UPDATE 1-Russian oil tsar backs zero duty as debate heats up

* Sechin argues for retaining E.Siberia tax break

* Says will convince Finance Ministry of benefits

* Fiscal hawks argue for rethink on taxation

(Recasts, adds details, quotes, background)

By Gleb Bryanski

MOSCOW, Feb 1 (Reuters) - Russian oil majors can be sure of keeping a blanket zero duty on exports from East Siberia, the country's powerful energy chief said on Monday, as debate heats up with fiscal hawks on taxing the lucrative oil sector.

Deputy Prime Minister Igor Sechin said he would convince opponents of the zero duty, which oil firms say is crucial for investment in the remote fields on which Russian output growth depends, that lost budget revenues can be replaced elsewhere.

"Within two months, we hope to convince the Finance Ministry of the need to stabilise the duty-free regime for East Siberian deposits," Sechin, the man tasked by Prime Minister Vladimir Putin to oversee Russia's energy sector, told reporters.

"I'm sure the Finance Ministry's position will be positive."

Russia is currently the only country pumping more than 10 million barrels per day of crude. But as mature deposits dry up, the country is becoming increasingly dependent on East Siberian fields to ensure that production does not stagnate or even fall.

JPMorgan forecasts East Siberia will account for 2.3 percent of Russia's oil output in 2010, from about 1.1 percent in 2009.

Twenty-two fields in the region, including state-run sector leader Rosneft's Vankor deposit, have recently won exemption from paying the export duties that weigh heavily on oil company profits.

Finance Ministry officials, however, are concerned the tax break could drain 120 billion roubles ($3.96 billion) annually from state coffers and have proposed the zero duty be replaced by a uniform levy on excess profits.

Alexei Kudrin, the finance minister, said on Jan. 28 that "deeper analysis" was required. [ID:nLDE60R2V9] The absence of export tax revenues from Vankor would be colossal when the field is pumping at full capacity, opponents of the policy have said.

Uncertainty around the duties has weighed on stock prices in the oil sector. Rosneft traded down 1.2 percent on Monday and the company's vice-president for finance and investments, Peter O'Brien, called for greater clarity on taxation. [ID:nLDE6101X1]

BENEFITS

Sechin, who forecast Russian oil production would this year hit the 500 million-tonne mark for the first time, said the budget would secure about 70 billion roubles ($2.31 billion) from the indirect benefits of boosting East Siberian output.

"We are convinced that Vankor will remain. We are convinced that the arguments we are preparing for the Finance Ministry will be received positively," said Sechin, who is also chairman of Rosneft.

"We want to stabilise the zero duty regime and we don't want a differentiated approach."

Sechin was speaking to reporters after attending a meeting with Putin and visiting oil officials from Venezuela.

Senior executives from Russia's main oil companies, including TNK-BP shareholder German Khan, were also in attendance.

TNK-BP, whose Verkhnechonskoye field lies in East Siberia, is another beneficiary of the zero export duty, along with Surgutneftegaz , Russia's fourth-largest oil producer, which owns the nearby Talakan deposit. (Writing by Robin Paxton; Editing by Marguerita Choy)