Resources Minister - Russia's Oil Output May Fall This Year For First Time In A Decade - Bloomberg

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March 27 (Bloomberg) -- Russian oil output may fall this year for the first time in a decade as the world's second-biggest supplier struggles with rising costs and harder-to-reach fields, Natural Resources Minister Yuri Trutnev said.

``Two years ago, we said the growth rate was falling, and we said this was bad for Russia, remember?'' Trutnev said in televised remarks after a government meeting in Moscow today. ``Now we're saying the production rate is falling this year. This is not a bogeyman, unfortunately, this is real,'' Trutnev said, without giving a specific forecast.

A decline would end a 10-year, 58 percent surge in production, which fell to 6.2 million barrels a day in 1998, when prices dipped below $10 a barrel and Russia defaulted on about $40 billion of domestic debt and devalued the ruble.

Trutnev's outlook contradicts that of the Energy Ministry, which expects an increase of 1.8 percent to 10 million barrels a day of crude and gas condensate, or about 11 percent of world consumption. The International Energy Agency, an adviser to 27 industrialized nations, expects demand to rise 2 percent this year to 87.54 million barrels a day. Investment bank Credit Suisse Group today joined Moscow- based UralSib Financial Corp. in forecasting an annual decline in Russian production after output slid in January and February.

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