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Sources said the Gazprom unit hasn't provided a firm schedule for the supply of gas during the rest of the year and the situation could possibly be salvaged through diplomatic channels.
The US and European nations have imposed heavy sanctions on Russia since Moscow sent troops into Ukraine on February 24. Some western oil firms have announced exit from Russian projects and Indian firms are being considered a natural candidate to join in.
India has raised oil imports from Russia after the Ukraine war despite criticism from the west and continues to engage with Moscow for business.
2.9 Russia’s Ministry of Finance is working on an updated budget rule to be introduced in 2025
Russia’s Ministry of Finance is working on an updated budget rule adapted to the new circumstances since the start of the war in Ukraine and Western sanctions, Vedomosti reported on July 18.
Prior to the war, the Finance Ministry set the budget based on an oil price of $40/barrel in 2018 prices. If the oil price averaged above this level, “excess” hydrocarbon revenues were accumulated as foreign exchange savings in the rainy-day National Welfare Fund. When oil prices fell below this level, the reserves were used to cover the shortfall in revenue, maintaining spending.
The budget rule was suspended at the start of the war, in part because of the sharp increase in spending on the military and economic stimulus, and also because sanctions meant it could no longer be implemented in previous form.
By sterilising excess ruble revenues from oil taxes, the budget rule prevented the rise of the ruble and exposure to the so-called Dutch Disease, where currently is artificially strengthened by
commodity exports to the detriment of the rest of the economy which becomes
uncompetitive. Without the sterilisation effects of the budget rule Russia has
caught a nasty bout of the Dutch Disease as the ruble has soared in value in recent
months to become the best performing currency in the world as a result of
sanctions.
The Finance Ministry is now reportedly proposing to reintroduce a new version of the budget rule from 2025, with an oil price of $60/b. At the same time, the Finance Ministry is assuming oil output of 9.5m barrels/day, a reduction of around 10% from the pre-war level.
23 RUSSIA Country Report October 2020 www.intellinews.com