SOFIA (Reuters) - Oil prices of around $50 a barrel are not high enough to ensure exploration and production but crude prices should rise to $70-80 within 12-18 months, Russian Energy Minister Sergei Shmatko said on Saturday.

"We are interested in a fair price ... The current oil prices does not ensure sufficient funds for continuous oil production, extraction or the implementation of new technologies," he said, when asked by Reuters what price the world's second largest oil producer needed to get for its crude.

"This can bring a significant deficit in hydrocarbon production in coming years," he told reporters at an energy security conference in Bulgaria.

Shmatko said oil prices, which have tumbled during the global economic crisis, should recover.

"$70-80 a barrel is the price we should be expecting in the foreseable future, in about a year or a year and a half," he said. "We have good reason to believe that such a price level will be reached."

Russian oil output stood at 9.8 million barrels a day last month, up 0.5 percent from 9.76 million bpd in March 2008.

GAS CONTRACTS

Shmatko said that although the slump in crude prices from over $147 in July 2008 to around $50 had also slashed the price of gas Russia exports, the world's largest gas producer would stick with oil-linked supply contracts for now.

"In principle we cannot change anything," he said.

"We are holding talks with our partners," he said. "But for the time being Russia's gas prices will continue to reflect the global oil price."

The energy minister said low gas prices were putting state-run Russian gas export monopoly Gazprom, under more pressure than when oil prices were high in 2007-2008.

"But Gazprom's investment programme is sufficiently balanced and Russia does have the capacity to increase gas production by 50-60 bllion cubic metres, so there will be no problem," he said.

Gazprom, which supplies about a quarter of Europe's gas, said earlier this month it expects to produce 492 bcm of gas in 2009, down from around 550 bcm last year, because of shrivelling demand in Europe and at home.

The company's deputy chairman, Alexander Medvedev, said in March that exports were expected to fall to 140 billion cubic metres (bcm) in 2009, down from 179 bcm last year.