Approaches of Russian oil companies to optimal capital structure

T Ishuk,O Ulyanova,V Savchitz

doi:10.1088/1755-1315/27/1/012066

Abstract

Oil companies play a vital role in Russian economy. Demand for hydrocarbon products will be increasing for the nearest decades simultaneously with the population growth and social needs. Change of raw-material orientation of Russian economy and the transition to the innovative way of the development do not exclude the development of oil industry in future. Moreover, society believes that this sector must bring the Russian economy on to the road of innovative development due to neo-industrialization. To achieve this, the government power as well as capital management of companies are required. To make their optimal capital structure, it is necessary to minimize the capital cost, decrease definite risks under existing limits, and maximize profitability. The capital structure analysis of Russian and foreign oil companies shows different approaches, reasons, as well as conditions and, consequently, equity capital and debt capital relationship and their cost, which demands the effective capital management strategy.

Highlights

Oil companies are known to be the main sector of Russian economy
At present there is an idea that this sector due to raw material profits will lead the Russian economy onto the way of innovative development like a locomotive
Considerable difference between capital structures of Russian and foreign oil companies can be explained by the fact that foreign companies were gradually founded under the influence of objective factors of the market system as well as regulatory actions of the government, while Russian companies were immediately founded on the basis of commercial acts under the condition of centrally planned economy (CPE) [4, 10]

Summary

Introduction

Oil companies are known to be the main sector of Russian economy. They manufacture more than a quarter of the industrial production volume in Russia whereas their share of income in the Federal budget comes to about 50%. Oil sector accounts for more than half of all export and one third of total capital investments [1]. At present there is an idea that this sector due to raw material profits will lead the Russian economy onto the way of innovative development like a locomotive. The urgent problem now is to provide favorable internal and external conditions to fulfil this idea

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Methods

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Conclusion