Expenses and other costs
Production and operating expenses
The acquisition cost of oil, gas and petroleum products in 2014 increased by 19.9% compared with the 2013 level from 319.1 bn to 382.5 bn RUB. The change was primarily due to an increase in the purchase of petroleum products on the domestic and international markets.
| 2013 | 2014 | Change, % | |
|---|---|---|---|
| HYDROCARBON PRODUCTION EXPENSES | 72,491 | 84,137 | 16.1 |
| Subsidiaries | 58,034 | 68,278 | 17.7 |
| RUB/TOE | 1,350 | 1,526 | 13.0 |
| USD/Converted to USD based on the average exchange rate for period.BOE | 5.78 | 5.42 | –6.3 |
| Proportionally consolidated companies | 14,457 | 15,859 | 9.7 |
| RUB/TOE | 1,543 | 1,750 | 13.5 |
| USD/Converted to USD based on the average exchange rate for period.BOE | 6.61 | 6.22 | –6.0 |
| REFINING EXPENSES | 37,293 | 45,393 | 21.7 |
| Expenses on oil refining at the oil refineries of subsidiaries | 21,558 | 25,681 | 19.1 |
| RUB/t | 633 | 741 | 17.1 |
| USD/Converted to USD based on the average exchange rate for period.barrel | 2.71 | 2.63 | –2.9 |
| Expenses on oil refining at the oil refineries of joint ventures | 11,139 | 14,145 | 27.0 |
| RUB/t | 1,300 | 1,602 | 23.2 |
| USD/Converted to USD based on the average exchange rate for period.barrel | 5.57 | 5.69 | 2.2 |
| Expenses on the production of oils and packaged products | 4,596 | 5,567 | 21.1 |
| TRANSPORTATION EXPENSES TO OIL REFINERIES | 23,747 | 26,234 | 10.5 |
| OTHER OPERATING EXPENSES | 11,021 | 15,947 | 44.7 |
| TOTAL | 144,552 | 171,711 | 18.8 |
Overall production and operating expenses grew by 18.8% in the reporting year from 144.6 bn to 171.7 bn RUB.
Hydrocarbon production expenses grew by 16.1% year-on-year from 72.5 bn to 84.1 bn RUB.
Specific operating expenses for hydrocarbon production at subsidiaries increased by 13.0% year-on-year as a result of:
- an acquisition by LLC Gazprom Neft Shelf (the Prirazlomnoye field) and the start of production on the Badra project;
- growth in expenses on the Novoportovskoye field due to high operating expenses during the pilot development stage, the commissioning of part of the aboveground infrastructure and organising temporary arrangements for the production and transportation of oil;
- growth in the tariffs of natural monopolies and prices for oilfield services.
Operating expenses on oil refining at the oil refineries of subsidiaries increased by 19.1% year-on-year due to growth in refining volumes, growth in material expenses related to an improvement in product quality, the launch of new rigs at the Omsk and Moscow Oil Refineries, repairs conducted at the Company’s oil refineries and growth in the tariffs of natural monopolies.
Operating expenses on oil refining at the oil refineries of joint ventures grew by 27.0% year-on-year due to growth in refining volumes, repairs and increased material costs related to an improvement in product quality.
Expenses on transporting oil to oil refineries grew by 10.5% year-on-year as a result of the termination of a contract for oil replacement with Rosneft, growth in refining volumes and an increase in supplies of oil and gas condensate to the Omsk Oil Refinery by rail transport.
Other expenses
Commercial, general business and administrative expenses increased by 19.9% year-on-year from 72.0 bn to 86.3 bn RUB due to growth in premium sales and expansion in the Company’s business.
Transportation expenses grew by 7.7% from 107.8 bn to 116.1 bn RUB on account of an increase in sales of petroleum products.
Expenses on depreciation, depletion and amortisation increased by 11.9% year-on-year from 76.8 bn to 86.0 bn RUB due to an increase in the value of amortised assets resulting from the implementation of the Company’s capital investments programme.
Taxes, not Including Income Tax
| 2013 | 2014 | Change, % | |
|---|---|---|---|
| Mineral extraction tax | 214,023 | 236,027 | 10.3 |
| Excise tax | 77,701 | 84,184 | 8.3 |
| Property tax | 7,938 | 9,477 | 19.4 |
| Other taxes | 16,408 | 13,888 | –15.4 |
| TOTAL TAXES EXCEPT PROFIT TAX | 316,070 | 343,576 | 8.7 |
Total expenses on the mineral extraction tax (MET) increased by 10.3% year-on-year from 214.0 bn to 236.0 bn RUB.
The growth resulted from increased oil production by subsidiary and proportionately consolidated companies and higher tax rates.
Despite a 10.0% year-on-year decline in Urals blend oil prices, the average MET rate for oil grew by 9.4% due to growth in the base rate from 470 RUB per tonne to 493 RUB per tonne and a 20.6% increase in the average RUB exchange rate versus the USD.
Excise taxes grew by 8.3% year-on-year due to growth in excise tax rates starting on 1 July 2013 and 1 January 2014, which was partially compensated by growth in the amount of high-class motor fuels produced that are subject to excise taxes at lower rates.
Other financial articles
The revaluation of part of the Company’s loan portfolio denominated in foreign currency made up the bulk of the profit / (loss) from exchange rate difference.
Share of the profit of associated and joint venture companies
| 2013 | 2014 | Change, % | |
|---|---|---|---|
| OJSC Slavneft OGC | 9,538 | –5,072 | — |
| LLC SeverEnergia | –131 | –1,809 | 1,280.9 |
| Other companies | 1,844 | 575 | –68.8 |
| SHARE OF THE (LOSS) / PROFIT OF ASSOCIATED AND JOINT VENTURE COMPANIES | 11,251 | –6,306 | — |
OJSC Slavneft OGC and LLC SeverEnergia incurred losses in 2014 primarily due to exchange rate differences.