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. Russia’s progressive tax system means that taxes increase in line with higher oil price ranges. With the oil and gas sector remaining the keystone of the country’s economy and with Western sanctions over the invasion of Ukraine starting to mount up, Russia is looking east for export opportunities.
Russian oil volumes are estimated to drop by 2 million barrels per day (bpd) by 2030 compared to 2021, while gas production will grow marginally, but will still be lower than pre-conflict estimates. 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. Russia’s recent move to block gas sales to Bulgaria and Poland will not have a significant impact on revenues.
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