The East European oil and gas market faces the risk of being completely dominated by foreign companies. Industry leaders like BP or Royal Dutch/Shell enter the market aggressively and are able to undertake significant financial investments. Their entry strategies significantly differ: while Royal Dutch/Shell focus their investments on E&P (targeting a major stake in Gazprom), BP also intensifies its downstream presence by creating a JV with TNK. The Polish or Hungarian markets have already been strongly penetrated by global industry leaders. Former state-owned national oil and gas companies have been attacked by local consolidation on the one hand and acquisition by global majors on the other hand. Only some of them have been able to keep their local downstream dominance, i.e. Polish Orlen and Hungarian MOL. To strengthen their local market leadership both are actively internationalizing their business by forming regional leaders in Central and Eastern Europe. Latest attempts have been seen of Orlen targeting the take-over of its domestic competitor Grupa Lotos and rumours already circulate about a merger of Orlen and MOL.

«Achieve market leadership from the black forest (Schwarzwald) to the Black Sea,» Austrian market leader, OMV, has further focused its market strategy. The future expansion of OMV’s downstream presence should especially target Eastern Europe. OMV could become a major catalyst of the East European market consolidation.

But what should be the strategy of East European oil and gas companies to stay in or enter the global premier league? A.T. Kearney study reveals that consolidation trends follow a distinct logic. East European oil and gas companies need to understand in which stage of the consolidation lifecycle they are positioned to survive the consolidation threat and even dominate the endgame.