MOSCOW, September 25. /TASS/. Gas purchases from any other country will cost Armenia significantly more than imports from Russia, Russian Security Council Deputy Secretary Alexey Shevtsov said.

Asked to comment on Armenian Security Council Secretary Alen Simonyan’s statement that the country will purchase gas "in any place where it is possible," including Russia, Turkey, Azerbaijan, and Iran, Shevtsov cited calculations on the cost of gas supplies from other countries to Yerevan.

"All in all, in any of the abovementioned cases, gas will cost much more than that purchased from Russia on preferential terms, largely due to which Armenia has been able to ensure the stability and growth of its economy in recent years. That said, diversification of its sources will entail additional associated costs," he said in a commentary to reporters.

As of last year, more than 2.2 bln cubic meters of gas had been supplied from Russia, accounting for around 83% of all gas deliveries to Armenia and 100% of gas supplied to domestic customers - the population and industrial enterprises, the official noted.

Alternative purchases calculations

Speaking about potential gas deliveries to Armenia from the mentioned countries, Shevtsov said that Turkey itself imports over 50 bln cubic meters of gas per year, including from Azerbaijan, Iran, and Russia. "Clearly, it has no gas to spare, nor is there infrastructure for pumping gas to Armenia," he wrote.

Armenia has a gas-for-electricity barter agreement with Iran, under which more than 400 mln cubic meters are supplied each year, he said, adding that Iranian gas is solely used in electricity production.

"It is possible to expand the barter mechanism provided an additional power transmission line from Armenia to Iran is constructed, especially as the capacity of existing gas pipelines allows for it. However, if Yerevan starts purchasing gas for commercial use, which means supplying it to households and industry, that would automatically bring Armenia under Washington’s sanctions, particularly considering today’s political environment," the official stressed.

Russia’s Security Council took note of the recent statements by Armenian and Azerbaijani officials on possible gas supplies from Azerbaijan to Armenia, Shevtsov added. "We welcome the resumption of Armenian-Azerbaijani energy partnership, which may represent a positive step toward restoring peace in the region. Especially since Baku has sent diesel fuel and gasoline to Armenia for the first time in many years," he stated.

At the same time, according to the Russian Security Council deputy chief, "the parties admit that its delivery is difficult to implement at the moment as the construction of a new gas pipeline is necessary." "In turn, it is only justified in the event of long-term contracts and stable demand," he stressed.

Arithmetic of supplies

Speaking about diversification of supplies, Shevtsov mentioned the problem of costs for Yerevan. "The arithmetic is simple here. The current exchange price for gas in Europe is around $900 per 1,000 cubic meters. The difference with Russia’s price is $720. Consequently, Armenia will have to pay almost $1.58 bln more annually for gas only at such prices," he explained.

"One may object that the gas price is at its local peak now. This is the case indeed, with the heating season just around the corner, and the known problems with supplies from the Middle East. However, even if we take the weighted average cost over the past five years, it stands at $753 per 1,000 cubic meters, which means around $1.27 bln worth of overpayment," Shevtsov said.

This excludes delivery costs that Armenia would also have to cover, he added. "Azerbaijan’s gas price will probably be lower, but the bulk of its supplies has already been contracted by buyers, according to analysts’ estimates," the official emphasized.

Gas delivered under long-term contracts is cheaper, he said. "However, that gas still has to be found, purchased, and supplied," he noted.

European case

In the context of diversification, Shevtsov also mentioned how the process of phasing out Russian gas is going in Europe and Germany, in particular. "Berlin’s politically motivated abandonment of Russian gas has spurred a five-fold surge in gas prices in the past five years. As a result, we are witnessing stagnation in the economy, which is turning into recession, a sharp contraction of industrial production, and the decline in the number of jobs," he noted.

The official also urged not to forget that "unlike Armenia, Germany has advanced infrastructure capable of receiving pipeline and liquefied gas from various sources, though the use of LNG adds liquefaction, tanker freight and regasification costs to the price of each cubic meter."

"No doubt the phasing out of Russian gas would be far more sensitive for Armenia than for Germany or other European countries," Shevtsov concluded.