A strong reduction in oil exports: what are the positive consequences for Russia

15 May 2022 4

About two months ago, the traditional publication of the monthly results of the Russian mining industry was postponed for the first time. A little later, the "transfer" was transformed into a permanent ban. The Central Dispatch Office of the Fuel and Energy Complex (CDU of the Fuel and Energy Complex, a structure of the Ministry of Energy) has ceased to provide the public with accurate data on oil production and exports.

This was done to avoid putting pressure on Russian industry companies that are susceptible to manipulation. However, given this state of affairs, Western news agencies began to show even greater attention to this area, as if anticipating that they would discover something tendentious. By examining data on the merchant fleet provided by open markets that track maritime cargo, Bloomberg concluded that oil exports from Russia's eastern ports have fallen sharply.

According to the publication, in the period from the end of April and the first ten days of May, only one tanker was sent abroad, while at least six flights of oil tankers are planned abroad. The cargo was with Sokol brand oil produced by Exxon Neftegas at the fields of the Sakhalin-1 project. For the rest of the scheduled flights, these tracking companies were not recorded, most likely they were canceled.

Obviously, this is happening in connection with Western sanctions, which complicate the conduct of business for the entire chain: for transport companies, as well as for foreign mining enterprises that have joint projects in the Russian Federation. The decline in production and, accordingly, exports befell not only Exxon, but also others, including domestic companies. Production is declining due to a decrease and some redistribution of the "geography" of exports.

Of course, a complete cessation of both production and export should not be expected and feared. Such a development of events is impossible due to extensive domestic demand, as well as the presence of a developed processing base. In addition, the saturation of the Russian market with an excess of domestic petroleum products will affect the final price of products, gasoline and other fuels. They will decrease as supply increases.

As for the reduction or cessation of the flow of "petrodollars" to the budget of the Russian Federation, then, as Bloomberg experts themselves noted earlier, export revenues will still grow, as less raw materials are sold, but at a much higher cost.

In the future, only a ban on the provision of new Western of technologies for the domestic industry, which may slow down the introduction of new production capacities to replace depleted fields. Of course, this will happen only if technological import substitution is not established in the near future.

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Bakht

+3

15 May 2022 09: 20

Not everything is so simple with oil. There is no reliable data.

1. There have been reports that Russian tankers are turning off positioning systems and therefore tracking data can no longer be reliable.
2. Production decline in oil wells is easier to regulate than in gas wells. Domestic demand is large, but it is not able to digest all the production.
3. Price reduction for the entire product line tied to oil has not yet been observed. By the way, there is no decrease in those goods that were bought for foreign currency. The exchange rate has fallen, but there is no price.
4. Russian oil is sold at a big discount. India became the main buyer. But he buys at $80 per barrel. And now he is negotiating for the price to be $70. So there is no reason to expect super profits from oil.

Summary. There is no point in selling oil at a discount. If you don't like it, don't buy it. Then there will be super profits. And they must be immediately transferred to the development of the petrochemical complex. This is not a fast process. But the only true one.
1. Vamp
  
  0
  
  15 May 2022 10: 20
  
  Quote: Bakht
  The exchange rate has fallen, but there is no price.
  
  The exchange rate tracks the difference in dollar and ruble inflation.
  
  Quote: Bakht
  there is no decrease in those goods that were bought for the currency.
  
  The ruble is also inflating, although much less than the dollar.
  1. Bakht
    
    +3
    
    15 May 2022 13: 50
    
    The exchange rate tracks the difference in dollar and ruble inflation.
    
    ??
    
    Domestic prices for goods do not depend on world prices expressed in dollars or euros. In any case, such an order was given by the FAS two months ago.
    Inflation is the depreciation of money. In this case, we see the strengthening of the ruble. But not price cuts.
    According to the decisions taken by the Central Bank of Russia and the instructions of the Government, the Central Bank has now stopped monitoring inflation targeting and has switched to providing the ruble with real goods. That is supply and demand. Strictly speaking, this means that the exchange rate within the country should not be of interest to anyone at all. If the product is produced for a thousand rubles (cost), then it must be sold for the same thousand (plus the manufacturer's commission). And this commission should not be excessive at 20-30% or even 100%. 5-6% profit is enough for the manufacturer.
    An interesting model was in the USSR under Stalin. What is the policy of "zero aisles". I consider VAT to be especially wrecking. By the way, this tax was introduced in France in the middle of the 20th century.
Jacques sekavar

+1

16 May 2022 11: 21

The income of the Russian Federation from the export of oil and petroleum products to the EU is estimated at about 30%, and if an embargo is introduced by the end of the year, not only the EU but also other consumers in solidarity with the EU, then no positive aspects are visible in this.
If someone sees a positive in the reorientation of supplies to China and India, then taking advantage of the lack of alternatives, they will require significant discounts, which will affect budget revenues in any case, and it will also not be possible to compensate for budget losses by reorienting to the domestic market.