Internationalization:

Country

Venezuela and Vietnam

Year of entry

2011

Industry/ business area

Oil

Entry mode

brownfield investment

TKN-BP purchased BP’s upstream and pipeline assets in Vietnam and Venezuela for an overall price of $US 1.8 billion. In Venezuela TNK-BP acquired from BP a 16.7% equity stake in the PetroMonagas SA extra heavy oil producer, a 40% stake in Petroperija SA which operates the DZO field, and a 26.7% stake in Boquerón SA.

BP employs approximately 140 staff in these businesses in Vietnam and some 35 staff in Venezuela.

Altogether, the acquisitions of the assets in Venezuela and Vietnam will bring TNK-BP net proved and probable (2P) reserves of ca. 290 million barrels of oil equivalent (WI), or ca. 260 million barrels of oil equivalent on an entitlement basis.

Motives

Since the young company was operating mainly in Russia yet, the acquisition marked a milestone in TNK’s strategic expansion in the global energy market.

Excellent platform for further growth and profitability and helps develop new competencies that can be applied for home

Russias strong relationship with Vietnam and Venezuela

Inspite of that, the main reason for the transaction was BP’s strategy of divestments to help the company meet its financial obligations arising from the recent Gulf of Mexico oil spill, considering the fact that BP holds 50% in TNK-BP.

Firm specific advantages used on the foreign market

Know-How transfer from BP to TNK-BP

First mover or follower

Follower

Type of state involvement in the process of internationalization

Evaluation of the success of the internationalization

As there is no official data yet concerning the sales of TNK-BP in these countries, the success can’t be proven. Nevertheless, it is very likely that the company is operating successfully in those countries, since BP is able to transfer their Know-How. Because of the upcoming takeover of TNK-BP by Rosneft there will anyway be another change in shareholders.

Country

Hungary

Year of entry

2009

Industry/ business area

Oil and gas

Entry mode

Brownfield Investment

In 2009 the company acquired a a 21.2% stake at the Hungarian energy company Mol Group, which was held by the Austrian company OMV, for 1.4 billion dollars. MOL’s management called the deal unfriendly and Hungary’s president expressed concern about the transaction. MOL considered Surgutneftegas to be a financial investor only and denied any other type of cooperation with the Russian company

Motives

It was a good start for Sorgutneftegas to enter European market, as Hungary is part of the EU. Furthermore we have to take into account that the company can extend their influence in the Hungarian market as well as whole European market.

Firm specific advantages used on the foreign market

The good relationship to Vladimir Putin

First mover or follower

Follower

Type of state involvement in the process of internationalization

 Surgutneftegas has close ties to the Russian government and Vladimir Putin, and many Hungarians believed the 2009 acquisition amounted to unnecessary involvement by Moscow in Hungarian affairs.

Evaluation of the success of the internationalization

Fail

In 2011 the Hungarian Government reacquired the Surgutneftegas’ stake in the company. It was the only acquisition of the Russian company yet and it failed, because of the lack of clarity in ownership. A Hungarian law prevented Surgutneftegas from being listed among shareholders until it revealed its beneficial shareholder. So Hungary paid the Russian company $ 2.7 billion. This failure should be a sign for the Russian company to reveal more of their shareholder information as well as information about where they deposit cash. The main competitors of the company in Russia already adapted the International Financial Reporting Standards and it is a question of time, till the company is forced to do the same.