Gas for Armenia is a New Year's gift from Russia, where houses are heated with coal and wood

Victoria Pavlova

On Wednesday, December 22, the governments of Armenia and Russia agreed to maintain the current gas price at $ 165 per 1,000 cubic meters. m. It remains to clarify only some details such as the calorific value of the supplied fuel. By world standards, this is a penny: on the spot market in Europe, gas rose to a record $ 2,187. In Asia, according to Platts, fuel isn't much cheaper either: $ 1,760. So Armenia is very lucky to get such a contract.

Alexander Lukashenko, of course, bargained for even more pleasant prices: $ 128.52 per 1,000 cubic meters. But Armenia has another trump card up its sleeve: the Commission for the Regulation of Public Services of Armenia, after negotiations with Russia, announced the possibility of concluding a 10-year contract at current prices. This will be a real gift from Gazprom and Russia. Especially against the background of the fact that the negotiations concerned the fifth power unit of the Hrazdan CHPP, which Gazprom Armenia received in 2006 for debts and completed by 2012. Armenia promised a return on investment, but Gazprom's subsidiary is still working on this project in the negative, increasing debts.

A firm 10-year contract is beneficial for Armenia, but for Gazprom and Russia as a whole (gas has long been an instrument of foreign policy) these are big risks. First, Armenia, unlike Belarus, does not have a common border with Russia. The main supplies are carried out via the North Caucasus - Transcaucasia gas pipeline through Georgia. But in March 2021, due to the planned repair of the gas pipeline, fuel was bypassed through Azerbaijan. This situation is far from the most stable and secure against the background of the escalating conflict between Russia and NATO. Unlike Armenia, the Georgian authorities are drawn to NATO. Thus, in November, the North Atlantic Alliance invited Georgia along with Ukraine to a meeting of foreign ministers, Georgia recently called Russia's demands on NATO and the United States unacceptable, and the head of the Russian delegation at the Vienna talks, Konstantin Gavrilov, said that Russia would in no case allow the deployment of infrastructure NATO in Georgia. Azerbaijan is also not against cooperation with NATO: after the tour of the NATO Secretary General's Special Representative for the South Caucasus and Central Asia Javier Kolomin, an agreement was reached to resume cooperation in the planning and analysis process. There are no guarantees of stability of gas supplies to Armenia, but the obligations under the long-term contract will not go anywhere.

Whether Russia will be able to profit from the sale of gas at $ 165 for all 10 years is also an open question. Last year, according to Interfax estimates , the profitable export level for Gazprom stood at $ 100 per 1,000 cubic meters. m. And every year this figure rises due to the need to develop new more inaccessible deposits, due to inflation. The increasing sanctions only exacerbate this process.

But Gazprom continues to stake on export projects. In the coming weeks, a feasibility study is expected to be prepared for the Power of Siberia-2 gas pipeline, which is supposed to supply fuel to China via Mongolia. China, by the way, also buys gas at bargain prices. The Celestial Empire receives gas through the Power of Siberia at a price of 0.9 yuan per 1 cubic meter. It turns out about $ 140 per 1,000 cubic meters. At this rate, investments in the pipeline itself in the amount of 1.1 trillion rubles (the associated infrastructure is estimated at another 35-50 billion dollars) will pay off for a very long time.

And what about the people living in Russia? The average level of gasification by the end of 2021 reached only 72%, and this is mainly due to the densely populated areas of the western part of Russia. Real supply of gas to households in the future becomes extremely difficult: the authorities promise to bring the pipe only to the border of the site, and even then not everywhere. Gazprom is now using the term “technically feasible gasification”. But for the very connection of a house in the regions, you still have to pay at least 300-400 thousand rubles. People are still forced to heat their homes with wood and coal.

According to Rosstat, 13% of the total area of housing is not equipped with heating systems at all. And the number of equipped housing includes houses with solid fuel boilers that are fired with wood or coal. These 13% are houses in which people warm themselves with ordinary stoves. And in rural areas, 30% of the housing stock is heated this way (in cities - 7%). The problem of heating is especially acute in several regions. In the Altai Republic, 39% of households are heated with stoves, in Buryatia - 43%, in the Trans-Baikal Territory - 50%, in Tyva - 88%. Stoves are heated not only in Siberia and the Far East. In the Pskov region, 30.3% of households also survive on traditional stoves. Even 70 thousand apartment buildings from the base of the Fund for Assistance to Housing and Utilities Reform in 1 million houses also have stove heating. Gazprom's investments in the gasification of regions in 2021-2025 should amount to only 526.1 billion rubles, which is several times less than spent on Power of Siberia. Tariffs fixed for 10 years in advance can also only be dreamed of by Russians. For the population, gas prices are increasing every year by 3%, and for wholesalers and industry, Minenego decided in September to raise tariffs by 5% in 2022, and by 4% in 2023-2024.

The heating problem is further complicated by the fact that not everywhere people have enough solid fuel. Residents of the Altai Territory, Novosibirsk and Omsk Regions complain about the shortage of coal: mining companies, against the backdrop of rising world prices for coal, prefer to export it. There is no gas, but other sources of energy are also inaccessible.

Gas has turned from a convenient, economical and environmentally friendly fuel into an instrument for buying the favors of other states, which Russia can no longer attract. And buying gas for the location of your own population is not required - the Russians already support the current government.