A Russian pipeline that supplies natural gas to Armenia

Russia on Tuesday warned of a steep surge in gas prices in Armenia if Yerevan chose to abandon agreements that provide advantageous pricing for Armenia.

A review of allied relations with Moscow by Yerevan could lead to the loss of advantages Armenia enjoys regarding the price of Russian gas, Mikhail Kalugin, a high ranking Russian Foreign Ministry official said in an interview with the RIA Novosti news agency on Tuesday.

“We have an extensive treaty-based legal framework with Armenia that enshrines the privileged, allied status of our bilateral relations,” Kalugin said.

“It is within their right if the Armenian authorities wish to revise this status as part of a ‘diversification’ of their foreign policy. However, in that case, it would also be necessary to forgo the advantages that Moscow grants only to its allies,” Kalugin said, adding that one example of the advantages would be the price of gas.

The Russian diplomat said that Moscow had no objections with Armenia purchasing gas from other countries, explaining that such a possibility is stipulated in the 2013 Russian-Armenian agreement.

Kalugin explained that up to 85 percent of the gas consumed in Armenia—around 2.2–2.7 billion cubic meters annually—is supplied by Russia without export taxes and at a fixed price of $177.5 per thousand cubic meters. Armenia also receives other petroleum products from Russia duty free, he said.

By comparison, the market-based gas price in the European Union currently stands at roughly $875 per thousand cubic meters.

Speaking at the United Nations General Assembly last month, Prime Minister Nikol Pashinyan linked the shift in Armenia-Russia relations to the new situation that has emerged in the region following what he called “the establishment of peace between Armenia and Azerbaijan.”

“Now that we have established peace with Azerbaijan, Armenia-Russia relations will naturally change, and it is our desire that these relations develop based on the principles of friendship and mutual respect,” Pashinyan told the UN General Assembly on September 25.

Pashinyan had also said that Armenia would diversify its gas supply—at whatever cost. Soon after, the newly appointed National Security chief Alen Simonyan echoed that sentiment, by saying that Yerevan was open to purchasing gas from Azerbaijan and Turkey.

“Who said we intend to replace dependence on one country with dependence on another? We plan to source from all possible places: if Russia supplies gas, we buy from Russia; if Azerbaijan supplies it, we buy from Azerbaijan; if Iran supplies it, we buy from Iran; and if Turkey has the capacity to supply gas from somewhere, we should buy from them as well,” Simonyan said last month.