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Gazprom is expecting to gain profit from the sale of natural gas on the domestic market in 2005
It hopes to incur no loss from domestic sales this year and to derive somewhere between 300 and 400 million dollars in profits next year if it manages to get its customers in southern Russian provinces, notably in Chechnya, to pay for the supplies without delay, Alexander Ryazanov, Deputy Chair of the Gazprom Board, said at a news briefing Thursday. Speaking of the problems facing Russia's flagship gas corporation, Mr Ryazanov said that most of them arise from the lack of pipelines, especially in places where natural gas is recovered both by Gazprom and independent producers. This year, Gazprom is expected its output to reach 542 billion cubic meters, Mr Ryazanov said. According to him, the corporation is willing to consider the possibility of reducing its price for Chechen customers by half. "We realize that even the prices set by the Federal Tariff Service are too high for customers in Chechnya, and so we are examining the possibility of cutting them (the prices) by half," the Gazprom Deputy Chair said. He told the reporters that a gas dealership had just been set up in Chechnya, and was now negotiating its first contracts. Gas prices in Chechnya was an issue prominent on the agenda of a conference in the capital of Grozny May 16, with both republican and federal government officials in attendance. "Now the gas tariff for the population in this price zone is standing at 610 roubles [about $20] for a thousand cubic meters. The government of the Chechen Republic is asking to bring the tariff down to 320 roubles ($10) for a thousand cubic meters," Mr Ryazanov told RIA Novosti. There are few industrial facilities in Chechnya now, and it is individuals and public-sector agencies who form the bulk of natural gas consumers over there, he added. "No one has ever paid for gas there, so the government is asking for a price cut," the Gazprom official explained. Over the past decade, Chechnya's debt to the supplier has come to 5.5 billion rubles (nearly 200 million dollars, on current rates). This is the price of the 24 billion cubic meters of gas supplied in that period. If Chechnya proves unable to repay the debt within ten years' time, Gazprom will have to slightly raise its prices for other Russian regions to make up for the losses.
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