Armrosgazprom

ArmRosGazprom (ARG) was founded in 1997 as a joint Russian-Armenian natural gas pipeline project. The company organizes the gas supply for Armenia's domestic gas market. Director General is currently Karen Karapetian. The company is registered in Armenia as a ЗAО (Закрытое акционерное общество, Russ. or Closed Joint Stock Company) and when ist was founded, the Russian state gas monopolist Gazprom owned 45% of stock, the Armenian Energy Ministry 45% and the ITERA company 10%.

ARG buys the gas at the border from Gazexport, an export unit of Gazprom, and distributes it through the ARG pipeline, mainly to the domestic market. In 2005 Gazexport supplied 1.5 billion cubic meter (bcm) of gas, which were distributed to about 430,000 customers, but also enlarges the gas transport system and underground gas depots in Armenia. The company employs currently some 6,000 people. According to Karen Karapetian, ARG has invested $81 million for the past four years in Armenia, mainly into provision of natural gas, but also into infrastructure.

Recent developments

In April 2006, Gazprom and Armenia signed a contract for 25 years about strategic principles of cooperation in gas and energy projects in the Armenian territory. After this contract Gazprom raised the gas price from the preferential $54 per 1,000 m3 to $110 per 1,000 m3. The price is fixed on this still preferential level until 1 January 2009.

To avoid a higher prizes level for natural gas, the Armenian government had to make some concessions that the Iran-Armenia Natural Gas Pipeline and the 5th unit of Hrazdan TPS (Thermal Power Station) get under control of ARG. Final owner rights must transit till 1 January 2007.

As part of the contract, Russia wanted to limit the diameter of the Iran-Armenia Natural Gas Pipeline to 700 mm to prevent the use of the pipeline to transport bigger amounts of gas to other countries like Georgia. However, the pipeline was built with the diameter of 1,200 mm. [http://www.gasandoil.com/GOC/news/ntr63953.htm]

The Hrazdan TPS (Thermal Power Stations) is the biggest power station of the Armenian energy complex. The incomplete but modern 5th unit should be completed and equipped with gas turbine engine up to 140 MWt.

During a visit to Moscow at the end of October 2006, Armenia's President Robert Kocharyan announced, that Gazprom will buy additional ARG-shares and then controls 58% of the companies equity capital. On 27 October 2006 Gazprom's Executive Board approved acquire additional issues of ARG, which is most likely part of April's controversial deal. According to Karen Karapetian, Gazprom will pay $118.8 million to have the commanding share of ARG.

Criticism

Since Armenia fully depends on gas import from Russia via Georgia, the Iran-Armenia Natural Gas Pipeline was intended to decrease the dependency on Russia. The 1.1 bcm of gas per year had given Armenia a considerable bargaining power against Gazprom. Critics now say that placing the pipeline under Russian control would only deepen that dependence and that the agreement could be seen as a big geopolitical victory of Russia in the Transcaucasian region.