Russian oil and gas revenue dropped by 47% between January and June compared with the same period last year. Finance Ministry data published on Wednesday showed that revenue fell to Rbs3.38trn ($37.4bn) in the first half of 2023. 

In June alone, oil and gas revenues declined by 26.4% to Rbs529bn compared with the year prior, amid falling oil prices and reduced gas flow to Europe. 

On Monday, Deputy Prime Minister Alexander Novak announced voluntary production cuts of 500,000 barrels per day as Russia seeks to raise oil prices. 

Taxes from the oil and gas industry are a key source of revenue for the Russian Government, including the financing of continued military activity in Ukraine.  

Earlier this year, Russia altered the way in which it calculates tax. The tax on oil extraction is now based on the price of Russia’s Urals blend. If oil trades above a certain threshold, then the prevailing market tax is used to calculate extraction tax. President Vladimir Putin’s government hopes that the measures will result in higher revenue. A number of Ukrainian allies have announced sanctions on Russian oil and gas in an attempt to limit government revenue. 

In June, natural gas revenues fell 54% to Rbs125.7bn. Proceeds from crude and petroleum products, which account for more than 76% of hydrocarbon revenue, also declined by almost a tenth to Rbs402.8bn. 

Reduced export of natural gas to Europe has been the most significant blow to Russia’s revenue. Prior to the invasion of Ukraine, Europe was the largest market for Russian gas giant Gazprom. 

In the month of May, Russian oil and gas revenue fell by 36% compared with the previous year. Russian Finance Minister Anton Siluanov has acknowledged the problem of falling oil and gas revenue.  

“Russia’s non-energy revenues are on track for growth as planned, with the potential for a small surplus by year-end, but there is a problem with energy revenues,” he said during a video conference in May.