Russia said Tuesday that state revenue from energy sales in March was $3.6 billion less than it forecast, suggesting the Ukraine war and Western sanctions hit exports.
The country’s oil and gas income sank by 38 percent in the month from expected 790 billion rubles (or $9.4 billion) to around 488 billion rubles as Western nations switch from Russian energy supplies in the wake of the Ukraine invasion.
Russia is a leading oil supplier and the world’s top gas exporter, and Europe typically gets about 40% of its natural gas from Russia. However, European and other Western nations have been switching away from Russian supplies in the wake of the Ukraine invasion.
The finance ministry pointed to lower-than-expected natural gas exports in March and changes to energy tax rules.
It also said that in February, its oil and gas revenues were 216.4 billion rubles lower than expected. However, it said it expected to earn 798.4 billion rubles in additional revenue from energy sales in April.
President Joe Biden has pledged to ban Russian energy imports and the European Commission has said it could reduce EU demand for Russian gas by two-thirds before the end of the year, under a plan to diversify supplies. The US has offered to ship more liquefied natural gas to its allies to help squeeze Russian exports.
Over the weekend, Lithuania became the first EU country to completely cut off Russian gas imports, Dainius Kreivys, its energy minister, said.
In 2021, just over a quarter of Lithuania’s gas supply came from Russia, according to Amber Grid, the country’s pipeline operator. Kreivys said the country would plug the gap with liquefied natural gas imports from the US and Norway.
Russian President Vladimir Putin has said that Russia is working on requiring “unfriendly countries” to pay for its gas in rubles, which European Commission President Ursula von der Leyen said would be a “clear breach of contract” and an attempt to circumvent sanctions imposed by the West.
Shortly after war broke out, Germany halted plans for the Nord Stream 2 pipeline, which is designed to carry gas between Russia and mainland Europe. On Monday, Germany said it had seized control of a local Gazprom unit.
Shell said earlier that it was pulling out from its joint ventures with Gazprom and related businesses while BP said it was dumping its 20% stake in the Russian state-backed oil firm Rosneft.
Western sanctions imposed on Russia could wipe out 15 years of economic growth in the country and send inflation skyrocketing.