The Golden Age Is Over: Russia Admits Crashing Oil and Gas Revenues

Russia has been forced to acknowledge that the era of windfall profits from its oil and gas sector has come to an end, according to the Center for Countering Disinformation on January 2.

Russia’s Ministry of Finance has warned that oil and gas revenues are set to decline both in the medium and long term.

Based on the ministry’s estimates, the share of oil and gas income in the federal budget—which stood at around 50% several years ago—is expected to fall to 23% this year and continue decreasing in the coming years.

Officially, Russian authorities attribute the downturn to the depletion of low-cost hydrocarbon reserves, avoiding any direct reference to the war against Ukraine.

“However, it is precisely the war and the sanctions that have dealt the strongest blow to oil and gas revenues,” the center added.

Analysts note that Russia has been forced this year to sell oil at the edge of profitability or even at a loss. Having lost access to Western markets because of the war, Moscow is now selling crude to India and China at steep discounts, which in some cases reach roughly 50% off market prices.

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Meanwhile, Russian oil shipments to India are continuing. Bloomberg reported on January 2 that tankers carrying almost 2.2 million barrels of Russia’s Urals crude are currently sailing to India’s largest refinery, the Jamnagar complex operated by Reliance Industries on the country’s western coast.

Vessel-tracking data analyzed by Kpler indicates the cargoes are expected to arrive later this month, pointing to a renewed flow of Russian crude to India despite tighter US sanctions.

Earlier, it was reported that Russia could have forfeited “trillions of dollars” as a result of international agencies undervaluing its oil and petroleum products.

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