Ukraine to buy Iranian gas

[Hovik]

Russian State Tv Says Europe Could Suffer Over Moscow-kiev Gas Dispute

RUSSIAN STATE TV SAYS EUROPE COULD SUFFER OVER MOSCOW-KIEV GAS DISPUTE

BBC Monitoring Service - United Kingdom
Dec 01, 2005

Russian state TV highlighted the consequences for Europe of the
Moscow-Kiev gas dispute after Ukrainian officials failed to attend
talks on the issue in Moscow on 29 November. On the other hand,
a senior correspondent on Gazprom's NTV suggested that Russia would
suffer as much as anyone if a deal is not struck with Ukraine.

Reports on state broadcaster Rossiya (RTV) have presented the gas
dispute with Ukraine in a broader European context. Indeed, they imply
that it is European consumers that will suffer most if Moscow and
Kiev fail to strike a deal on tariffs before the current contract
expires at the end of the year. "Gazprom says that if a transit
agreement with Ukraine is not signed, then there is no certainty
that Russian gas will get to European consumers. Europe has already
expressed its concern about this, but Ukraine is not commenting,"
correspondent Yevgeniy Rozhkov noted on 29 November.

RTV's main evening bulletin on 30 November played up both Europe's
concerns and its dependence on Russian gas. "The EU is carefully
following the course of talks between Moscow and Kiev. If prices are
put up, Ukraine is threatening to stop transit of gas to the EU in
2006, which would mean the European energy market facing a crisis.

Russia supplies natural gas to half of Europe," presenter Mariya
Sittel told viewers.

If Europe does suffer gas shortages, Ukraine could be made to suffer,
Channel One's resident pundit Mikhail Leontyev said in his Odnako
spot on 30 November. "The so-called European choice made by Ukraine
was a purely political and ideological decision. And following this,
our relations with Ukraine have become purely economic. But when the
Europeans discover that the European choice by Ukraine was a political
decision to instead of taking Russian gas steal European gas, that is,
gas that is bought and paid for by Europe, then this could have the
most unexpected consequences for the Orangeists," the pro-Kremlin
commentator warned.

As well as pointing out the consequences of a failure to reach a deal,
RTV has argued that Ukraine's position is unjustified. The evening
bulletin on 29 November explained that from 1 January 2006 even
poorer CIS states, such as Armenia and Moldova will be paying twice
or three times the 50 dollars that Ukraine is currently being charged
for Russian gas. "Ukraine is still demanding special treatment and
is refusing to buy gas on the general basis," correspondent Yevgeniy
Rozhkov complained. He went on to stress the Gazprom's objective and
responsible attitude to the problem. "Russia wants to leave politics
out of the gas question completely, and establish transparent,
market relations. Gazprom says it is even ready to increase payment
for transit by two or three times at a loss to themselves. The main
thing is to make sure that Europe gets its fuel without problems,"
Rozhkov stressed.

Rozhkov's report suggested that it is Ukraine that is trying to
politicize the issue. Duma deputy Valeriy Yazev explained that the
Ukrainian authorities are desperate to avoid the "political crisis"
that gas price hikes would produce in the run-up to the parliamentary
election next spring.

NTV's veteran correspondent Vladimir Kondratyev agreed with RTV that
the gas dispute is "jeopardizing the stable supply of gas to Western
Europe". However, Kondratyev suggested that this is as much a problem
for Russia as anyone else. "Ukraine has become a stumbling-block
for Gazprom," Kondratyev remarked. The Northern Gas Pipeline from
Russia to Germany under the Baltic Sea should take Ukraine out of
the European gas equation after 2010, the NTV correspondent explained.

However, until then, he said, "Russia does not have any reasonable
alternative to supplying Europe with gas other than through Ukraine".

"At the moment Moscow and Kiev are forced to seek and find a
compromise," Kondratyev concluded.

