When oilfield service companies enter developing economies: a new model for efficiency

Journal of Business Strategy. 2020. Vol. 41. No. 5. P. 57–66.

Ulanov V. L., Simonov K.

The global market for oilfield services by 2020 will amount to about $220bn. The industry leading segments are works belonging to well commissioning (drilling, cementing, etc.) and well servicing (overhaul of wells and routine well repair), both of which account for 70 per cent of the global oilfield services market . The leader of the global oilfield services market is North America (34 per cent) while Eastern Europe and the CIS (the Commonwealth of Independent States comprising post-Soviet nations throughout Eurasia) are one of the most dynamic oilfield services markets (16 per cent). The drivers of the Russian oilfield services market are exploration segments and production drilling, characterized by a stable annual growth of 10-12 per cent.
Because of the natural geographical distribution of oilfield services businesses (oil, gas and other fields), international oilfield services companies have to look for ways to enter new markets. Entrance to new markets in developing countries is accompanied by technological, economic and political barriers, depending on the economic characteristics of the region and the specifics of state regulation of the national energy market. The operating models of oilfield services companies depend on the regulatory aspects of the oilfield services industry in different countries, the principles of interaction between energy and service companies and the level of competition and market transparency. To be successful in a new market, an international oilfield services company needs to consider the national characteristics of the economy and politics of the region and propose the correct operating model that meets the requirements and wishes of energy companies.
The Russian oilfield services market is one of the youngest in the world.
The relations between energy and service companies that have been developing over the past decades in the Russian economy have narrowed competition in the national market. 
International oilfield service companies in the Russian market are primarily involved in low-profit projects and offer services for certain types of work. To gain access to highly profitable projects for international oilfield service companies, operational models needed to be reviewed.
 

Keywords: market for oilfield services, overhaul of wells and routine well repair, The Russian oilfield services market, International oilfield service companies, operational models, The operating models of oilfield services