Russia’s largest oil and gas exporters faced a significant challenge as their total revenues plummeted by 41% between January and September compared to the same period in the previous year. The decline is attributed to lower commodity prices and reduced exports, impacting the production and export of oil and gas. The Bank of Russia highlighted the ongoing shift away from the use of the U.S. dollar in international payments, affecting the supply and demand of currencies on the domestic market. The share of Chinese yuan in payments for Russia’s oil and gas exports increased from 13% in January to 35% in September, indicating a move towards alternative currencies.
Key Points:
- Revenue Decline: Russia’s largest oil and gas exporters experienced a 41% decline in total revenues between January and September compared to the same period in the previous year.
- Factors Affecting Production and Exports:
- Lower commodity prices and reduced exports contributed to the decline in revenues.
- Oil and gas production and exports witnessed a decrease during the year.
- Shift Away from U.S. Dollar: The Bank of Russia highlighted an ongoing process of moving away from the use of the U.S. dollar and other “toxic” currencies in international payments.
- Impact on Currency Supply and Demand:
- The shift away from the dollar had implications for the supply and demand of currencies on the domestic market.
- Rise in Chinese Yuan Payments:
- The share of Chinese yuan in payments for Russia’s oil and gas exports increased from 13% in January to 35% in September.
- Exports in Russian Rubles:
- The share of exports in Russian rubles remained significant, reaching 39% in September 2023.
- Production and Export Statistics:
- Russia’s natural gas production fell by 11.4% year-over-year between January and September, attributed to lower exports to the EU.
- The volume of oil exports via the Transneft pipeline system declined by 8% annually in the first nine months of 2023 due to the EU embargo on Russian oil and fuels.
- Impact on Crude Oil Prices:
- The average price of the Russian crude grade Urals slumped by 26% compared to January-September 2022.
- Government Income Stability: While companies faced challenges with lower commodity prices and exports, Russia’s state continued to see a steady income from oil and gas exports. In October, oil and gas revenues jumped due to a cyclical surge in profit-based tax, exceeding $18.3 billion.
Conclusion: The significant drop in revenues for Russia’s largest oil and gas exporters reflects the challenges posed by lower commodity prices and reduced exports. The shift away from the U.S. dollar in international payments and the increasing use of alternative currencies, particularly the Chinese yuan, indicate a changing landscape in global trade dynamics. Despite the impact on companies, Russia’s state income from oil and gas exports remained relatively stable, supported by a surge in profit-based tax in October.
