Russian Oil Giant Set To Buy Armenian Chemical Plant

Russia’s largest oil company controlled by the Kremlin appeared to have moved closer on Wednesday to acquiring a troubled Armenian chemical enterprise that has stood idle for more than two years.

Igor Sechin, the powerful chairman of the Rosneft giant, met with President Serzh Sarkisian during his third visit to Yerevan in less than a year.

Sarkisian’s office said the talks were followed by the signing at the presidential palace of several agreements between Sechin and a top executive from the Russian subsidiary of Pirelli, one of the world’s largest tire manufactures. It said one of those documents is a memorandum of understanding on the creation of a joint venture that will manufacture synthetic rubber in Armenia.

No further details were reported by the presidential press service. Rosneft did not issue any statements on Sechin’s visit as of late Wednesday.

The development comes less than a month after it was announced that Rosneft is negotiating with the Armenian government on the possible takeover of Nairit, the country’s largest chemical enterprise specializing in the production of chloroprene rubber

The Soviet-era plant located in a southern Yerevan suburb has struggled to remain afloat since the early 1990s, repeatedly changing foreign owners and operators in murky deals overseen by successive Armenian governments. Erratic manufacturing operations at Nairit ground to a halt in April 2010 following a global financial crisis that hit Armenia hard.

Only some 500 of the plant’s more than 3,000 employees have gone to work on a regular basis since then. They are entitled to some pay despite being idle most of the time. Significant delays in the payment of those wages periodically trigger street protests by Nairit workers.

Energy Minister Armen Movsisian told reporters on December 4 that Rosneft has “tentatively” agreed to take over and breathe new life into Nairit. “What is more, Rosneft is engaging the Italian company Pirelli in the project,” Movsisian said without going into details. He said the deal could be finalized by the end of this month.

A senior official from the Russian Energy Ministry, Mikhail Pleshkin, cautioned, however, that the takeover is not yet a done deal. Pleshkin told the Regnum news agency that the two sides have yet to agree on who will clear Nairit’s multimillion-dollar debts.

Sechin was among Russian officials and business executives who accompanied President Vladimir Putin during his December 2 visit to Armenia. The Rosneft chief is a close and influential ally of Putin.

Sechin also visited Yerevan in April. He signed at the time an agreement with a little-known Armenian firm to set up a joint venture specializing in fuel sales. Sarkisian personally welcomed the deal.

It is still not yet clear if the Rosneft subsidiary will engage in wholesale imports of fuel or its retail sales in Armenia. The lucrative imports have been controlled by three or four Armenian firms ever since the late 1990s.