RUSSIA’S OIL AND GAS REVENUE AND OUTPUT FELL MONTH BY MONTH

Russia’s oil and gas output shrank amid capped gas flows to Europe. Russia is finding oil customers in Asia to replace sanctions-blocked European buyers, by clawing away at the market share of its energy allies.

R ussian natural gas production fell 15.3 percent between January and May 2023, from 233 billion cubic meters, last year from a year ago. In May, Russia’s output was 39.6 billion cubic meters, down 19.3 percent from a year ago and 11 percent from a month ago.

Russia boasts higher liquefied natural gas output. LNG output in January-May decreased by 3.8 percent year-on-year to 13.7 million tons. Production of liquefied natural gas grew 4.1 percent last month, on a year-on-year basis, to 2.9 million tons, and was up 4.2 percent from April. The decline in Russian gas output stems from Europe’s moving away from Russiansourced energy. In 2022, Russian imports of energy goods were 23.3 percent, compared to a 7.6 percent decrease year-on-year. Natural gas deliveries to Europe shrank by 15.7 percent. In 2022, Russian gas accounted for 32.7 percent of Europe’s imports. Meanwhile, Russia decreased pipeline shipments by 50 percent and boosted LNG supplies by 12 percent, also due to political decisions from countries such as Italy. Italy is still importing 3-4 million cubic meters of Russian natural gas, Environment and Energy Security Minister Gilberto Pichetto Fratin said. Regular liquefied natural gas supplies will meet Italy’s 50 percent of total gas demand, he added. Italy will be able to completely free itself from dependence on Russian gas by mid-2024. Italy’s dependence on Russia for imported gas was from 40 percent by February 2022. A decrease in Russian oil and gas output and supplies thus hit federal budget proceeds. In May, proceeds from crude and petroleum products fell by 36 percent compared to a year ago. Crude oil and oil products, which accounted for some 75 percent of Moscow’s total hydrocarbon revenues in May, saw a 31 percent drop in budget proceeds for Moscow compared to a year ago based on calculations made by Bloomberg. Natural gas tax revenues also fell 46 percent in May, compared to a year ago, while tax income from the collection of tariffs on natural gas exports shed 81 percent. The U.S. treasury, citing Russian Finance Ministry figures, said federal government oil revenues were down over 40 percent between January and March compared to last year. Before the war, oil revenues constituted 30–35 percent of the total Russian budget. In 2023, oil revenues have fallen to just 23 percent of the Russian budget. Immediately after the invasion, Russia received windfall profits on an oil price spike created by its war in Ukraine. Today, however, the price cap policy is taking that windfall off the table. ■

30 June 2023