SPIMEX

Exchange commodity trading in Russia

SPIMEX: Russia’s largest commodities exchange

Profile

Slide 2

Saint-Petersburg International Mercantile Exchange (SPIMEX)

License № 040-004. Charter capital: RUB 435 mn

SPIMEX was incorporated in by: Transneft, Transnefteproduct, Rosneft,

Gazprom Neft, Zarubezhneft, Surgutneftegaz, Sovcomflot, Russian Railways

and others.

Clearing house: Settlement Depository Company (SDCO).

Settlements are effected by 8 authorized banks: Sberbank, VTB Bank, Gazprombank,

Alfa-Bank, Rossiya Bank, RRDB, Russian Agricultural Bank and National Settlement

Depository.

Advanced and liquid refined products market: over 15 million tonnes traded

annually. Number of trading participants: 2000+

Price indices calculation: based on exchange and OTC transactions in commodities.

Futures market for exchange-traded refined products and crude oil.

Registration of OTC transactions for crude oil, refined products, LPG, coal and grain.

1

Market share and volume traded as of 31 August 2016

Slide 3

1 SPIMEX is Russia’s the largest commodities exchange.

Refined products are the largest segment of domestic

commodities market. The share of SPIMEX in all

exchange-traded refined products in Russia stands at 98%.

In 2015, more than 84,82 million tonnes of refined

products were traded via SPIMEX.

In 2013, SPIMEX launched trading in crude oil. The sellers include ZarubezhNeft, TransNeft and

Bashneft. The volume trade since launch stood at 2,71 mln tonnes. (38,28 bn ₽)

In December 2010, the SPIMEX Derivatives Market started trading in deliverable and settlement

contracts of refined products. Volume traded since then has amounted to 1.61 million

contracts (38.28 bn ₽).

Timber trading started in July 2014. Volume traded since then has amounted to 140.77 bcm

In October 2014, the SPIMEX Natural Gas Market launched month ahead trading. The trading

participants include largest domestic suppliers (Gazprom Mezhregiongaz, Rosneft, NOVATEK)

and natural gas end consumers.

In 2015, volume traded amounted to 18.98 bcm. (51,42 bn ₽)

0,4 13,2

90,8

284,9 271,6

409,4

536,6 532,5

378,2

0,0

100,0

200,0

300,0

400,0

500,0

600,0

2008 2009 2010 2011 2012 2013 2014 2015 2016

52 1192 9179

19350 18239

94940

131812

107181

82137

0

20000

40000

60000

80000

100000

120000

140000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Trading activity All markets

Slide 4

1

* Including the Futures Market ( as of 31 August 2016)

Volume Traded (bn ₽)

Number of contracts

Advanced and liquid refined products market

2

Slide 5

Refined Products

Refined Products Market Nationwide Reach

Slide 6

The SPIMEX designated delivery points include all key refineries in Russia. A buyer

purchases refined products on the exchange and get them delivered to the relevant

railway station in Russia.

2 Delivery terms:

By rail (FOR dispatch station);

By fuel trucks (ex-works);

Ex-tank;

Ex-pipe;

By rail (ex-works).

0

500

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Jan

.12

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r.12

May 1

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.12

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Au

g.1

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.12

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.12

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v.1

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Dec.

12

Jan

.13

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.13

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Ap

r.13

May 1

3

Jun

.13

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g.1

3

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.13

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v.1

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Dec.

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Jan

.14

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r.14

May 1

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g.1

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.14

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.14

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v.1

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Dec.

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Jan

.15

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.15

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r.15

May.1

5

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.15

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5

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g.1

5

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.15

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.15

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v.1

5

Dec.

15

Jan

.16

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.16

Mar.

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Ap

r.16

May.1

6

Jun

.16

Jul.1

6

Au

g.1

6

MIMEX SPIMEX Saint-Petersburg Exchange MOSENEX

0%

20%

40%

60%

80%

100%

Jan

.12

Feb

.12

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Ap

r.12

May 1

2

Jun

.12

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g.1

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r.13

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g.1

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v.1

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.14

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r.14

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g.1

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.14

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v.1

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Jan

.15

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.15

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r.15

May.1

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g.1

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.15

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v.1

5

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.16

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Ap

r.16

May.1

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Au

g.1

6

Volume traded Refined products, 000’ mt

Slide 7

2

Max = 1729.64

Market analysis, by commodity exchange (%)

Market analysis, 000’ mt

30%

Gasoline

Regular-92;

4,591;

12%

Gasoline

Premium-95;

1,926;

12%

Jet Fuel;

1,903;

