UPDATE 1-Russia's 2014 gold output seen down 5 pct - lobby

* Gold production to fall from a record 254 tonnes in 2013

* Decline to be caused mainly by Polyus Gold project delay

(Rewrites focus on 2014 output forecast)

MOSCOW, Feb 11 (Reuters) - Russian gold production is likely to fall by 5 percent this year from a record level of 254 tonnes in 2013 due to a fall in prices, Sergei Kashuba, head of the Russian Gold Industrialists' Union, told Reuters on Tuesday.

Gold producers were hit by a 28 percent price drop XAU= last year - gold's biggest annual loss in 32 years - prompting miners to delay project development.

"Production will be about 5 percent lower this year," Kashuba said. "Postponed projects are unlikely to allow us to get more."

A delay at the project run by Polyus Gold PGIL.L - Natalka in Russia's Magadan region - will be one of the biggest factors contributing to lower output, he added.

Polyus, Russia's largest gold producer, recently announced a delay to the start of Natalka by a year until summer 2015. Natalka is a challenging and costly project to develop one of the world's largest untapped deposits. News Search ID:nL6N0K62JM

Two other Russian gold miners - Petropavlovsk POG.L and Nord Gold NORDNq.L - plan to cut output in 2014, while their rival Polymetal POLYP.L plans to keep 2014 production flat, they have previously said. News Search ID:nL5N0KX0NH

Russian gold production rose by 12.6 percent year on year in 2013, beating its own forecast, the Union said on Tuesday.

Total gold production was 254 tonnes (8.17 million troy ounces) in January-December, including output from mines, gold as a by-product of other metals and refined from scrap. Mined output rose 8.2 percent year-on-year to 214 tonnes.

The organisation had expected Russia's 2013 gold production to reach 240 tonnes.

(Reporting by Polina Devitt; Editing by Andrew Heavens and David Evans)

((Polina.Devitt@thomsonreuters.com)(+7 495 775 12 42)(Reuters Messaging: polina.devitt.reuters.com@reuters.net))

Keywords: GOLD RUSSIA/OUTPUT