New Details Of Russian-Armenian Gas Deal Emerge

An agreement signed during Russian President Vladimir Putin’s recent visit to Yerevan bars Armenia from changing for the next 30 years the regulatory environment for its domestic gas distribution network controlled by Russia’s Gazprom giant, it emerged on Tuesday.

More details of the agreement signed by Energy Minister Armen Movsisian and the Gazprom chairman, Alexei Miller, on December 2 came to light during hearings held in the Armenian parliament. Opposition lawmakers attending them accused the Armenian government of having withheld crucial information about its energy dealings with Moscow from the public for political purposes.

The deal in question formalized the transfer of the government’s remaining 20 percent share in Armenia’s gas distribution network to Gazprom in payment for its hitherto unknown debt worth $300 million. The government has run up the debt while secretly subsidizing the price of Russian gas raised by Gazprom in April 2011.

The price hike was acknowledged by the Armenian authorities only after a presidential election and municipal polls in Yerevan held in February and May respectively. Official vote results, rejected as fraudulent by the Armenian opposition, gave victory to President Serzh Sarkisian and his Republican Party (HHK).

Opposition deputies condemned the secret subsidy, saying that it was illegal and aimed at helping Sarkisian hold on to power. “This is a crime for which this government must be prosecuted,” Levon Zurabian of the Armenian National Congress (HAK) charged during the hearings.

Gurgen Arsenian, a wealthy lawmaker representing the Prosperous Armenia Party (BHK), claimed that the election outcome would have been different had voters been aware that Russian gas has become far more expensive.

Movsisian, who also spoke at the hearings, denied any wrongdoing on the part of his government. He argued that the 20 percent share in the Armenian gas network covered only half of the debt to Gazprom and that the rest of it was forgiven by the Russian gas monopoly.

“On top of that, no gas price rises are expected for the next five years. I consider this a good deal,” the minister said. He also claimed that the government has never lied to the public about the gas tariff.

Movsisian repeatedly denied any increase in the cost of Russian gas in 2012 and earlier this year.

Meanwhile, Alexander Arzumanian, another opposition deputy, decried other, hitherto unknown provisions of the latest Russian-Armenian gas deal. Under one of them, Armenia cannot enact any legislation affecting Gazprom’s tight grip on its gas network until December 2043. The Russian energy conglomerate will be able to challenge any relevant change in Armenian laws and regulations at an international arbitration body.

“This contract totally restricts the rights of one of the signatories and runs counter to our constitution,” raged Arzumanian. “It only serves the interests of the other side. Such agreements are called capitulation acts.”

The disclosed clause could make it even harder for the Armenian government to significantly boost the presently modest volumes of gas imports from neighboring Iran. Armenian officials and Movsisian in particular have repeatedly claimed that Iranian gas is more expensive than the gas supplied by Gazprom.

The Iranian ambassador in Yerevan, Mohammad Reisi, publicly questioned these claims earlier this month. Reisi hinted that Iran is ready, in principle, to sell gas to Armenia at prices well below international market levels.

Movsisian on Tuesday dismissed Reisi’s statements. He said the government will consider buying more Iranian gas if Tehran offers a “good price.”