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Lower oil prices and lower sales volumes led to a 38.1% slump in Russia’s oil and gas revenues between January and August, compared to the same period of 2022, finance ministry data showed on Tuesday.
During the first eight months of this year, Russian oil and gas revenues dropped to $49.5 billion (4.836 trillion Russian rubles), from $80 billion (7.818 trillion rubles) for the same period of 2022.
This year, Gazprom’s gas exports to Europe slumped and dragged the gas giant’s profits down this year compared to 2022. Gazprom has reported a massive drop in its first-half net profit as deliveries to Europe plunged compared to 2022, when Russia was still supplying pipeline gas to its European customers for most of the first half of last year.
Additionally, the lower average oil prices so far this year compared to January-August 2022 dragged down revenues from oil. The G7 price cap, the loss of Western buyers, and the hefty discounts Russia has had to make to sell its crude in India and China also weighed on the revenues.
In August alone, Russian oil and gas revenues fell to $6.6 billion (642.7 billion rubles), down by 4.3% year-over-year and down from July 2023, too. The decline in August was mostly due to the profit-based tax paid once a quarter, which was in July in the third quarter.
Last week, the Russian finance ministry said that the price of Russia’s flagship crude grade, Urals, averaged $74 per barrel in August, slightly down from August 2022, but way above the G7 price cap of $60 and higher than the July average of $64.37 a barrel. Between January and August 2023, the average price of Urals was $56.58 per barrel, compared to an average of $82.13 a barrel for the same period of 2022, the ministry’s data showed.
August was the second consecutive month in which the average price of Russia’s Urals has exceeded the $60 price cap set by the G7 and the EU if Russian crude shipments to third countries outside the EU are to use Western insurance and financing.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com