Kommersant, Russia
April 7 2006

Gazprom Takes Over Armenian Energy

Gazprom has reported the signing of a 25-year agreement with Armenia
on strategic partnership in gas projects. Armenian Foreign Minister
Vardan Oskanian is to hand a draft agreement signed in Yerevan to his
Russian counterpart, Sergey Lavrov today. Under the document, Gazprom
takes control over all gas pipeline projects of the country. In
return, Armenia will get the guaranteed volume of gas supplies for
the next 25 years and the fixed gas price of $110 per 1,000 cu.
meters for the next three years.
The visit of the Armenian foreign minister to Moscow is timed to the
Year of Armenia in Russia. Yet, Armenia is set to discuss a more
pressing issue in Moscow – that of gas prices. Gazprom announced last
December an intention to raise gas prices for Armenia to $110 per
1,000 cu. meters from $56. In the end, Moscow offered Erevan a deal
designed to cushion the price blow.

Gazprom and Armenia’s government initialed an agreement on long-term
cooperation in late March, according to the information Kommersant
obtained. Gazprom is to increase its share in Armrosgaz, the joint
venture controlling all gas transportation in Armenia, to 82 percent
from 45 percent. The Armenian government is currently holding 45
percent in the company and 10 percent is owned by Itera. Under the
agreement, Gazprom will bring funds to the Armenian budget which will
make up for the price hike for local customers.

Gazprom officially confirmed that Armrosgaz will buy the 40km-long
portion of the Megri-Kazharan gas pipeline from Iran to Armenia. The
gas main is to be put into operation by the end of the year.

by Ara Tatevosian, Erevan; Alexander Reutov, Nataliya Grib