Downstream

Almost all of our sales are made via trading on exchanges, with our remaining revenues being earned from participation in tenders to do business with large companies, including airports and power stations. Albeit we prioritize servicing the Russian market, the gasoline, jet fuel, diesel, and both motor and heating oil derived from the hydrocarbons we produce may also be exported, with an amount transferred and sold to entities located in both Northern Europe and ports on the Black Sea. This, however, was considerably expanded in 2019, when we started our first foray into the business of global commodities, establishing ourselves as a reliable supplier of crude oil and refined products to both domestic and foreign customers. This began when Rusneftegaz opened an international office in New York, which acts as the sole vendor of our goods outside Russia. The operation retains our corporate branding and aims to strengthen our worldwide presence, accelerating our ongoing expansion into new markets in Africa, the Asia-Pacific, and both North and South America. Assigning this aspect of our operations to a single hub has also simplified and optimized workflows, whilst ensuring accountability, efficiency, and transparency. It also allows us to maximize the value of our petroleum production via comprehensive commercial, shipping, and storage strategies, while retaining flexibility in our ability to supply. It also permits us to undertake effective hedging to mitigate the effects of, and speculate on, fluctuations in commodity prices.

Prior to the commencement of this particular venture, we sold and delivered the goods we extracted to refiners and exporters within the vicinity of the loading port. Nonetheless, a monumental shift in market dynamics means that we now have the capacity to transport our hydrocarbons to any industry in all corners of the world. Under the new program, our trading hub in New York has the capability to take control of the crude derived from the Timan-Pechora basin and utilize the pipeline system controlled by Transneft to relocate products to major ports, including Novorossiysk, Primorsk, and Ust-Luga, on our behalf. Similarly, Rusneftegaz also undertakes more entrepreneurial business by purchasing discounted fuels from third parties and remarketing the acquired product for an increased margin. We manage to make incremental gains on what we procure through efficient supply chain management, by upholding strong working relationships with our contemporaries, and increasing trade volumes, thus enhancing our profitability.

Value can also be added through the minimization of costs, maintaining effective logistics, and via blending. Therefore, as a rapidly growing trader of petroleum, Rusneftegaz has been able to facilitate this as a result of our numerous partnerships and agreements with worldwide commercial operators, ultimately expediting our execution and delivery. These companies bear responsibility for the fulfillment of our contractual arrangements, operating the barges, railways, terminals, and tankers necessary to ship our oil products to their destinations. We also collaborate with other firms to resolve legal, tax, and supplementary economic issues, maintain high safety standards, and inspect product quality. In the long term, we view the integration of these services into our enterprise as a vital modicum to reduce our expenses further, and are currently devising long-term strategies to expand this operation. This involves leasing additional tank storage and deploying a larger number of our own trucks, rail wagons, and sea-faring vessels. With extra financial resources, we will be able to transport and trade greater quantities of goods, whilst also expanding control of our business from initial extraction to seamless transfer in an international port. The enlargement of our trading capabilities will be enabled by our team of experts, who are engaged all hours of the day with our aforementioned partners to fulfill our binding obligations almost every day of the year. These personnel are also entrusted with upholding our corporate ethics and promoting transparency in our operations.