Russia Eyes Cut In Subsidy To Oil Firms

Russia’s government is considering cutting subsidies to the nation’s oil refineries as it looks for ways to limit spending amid the war in Ukraine, according to people familiar with the matter.

• In 2022, Russia spent 2.17 trillion rubles ($26.6 billion) compensating refiners for the difference between the base price of domestic fuels and their theoretical value if exported to Europe, according to data from the Finance Ministry.
• In the first quarter of 2023, the companies received more than 253 billion rubles.
• Now the government is looking to raise the base price of gasoline and diesel in the subsidy formulas by as much as 50%. That would reduce future subsidies, or could even lead to a situation where refiners would have to make payments into the budget if the base fuel price exceeded the European export value, people familiar with the matter said.
• The nation’s oil and gas industry is a key source of tax revenue for the Kremlin. In March, the industry’s contributions to the budget dropped more than 40% from a year earlier to 688.2 billion rubles, according to data from the Finance Ministry.