[Hovik]

Russia Raises Gas Price And Exports Democracy: Armenian Press Digest

RUSSIA RAISES GAS PRICE AND EXPORTS DEMOCRACY: ARMENIAN PRESS DIGEST

Regnum News Agency, Russia
Dec. 6, 2005

As Kommersant daily reports, Gazprom President Alexey Miller received
Georgian Prime Minister Zourab Nogaideli in his central office on
November 24. Gazprom managed to persuade the Georgian premier into
accepting the proposed raise in gas price for Georgia from $64 to $110
for 1,000 cubic meters. A source aware of the talks told Kommersant
that Miller's key persuasive was an adequate raise in the tariff
for gas transit via Georgia to Armenia. Now, in accordance with the
agreements made in 1990s, Georgia gets 10% of the total gas supplies
as a payment for gas transit to Armenia.

"What does this 'adequate raise in the tariff for gas transit to
Armenia' mean?" wonders Novoye Vremya. Does this mean that Gazprom
is going to please Georgia with a raise in its 10% portion? If so,
you are welcome, we won't grudge -- if only the pipeline could take so
much. But if the point is about a higher price for transiting Armenian
gas via Georgia... This will certainly lead to boosting gas tariff for
Armenia and a consequent raise for ArmRosgazprom consumers. The paper
says, the gossip has been on in Armenia for already half a year that
the tariff for gas supplies and gas consumption will increase. But
the commission for public services regulation always there to calm
the public down by reporting no such applications received so far. If
not so far, then some day?

In search for the answer, Novoye Vremya has inquired ArmRosgazprom
about the credibility or the underlying motives of the Russian-Georgian
agreements, but neither their press office nor even director Karen
Karapetyan have shown any knowledge of what the Miller-Nogaideli
meeting might be about. So, it remains unclear at whose expense
Gazprom is trying to push its economic and political ends through.

In 2006 the company is planning to raise the price for its gas for
the Baltic States to $120-125 per 1,000 cubic meters. REGNUM reports
that while speaking at the Russian Gas 2005 forum in Moscow Deputy
Chairman of the Gazprom board Alexander Ryazanov said that now the
price is almost $80. He also said that Gazprom has agreed with Georgia
on $110. For Armenia the tariff will be raised to $110, for Moldova
to $150-160.

Iravunk reports a turning event in Russia: the United Russia
parliamentary faction has proposed a 500 million rubles addition
to the draft budget 2006 "for developing democracy in Russia and
abroad." The daily reports, the leader of the faction Vyacheslav
Volodin said that the state should finance civil society institutions
both inside and outside Russia. "We are not alone and we do care for
how they behave in the neighboring countries. If they violate human
rights and freedoms why can't we sponsor NGOs like they do in the
US?" The head of the culture and inter-regional relations department
of the Russian president administration Modest Kolerov says that
"democracy development financing is general practice with all big
democratic states."

Thus, Russia will obviously approve the above budgetary amendment
and will become "a democracy exporter" to countries with supposedly
unreliable regimes. Not so good a prospect for the Armenian
authorities, says the daily, especially as there is no force in the
Armenian opposition Russia would rather not cooperate with. Iravunk
is sure that the "post-referendum" period (Nov 27 Armenia held a
referendum on constitutional reforms -- REGNUM) will be a period of
"democracy import" in Armenia, but it is not clear yet who will be
the exporter -- "Russia, the US... probably Iran?.."

Armenia-Turkey

Turkey's joining the EU will be decisive for the peace processes in
the South Caucasus and the region's further development as a whole,
the head of the international problems department of the Institute of
Political and Military Studies Sergey Markedonov says in the Lragir
daily. He says that whether Turkey joins the EU or not will depend on
whether Russia stays present in the Caucasus: "Armed with a democratic
vocabulary, the EU member-Turkey can minimize Russia's influence in
the region -- not so much for common European as for its own personal
interests." Turkey's Euro-integration is also dependent on such a
key issue of "the big Caucasian game" as Turkey's attitudes towards
"the Armenian world." "The Armenian world" is not only the Republic
of Armenia but also key components like the unrecognized Nagorno
Karabakh and the Diaspora with its strong lobby abroad. Markedonov
says that the key problem between Armenia (and "the Armenian world")
and Turkey is the recognition of the Armenian Genocide in Ottoman
Empire in 1915. Turkish historians and politicians have a weighty
counter-argument whose key stone is that the present-day Turkey has
nothing to do with the actions of the Ottoman government.

