Ready for selection

Gazprom is again under threat of a transit crisis

Gazprom publicly admitted that it maintains preferential gas prices in 2007 for Armenia. Yerevan will continue to buy blue fuel at $110 per thousand cubic meters, press secretary of the head of Gazprom Sergei Kupriyanov said on Echo of Moscow. Moreover, under these conditions, deliveries will be made until January 1, 2009. “We agreed so, signing an agreement on a fixed price for three years,” he said, emphasizing that for this Gazprom would increase its share in the Armrosgazprom enterprise. Other Transcaucasian countries - Azerbaijan and Georgia - are still offered to buy gas at $230. Gazprom explains the Armenian privileges by saying that they will receive strategic assets in this country as compensation. However, this recognition will give another reason for Tbilisi and Baku to accuse Moscow of political pricing.

Last year's cooperation agreement between the Armenian government and Gazprom provides for the sale of a gas pipeline from Iran to the joint venture Armrosgazprom with a concomitant increase in the Russian concern's share in the joint venture from 45% to more than 75%. The process of finalizing these transactions is still ongoing. Thus, Gazprom must gain control over the gas flow of Iranian gas in this direction, which is extremely important from the point of view of competition for gas markets.

At the same time, it is obvious that it is impossible to provide gas to Armenian consumers and at the same time stop supplies to Georgia, which in this case acts as a transit country. Tbilisi, apparently, will simply begin unauthorized selection of gas intended for Yerevan, as happened last winter in Ukraine, with all the ensuing consequences.

Gazprom has not yet invented a recipe for how to avoid such a development of events, other than to sign contacts for the supply of raw materials with a transit country. Moreover, Ukrainian history may well repeat itself in a much more important export direction - Belarusian. Mr. Kupriyanov said yesterday that the prospects for ongoing negotiations on the valuation of Beltransgaz (the transfer of 50% of shares to Gazprom could become a mechanism for reducing the price of gas for the republic) “are not yet optimistic,” and therefore “the expected price for Belarus is about $200 ." “I really wouldn’t want last year’s scenario with Ukraine to repeat itself” in relations with Minsk, said a Gazprom representative, recalling that “45 billion cubic meters of gas transit through Belarus to Western Europe, Ukraine, and the Baltic countries.”

The Belarusian authorities yesterday did not fail to confirm the presence of serious problems in the negotiation process. The republic's Finance Minister Nikolai Korbut said that the country's draft budget for 2007 was developed based on a projected increase in gas prices of 15%, and exceeding this price will not require significant adjustments to the budget process. “We did not draw up any other budget, but proceeded from the fact that the increase in gas prices would be the same as in Russia - by 15%,” Interfax quotes Mr. Korbut. “The budget process does not depend on the progress of negotiations on gas supplies,” the minister is confident. “I don’t think that the results of these negotiations will affect the budget process in the country and that they will affect socially protected budget items.” The $200 per thousand cubic meters that Gazprom continues to insist on can hardly be called a minor increase. Which once again indicates a deadlock in the negotiation process.

Even compared to other neighbors in the CIS, the situation with Moldova is special. Since the second half of the year, Gazprom has been selling gas to this country at $160 per thousand cubic meters, but cannot ensure full collection of consumer funds. As a result, Alexey Miller is forced to discuss (the next meeting was yesterday) with Moldovan Deputy Prime Minister Zinaida Greceanii not so much the terms of supplies for the next year, but rather the repayment of accumulated debts over many years in the amount of $1.4 billion.

Alexey GRIVACHS