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Gazprom & Globalization Paper

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Final assignment
introduction
Gazprom a company established in 1989 in Russia is the number one producer of natural gas in the
world. It produces a total of 12 percent of the world's total gas and 74 percent of gas produced in
Russia. It has the largest transmission network which measures about 168000 kilometers and exports its
products to more than 30 countries. Gazprom used to operate as a monopoly before the emergence of
new companies where it earned a lot of profit resulting from high prices of the gas. However, the
situation has been changing recently due to economic retardation activity in Europe which has been a
large market for Gazprom. Also, the emergence of other substitutes such as shale, Novatek, and Rosneft
which had fair prices made most consumers shift from Gazprom. Lastly, people lost trust with Gazprom
after they stopped the supply of natural gases for two weeks to Ukraine in 2009, a scenario which also
happened again in 2014 (Rosner, 2006).
How globalization is impacting on Gazprom.
Globalization in general meaning refers to the spread of goods and services, information and technology
among persons, firms, and governments across nations. In this context, globalization refers to the
process of spreading Gazprom products to other nations.
The world's largest natural gas reserve is held by a Gazprom company in Russia. It produces 12.1 percent
of the total gas produced by the world and 69 percent domestically and has the largest pipeline in the
world which is about 168000 kilometers. Gazprom exports its gas to more than 30 countries which have
helped to expand its market, hence increasing profits. Russia does not import natural gas since more
than half of the gas produces by Gazprom is consumed locally. Currently, the company has started on
large scale projects for the development of gas in the Yamal peninsula in west-central Russia, the Arctic
shelf, the Russian far East and in Siberia. Since the LNG market is growing drastically Gazprom has come

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up with the Sakhalin II project. This project will help the company expand its sales. strengthen its
position. Besides, Gazprom the number one thermal energy producer in the world (Rosner, 2006).
Discuss the advantages and disadvantages of globalization for Gazprom 40
Through globalization, firms can secure themselves new territories hence increasing the market size.
Gazprom being a global firm it has various subsidiaries around the world where it supplies its products
which has helped to increase Russia’s' Gross Domestic Product at a very high rate (Rossum, 2017).
The globalization of firms also leads to global economic growth. This is because through globalization job
opportunities are created in countries where a firm sells its products, it also creates competition
between companies which further lowers the prices of the products for the consumers. In this case, job
opportunities in the 30 countries where Gazprom sells its products (Rossum, 2017).
When a firm operates internationally, it diversifies its assets. It sets a base to protect itself from the
unforeseen events. This means that if a market fails in one country the other one will still be operating.
For instance, Gazprom operates in more than 30 countries so when the market in one country fails other
markets will still be operating successfully (Rossum, 2017).
Globalization also gives companies a competitive advantage. For instance, if a company enters a market
where its competitors have not reached it will get to create strong brand awareness. Gazprom created
strong brand awareness in Europe.
Through globalization, firms can get opportunities to invest in foreign countries. In this case, the
Gazprom company has various subsidiaries in different companies (Rossum, 2017).
Despite all the above advantages of globalization for Gazprom, there are also disadvantages. Firstly,
Russia depends on revenues from Gazprom which on the other hand depends on the current state of
the consumers. Europe offers the greatest market for Gazprom products. For instance, in 2015 Europe
imported 65 percent of crude oil and 75 percent of natural gases. This is an indicator that Gazprom

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Final assignment introduction Gazprom a company established in 1989 in Russia is the number one producer of natural gas in the world. It produces a total of 12 percent of the world's total gas and 74 percent of gas produced in Russia. It has the largest transmission network which measures about 168000 kilometers and exports its products to more than 30 countries. Gazprom used to operate as a monopoly before the emergence of new companies where it earned a lot of profit resulting from high prices of the gas. However, the situation has been changing recently due to economic retardation activity in Europe which has been a large market for Gazprom. Also, the emergence of other substitutes such as shale, Novatek, and Rosneft which had fair prices made most consumers shift from Gazprom. Lastly, people lost trust with Gazprom after they stopped the supply of natural gases for two weeks to Ukra ...
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