- •3. Read the text and do the exercises.
- •The entire oil industry is often divided into three major sectors: upstream, midstream and downstream.
- •Downstream (oil industry)
- •Upstream (oil industry)
- •Midstream (oil industry)
- •The Seven Sisters of the petroleum industry is a term coined by an Italian entrepreneur, Enrico Mattei, that refers to seven oil companies that dominated mid-20th century oil production, refinement, and distribution.
- •ROYAL DUTCH SHELL
- •Founded: 1907
- •Products: oil, natural gas, petrochemicals
- •Products: natural gas, petroleum
- •Headquarters: the Netherlands, principal offices in Houston, Paris and the Hague
- •Pronunciation of the name
- •12. Translate into English.
- •12. http://www.fourmilab.ch/gravitation/foobar/
- •15. http://www.fe.doe.gov/education/energylessons/oil/oil2.html
- •Exploration Methods
- •Elements of a petroleum prospect
- •Terms used in petroleum evaluation
- •Drill Stem Tests
- •A. Electric, Radioactivity and Acoustic (Sonic) Logging
- •2. ______ _______ invades the rock surrounding the wellbore, affects the logging of the hole and must be accounted for.
- •3. ______ _______ measure formation radioactivity.
- •Acidizing
- •2. Pay attention to the underlined stress in the following words.
- •Completion
- •Production
- •Abandonment
- •3. Pay attention to the underlined stress in the following words.
- •4. Read the following text and do the exercises.
- •2. Pay attention to the underlined stress in the following words.
- •5. Fill in the gaps with the most suitable words or terms from the text.
- •6. Match the two parts of the sentences.
- •Terms and Vocabulary
- •People
- •9. Read the text “Drilling Rig” and fill in the missing words from the box. There is one extra word.
- •Drilling Rig
- •Drilling Rig Classification
- •4. Read the text “Hoisting system components” and do the exercises.
- •16. Read the text “PIPE (MATERIAL)” and fill in the missing information. The first sentence is done for you.
- •2. Pay attention to the stress in the following words. □ shows the position of stress.
- •2. Pay attention to the stress in the following words. □ shows the position of stress.
- •2. Pay attention to the underlined stress in the following words.
- •6. Fill in the gaps with the correct term.
- •Example: 7. relies upon
- •7. Scan through the following short definitions and do the after – task exercises.
- •Corrosion types
- •Crack characteristics can vary greatly depending on the cause of the crack, the materials being cracked, and the environment causing the cracking. The following photos show examples of crack profiles.
- •Applied coatings
- •15. Match the questions about “Cathodic protection” on the left with the answers on the right.
- •STEEL TANKS WITH FIXED ROOFS
- •STEEL TANKS WITH FLOATING ROOF
- •METHODS OF ERECTION OF CYLINDRICAL STEEL TANKS
- •APPENDIX 5
- •Dictionary of Pipeliner's Terms (SLANGS)
- •A. подаваемый ток
- •1. weakening
- •B. коррозионный элемент
- •2. rust
- •C. выходное напряжение
- •3. discoloration
- •D. интенсивность
- •4. impressed current
- •E. (удельная) проводимость
- •5. direct current
- •F. ослабление
- •6. corrosion cell
- •G. обезвоживание
- •7. output voltage
- •H. постоянный ток
- •8. severity
- •9. water removal
- •10. conductivity
- •K. толщина стенки
- •11. operating pressure
- •12. yield strength
- •L. ухудшения характеристик
- •M. рабочее давление
- •13. allowance
- •N. предел текучести
- •14. wall thickness
- •O. допуск
- •fracture
- •трещина
- •gradient
- •угол наклона, склон
- •circuitous
- •окольный, обходной
- •Reynolds number
- •число Рейнольда
- •interplay
- •взаимодействие
- •facet
- •сторона
- •aquifer
- •водоносный слой
- •porous media
- •пористая среда
- •pertinent
- •имеющий отношение
- •civil engineering
- •гражданское строительство
- •soil science
- •почвоведение
- •fluid mechanics
- •механика жидкости
- •inertia
- •инерция
- •Laplace equation
- •уравнение Лапласа
- •simulate
- •имитировать
- •heat conduction
- •теплопроводность
- •heat transfer
- •теплообмен
- •uncoupled processes
- •несвязанные процессы
- •soil moisture
- •влажность почвогрунта
- •viscous
- •вязкий
- •viscosity
- •вязкость ( жидкости, газа )
- •diffusion
- •диффузия
- •steady flow
- •transient flow
- •неустановившийся поток
- •15. deterioration
- •UNIT 1
- •Introduction to Economics and management
- •UNIT 2
- •Finance
- •UNIT 3
- •STOCK
- •UNIT 4
- •THE ECONOMY OF PETROLEUM INDUSTRY
- •UNIT 5
- •Taxation and audit
- •UNIT 6
- •Production and Costs
- •UNIT 7
- •BUSINESS PLAN
- •UNIT 8
- •International Business Etiquette AND ETHICS
- •References
- •3. Read the text “Hydrogeology: Key Terms and Concepts”, do the exercises
- •Hydrogeology
- •7. What are the subjects of the following sciences?
