Deputy Prime Minister of the Russian Federation Alexander Novak said at the last meeting of the college of the Russian Ministry of Energy that in 2022, exports of Russian oil to India increased 22 times.
“Supply to the People’s Republic of China and other markets has increased, and this is also a result of the great work done in the industry,” the deputy prime minister said.
According to him, in 2022 most of the Russian energy supply was diverted to the markets of “friendly” countries. The Deputy Prime Minister emphasized that in 2023 Moscow will continue to work on the creation of a tanker fleet and the redirection of energy resources, including insurance and reinsurance vehicles.
The Deputy Prime Minister said that revenues from the fuel and energy complex last year provided 42% of federal budget revenues, compared to 36% in 2021. This is an important contribution to the stable functioning of the entire economy of our country.
Novak noted that despite the sanctions in 2022, the industry achieved good results. “And they even exceeded the expectations of the skeptics, especially those who say our country will fall in terms of both production and exports,” added the Deputy Prime Minister.
Earlier, Novak reported that in 2022 Russia’s budget revenues from the oil and gas industry increased by 28%, or 2.5 trillion rubles. He also pointed out that Russia delivered about 67 million tons of oil to China in 2022, that is, almost a third of its total exports. The Deputy Prime Minister later noted that these volumes will increase in the future.
Sales did not fall
In turn, Energy Minister Nikolai Shulginov said that Russia has managed to completely reorient the volume of oil and oil products supply, which fell due to the embargo of the EU and G7 countries.
“There was no drop in sales,” the minister said. He pointed out that Moscow directed its oil and petroleum products exports to Asian, African, Middle Eastern and Latin American countries.
According to the Ministry of Energy, in 2022, Russia’s oil exports increased by 7.6% to 242.2 million tons, while energy production increased by 2% to 535.1 million tons. At the same time, gas exports decreased by 30.7% to 170.6 billion cubic meters. m, and its production – 673.8 billion cubic meters, increasing by 11.7%. m.
The ministry expects a decline in oil and gas production in 2023. According to Shulginov, this is due to a “voluntary reduction in stable output”.
“The gas production level for the year may be lower due to the rejection of our gas by European consumers and the inability to reroute gas flows instantly – a new infrastructure needs to be created for this,” the minister said.
Energy price
In September 2022, Denis Deryushkin, vice-president of the Russian Energy Agency (REA) under the Russian Ministry of Energy, told TASS news agency that the discount for Russian quality Urals is up to $20 per barrel compared to Brent prices.
agency at the end of December. Reuters He reported that the Urals continue to trade in Asia at deep discounts – below the set ceiling price and sometimes below cost.
In February, Russian Deputy Foreign Minister Andrei Rudenko said in an interview with RIA Novosti that the price for Russia to sell oil to India is determined by market methods. At the same time, Moscow “will not sell its energy resources at a loss,” he said.
“We will continue to export oil to India as much as it needs to ensure its own energy security,” Rudenko said.
On March 15, the Russian Ministry of Finance reported that the average price of Ural oil, the main type of oil produced in Russia, from February 15 to March 14, 2023 was $ 50.8 per barrel or $ 370.9 per ton. According to the Russian Ministry of Finance, the average price of Russian oil for the whole of 2022 was $ 76.09 per barrel.
The price of $50.8 per barrel is below the ceiling set by Western countries to limit offshore oil supplies from Russia. The ceiling price of $60 per barrel took effect on December 5.
On March 12, Bloomberg wrote, citing sources, that India will not violate the price cap for Russian oil imposed by the West. According to him, Indian officials appealed to the leadership of banks and traders with the obligation to comply with restrictions after “detailed talks” with members of the US delegation and other G7 countries. As Vortexa analysts pointed out in January, the oil price for India has already not exceeded the ceiling and has reached $53-56 per barrel.
In Russia, information on India’s compliance with the price ceiling was called unreliable. “India is profitable to buy Russian oil and India will continue to buy it as long as it is profitable. I think that’s the problem, Denis Alipov, the Russian Ambassador to New Delhi, told TASS. Indian officials declined to comment on the Bloomberg article.
Moscow has repeatedly stated that it does not recognize ceiling prices. according to the newspaper “Kommersant”, the ceiling did not lead to a decrease in oil production in Russia, but reduced the cost of the Urals. This prompted the Russian leadership to change the methodology of calculating the oil price in order to tax oil companies. Therefore, since April, the maximum tax deduction of the Urals to Brent for tax purposes cannot exceed $ 34 per barrel, and from July 25 $ per barrel. In February, the price of Russian oil was about $50 a barrel, so the discount to Brent was about $30 a barrel. In March, Novak promised to reduce the discount in the Urals.
Russia supplied 40% of India’s oil imports and 20% of China’s imports in February, according to the International Energy Agency. These countries account for 70 percent of Russia’s oil exports., the agency calculated. Analyzing February 2023 data, the agency said Russia’s oil export revenue fell by $2.7 billion in February to $11.6 billion.