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Armenia, Russia ‘Negotiating’ On Lower Gas Price


Armenia -- Minister of Energy and Natural Resources Yervand Zakharian gives a press conference, Yerevan, 13May2015

Armenia -- Minister of Energy and Natural Resources Yervand Zakharian gives a press conference, Yerevan, 13May2015

Armenia is discussing with Russia the possibility of cutting the price of Russian natural gas delivered to the South Caucasus country, Energy and Natural Resources Minister Yervand Zakharian said on Thursday.

Prime Minister Hovik Abrahamian revealed on Saturday that the Armenian government has formally requested a lower gas price in the light of the decreased oil prices and the sharp depreciation of the Russian ruble, which has hit Armenian exporters hard.

Zakharian said that the two sides are already “negotiating” on the matter. They have reached no agreements yet, he said.

Russia’s Gazprom state gas monopoly, which supplies at least 80 percent of Armenia’s gas, lowered the price from $190 to $165 per thousand cubic meters less than a year ago. It 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.

The subsequent collapse of oil prices, which also determine worldwide gas tariffs, has offset much of the Russian discount for Armenia. The Russian gas price for Europe averaged $238 per thousand cubic meters last year. The TASS news agency quoted Viktor Zubkov, the chairman of Gazprom’s board of directors, as saying on Wednesday that it will likely fall to $180 by April.

Zakharian declined to clarify what the Armenian government will do if the Russians reject a price cut requested by it. “Let’s not talk about hypothetical situations,” he told a news conference.

“As soon as there is an answer from Russia I will address all other issues,” added the minister.

Zakharian also made clear that Yerevan is not negotiating with the government of neighboring Iran on the possibility of significantly increasing Iranian gas imports. He insisted that Russian gas remains cheaper for Armenia than the gas supplied by the Islamic Republic.

“I can responsibly state that Iranian does not supply gas for $165 [per thousand cubic meters] to any country,” he said.

Speaking in December 2013, the then Iranian ambassador in Yerevan, Mohammad Reisi, hinted that Tehran could charge Armenia only $100 per thousand cubic meters should the latter ask for a major rise in the presently modest volume of Iranian gas deliveries.

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