How to invest under the pressure of high natural gas prices
by Anatoliy G. Goncharuk
International Journal of Technology, Policy and Management (IJTPM), Vol. 16, No. 2, 2016

Abstract: The purpose of this study is to define the key sources of investments for steel and chemical companies under the pressure of high gas prices, and the government's capability to activate their investment activity. The author used the traditional methods of structural, dynamic and statistical regression analysis to investigate the sources of investments and to identify the establishing of quantitative relationships between natural gas prices and the company's indicators. When natural gas prices grow an investment activity of the steel and chemical companies is declining. Under the tough pressure of gas prices, these companies use only two sources of investments: long-term loans and depreciation funds. If the company's unprofitability is long-lasting, depreciation is not enough even to cover losses, thus, the company has to accumulate loan debts or to become bankrupt. To ensure break-even operations of such enterprises, the government should keep price for natural gas below certain thresholds. Using the developed models, author determined critical levels of natural gas prices for metallurgical and chemical industries.

Online publication date: Tue, 03-May-2016

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