18%

Diesel Summer;

2,814;

4%

Diesel Outseason;

0,572;

8%

Diesel winter;

1,311;

3%

Diesel Arctic;

0,390;

12%

Fuel oil;

1,797;

1%

Other refined

products;

0,175;

2015

26

,5

84

5,7

49

20

,4

11

56

8,1

95

73

,9

13

63

6,7

17

39

1,8

15

92

3,5

10

92

7,8

0,0

5000,0

10000,0

15000,0

20000,0

2008 2009 2010 2011 2012 2013 2014 2015 2016

Refined products

Slide 8

Trade Activity

Refined products, share of implementation (mln tones)

0,4

13

,2

90

,1

27

2,5

25

4,4

38

9,0

52

1,6

49

5,9

34

4,0

0,0

100,0

200,0

300,0

400,0

500,0

600,0

2008 2009 2010 2011 2012 2013 2014 2015 2016

Bn ₽ Thousand tones

30%

Gasoline

Regular-92;

3,176;

13%

Gasoline

Premium-95;

1,413;

11%

Jet Fuel;

1,188;

22%

Diesel Summer;

2,290;

4%

Diesel Outseason;

0,375;

8%

Diesel Winter;

0,795;

2%

Diesel Arctic;

0,205;

9%

Fuel Oil;

0,956;

1%

Other refined

products;

0,084;

2016

Natural Gas Market

3

Natural Gas

Slide 9

Trades are carried out under the rules of the exchange and the clearing house associated with it

Trading is based on the following balancing points:

Nadym

Parabel

Vyngapurovskaya

South-Balykskaya

Contract size: 100,000 m3 (for month ahead trading)

Commodity price is set for 1,000 m3 (₽) including a 18% VAT

Minimum price flux: 1.0 ₽

Associated clearing house of SPIMEX: Settlement Depository Company (SDCO)

Gazprom Mezhregiongaz Delivery provides agency services for natural gas transportation

Trading and clearing participants are accredited at SPIMEX and SDCO (the clearing house)

Gazprom acts as the natural gas transportation operator

In October 2015, SPIMEX launched day ahead trading in natural gas

Natural Gas Market

Slide 10

3

55

53

4

84

6

36

1

40

6

34

8

64

2

92

3 1

44

8

23

15

26

02

35

73

44

63

10

45

29

15

25

14

30

66

33

11

31

87

29

22

46

54

42

28

50

61

0

1000

2000

3000

4000

5000

534 417 1123

3096 3013 3173

4116 3507

0

1000

2000

3000

4000

5000

4 qr 2014 1 qr 2015 2 qr 2015 3 qr 2015 4 qr 2015 1 qr 2016 2 qr 2016 3 qr 2016

Slide 11

Natural Gas Market Trades overview (October 2014 – August 2016)

26.01.2015-19.02.2015 Gazprom did not participate in trades

3 Volume traded (м3, mln)

Volume traded ( mln ₽)

0

500

1000

1500

2000

2500

3000

3500

4000

4500

0

200

400

600

800

1000

1200

1400

1600

1800

Slide 12

Nadym balancing point. Trades overview (October 2014 – August 2016)

15.10 bcm of natural gas sold

at Nadym balancing point

since launch of trading at SPIMEX

(RUB 40.78 bn)

3 Natural Gas Market

Price changes

Trade volumes (mln m3) Volume traded (mln ₽)

26.01.2015-19.02.2015 Gazprom did not participate in trades

2450

2550

2650

2750

2850

2950

Max priсe

Min priсe

Market priсe

Crude Oil Market Delivery by pipeline, FOB seller's facility

Crude Oil

Slide 13

4

SPIMEX designated delivery points

and destination bases

Usa

«Gazprom neft – Moskovskij NPZ»

«Slavneft – Jaroslavnefteorgsintez»

«LUKOJL - Uhtaneftepererabotka»

«Zarnestservise»

Varandei terminal

«Varandei»

Slide 14

4

Southern Balyk

«Novokujbyshevskij NPZ»

«Syzranskij NPZ»

«Kujbyshevskij NPZ»

«Saratovskij NPZ»

«Rjazanskaja neftepererabatyvajushhaja

kompanija»

«Gazpromneft'-MNPZ»

«Gazpromneft'-ONPZ»

«Orsknefteorgsintez»

«Marijskij NPZ»

«Novoshahtinskij ZNP»

«TAIF-NK»

«TANEKO»

«Kargopol'skij zavod nefrasov»

Yangpur

«Evropeiskaya tradingovaya kompania»

