Main macroeconomic factors affecting operational results

The main factors affecting the Group’s operational results include:

  • Changes in market prices for crude oil and petroleum products;
  • Changes in the exchange rate between the Russian rouble and the US dollar; inflation;
  • Taxation;
  • Changes in transportation tariffs for crude oil and petroleum products.

Changes in market prices for crude oil and petroleum products

Prices for crude oil and petroleum products on international and Russian markets are the primary factor affecting the Group’s operational results.

Petroleum product prices on international markets are primarily determined by world prices for crude oil, petroleum product supply and demand, and competition on different markets. Petroleum product price trends on international markets in turn determine domestic prices. Price trends are different for different types of petroleum products.

The decrease in crude oil and petroleum product prices on international markets in 12 months 2016 had a negative impact on the Group’s results, but the drop in oil prices was largely offset by changes in the exchange rate for the US dollar relative to the Russian rouble.

Oil and petroleum product price dynamics Sources: Platts (international), Kortes (domestic)
2015 2016 ∆, %
International market (USD/ barrel)
Brent 52.46 43.73 (16.6)
Urals Spot (average Med + NWE) 51.49 42.02 (18.4)
International market (USD/ barrel)
Premium gasoline (average NWE) 569.96 467.05 (18.1)
Naphtha (average Med. + NWE) 450.05 377.85 (16)
Diesel fuel (average NWE) 500.7 398.58 (20.4)
Gasoil 0.1% (average Med.) 486.26 391.21 (19.5)
Fuel oil 3.5% (average NWE) 247.49 199.93 (19.2)
Domestic market (RUB/t)
High-octane gasoline 32,488 34,574 6.4
Low-octane gasoline 28,435 29,858 5
Diesel fuel 28,944 27,965 (3.4)
Fuel oil 7,202 6,051 (16)

ROUBLE vs. US dollar exchange rate and inflation

The Group’s management has determined that the Russian rouble is the presentation currency for the Group’s financial statement. The functional currency of each subsidiary is considered the currency of the economic environment in which the company does business and is the Russian rouble for most subsidiaries.

2015 2016
Change in Consumer Price Index, % 12.9 5.4
Average RUB/USD exchange rate for the period 60.96 67.03
USD/ RUB exchange rate as of the beginning of the period 56.26 72.88
USD/ RUB exchange rate as of the end of the period 72.88 60.66
Depreciation (appreciation) of Russian rouble to USD, % 30 17

Hydrocarbon taxes

Average tax rates effective in reporting periods for the taxationof oil and gas companies in Russia
2015 2016 ∆, %
Export duty, (USD/ t)
Crude oil 120.25 75.61 (37.1)
Light petroleum products 57.67 30.21 (47.6)
Diesel 57.67 30.21 (47.6)
Gasoline 93.75 46.07 (50.9)
Naphtha 102.17 53.63 (47.5)
Heavy petroleum products 91.34 61.96 (32.2)
Mineral extraction tax
Crude oil (RUB/t) 6,326 5,770 (8.8)