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GAZPROM KEEPS ESTABLISHING CONTROL OVER SUPPLIES OF FOREIGN GAS TO EUROPE
Source: Vedomosti, April 07, 2006; Vremya Novostey, April 07, 2006
Agency WPS
The Russian Oil and Gas Report (Russia)
April 10, 2006 Monday
On April 6, Gazprom reached an agreement with Armenia on supplies of
gas to it until 2009 at a price of $110 per 1,000 cubic meters. In
exchange Armenia will yield the Iran-Armenia gas pipeline via which
gas is delivered to Europe to Gazprom.
Armenia does not have gas production of its own. In 2005, Gazprom,
the only gas supplier to this country, sold 1.7 billion cubic meters of
gas to Armenia. On Armenian market gas is distributed by ArmRosgazprom
established in December of 1997. In this company 45% stakes belong
to Gazprom and Energy Ministry of Armenia and 10% belong to ITERA.
On April 6, Gazprom signed an agreement with the government of Armenia
for 25 years. This agreement outlined principles for cooperation in the
territory of Armenia. The document stipulates that until January 1 of
2009 Armenia will buy gas at $110 per 1,000 cubic meters (until April,
Gazprom sold gas to the republic at $54 per 1,000 cubic meters). For
stability Armenia will pay Gazprom generously. ArmRosgazprom will
buy from the government of Armenia the 40-kilometer extension of
the Iran-Armenia gas pipeline being under construction and will
accomplish it and will also be the customer of construction of the
second 197-kilometer extension of the pipeline.
As a result of an additional issue of shares the stake of Gazprom
in ArmRosgazprom will grow from 45% to 75%. A spokesperson for the
Ministry of Energy of Armenia says that the agreement does not mention
the gas pipeline. A source close to Gazprom says that the agreement
about this is achieved but is not signed yet.
Armen Movsisyan, Energy Minister of Armenia, says that Gazprom will
also buy out the fifth energy generating unit of the Razdanskaya heat
and power station from the republic (four units are managed by RAO
EES Rossii) for $248.8 million and will invest $140 million more in
its accomplishment. Until April 14, Gazprom plans to sign preliminary
agreements of sale-purchase and until January 1 of 2007 it is going
to acquire the promised objects.
Analyst Valery Nesterov of Troika Dialog remarks that obtaining the
Iran-Armenia gas pipeline Gazprom will control supplies of Iranian
gas, reserves of which are estimated at 28 trillion cubic meters, to
Europe. Now Iran exports gas to Turkey but potentially it may become
a serious competitor for Russian gas in Europe. One of the possible
routes for transportation of Iranian gas to Europe passes through
Armenia, Georgia and Ukraine. Nesterov says, "Any participation
of Gazprom in these projects will enable the company at least to
influence the transportation costs and the end price of gas."
A manager of Gazprom presumes that Armenia may become a transit point
for Iranian gas to prevent its flow to Europe via Turkey. According to
the manager, it is possible to transport this gas to Europe through the
territory of Russia via the unified gas supply system of Gazprom. The
source concludes, "This will also allow reduction of our dependence
on Turkmen gas that Turkmenistan promises to sell to China."
Gazprom is going to raise the price of gas for other CIS countries
too. Alexander Ryazanov, Deputy CEO of Gazprom, said earlier that
Azerbaijan and Georgia would have to buy gas at $110 instead of the
current $54 and $89 per 1,000 cubic meters respectively. For Belarus
for which Russian gas is the cheapest of all among the neighbors of
Russia now Gazprom promises to triple the price that now amounts to
$46.80 per 1,000 cubic meters. In any case, a manager of Gazprom
admits that the price for Belarus may be even lower if Belarusian
authorities keep their promise and give a 50% stake in the pipeline
company Beltransgaz to Gazprom. The source concludes, "The example
of Armenia proves that a compromise is possible."
Source: Vedomosti, April 07, 2006; Vremya Novostey, April 07, 2006
Agency WPS
The Russian Oil and Gas Report (Russia)
April 10, 2006 Monday
On April 6, Gazprom reached an agreement with Armenia on supplies of
gas to it until 2009 at a price of $110 per 1,000 cubic meters. In
exchange Armenia will yield the Iran-Armenia gas pipeline via which
gas is delivered to Europe to Gazprom.
Armenia does not have gas production of its own. In 2005, Gazprom,
the only gas supplier to this country, sold 1.7 billion cubic meters of
gas to Armenia. On Armenian market gas is distributed by ArmRosgazprom
established in December of 1997. In this company 45% stakes belong
to Gazprom and Energy Ministry of Armenia and 10% belong to ITERA.
On April 6, Gazprom signed an agreement with the government of Armenia
for 25 years. This agreement outlined principles for cooperation in the
territory of Armenia. The document stipulates that until January 1 of
2009 Armenia will buy gas at $110 per 1,000 cubic meters (until April,
Gazprom sold gas to the republic at $54 per 1,000 cubic meters). For
stability Armenia will pay Gazprom generously. ArmRosgazprom will
buy from the government of Armenia the 40-kilometer extension of
the Iran-Armenia gas pipeline being under construction and will
accomplish it and will also be the customer of construction of the
second 197-kilometer extension of the pipeline.
As a result of an additional issue of shares the stake of Gazprom
in ArmRosgazprom will grow from 45% to 75%. A spokesperson for the
Ministry of Energy of Armenia says that the agreement does not mention
the gas pipeline. A source close to Gazprom says that the agreement
about this is achieved but is not signed yet.
Armen Movsisyan, Energy Minister of Armenia, says that Gazprom will
also buy out the fifth energy generating unit of the Razdanskaya heat
and power station from the republic (four units are managed by RAO
EES Rossii) for $248.8 million and will invest $140 million more in
its accomplishment. Until April 14, Gazprom plans to sign preliminary
agreements of sale-purchase and until January 1 of 2007 it is going
to acquire the promised objects.
Analyst Valery Nesterov of Troika Dialog remarks that obtaining the
Iran-Armenia gas pipeline Gazprom will control supplies of Iranian
gas, reserves of which are estimated at 28 trillion cubic meters, to
Europe. Now Iran exports gas to Turkey but potentially it may become
a serious competitor for Russian gas in Europe. One of the possible
routes for transportation of Iranian gas to Europe passes through
Armenia, Georgia and Ukraine. Nesterov says, "Any participation
of Gazprom in these projects will enable the company at least to
influence the transportation costs and the end price of gas."
A manager of Gazprom presumes that Armenia may become a transit point
for Iranian gas to prevent its flow to Europe via Turkey. According to
the manager, it is possible to transport this gas to Europe through the
territory of Russia via the unified gas supply system of Gazprom. The
source concludes, "This will also allow reduction of our dependence
on Turkmen gas that Turkmenistan promises to sell to China."
Gazprom is going to raise the price of gas for other CIS countries
too. Alexander Ryazanov, Deputy CEO of Gazprom, said earlier that
Azerbaijan and Georgia would have to buy gas at $110 instead of the
current $54 and $89 per 1,000 cubic meters respectively. For Belarus
for which Russian gas is the cheapest of all among the neighbors of
Russia now Gazprom promises to triple the price that now amounts to
$46.80 per 1,000 cubic meters. In any case, a manager of Gazprom
admits that the price for Belarus may be even lower if Belarusian
authorities keep their promise and give a 50% stake in the pipeline
company Beltransgaz to Gazprom. The source concludes, "The example
of Armenia proves that a compromise is possible."