Moscow working to save oil face

Russia is having a hard time keeping oil production levels at a static level because of revenue issues, Energy Minister Alexander Novak said Friday.

"Our budget depends very strongly on revenues from the oil industry," he said. "We don't have such technologies as Saudi Arabia to cut or boost output quickly, but, in general, we're working inside the government from the viewpoint of the expediency of such methods."

Exports of crude oil, petroleum products and natural gas accounted for 68 percent of all export revenues for Russia in 2013.

Western powers have sanctioned the Russian energy sector in response to Moscow's reaction to political upheaval in Ukraine last November, which resulted in the former Soviet republic drawing closer to the European Union.

Novak said Russian oil output might be curbed by market mechanisms outside the Western sanction regime. All major oil producers, not just Russia, are feeling some impacts from the bear market for crude oil, he said.

As a whole, the minister said, Russia's future oil production should be in the range of 10 million barrels per day, though current rates are higher.

"It is increasingly difficult to maintain even this level with each passing year because we need to drill more, have more funds to invest, open new deposits, develop hard-to-access oil reserves and launch more complex oilfields with no infrastructure," he said.

An annual report from the European Commission said the Russian economy was entering a period of stagflation and Russia's currency is trading at historic lows against the U.S. dollar.