Russian Energy Revenues Decline Despite Rising Global Oil Prices
(MENAFN) Russia’s income from oil and natural gas has fallen sharply despite a surge in international energy prices, with a stronger ruble, fuel-sector subsidies and Ukrainian drone strikes on refineries weighing on government revenues and disrupting production and exports.
Federal budget receipts from oil and gas declined 17.2% year-on-year to 5.47 trillion rubles, equivalent to $67.7 billion, during the first nine months of the year, according to Finance Ministry figures. The decrease represents an estimated $14.1 billion shortfall in energy-related government income.
Overall federal budget revenues, however, increased by 10% to $367 billion over the same period. Non-energy receipts recorded stronger growth, climbing 18.8% to $299.3 billion, the data showed.
The decline in energy income occurred as conflicts in the Middle East pushed international oil prices higher. Although rising prices can increase the value of Russian crude exports, higher market quotations do not automatically translate into equivalent gains for the state budget because tax calculations depend on several factors beyond the selling price.
The average price of Urals crude, Russia’s principal export oil grade, climbed to $92.1 per barrel in September, compared with $56.8 per barrel during the same month a year earlier.
The increase of approximately 62% boosted foreign-currency earnings for Russian oil producers, but the improvement did not produce a comparable increase in government revenue.
A key factor is the difference between the currencies used in oil transactions and those applied to domestic taxation. Russia generally sells its oil exports in foreign currencies, while production taxes and government budget receipts are calculated in rubles. Consequently, exchange-rate movements can influence how much of the revenue generated by higher global oil prices ultimately reaches state coffers.
Federal budget receipts from oil and gas declined 17.2% year-on-year to 5.47 trillion rubles, equivalent to $67.7 billion, during the first nine months of the year, according to Finance Ministry figures. The decrease represents an estimated $14.1 billion shortfall in energy-related government income.
Overall federal budget revenues, however, increased by 10% to $367 billion over the same period. Non-energy receipts recorded stronger growth, climbing 18.8% to $299.3 billion, the data showed.
The decline in energy income occurred as conflicts in the Middle East pushed international oil prices higher. Although rising prices can increase the value of Russian crude exports, higher market quotations do not automatically translate into equivalent gains for the state budget because tax calculations depend on several factors beyond the selling price.
The average price of Urals crude, Russia’s principal export oil grade, climbed to $92.1 per barrel in September, compared with $56.8 per barrel during the same month a year earlier.
The increase of approximately 62% boosted foreign-currency earnings for Russian oil producers, but the improvement did not produce a comparable increase in government revenue.
A key factor is the difference between the currencies used in oil transactions and those applied to domestic taxation. Russia generally sells its oil exports in foreign currencies, while production taxes and government budget receipts are calculated in rubles. Consequently, exchange-rate movements can influence how much of the revenue generated by higher global oil prices ultimately reaches state coffers.
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