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Russia Wants Talks on Raising Domestic Oil Prices

August 7, 1991

MOSCOW (AP) _ The Russian Federation, endowed with more than half the Soviet Union’s oil and gas reserves, wants to negotiate an increase in domestic energy prices with other republics, it was reported Wednesday.

The independent Interfax news agency said Russian President Boris N. Yeltsin made the announcement Tuesday to oil workers in the Tyumen region, part of his weeklong tour of western Siberian oil and gas fields.

Yeltsin also granted certain Siberian energy producers the right to sell 25 percent of their resources at market prices beginning Sept. 1, a Russian government spokesman said.

Some of the profits, estimated annually at $1.7 billion at the official exchange rate in the Tomsk region alone, would be used to build houses and hospitals and help low-income people, the official Tass news agency reported.

Interfax quoted Yeltsin as saying he wants oil price talks to begin with other republics after the signing of a new Union Treaty, which would reconstitute the country as a loose federation.

Republics refusing to sign will be charged world-level prices, Yeltsin said.

Russia, Kazakhstan and Uzbekistan are scheduled to sign the treaty on Aug. 20, followed by at least five other republics.

Georgia, Moldavia and the three Baltic republics refused to take part in treaty negotiations and say they will not sign. Armenia is holding a public referendum, and the Ukrainian parliament is divided.

The world price for oil is $157 a ton, significantly higher than the domestic Soviet prices of 60 rubles a ton, soon to rise to 74 rubles. At the official exchange rate, that would be $96 a ton, rising to $118 a ton, but no one is permitted to trade rubles for dollars at that rate any longer. The ruble has been selling for as little as 2 cents at recent currency auctions, making a more accurate comparison $1.20 a ton, rising to $1.48 a ton.

Members of a new Siberian Agreement Association will be permitted to sell up to one-quarter of their oil and gas at market prices, either domestically or overseas, said Leonid Batalin of the Russian Council of Ministers.

The association is made up of 17 local governments.

Batalin said in an interview the Russian government might limit the amount of resources that could be sold abroad, to ensure an adequate energy supply within its own borders.

Yeltsin refused to raise the limit to 50 percent, as demanded by some producers, saying that would be ″highway robbery of the state.″

″You want to rob the state now because it used to rob you,″ Interfax quoted him as saying.

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