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    Armenia Seeks 10-Yr Gas Price Freeze from Russia


The former Soviet state failed to secure a price cut for supplies this year.

by: Dalga Khatinoglu, Ilham Shaban

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Natural Gas & LNG News, Europe, Premium, Corporate, Import/Export, Political, Supply/Demand, News By Country, Armenia, Russia

Armenia Seeks 10-Yr Gas Price Freeze from Russia

The Armenian government has entered talks with Russia’s Gazprom to try and secure a 10-year freeze in the price it pays for Russian gas until 2030, the chairman of Armenia’s commission for regulating public services, Garegin Baghramyan, announced on January 20.

Armenia has agreed to pay $165/’000 m3 for Russian gas this year, the same rate as it did in 2019, after failing to secure a price cut from Gazprom despite a significant decline in international prices over the last year. In 2018 the price was set at $150.

In practice, Armenia pays much more for Russian gas. The $165 only represents the cost to Gazprom’s Armenian distributor, Gazprom Armenia, which then charges consumers a much higher rate, set at $290/’000 m3 for this year.

Gazprom supplies almost all of Armenia’s gas, and is contracted to deliver up to 2.5bn m3/yr to the country in 2020. Armenia receives a further 350-400mn m3/yr of gas from Iran in return for providing its southern neighbour with electricity.

Gazprom has not yet published export statistics for 2019. But according to Armenia’s official data, the Russian company supplied 1.678bn m3 of gas in the first nine months of last year, indicating an annual growth of 3.9%. Around 27.4% of this volume was used by households, 25.5% in the transport sector, 23% in power generation and 8% in industry.

Gazprom Armenia (100%-owned by Gazprom) approved a 2020-2024 investment programme in December worth drams 60.8bn ($128mn). Some drams 36.8bn will be spent expanding the Abovyan underground gas storage facility, while 12.6bn will pay for expanding the country’s gas transportation system and 2.4bn for connecting new subscribers to the grid.

According to Baghramyan, Gazprom Armenia’s 10-year investment programme is valued at $500mn.