The Russian budget’s oil and gas revenues fell by 47% to 3.38 trillion roubles ($37.4 billion) in the first half of the year from the same period in 2022,finance ministry data showed on Wednesday, as tax returns fell because of lower prices and sales volumes.

Proceeds from oil and gas sales are crucial for Russia’s commodity-oriented economy and for the financing of what it calls its “special military operation” in Ukraine.

The oil and gas revenuesdeclined by 26.4% in the month of June, year on year, to 528.6 billion roubles – less steep than the 36% fall seen in May.

Russia’s energy revenues have been squeezed by a western price cap on its oil and by the closure of the Nord Stream gas pipelines to Europe that were blown up last September. Investigators have yet to establish who was responsible.

Russia’s budget deficit hit $42 billion for the first five months of the year, already 17% above the plan for the whole of 2023.

June’s oil and gas budget revenues were down7.4% from May, mainly due to lower proceeds froma mineral extraction tax (MET) on oil and gas and fromexport duty on natural gas.

Proceeds from the MET fell to 631.6 billion roubles in June from May’s 703.6 billion roubles, while exportduty declined to 57.7 billion roubles from 66.1 billion roubles in May.

Budget subsidiesto refining companies from an “oil reverse excise tax” declined to 73.9 billion roubles from 91 billion roubles in May.

Payments to refineries under the “damping mechanism” – introduced to stop companies from capitalizing on high fuel export prices and defend the domestic market – fell to 78.6 billion roubles from 103.5 billion roubles in May.

The financeministry projectsoil and gas revenues this year to declineby 23% to 8.94 trillion roubles, while the budgetdeficit is seen at almost 3 trillion roubles, or 2% of gross domestic product.
Source: Reuters (Reporting by Darya Korsunskaya; writing by Vladimir Soldatkin; Editing by Mark Trevelyan)