- •12. Fill in the chart with the necessary information from the text.
- •13. Pay attention to the pronunciation of the following terms.
- •14. Read the following short texts and fulfill the after-reading exercises. Pay attention to the diagrams and underlined words.
- •Ground Water Aquifer
- •Confined or Artesian Aquifer
- •Drawdown – the vertical drop of the water level in a well caused by ground water pumping; also, the difference between the water level before pumping and the water level during pumping.
- •Make your own sentences with two of the expressions.
- •UNIT 4
- •THE GREENHOUSE EFFECT
- •Compose your own sentences with two of the expressions.
- •5. Translate from Russian into English.
- •10. Answer the following questions.
- •1. What are the functions of atmosphere?
- •1. The phenomenon known as El Niňo
- •A) is confined to the Pacific Ocean.
- •D) caused the disappearance of the dinosaurs.
- •2. It was named after
- •3. It is caused by
- •A) the wind changing direction.
- •D) occurs every four or five years.
- •5. The effect of El Niňo
- •Make your own sentences with two of the expressions.
UNIT 5
TAXATION AND AUDIT
Lead-in
Fill in the spidergram with the words associated with Taxation and Audit.
Taxation and
Audit
Discuss.
1.What does the word “tax” mean? What kind of taxes do you know? Where do taxes taken by governments go to?
2.Do you think all people should pay equal taxes? How much is income tax in Russia now? In your opinion, is it fair when oil and gas companies pay taxes on the usage of natural resources? Why? Why not?
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|
Terms and Vocabulary |
distinction |
различие |
taxes |
налоги |
direct taxes |
прямые налоги |
revenue authorities |
департамент налогов и сборов, финансовое |
|
управление |
incidence |
снижение налогового бремени |
income tax |
подоходный налог |
vehicle excise duty |
акцизный сбор с транспортного средства |
indirect taxes |
косвенные налоги |
burden |
налоговое бремя, расходы |
elasticity of demand |
эластичность спроса |
demand curve |
кривая спроса |
to recoup |
возместить |
to assert |
утверждать |
individual tax |
налог физических лиц |
collection cost |
затраты на взыскание |
capital gains tax |
налог на прирост капитала |
controversial |
противоречивый |
progressive |
пропорционально увеличивающийся |
regressive |
регрессивный |
proportionate |
соразмерный, пропорциональный |
flat rate |
единая ставка, цена без начисления |
|
процентов |
to distort |
искажать, изменять |
deliberate |
спланированный, взвешенный |
demerit goods |
недостаточные товары |
pricing policy |
ценовая политика |
foreign trade |
внешняя торговля |
to levy |
облагать налогом, взимать |
profligate |
неэкономный, расточительный |
principle of non-distortion |
принцип невмешательства |
willingness |
желание |
value |
ценность |
marginal rate |
предельная налоговая ставка |
alteration |
изменение, перемена |
expenditure |
затрата, трата, расход(ы) |
RPI (Retail Prices Index) |
индекс розничных цен |
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Exercise 1. Read the text and do the exercises.
