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As a Monopoly Russia Manipulates Gas Prices in Armenia 

On April 21, Russia’s Foreign Minister Sergey Lavrov commented on a number of topics related to Armenia. To a question by a journalist on the prices of gas sold to ally Armenia, Lavrov mentioned that the problem lies “within the internal rates” and not the exported price. “Fact Investigation Platform” (fip.am) has reacted to this statement with an explanation that Lavrov’s incomplete response distorts the reality and can be characterized as manipulative. FIP’s text is slightly shortened below.

Journalist Hayk Khalatryan asked Lavrov why, in this time of decline of energy prices, does Russia not drop the gas prices for Armenia and Belarus, allies of Russia, as it has dropped for EU member states? Lavrov commented that years ago the gas price was triple lower for Armenia and Russia than the international prices and these countries should not raise such a question. “There is a recurrent problem which we are not managing to resolve for several years, and that is the internal rates in Armenia, they make maximum preferential approaches to pricing difficult,” said Lavrov and mentioned that he will refrain from elaborating on the details.

FIP claims that the devil is in the detail.

The issue is that starting January 1 2019, Russian state enterprise “Gazprom Export” sells gas at the border of Armenia at 165 USD per 1000 cubic meters (before it was 150 USD). The buyer on the border is another Russian state enterprise “Gazprom Armenia”, the distributor of gas in Armenia. This company then sells the gas to subscribers at 200USD to 310 USD (depending on whether these are physical entities or industries) per 1000 cubic meters. These “internal rates,” that make preferential pricing approaches difficult, are in fact set by Russian state corporations.

“Gazprom Armenia” obtained the full ownership of the gas distribution system in 2013, becoming a monopolist in the gas market in the country. The Russian corporation has submitted a claim to the Public Services Regulating body to increase the gas prices to subscribers starting July 2020. The decision by the regulating commission is yet pending. FIP.am also contends that Lavrov exaggerates that the gas supplied to Armenia and Belarus in the past years has been three times cheaper that that supplied to Europe.

The diagram below shows gas price fluctuations in Armenia (red) and Europe (blue) since 2014 (price of gas at the border).