Markedonov is sure that Turkey could make best of this card "by
just elaborating on the version of the 'liberal' Turkish historians
that the Turkish Republic is in no legal relationships with the
Empire and by blaming the Ottoman past with its probable Armenian
Genocide." Ankara could take Yerevan's "serve" of no territorial
claims and make a bargain of the Armenian Genocide recognition: "As
Azerbaijan's strategic partner, Ankara will recognize the genocide if
it pressures Yerevan in the Nagorno Karabakh issue. And let Armenia,
pressed by the EU, force Nagorno Karabakh to acquiesce the farfetched
peacemaking scenarios by international structures."

Radio Liberty reports Gazi University to host Nov 22 the international
scientific conference on "Turkish-Armenian Relations and the Events
of 1915." Opening the conference, the president of the Association
of Historians of Turkey, professor Yusuf HALACOÄ~^LU said that "the
parliaments of different countries have turned into courts giving
no say to those accused." The vice speaker of the Turkish parliament
Sadik Yakut said that "the mission of the Turkish Parliament was to
explain to the world that the problem is not in the Armenian issue,
but in the Armenians who have invented this issue." Anadolu news
agency does not specify if any conferee has acknowledged the Armenian
Genocide. Liberty reminds its audience that in late September a
conference in Istanbul openly spoke about the Armenian Genocide.

Meanwhile, Noyan Tapan reports that professor Baskin Oran, who does not
share the official Turkish stance on the issue, spoke in support of the
Armenian stance by saying that "the impunity of those guilty of the
1915 events has caused a counter-reaction with the Armenians..." "We
should lift the taboo from the Armenian Genocide issue," Oran said
giving rise to heated debates.

Haykakan Zhamanak daily says that when talking to journalists after
a Ljubljana meeting with Slovenian President Janez Drnovsek Armenian
President Robert Kocharyan said that Armenia has never been against
Turkey's membership to the EU. "We have just said that the eligibility
criteria should be equal for all the membership seekers." Those
wishing to be an EU member should normalize relations with their
neighbors. "Turkey's admission into the EU will be profitable for us
as we will get a predictable neighbor and an EU border," Kocharyan
said. In his turn, Drnovsek said that Turkey should open its border
with Armenia with no preconditions. "There is no sense in preventing
the flow of people and capital," he said.

Commenting on Kocharyan's visit to Slovenia in its November 25
"We Are Not Against Turkey's Membership to the EU" Hurriyet says:
"Armenian President Robert Kocharyan stressed that if Turkey is
admitted into the EU Armenia will become an EU neighbor. Formerly the
Armenian leaders spoke about the necessity of demanding that Turkey
recognize the so-called Armenian Genocide as a precondition for its
admission into the EU."

Aravot daily reports that during Nov 22-24 26th interparliamentary
assembly of the Black Sea Economic Cooperation (BSEC) in Tirana,
Armenia took up the chair of that organization for six months. The key
issue for Armenia was transport infrastructures and, most importantly,
the restart of the Kars (Turkey)-Gyumri (Armenia)-Tbilisi-Baku
railroad. Aravot reports high words and objections by Turkey and
Georgia (Azerbaijan was absent from the meeting -- REGNUM).

Saving the situation was Russia who proposed discussing the issue
separately and only then putting it to the vote. During the break,
Speaker of the Armenian parliament Artur Bagdassaryan spoke with the
Georgian delegates and, reportedly, "through diplomatic tricks" got
them to agree to Gyumri's inclusion in the railroad. With no publicity
meant, the daily says that were it not for Bagdassaryan Gyumri would
have never been on the Kars-Tbilisi-Baku route. Bagdassaryan himself
says: "This will have a great political importance. In fact the BSEC
interparliamentary assembly has recorded the necessity of restoring
the Kars-Gyumri-Tbilisi-Baku route. We can send this decision to other
international structures too. In fact this is a unanimous decision
of 12 countries witnessed by EU and CE representatives."

