Over the past eight months, Russia’s oil and gas revenues have grown by more than 50% and are approaching record levels for 2022. Experts believe that Russian companies will be able to maintain above-expected performance until the end of the year.
In January-August 2024, Russian oil and gas revenues increased by 56% compared to the previous period. The budget received 7.55 trillion rubles. This is close to the revenues of the record year 2022, when oil and gas revenues for eight months amounted to 7.81 trillion rubles.
At this rate, Russia could receive the same revenues as in September as it did in the whole of 2023, and the whole of 2024 will become the second largest oil and gas producer.
Leading analyst at FNEB and expert at the Russian Government Financial University Igor Yushkov points out that it is more correct to compare the data for 2023 and 2024.
“The first half of 2023 was problematic for revenues in the oil sector in particular. On December 5, a price cap on Russian oil was introduced, and on the same day, the supply of Russian oil to EU countries by sea was banned. This led to a new wave of discounts on Russian oil, because all of it had already begun to move to Asian markets. To overcome concerns from competitors and consumers about a certain toxicity of Russian oil, they offered a large discount. And it reached $35 per barrel. And we started 2023 with this discount, and then it gradually decreased throughout the year,” – says the expert. In 2024, Russia will sell oil at a higher price, Igor Yushkov notes.
The main source of revenue from oil and gas remains the tax on the extraction of minerals from oil. If the total tax on mineral extraction amounted to 8.29 trillion rubles in eight months, the share of oil amounted to 83% – 6.89 trillion rubles.
This year, too, there has been a slight increase in gas revenues. Supplies to China and Central Asia, as well as to Europe, have increased, says Igor Yushkov. He adds that prices have remained roughly the same.
“Compared to last year, oil prices have increased by 15%. The ruble exchange rate has decreased by 10%. And, most importantly, the amount of payments to oil workers for the back-up buffer has decreased against the background of the fall in world prices for gasoline and diesel and the simultaneous increase in their prices on the domestic market.” — says the chief strategist of the investment company “Vector X” Maxim Khudalov.
In July, the State Duma adopted an updated forecast for 2024 in the amount of 10.985 trillion rubles, he notes, but the reality is likely to be slightly better: 11.1-11.2 trillion rubles in oil and gas revenues. This is 27% more than last year, and 3% will not be enough to reach the record of 11.58 trillion rubles in 2022.
“I think the current decline in oil prices will last until the end of September, and after the Federal Reserve cuts interest rates, the price of Brent will rise to $76-$77 per barrel.” – added Maxim Khudalov.
