KOCHARIAN CONFIRMS RUSSIAN CONTROL OF IRAN-ARMENIA PIPELINE
By Emil Danielyan

Radio Liberty, Czech Rep.
Oct 30 2006

President Robert Kocharian confirmed on Monday that Russia’s state-run
Gazprom monopoly will gain a controlling stake in Armenia’s national
gas distribution company that will almost certainly own the incoming
gas pipeline from Iran.

Gazprom’s board approved and announced on Friday the issuance of
additional shares in the ArmRosGazprom (ARG) operator, saying that it
will buy all of them and thereby raise its ARG stake from 45 percent
to 58 percent.

Kocharian confirmed the information as he met with Russian President
Vladimir Putin in the Kremlin. "I would like to immediately inform you
that all of our serious agreements on energy projects with Gazprom
are entering the implementation phase," he said in remarks posted
on the Kremlin’s website. "Just a few days ago, they were finally
approved by the Gazprom board."

The Armenian government has until now owned another 45 percent of ARG,
with the remaining 10 percent belonging to ITERA, a private Russian
gas exporter.

There has been no word yet on whether the Russian giant will
pay Armenia anything for gaining control of its gas distribution
network and further tightening the Russian grip on the Armenian energy
sector. All the signs are that the ARG takeover is part of last April’s
controversial deal that allowed Armenia to avoid a doubling of in the
price of gas imported from Russia until January 2009 in exchange for
handing over more energy assets to Gazprom.

One of those assets is the incomplete but modern Fifth Unit of the
country’s largest thermal power plant located in the central town of
Hrazdan. Gazprom initially confirmed but later refuted reports that
it will also get hold of the Armenian pipeline from Iran as part of
the deal. Armenian officials also denied that.

Nonetheless, Russian control of the first 40-kilometer Armenian section
of the pipeline, slated for completion this winter, now seems a forgone
conclusion. Prime Minister Andranik Markarian revealed last week
Yerevan’s plans to incorporate the pipeline into ARG, saying that "it
would be illogical to have two gas distribution networks in Armenia."

The ARG chief executive, Karen Karapetian, likewise indicated on Friday
that his company’s ownership of the pipeline is imminent. "The question
is whether the Iran-Armenia pipeline will be a separate enterprise
or will be given to ARG," Karapetian told reporters. "In my view,
giving to ARG would be logical." "ARG has offered to take over that
pipeline," he added.

The pipeline in question was supposed to end Armenia’s strong
dependence on Russian gas and other energy resources. Critics say that
by placing it under Russian control the Armenian government would
only deepen that dependence. Moscow is thought to have already made
sure that the pipeline’s diameter is not large enough to allow Iran
to export its gas to Georgia and other countries via Armenia.

This and other economic issues apparently topped the agenda of
Kocharian’s talks with Putin, who described as "shameful" the fact
that Russia is only the third largest foreign investor in Armenia. "I
say ‘shameful’ because it is odd that Russia does not occupy the first
place in terms of investments in the economy of its strategic partner,"
Putin said.

It is not clear if the two men discussed the Kremlin’s controversial
blockade of Georgia which is seriously hurting Armenian companies
trading with Russia. Meeting with their Russian colleagues earlier
this month, senior Armenian lawmakers exposed Yerevan’s frustration
with Moscow’s perceived failure to reckon with the interests of its
main regional ally in its dealings with the pro-Western government
in Tbilisi. Some of the visiting Russian parliamentarians demanded,
for their part, that Armenia make a clear-cut "choice" between Russia
and Georgia.

However, the Kocharian administration has avoided taking sides in
the latest Georgian-Russian confrontation, expressing hope for its
peaceful settlement. Parliament speaker Tigran Torosian reiterated
those hopes at a meeting with the Georgian ambassador to Armenia,
Revaz Gachechiladze, on Monday. According to Torosian’s office,
Gachechiladze praised Yerevan’s stance as "balanced and acceptable
to the international community."