Page 14 - RusRPTJul20

NWF within a couple of years, and now they are considering the prospect of replenishing the fund again.
From $10 to $42 in two months
According to the data of the Argus Media price agency provided by RBC, on June 5 the cost of Urals consignments with delivery to the Dutch port of Rotterdam on the basis of CIF (Cost, Insurance and Freight, the final price includes freight costs to the destination port and cargo insurance, which are incurred by the seller ) amounted to $42.55 per barrel, in the Italian port of Augusta - $42.10 per barrel.
The base price of oil in the Russian budget for 2020 (cut-off level) is $42.4 per barrel. According to the budget rule, excess budget revenues at an oil price above this mark should be sent to the NWF, for, which the Ministry of Finance buys currency on the market, and if prices are lower, the currency purchased for the NWF is sold on the market to finance current budget expenditures.
On March 9, world oil prices collapsed (including Urals fell below the budget cut-off price) against the background of the initial collapse of the OPEC + deal, after, which the Bank of Russia, in agreement with the Ministry of Finance, started selling foreign currency from reserves - for the first time since the budget rule in 2017 .
In April, the average price of Urals reached $18.2 per barrel (at a minimum it fell to $10.5), and the Ministry of Finance was going to use 2 trillion rubles. from the NWF to compensate for shortfalls in oil and gas revenues.
Why currency purchases won't start right now
Currency purchases to reserves may begin no earlier than July. This depends, in particular, on what the average Urals price will be in June (for calculating budget revenues from mineral extraction tax) and for the period from May 15 to June 14 - for calculating the export duty. The average price of Urals in June is still about $40.
But it is necessary that the average monthly price of Urals reaches $44–47 per barrel, analysts estimated for RBC. The fact is that Russia, in accordance with the OPEC + agreements, sharply reduced oil production in May - by 17% compared to the April figure. Such a reduction was not laid down in the forecast of socio-economic development, on the basis of, which the Ministry of Finance now estimates the shortfall in oil and gas budget revenues. In May-July, Russian companies should reduce production to 8.5mn barrels. per day from 10.3-10.4mn as of March. Then production can be gradually increased, but still it will remain below the levels “before the OPEC + deal” until 2022.
OPEC + Countries Extend Oil Production Reduction Until End of July
Business According to the budget rule formula , the Ministry of Finance estimates monthly lost or additional oil and gas revenues based on prevailing Urals quotes (relative to the base level of $42.4), the actual prevailing dollar / ruble exchange rate and forecast monthly volumes of oil and gas production and export of oil, gas and oil products. These volumes are taken from the basic forecast of the Ministry of Economic Development compiled in September last year.
The discrepancy between these indicators and actual volumes is noticeable even in the first quarter of 2020, when the OPEC + transaction has not yet been concluded. So, oil export in January – March amounted to 63.1mn tons against the forecasted 67.4mn tons. The discrepancy in gas export is even stronger: actual deliveries amounted to 46.6bn cubic meters. m against the
14​ RUSSIA Country Report​ July 2020 ​ ​www.intellinews.com