Lukoil Case Essay

627 Words3 Pages
o What theories of trade help to explain Russia’s position as an oil exporter? Which ones do not, and why? Russian is an exporter of oil based on various trade theory. First of all, Russia's oil exports as a competitive advantage compared to foreign counterparts. Since the oil industry must follow the laws of supply and demand, Russia is now in high positions. Russia has the largest oil reserves in the world along with Saudi Arabia, they continue to rotate the position of the largest oil producing country in the world. Russia is third country give oil and gas in Europe and now beginning to increase exports to the East Asian markets are hungry for energy. Russian oil companies have become major competitors worldwide. Thus, the percentage…show more content…
To master the source of energy is always a big challenge for the security of all countries. The big countries like the U.S., Russia and China are building energy strategy to create competitive advantage and maintain control over their resources. This is also the exporter, the largest importer of energy in the world, so the adjustment of Russia's energy policy and the U.S. will definitely raises big influence on the outcome of performance, world markets and prices of oil. o In LUK oil’s situation, what is the relationship between factor mobility and exports? Capital, technology, and skilled employees are all critical factors in the global oil industry. Even in Russia oil production and processing are capital-intensive activities that require massive amounts of highly valuable and highly specialized capital equipment manned by skilled laborers. Investment naturally flows to those sites where oil is abundant and production activities are the most efficient. Because oil is a limited resource and demand exists the world over, competitors such as LUK oil serve their global customers via production sites that are scattered across the world. LUKOIL must become as efficient as its major Western competitors. In Russia new competitive threats are starting to emerge (BP and Total FinaElf, for instance, have bought interests in Russian oil companies). LUKOIL, however, sees foreign oil companies as something more than stiffer domestic
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