Dwindling sales of Russia’s natural gas and oil show how energy exports will not help the growing economic problems that Vladimir Putin is facing, his former deputy energy minister has told Newsweek.
The comment by Vladimir Milov, an economist who served under the Russian president from May to October 2002, follows figures which show another drop in official revenues of Russia’s energy exports amid a plunging ruble, and a stubbornly high inflation rate, fueled in part by Putin’s military spending.
In a bid to curb inflation which is at more than twice its goal of 4 percent, Russia’s Central Bank has raised the key interest rate to a record 21 percent, a level which it is expected to raise again when it meets this month.
Amid increased economic turbulence in Russia, the business newspaper Kommersant reported that oil and gas revenues for the federal budget in November was 802 billion rubles ($7.97 billion), a dip by over a third (34 percent) from the previous month and 17 percent down year-on-year.
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“With the newly implemented banking sanctions, we expect December to be much worse,” Ukraine’s Centre for Strategic Communication and Information Security posted on X, formerly Twitter, in reporting the figures published December 5.
“It’s not a game-changer, but it shows that oil and gas revenue won’t ease Putin’s mounting budget troubles,” Milov, said on Monday. “I think in part, which the Kommersant article fails to mention, it also comes from loss of (over) 200 million euros ($212 million) monthly revenue from gas sales to Austria.”
Russia halted gas supplies to Austria on November 16 in a dispute over payments following an arbitration award to energy supplier OMV over unfulfilled supplies to its German unit by Russia’s state firm Gazprom.
Before Putin launched his full-scale invasion of Ukraine, Russia was Europe’s biggest supplier of natural gas, but lost almost all of its purchasers on the continent which has since reduced its reliance on Moscow.
As Moscow tries to find new markets for its key energy exports, natural gas sales have plummeted, forcing Gazprom to cut production this year and post its first annual loss of the century in June.
The G7 led sanctions against Russian oil exports via a $60 price cap on sea-bound barrels, although the Kremlin has circumvented many of these measures through a “shadow fleet” of vessels whose ties to Moscow are hidden, often through shell companies.
The Russian Finance Ministry’s figures cited by Kommersant showed the dollar value of a barrel of Urals had decreased by over one fifth in one year—from $81.7 in October 2023 to $64.7 in October 2024.
Russia has posted better than expected GDP growth, but Putin’s military spending plans are expected to eat up nearly one third of the national budget in 2025, according to plans posted on a government website.
Newsweek has contacted the Russian Finance Ministry for comment.
