The government of the aggressor country is already preparing to reduce the key source of financing the criminal war against Ukraine - profits from the sale of oil and gas over the next three years.
Points of attention
- Russian government predicts a 14% decrease in profits from oil and gas sales by 2027, affecting funding for the war against Ukraine.
- Tax breaks for Gazprom could lead to more than 30% decrease in state revenues by 2025, aiming to improve the gas giant's financial results.
- Average export prices of Russian crude oil and gas are expected to decline, with oil prices projected to fall below $70 per barrel.
- The government's plan to ease the tax burden on Gazprom may offset the decline in state revenues and help boost the company's financial performance.
- Efforts by OPEC+ to rebalance oil markets by cutting output could further impact the long-term pricing and demand for oil.
In Russia, a decrease in profits from the sale of oil and gas is expected
Journalists of the publication refer to the three-year draft budget of the aggressor country, which they managed to familiarize themselves with.
It is noted that revenues from oil and gas, which serve as a key source of funding for the unleashed criminal war against Ukraine, should decrease by 14% in the period from 2024 to 2027.
Russian government officials predict that oil and gas production and sales companies will need to supplement the budget by $118 billion over the next year.
It is emphasized that it will be 3.3% less than this year.
Annual revenues are expected to continue to decline over the next two years, reaching 9.77 trillion rubles in 2027.
For the third year in a row, oil and gas revenues have served as a key source of funding for the Kremlin's criminal war against Ukraine.
This had a significant impact on the effect of multibillion-dollar military aid from Western countries to Ukraine. In addition, Russia successfully circumvented Western sanctions that limited the sale of oil to Russia.
The average export price of Russian crude oil is expected to fall below $70 per barrel starting next year.
Average contract prices for gas exports from the country are also expected to decline through 2027.
Over the long term, oil may become even cheaper as demand declines and renewables become more popular.
The documents praise efforts by OPEC+, led by Saudi Arabia and Russia, to rebalance oil markets by cutting output.
What is known about the expected tax reduction in Russia
As noted in the article, an additional factor in reducing the aggressor country's profits from the sale of oil and gas is the plan to remove the additional tax burden from Gazprom, which has long been the main source of funds for the government.
After the Russian invasion of Ukraine and the closure of the European gas market, Gazprom lost most of its gas transit volume to EU countries.
This decision led to Gazprom's first net losses since the beginning of the century.
However, the government has introduced a gas production tax for the producer, expecting to receive an additional 50 billion rubles from the company every month between 2023 and 2025.
The documents show that there is now a plan to ease the tax burden on Gazprom.
If passed, the softer fiscal regime would reduce Russia's tax revenue from gas production by more than 30% compared to the previous year, to just over 1 trillion rubles in 2025.
However, the tax breaks could boost Gazprom's financial results, which began to recover earlier this year.
If Gazprom resumes paying dividends, it could offset some of the decline in state revenues, as the state is the company's largest shareholder.
