Russia, Armenia agree on new

[Sari Galin]

By Ruben Meloyan and Aza Babayan in Moscow

Russia’s Gazprom giant and the Armenian government have reached agreement on the new price of Russian natural gas for Armenia set to rise considerably next year, officials in Moscow and Yerevan said on Tuesday.

But they would not specify the price hike, saying only that it will not be as sharp as many in Armenia feared.

Gazprom already nearly doubled the price of its gas to $110 per thousand cubic meters more than two years ago. However, its cost for Armenian corporate and individual consumers remained virtually unchanged until last May due to a controversial April 2006 agreement that left more Armenian energy assets under Russian ownership. In particular, Gazprom solidified its controlling stake in Armenia’s ARG gas distribution network and paid $249 million for an incomplete but modern thermal-power plant located in the central town of Hrazdan.

The Armenian government used the money for subsidizing the domestic gas prices. It ended the subsidies on May 1, triggering a 50 percent surge in the retail prices of gas supplied to Armenian households and business entities.

Gazprom announced shortly afterwards that by 2011 Armenia will have to pay for Russian gas at world prices that are currently above $200 per thousand cubic meters. Armenian officials have since been scrambling to minimize the price hike. The issue was high on the agenda of President Serzh Sarkisian’s late May visit to Moscow.

The ARG chief executive, Karen Karapetian, visited the Russian capital and met Gazprom’s chairman, Alexei Miller, for the same purpose on Monday. A spokesman for the Russian gas monopoly, Sergei Kuprianov, told RFE/RL that the two men agreed on the new price but refused to disclose it. Kuprianov said only that Gazprom “took into account the allied Russian-Armenian relationship” when deciding how much to charge Armenia in 2009.

Karapetian confirmed the information as he spoke to RFE/RL in Yerevan. “There will be a price rise but it will be very pleasant for everyone, he said, adding that Russian gas will remain “very affordable” for Armenians in the coming years. He did not elaborate.

Natural gas is the number one source of winter heating for Armenia’s population. It is also widely used, in liquefied and pressurized forms, by public transportation means and personal cars.

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