Crude oil market Volume traded (000’ ₽)

Volume Traded (mt)

Slide 15

4 13,65

9,85 9,18

4,04

2013 2014 2015 2016

0

50000

100000

150000

200000

Timber Spot Trading

Timber

Slide 16

Timber Market

Initial steps:

Volume traded, by shipment point (July 2014 – August 2016) (m3)

Slide 17

19 425; 27%

15 875; 22%

4 950; 7%

3 500; 5%

550; 1%

750; 1% 16 450; 23%

9 900; 14%

Baerskiy forestry

Cheremhovskiy forestry

Nizhneudinskiy forestry

Kostinskiy forestry

Kazachinsko-Lenskiy forestry

Osinskiy forestry

Bratskiy forestry

Balaganskiy forestry

On 11 July 2014, SPIMEX launched timber trading in its Timber and Construction Materials

Market.

Trading in conifer timber and processed forest products organized for deliveries originated in

Irkutsk Region.

SPIMEX brings together over 60 entities, including major logging companies, forest leaseholders

and wood processing businesses.

The exchange plans to add new trading instruments, to expand geographic reach and in the

long run to launch a cross-border delivery mechanism.

Products:

Various types of timber;

Sawlog;

Wood slabs;

Bars and planks;

Deal boards;

Plant bands.

Timber trading

The exchange and market participants focus on broadening trading

geography, raising the number of trading instruments, tools and delivery

methods.

Perspectives:

Slide 18

Deliverable and cash-settled futures contacts

5

Slide 19

Derivatives Market

Advantages:

Derivatives Market Russia’s largest organized market for refined products

Slide 20

Market participants: leading brokers and their customers in spot commodity

markets, oil companies and end users of refined products.

Market makers provide permanent liquidity

Acts as a price fixing tool for future purchase/sale of refined products

Central counterparty services provided by Settlement Depository Company (SDCO)

Contemporary risk management (portfolio margining based on SPAN©

methodology)

Low initial margin ~7% per volume contract in index futures contracts, low

commission.

Tools for various trading and investment strategies

5 Futures contracts for refined products are used by the market participants both for

hedging and speculation.

Cash Settled Deliverable

a contract made at SPIMEX, under which

the Parties undertake to pay the difference

between the sale and repurchase prices of

the futures contract at a certain date in the

future.

The underlying asset for a cash settled

futures contract are SPIMEX INDICES which

track changes in the domestic refined

products market accurately and without

delay:

a contract made at SPIMEX, under which the

Parties undertake to make or take a delivery

of specified quantity of the traded product at

a specified location at certain date in the

future.

All terms and conditions of any futures

contact are standard, except for the price,

which is determined at the trading session

depending on the current market situation.

Deliverable futures contracts are executed at

the SPIMEX spot market:

The exercise price of a cash settled futures

contract is determined on the basis of

SPIMEX indices as of the expiration date

set in compliance with the SPIMEX Rules.

The exercise price of a deliverable futures

contract is determined as its settlement price

at the SPIMEX futures market as of its

expiration date set in compliance with the

SPIMEX Rules.

Derivatives Market Types of futures contracts

Slide 21

Index Regular-92

Index TS (RT)

Index DTL

Index DTZ

Mazut Index

DTL (Vladimir-based)

Regular-92 (Kirishi-based)

Premium-95 (Kirishi-based)

DTL (Kirishi-based)

DTZ (Kirishi-based)

5

Derivatives Market Volume Traded (December 2010- July 2016)

Slide 22

Trades in the SPIMEX Derivatives Market were launched on 17 December 2010.

Volume of trades: 1608,1 K contracts (38 156 mln ₽)

Year Number of trades

2010 462

2011 6 798

2012 1 290

2013 40 979

2014 44 577

2015 4 381

2016 1 228

Total 99 715

26,4

507,8

119,3

524,3

221,3

177,5

34,8

0 100 200 300 400 500 600

2010

2011

2012

2013

2014

2015

2016

Thousands of contracts

581,6

12 411,2

3 500,3

10 491,1

3 709,8

6 333,0

1 129,0

0 2 000 4 000 6 000 8 000 10 000 12 000 14 000

2010

2011

2012

2013

2014

2015

2016

Millions of Rubles

5

Slide 23

Indices

6

A fully-fledged SPIMEX Refined Products

Market and emergence of the Derivatives

Market create both condition and necessity for

introduction of price indices on refined

products.

Price indicators make exchange prices more

representative and lay the foundation for

setting reliable and transparent market pricing.

