RUSSIA AND ARMENIA PREPARING AGREEMENT FOR THE EXPORT OF GAS TO YEREVAN IN 2009-2011

Interfax
Sept 1 2008
Russia

Moscow and Yerevan are working intensively to prepare a midterm
agreement on the supply of Russian gas to Armenia in 2009-2011,
a Kremlin source told Interfax commenting on the run-up to Armenian
President Serge Sargsyan’s visit to Moscow.

"Energy [resources] remain a priority in economic cooperation:
intensive work is underway for the preparation of a midterm agreement
on the supply of Russian gas to Armenia in 2009-2011," the source said.

The source said that during the upcoming meeting between Sargsyan
and Russian President Dmitry Medvedev, both sides would discuss the
possibility of expanding trade and economic relations.

He added that Russia is definitely a leader among Armenia’s trading
partners. According to customs service statistics, in 2007 total
trade between the two countries came to $821 million while Russian
exports increased 67% to $655 million. In the first half of 2008,
trade turnover increased 20% year-on-year to $400 million.

The source also said that Russia was likely the leading investor in
the Armenian economy with most funds going into the energy, banking,
construction, communications, information technologies, mining and
metallurgical sectors.

Total capital investment topped $1.3 billion, the source said.

In addition, the source commented on current interest in expansion of
the Russian presence in the Armenian banking system, saying that the
share of Russian banks in the combined charter capital of Armenian
bands came to over 25%.

"Recently, both countries have been discussing the possibility of
implementing new and large-scale joint projects in various production
and manufacturing sectors, as well as in transportation," he said,
adding that this would facilitate the doubling of capital investment
in Armenia in the coming years.

The source added that there had also been noticeable steps in the
development of cooperation in precious stones and metals. He cited
Alrosa (RTS: ALRS) and the Armenian government’s 2007 signing of a
partnership agreement for development in these spheres.

In addition, the source said there has been dynamic development
in humanitarian cooperation between the two countries. He cited
Armenia’s participation in the implementation of Russia’s plan for
the development of coordinated multilateral humanitarian efforts
throughout the CIS.