Russia will have record revenues from natural gas sales this year due to high prices in the spot markets, Janis Kluge, a Eurasia-focused researcher at the German Science and Politics Foundation, told ntv.de news outlet.
“Almost half of the Russian budget is based on transactions with oil and gas. The state earns enormously from production taxes and export duties. It receives the income in rubles, and the amount is determined by two factors: firstly, by energy prices on the world market and, secondly, by the exchange rate of the ruble,” Kluge says.
According to him, revenue from gas will soar this year, as many of Russia’s gas contracts are adjusting to the rising spot prices.
“The gas price on the spot markets has quintupled within the past year. That means Gazprom will have record revenues,” he said, while predicting that the cost will increase significantly within the next several months.
The situation is similar with oil, Kluge says, which profits from the ruble’s sanctions-induced drop.
“Russia planned the national budget with a dollar-ruble exchange rate of 72, but now the ruble is around 85, much weaker, but with a view to energy exports this is an advantage. If we multiply the oil price by the ruble exchange rate, it shows that Moscow expected revenues of around 4,500 rubles per barrel of oil, but is getting much more, around 7,000 rubles.”
According to him, the profit from energy sales will be enough to cover the impact of Ukraine-related sanctions on the Russian economy, among other things, by halting inflation.
Kluge also believes the costs of the operation in Ukraine are not very high, and economic measures, except for a complete embargo, will hardly “stop the tanks.” And seeing that the Russian Central Bank has been inventive in introducing counter-measures to keep the economy afloat, Kluge predicts that Russia will survive the sanctions and even have a budget surplus this year.