RUSSIA'S RTS Index may climb 20 percent in the next year, led by oil companies amid record crude prices and proposed cuts in oil taxes, Goldman Sachs Group Inc said yesterday.

Goldman raised its 12-month estimate for the dollar-denominated RTS by 12 percent to 2,750.

It recommending the shares of OAO Gazprom, the world's biggest natural-gas company; OAO Lukoil, Russia's second-biggest oil producer; and OAO Surgutneftegaz, the fourth-biggest oil producer.

"Oil and gas names trade at a discount to global peers, but should continue to benefit from record high oil prices and a likely change in the government's attitude to sector taxation," wrote analysts, including Moscow-based Sergei Arsenyev in a report dated yesterday and obtained by Bloomberg News.

"Lukoil is currently our top oil idea in Russia."

The New York securities firm joined international and Russian investment banks in recommending the country's shares after Prime Minister Vladimir Putin said the government will submit a plan in August to reduce taxes in the oil industry.

Lukoil shares have under-performed the MSCI World Energy Index by 23 percentage points in the last two years, as Russia raised its crude export duty in line with the price of the country's Urals blend.

OAO Rosneft, the biggest Russian oil producer, rose by the most ever last Thursday, the day of Putin's comments.

The shares climbed 8.97 rubles, or 3.6 percent, to a record 257.40 rubles (US$10.80) yesterday in Moscow on the Micex Stock Exchange.

Crude futures rose to a record US$126.27 a barrel in New York on Friday.

The June contract slipped 70 cents, or 0.6 percent, to US$125.26 a barrel yesterday in after-hours electronic trading.