TAXATION
The traditional distinction between, or classification of, taxes is to call them direct or indirect. Direct taxes are ones where the individual who pays the tax to the revenue authorities also bears the loss or incidence of the tax. Income tax is the clearest example but there are problems with the classification and it is not very useful. Vehicle excise duty is, for example, a direct tax on a private car owner who pays for the car out of his or her own pocket but if the tax is paid by a business it can be recovered wholly or in part via the prices charged to customers and is indirect.
Indirect taxes are ones where the individual or firm that pays the tax to the revenue authorities can pass on some or all of the burden, loss or incidence of the tax to other people. The manufacturer pays the tax but recovers some of it from the distributors, wholesalers and retailers, who in turn raise their prices so that the final customer bears some of the incidence. The public often believes that the whole of the tax burden is passed on but if there is any elasticity of demand at all, that is the demand curve is not vertical, the manufacturer and distributors suffer a loss of sales and profit when they try to raise their prices to recoup the tax. Thus the incidence, or loss, of an indirect tax is normally shared by three groups, manufacturer, retailers and wholesalers and final purchaser.
Principles behind the tax system.
It is usually asserted, following Adam Smith, that an individual tax should be certain, that is the payer should be clear as to what is liable to be taxed, how much the tax bill is and when and how to pay it. Another principle is that the cost of collecting a tax should be minimal. Modern taxes are usually very productive in the sense that their collection cost is only a very small percentage of the total raised. There are some exceptions to this and some taxes such as capital gains tax are maintained nowadays as a gesture to the old concept of equality of tax burdens, that is the idea that the rich should bear the greater share of tax.
The principles mentioned above are important but a much more fundamental, and controversial, one is that of equity. It is controversial because it is interpreted in different ways. The consensus used to be that an individual tax or the whole system was equitable if it contained a strong element of
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progression, that is the higher income groups paid a larger percentage of their income in tax than the lower income groups.
Technically, a tax is progressive if the proportion of income in tax rises with income. A tax is regressive if the proportion of income taken in tax falls as income rises and this includes most indirect taxes on expenditures. It is possible for a tax to be proportionate if the percentage of income taken in tax remains the same as income rises, for example a flat rate 10 % income tax without any allowances.
Another principle that is important is that taxes should not distort the economy to any serious extent unless that is the deliberate intention as demerit goods are taxed. Taxes also affect pricing policies, especially in alcohol, tobacco and petrol markets or in foreign trade if tariffs are levied. A badly designed tax system can seriously affect the allocation of resources within a country and one nation’s tax regime can have an adverse impact on the world economy. An example of the latter effect is the USA whose low tax policy for fuel oil and gasoline leads to the profligate use of scarce world resources.
One important application of the principle of non-distortion is that taxation should not adversely affect the willingness of people to work, to save or to take risks in their enterprise. It is generally “acknowledged that the individual will often have a backward bending” supply curve for their labour because they come to a point where they value extra leisure above the additional income from working longer hours. The level at which they reach this point will be affected by their marginal rate of tax.
Other considerations which can be elevated to the status of principles are:
- minimum impact on the rate inflation. Alteration in most taxes on expenditure affect the RPI (Retail Prices Index) and the rate of inflation. Fuel tax increases are particularly inflationary;
-ease of alteration. The tax mechanism must lend itself to easy and administratively cheap change;
-contribution to economic stabilization. Some taxes aggravate a recession
while others fail to help restrain a boom. Indexation of some taxes helps to prevent this tendency but not all taxes can be indexed;
- encouragement to saving. This may be achieved by the differential taxation of savings and expenditure or, in the company sector, by taxing distributed profits more highly than retained profits.
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Exercise 2. Think over and answer the questions.
1.Did you find any answers to the questions, you discussed before reading, in the text? Can you give more detailed answers now?
2.Did you come across the definition of “a tax”? Read the following definition taken from the dictionary of economic terms and translate it into English:
“Налоги – платежи, взимаемые государством с предприятий и организаций, населения. Являются одной из форм финансовых отношений, обеспечивающих распределение и перераспределение национального дохода в соответствии с задачами экономического и социального развития”.
Exercise 3. Determine whether the statements are true or false.
1.The distinction between direct and indirect taxes is very clear.
2.It is the final customer who bears tax burden.
3.A tax can be called productive if its collection cost is very low.
