Sale of petroleum products by product business units

In order to improve the efficiency of petroleum product sales, Gazprom Neft has set up individual business units that are responsible for the sale of jet fuel, bunkering, lubricants, bitumen and petrochemical products. The Company has drawn up specific strategic development plans for each division.

Main objectives for the product business units:

  • improve sales efficiency;
  • expand the geography of business;
  • increase the Company’s share in premium market segments.

The key segments experiencing growth are: bunkering and the sale of jet fuel, lubricants and premium bituminous materials. Lower sales of jet fuel, marine fuel and bituminous materials resulted from the overall decline in the capacity of the Russian market and decreased funding for the road industry. Despite these conditions, the Company managed to maintain its leading positions and widen its market share.

Sales of premium-grade bituminous products, particularly polymer-bitumen binders, increased as a result of enhanced productivity by the Company’s Ryazan Bituminous Products Plant following the modernisation of production facilities and also because an expanded number of its products meet Russian and international quality standards. Thanks to the development of premium sales channels, the expansion in sales geography and participation in the import substitution programme, sales of lubricants increased along with the Company’s market share despite an overall 5% decline in the market’s capacity.

Total premium sales by product business units in Russia and abroad1, mn t
Source: Company data
1 Premium sales include:
— Sales of petroleum products through premium sales channels — retail and wholesale.
This group includes all sales of petroleum products via petrol stations and petroleum storage depots, for aircraft and vessels and small-scale wholesale from refuelling facilities at airports and port terminals.
— Sales of packaged petroleum products.
This group includes all oil sales in barrels and canisters as well as bitumen sales in clovertainers, etc.
— Sales of premium petroleum products, i.e. petroleum products that generate added value due to the presence of certain qualitative features compared with other products of their kind.
This group includes the sale of premium bulk lubricants (Gazpromneft, G-Family, Texaco), premium bituminous materials (polymer-bitumen binders, PMB, bituminous emulsions, etc.) and the possible wholesale of premium motor fuels — G-Drive, etc.
Sales channels

In 2015, the Gazprom Neft sales unit launched full-scale work as part of a targeted functional model to separate by sales channel

  • The corporate centre (Management Company) consolidates the Company’s retail assets and the management functions for the filling station network;
  • Gazpromneft — Regional Sales handled small-scale wholesale in 2015;
  • Gazpromneft — Corporate Sales provides services for corporate clients;
  • Gazpromneft — Laboratory guarantees the integrity of the quality and quantity of petroleum products throughout the entire commodity distribution network.
Branded fuel

During the reporting period, Gazprom Neft continued implementing projects to sell premium branded fuel at its filling stations. In 2015, 565,000 tonnes of premium class G-Drive 95 fuel were sold. An average of 1,035 filling stations sold this type of fuel. Sales of G-Drive 95 accounted for 27% of the overall sales of Ai-95 fuel.

The Company continued selling G-Drive 98 premium class motor fuel in 2015. A total of 63,000 tonnes of this fuel was sold during the reporting period with an average of 449 filling stations selling this type of fuel.

Gas engine fuels

In recent times, the environmental friendliness and cost-effectiveness of transportation has become a much greater social issue and particularly important for municipal and commercial transportation in large cities. This makes these segments a pillar and an example for the widespread use of this type of fuel. Gazprom Neft has responded by paying close attention to developing sales of gas engine fuels, in particular liquefied petroleum gas (LPG) and compressed natural gas (CNG).

In Russia, the consumption of LPG and CNG within the motor fuel structure does not exceed 3%.Liquefied gas has witnessed the most development as a motor fuel and accounts for 2.4% of all fuel consumption. CNG consumption accounts for only 0.4%.

In 2015, there were a total of 146 vehicle filling stations (VFS) under the Gazprom Neft brand within multi-fuel filling complexes. A total of 12,000 tonnes of CNG and 105,000 tonnes of LPG were sold in 2015.

1,432 filling stations 43 stations in operation in Russia and the CIS as of the end of 2015
Rebranding is one of the tools the Company uses to increase sales via its filling station network

Product sales via petroleum storage depots

As of the end of 2015, the Company’s oil product supply enterprises operated 49 owned and leased petroleum storage depots. A total of 7.1 million tonnes of petroleum products were sold via small-scale wholesale in 2015. The tank farms of petroleum storage depots had a turnover ratio of 16.2 per year.

Retail sales

Developing the petroleum product retail sale segment is one of the key priorities of the Company’s business. The Company believes having its own national brand with a high level of brand awareness and trust in the quality of its products will help achieve one of its strategic goals of becoming a leader in Russia and the CIS in terms of the volume of retail sales and the efficiency of the filling station network by 2015.

With one of the most extensive distribution networks in Russia, Gazprom Neft continued to consolidate its position on the retail motor fuel market in 2015, increasing its market share in the regions where it operates by 1.3 percentage point to 27.8%. The Gazprom Neft filling station network is represented in 28 Russian regions as well as countries of the CIS and Eastern Europe. As of the end of 2015, the Company had 1,432 filling stations in operation in Russia and the CIS, an increase of 43 stations from the end of the preceding year.

Key filling station network indicators
Source: Company data
Sales via filling stations in Russia and abroad, mn t
Source: Company data

The Company’s subsidiary LLC Gazpromneft Marine Bunker handles sales of light and dark blends of marine fuel for sea and river transportation.

The Company maintained leading positions on the Russian bunkering market with a 21.0% share (up 2.4 percentage points from 2014) despite a 12.6% contraction in market capacity in 2015.

Premium sales of marine fuel, mn t
Source: Company data
Share of the russian marine fuel market, %
Source: Company data

26.3 % 1.1 p.p. Company’s share of the Russian jet fuel market in 2015

The Company provides small wholesale and retail sales of jet fuel as well as a range of services connected with the provision of aviation fuel and lubricants.

In 2015, the Company (with a 26.3% share of sales, up 1.1 p.p. from 2014) was the leader in retail jet fuel sales in Russia. Retails sales of jet kerosene decreased 7% versus 2014 despite a 10% decline in the market’s capacity.

Premium sales of jet fuel, mn t
Source: Company data
Share of the Russian jet fuel market, %
Source: Company data

35 % Growth in premium product sales on foreign markets in 2015 vs. 2014
A new lubricant production section with capacity of 5,000 tonnes per year was put into operation at the Omsk Oil Refinery in 2015.

Gazprom Neft sells oils and lubricants via its own filling station network and also supplies products to retail chains, online stores, service stations and the assembly lines of automotive manufacturers.

Sales of premium products on foreign markets increased 35% versus 2014.

Despite an overall decline in the market’s capacity by 5 percentage points in 2015, the Company managed to increase its market share to 17.1% (up 3.5 percentage points versus 2014). Premium sales grew by 24% compared with 2014, while sales of the G-Family brand soared by 69%.

Premium sales of oils and lubricants, mn t
Source: Company data
Share of the russian oils and lubricants market, %
Source: Company data

The products manufactured by Gazprom Neft’s Ryazan Bituminous Materials Plant won the ‘100 Best Russian Products’ contest. High ratings were given to two innovative and traditional bituminous material product lines: polymer-bitumen binders and viscous petroleum bitumen for road construction.

In 2014, Gazprom Neft spun off a subsidiary LLC Gazpromneft — Bituminous Materials, which specialises in the production and sale of all the Company’s bituminous products.

In 2015, the Company completed the first stage of modernising an asset it acquired in 2014 — the Ryazan Bituminous Materials Plant, Russia’s largest producer of polymer-bitumen binders.

Premium sales of bituminous materials, mn t
Source: Company data