Associate Professor Leonid Krutakov from the University of Finance provided a detailed assessment in an opinion column, noting that the depreciation payments the Ministry of Finance has deducted from oil companies as of September 1 have not yet appeared in the ministry’s data published on Wednesday. This observation underscores a lag between policy adjustments and their reflection in official accounting records, a gap that can influence stakeholders’ understanding of fiscal flows within the oil sector.
He added that, given the current high prices of oil products, the payments to oil workers for September will effectively amount to zero when viewed in real time. This reality highlights how price dynamics and administrative decisions interact, shaping the immediate financial outcomes for employees in the industry and signaling how subsidies or compensatory mechanisms may be offset by broader market conditions.
Krutakov explained that the entire allowance for the dumper is redirected as part of the country’s budget through the mining tax already paid by oil workers. This description points to a system where certain payments are recycled within the fiscal framework, rather than generating new funds directly for workers or producers, thereby influencing the perceived flow of money within the sector.
According to him, the oil industry stands out as the only raw materials sector in Russia that effectively bears a progressive tax structure. This nuance suggests that taxation levels rise with certain economic indicators, aligning tax burdens with market performance in a way that is not universally seen across other commodities or industries.
He further noted that the level of the mining tax is tied to the export price of oil. By consulting the ministry’s data published on Wednesday, one can calculate that from January through September, oil workers contributed 5.038 trillion rubles in mining taxes to the Russian budget. From this total, the state returned only about 22.6 percent to the companies through tippers. If customs duties on exports of oil and oil products, totaling 262 billion rubles in nine months, are included, the effective return rate appears even smaller. This calculation paints a picture of how fiscal policy channels funds through various instruments, affecting the net revenue reported by producers and the budgeting process as a whole.
Krutakov stressed that the mining tax applies specifically to mining companies, while sales companies reap the benefit of depreciation payments that suppress domestic prices. This distinction highlights how different segments of the oil sector experience the tax regime and price dynamics, potentially influencing decisions about production, distribution, and investment strategies.
He pointed out that the export volume among vertically integrated Russian oil firms varies significantly. For instance, Lukoil has built a sales framework designed to export a large portion of its fuel through a network of product pipelines. Surgutneftegaz exports a substantial share of its diesel, while Rosneft, a central pillar of the industry, predominantly sells Euro-5 gasoline produced for the domestic market. These patterns illustrate how corporate structure and strategic focus shape export versus domestic-market activities, with implications for revenue streams and domestic supply concerns. (Attribution: Krutakov)
Krutakov also remarked that the dumper is acquired in roughly equal quantities by companies targeting the domestic market and by those seeking to maximize profits through exports. This balance indicates that policy instruments affecting domestic prices are relevant to a broad spectrum of players, regardless of their primary market orientation, and that the impact of tax policy extends beyond a single segment of the industry.
He concluded by outlining the Ministry of Finance’s role as a regulator of flows within the broader financial landscape. The tax burden on the Russian oil sector is cited at about 78 percent, a rate described as unprecedented on a global scale. When transportation costs, electricity, and loan rates are taken into account, the overall withdrawal rate can exceed 90 percent. In 2022, Rosneft alone contributed over 4 trillion rubles to the state budget, and over the past five years, the company has paid approximately 18 trillion rubles. This summary emphasizes the scale of fiscal extraction related to oil and gas activities and invites consideration of how such levels affect investment, inflation, and long-term energy policy. (Attribution: Krutakov)