New Buyers for Russian Oil, Yet Revenues Plunge

The global energy landscape has been altered by the cap on crude oil prices, with Russian crude oil being exported to this region for the first time in at least four years. Despite there still being a market for oil exports, the country's energy revenues have not improved...

The oil tanker Theseus unloaded the Russian crude oil it had been carrying into the storage tanks of the Tema Oil Refinery in Ghana over the weekend. The tanker had been anchored outside the port of Ghana, awaiting permission to dock since February 24th.

Ship tracking data monitored by foreign media shows that the tanker left the single-point mooring on Monday morning, with draft readings indicating that it had offloaded its cargo. The data reveals that the tanker loaded approximately 600,000 barrels of crude oil from the Black Sea port of Novorossiysk at the end of January, marking the first observed shipment of Russian crude oil to a West African country in at least four years.

According to informed sources, the Ghana National Petroleum Authority (NPA) had previously approved the unloading, but the process was delayed due to national security considerations. The head of the NPA had stated that the cargo would be blocked if the tanker headed to the country while it was still en route.

One of the informed sources indicated that the tanker was granted clearance after claiming the cargo was from Kazakhstan, but port agency reports from Novorossiysk and data intelligence from companies Vortexa and Kpler show that it originated from Russia. Tema Oil Refinery, Ghana's only large crude oil processing plant, has been shut down for about two years, although the government has assured that production will resume this year.

The Energy Security Institute confirmed that Ghana's Platon Oil and Gas Company is the buyer of the cargo. The institute's Executive Director, Nana Amoasi VII, previously stated that the company operates a small refinery near the Tema Oil Refinery and leases the latter's storage tanks. He added that Platon would need at least six months to process the crude oil.

This is another example of the change in the Russian crude oil export market under the crude oil price cap. Although Russian crude oil has found new markets, the data shows that the country's energy revenues have not improved.

The latest data released by Russia shows that the country's fiscal deficit for the first quarter is close to 2.4 trillion rubles (approximately $30 billion), which is a stark contrast to the surplus of 1.13 trillion rubles (approximately $14 billion) in the first quarter of last year.

Data released by the Russian Ministry of Finance last Friday shows that the Russian government's revenue for the first quarter decreased by nearly 21% year-on-year to 5.7 trillion rubles, with energy revenues plummeting by 45% to 1.64 trillion rubles. This is due to the decline in the price of Russia's flagship Urals oil and the decrease in natural gas exports.

Previously, the European Union, a major customer for Russian energy, banned the import of its crude oil from December 5th last year. At the same time, the EU, the G7, and Australia also imposed a price cap of $60 per barrel on Russian crude oil. In February of this year, the EU implemented a similar ban and price cap on imported Russian refined oil products.The Russian Ministry of Finance has not quantified the impact of the ban and price cap on Russian crude oil, but the Finnish think tank the Centre for Research on Energy and Clean Air estimated in January that the ban and price cap are causing the Kremlin to lose over $170 million per day.

Meanwhile, Russia's expenditures have seen a significant increase. According to data from the country's Ministry of Finance, spending in the first quarter rose by 34% to 8.1 trillion rubles.

Data from the Moscow-based independent think tank Gaidar Institute shows that the Russian Ministry of Finance has not explained why spending has increased so sharply, but the country's defense spending in 2022 exceeded the budget by 54%.

According to a budget analysis by foreign media in November last year, Russia may continue to invest in defense and security, with total spending in 2023 expected to reach 9.4 trillion rubles, which is almost one-third of the country's budget.

On February 17, Russian Finance Minister Anton Siluanov stated that the Kremlin plans to keep the deficit for 2023 to no more than 2% of GDP. However, analysts say that the deficit may exceed 2% of GDP and could even reach 4%-5%.