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Economic Analysis: Theory and Practice

Market attractiveness of oil and gas companies as a factor affecting the socio-economic development in regions of their business operations

Vol. 20, Iss. 1, JANUARY 2021

Received: 8 October 2020

Received in revised form: 19 October 2020

Accepted: 29 October 2020

Available online: 28 January 2021


JEL Classification: Q4, Q23, Q28, R12

Pages: 124–141


Sergei G. MARICHEV Ufa Federal Research Centre of Russian Academy of Sciences (UFRC RAS), Ufa, Republic of Bashkortostan, Russian Federation


Subject. I address the impact of market capitalization of oil and gas companies on their contribution to the socio-economic development of regions of presence.
Objectives. The purpose is to determine to what extent the factor of high market capitalization of the oil company is crucial in the changing the market environment.
Methods. The study draws on methods of economic and statistical analysis.
Results. I considered the current state of the Russian oil industry in the context of tax maneuver, and the future evolution of the oil and gas sector from the perspective of government authorities’ desire to develop oil refineries. I performed the financial analysis of operations of two large regional oil companies, namely, Bashneft and Tatneft, examined their contribution to the regions of presence in accordance with the level of market capitalization and ownership structure. The paper highlights the key factors, influencing the contribution of companies to the socio-economic development of regions.
Conclusions. In addition to the unfavorable global market conditions, changes in the taxation of oil companies in Russia in the form of tax maneuver are the additive factors that negatively affect the profitability of the industry as a whole. The growth of oil companies’ capitalization has a positive impact on their contribution to the development of regions of presence, depending on the specifics of equity structure. In the face of adverse external factors, the influence of high market capitalization of the oil company reduces drastically due to cumulative decline in business profitability.

Keywords: oil industry, tax maneuver, profitability, equity capital, socio-economic development


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