What awaits oil and gas budget revenues
Analysts estimated future oil and gas revenues of the budget, in their opinion, it is unlikely that the cost of raw materials will drop to $35 per barrel. The reason is negative sentiment against the background of reduced demand and fears of another wave of coronavirus.
According to the Ministry of Finance, the export duty on oil is 45.4 dollars per ton, having dropped by 2 dollars. However, the expert does not rule out that the rough market should soon go up.
The amount of the export duty in Russia depends on the world prices taking into account monthly corrections made by the Ministry of Finance. The revision is carried out on the 15th of last month for Urals crude, and this policy has been adopted since 2001.
The cost of raw materials started to get cheaper in autumn. For example, in the period from late August to mid-September last year, the Brent futures for November fell from 46.5 to 39.3 dollars per barrel. The Russian brand Urals traditionally goes at a discount to the North Sea benchmark, which is a few dollars. According to analysts from the relevant ministry, the average cost of Urals for half of September is 42.7 dollars per barrel. This means that in October the tariff for export of Russian raw materials for its producers decreased to $45 per ton, and before that it was at the level of $47.5.
There is an effect of Kudrin’s scissors, when the period of tax payment for oil workers is different in terms of time of receiving funds from the sale of raw materials. The cost of oil has a direct impact on budget revenues – the price drops and revenues go down. Moreover, not only oil sales will reduce revenues, but also mineral extraction tax, the formula of which also applies this price element. The share of MET is 73% of oil revenues, which means that the export duty in this case affects much less.
Analysts agree that the oil price will not reach $35 per barrel. There is now a trend in the market for higher prices, and there is every reason to believe that such sentiment will continue in the future. Experts note that the equilibrium price of oil is about $40-42 per barrel and it is not expected to exceed $50 per barrel. For comparison, in the fourth quarter of last year the Brent brand was bought for 47 dollars per barrel, and so far it remains at this level. Demand for energy is expected to increase and, with it, export rates, which will allow Russian oil companies to cover losses during the pandemic.