Macroeconomic Factors Review

Change in market prices for oil and petroleum products

The price of oil and petroleum products on the global and Russian markets is the main factor that influences the results of the Company’s operations.

Petroleum product prices on the global market are primarily determined by the level of global oil prices, the supply of and demand for petroleum products and the level of competition on different markets.

Price dynamics on the international market, in turn, influence prices on the domestic market. The price dynamics vary for different types of petroleum products.

Price dynamics on petroleum products
2013 2014 Change, %
INTERNATIONAL MARKET (USD/BARREL)
Brent oil 108.66 98.95 —8.9
Urals oil (avg. Med and NWE) 107.71 96.94 —10.0
(USD/T)
Premium petrol (avg. NWE) 986.86 918.72 —6.9
Naphtha (avg. Med and NWE) 892.35 825.28 —7.5
Diesel fuel (avg. NWE) 938.47 854.41 —9.0
Gasoil 0.2% (avg. Med and NWE) 920.54 837.77 —9.0
Fuel oil 3.5% (avg. NWE) 583.80 518.48 —11.2
DOMESTIC MARKET (RUB/T)
High-octane petrol 28,344 31,948 12.7
Low-octane petrol 24,882 28,071 12.8
Diesel fuel 26,894 27,764 3.2
Fuel oil 8,732 9,014 3.2
Change in rub/usd exchange rate and inflation

The Company’s management has decided that the Russian rouble shall be the Company’s reporting presentation currency. The functional currency of each subsidiary shall be the currency of the economic environment in which the company is engaged in operations, which is the Russian rouble for most companies.

The Company performed its operating activities in 2014 amidst a 5.9% increase in producer prices and a 21% increase in the value of the USD vs. the RUB.

Dynamics of the RUB exchange rate vs. the USD and inflation
2013 2014
Change in consumer price index (CPI), % 6.5 11.4
Change in producer price index (PPI), % 3.7 5.9
RUB exchange rate vs. USD at the end of the period, RUB 32.73 56.26
Average RUB exchange rate vs. USD for the period, RUB 31.85 38.42