Armenia to buy Iranian gas at lower prices?

Photo: Vladimir Ivanov, REUTERS

The National Assembly of Armenia has officially announced that Armenia and Iran have made a deal concerning the purchase of Iranian gas, which could allow for the importation of Iranian gas to Armenia at lower prices. However, official data concerning the price has not been announced as yet.

One thousand cubic meters of Iranian gas currently costs around 180 dollars, 30 dollars more than Russian gas. Iranian gas is also not of the same quality as Russian gas. Experts believe that the focus during the negotiation process would primarily have been on these issues.

“It is obvious that the entire negotiating process would have touched on the lowering of gas prices. Economically speaking, the current price for Iranian gas does not work for the Armenian side in respects to our gas and transport system, so I hope that during the negotiations a political decision will have been made to lower the price of Iranian gas,” says Vahe Davtyan, an expert on energy security.

Armenia has no other alternatives

An announcement was recently made that the price of Russian gas delivered to Armenia will not change until the end of 2018. Russian gas on the Armenian market goes for 150 dollars for 1000 cubic meters, meaning that Armenian citizens pay twice as much for this gas. This was the decision of Gazprom Armenia, which belongs to Russian and state-owned company Gazprom and is the distributor of Russian gas in Armenia.

More simply, Russia sells its gas for 150 dollars to a company that it owns,  which then sells the same gas at twice the rate.

Experts note that the same issue might emerge with Iranian gas, because Iranian gas would be delivered to Armenia via Russian pipelines. The infrastructure through which Iranian gas flows is owned by Gazprom. As a consequence, the prices for Iranian gas are set by the Russian company – in other words Russia.

“One cannot look at the import of Iranian gas as real diversification or as an alternative. The origin of the gas isn’t important – where it’s from, from what country it is being exported. It is rather the infrastructure itself that is important, the infrastructure that delivers the gas. The Iranian alternative simply won’t work because Iranian gas comes in via the infrastructure of Gazprom. And any decision which we make on the import of gas from Iran into Armenia will be made only with the agreement of Russia,” stated Vahe Davtyan.