Russia’s July Oil and Gas Revenue to Jump 50% to $14 bln, Reuters Calculations Show

Oil and gas revenue has been the most important source of cash for the Kremlin, accounting for about a third to a half of total federal budget proceeds over the past decade.

Preliminary estimates project Russia’s July oil and gas revenue at 1.22 trillion roubles ($13.93 billion), up from 747 billion roubles in June and 811 billion roubles in July 2023.

Proceeds for the January to July period are projected to rise by 65% year on year to 6.9 trillion roubles.

Russia’s Finance Ministry is due to publish the July data on Aug. 5.

July’s payments will also benefit from Russia’s profit-based tax, typically paid once a quarter, reaping about 500 billion roubles, according to Reuters calculations.

The coffers have been boosted by a rise in the average price of Russia’s Urals oil grade to 6,405 roubles ($73.12) a metric ton in the second quarter, up from 6,139 roubles in the previous quarter.

The budget is also set to benefit from lower subsidies to refineries under the so-called damper mechanism and excise tax. Those payments from the budget are set to decline in July by about 29 billion roubles from June.

For 2024 as a whole, the government budgeted for federal revenue of 10.7 trillion roubles from oil and gas sales, up 21% from 2023, when weaker oil prices and a fall in gas exports reduced the revenue by 24%.

That 2024 target was revised down from initial plans for 11.5 trillion roubles.

Russia has heavily increased defence and security spending since launching what it calls its special military operation in Ukraine in February 2022, leading to two consecutive annual deficits exceeding 3 trillion roubles, about 2% of GDP.

(Reporting by Reuters Editing by David Goodman)