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32

Lukoil Is "Strangled" By Taxes & Costs

A vice president of Russia's second-biggest oil producer Lukoil, Leonid Fedun noted in the interview to The Financial Times that Russian oil production had peaked and may never return to 2007 levels

A vice president of Russia's second-biggest oil producer Lukoil, Leonid Fedun noted in the interview to The Financial Times that Russian oil production had peaked and may never return to 2007 levels.

Fedun said he believed last year's production of about 10 million barrels/day was the highest he would see "in his lifetime".

Fedun compared Russia to the North Sea and Mexico, where oil production is declining sharply, saying that in its main oil-producing region of western Siberia, "the period of intense oil production is over".

Russia produced 491.48 million mt (9.83 million b/d) of crude in 2007, up 2.3% from 2006, according to the country's industry and energy ministry.

But in the first two months of 2008, average crude output fell 0.7% to around 9.75 million b/d, while in March it fell 1.2% to 9.72 million b/d.

A combination of high taxes and rising costs could lead to a further decline as they prevent producers from increasing investments as existing resource bases deplete, analysts said.