Russian energy behemoth Gazprom plans to gobble up all of the shares in its majority-owned Armenian natural gas distribution company and with it, observers fear, whatever little political and economic wiggle-room that Yerevan has in its ties with Moscow.
Giving up its share in the national gas supplies company, ArmRosGazProm, could be the price Armenia needs to pay to keep its gas bills down. The takeover talks (the Armenian government owns the minority 20-percent share) were confirmed on June 19 after Armenia’s energy minister, Armen Movisisian returned from discussions in Moscow. Russia, which wants Yerevan to join its proposed antithesis of the European Union, got Armenia’s attention after Gazprom announced plans for a hike in gas fees that would have resulted in a 60-percent increase in the price that Armenians pay for gas. Armenian regulators eventually agreed to a roughly 18-percent increase, but, though lower, the price still could put Armenia in a bind.
Its friendly, energy-rich neighbors limited to Iran, the country gets 1.7- billion cubic meters of gas it burns annually from Russia. Iran is the only regional alternative, but there is no infrastructure in place yet to pipe in large volumes. The State Oil Company of the Azerbaijani Republic offered to take care of Armenia’s energy woes in exchange for it recognizing Azerbaijan's right to Nagorno-Karabakh and other Armenian-occupied territory.
But keeping Karabakh ethnically Armenian is seen as part and parcel of Armenia's national identity, and Yerevan would not give up its backing for the separatist region.
As it is running out of options, fully conceding its national gas distributions to Moscow could shape up as the most straightforward way for Armenia to avoid gas crisis at home. Any such deal, though, is sowing worry about the implications of such a sale for Armenia’s sovereign decision-making.
The EU repeatedly warned Armenia against joining Moscow’s proposed Eurasian Union if it wants to continue toward trade integration with the EU. So far, Armenia has managed to maintain a certain balance between its pro-Western aspirations and, the economic and military partnership with Russia. But Moscow could be about to get another trump card.