BEIJING (Commodity Online) : In an attempt to soothe public anger at the wealth of giant energy companies operating in Xinjiang, China has imposed a tax on oil and gas production in its Northwestern Province.

The 5 percent tax in oil-rich Xinjiang, imposed Tuesday, is part of a development plan for the desert region, where ethnic tensions exploded into rioting last July that killed nearly 200 people.

Earlier, Chinese president Hu Jintao said increased revenue from the resource tax should be focused on improving local people's lives. Beijing says that after a trial there, the tax will be applied to resource production nationwide.

Minority areas such as Xinjiang and Tibet are among China's poorest despite producing a large share of its oil, gas and minerals.

A key source of anti-Chinese anger is complaints by local residents that they get little of the wealth extracted by government companies, most of which flows to distant Beijing.

There has been no word on how the tax might apply to other resources such as copper and gold mining in mineral-rich Tibet.

Beijing has invested billions of dollars in Xinjiang and other minority areas and built roads and other infrastructure. But local residents say the benefits largely go to settlers from China's Han majority.

The new tax would cut into profits at state-owned oil and gas companies, possibly helping to defuse public irritation at the windfall they have enjoyed due to soaring prices and China's boom in auto sales.

The biggest oil producer, PetroChina Ltd., reported a 2009 profit of $15.1 billion, or nearly $2 million per hour.

Critics say energy companies and their well-paid bosses benefit from official favors and profit unfairly at the expense of China's public.

Xinjiang produced about 13 percent of China's crude in 2009. The tax in Xinjiang could raise 4 to 5 billion yuan ($580 million to $730 million) a year.

China previously charged a small oil and gas tax based on production volume rather than value. That meant revenues failed to rise during the latest commodities boom.

China Energy