GAZPROM RAISING GAS PRICE FOR ARMENIA 40 PCT IN 09

Guardian
Reuters
Tuesday September 23 2008

YEREVAN, Sept 23 (Reuters) – Russia’s Gazprom said on Tuesday it will
raise the gas price for Armenia by 40 percent next year, bringing it
into line with the European market within two years, as it seeks to
stop subsidising former Soviet states.

Gazprom, Russia’s gas export monopoly, has been supplying former
communist neighbors with cheap gas for more than 15 years, since the
Soviet Union collapsed. It is seeking to make them gradually reach
parity with gas prices in Europe.

Gazprom will charge Armenia $154 per 1,000 cubic metres (tcm) from
April 1, 2009, up from $110 per tcm this year, Karen Karapetyan,
general director of ArmRosgazprom, Gazprom’s Armenian subsidiary,
told reporters.

In 2010, the price will further climb to $200 per tcm, and from 2011
Armenia will pay Gazprom as much as its European customers, he added.

Karapetyan said that Armenia, which has no natural gas of its own and
relies solely on imports, plans to buy 2.5 billion cubic metres (bcm)
of gas in 2009, up from 2.4 bcm this year. Gazprom, which supplies
a quarter of Europe’s gas needs, has forecast that its gas export
price for Europe will hit $500 per tcm by the end of this year,
almost double last year’s average price of $260.

Gazprom has yet to complete its gas pricing talks with other
neighbours, such as Ukraine and Belarus, for the next year.

Despite being the world’s largest gas producer, Gazprom also imports
the fuel from Central Asian countries to meet growing demand at
home. It said earlier this year that its import bill for gas purchases
may more than double next year.

The gas firm has warned that it could raise its export price to
Ukraine to more than $400 per tcm from $179.5 now.

Belarus paid $128 per tcm in the second quarter of 2008, up from $119
in the first quarter and $100 last year.

Europe is carefully watching pricing talks between Ukraine and
Russia after a previous dispute led to supply disruptions to Europe,
which imports much of its gas via Ukraine. (Reporting by Hasmik
Lazarian, writing by Tanya Mosolova, editing by Anthony Barker)