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Russia's Finance Ministry has lowered its oil price forecast
Russia's Finance Ministry has lowered its oil price forecast to $50 per barrel for 2009, $55 for 2010 and $60 for 2011 amid the global financial crisis and plunging oil prices, the minister said on Wednesday.

"This is substantially lower than what has been fixed in the budget," Alexei Kudrin, who is also a deputy prime minister, told the upper house of parliament. The federal budget had been approved based on a forecast for 2009 of $95 per barrel, $45 higher than the revised forecast.

Kudrin said the shortfall would be made up from the Reserve Fund, designed to cushion the federal budget against a drop in oil prices. He said that he was confident the budget will not be affected and will be implemented in full despite the downgrade in the oil price forecast.

The Federation Council approved on Wednesday a three-year federal budget, based on a forecast of 95$ per barrel for 2009, $90 for 2010 and $88 for 2011.

The official said the 2009-2011 budget would be adjusted in line with the revised forecast for oil prices and a number of other macroeconomic indicators in December.

He also said he saw no reason to review a forecast of $65-70 for oil prices after 2011.

Kudrin said oil and gas production in Russia is not expected to increase significantly over the next decade rising by an average of 0.5% for oil and 1.9% for natural gas up to 2018.

"If we actively develop new oil and gas fields and invest more in prospecting, then these figures could change, but only after 2018," he said, adding that budget income from oil and gas would decline each year.


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