Russia's 2023 oil and gas revenues falls to three-year low

Russia's annual oil and gas revenues fell to Rb8.822 trillion ($99.34 billion) in 2023, down Rb2.746 trillion on the year and the lowest since 2020, according to a Jan. 11 report published by Russia's finance ministry.

December oil and gas revenues totaled Rb650.5 billion, the report showed, the lowest monthly revenue since August.

The ministry said December's oil and gas revenues were Rb199.9 billion below expectations because of "adjustment to tax legislation" and the "deviation of physical volumes from forecasted values."

Russia cut oil production and export volumes throughout 2023 amid a wider OPEC+ strategy to buoy global oil prices.

At the latest OPEC+ meeting in November, Russia agreed to cut an additional 200,000 b/d of supply, bringing its total reduction to 500,000 b/d in the first quarter of 2024. The reduction will be from an average level of exports in May and June 2023, and will consist of 300,000 b/d of crude and 200,000 b/d of refined products.

OPEC+ kingpin Saudi Arabia agreed to cut 1.3 million b/d of crude supplies during the same time period.

Russia's 2023 oil and gas revenues have taken a hit following the implementation of Western sanctions on Russian energy resources, including a $60/b price cap on Russian oil introduced by G7 nations in December 2022.

According to assessments made by Platts, part of S&P Global Commodity Insights, Urals have at times traded at a discount greater than $40/b to Dated Brent following the introduction of the price cap.

Platts last assessed Urals FOB Primorsk at $17.75/b below Dated Brent Jan. 10, placing the outright price for the grade at $60.19/b.

Urals breached the price cap for the first time in July before climbing to a peak of $84.27/b Sept. 27, according to assessments made by Platts, on the back of a tightening global sour crude market, stemming from OPEC+ production cuts, Russian exports cuts and the continued suspension of Iraqi crude exports from Turkey.

In Q4 2023 Urals crude prices came increasingly under pressure as the US, UK and EU all stepped up their enforcement of the price cap.

"US authorities have been more active against operators clearly involved [in circumvention], adding pressure on any such movement in future," said Fotios Katsoulas, lead tanker analyst at S&P Global.

G7-linked tanker operators continued to shy away from Russian crude trade, S&P Global Commodities at Sea data showed, amid tighter sanction enforcement from Western authorities to counter circumvention.

In December, 1.2 million b/d, or 36%, of seaborne Russian crude exports were lifted by tankers flagged, owned or operated by companies based in the G7, the EU, Australia, Switzerland, or Norway or insured by Western P&I Clubs, CAS data showed. This compared with 38% in November and was the second-lowest reading since November 2022, the month before the G7 price cap come into effect.