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Russia Wants Talks on Raising Domestic Oil Prices

August 7, 1991

MOSCOW (AP) _ Russian Federation President Boris N. Yeltsin is seeking negotiations on gas and oil sales to republics that sign the Union Treaty, but maverick republics could face full free-market prices, a news agency reported today.

Russia, with more than half the Soviet Union’s oil and gas reserves, supports the Union Treaty to make the country a loose federation and reduce Kremlin authority.

The independent Interfax news agency quoted Yeltsin as saying he wants oil price talks to begin with other republics after the signing of the treaty. Ten of the 15 Soviet republics helped draft the pact.

Interfax said Yeltsin made the announcement Tuesday to oil workers in the Tyumen region during his week-long 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.

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

Yeltsin said republics refusing to sign the treaty may be charged world prices for energy.

Russia, Kazakhstan and Uzbekistan are scheduled to sign the treaty Aug. 20, followed later 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 the document. Armenia is holding a public referendum, and the Ukrainian parliament is divided on the issue.

The world price for oil is significantly higher than the domestic Soviet prices.

Members of a new Siberian Agreement Association will be permitted to sell up to 25 percent 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.

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

The Siberian region of Russia produces 60 percent of the country’s gas and 50 percent of its natural gas.

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