New Russian Gas Price for Armenia Unveiled

YEREVAN (Combined Sources)–Officials disclosed on Tuesday the new, considerably higher price of Russian natural gas which Armenia will have to pay next year and which will rise further in 2010.

The national gas distribution company ArmRosGazprom (ARG) said that under the terms of its agreement signed with Russia’s Gazprom monopoly last week, the gas price will grow from $110 to $154 per thousand cubic meters starting from April 1, 2009.

The agreement signed in Moscow envisages the tariff’s gradual increase to international levels, currently exceeding $250 per thousand cubic meters, within the next few years. According to ARG’s chief executive, Karen Karapetian, Gazprom will be charging Armenia $200 per thousand cubic meters from April 2010.

President Serzh Sarkisian and top ARG executives downplayed the price hike’s impact on Armenian households and corporate users as they revealed it during a meeting at the Russian-controlled company’s Yerevan headquarters. “The tariffs that will take effect on April 1, 2009 will only slightly increase the socioeconomic burden [of the population,]” Sarkisian said.

“I am convinced that the new tariffs will not weigh heavily on the economy,” Karapetian told reporters after the meeting. He said the increased cost of Russian gas, the main source of winter heating for Armenian households, will be mitigated by recent years’ dramatic appreciation of the Armenian dram against the U.S. dollar.

Karapetian also stressed the fact that the measure will take effect after the 2008-2009 heating season and therefore spare the population extra spending this winter.

Russian gas is also used by local thermal-power plants that general about one third of Armenia’s electricity. Whether they will seek to raise their electricity fees as a result is not yet known.

The retail prices of gas in the country already surged by 50 percent on May 1 after the Armenian government stopped subsidizing them with proceeds from a controversial 2006 deal with Gazprom that left more Armenian energy assets under Russian control. Gazprom supplies to Armenia totaled just over 2 billion cubic meters last year.

The latest tariff deal with Gazprom came amid the nearing completion of work on the second and final section of a gas pipeline linking Armenia to neighboring Iran. Sarkisian announced on September 3 Armenia will be able to import up to 2.5 billion cubic meters of Iranian gas annually “in late October or early November.”

The head of the Iranian Gas Export Company Tuesday said Iran will be able to provide Armenia with the gas it needs during the coming winter.

“Iran will pump three million cubic meters of gas to Armenia during this winter,” Reza Kasaei-Zadeh said in an interview with ISNA news agency.

Armenia’s Minister of Energy, Armen Movsisyan, recently said that the capacity of the Iran-Armenia gas pipeline project would increase to 2.5 billion cubic meters per year.

“The opening of the Iranian-Armenian pipeline will guarantee the energy safety of Armenia,” he said, adding that this would become feasible by increasing the capacity of the Kadzharan-Yerevan section of the pipeline by November, 2008.

The Iran-Armenia gas pipeline project was officially opened on March 19, 2007 by Iranian President Mahmoud Ahmadinejad and Armenian President Robert Kocharian. The project will provide Armenia with an alternative to the gas it now imports from Russia.

The two countries will share the $220 million cost of the 140 kilometer pipeline.

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