Russian Budget Sees Reduced Oil Income

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The share of oil and gas in the income of the state budget in the first three months of the year fell to its lowest quarterly level since 2011, according to a report by Russian Scientific Research University Higher School of Economics. Income from oil and gas accounted only for 30% of the total inflow into state coffers of 5.3 trillion rubles ($70 billion), amounting to 1.6 trillion rubles, which is 10% lower than in the first quarter of 2020. In the past, its share has been close to 50%. The main reason for the drop was the oil production cuts under Russia's participation in the Opec-plus deal. According to the report, the price for Russia's Urals crude oil export blend in first-quarter 2021 averaged $60.20 per barrel. This is practically the same as a year ago, or at least in the first two months of 2020, before prices started plummeting as a result of the spread of coronavirus and collapse of the previous Opec-plus deal. However, Russia's crude oil and gas condensate production dropped by 10% in first-quarter 2021 from the same period of 2020, to 10.171 million b/d, according to preliminary data from the energy ministry. Diversification of the Russian economy away from oil and gas is one of the long-standing targets set by the government and President Vladimir Putin. However, there is still a way to go to reach that goal and experts are sure that when the Opec-plus deal expires in April 2022 and Russia recovers its reduced output volumes, the share of oil and gas in the state budget will go up again. Meanwhile, the energy ministry said that capital expenditure in the country's oil production by vertically integrated companies last year stood at 1.3 trillion rubles ($18 billion), down a thin 1.9% from 2019. In US dollar terms, however, the drop was much bigger as the national currency lost 12% of its value last year.

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