Oil products

TNK-BP is a vertically integrated oil company which operates across the whole value chain, producing refining and marketing crude oil and refined products.

Marketing is handled by TNK-BP Supply, Trading and Logistics (STL), which delivers crude oil and refined products to domestic and international customers, supplies feedstock to TNK-BP’s refineries and refined products to its retail subsidiaries for onward sale.

Currently TNK-BP sells 9 grades of crude oil and 46 types of refined products through various transportation and sales channels, including pipelines, railway, river and sea vessels (about 60 different routes), and via 14 retail subsidiaries and a network of oil depots in several regions of Russia.

In 2009, crude oil sales were approximately 47.7 million tons, 84% of which was exported to the CIS and outside CIS. Most of the company’s crude oil exports are sold via open tenders.

Refined products sales in 2009 amounted to 32.6 million tons, of which 67%, or 21.6 million tons, was exported. Domestic sales of refined products consist primarily of gasoline, while exports consist largely of diesel and fuel oil.

In 2009, TNK-BP began trading of refined products at the oil exchange. The main trading floors are the St. Petersburg International Mercantile Exchange and the Inter-regional Oil & Gas Exchange. In 4Q 2010, TNK-BP sold 21% of its light products delivered to the domestic market via the exchange. We regard this as the most open, transparent and equitable method of trading and determining market prices.

To increase efficiency STL has implemented a number of projects aimed at diversifying sales channels, optimizing business processes and IT systems, expanding the product slate, improving transportation safety, and developing human resource capability.

As transportation of crude oil and refined products is a high-risk activity the company has always devoted particular attention to transportation safety. Both sea and river transportation is currently carried out by vessels that comply with safety standards used by BP and other international companies.

All terminals used by the company are regularly audited for early identification and elimination of environmental and safety risks.

The company’s five-year long-range development strategy focuses on the following priorities:

• Further improvement of value chains — optimization of business processes in sales and logistics.
• Increasing the share of high-liquidity refined products and products that meet international standards.
• Efficient use of storage facilities for crude oil and refined products to extract additional value.
• Introduction of risk control and mitigation systems.
• Development of trading mechanisms for both oil products and crude oil at the oil exchange, including crude volumes delivered via the ESPO pipeline system.
• Development of new efficient business processes and support systems.
• Professional development of employees through motivation, training and rotation opportunities.