Russia's oil and gas proceeds jump 41% in first half

Increase attributed to rising oil prices, weaker rouble and nation's producers adapting to international sanctions

Oil storage tanks at the RN-Tuapsinsky refinery in Tuapse, Russia. Bloomberg

Revenue from Russia's oil and gas sales for the federal budget jumped by almost 41 per cent on an annual basis in the first half of the year, reaching almost 5.7 trillion roubles ($65.1 billion), Reuters reported, quoting data from the Russian Finance Ministry.

Russia expects to generate more than 10.9 trillion roubles from the oil and gas industry this year.

This surge is attributed to escalating oil prices, a weaker rouble, and the nation's producers adapting to international sanctions.

Revenue from the mineral extraction tax increased to more than 1 trillion roubles last month from 631.6 billion roubles in the same month last year, according to the ministry’s data.

Urals crude, Russia’s key export blend, averaged at $69.1 per barrel during the January-June period, above the western-imposed price cap of $60 and up from $52.5 in the same period last year.

But during the six-month period, the rouble rate faded to 90.8 to the dollar from 76.9 in the prior-year period.

Over the past decade, oil and gas proceeds have been among the major contributors to the country’s income. It added between one third and one half of the total federal budget during the period.

The West has enforced numerous sanctions on Russia intended to reduce its oil and gas revenue because of the continung conflict in Ukraine.

After sanctions by the US and its allies, which have largely closed western markets to Russian exports, China and India have emerged as major buyers of Russian oil.

Indian Prime Minister Narendra Modi is also expected to travel to Russia on July 8-9 to hold talks with Russian President Vladimir Putin.

Russia’s oil-related taxes rose to 590.6 billion roubles in June compared with 402.8 billion roubles in June 2023, according to Bloomberg calculations based on Finance Ministry data.