. seriâ èkonomika
Language(s) - English
Resource type - Journals
ISSN - 2541-8904
DOI - 10.17122/2541-8904-2020-4-34-7-14
Subject(s) - business , investment (military) , revenue , profitability index , population , market economy , petroleum industry , financial crisis , scarcity , economic policy , economics , natural resource economics , finance , macroeconomics , paleontology , demography , sociology , politics , political science , law , biology
In order to prevent the consequences of the pandemic, governments were forced to take radical measures that restrict the mobility of the population, which had a negative impact on the oil market, which is based on the transport sector. The article discusses how such market fluctuations affect the market environment and the behavior of companies. Reductions in revenues and profits caused by falling demand and oil prices, forced companies to resort to cost optimization, including staff cuts and budget cuts in investment programs. The article shows how changes in the behavior of stakeholders represented by the state, investment banks, and civil society affect the activities of oil companies during the pandemic. It describes the impact of short- and medium-term consequences of the pandemic on long-term trends in the energy sector. The Russian Government faces a difficult task of combining two characteristics in the oil industry: an industry that can pull the entire economy out through its growth due to a multiplicative effect in the face of global environmental challenges, and an industry that is the main source of income that determines the country's financial condition. While the renewable energy sector is making a breakthrough in its development, the oil industry is forced to reduce investment in conditions of resource scarcity. If before the crisis, the profitability of the oil business could provide oil companies with investment resources for new projects, the pandemic shock and difficulties in overcoming it forced oil companies to reconsider their investment plans for an indefinite period. Despite the fact that it is not possible to predict the final consequences of the crisis, many industry giants have already announced a revision of their strategies in accordance with the growing trends for greening.