4.The principle of equity means that all people pay the same percentage in taxes.
5.The introduction of new taxes does only good to the country and its citizens.
6.A progressive tax can prevent people from having extra jobs.
Exercise 4. A). Pick up the main ideas and sum up the text.
B). Find information and make a short report about taxes in Russia.
Exercise 5. Read the article, do the exercises.
Kazakhstan’s New Oil Tax Regime
Two types of contracts
Mineral exploration and extraction activities are permitted only to those who have an appropriate contract with the Republic of Kazakhstan, termed a subsurface user contract. The Tax Code offers alternative tax regimes for taxpayers involved in mineral exploration and extraction activities, which the legislation terms “subsurface users”.
Model 1 offers a regime under which the subsurface user is subject to all the
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taxes which affect ordinary taxpayers (corporate income tax, social tax, vehicle tax, property tax, land tax, etc) and, in addition, certain specific taxes applicable to mineral extraction activities:
•Bonuses (both on signature of the contract and following a commercial discovery)
•Royalties
•Excess Profits Tax
•Rent Tax on Export of Crude Oil
Of these taxes, the first three existed prior to the 2004 tax changes, but the reform package includes major changes to the way they operate which are described later in this article. The fourth, Rent Tax, is a completely new tax. This is also described in more detail below.
Royalties and Rent Tax apply to gross income and are deductible in calculating both corporate income tax ("CIT") and Excess Profits Tax. СГТ is deductible in computing Excess Profits Tax.
Model 2 offers a production sharing regime of the type familiar from other hydrocarbon provinces around the world. Though not explicitly confined to hydrocarbon extraction activities, the mechanism for allocating production between the State and the subsurface user is written with hydrocarbon liquid extraction activities in mind and may not be easily adapted to other kinds of minerals, including gas. Subsurface users which sign up to Production Sharing Agreements ("PSAs") are obliged to share production with the Republic in accordance with formulae set out in the PSA itself, and to the other taxes prescribed in tax legislation, excluding, however:
•Rent Tax on Export of Crude Oil
•Excise Tax on Crude Oil (including gas condensate)
•Excess Profits Tax
•Land Tax
•Property Tax
The gross income of the contractor for CIT purposes includes both cost recovery oil and the contractor's share of profit oil. The base for calculating the contractor's royalty obligation is the gross amount of crude oil produced before production sharing.
In 2003, the possibility of a third model was extensively discussed. This was to be based around a rent tax similar in concept to that discussed below, but the idea was abandoned, apparently following discussions with state oil company Kazmunaigaz.
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Bonuses
The Tax Code continues to provide for 2 types of bonuses:
•Signature Bonus
•Commercial Discovery Bonus
The major change in respect of Signature Bonuses is an explicit statement that the amount will be set by competitive tender. The framework of the competitive tender is to be prescribed by a proposed new PSA law.
The calculation of the amount of Discovery Bonus continues to be based on the officially approved estimate of recoverable reserves. The rate is now fixed at 0.1 percent of the value of recoverable reserves, rather than this figure being specified as the minimum amount as previously.
Royalty
The most important change to the royalty regime is the introduction of a fixed
scale of royalty rates for oil production based on tons produced. In the past, royalty rates (except for those applicable to "commonly occurring useful minerals" which were specified in the Tax Code) have been subject to negotiation within broad parameters and in at least two cases have not been applied to a project on economic grounds.
Associated gas is to be converted to equivalent using a formula of 1,000 cu. m. equals 0.857 t.
The new rules provide that the Government may publish separately, rates for solid minerals, but is completely silent on how the base for dry gas will be calculated. Presumably, one should apply the conversion factor specified for associated gas and then apply the sliding scale for oil, but this is not clearly stated anywhere. There is also considerable uncertainty about how the sliding scale should actually be applied.
For example, what rate would be applied if the amount extracted was exactly 2 min t? Once the production passes 5 min t in the year does the scale operate to subject all production, since the beginning of the year, to the 6- percent rate?
Rent Tax on the Export of Crude Oil
The most fundamental change introduced by the recent amendments is the creation of a completely new tax which applies to exports of crude oil. The tax will apply to taxpayers who export crude oil, apart from those who are
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parties to PSAs. It is not clear whether the tax will apply to an oil trader who purchases crude from the producer in Kazakhstan and then exports it.
