Moscow — Russia plans to fix the price of Urals crude oil at $20 per barrel below dated Brent for tax purposes after state oil revenue slumped in January, three industry sources said on Friday.
The government has been debating how to calculate Russia’s taxable oil price following the European Union’s import ban and the resulting lack of a reliable price-setting mechanism.
Russia currently uses Urals price assessments in Europe’s Rotterdam and Augusta ports, provided by commodity price reporting agency Argus, to determine its mineral extraction tax, additional income tax, oil export duty and reverse excise on oil.
According to Russia’s Finance Ministry, the average price of Urals in January was around $49.48 a barrel – in line with the figure used for tax purposes – down 42% from a year earlier and well below the $70.1 per barrel Moscow has used in its 2023 budget planning.
Moscow relies on oil and gas income to fund its budget, but has been forced to start selling foreign currency reserves to cover a deficit that stretched to 1.76 trillion roubles ($24.8 billion) in January to cover the cost of the military operation in Ukraine.
Urals crude differentials to dated Brent slipped to minus $30 a barrel in December from minus $24 in November, remaining sharply below the single-digit discounts seen prior to 2022.
Russia’s oil and gas revenue last year totalled around 11.6 trillion roubles ($165 billion).
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