KUWAIT ENERGY plc GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2013
F-66
29.
FINANCIAL INSTRUMENTS (CONTINUED)
Price risk management
Volatility in oil and gas prices is a pervasive element of the Group’s business environment.
The Group is a seller of crude oil, which is typically sold under short-term arrangements priced in USD at current
market prices. At the end of the current year the Group has not hedged its exposure to oil price risk.
The Group does not sell gas under any long-term agreements.
The following table illustrates the sensitivity of the profit for the year to a reasonably possible change in oil and
gas prices by +10%. A positive number below indicates an increase in profit and decrease in price will have the
opposite effect.
2013
2012
USD 000’s
USD 000’s
Impact on consolidated statement of income
28,439
22,527
Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate
fluctuations arise. Exchange rate exposures are managed within approved policy parameters.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at
the reporting date are as follows:
Liabilities
Assets
2013
2012
2013
2012
USD 000’s
USD 000’s
USD 000’s
USD 000’s
Kuwaiti Dinar
22
-
3,125
2,439
Ukraine Hryvnia
5,642
2,209
5,110
364
Russian Rouble
4,778
3,145
4,466
1,389
Market risk (Continued)
Foreign currency sensitivity analysis
The Group’s main foreign currency exposure is to fluctuations in the Kuwait Dinar, Ukraine Hryvnia and Russian
Rouble.
The following table details the Group’s sensitivity to a 10% increase and decrease in the USD against Kuwaiti
Dinar, Ukraine Hryvnia and Russian Rouble. The sensitivity analysis includes only outstanding Kuwaiti Dinar,
Ukraine Hryvnia and Russian Rouble denominated monetary assets and liabilities and adjusts their translation at
the year end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit
and a negative number indicates decrease in profit. All other variables are held constant. There have been no
changes in the methods and the assumptions used in the preparation of the sensitivity analysis.
2013
2012
USD 000’s
USD 000’s
Impact on consolidated statement of income
Kuwaiti Dinar
310
(244)
Ukraine Hryvnia
(53)
185