Price Indices on Refined Products

Slide 24

7 Consolidated prices at large Russian refineries

The average price for refined products at each of large Russian refineries. Consolidated

prices are calculated for such large refineries and are used for calculating SPIMEX Regional

and SPIMEX National Indices.

Regional Indices

The average price for refined products at 9 large demand centers (Moscow, St. Petersburg,

Rostov-on-Don, Samara, Yekaterinburg, Novosibirsk, Krasnoyarsk, Irkutsk and Khabarovsk).

Territorial Indices

The average price for refined products at large Russian refineries located in the following

territories of Russia: European Russia, the Urals & Western Siberia and Eastern Siberia & the

Russian Far East.

National Indices

The average price for refined products at large refineries located all over Russia.

Composite Index

A unified indicator of the Russian domestic refined products which measures price

performance of an average metric tonne of exchange-traded light refined products.

You can find all SPIMEX Indices for refined products at spimex.com

Consolidated prices at large Russian refineries General Overview

Slide 25

For each large refinery (more than 25 refineries on the territory of Russia) SPIMEX

calculates Consolidated Prices for the following refined products:

Gasoline Regular 92

Gasoline Premium 95

Summer Diesel

Autumn/Spring Diesel

Winter Diesel

Jet Oil

Fuel Oil

7

Consolidated prices at large Russian refineries are used as a basis for calculations of all

indices for refined products.

The Regional Indices are calculated for large demand centers of Russia.

The demand centers are located all over Russia.

Regional Indices for each demand center are calculated on the basis of supply contracts made

by refineries which actual supply (the information is based on the data on actual railroad cargo

traffic) relevant types of refined products to the relevant large city (demand center).

The list of refineries taken into account while calculating the Regional Indices for each demand

center is compiled separately for each type of refined product.

SPIMEX uses special computer filters which exclude from the input data all supply contracts

with prices which materially differ from the average level of prices in the relevant demand

center.

Regional Indices

Slide 26

St. Petersburg

Moscow

Rostov-

on-Don

Samara Yekaterinburg

Novosibirsk Irkutsk

Khabarovsk

7

Krasnoyarsk

38000

39000

40000

41000

42000

43000

44000

45000

46000

01.04.2016 01.05.2016 01.06.2016 01.07.2016 01.08.2016

Regional Indices Moscow region

Slide 27

For each demand center and for each type of

refined product SPIMEX – relying on the

information on the OTC contracts - calculates

the relevant Regional Index for OTC-traded

refined products.

The methodologies used for the calculation of

the Regional Indices for exchange-traded and

OTC-traded refined products are based on the

unified principles, thus providing an

opportunity to compare prices for exchange-

traded and OTC-traded refined products.

Gasoline Premium 95

Gasoline Regular 92

Reginal Indices (demand center – Moscow) both

for exchange-traded and OTC-traded products

On 01 July 2016, SPIMEX ceased calculating the Vladimir-based Indices for refined products.

SPIMEX regards it expedient to use the Regional Indices for the demand center Moscow as a substitution for now-

defunct Vladimir-based Indices.

The methodology used for the calculation of the SPIMEX Regional Indices has been adjusted to the current situation

in the market of exchange-traded refined products and is simpler, more transparent and easier to verify than the

methodology used for the calculation of the Vladimir-based Indices. All these factors make such switch from the

Vladimir-based Indices to the Regional Indices well justified and well timed.

Analogous indices are calculated for OTC-traded refined products

7

Territorial Indices General Overview

Slide 28

Territorial Indices reflect the average price for refined products offered by refineries

located in European Russia; the Urals & Western Siberia and Eastern Siberia & the

Russian Far East.

Their distinguishing feature is the fact that they do not take into account neither

adjustment ratios nor transportation rates. The average prices for exchange-traded

refined products at the relevant territory are measured most precisely by indices of this

class.

European Russia

7

The Territorial Indices have been

calculated since 2014;

They are regarded as benchmark prices

by exchange trades participants and

regulators;

Straightforward and transparent

calculation techniques;

The indices are representative and

verifiable.

33000

35000

37000

39000

41000

43000

45000

01.04.2016 01.05.2016 01.06.2016 01.07.2016 01.08.2016

Territorial Indices for exchange- and OTC-traded refined products as well as netbacks

Slide 29

In addition to the territorial indices for exchange-traded refined products SPIMEX -

applying analogous methodology - also calculates territorial indices for OTC-traded

refined products and territorial netback indices based on the Argus Russian Netbacks.

Thus, for each territory listed above and for each type of refined product we offer three

sub-classes of the Territorial Indices: for exchange-traded refined products;

for OTC-traded refined products and netbacks.

