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Oil and natural gas sales account for 68% of Russian export revenues

Hydrocarbon Engineering,

According to the US Energy Information Administration (EIA), sales of crude oil, petroleum products and natural gas accounted for 68% of Russia’s total export revenues in 2013. Russia received almost four times as much revenue from exports of crude oil and petroleum products as from natural gas.

Most of Russia’s exports of crude oil and products, as well as virtually all exports of natural gas, are delivered to Europe, including Turkey. Asia (in particular China) receives substantial volumes of crude oil and some LNG. Recently, Russia finalised a 30 year, US$ 400 billion natural gas supply deal with China. North America imports some Russian petroleum products, particularly unfinished oils used in refineries.

Although Russia exports less crude oil and less natural gas than it consumes domestically, domestic sales of crude oil and natural gas are much lower in value than exports because of vertical integration of the oil and natural gas industry and  subsidized domestic prices.

The EIA highlights that many Russian oil firms are vertically integrated, owning both the oil fields and refineries that process crude oil. These firms can sell crude oil directly to their own refineries at low prices. Domestic natural gas prices are also subsidized, forcing Russian companies like Gazprom to use export revenue to fund new investment in infrastructure and projects. EIA estimates that Russian domestic sales of natural gas and crude oil were US$ 20 billion in 2013, based on data from IHS energy.

Although revenue from domestic sales of crude oil and natural gas in 2013 was significantly lower than revenue from exports, Russian domestic sales of petroleum products, particularly motor gasoline and distillate fuel oil, were approximately US$ 102 billion, similar to revenue from product exports.

According to EIA, oil and natural gas activities make up a large portion of Russia’s federal budget. According to the Ministry of Finance, 50% of Russia’s federal budget revenue in 2013 came from mineral extraction taxes and export customs duties on oil and natural gas.

Adapted from a press release by Emma McAleavey.

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