According to the new rules: the Federation Council approved a law on changing the methodology for calculating prices for Russian oil

From April 1, 2023, the procedure for determining prices for exported oil for taxing the energy industry should change in Russia.

The law on this was approved by the Federation Council on Wednesday, February 22.

The document was initiated by the government on behalf of President Vladimir Putin and was approved by the State Duma on February 16.

As part of the initiative, it is proposed to limit the discount on Russian raw materials of the Urals brand when calculating taxes on the extraction of minerals (MET) and on additional income (ATD) of companies from the production of hydrocarbons.

So, starting from April, if a barrel of Urals oil on the market is sold at a discount of more than $34 off the price of Brent reference crude, the authorities will calculate the MET and AIT based on the cost of Urals with a $34 discount from Brent.

In May, when taxing, the price of Urals will be taken into account as the cost of Brent minus $31, in June a $28 discount will begin to apply, and in July — $25.

“Since the end of 2022, against the backdrop of embargoes imposed by the West and price ceilings for Russian energy carriers, the discount in the price of Urals to the world benchmark Brent has greatly expanded.

This affected our budget revenues, and the authorities decided to change the procedure for calculating Urals for tax purposes, ”Igor Galaktionov, an expert on the BCS World of Investments stock market, explained to RT.

Recall that in December 2022, the European Union refused sea supplies of crude oil from the Russian Federation.

At the same time, the EU, together with the G7 countries, banned its companies from insuring and transporting Russian raw materials to other regions of the world if the price in the contract exceeds $60 per barrel.

Since February 5, similar restrictions have been applied to oil products sold by Moscow for more than $45 and $100 per barrel, depending on the category of fuel.

In response to the actions of the West, Russia imposed a ban on the sale of oil to those countries that require compliance with the price ceiling when concluding agreements on February 1.

In the near future, the same measures will have to apply to the export of petroleum products.

Russian companies, meanwhile, are reorienting their supplies of raw materials to new markets, but so far they are making big discounts to attract customers.

“We have finally entered the Asian market.

In order to successfully gain a foothold there and push out competitors, oilmen offer discounts.

Plus, business began to pay more for transportation, as the routes became longer, ”Igor Yushkov, a leading analyst at the National Energy Security Fund, told RT.

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At the same time, according to the expert, recently some buyers of Russian oil have begun to take big discounts for granted.

For the most part, the current situation suits the oil industry, but not the state, the specialist emphasized.

“The authorities want to shake up the market and change the state of affairs.

Therefore, since March, Russia plans to reduce oil production by 500 thousand barrels per day and thereby limit the supply of raw materials on the world market.

At the same time, at the expense of the law approved by the Federation Council, the state intends to stimulate companies to negotiate with consumers to reduce discounts, ”added Yushkov.

In favor of the budget

According to the latest report of the Ministry of Finance of the Russian Federation, from January 15 to February 14, a barrel of Russian Urals oil was sold at an average of $50.51.

At the same time, the cost of Brent crude on the world market fluctuated in the range of $79-89 per barrel, according to the data of the international exchange ICE.

The current situation has led to a sharp reduction in oil and gas revenues of the Russian budget.

According to specialists from the Ministry of Finance, in January 2023, the state treasury received 426 billion rubles from the sale of hydrocarbons, which turned out to be almost two times (46%) less compared to the same period in 2022.

At the same time, non-oil and gas budget revenues decreased by 28% year-on-year to RUB 931 billion, mainly due to a reduction in domestic VAT and income tax revenues.

At the same time, state treasury spending, on the contrary, increased immediately by 59% to 3.12 trillion rubles.

The Ministry of Finance explained this by additional spending on social needs and support for the economy, as well as financing some expenditure items in advance.

As a result, in January the Russian budget deficit amounted to 1.76 trillion rubles and exceeded half of the amount budgeted for the whole of 2023 (2.93 trillion rubles or 2% of GDP).

Under these conditions, Vladimir Putin asked the government to take measures to ensure that oil discounts provided by Moscow do not create problems for the treasury.

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• © Alexander Wilf

According to experts, changes in the system of taxation of the oil business will partly help improve the filling of the budget.

According to the Federation Council, in 2023 the initiative will bring an additional 660 billion rubles to the treasury.

As Igor Yushkov noted, now it will not matter to the state what kind of discount the oilmen sell raw materials with, since the authorities will still calculate taxes for business according to the parameters fixed in the law.

In such circumstances, suppliers are likely to be forced to independently reduce the discount on exported oil in order to avoid losses, the expert believes.

A similar point of view is shared by Freedom Finance Global analyst Vladimir Chernov.

“Linking to a certain discount will not allow oil companies to sell raw materials cheaper than indicated in the law.

Otherwise, they will have to pay additional tax deductions from their own funds, ”Chernov explained.

Note that the budget for 2023 includes the price of Urals oil at $70 per barrel.

Thus, in April (at a discount of $34) for the planned filling of the treasury, a barrel of Brent on the global market should cost at least $104, in May - $101, in June - $98, and in July - $95.

Experts consider such values ​​realistic.

According to Vladimir Chernov, as the Chinese economy revives, the demand for energy resources in the Asian republic will grow and thereby push up world prices for hydrocarbons.

In this case, the Russian budget will have a chance to run a surplus in the middle of the year, the analyst did not rule out.

No cost cuts

In addition to changing the methodology for calculating oil prices, the Ministry of Finance is now increasing sales of foreign currency from the National Welfare Fund to fill the budget.

It should be noted that the amount of funds in the National Welfare Fund now exceeds 10.8 trillion rubles.

In addition, the government is discussing with big business a one-time contribution to the treasury totaling about 300 billion rubles.

As planned by the authorities, the initiative will affect only those companies that have received windfall profits over the past two years.

Moreover, according to the head of the Ministry of Finance Anton Siluanov, the enterprises themselves are ready to share part of the additional profits with the state.

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• © Pavel Bednyakov

At the same time, borrowings in the domestic market will continue to be the main source of covering budget expenditures, Siluanov noted.

To do this, the Ministry of Finance issues special debt bonds.

Russian investors buy such securities and thereby direct money to government needs, while receiving a stable income in the form of interest.

“We offer various types of securities.

Now, for the most part, these are papers of the medium and long-term period of circulation ... The main investors in our papers are Russian organizations, first of all, of course, banking and financial companies, ”Siluanov said in an interview with the Rossiya 24 TV channel.

Thus, as the head of the Ministry of Finance emphasized, today the state has all the means to fully fulfill its obligations, primarily social ones.

At the same time, even taking into account the increased spending, the authorities see no reason to revise the budget parameters for the current year.

“The budget deficit will be at the level of planned values ​​(2% of GDP. -

) ... There is no reason to say that some of our planned expenses will not be fulfilled, no.

There are enough resources,” Siluanov stressed.