Gasoline Regular 92 Summer Diesel

7

25000

27500

30000

32500

35000

01.04.2016 01.05.2016 01.06.2016 01.07.2016 01.08.2016

National Indices General Overview

Slide 30

The National Indices track average prices for each type of refined product at the

national level.

Each index is calculated on the basis of Consolidated Prices for the relevant product at

all large Russian refineries, weighted by the share of the relevant producer in the overall

domestic supply.

SPIMEX National Indices

7

National Indices are calculated on the basis of consolidated prices at refineries

Slide 31

Consolidated prices at refineries are solid price indicators of each type of refined

product offered by each large producer. Such prices are also used as a basis for

calculation of the National Indices for refined products traded at the domestic market.

The chart below shows changes in consolidated prices for Gasoline Regular 92 at all

Russian refineries and the relevant National Index:

7

25000

30000

35000

40000

45000

50000

The Composite Index has been calculated since 2011 as a unified indicator for the

domestic refined products market which measures price performance of an average

metric tonne of exchange-traded light refined products.

The Composite Index is calculated in points each business day.

Composite Index General Overview

Slide 32

7

2011 2012 2013 2014 2015 2016 950

1050

1150

1250

1350

1450

1550

1650

01.01.2011 01.01.2012 01.01.2013 01.01.2014 01.01.2015 01.01.2016

Registration of OTC transactions SPIMEX

Slide 33

OTC Market

7

Registration by SPIMEX of OTC transactions in commodities traded at the Exchange

Slide 34

Acting under Russian Federal Law No. 325-FZ of 21 November 2011 and Decrees of the Russian Government No. 623 of 23

July 2013 and No. 764 of 28 July 2015 , SPIMEX registers OTC transactions which result in transfer of title to the following

commodities:

refined products, provided that over the preceding calendar year the seller produced more than 100,000 mt thereof and

the OTC contract size is equal or exceeds 60 mt;

crude oil, provided that over the preceding calendar year the seller produced more than 1.0 mln mt thereof and the

OTC contract size is equal or exceeds 1,000 mt;

coking coal, stone coal, brown coal and anthracite, provided that over the preceding calendar year the seller produced

more than 1.0 mln mt thereof and the OTC contract size is equal or exceeds 60 mt;

3rd and 4th grade wheat, provided that over the preceding calendar year the seller sold more than 10,000 mt thereof

and the OTC contract size is equal or exceeds 60 mt;

Natural gas sold in the domestic market at free market prices, provided that over the preceding calendar year the seller

produced more than 1.0 bcm thereof and the OTC contract size is equal or exceeds 10 mcm *;

LPG , provided that over the preceding calendar year the seller produced more than 100,000 mt thereof and the OTC

contract size is equal or exceeds 30 mt*.

* SPIMEX started to register OTC transactions in this commodity on 30 Jan 2016

6

Registration by SPIMEX of OTC transactions with commodities traded at the Exchange in 2011-2015

Slide 35

7 593 749

3 911 532

59 003

129 101

Refined

products

Crude oil LPG Coal Natural

Gas

Grain

Commodity positions

Volumes of OTC contracts with

Natural Gas are 148,64 bcm

494 415

200

1 140

167

Refined

Products

Crude Oil LPG Coal Grain

Volume of contracts (mln tones)

6827

693

44

11976

38

79

Refined

Products

Crude Oil LPG Coal Natural

gas

Grain

Contracts

Registration by SPIMEX of OTC transactions with commodities traded at the Exchange in 2016

Slide 36

7

Volumes of OTC contracts with

Natural Gas are 176,50 bcm

4 834

476

1 253 1217

165

2

Refined

Products

Crude Oil LPG Coal Natural

gas

Grain

Contracts

172 889

8 008

25 985

9 866

5 751 41

Refined

products

Crude oil LPG Coal Natural

Gas

Grain

Commodity positions

155

366

4,5

418

0,1

Refined

Products

Crude Oil LPG Coal Grain

Volume of contracts (thousand tones)

Slide 37

Registration by SPIMEX of OTC transactions in commodities traded at the Exchange

Number of companies that registering OTC contracts on SPIMEX:

13

95

114

139

251

13

82

34 44

134

0

50

100

150

200

250

300

2012 and before 2013 2014 2015 2016

Active companies

Newcomers

Slide 38

Contact Information

JSC Saint Petersburg International Mercantile Exchange

Address: Moscow, Timura Frunze str., 24

Tel.: +7 (495) 380-04-24

Web-Site: www.spimex.com

E-mail: clients@spimex.com