It happened at the end of last year. The time periods are really very interesting. At first, the government refuted those rumors, however, later the price was increased the price for 1.000 cm gas from $54 to $110. They were refusing the rumors about giving energetic businesses to the Russians as well; however, they gave the fifth bloc of Hrazdan to them too. Now, there are rumors about the Iran-Armenia gas pipeline. At first, “Arm Ros Gazarg” (ARG) company wrote information in its web page that Armenia was going to sell the pipe line to the ARG. Later that information disappeared from the web page and re-appeared there with the following content: “some object of gas supply”. The government refuted those rumors and said that the issue of the pipeline had not ever been discussed with the Russians. Even more, some of their arguments were baseless. They said that the construction works had not been finished yet and thus they couldn’t sell it. Nevertheless, the fifth bloc of Hrazdan was not constructed fully either.
Anyway, the pipeline will be constructed by the end of this year. The Russians are interested in the pipeline and some high ranked officials have spoken about it. Following those rumors the Russian press covered information that the Russian deputies had documents clearly writing that Armenia takes the responsibility to sell the pipeline to the Russians. RA defense minister Serj Sargsyan was asked about the mentioned issue and he promised to ask the head of the ARG, Karen Karapetyan to explain the situation in details. The latter said that the Armenian government had not made any negotiations on the Iran-Armenia pipeline; however, the ARG is interested in taking the management of the pipeline. People are not curious to these things, even they are not curious to the fact that the share of “Gazprom” in the ARG increased from 45% to 58%.
Now let’s clarify what the ARG is and what its potential is. It is a company that owes 1753.47km long road pipelines and 11474km long gas distribution networks. The main function of the company is to transport gas through its pipelines from the border to consumers. It is worth mentioning that after buying the fifth energetic block of Hrazdan this company enlarged its profile and now is involved in energy production too. During the meeting with journalists Karen Karapetyan said that the ARG is an Armenian company due to the fact that it had invested much money and paid huge taxes to the budget.
Nevertheless, we think that there is a very simple way to find out who the owner of the company is; it is enough only to find out who is the owner of the biggest share in that company. Before the time when the ARG bought the fifth bloc “Gazprom” had 45% share in the ARG, the Armenian government – 45%, and the rest 10% belonged to “Itera” company. Now the Armenian government owes less share in that company.
The ARG was founded in 1997 and its founding capital was $280 million. Thus the Armenian government and “Gazprom” used to owe 126 million each, and “Itera” – 28 million. Later the Armenian government decided to sell the HES of Hrazdan, which was estimated $248.8 million. By the way, the fifth bloc was not sold directly, but the scenario was performed in the following way: the potential buyer is the ARG, and “Gazprom” wants to increase its share in the ARG. As the payment had to be made partially during three years, thus the share of the Russian company was increasing as well.
Now let’s discuss the issue of the pipeline. If the Armenian government gives the pipeline to the ARG according to the same scenario, the share of “Gazprom” will increase as well.
Why is the pipeline so important? Currently Armenia imports gas only through the pipeline coming from Russia, which is not secure much. “…We use the Georgian substructures for importing and supplying gas, which is technically vulnerable and may be a reason for cutting the gas of. It is worth mentioning that the mentioned pipeline is risky and is not secure. If they stop supplying gas to Armenia, it will have huge losses since it doesn’t have any alternative resources for importing gas and reimbursing the loss” said Karen Karapetyan.
There is a small detail here. The mentioned report was prepared before the period when the gas price was increased. It means the only risky factor they considered was the transit factor. Nevertheless, our experience shows that the price policy of “Gazprom” is much risky too. In that period the government started discussing the issue of the pipeline and its importance. Even though initially that pipeline was designed to supply gas only to those energy producing energy stations that exported energy to Iran it was an alternative source for.
In that period they started discussing the issue of the pipeline and as well as its width. Armenia could have a wider pipeline and have an opportunity to transit gas through our territory.
Mr. Karapetyan says that countries can transit gas when there is mutual agreement between the supplier and the other country on all the ways and quantities to be exported. However, the latter said it needs much investment. The mentioned report writes that if Armenia built the pipeline with 1200mm width (instead of the existing 700mm), it could provide 4-5 billion cm gas supply. However, to build such pipeline our government needs $360-400 million, which it can’t provide now.
As for the future owner of managing company, Karen Karapetyan said that the ARG was a possible company to buy the management of the pipeline.
The Iran-Armenia pipeline has 141 km length, 41km out of which is in the territory of Armenia. This pipeline has to be connected to the central gas distribution network, which belongs to the ARG. Otherwise the Armenian government will have to build another long pipeline to transport gas to the HES of Hrazdan. This means that most part of the pipeline from Iran will be controlled by the ARG.
This is how the ARG wants to prove that it will be better to give the management of the pipeline to it. “…This 40km is equal to the 2.3% of the total pipeline length that the ARG owes” informs the web page of the company.
Karen Karapetyan assures that if they become the owner of the mentioned 40km it is not possible that anyone may close the source of gas and stop supplying gas to Armenia. The head of the ARG says that it will be a law violation.
In other words, everything is normal and the press still believes that nothing wrong will happen. If everything is OK, why did they start discussing that issue in one year after the rumors and why did they refute those rumors for one year? Maybe there are reasons that we don’t know about.