BP says tax cuts should boost Russia oil output

LONDON (Reuters) - Russia's decision to offer tax breaks on oil production should boost output, although it could take a couple of years, the chief executive of BP Plc (BP.L) said on Tuesday.

"One of the issues is the fiscal structure which has become too onerous to encourage future investment," Tony Hayward told a news conference in London.

"They (the government) are taking action to modify the fiscal structure which will encourage investment, which will, over a course of time, get Russian production growing again. It will probably take a year or two."

Oil production in Russia, the world's second largest oil exporter after Saudi Arabia, fell by 0.3 percent in the first half of this year, prompting some analysts to say the fall might become a trend until the country launches production at new deposits in East Siberia and the Far East.

Last year, Russian production rose by 2.3 percent, a notch up from 2.2 percent in 2006, but much lower than huge spikes in previous years including a record 11 percent in 2003.

(Reporting by Tom Bergin; Editing by Paul Bolding)