Armenia-Georgia

The Armenians of Samtskhe-Javakheti (region of Georgia mostly
populated by Armenians -- REGNUM) are against the construction
of the Kars-Akhalkalaki-Tbilisi-Baku railroad. The local Zhamanak
daily reports them to say that the project will bring no change in
their lives. There are only 50 km from Akhalkalaki to Bavra, a check
point on the Armenian border, but to pass them takes one as long as 3
hours. Traveling from nearby villages to Akhalkalaki or Ninotsminda
proves quite enormous an effort for people and cars. "We are in a
deadlock: the Georgian authorities are giving promises but are failing
to keep them, while in Armenia they regard us as other Armenians,"
Zhamanak represents Javakheti Armenians' opinion.

A-Info reports that Nov 23 the Council of Samtskhe-Javakheti Youth NGOs
sent a message to Georgian President Mikhail Saakashvili congratulating
him on the third anniversary of "the Rose Revolution." They expressed
their assurance that Georgia will emerge from the crisis and their
commitment to support the current reforms. "We hope that the reforms
will make the country stronger and will promote the protection of
the rights of the ethnic minorities and the strengthening of the
inter-ethnic friendship.

Asked if there is actually any change in the attitude towards
Georgia-residing Armenians after "the Rose Revolution", Georgian
MP, Armenian by origin, Melik Raisyan says: "There is an evident
change." "The approach of the authorities to the local Armenians has
drastically improved. Simply, decades of desperate existence prevent
us from seeing big progress now. There are roads restored, Ninotsminda
and Akhalkalaki are beginning to look better, but the social-economic
development of the region is very slow," says Raisyan (Radio Liberty).

--Boundary_(ID_5YHFlSO5UXs5u7psma6zTA)--

[Hovik]

Rise In Tariff Of Russian Gas May Seriously Hinder Economic Development In Armenia: M

RISE IN TARIFF OF RUSSIAN GAS MAY SERIOUSLY HINDER ECONOMIC DEVELOPMENT IN ARMENIA: MINISTER OSKANYAN

YEREVAN, DECEMBER 29. ARMINFO. The expected rise in the tariff
of Russian gas supplied to Armenia may seriously hinder economic
development in Armenia, Foreign Minister of Armenia Vardan Oskanyan
says in an interview to "Kentron" TV channel.

At the same time, the minister thinks one should not make any sharp
political statements and revise the whole "pallete" of the strategic
relations with Russia. Russia is also well aware of what the rise
in the tariff may result for Armenia. Armenia needs to revise its
policy of energy and economic safety to avoid such shakes in future,
the minister says. The talks for settlement of the problem are
still in process and I hope an acceptable way out will be found,
the minister says.

[Hovik]

Armenia Must Review Its Approach To Energetic Security

ARMENIA MUST REVIEW ITS APPROACH TO ENERGETIC SECURITY

ARKA News Agency, Armenia
Dec 29 2005

YEREVAN, December 29. /ARKA/. Armenia must review its approach to
energetic security, as the RA Minister of Foreign Affairs Vartan
Oskanian said in his interview to "Kentron" TV Company. "We should
intensify our steps directed for energy diversification", he said.

"In this regard I consider the decision of building the Iran-Armenia
gas pipeline irrespective of definite opposition to be very correct",
he said, adding that the construction should have begun earlier.

According to him, the country should have a precise program of energy
security, including various scenarios of the possibility of increasing
prices for fuel and stopping its supply.

Oskanian finds that the events at northern borders of Armenia may
cause stoppage of gas supply to the country.

"I hope that it will not be so, but we should be ready to it", he
said.

[Hovik]

Mika Limited President Does Not Accept Russia's Arguments In Gas Price Issue

MIKA LIMITED PRESIDENT DOES NOT ACCEPT RUSSIA'S ARGUMENTS IN GAS PRICE ISSUE

YEREVAN, JANUARY 19. ARMINFO. Russia must mot supply gas to Armenia,
Georgia, Moldova and the Baltic states at one and the same price -
this is wrong, says President of Mika Limited Mikhail Bagdasarov.

