* Seeks further cost cuts
* Says cuts will not offset nuclear tax burden
* Annual costs for carbon permits to double in 2013
* RWE's Birnbaum says does not seek expansion outside Europe
* RWE shares extend losses at close, drop more than sector
(Adds shares, executive quotes, analyst estimates)
BERLIN, Jan 19 (Reuters) - Germany's RWE will not be able to offset the burden of the German nuclear fuel tax on its profits, an executive told Reuters on Wednesday.
The nuclear fuel tax will lower RWE's earnings before interest and taxes by some 700 million euros ($942.8 million) annually or by about 10 percent of the company's 2009 operating result of 7 billion euros.
In order to mitigate the impact, RWE plans to extend its current cost cutting programme, Chief Commercial Officer Leonhard Birnbaum told Reuters, declining to be specific.
"We have to cut more costs," Birnbaum said, adding that "we will not be able to make up for the burden" from the tax, introduced for the years 2011 to 2016.
The utility's shares closed 0.7 percent lower at 53.33 euros, lagging the utility sector, which slid 0.3 percent.
RWE and larger German peer E.ON -- the country's largest utilities -- are valued at least 25 percent below European peers, according to Thomson Reuters StarMine.
While the tax will burden German utilities' earnings initially, they are betting they will in the long term be able to make up for the losses as the government has allowed them to operate their highly profitable nuclear power plants 12 years longer than scheduled.
Birnbaum's comments might come as a disappointment to some investors, as analysts are expecting EBIT to rise again in 2014, according to StarMine.
StarMine gives more weight to the most recent estimates made by analysts and to those estimates from analysts whose forecasts had been right on the mark.
The EBIT consensus might also be too optimistic in the face of additional burdens which the company faces from emissions trading starting from 2013.
Birnbaum estimated annual costs for buying carbon emissions certificate doubling to more than 2 billion euros.
The utility, based in the western German city of Essen, is Europe's largest emitter of carbon-dioxide, one of the gases causing global warming.
RWE itself is forecasting its earnings in 2013 will be higher than in 2009, helped by a planned 1.2 billion euros cost cuts. It has said it will update its earnings expectations in February, without being more specific.
Unlike E.ON, RWE does not seek to expand outside Europe in the quest for growth and is seeking higher growth markets in regions such as eastern Europe and Turkey, Birnbaum said.
"We have enough opportunities to expand our business in Europe," said the 43-year old executive.
(Reporting by Peter Dinkloh, Vera Eckert and Tom Kaeckenhoff; Writing by Peter Dinkloh; Editing by Elaine Hardcastle)