Production and operating expenses


Production and operating expenses (₽ m)
Item 2014 2015 2016 2017 2018 ∆ 2018/2017 (%)
Upstream expenses 83,602 98,095 106,765 111,837 112,840 0.9
₽ per toe n/a n/a 1,782 1,767 1,726 (2.3)
$ Translated to $ at the average exchange rate for the period. per boe n/a n/a 3.63 4.13 3.76 (9.0)
Consolidated subsidiaries in Russia 63,955 72,854 80,392 85,898 85,135 (0.9)
₽ per toe n/a n/a 1,647 1,653 1,579 (4.5)
$ per boe n/a n/a 3.35 3.86 3.44 (10.9)
Including:
Вrownfields
57,271 61,225 65,960 67,923 61,114 (10.0)
₽ per toe 1,472 1,582 1,692 1,812 1,757 (3.0)
$ per boe 5.22 3.54 3.44 4.24 3.82 (9.9)
Greenfields 6,684 11,629 14,432 17,975 24,021 33.6
₽ per toe n/a n/a 1,470 1,242 1,256 1.1
$ per boe n/a n/a 2.99 2.90 2.73 (5.9)
Consolidated subsidiaries outside Russia (including PSA)  PSA refers to production sharing agreement. 4,323 9,426 9,655 8,381 9,311 11.1
₽ per toe n/a n/a 4,144 3,059 2,975 (2.7)
$ per boe n/a n/a 8.43 7.15 6.47 (9.5)
Joint operations 15,324 15,815 16,718 17,558 18,394 4.8
₽ per toe 1,691 1,787 1,924 2,061 2,232 8.3
$ per boe 6.01 4.00 3.92 4.82 4.86 0.8
Downstream expenses 46,222 53,549 53,132 55,318 58,919 6.5
Refining expenses at own refineries 26,510 30,724 30,619 31,191 32,251 3.4
₽ per tonne 765 882 893 966 920 (4.8)
$ per barrel 2.72 1.97 1.82 2.26 2.00 (11.5)
Refining expenses at joint ventures  Refining expenses at joint ventures are based on processing agreement. 14,145 14,648 12,453 12,259 12,496 1.9
₽ per tonne 1,602 1,778 1,639 1,568 1,590 1.4
$ per barrel 5.69 3.98 3.34 3.67 3.46 (5.7)
Lubricants and packaged products production expenses 5,567 8,177 10,060 11,868 14,172 19.4
Transportation to refineries 26,234 27,541 29,561 29,265 32,950 12.6
Other operating expenses 15,653 35,082 12,404 20,110 23,909 18.9
Total revenue 171,711 214,267 201,862 216,530 228,618 5.6

Upstream expenses include costs attributable to raw materials and supplies, equipment maintenance and repair, wages and salaries, fuels and lubricants, electricity, oil recovery activities and other similar costs at the Group’s upstream facilities.

A 4.5% decrease y-o-y in upstream expenses per toe (₽ per toe) at the consolidated subsidiaries in Russia was primarily driven by the reduction in brownfield expenses by 3% y-o-y due to cost-cutting efforts:

  • shutdown of low-margin wells (low well flows and high watercut);
  • decreased workover activities.

Upstream expenses per boe ($ per boe) at the consolidated subsidiaries outside Russia went down by 9.5% y-o-y due to the increased production in Iraq. Upstream expenses per boe for joint operations increased by 8.3% y-o-y primarily due to the production cut in line with the OPEC deal.

Refining expenses at own refineries include costs attributable to raw materials and supplies, equipment maintenance and repair, wages and salaries, electricity and other similar expenses.

Refining expenses per tonne at own refineries went down by 4.8% due to:

  • throughput growth;
  • cost-cutting initiatives (upgrade of facilities, optimisation of additives and energy costs).

Unit refining expenses at joint ventures added 1.4% y-o-y due to the increased processing expenses (launch of new refining units and increased natural gas costs).

Lubricants production expenses went up by 19.4% y-o-y caused by higher production volumes, enhanced product range focused on premium lubricants and higher purchased materials costs (including those of additives). Transportation to refineries expenses went up by 12.6% y-o-y due to higher crude oil supplies to refineries. Other operating expenses increased y-o-y in line with other revenue growth.

Selling, general and administrative expenses

Selling, general and administrative expenses include distribution costs, retail business expenses, remunerations, wages and salaries (excluding remunerations, wages and salaries at upstream subsidiaries and own refineries), social payments, insurance, legal, consulting and audit services, and other expenses.

Selling, general and administrative expenses went up by 7.7% y-o-y following:

  • higher selling expenses due to the growth of premium sales;
  • higher expenses at foreign subsidiaries due to the rouble depreciation.

Transportation expenses

Transportation expenses relate to crude oil and petroleum products transportation to final customers, including pipeline, and railway transportation, sea freight, handling operations, and other transportation costs. Transportation expenses increased by 3.7% y-o-y due to stronger sales of petroleum products.

Depreciation, depletion and amortisation

Depreciation, depletion and amortisation include depletion of crude oil and gas assets, depreciation of other items of PP&E and impairment of crude oil assets. Depreciation, depletion and amortisation increased by 24.4% y-o-y due to higher value of assets subject to depreciation and amortisation associated with the investment programme and increased production at the Novoportovskoye and Prirazlomnoye fields and in Iraq.

Taxes

Taxes other than income tax (₽ m)
Tax 2014 2015 2016 2017 2018 ∆ 2018/2017 (%)
Mineral extraction tax (MET) 236,027 256,477 237,300 329,579 487,492 47.9
Excise tax 84,184 68,358 112,102 128,229 126,779 (1.1)
Social security contributions 11,886 15,599 18,530 20,433 22,113 8.2
Other taxes 11,479 12,711 13,199 14,028 16,400 16.9
Total revenue 343,576 353,145 381,131 492,269 652,784 32.6

Taxes other than income tax grew by 32.6% y-o-y. MET increased by 47,9% due to higher crude oil prices and adjustment ratio. Excise tax went down by 1.1% following the reduction of excise rates since June 2018.