Deputy Prime Minister Alexander Novak charts 2022 oil exports and market shifts
At a recent meeting of the college of the Russian Ministry of Energy, Deputy Prime Minister Alexander Novak highlighted a dramatic rise in Russian oil exports to India in 2022, noting a twenty-twofold increase. He also pointed to growing shipments to China and other markets, crediting the industry’s hard work for these gains.
Novak explained that in 2022 Russia redirected a large share of its energy supplies toward what he called friendly markets. He stressed that Moscow intends to press forward in 2023 with efforts to expand a tanker fleet and to develop energy resource routing, including insurance and reinsurance mechanisms, to better support the flow of oil and gas to new destinations.
The Deputy Prime Minister reported that revenues from the fuel and energy complex constituted 42 percent of federal budget receipts in 2022, up from 36 percent in 2021. He described this as a vital contribution to the stability of Russia’s broader economy.
Novak also touched on resilience amid sanctions in 2022, noting that the industry still delivered solid results and exceeded the expectations of skeptics who warned of declines in production and exports. In a separate briefing, he said that Russia’s 2022 budget revenues from oil and gas rose by 28 percent, equating to about 2.5 trillion rubles. He noted that Russia shipped roughly 67 million tons of oil to China in 2022, roughly a third of China’s total imports, and indicated that these volumes are set to grow in the future.
Sales did not fall
Energy Minister Nikolai Shulginov said Russia managed to fully reorient its supply of oil and oil products after the embargo by the European Union and G7 countries, and that sales did not decline. He stated that Moscow redirected exports toward Asia, Africa, the Middle East, and Latin America to maintain momentum.
According to the Ministry of Energy, Russia’s oil exports rose by 7.6 percent in 2022 to 242.2 million tons, while overall energy production grew by 2 percent to 535.1 million tons. Gas exports fell by 30.7 percent to 170.6 billion cubic meters, though gas production still rose 11.7 percent to 673.8 billion cubic meters. The ministry cautioned that 2023 could bring a downturn in oil and gas output due to a voluntary reduction in stable production and other market dynamics.
Shulginov noted that gas production for the year could be lower because European buyers have rejected gas flows and a rapid rerouting is not feasible without new infrastructure. He emphasized the need to invest in and develop the necessary transmission lines and storage facilities to adapt to shifting demand while maintaining reliability for consumers.
Energy pricing movements
In late September 2022, Denis Deryushkin, vice-president of the Russian Energy Agency within the Ministry of Energy, told TASS that the Urals crude was trading with a discount of up to $20 per barrel to Brent, reflecting market conditions. By year-end, Reuters reported the Urals price in Asia remained deeply discounted, sometimes below the agreed ceiling and occasionally below cost.
In February, Deputy Foreign Minister Andrei Rudenko told RIA Novosti that pricing for oil sold to India would continue to be determined by market mechanisms, with Moscow asserting that it would not sell energy resources at a loss. He added that Russia would keep exporting oil to India to support India’s energy security as long as it remained profitable for Moscow.
On March 15, Russia’s Finance Ministry released data showing that the average Urals price for February 15 through March 14, 2023 stood at about $50.8 per barrel, or $370.9 per ton. The ministry also noted that the average price for all of 2022 was $76.09 per barrel. Analysts observed that this price point was below the Western ceiling established to cap offshore Russian oil sales, which had been set at $60 per barrel starting in December.
Bloomberg, citing unnamed sources, reported in mid-March that India would comply with the price ceiling as part of ongoing discussions with Western governments and banks. Some industry analysts noted that Indian buyers had not exceeded the ceiling and were trading within a reasonable range of $53–$56 per barrel. Russia disputed the applicability of the ceiling to its pricing strategy, with officials arguing that the ceiling did not apply to all transactions and that tax rules would adjust accordingly. In a separate move, Moscow revised the Urals’ tax treatment to reflect new accounting methodologies aimed at aligning with budgetary needs, a change that was expected to narrow the gap between Urals and Brent prices. By February, Urals traded at roughly a $30-per-barrel discount to Brent, and Novak signaled plans to decrease the discount further in March.
February data from the International Energy Agency indicated that Russia supplied 40 percent of India’s oil imports and 20 percent of China’s imports, with these two countries accounting for about 70 percent of Russia’s oil exports. In February, IEA estimated that Russia’s oil export revenue declined by about $2.7 billion compared with the prior month, underscoring the ongoing impact of price controls and market diversification on the country’s energy economy.