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Armenia Wants Russia To Cut Gas Price


Armenia - President Serzh Sarkisian (R) awards a medal to Gazprom Chairman Alexei Miller, Yerevan, 16Apr2015.

Armenia - President Serzh Sarkisian (R) awards a medal to Gazprom Chairman Alexei Miller, Yerevan, 16Apr2015.

The Armenian government has asked authorities in Russia to lower the price of Russian natural gas delivered to Armenia, Prime Minister Hovik Abrahamian revealed on Saturday.

Abrahamian made the announcement at a meeting with owners of Armenian manufacturing companies exporting foodstuffs and other goods to Russia.

A statement by his press office cited them as complaining that the existing energy prices are hurting their businesses that have already been hit hard by a steep depreciation of the Russian ruble. It said they asked the Armenian premier to seek a deeper Russian gas price discount in view of the current “global dynamics of energy costs.”

According to the statement, Abrahamian told the entrepreneurs Yerevan has already “appealed to the Russian Federation’s authorities with regard to energy resources” and expects a positive response from them given “the strategic nature of our partnership.” There was no word on the scale of the price cut sought by the Armenian government.

Russia’s Gazprom state gas monopoly, which supplies at least 80 percent of Armenia’s gas, lowered the tariff from $190 to $165 per thousand cubic meters less than a year ago. The move did not translate into corresponding retail price reductions for Armenian households and corporate consumers, however, benefiting only the Armenian national gas distribution network owned by Gazprom.

Gazprom had previously cut the tariff in 2013 in return for Yerevan’s decision to join the Russian-led Eurasian Economic Union (EEU). At that time the Russian giant charged European countries an average of almost $350 per thousand cubic meters of its gas, meaning that Armenia enjoyed a significant discount.

The subsequent collapse of oil prices, which also determine worldwide gas tariffs, has offset much of that discount. The Russian gas price for Europe averaged $238 per thousand cubic meters last year and is expected to fall to about $200 this year, the lowest level in more than a decade.

With natural gas generating at least one-third of Armenia’s electricity, a lower Russian tariff could allow the Armenian authorities to avoid raising domestic electricity prices this year. A more than 16 percent rise in those prices, announced by utility regulators in June 2015, sparked dramatic street protests in Yerevan.

The mostly young protesters forced the government to decide to keep the electricity tariff unchanged, through a subsidy, for the vast majority of households at least until September 2016.

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