ARMENIA COULD BE HURT BY RUSSIAN SANCTIONS TOO
By M. Alkhazashvili (Translated by Diana Dundua)

The Messenger, Georgia
Oct 17 2006

Russian sanctions targeted to hurt Georgia might also damage a
strategic partner of Russia- Armenia.

According to Armenian analysts, the Georgian-Russian confrontation
will create problems for the delivery of natural gas to Armenia. It’s
highly probable that as of January 2007, Russia will increase (some
analysts predict even double) the price of natural gas for Georgia.

It is likely Georgia will try to recuperate some of this money by
increasing the transit price of the gas to Armenia, leading to a
price increase for them as well.

The paper Rezonansi reports that Yerevan predicts that Georgia will
increase the transit price of 1000 cubic metres of gas from USD 30
to USD 75. The Georgian Energy Minister declines to discuss the issue.

Georgia increased the transit price to Armenia in 2006 from USD 10
to USD 30, when Russia increased the cost of natural gas to Georgia.

According to Armenian analysts, one of the biggest threats to the
country’s energy security is the Baku-Erzurum natural gas pipeline
(also known as the South Caucasus pipeline). If this pipeline becomes
fully operational, Armenia talks about the possibility of the pipeline
from Russian serving Georgia and then Armenia closing completely.

Some Armenian analysts believe that after receiving the Shah-Deniz
natural gas (through the South Caucasus pipeline) Georgia might not
need Russian natural gas any more. But this is highly unlikely in
the near future as the Baku-Erzurum natural gas pipeline will not
likely be able to satisfy Georgia’s needs right away, and furthermore,
Azerbaijan itself still relies on Russia for some four million cubic
meters of gas annually.

Yerevan optimistically awaits construction of the Iran-Armenia natural
gas pipeline which will be controlled by Russia’s Gazprom.

According to Russian analysts, after this pipeline comes on stream,
Armenia will no longer have natural gas problems. The pipeline should
come on stream within two years and its power will be 1.2 billion
cubic metres annually.

This pipeline worries some in Georgia, who point out that the gas
currently coming from Russia could be easily turned off without
affecting Armenia, making the possibility of ‘terrorist attacks’
of the kind that happened last winter much more likely.