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Transneft: Worldwide Leader

Date of publication: 13 February 2019 Printable version

KPMG, an international consultancy firm, has prepared a review of Transneft’s KPIs in 2016 and 2017.


Tank farms are essential for transportation of oil and petroleum products. In 2017, the total capacity of Transneft’s tank farm stood at 19.3 million m3. Pictured: Zapolyarye PS-1, the Company's northernmost station

The research also included Transneft’s peer companies: 41 from the USA and Canada, 9 from Europe and 7 from Asia and the Pacific, South America and Africa. The results confirmed that Transneft has no foreign competitors in terms of cargo turnover, transportation volume, pipeline length and other indicators.

LONGER THAN TWO EQUATORS

According to KPMG, the Russian company’s oil transportation volume significantly exceeds that of similar foreign enterprises and remains at a consistently high level. In 2016, it amounted to 483 million tonnes; in 2017, the figure added up to 478 million tonnes. The study points out that “the remarkable difference from foreign companies can be explained by the fact that in international practice, long-distance oil transportation is often carried out by different oil transporting firms, each of them way inferior to Transneft in size and devoid of similar capacities for oil reception, transportation and delivery”.

Transportation of petroleum products is a highly competitive market for Transneft.

In Russia, most of them are transported by rail and tank vehicles. Despite that, the Company transported 33 million tonnes in 2017, with the median being 41 million tonnes.

In 2016, the Company's freight turnover amounted to 1,219,134 million tonne-kilometres; in 2017, this indicator stood at 1,211,230 million tonne-kilometres, which is more than 7 times higher than the result of the closest rival covered by the research – Enbridge (Canada).

Transneft ranked among the largest companies in the world in terms of petroleum products turnover, which amounted to 46,778 million tonne-kilometres in 2017, while the research’s foreign participants’ median level was 6,251 million tonne-kilometres.

The Russian company has the longest oil pipelines. In 2017, their length totalled 51.5 thousand km, exceeding the median value by more than 6.6 times.

First and foremost, this has to do with Russia’s vast expanses and considerable distance from oil fields to oil consumption and sales locations, both domestic and foreign.

 Transneft also ranks first by the length of petroleum products pipelines. However, the gap between the Company and its foreign peers is not as wide as with oil pipelines: in 2017, Transneft operated 16.9 thousand km of pipes versus 15.6 thousand km owned by Magellan Midstream (USA).

THE LOWEST TARIFFS

In 2017, Transneft’s average weighted oil transportation tariff stood at USD 0.89 per 100 tkm, which is twice lower than the sample median (USD 2.12). According to KPMG, this tariff is one of the lowest among the companies engaged in pipeline oil transportation. The following companies have the highest tariffs: Chevron, USA (USD 14.08), Enterprise Crude, USA (USD 12.14), Genesis USA, USA (USD 11.56).

R&D AND LABOUR PRODUCTIVITY

Traditionally, Transneft’s ratio of research and development (R&D) expenses to revenue is the highest among all companies. This indicator was equal to 1.41%, which is 4 times higher than the median.

In 2017, the Russian company’s labour productivity in physical terms was more than two times higher than the median (17.3 million tkm/worker versus the median level of 7.8 million tkm/worker).

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