Reflecting government concerns about transfer pricing, the tax base is not the actual sale price of the exported crude, but a formula which applies an average price for a basket of widely-traded benchmark oil prices, to the volume of oil sold. There is provision to adjust this deemed price for quality differentials as a result of mixing the oil in pipelines, though it is not completely clear how this is to operate. The components of the basket will be fixed by the Government. Transportation costs should be deducted to arrive at the base for calculating the tax. Which transportation costs is not explained, nor is it indicated whether these are only the costs incurred by the producer or whether one can take into account the costs of shipping crude to a location comparable with one where the benchmark crudes are traded.
In the rather likely event that the deemed price is not a round number of dollars per barrel, the legislation is silent on how the resulting fraction will impact the rate, e.g., if the deemed price is $25.57 per barrel, then should the rate be 16 percent or 17 percent or somewhere between the two?
The tax period is to be a calendar month, and the taxpayer will be required to pay tax for a particular month by the 10th day of the month following. A tax declaration will be due by the 15th of the following month. Like all turnover taxes, the rate of rent tax has no relationship to profitability, and will, therefore, tend to depress the economic viability of projects in the hostile conditions of the North Caspian.
|
Words and expressions |
extraction |
добыча; извлечение нефти, газа |
appropriate contract |
подходящие контракты |
tax code |
налоговый кодекс |
taxpayer |
налогоплательщик |
legislation term |
законодательный срок |
corporate income tax |
налог на доход корпорации |
property tax |
налог на собственность |
land tax |
земельный налог |
royalty |
плата за право разработки недр |
excess profits tax |
налог на сверхприбыль |
rent tax |
налог на аренду |
gross income |
валовой доход |
deductible |
нестрахуемый минимум |
|
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explicitly |
детально, подробно |
to sign up |
подписать |
to set out |
установить |
recovery oil |
переработаная нефть |
cost |
затраты, издержки |
abandoned |
оставленный |
recoverable reserves |
извлекаемые запасы |
to be fixed at |
быть зафиксированным на |
associated gas |
нефтяной газ, попутный газ |
broad |
широкий, многочисленный |
t/min |
тонн в минуту |
amendment |
поправка |
to apply to |
заявить, подать заявку на |
apart from |
отдельно от |
benchmark |
база (сравнения) |
deemed price |
разумные цены |
transportation costs |
транспортные расходы |
resulting fraction |
результирующая фракция |
turnover taxes |
налог с оборота |
profitability |
прибыльность, рентабельность |
Exercise 6. Answer the questions.
1.Who is likely to be interested in this information?
2.Are alterations in tax regime favourable for foreign oil and gas companies?
3.Is everything clear and well thought over in the new oil tax regime?
4.Write out the names of taxes which should be paid by “subsurface users” according to Model I. Are the same taxes paid according to Model II? What is different?
5.Find those parts of the text where the author says about some uncertainties in the new tax application. Comment on them.
6.Find the conclusion the author made on the economic viability of projects in Kazakhstan. Do you agree with it?
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Exercise 7. Look through the text and be ready to answer some questions.
1.Does the first sentence of the text have the same meaning as the title?
2.What problem is discussed?
3.Is it a local or a global issue?
4.What kinds of fiscal systems are mentioned in the text?
Different fiscal systems complicate reserve values
The value of hydrocarbon reserves in-the-ground varies dramatically worldwide because of the existence of numerous reserve categories and diverse fiscal systems.
For a company’s survival in the petroleum industry, value replacement is more important than reserve replacement. But unfortunately, when it comes to international reserve values, nobody seems to speak the same language. Discoveries are often measured in terms of gross recoverable reserves. But, reserve and financial transaction reporting differ widely.
Term uncertainty
In the U.S. during 1994, $4.50/bbl was the average price paid for proved developed producing reserves. In other words, reserves in-the-ground were worth about $4.50/bbl. Unfortunately, some of the confusion begins right here. Quoted U.S. reserve transaction values are based usually, but not always, on net-revenue-interest barrels. In fact, it is often impossible to determine from published sources whether working-interest barrels or net- revenue-interest barrels are quoted.
