By Emil Danielyan
Armenia’s Russian-controlled national gas distribution company has become the owner of the entire Armenian section of an under-construction natural gas pipeline from Iran, it was officially confirmed on Wednesday.
The ArmRosGazprom (ARG) operator has been widely expected to control the pipeline ever since the emergence late last year of new details of a controversial March 2006 agreement that allowed Armenia to avoid a surge in the price of Russian gas until January 2009.
The Armenian government said initially that it will only give Russia’s Gazprom gas conglomerate an incomplete but modern thermal power plant, located in the central town of Hrazdan, in return. The Russians pledged to invest $140 million in completing the facility by the end of 2008.
Officials in Yerevan and Moscow announced later in 2006 that as part of the complex deal, Gazprom has also had its share in ARG increased from 45 percent to almost 58 percent. Furthermore, they pointedly declined to refute reports that the Iran-Armenia pipeline will become the property of ARG. Armenian Energy Minister Armen Movsisian spoke out in favor of that early this year, but said his government has not yet decided on the pipeline’s ownership.
The Russian Regnum news agency quoted Valeri Golubev, deputy chairman of Gazprom, as saying in Yerevan on Wednesday that its takeover by ARG has already been formalized. Golubev did not specify how much the gas operator paid for the pipeline, saying only that it used proceeds from the issuance and sale of additional shares in ARG. All of those shares were bought by Gazprom, he said.
ARG announced plans to increase its charter capital in February. Company officials said at the time that this will enable to raise its ARG stake to 80 percent over the next two years.
ARG ownership of the pipeline appeared to be a fait accompli last May when the Gazprom-controlled company announced that it has started work on the pipeline’s second, 197-kilometer section and will finish it by the end of next year. The ARG chairman, Karen Karapetian, said the construction will cost $150 million.
The pipeline’s first, 40-kilometer stretch was inaugurated by the Armenian and Iranian presidents last March. A senior Iranian official was reported to say earlier this month that Iran will start pumping gas to Armenia on September 22. Energy Minister Movsisian denied this last week, however.
The pipeline from Iran was originally designed to ease Armenia’s heavy dependence on Russia for gas and other energy resources. Gazprom is currently Armenia’s sole supplier of gas, which generates about 40 percent of the South Caucasus nation’s electricity and is the main source of winter heating for its population.
Opposition politicians and government critics in Yerevan believe that the Russian takeover of the pipeline will nullify its anticipated positive impact on Armenia’s energy security. They have also criticized the 2006 Russian-Armenian agreement as a whole, pointing to the fact that it left the Armenian energy under near total Russian control. Armenian officials have repeatedly dismissed such concerns.
Both Golubev and Karapetian insisted that ARG’s activities have been highly beneficial for Armenia as they spoke to journalists after a meeting of the company board, which was attended by President Robert Kocharian. Karapetian, in particular, argued that the percentage of Armenian households having access to centralized gas supplies has increased dramatically over the past decade and is now the highest in the Commonwealth of Independents States.
The Armenian gas network fell into disuse during the severe energy crisis of the early 1990s and began to be slowly rebuilt following ARG’s establishment in 1997. ARG claims to have invested $120 million in the network since then. The number of its household subscribers jumped from 112,000 to 500,000 between 2002 and 2007.
“I can declare on behalf of Gazprom that we envy ArmRosGazprom’s achievements,” Golubev said, according to Regnum. “ArmRosGazprom is now an exemplary company in the CIS gas sector.”