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Table of Contents
VALERO ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
• Trading Derivatives – Our objective for entering into commodity derivative instruments for trading purposes is to take advantage of
existing market conditions related to future results of operations and cash flows.
As of December 31, 2015, we had the following outstanding commodity derivative instruments that were entered into for trading
purposes. The information presents the notional volume of outstanding contracts by type of instrument and year of maturity
(volumes in thousands of barrels, except those identified as natural gas contracts that are presented in billions of British thermal
units).
Notional Contract Volumes by
Year of Maturity
Derivative Instrument
2016
2017
Crude oil and refined products:
Swaps – long
7,739
—
Swaps – short
7,739
—
Futures – long
38,732
500
Futures – short
39,279
—
Options – long
10,800
—
Options – short
12,400
—
Natural gas:
Futures – long
1,400
—
Interest Rate Risk
Our primary market risk exposure for changes in interest rates relates to our debt obligations. We manage our exposure to changing
interest rates through the use of a combination of fixed-rate and floating-rate debt. In addition, at times we have used interest rate swap
agreements to manage our fixed to floating interest rate position by converting certain fixed-rate debt to floating-rate debt. We had
no interest rate derivative instruments outstanding as of December 31, 2015 and 2014, or during the years ended December 31, 2015,
2014, or 2013.
Foreign Currency Risk
We are exposed to exchange rate fluctuations on transactions entered into by our international operations that are denominated in
currencies other than the local (functional) currencies of these operations. To manage our exposure to these exchange rate fluctuations,
we use foreign currency exchange and purchase contracts. These contracts are not designated as hedging instruments for accounting
purposes, and therefore they are classified as economic hedges. As of December 31, 2015, we had commitments to purchase
$292 million of U.S. dollars. These commitments matured on or before January 31, 2016 resulting in a gain of $10 million in the first
quarter of 2016.
Environmental Compliance Program Price Risk
We are exposed to market risk related to the volatility in the price of credits needed to comply with various governmental and
regulatory environmental compliance programs. Certain of these programs require us to blend biofuels into the products we produce,
and we are subject to such programs in most of the countries
121