Russia is projected to add $260 billion into its budget from sales of oil and gas this year because of high energy prices, Norwegian research company Rystad Energy said on Monday
MOSCOW (Pakistan Point News / Sputnik - 02nd May, 2022) Russia is projected to add $260 billion into its budget from sales of oil and gas this year because of high energy prices, Norwegian research company Rystad Energy said on Monday.
"Despite the severe oil production cuts expected in Russia this year, tax revenue will increase significantly to more than $180 billion due to the spike in oil prices, Rystad Energy research shows. This is 45% and 181% higher than in 2021 and 2020, respectively," the company said in a statement, adding that "extremely high gas prices in Europe as well as liquefied natural gas (LNG) prices in Asia will generate around $80 billion of tax flows in Russia in 2022."
According to Rystad Energy, European buyers started avoiding buying Russian oil over concerns about sanctions immediately after Russia started its military operation in Ukraine. Nevertheless, this issue created problems only for three weeks and in the exports started to rebound in late May thanks to new orders from China and India. In April, Russia's oil exports remained stable.
"If further sanctions on Russian energy exports come into place, then the most likely scenario is a gradual phase-out of Russian oil in Western markets that will take several months to complete. Russia's ability to redirect all unwanted cargoes from the West to Asia are limited, meaning that, in the case of embargoes, Russia will be forced to cut production further as it lacks storage capacity for extra crude volumes," the company stated.
On February 24, Russia launched a military operation in Ukraine after the breakaway republics of Donetsk and Luhansk appealed for help in defending themselves against Ukrainian forces. In response, Ukraine's allies, including the European Union, rolled out a comprehensive sanctions campaign against Moscow, which includes airspace closures and restrictive measures targeting numerous Russian officials and entities, media, and financial institutions.
Last week, European Commission Executive Vice-President and Commissioner for Trade Valdis Dombrovskis told The Times that Brussels was drafting more sanctions against Russia over the operation in Ukraine, which will include "some form of an oil embargo."
