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Moscow Dismisses Complaints About Russian Gas Price For Armenia


Switzerland -- Russian Foreign Minister Sergei Lavrov attends the Human Rights Council at the United Nations in Geneva, February 25, 2020.

Russian Foreign Minister Sergey Lavrov has defended Moscow’s reluctance to cut the price of its natural gas supplied to Armenia and criticized Armenian criminal investigations into major Russian companies operating in the country.

The Armenian government effectively requested a price cut in a letter to Russia’s Gazprom giant sent late last month. The letter argued that international oil prices, which essentially determine the cost of Russian gas supplied to Europe, have fallen sharply due to the coronavirus pandemic.

Prime Minister Nikol Pashinian also discussed the matter by phone on March 31 with President Aleksandr Lukashenko of Belarus, which is also heavily dependent on Russian gas. According to Lukashenko’s press office, the two men agreed that the current gas prices set for their countries are “inflated.”

Lukashenko has since repeatedly complained that European Union member states are now paying less for Russian gas than Belarus or Armenia, which are part of the Russian-led Eurasian Economic Union (EEU).

Kazakhstan - Belarusian President Alexander Lukashenko (L) and Armenian Prime Minister Nikol Pashinian talk at a CSTO summit in Astana, 8 November 2018.
Kazakhstan - Belarusian President Alexander Lukashenko (L) and Armenian Prime Minister Nikol Pashinian talk at a CSTO summit in Astana, 8 November 2018.

Lavrov dismissed such complaints during a video conference on Tuesday. He argued that unlike EU consumers, Armenia and Belarus buy Russian gas at fixed prices that had been set well below international market-based levels.

“When the existing price for Armenia and Belarus was two or three times lower than the international price this was taken for granted and nobody said that it’s politics,” he said.

While acknowledging that the two ex-Soviet states allied to Russia are entitled to privileged treatment by Gazprom Lavrov stressed that they must also honor their “contractual obligations.”

Lavrov also said that internal gas prices set by Armenian utility regulators make it harder for Gazprom to agree to a deeper discount. He complained that this “chronic” problem is “not being solved for several years running.”

The retail prices have remained unchanged since Gazprom raised its wholesale tariff for Armenia from $150 to $165 per thousand cubic meters in January 2019. Armenia’s Gazprom-owned gas distribution network has incurred additional losses as a result.

Last month the Gazprom Armenia network formally asked the Public Services Regulatory Commission (PSRC) to allow a roughly 11 percent rise in the gas prices set for Armenian households and businesses. The commission has to approve or reject the application by June 19.

Deputy Prime Minister Mher Grigorian said on April 15 that in response to his letter Gazprom Chairman Alexei Miller indicated that it is up to the two governments to agree on the new wholesale price. Pashinian discussed the issue with Russian President Vladimir Putin in an April 6 phone call.

Lavrov mentioned that conversation, saying that Putin and Pashinian “see ways of developing our alliance and strategic partnership.” But he did not clarify whether the two leaders reached any agreements on the gas issue.

Armenia -- A commuter train at Yerevan's railway station, February 27, 2018.
Armenia -- A commuter train at Yerevan's railway station, February 27, 2018.

The Russian minister promised that Moscow will continue to take into account “our allied relations” in deciding the gas price for Armenia. But, he said, Yerevan too should demonstrate its commitment to the Russian-Armenian alliance by dropping “inappropriate” criminal proceedings launched against major Russian corporations.

Lavrov singled out Armenia’s railway network managed by the Russia Railways (RZD) giant.

An Armenian law-enforcement agency effectively accused the network called South Caucasus Railway (SRC) of investment-related fraud after raiding its offices and confiscating company documents in August 2018. Both SRC and its Russian operator denied any wrongdoing.

Russia’s Deputy Transport Minister Vladimir Tokarev said last September that the continuing criminal investigation has effectively disrupted RZD’s operations in Armenia. He warned that the state-run company managing Russia’s vast network of railways is therefore considering pulling out of a 30-year management contract signed with the former Armenian government in 2008.

In late 2018, Armenian law-enforcement authorities also launched a fraud inquiry into Gazprom’s Armenian subsidiary. They have not indicted any senior executives of the gas and railways operators so far.

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