The Company’s operations are in two main segments:
- Exploration and production, consisting of exploration, development, and production of oil and gas.
- Refining, marketing and sales including crude refining, purchasing, sale and transportation of crude oil and petroleum products.
The two segments are interdependent: a part of revenues from one segment is a part of costs in the other. In most cases, market prices for crude oil on the domestic market are hard to calculate due to considerable intra-group turnover within vertically integrated producers. Prices set for intra-group crude oil purchases reflect a combination of such market factors as global oil prices, the costs of transportation and refining, the needs of individual subsidiaries for capital investments, and other factors. Therefore, operating results of either segment considered separately do not necessarily represent the segment’s financial situation and performance. This is why we are not analyzing each segment separately.