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Oil Report

UPDATE 1-Russia to cut Jan oil exports, output at risk

  (Adds Alekperov, traders, tariffs increase, details)
 MOSCOW, Dec 24 (Reuters) - Russia will cut seaborne oil
exports by 7.5 percent in January, about two-thirds of a
voluntary reduction suggested by a top official, as high duties
make exports and output unprofitable in a domestic oil glut.
 "We are about to start shutting down wells in Siberia," a
trader with a Russian major said on Wednesday.
 "A fall in output is unavoidable," he said, adding that he
either exported at a loss or close to break even despite a
domestic oil price at $12 per barrel.
 The output of the world's second largest oil exporter is set
to fall by around one percent this year after a decade of
continuous growth.
 The decline is expected to continue next year as plunging
oil prices and heavy taxation leave no cash for producers to
open new fields and maintain output at existing deposits.
 On Wednesday, a final export schedule for January showed
exports will fall by 220,000 barrels per day from December to
2.69 million bpd, the lowest level since August.
 The cut follows statements by Deputy Prime Minister Igor
Sechin that the country may reduce exports by up to 320,000 bpd
in 2009 to help OPEC prop up prices.
 Russia, which attended an OPEC meeting earlier this month as
an observer, made no firm pledges to OPEC despite previous
statements it could do so.
 Russia earlier this decade joined some of OPEC's moves to
reduce exports, but its compliance has been seen at irregular. 
 Oil companies said on Wednesday they believed the cut in
exports in January was mainly driven by price factors.
 "Today's price of oil is too low to guarantee stability of
supplies in the future," the head of Russia's No.2 oil firm
LUKOIL LKOH.MM, Vagit Alekperov, told state television.
 Alekperov, the main advocate among Russian oil executives of
closer cooperation with OPEC, said he hoped Russia and OPEC
would do more in future to stabilise prices.
 Russia depends heavily on oil revenues to sustain its budget
needs, support its shrinking economy and maintain confidence in
the rapidly depreciating national currency.
 The government has maintained the system of relatively high
export duties, which backfire badly on oil companies during 
periods of rapidly declining oil prices as they are based on
much higher prices of previous periods.
 As exports decline, oil firms rush to refine more at their
local refineries but are already facing a glut as domestic oil
prices for January delivery on the free market fell to below $12
per barrel [ID:nLN619937].
 The government also approved on Wednesday a request by its
pipeline monopoly Transneft to allow it to raise shipping fees
by 15.7 percent in 2009, lower than the requested 21 percent but
much higher than oil firms had hoped.
 Fees are calculated on a rouble per tonne basis while
companies had asked to switch to calculations linked to profits
or revenues.
 Following is a final export schedule for January (in
millions of tonnes. Reuters uses a rate of 7.33 to convert 1
tonne of Urals crude into barrels):  
            Jan      Dec     Nov    Oct      Sept      Aug 
            final                                          
 Novorossiisk  3.830   3.596   3.449   3.873    3.197    3.526
 Primorsk      6.100   6.800   6.200   6.100    6.400    6.000
 Yuzhny        0.824   0.810   0.835   0.850    0.325    0.421
 Tuapse        0.368   0.346   0.353   0.364    0.390    0.399
 Gdansk        0.000   0.128   0.124   0.128    0.278    0.286
 Odessa        0.255   0.635   0.562   0.618    0.580    0.635
 TOTAL        11.377  12.315  11.523  11.933   11.170   11.267
 
(Reporting by Dmitry Zhdannikov; editing by Peter Blackburn)

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