Russia does not hide the political basis of gas prices for Armenia

At a May 19 videoconference of heads of EAEU member states, Russian President Vladimir Putin, referring to gas requests of Armenia and Belarus, noted that it is too early to talk about uniform gas pricing in the EAEU. According to Putin, deeper integration is needed for this. He noted that if the position of Armenia and Belarus on this issue is unchanged, then this item should be removed from the EAEU development strategy and a strategy adopted without it.

Yerevan circles believe that Putin, in exchange for cheap gas, offers Armenia deep integration, "which is also called political surrender. Apparently, one of the conditions for Russia is the introduction of a single currency based on the ruble," writes Lragir.

The cost of Russian gas supplied to Armenia is 2.8 times more expensive than in Europe. As of the first quarter of 2020, the average price of Russian gas supplied to Europe (at the border) is about $ 87. On the border of Armenia, the price is $ 165 (almost two times more expensive than in Europe).

The high price of Russian gas for Armenia was not affected by its depreciation in Europe, which began before the coronavirus pandemic. In the third quarter of 2019, Russian gas in Europe was already much cheaper than in Armenia, and in April 2020 the price was about $ 59 per thousand cubic meters, epress.am reports citing the Armenian NGO “Union of Informed Citizens”.

In early April, Gazprom Armenia applied to the Armenian Public Services Regulatory Commission with a request to revise natural gas tariffs. It is proposed to increase the average tariff by 11% and set it at 136 drams instead of the current 122 drams per cubic meter.

On May 19, Vladimir Putin explained the mechanism of Russian pricing. By asking for a gas price increase for the Armenians, Gazprom Armenia fulfilled the order of the Russian president.

Armenian society is very dissatisfied with the price of Russian gas. Articles published in the Yerevan press necessarily repeat the refrain on strategic cooperation between Russia and Armenia, which Putin does not take into account. The authors demand that Pashinyan refuse to purchase Russian gas and transfer Armenia to gas consumption from Iran.

The Russian political scientist Andrei Ivanov commenting on the statements of Armenian economists that the cost of Russian gas in Europe has decreased significantly and that it is supplied to Armenia at a higher price. He said, “The political leadership of Armenia must understand that the price of gas always depends on many factors - you can’t take the world average price and calculate the cost of fuel deliveries to one or another country,” he told Trend.

For example, Germany, the price of Russian gas for it is noticeably lower than for other European countries simply because the Russian Federation and Germany have a number of joint projects in the energy sector. According to Ivanov, it is worth considering the cost of gas delivery, political risks associated with this, and, of course, the volume of gas supplied.

“For example, gas will be transported from Russia to China through the recently built Power of Siberia pipeline for many years, we are talking about colossal purchases of “blue fuel”, and so China can reasonably count on discounts. As for Armenia, deliveries to this country are relatively small. In addition, there are already concluded long-term contracts and obligations undertaken by Armenia, under which it, in particular, must buy a certain amount of gas from Russia by 2048. ”

According to the political scientist, the fact is that relations between Russia and Armenia are not completely built on a mutually beneficial basis and do not have a solid economic basis, as in the case of bilateral relations between Russia and Azerbaijan:

“Moscow and Yerevan are exchanging political loyalty from each other in exchange for energy resources, economic assistance for the conclusion of a contract, any preferences in exchange for military protection. That is, between Russia and Armenia there are no purely economic contracts, purely political alliances and purely military-technical cooperation. There is precisely mixed bargaining, where objects from things of various planes are objects. Of course, Moscow does not like that Yerevan began to look more to the West. But at the same time, Moscow knows very well that energy resources, security, inclusion in geopolitical projects, a sales market are all in its hands, and therefore there is no serious fear that Armenia will “float away” somewhere, ”Ivanov explained.