Oil and Gas Share in Russia’s Economy Drops to Nine-Year Low
Vladimir Putin’s long-standing goal of reducing dependence on energy exports appears to be materializing, though not necessarily by choice. According to Rosstat, the oil and gas sector’s share of Russia’s GDP fell to 13% last year—the lowest level since the agency began tracking this data in 2017. For comparison, even during the 2020 pandemic when oil prices collapsed, the sector’s weight remained higher at 14%.
The decline persisted throughout the year, shrinking from 15.5% in the first quarter to 11.6% by the fourth. This contraction is directly linked to the plummeting financial performance of the industry. The turnover of oil and gas companies fell by 16.7%, while profits crashed by nearly two-thirds (63.9%). Last year, fewer than half of the companies in the sector (49.1%) remained profitable.
Factors Stifling the Industry:
- Sanctions and OPEC+: Production cuts and international restrictions limited export volumes;
- Price and Currency: Low global prices combined with a relatively strong ruble hit revenues;
- Budget Impact: Federal oil and gas revenues dropped by nearly a quarter (23.8%), forcing a massive mid-year budget revision.
Notably, the shift in economic priorities is reflected in other areas: drones and UAVs are now being purchased even by institutions far removed from technical fields, such as the Moscow Academy of Choreography and kindergartens in the Tyumen and Perm regions. In these curricula, drone piloting is framed as an “additional developmental activity.”
Analytical Summary
This “departure from the oil needle” is less a result of structural diversification and more a consequence of the shrinking profitability of Russia’s primary industry. The record low share of GDP reflects the loss of export margins due to heavy discounts, sanctions, and skyrocketing logistical costs rather than the organic growth of other sectors. The 2026 budget faces a new reality: the oil and gas rent is no longer an unconditional “safety cushion,” necessitating a search for alternative revenue sources.
However, the “trickle-down effect” remains crucial: Russia’s actual dependence on hydrocarbons is significantly higher than the nominal 13%. Petrodollars continue to fuel consumer demand through high wages in mining regions and government contracts that indirectly stimulate manufacturing. Thus, the current decline in the sector’s share is a warning sign of a shrinking investment resource for the entire economy, rather than a triumph of diversification.