Citing the economic fallout from the coronavirus pandemic, the Armenian government has asked Russia’s Gazprom giant to consider cutting the price of its natural gas supplied to Armenia.
In a letter to Gazprom Chairman Alexei Miller published by the Armenpress news agency on Tuesday, Deputy Prime Minister Mher Grigorian proposed that the two sides open negotiations on the matter.
Grigorian argued that international oil prices, which greatly determine the cost of natural gas, have fallen sharply over the past month. He also said that economic disruptions caused by coronavirus will significantly reduce energy consumption levels in Armenia unless they are offset by a gas price cut.
In these circumstances, Yerevan finds it “expedient to start new negotiations on changing the price of gas supplied to the Republic of Armenia,” Grigorian wrote. He said the talks should focus on the possibility of lowering that price or setting it in Russian rubles, rather than dollars, as has long been the case.
Deputy Prime Minister Tigran Avinian likewise said that the collapse of the oil prices gives the Armenian side sufficient grounds to seek a price cut. “I think that we will hold such discussions with our Russian partners very soon,” Avinian told reporters.
Armenia imports more than 80 percent of its gas from Russia. The wholesale price of that gas is currently set at $165 per thousand cubic meters. Gazprom raised it from $150 per thousand cubic meters in January 2019.
Despite that price rise, the cost of Russian gas supplied to Armenian consumers remained unchanged. Officials in Yerevan indicated before the coronavirus crisis that Armenian utility regulators may allow Armenia’s Gazprom-owned to raise its retail tariffs this spring.
Natural gas generates around one-third of Armenia’s electricity. It is also used in pressurized and liquefied forms by most vehicles in the country.