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6

Gazprom Suffers Losses For Government's Obstinacy

Gazprom, the world's largest gas producer, suffers losses on gas sales within Russia

Gazprom said it suffers losses on gas sales within Russia, more than fivefold to around $1 billion in 2005.

Yelena Karpel, the head of Gazprom's pricing department, said the main reason for the losses was the Russian government's unwillingness to allow Gazprom to raise domestic gas prices and Gazprom's asset revision this year, which boosted its amortization charge.

"In 2004 we had a operating profit (on domestic sales), but excluding costs and other deductions we had a net loss of 5 billion roubles," she said. "This year losses will grow to 27 billion roubles ($957.8 million)."

The government may accept raising wholesale prices by 14 to 16 percent in 2006. Gazprom wanted a 21 percent increase.