KMG EP website

MARKET RISKS

Market risks include risks of adverse impact of oil price changes, exchange rates, and interest rates (for more details about currency risk and interest rate risk, see the Financial Risks Section below).

The company provides wholesale supply of oil, for both internal and external markets.The main possible deterioration, both for internal and external markets, is a decline in oil prices, which can be characterized by significant volatility due to a number of factors: the balance of supply and demand, the impact of policies of major oil-producing countries or the political situation in the main producing regions of energy. A decline in world oil prices would significantly result in a deteriorating financial performance of the Company.

The company does not at the moment resort to hedging the risks of oil prices falling, but in each situation uses internal cost management tools to reduce the negative impact of the risk.