Transneft has requested the KPMG international consultancy to prepare a brief review of KPIs of Transneft and peer foreign companies for 2018-2019.
With regard for the actual access to and comparability of the data collected, KMPG included 62 overseas companies in its final study: 44 companies based in the US and Canada, 11 European companies and 7 companies from South America, Africa and Asia Pacific. In pursuance of the goals set, 30 different indicators were included in the basic set.
The study confirmed the lack of foreign pipeline companies similar in terms of operational scope and KPIs (cargo turnover, transported volumes, transpiration distance, length of pipelines, revenue from transportation).
Cargo Turnover and Transportation
Experts point out that Transneft demonstrates consistently high performance results in terms of oil transportation volumes - 480 and 485 million tonnes in 2018 and 2019, respectively (the median value being 81 million tonnes). In 2018, the oil turnover stood at 1,217,397 million tkm, whereas in 2019 it rose to 1,247,584 million tkm. Transneft’s oil transportation volume exceeds the performance of all comparable companies. Experts explain this difference not only by the scale of Transneft’s trunk pipeline network (as of 2019, it reached 51.1 thou km, which exceeded the median value by 5.2 times), but also by a much larger transportation distance (as of 2019, it stood at 2,572 km, which exceeded the median value by 3.3 times).
In 2018-2019, Transneft’s revenue from oil transportation services also exceeds the revenue of other companies considered herein. In the past year, it amounted to USD 10,866 million (the median value being USD 1,066 million). Analysts explain it by the greatest turnover volumes. The given comparison is also influenced by the RUB/USD exchange rate and the level of transportation tariffs in base currencies.
As for petroleum products transportation, Transneft faces stiff competition in this area of business, since petroleum products are mainly transported by other types of transport (railway, motor transport) in Russia. Transneft performed close to the final sampling’s average value, with 38 million tonnes in 2019 as against the median value of 48 million tonnes.
Transneft is also one of the world’s major companies in terms of petroleum products turnover, surpassing the value of most foreign counterparts. 49,800 million tkm in 2019 (almost 5.5 times more than the median value of 9,055 million tkm).
The length of Transneft’s petroleum products pipelines in 2019 exceeds the median value more than twice, coming to 9.1 thou km. By this indicator, Transneft ranks first, although the gap with biggest foreign companies is not too wide.
In 2019, Transneft’s revenue from petroleum products transportation exceeded that of most other companies considered herein and amounted to USD 1,055 million, which is almost two times more than the median value of USD 633 million.
Transneft’s average weighted transportation tariff per 100 tkm of oil turnover is still one of the lowest as compared to those of other companies transporting crude oil via pipelines. In 2018-2019, the tariffs were more than twice lower than the median value for comparable companies (in 2019 - USD 0.87 per 100 tkm against the median value of USD 2.13/100 tkm).
Comparing Transneft’s average weighted tariffs per 100 tkm of petroleum products turnover showed a pattern similar to oil tariffs in 2018-2019. The petroleum products transportation tariff per 100 tkm in 2019 was more than 32.9% lower than the median value charged by foreign companies (USD 2.12 per 100 tkm against the median value USD 3.16 per 100 tkm).
Operating Expenses on Transportation
As noted by KPMG, Transneft’s specific operating expenses on oil transportation in 2019 was 3.2 times lower than the median value charged by foreign companies (USD 0.31 per 100 tkm against the median price of USD 1.01 per 100 tkm).
Transneft’s specific operating expenses on 100 tkm of petroleum products freight turnover in 2019 were 2 times lower than the median value charged by foreign companies (USD 0.81 per 100 tkm versus the median USD 1.61 per 100 tkm).
Energy Efficiency, Safety, Environmental Protection
As per KPMG, outlay on energy is among the key items of operating expenditures for all pipeline companies, which requires a greater emphasis on energy efficiency. An overwhelming majority of overseas companies do not explicitly disclose information about consumed energy, the report further states.
In 2019, the level of specific energy consumption in oil transportation for Transneft was 25.4% below the median value (11.90 kWt/1,000 tkm in 2019 versus 15.96).
In 2019, Transneft had a 17-fold lower specific accident rate during transportation via trunk pipelines compared to the median value for the companies considered herein (0.06 versus 1.05). In 2019, this indicator remained at a consistently low level relative to 2018.
The analysis showed that Transneft’s fixed capital depreciation ratio of 41% in 2019 was roughly at the median value’s level (46%). Judging by a moderate growth of the depreciation indicator, the Russian company invests requisite funds in revamping and upgrading, as well as in new construction, experts point out.
In 2019, Transneft’s specific air pollutant emission during crude oil and petroleum products transportation further dropped by 6.9% (in 2017, the reduction stood at 1.9% against 2016).
R&D and Labour Productivity
In 2019, labour productivity in physical terms was more than two times higher at Transneft against the median (17.6 million tkm/worker versus the median value of 7.6 million tkm/worker). Yet in 2019, this indicator rose by 1.7% in physical terms against 2018.
In 2019, Transneft’s ratio of R&D expenditures to revenue stood at 1.41%, more than 5 times exceeding the median value (0.28%) and being the highest ratio among all companies considered. The highest indicator in 2018 was also shown by Transneft and stood at 1.41%.
Total Debt to EBITDA Ratio
Transneft’s total debt to EBITDA ratio in 2018-2019 was also at a stable level, insignificantly dropping in the past year to 1.31, which is 2.6 times lower than the median value. For some of the companies analysed herein, this indicator exceeds the median value 1.5 to 3 times.
Different types of companies transporting crude and petroleum products via pipelines were considered in the study, including:
- independent operators of trunk pipelines (oil, petroleum products).
- pipeline subsidiaries of vertically integrated oil and gas holding companies.
- parent companies of pipeline and transportation holding companies as well as vertically integrated holdings.
All the monetary values of the indicators for the companies under review are denominated in US dollars. For companies submitting their financial statements in currencies other than the US dollar, monetary values of their performance indicators were converted to US dollars in accordance with average annual currency exchange rates or exchange rates as of the end of 2018 and 2019.