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Russia may start liberalizing associated gas market in late 2007 -1

(Recasts headline, lead, adds additional information in paras 3-5)

MOSCOW, August 7 (RIA Novosti) - A plan for liberalizing the Russian market of associated petroleum gas could be adopted in the fourth quarter of 2007, the head of the Federal Tariff Service said Tuesday.

"We have drawn up a preliminary plan to liberalize the associated petroleum gas market, or more exactly, to halt direct price regulation of the market. We have discussed these proposals with interested ministries ... As a result, a corresponding decision could be made in the fourth quarter of 2007," Sergei Novikov said.

The idea of liberalizing associated petroleum gas prices was earlier put forward by Russia's ministry for natural resources, which voiced concern over the large volume of gas flaring, causing environmental damage and wasting potentially valuable fuel.

The ministry also said it would hold negotiations with energy giant Gazprom and electricity monopoly Unified Energy System on facilitating access of refined associated gas products to the gas and electricity distribution networks.

Novikov said the liberalization of associated petroleum gas prices would not affect household gas prices.

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