2008 Oil Production Estimate Reduced

The Economic Development Ministry cut its forecast Monday for 2008 oil production as output declines at older fields in Siberia, but the new figure remains just above last year's production.

The ministry now forecasts annual production of 492 million tons, 3 million tons less than previously predicted, Deputy Economic Development Minister Andrei Klepach said.

Russia, which produced 491.3 million tons of oil last year, will have the smallest growth in production since 1998 should the ministry's forecast prove accurate. Prime Minister Vladimir Putin's government has approved tax breaks to encourage new projects in challenging environments and is considering additional measures to boost output.

The government has raised its estimate of the average Urals price for 2008 to $112 a barrel, up from $92, Klepach said, citing record energy prices worldwide.