He does not accept Moscow's arguments that the rise in the
Russian gas export is an economic necessity and has no political
motivation. Politics play a big role in economy, especially in energy,
he notes.

He says that the price for Armenia can be much lower than $110 -
for example $85 per 1,000 c m.

Today Armenia buys Russian gas for $54/1,000 c m. The rise is expected
Apr 1.

[Gavur]

Gas From Iran To Break Gazprom's Monopoly In Armenia

by Vladimir Socor

Eurasia Daily Monitor -- The Jamestown Foundation
Friday, January 20, 2006 -- Volume 3, Issue 14

Moscow's intention to double the price of gas supplies to Armenia
(see EDM, January 17) vindicates Yerevan's decision to de-monopolize
the market by importing gas from Iran. Armenia thus becomes the
first among formerly Soviet-ruled countries (outside Central Asia)
to diversify its supply sources away from Russian-delivered gas.

Under agreement with Armenia's government, the National Iranian Gas
Company (NIGC) is laying a pipeline from Tabriz in northwestern Iran
to Armenia, at a cost of $220 million. With construction now running
slightly ahead of schedule, the 160 kilometer line is expected to
be commissioned in autumn 2006 and to operate at full capacity by
mid-2007. The price of gas has been agreed at $85 per one thousand
cubic meters at the Armenian border. The line is scheduled to supply
Armenia with 1.1 billion cubic meters of gas annually in the first
four years of operation, with the option to double that volume in
the ensuing years.

By way of comparison, Russia supplied Armenia with 1.7 billion cubic
meters of gas in 2005 at the old price of $54 to $56 per one thousand
cubic meters, and now demands $110 per one thousand cubic meters as
of April 1. Prior to the start of the Iran project, Moscow cajoled
Yerevan into accepting a change in design, halving the line's diameter
to 770 millimeters, so as to preclude transit of gas from Iran via
Armenia to Georgia.

Iran-supplied gas to Armenia will probably originate in Turkmenistan.

The latter delivers gas to northern Iran, which lacks access to the
distant gas fields in southern Iran. Turkmen gas reaches northern
Iran through the Korpeje-Kurt Kui pipeline, whose design capacity of
13 billion cubic meters annually can accommodate additional volumes
earmarked for Armenia. The line carried 6 billion cubic meters of
gas to Iran in 2005 and is scheduled to carry 8 billion cubic meters
in 2006.

The $85 price on Iran-delivered gas to Armenia was agreed upon in
2005. Whether this price can be sustained in 2006-2007 and thereafter
seems far from certain. Turkmenistan increased the price on its
gas from $44 to $50 at its border in 2005, and announced a further
increase from $50 to $60 per one thousand cubic meters, to take effect
during 2006. Even so, Iran's price offer to Armenia is clearly more
advantageous, compared to Russia's extortionate demand of $110 for
Gazprom-delivered gas, which also originates in Turkmenistan.

The Iran option does not constitute an "alternative" to Gazprom's gas
in Armenia; it could only play that role in the hypothetical event
of force-majeure interruptions in the transit of gas from Russia via
Georgia to Armenia. Rather, gas delivered from Iran would break the
Russian monopoly on Armenia's market, offsetting Moscow's ability to
dictate the price or impose other concessions on Armenia. Yerevan
will be far better placed to negotiate with Moscow, once the Iran
option becomes available.

Armenia will compensate Iran with electricity for the gas. They
have agreed on a 3:1 ratio, i.e. 6 billion Kw/h of electricity
for 2 billion cubic meters of gas per year (including the gas for
electricity generation). The electricity is to originate at the Hrazdan
power plant's fifth bloc, under reconstruction since 2005 by Iranian
state companies on a $160 million investment agreement. The work is
scheduled to be completed in late 2007. Iran's state electricity
company, furthermore, is constructing a high-voltage transmission
line to connect Hrazdan with Iran.