Some published U.S. reserve/production transaction data include working interest barrels while others record net-revenue-interest barrels. Unless the terms are defined, uncertainty will exist.
The U.S. Security and Exchange Commission (SEC) 10-K reporting requires net-revenue-interest barrels. But unfortunately outside the U.S., this consistent
treatment disappears. In fact, the net-revenue-interest concept is almost nonexistent in countries with contractual systems.
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Fiscal systems
Fig. 1 groups the world’s petroleum fiscal systems.
•Under royalty/tax systems, oil companies take title to produced hydrocarbons at the wellhead and then pay the appropriate royalties and taxes. The royalties are paid either in cash or in kind.
•In contractual systems, oil companies receive a fee for exploration, development, and production operation services.
•With a production sharing contract (PSC), the fee is a share of production so that ultimately the oil company takes title to a share of hydrocarbons— usually at the point of export.
•Service or risk service agreements are similar to PSCs except the fee is in cash.
The company does not take title to any hydrocarbons. This fact creates the confusion: How can a company book reserves it does not own?
Exercise 8. Study and discuss Figures 1, 2.
1.The difference between definitions of reserves “booked” (Fig. 1)
2.Classification of petroleum fiscal systems (Fig. 2)
Definitions of reserves “Booked”
Royalty/tax |
Production sharing |
Gross recoverable reserves |
Gross recoverable reserves |
x Working interest (%) |
x Working interest (%) |
= Working-interest reserves |
= Working-interest reserves |
- Royalty |
- Royalty |
= Net-revenue-interest bbl |
- Government profit oil |
|
= Contractor entitlement* |
*The contractor share of profit oil is usually taxed.
Fig. 1
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|
Words and expressions |
dramatically |
эффектно, поразительно |
fiscal systems |
налоговая система |
recoverable reserves |
извлекаемые запасы |
net-revenue-interest |
доля чистого дохода |
|
компании от общего |
|
дохода по проекту |
working-interest |
процент участия |
take title to |
брать право |
|
собственности на товар |
wellhead |
устье скважины |
to pay in cash |
платить наличными |
to pay in kind |
платить товаром |
fee |
плата |
Exercise 9. Discuss the following points.
1.Have you ever heard or read that a particular company has problems with revenue authorities? What company was it? What was the problem?
2.Do all businesses in Russia pay taxes in full? Why do you think some of them try to avoid taxes? What should the authorities do with such companies? Do you know what the auditors deal with?
Auditors and their reports
Auditors are usually independent certified accountants who review the financial records of a company. These reviews are called audits. They are usually performed at fixed intervals – quarterly, semiannually or annually. Auditors are employed either regularly or on a part-time basis. Some large companies maintain a continuous internal audit by their own accounting departments. These auditors are called internal auditors.
Not so many years ago the presence of an auditor suggested that a company was having finacial difficulties or that irregularities had been discovered in the records.
Currently, however, outside audits are a normal and regular part of business practice. Auditor's see that current transactions are recordered promptly and
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completely. Their duty is to reduce the possibility of misappropriation, to identify mistakes or detect fraudulent transactions. Then they are usually requested to propose solutions for these problems.
Thus auditors review financial records and report to the management on the current state of the company's fiscal affairs in the form of Auditor's Report or
Auditor's Opinion.
|
Words and expressions |
auditors |
аудитор |
accountant |
бухгалтер |
quarterly |
по квартально |
semiannually |
раз в полгода |
internal auditor |
внутренний аудитор |
irregularity |
нарушение |
current transaction |
текущие операции |
misappropriation |
незаконное |
|
присвоение, растрата |
fraudulent |
обманный, мошеннический |
Exercise 10. Answer the following questions.
1.What do auditors do?
2.Audits are planned actions, aren’t they?
3.What did the presence of an auditor in a company suggest in the past?
4.What is auditors’ duty?
5.In what form do the auditors make their report?
6.What is the difference between internal and independent auditors?
Exercise 11. Decide whether the statements are true or false.
1.Auditors are usually chiefs of accounting departments.
2.It is quite usual when an auditor comes to a company anytime he/she likes.
3.Internal auditors are employees of the same company where they make audit.
