Russian oil, gas tax revenues soar in October

Oil and gas revenues collected by the Russian state soared to 1.281 trillion rubles ($21bn) in October, from 688.6bn rubles in the previous month, according to finance ministry data, after a temporary windfall tax was imposed on Gazprom's profits.

The Russian government has increased the amount of mineral extraction tax (MET) that Gazprom has to pay by a projected 416bn rubles for September through November this year. The company is expected to pay 1.248 trillion rubles in total MET during the three-month period.

The hike in MET will largely be offset by increase in domestic gas tariffs charged by Gazprom, Ronald Smith, analyst at BCS Global Markets, tells NGW. But the company also faces a flat, 50bn ruble/month tax over the next three years, "which effectively removes much of the super-profits from record-high European exports," he says.

MET is by far the largest contributor to Russian tax receipts from the oil and gas sector, amounting 990.2bn rubles in October, or three-quarters of the total. Of this sum, 408.4bn rubles was taxed on oil production and 452.9bn on gas production. In comparison, MET payments for gas output came to only 577.8bn rubles in 2021, and only 482.2bn rubles in the previous year.

The increase in tax receipts comes despite declining Russian oil and gas export volumes in recent years, as a result of Moscow's cuts to gas supply and European buyers shunning Russian crude ahead of an EU ban due to come into force in early December.

Russian authorities already tax the oil and gas sector considerably, but have had to hike rates to shore up budget finances, which have been left depleted by the war in Ukraine and resulting sanctions.