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. Last Updated: 07/27/2016

Oil Tax Cuts May Create Gains In Production and Exploration

PARIS — Russia, the world's second-largest oil exporter, will raise its oil output in the next few years as new tax cuts will allow oil firms to invest more in exploration and production, Prime Minister Vladimir Putin said Friday.

The country imposed heavy taxes on the oil industry, stashing away the proceeds in two oil wealth funds. Oil companies have complained about the excessive tax burden, which they say has led to underinvestment and stagnation.

In its first major policy decision, Putin's government has approved a number of tax breaks for the oil industry, including cuts in the mineral extraction tax and tax holidays for remote Siberian regions where oil is costly to extract.

"We are sure, in the next few years Russia's oil output will increase," Putin said in an interview with French daily Le Monde attended by Reuters and released Saturday.

The tax cuts announcement prompted a stock market rally.

France, which hosted Putin on his first foreign visit since becoming prime minister, has called on the Group of Eight industrialized nations to act together to restore oil prices to a more "bearable" level.

French Economy Minister Christine Lagarde called on oil producing nations to increase their output while French Prime Minister Francois Fillon said energy would be "at the heart" of the agenda of France's rotating EU presidency, which starts in July.

Putin told a news conference in Paris that global markets decided the price of oil and then joked: "If Russia could decide on the price of oil, we would have given you a good deal."

Oil output in the country dropped 1 percent in the first quarter of this year, confirming analysts' gloomy outlook for the whole of 2008. Officials expect oil output to rise by no more than 1 percent in 2008.