Domestic Sales of Petroleum Products

Rosneft has extensive and well-developed infrastructure for the sale of petroleum products on the domestic market. The Company owns a chain of marketing companies engaged in wholesale and retail sale of petroleum products, their storage, transport and transshipment.

Rosneft sold 20.49 mln tonnes of petroleum products on the domestic market in 2010, which is 16% more than in 2009. The growth reflects recovery of the domestic market after the financial crisis. Gasoline accounts for 33% of petroleum product sales on the domestic market, while 40% of sales are diesel fuel, 12% are fuel oil, and jet fuel accounts for 5%.

Sales of petroleum products on the domestic wholesale market were 15.23 mln tonnes in 2010. The largest wholesale buyers of Rosneft petroleum products are independent traders and large end-users (including budget-funded organizations, such as the Russian Ministry of Defense). The main product types delivered to these buyers are boiler fuel, diesel and jet fuel.

The Company has prioritized development of trading via commodity exchanges as a way of raising the efficiency and transparency of its marketing business. The full range of Company petroleum products, as well as petrochemicals and lubricants, is offered for exchange sale. The Company sold 3.4 mln tonnes of petroleum products via the Saint Petersburg International Commodity Exchange and Russian Inter-Regional Oil & Gas Trading Exchange in 2010, which is three times more than in 2009 and represents 17% of total sales on the domestic market. From February 2010 Rosneft switched to sale of most of the wholesale volumes of petroleum products to third parties via commodity exchanges. Rosneft is the biggest Russian seller of petroleum products via commodity exchanges.

In 2010 Rosneft continued to diversify its wholesale geography: the Company entered the wholesale product market of Ingushetia.

Rosneft had retail business in 41 regions of Russia at the end of 2010, from Murmansk in the north to the North Caucasus in the south, and from Bryansk in the west to Sakhalin Island in the east. Rosneft sells gasoline, diesel fuel and lubricants through its retail network.

As of December 31, 2010, Rosneft marketing subsidiaries owned 142 operating tank farms with a capacity of 2.7 mln cubic meters. The Company’s network of operating filling stations consisted of 1,728 stations in ownership or leased, and 72 stations operating under the Rosneft brand through franchising agreements. Owned and leased filling stations were equipped with 124 car washes, 953 shops and 107 cafes. There were small-scale vehicle repair and servicing facilities at 91 of Rosneft’s filling stations.

Demand for petroleum products from retail consumers revived in 2010, boosting product sales at Company filling stations by 10% to 5.26 mln tonnes.

In the future Rosneft plans further expansion of its service station network in regions adjacent to Company refineries, particularly in Siberia and the Far East, as well as on promising markets in Moscow, Saint Petersburg and other Russian largest cities.

Domestic sales of petroleum products