Key Moments
- Russia’s oil and gas budget revenue is projected at 410 billion roubles in December. This is almost half the level recorded a year earlier.
- Full-year oil and gas revenue is expected to reach 8.44 trillion roubles. This is nearly a quarter below the prior year and below the Finance Ministry’s 8.65 trillion rouble forecast.
- The last time monthly oil and gas revenue was this low was in August 2020, when it totaled 405 billion roubles.
Projected December Collapse in Energy Income
Russian federal revenue from the oil and gas sector is expected to drop to 410 billion roubles ($5.17 billion) in December, according to Reuters calculations published on Friday. This figure would represent almost a 50% decline compared with December a year earlier. That figure would represent almost a 50% decline compared with December a year earlier, driven by weaker crude prices and a stronger rouble.
The projections are based on data from industry sources and official statistics covering oil production, refining, and supplies. If realized, the December outcome would be only marginally above the 405 billion roubles Russia recorded in August 2020, the lowest monthly oil and gas revenue level since that time, when prices slumped during the COVID-19 pandemic.
Full-Year Revenue Set to Miss Government Targets
For the full year, Russia’s oil and gas receipts are projected to reach 8.44 trillion roubles. That would mark a decline of almost one quarter from the previous year and come in below the Finance Ministry’s current forecast of 8.65 trillion roubles.
The ministry had originally anticipated 10.94 trillion roubles in oil and gas revenue for the year, but it cut that outlook in October in response to weakening global crude prices, which have been under pressure due to concerns about excess supply.
| Indicator | Amount (roubles) | Comment |
|---|---|---|
| Expected December 2023 oil and gas revenue | 410 billion | Almost half of December a year earlier |
| Lowest recent monthly oil and gas revenue | 405 billion | Recorded in August 2020 |
| Projected full-year 2023 oil and gas revenue | 8.44 trillion | Below revised Finance Ministry forecast |
| Revised 2023 Finance Ministry forecast | 8.65 trillion | Updated in October |
| Original 2023 Finance Ministry forecast | 10.94 trillion | Set before October revision |
Budget Pressures Amid Higher Defense Spending
Oil and gas taxes remain the Kremlin’s primary fiscal pillar, accounting for roughly one quarter of total federal budget income. The projected shortfall is significant for Russia, which has sharply increased defense and security expenditures since it launched its military campaign in Ukraine in February 2022.
Ukraine and its Western supporters have repeatedly said they want to force Russia, the world’s second-largest oil exporter, to end the conflict by weakening its economic base.
Price Dynamics and Tax Base Erosion
The pressure on revenues has intensified as the tax base has deteriorated. In November, the rouble-denominated price of Russian oil used for tax calculations fell 17.1% from October to 3,605 roubles per barrel. This decline, combined with the stronger domestic currency, has reduced the effective rouble value of oil exports for budget purposes.
The Finance Ministry is scheduled to release its official December oil and gas revenue figures on January 14.
($1 = 79.3000 roubles)
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