Page 17 - RusRPTNov22

is to cut exports. “In a good way, now somehow all raw material exports, which have recently been actively developing due to the undervalued ruble, need to be limited,” another official said.
The most obvious measures are to increase exemptions in the form of export duties and severance tax in the gas industry; a transition to market-based internal gas pricing is less likely. Both measures will affect the population, but the first one is noticeably weaker: for 1 ruble of the increase in the mineral extraction tax (MET) on gas, the population accounts for only 8 kopecks, Dmitry Kulikov, director of the ACRA group of sovereign and regional ratings, told the publication.
The domestic gas price in Russia (4,370 rubles per thousand cubic metres in 2021) is an order of magnitude lower than the external one, and balancing promises to be painful. Nevertheless, the idea of an equilibrium price for gas is being cautiously discussed in the government, says a RBC source.
It is impossible to sharply increase imports from friendly countries, since this will bury the domestic industry (what is happening in the sector of road construction equipment, Kommersant said today). Barriers against import dumping for the sake of import substitution are being built by the Ministry of Economic Development and the Ministry of Industry and Trade, including through the mechanisms of the Eurasian Economic Union.
Officials are not busy with what needs to be done now, Kulikov believes. In his opinion, it is necessary to think not about curbing exports, but about how to use the excess surplus and whether it is worth exchanging natural resources for vulnerable external assets. There is no sure answer, but as options, economists suggested issuing export loans in rubles or cheaply financing the purchase of equipment and technologies. However, it seems easier and more realistic to transfer assets to yuan.
The current surplus is a problem of one year, and things may simply not get to the real “Dutch disease”, does not exclude the director of the Institute of Economics of the Russian Academy of Sciences Alexander Shirov. Most likely, it will stop by itself with the development of parallel imports, the introduction of an oil embargo and the virtual cessation of gas exports to the EU.
2.7 EU gas prices tumble in a lull before the storm
Gas prices have been falling fast in the last few weeks as the EU storage tanks are nearly full. Unlike equities, which are priced on a discount to future revenue flow, gas prices are set on the day depending on how much space is left in the tanks and how much gas is being consumed. Given at the moment the tanks are also completely full and thanks to one of the balmiest Octobers in years, the price for gas could well go negative in the next few weeks.
“TTF spot gas prices fell to $990 per 1,000 cubic metres [€94.2/MWh] on high storage and warm weather in the region – the lowest level since mid-June. European storage is currently 93.6% full, while temperatures in Germany are
17 RUSSIA Country Report November 2022 www.intellinews.com