4.If auditors review the financial records of a company, it doesn’t mean that this company has some problems.
5.Auditors are supposed to know how to solve financial problems.
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Exercise 12. Read the text and find information on the following points.
1.The names of the auditing and audited companies;
2.The reason of Transneft’s changing its auditor;
3.The names of the documents to be complied with while conducting audit;
4.Characteristics of an emerging market.
Independent Auditor’s Report
We have audited the accompanying consolidated balance sheet of ОАО АК Transneft and its subsidiaries (the "Group") as of 31 December 2003, and the related consolidated statements of income, cash flows and changes in shareholders’ equity for the year then ended. These consolidated financial statements, as set out on the pages 6 to 25 are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
The consolidated financial statements of the |
Group |
for the |
year |
ended |
|
31 |
December 2002 were audited by another |
auditor, |
whose |
report |
dated |
26 |
May 2003 expressed an unqualified opinion on those statements. |
|
We conducted our audit in accordance with International Standards on Auditing as issued by the International Federation of Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group of 31 December 2003 and the results of its operations, cash flows and changes in equity for the year then ended in accordance with International Financial Reporting Standards promulgated by the International Accounting Standards Board.
Without qualifying our opinion, we draw your attention to the fact that, whilst there have been improvements in the economic situation in the
568
Russian Federation in recent years, the country continues to display some of the characteristics of an emerging market. These characteristics include, but are not limited to, the existence of a currency that is not freely convertible in most countries outside of the Russian Federation, restrictive currency controls, and relatively high inflation. The prospects for future economic stability in the Russian federation are largely dependent upon the effectiveness of economic measures undertaken by the government, together with legal, regulatory, and political developments.
(KPMG Limited Moscow, Russian Federation 28 June 2004)
Words and expressions
consolidated balance sheet |
консолидированный баланс |
cash flow |
движение денежной наличности |
to conduct |
проводить |
in accordance with |
в соответствии с |
assurance |
гарантия, заверение |
to promulgate |
пропагандировать, распространять |
to draw your attention to |
привлекать внимание |
convertible |
конвертируемый |
Exercise 13. Look through the table which represents “Consolidated Balance Sheet” of Transneft Company.
1.Translate the terms into Russian.
2.Discuss the numbers in the table, compare and comment on them.
Consolidated Balance sheet derived from the consolidated financial statements – year ended 31 December 2003
(in millions of Russian roubles, unless otherwise stated)
Assets |
31 December 2003 |
31 December |
|
|
2002 |
Non-current assets |
|
|
Intangible assets |
535 |
510 |
Property, plant and equipment, net |
261.185 |
225.74 |
Available-for sale investments |
1.198 |
1.380 |
Total non-current assets |
262.918 |
227.064 |
|
569 |
|
Current assets |
|
|
Inventories, net |
7.515 |
6.051 |
Receivables and prepayments, net |
6.842 |
2.394 |
VAT assets |
19.501 |
15.686 |
Prepaid profit tax |
3.234 |
700 |
Available-for-sale short-term |
890 |
– |
investments |
|
|
Cash and cash equivalents |
17.219 |
13.472 |
Total current assets |
55.201 |
38.303 |
Total assets |
318.119 |
265.367 |
Shareholders’ Equity, Minority |
|
|
interests and liabilities |
|
|
Shareholders’ equity |
|
|
Share capital |
307 |
307 |
Retained earnings |
228.719 |
200.803 |
Total shareholders’ equity |
229.026 |
201.110 |
Minority interests |
10.014 |
8.573 |
Non-current liabilities |
|
|
Borrowings |
15.952 |
3.485 |
Deferred taxes |
28.694 |
28.019 |
Provisions for liabilities and |
5.195 |
2.907 |
charges |
|
|
Total non-current liabilities |
49.841 |
34.411 |
Current liabilities |
|
|
Trade and other payables |
26.236 |
11.968 |
Profit tax liabilities |
570 |
321 |
Borrowings |
2.432 |
8.984 |
Total current liabilities |
29.238 |
21.273 |
Total liabilities |
79.079 |
55.684 |
Total shareholders’ equity, |
318.119 |
265.367 |
minority Interests and liabilities |
|
|
570