The largest oil and gas companies in Russia have seen their revenues drop by almost half

The introduction of a price ceiling on Russian oil and petroleum products led to a reorientation of export flows to Asia and Africa.

The revenue of the largest oil and gas companies in Russia fell by 41% in January-September 2023, the Central Bank of the Russian Federation reported on Thursday in its Financial Stability Review.

“This happened due to a deterioration in the price environment and a decrease in oil export volumes amid tightening sanctions, restructuring of supply chains and financial flows,” the review says.

Oil export volumes through the Transneft system dropped by 8% over 9 months, and the average price of the Urals grade dropped by 26%, the Central Bank states: this year, on average, each barrel was exported at $59.54, and last year – at $80 ,58.

The introduction of a price ceiling on Russian oil and petroleum products led to a reorientation of export flows to Asia and Africa, but as a result, logistics became more expensive, transaction costs increased, and some payments arrived with delays, the Central Bank writes. “In addition, there remain risks of introducing secondary sanctions affecting the oil industry,” the review says.

The volumes of foreign exchange earnings of Russian oil and gas majors decreased even more: the share of the dollar in export revenues shrank by half, to 24%, and the volume of foreign currency sales on the stock exchange collapsed by 58%.

The “weak link” of Russian oil and gas was Gazprom, which lost the European market. After cutting off supplies to most customers in the EU, the company suffered more than a trillion rubles in net losses and was forced to reduce production by a quarter compared to the pre-war period. Rosneft reported a drop in revenue by 8% for the first nine months of 2023, to 6.612 trillion rubles.

Russian gas trade – details

From January to September 2023, Europe imported roughly the same amount of Russian liquefied natural gas (LNG) as in the same period last year. Spain and Belgium doubled their imports of liquefied natural gas from Russia during this period.

Germany is still trading in Russian gas because terminating a nationalized firm’s contract could cost billions of euros, creating a dilemma for Berlin that could potentially benefit Moscow.

(C)UNIAN 2023