Moscow expects a decline in budget revenues from oil and gas exports due to falling global prices, Bloomberg reports, citing Russia’s three-year budget proposal.
“The Russian government forecasts that revenues from oil and gas production will decline over the next three years due to lower energy prices and a softer tax regime for PJSC Gazprom,” – the agency writes.
It estimates that revenue will decline by 14% from 2024 to 2027.
Russia’s oil and gas industry is expected to contribute 10.94 trillion rubles ($118 billion) in taxes to state coffers next year, according to a draft forecast prepared by the government. This will be 3.3% less than projected for 2024. Annual revenues are expected to continue to decline over the next two years and reach 9.77 trillion rubles in 2027. – Bloomberg continues.
The agency noted that the West imposed sanctions on Russia, but the country avoided them. Because even a decrease in revenues in the next three years is expected to occur for another reason: the weakening of global energy markets and, consequently, prices.
“The average export price of Russian oil is expected to fall below $70 per barrel starting next year. Average contract prices for the country’s gas exports are also expected to decline until 2027.” – The agency reports that the export price of oil will fall from $70 to $65.5 per barrel, and that of gas from $279.9 to $240.2 per thousand cubic meters.
“Another factor contributing to the projected decline in oil and gas revenues for the Russian budget next year is a plan to remove the additional tax burden from Gazprom, which has long been the government’s main source of cash,” Bloomberg added.
In the period 2023-2025, Gazprom will pay an additional 50 billion rubles in excess of income tax to the budget every month. A softer tax regime for Gazprom will lead to a decrease in revenues from gas production by more than 30%, to just over 1 trillion rubles. At the same time, the company will be able to pay dividends again, which will partially offset the reduction.