Owned by the Armenian government, the fifth power bloc at Hrazdan is
the most modern and will operate independently from the other four.

Those were turned over in 2002-2003 to Russia's United Energy System
(UES), as part of the debt-for-assets deal that settled Armenia's $96
million debt to Russia. Last year, UES and Gazprom formed a consortium
to participate in the tender for completion of the fifth power bloc,
as well as to lay the gas pipeline's section on Armenian territory
up to the border with Iran. However, Yerevan chose Iranian companies
for this project.

At the moment, Gazprom offers to be flexible on the price of gas to
Armenia, if Yerevan cedes its ownership of the Hrazdan fifth bloc
to Gazprom and/or UES. Such a solution could jeopardize the Iran gas
supply project, with which that power bloc is inseparably linked.

(Mediamax, Noyan Tapan, Arminfo, January 3-19) -- Vladimir Socor

[Gavur]

Georgia blames Russia for gas cut-off

Georgia's President Mikhail Saakashvili blamed Russia on Sunday for cutting gas supplies to his country and triggering an energy crisis as people shivered in sub-zero temperatures.

Explosions in Russia's southern region of North Ossetia knocked out the main pipeline that exports Russian gas to Georgia and onward to its neighbour Armenia.

Russian officials blamed anti-Moscow insurgents.

But Mr Saakashvili, who has tense relations with the Kremlin and has sought to bring his ex-Soviet state closer to the West, said he did not believe the Russian explanation.

"This morning there was a serious act of sabotage on the part of Russia on Georgia's energy system," Mr Saakashvili told a news briefing.

He said he believed Russia had deliberately cut off Georgia's gas supply to pressure it into surrendering ownership of its domestic gas pipeline network to Moscow - the subject of long-running negotiations.

"Basically what happened is totally outrageous and we are dealing with an outrageous blackmail by people who do not want to behave in a civilised way," Mr Saakashvili told Reuters.

He said Russia had chosen the coldest time of the year in Georgia to cut gas supplies.

The pipeline was knocked out overnight by two explosions in quick succession on two sections of the pipeline in a mountainous part of North Ossetia.

Officials said it will be at least two days before gas starts flowing again.

"The flow of gas through the pipeline has been stopped because of the damage that resulted from these explosions," said Vladimir Ivanov, a spokesman for the Emergencies Ministry in North Ossetia.

"The main version that the prosecutors are working on is that the pipeline was blown up deliberately."

Suspicions

Russian news agencies quoted unnamed security officials as saying they suspected anti-Moscow insurgents, who periodically carry out violent attacks in the mainly Muslim Caucasus region, were to blame for the blasts.

In September 2004 insurgents took a school hostage in the North Ossetian town of Beslan.

The siege ended with the deaths of over 300 people - half of them children.

Mr Saakashvili said Georgia was suffering the same fate as Ukraine, which had its supply of Russian gas cut off earlier this month in a pricing dispute.

Ukraine's pro-Western leadership said Moscow was using its huge energy resources as a political weapon.

"I think the world should wake up to this kind of behaviour. Yesterday it was Ukraine, today it is Georgia and tomorrow it might (reach) everywhere where Russia sells its gas and electricity," said Mr Saakashvili.

Georgia has for years suffered from chronic energy shortages but the cut-off comes at an especially bad time because of unusually cold weather.

The temperature in the capital Tbilisi on Sunday was minus 5 degrees Celsius, bitterly cold for a country known for its sub-tropical Black Sea seaside resorts.

Energy officials said Georgia's gas reserves would run out by 5:00 pm local time on Sunday.

Queues formed outside shops selling kerosene, firewood and gas canisters. School children were told to stay at home on Monday.

Armenia receives all its gas via the same pipeline as Georgia, though a nuclear power station generates much of its electricity.

"Gas is not reaching Armenia after the explosions but consumers are receiving gas drawn from our reserves," said Shushan Sardarian, a spokeswoman for Armenia's Armrosgazprom gas supplier.

- Reuters