If the gas contract with Russia is broken, Armenia may overpay $1.27 billion for fuel
Quick Look
- Deputy Secretary of the Russian Security Council Alexey Shevtsov said that if a long-term gas contract with Russia is broken, Armenia may overpay for fuel from alternative suppliers by about $1.27 billion.
- He noted that Iran and Azerbaijan could become alternative exporters, but Türkiye is not suitable due to a lack of infrastructure.
- The weighted average gas price for five years is $753 per thousand cubic meters.
AI-generated summary
Why It Matters
Armenia has been receiving gas from Russia for a long time under a long-term contract. If it breaks, the country will have to look for alternative suppliers, which will lead to an increase in fuel costs due to the lack of preferential prices.
If a long-term gas contract with Russia is broken, Armenia’s overpayment for fuel from alternative suppliers could turn out to be colossal and amount to about $1.27 billion. This was stated by Deputy Secretary of the Security Council (SC) of the Russian Federation Alexey Shevtsov. His words are quoted by TASS.
Iran and Azerbaijan could become alternative exporters for Armenia. Turkey can be discounted in this regard, since this country does not have the necessary infrastructure to supply large volumes of fuel to the post-Soviet state.
At the same time, it will not be possible to buy fuel at a reduced price from Armenia in this situation, Shevtsov noted. The weighted average exchange price of gas over the past five years was $753 per thousand cubic meters. “Accordingly, approximately $1.27 billion in overpayment,” he concluded.
What to Watch
AI outlook — possibilities, not facts
Armenia will begin negotiations with Iran and Azerbaijan on gas supplies in case of termination of the contract with Russia
Likely · Within months
Open Questions
- When exactly can a gas contract be broken?
- Exactly what volumes of fuel will need to be purchased from alternative suppliers?
- Are Iran and Azerbaijan ready to increase gas supplies to Armenia?
