leading positions in expanded hydrocarbon production
The resource base of the Company’s current assets has deteriorated in terms of the remaining commercial reserves as most fields are in a late stage development. Nevertheless, the Company managed to improve the efficient development of these reserves through high-tech drilling and the use of tertiary methods for boosting oil recovery.
Increased production at the Novoportovskoye, Messoyakha, and Prirazlomnoye fields as well as in Iraq enabled the Company to increase hydrocarbon production year-on-year.
Oil refining decreased by 4.2% due to modernization and scheduled repairs at the Group's oil refineries.
Strong financial results
Revenue increased by 20.2% including duties due to increased oil production as well as higher oil and petroleum product prices around the world and on the domestic market.
Increased production at major projects (the Novoportovskoye, Prirazlomnoye, and Messoyakha fields) along with growth in retail sales and higher oil and petroleum product prices resulted in a 20.8% increase in adjusted EBITDA.
The growth in net profit was mainly due to the higher EBITDA.
Growth in oil and petroleum product sales
A 16.8% YoY increase in oil sales resulted from expanded production at the Novoportovskoye, Messoyakha, and Prirazlomnoye fields and a decrease in supplies to oil refineries in Russia.
Sales of petroleum products decreased slightly in 2017 due to a reduction in refining volume and fuel oil production at Russian oil refineries.
Sales via high-margin channels grew by 3.9% YoY primarily due to an increase in retail sales of motor fuels in Russia. In addition, sales of aviation fuel increased due to greater demand for air transportation. Expanded infrastructure construction in Russia and access to new foreign markets, in turn, resulted in increased sales of premium bitumen products.
Commitment to safety, resources, and the environment
The use of the latest technologies and a commitment to occupational safety helped to achieve good results.