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Gazprom Fixes Armenian Gas Price At $110/Km3 And Gains Control Of Pi

GAZPROM FIXES ARMENIAN GAS PRICE AT $110/KM3 AND GAINS CONTROL OF PIPELINES

European Spot Gas Markets
April 6, 2006 Thursday

Russian gas monopoly Gazprom this week agreed to supply gas to Armenia
at a fixed price of US$ 110 per thousand cubic metres until 2009
in return for control of Armenia’s gas pipelines, part of a power
station and the 40km pipeline from Iran.

"The deal was struck this week," a Gazprom spokesman told The Heren
Report, explaining that Gazprom would soon hold around an 80% of the
joint venture ArmRosGazprom. It is believed that Gazprom will build
a 140 MW gas turbine at the Rasdan 5 power station. "The deal will
have several stages and will be completed later this year," he added.

Mikhail Korchemkin, a US-based Russian gas expert, said the deal was
good for both Gazprom and Armenia but added that he was surprised the
price had been fixed in absolute terms. "Gazprom is adding assets
all over the world. Expansion is the major goal of Gazprom now,"
he told The Heren Report, adding that buying overseas assets was
the only way for the Russian gas giant to support its share price,
given the declining output from its Russian fields.

In January, Russia doubled the price for gas supplies to Armenia from
US$ 54 per thousand cubic meters to US $ 110 as part if its drive to
raise gas prices across former Soviet republics in line with European
levels. Gazprom will also take charge of the construction of a second
197km pipeline between Iran and Armenia.

Armenia does not produce gas but uses it for power generation, which
consumes around 1.7 billion cubic metres of gas a year.

Jabejian Elizabeth:
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