Though Russia became the world’s largest oil producer in 2010 there is an imbalance between production, refining and the supply of petroleum products for the domestic market. This imbalance is being addressed by government and industry players through investment programs which entail vast capital spend and should be effectively managed.
At KPMG we have worked with many of the industry players assisting with risk management, tax and restructuring, contract assurance, system support and process design. We know that large spend programs like these need to be carefully managed and controlled to ensure they are cost effective.
A key change we see today is in risk management practices whereby major operators develop risk mitigation strategies. The current fiscal system is also under development to stimulate investment in Greenfield projects, inject new life into Brownfield projects and encourage investment in deeper refining processes.
We continue to see an emphasis on cost control and cost reduction measures. Some of the focus areas include logistics and procurement, leveraging technology investments, managing cash flow and ensuring companies are achieving the benefits that are already built into existing contracts. Finally, the sector is also increasingly seeing joint ventures.
KPMG has a strong Oil & Gas practice that has an extensive understanding of the existing legislation, the impact of the proposed changes and how these can influence the current business models of the major players.