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. Last Updated: 07/27/2016

Calculations Of Oil Duty Face Review

The government may start recalculating oil export duties every two weeks instead of every two months, an Energy Ministry official said Thursday, as he suggested that annual production could fall this year.

Oil companies have said the government should cut the duties or face lower production, as they have to export at a loss as oil prices fall sharply.

"I think that by Dec. 1 there will be proposals to switch to monitoring prices every two weeks," said Vitaly Karaganov, head of the ministry's oil and gas sectors department.

Karaganov also said Russian oil production, which had been growing rapidly earlier this decade, may decline this year for the first time, falling by around 1 million tons. But he said Russia still had a chance to meet the ministry's previous forecast of flat oil output if new deposits prove to be a quick success.

The government, which usually sets duties based on a monitoring of international prices for Urals crude blend, changed the procedure last month and slashed the previously announced duties to protect oil firms from falling oil prices.

It cut the duty for October and November by 23 percent to $372.2 per ton ($50.8 per barrel) from the previously announced $485.5 per ton.

Last week, an association of small and medium-sized oil and gas companies, AssoNeft, urged the government to further cut the export duty because it said oil producers were exporting crude at a loss of $102 per ton in October.