European sanctions imposed on Russia two years may be lifted by the end of 2016, the chief executive of Russia's sovereign wealth fund told CNBC on Friday.

The U.S. and the European Union introduced sanctions against Russian companies and individuals with links to Moscow after Russia's annexation of Crimea in 2014. The 28-country EU will meet next month to decide whether to renew them.

EU diplomats say sanctions may be softened but extended by a further six months, according to media reports. There are signs of disagreement among EU members, with Baltic countries on Russia's borders typically keener on maintaining tough sanctions, while countries like Greece have flagged the possibility of tailing them off.

"We expect sanctions to be lifted by the end of the year," Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF) told CNBC in Russia at the St. Petersburg International Economic Forum.

"We don't believe (they can be lifted) right away… (But) Russia cannot be ignored. Russia is a very important player," he later added.

RDIF holds $10 billion of reserved capital under management. Many of its projects have focused on the Middle East and Asia, but Dmitriev said the fund and President Vladimir Putin also wished to have strong investment relationships in Europe.

"We believe Russia needs to have a balanced position," he said.

In a news release on Thursday, RDIF announced joint projects with unnamed "leading" Middle Eastern funds to invest in Russian helicopters and Russia's AFG National Agro Holding.