PESTLE, PORTER and SWOT analysis of LUKOIL Essay

2595 Words11 Pages
Alina Belkina
1. Short overview of LUKOIL

Industry
Oil and gas
Founded
1991
Headquarters
Moscow, Russia
CEO
Vagit Alekperov
Products
Petroleum, Natural gas, Petrochemicals
Revenue
Increase US$ 139.2 billion (2012)
Net income
Increase US$ 11. billion (2012)
Employees
150,000

LUKOIL, a vertically integrated oil company, and carries out exploration, acquisition, integration and subsequent efficient development of oil and gas fields outside the Russian Federation to facilitate the transformation of LUKOIL into a transnational energy corporation.
LUKOIL operates in 25 countries (the most major of them are Russia, Azerbaijan, USA, Georgia, Turkey and Czech Republic). Net income in 2013 is $3.105 billion. Basic earnings
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2. Interest rate

The interest rate in Russia was last recorded at 5.50 percent. Interest Rate in Russia is reported by the Central Bank of Russia. It is quite high interest rate in comparison with for instance European countries. The average interest rate in Europe is 0.25%.
For LUKOIL it is a threat of decreasing the company’s sales, because during high interest rate potential consumers tend to spend less (borrowings become more expensive). Therefore the consumer purchasing power is quite low and company’s sales will be decreased.

Figure 2.2 Russia interest rate
3. Inflation rate

Figure 2.4 Russia inflation rate

Figure 2.5 Petroleum price RUB per liter
As we can see Figure 2.4 and Figure 2.5, the oil price and rate of inflation are connected directly: when oil price goes up, the inflation follows in the same direction. We can explain it by that the oil is the major input in economy (oil is used for manufacturing and transportation).
The inflation rate in Russia was recorded at 6.30 percent in October of 2013. It has a positive impact on Oil and Gas industry. LUKOIL can estimate future profit more accurate and eliminate several risks which effected by the oil price and inflation rate.
4. Unemployment rate

Figure 2.5 Russia unemployment rate At the moment the rate is 5,5%. And the tendency has a declining character. Thus it could be opportunity to find high-qualified employees. There is a competition on a

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