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Russian gas for Armenia

17.12.2012  |  17:17

Russian gas for Armenia. 28837.jpeg

With the advent of winter the issue of prices on gas, which affects the entire population, has again become relevant in Armenia. The Russian side, according to the official report, intends to increase the price on the "blue fuel". Armenian expert does not rule out a possibility of the price increase due to Yerevan's position in respect to the Eurasian and Customs Union. Armenia has officially declared its non-intention to join these structures.


"Gazprom" is going to raise the price of gas supplied to Armenia", the Minister of Energy and Natural Resources of Armenia Armen Movsisyan said on December 13 during a meeting with journalists. The Minister did not specify the amount of increase in the cost of gas for Armenian consumers.

The Minister said the negotiations with "Gazprom" on the subject were ongoing, however, "the company says that the cost for gas supplied to Armenia shall raise again". "The Russians, of course, want to raise the gas price, and we do not want this, so we are negotiating. I think by the end of this month we learn the gas prices", said Movsisyan.

Has the price risen?

Talks on the cost of gas supplied to Armenia with "Gazprom" has been going on for several months. Armenian government, despite the comments of the experts, says that the price of gas for this period had not risen. Now, according to official data, the "blue fuel" costs 132 drams per cubic meter for average consumer, and for the largest economic entities - at $ 243 per 1,000 cubic meters. However, the data of the State Revenue Committee suggest the opposite trend.

Thus, according to the agency, for the period from July to September Armenia to purchased gas from Russia at a cost of $ 244 per thousand cubic meters, but this fact has not been commented officially. Experts note that the tariffs for gas since 2005 have risen by 5 times. According to experts, in fact, the price has risen, but the government, for various reasons, including the anticipated presidential election in February, is hiding this fact and subsidizing "ArmRosgazprom" to make it not raise prices for consumers.

It should be noted that the issue of gas prices was discussed between Serzh Sargsyan and Vladimir Putin in early August. That time, as the President said, they found mutual understanding on the issues. "The cost should be based on actual market prices for gas, multiplied or divided on the need for natural gas in Armenia for comparable with other regional tariffs", said Sargsyan.

Russian-Armenian company "ArmRosgazprom" which, in effect, is a monopoly, is engaged in the gas import and distribution in Armenia. The owner of 80% stake in the company is "Gazprom"; the Government of Armenia owns the remaining 20%. It is interesting that at one point the media reported information that the sale of its shares to the Russian gas giant might become the result of the deal between Turkey and "Gazprom" on the gas prices.

Higher gas prices is a political issue

Armenian economists tend to believe that from an economic point of view, at the moment there is no need to raise the gas price, since the demand for it throughout the world is not much growing, in spite of its dynamism. "Gas is not only an economic but also a political factor for Russia, and it would be a manifestation of short-sightedness to ignore this", the head of the center "Alternative", Doctor of Economics Tatul Manaseryan said in an interview with GTimes.

Manaseryan believes that a possible increase in tariffs can be used to influence the political decisions. In this respect, he has not ruled out the possibility of a link between increasing of gas cost with Armenia's position on Eurasian and Customs Union. Recall, Yerevan has officially refused from joining these structures due to the lack of common borders; however the country is ready to work closely with these integration formats.

"At the moment it is necessary to speak not of the Eurasian Union but of the Free Trade Area (FTA) in the CIS, which has been joined by Armenia. Even this project is not justified for Armenia from an economic point of view, since there are no common borders. Given the fact that the rules in the FTA are not clearly specified, it's prematurely to talk about Armenia's prospects in Eurasia", the expert summarized.

What can Armenia propose: two outputs

The words of the Minister of Energy and Natural Resources about Armenia's non-willing to raise the price of gas, and therefore is negotiating with the Russian side, indicate that Armenian side is also raising certain issues in order to prevent a rise in price of gas. "Armenia is the only reliable ally of Russia in the South Caucasus region, and a strong increase in the price of gas can ruin relationships, thereby weakening the position of Moscow in the region", said Manaseryan.

In his view, now times have changed, and "it is necessary to transfer from the language of coercion to the work for mutual benefit". In this regard, according to the economist, it is better to work in direction to greatly facilitate the way of transit communication between Armenia and Russia via Georgia. "It will strengthen Armenia's integration into the post-Soviet rather than the other instruments", says the economist.

However, if the rise in the "blue fuel" happens, Armenia has two choices - to import cheap gas from Turkmenistan via Iran and not to compensate the increase prices due to the current high margins (about $ 180), concluded Manaseryan.


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