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Crucial Choice: Armenia mulling over 'geopolitically important' energy deals
Analysis | 25.07.14 | 10:37
By Naira Hayrumyan
ArmeniaNow correspondent
Armenia's energy sector is facing a crucial choice. At its July 24
sitting the Armenian government considered, but not yet approved
several major deals concerning the sphere. As it turned out, the
ArmRosgazprom company, which owns almost the entire domestic gas
distribution network in Armenia and earlier this year was renamed
Gazprom-Armenia, has considerable debts. In particular, the company
owes to Vorotan HPP Cascade CJSC, which is to be sold to an American
company, Contour Global, although the deal is not completed yet.
The government is considering the possibility of transferring the
assets of Gazprom in Armenia on account of settling part of the debts
to Vorotan HPP and the Armenian government. In particular, it is
planned to transfer 53.3 percent of the assets of Nairit-2 and 3.6
percent of the assets Nairit Plant to Vorotan HPP Cascade CJSC. The
budget loans and other liabilities of Armgazprom to the Ministry of
Finance of Armenia will be repaid through the transfer of the
Tegh-Stepanakert gas pipeline, as well as 46.73 percent of the assets
of Nairit-2.
These planned deals have raised a number of questions in Armenia,
first of all, whether Vorotan HPP, already together with over half of
the shares of Nairit-2 (which is an operating chloroprene rubber
production shop), will finally be sold to an American company. The
thing is that the deal, which was concluded last November, has not
been finalized yet. Moreover, Russian energy giant Rosneft also
aspired to get Nairit, but it apparently set the condition that it
would buy Nairit only with Vorotan HPP.
The Armenian government does not yet specify who will get the two
major energy enterprises - an American company or a Russian one. U.S.
Ambassador to Armenia John Heffern believes that the transfer of
Vorotan HPP to an American firm will be a powerful message for Western
investors that Armenia is ready to work with them.
Meanwhile, if Armenia reconsiders the deal and sells debt-free Nairit
and Vorotan to a Russian company, it will be another powerful message
that Armenia has finally "surrendered" to Russian companies.
Prime Minister Hovik Abrahamyan gave the government several days to
"think" about what to do.
But there is also another aspect here - the transfer of the
Tegh-Stepanakert pipeline from Gazprom to the Armenian government.
This is the only pipeline through which Nagorno-Karabakh receives
natural gas. It is possible that Gazprom has given up this asset at
the request of Azerbaijan, which is doing everything for foreign
companies not to work in Karabakh officially.
On the other hand, there is an opinion that Rosneft is simply ousting
Gazprom also in Armenia. As is known, in Russia these two giants are
engaged in tough competition, and Rosneft is aggressively trying to
acquire the assets of Gazprom.
The deal on the sale of Vorotan HPP, already with Nairit, may be an
indicator of Armenia's foreign-policy orientation. Armenia will either
diversify its energy system by letting Americans to its mostly
Russian-dominated market or will admit that it has completely lost the
sovereign right to take even economic decisions.
If Armenia takes a step towards Americans it may be followed by a
visit of the energy minister to Iran, where he can negotiate about the
transit of Iranian gas to Europe via Armenia and Georgia, buying cheap
Iranian gas and, accordingly, refusing to buy more expensive gas from
Gazprom. If Armenia chooses the Russian company, however, it will have
to forget, for a long time, about its being a political entity even on
the regional scale.
http://armenianow.com/commentary/analysis/56375/armenia_energy_system_nairit_vorotan_government
From: Emil Lazarian | Ararat NewsPress
Analysis | 25.07.14 | 10:37
By Naira Hayrumyan
ArmeniaNow correspondent
Armenia's energy sector is facing a crucial choice. At its July 24
sitting the Armenian government considered, but not yet approved
several major deals concerning the sphere. As it turned out, the
ArmRosgazprom company, which owns almost the entire domestic gas
distribution network in Armenia and earlier this year was renamed
Gazprom-Armenia, has considerable debts. In particular, the company
owes to Vorotan HPP Cascade CJSC, which is to be sold to an American
company, Contour Global, although the deal is not completed yet.
The government is considering the possibility of transferring the
assets of Gazprom in Armenia on account of settling part of the debts
to Vorotan HPP and the Armenian government. In particular, it is
planned to transfer 53.3 percent of the assets of Nairit-2 and 3.6
percent of the assets Nairit Plant to Vorotan HPP Cascade CJSC. The
budget loans and other liabilities of Armgazprom to the Ministry of
Finance of Armenia will be repaid through the transfer of the
Tegh-Stepanakert gas pipeline, as well as 46.73 percent of the assets
of Nairit-2.
These planned deals have raised a number of questions in Armenia,
first of all, whether Vorotan HPP, already together with over half of
the shares of Nairit-2 (which is an operating chloroprene rubber
production shop), will finally be sold to an American company. The
thing is that the deal, which was concluded last November, has not
been finalized yet. Moreover, Russian energy giant Rosneft also
aspired to get Nairit, but it apparently set the condition that it
would buy Nairit only with Vorotan HPP.
The Armenian government does not yet specify who will get the two
major energy enterprises - an American company or a Russian one. U.S.
Ambassador to Armenia John Heffern believes that the transfer of
Vorotan HPP to an American firm will be a powerful message for Western
investors that Armenia is ready to work with them.
Meanwhile, if Armenia reconsiders the deal and sells debt-free Nairit
and Vorotan to a Russian company, it will be another powerful message
that Armenia has finally "surrendered" to Russian companies.
Prime Minister Hovik Abrahamyan gave the government several days to
"think" about what to do.
But there is also another aspect here - the transfer of the
Tegh-Stepanakert pipeline from Gazprom to the Armenian government.
This is the only pipeline through which Nagorno-Karabakh receives
natural gas. It is possible that Gazprom has given up this asset at
the request of Azerbaijan, which is doing everything for foreign
companies not to work in Karabakh officially.
On the other hand, there is an opinion that Rosneft is simply ousting
Gazprom also in Armenia. As is known, in Russia these two giants are
engaged in tough competition, and Rosneft is aggressively trying to
acquire the assets of Gazprom.
The deal on the sale of Vorotan HPP, already with Nairit, may be an
indicator of Armenia's foreign-policy orientation. Armenia will either
diversify its energy system by letting Americans to its mostly
Russian-dominated market or will admit that it has completely lost the
sovereign right to take even economic decisions.
If Armenia takes a step towards Americans it may be followed by a
visit of the energy minister to Iran, where he can negotiate about the
transit of Iranian gas to Europe via Armenia and Georgia, buying cheap
Iranian gas and, accordingly, refusing to buy more expensive gas from
Gazprom. If Armenia chooses the Russian company, however, it will have
to forget, for a long time, about its being a political entity even on
the regional scale.
http://armenianow.com/commentary/analysis/56375/armenia_energy_system_nairit_vorotan_government
From: Emil Lazarian | Ararat NewsPress