ArmInfo. Armenia does not have a mechanism for linking gas prices to oil prices. Mikael Melkumyan, Deputy Minister of Territorial Administration and Infrastructures of the Republic of Armenia Hakob Vardanyan stated this at the plenary sitting of the Parliament on March 24, answering the question of the MP from the Prosperous Armenia faction
According to him, a number of countries, primarily European, use this binding. But, as the deputy minister noted, in the case, if prices continue to decline, the Ministry will take steps in this direction in order to reduce gas prices for the republic.
In Armenia, this mechanism is not applied for the simple reason that the republic purchases oil and gas, mainly in Russia, from pre-negotiated prices. According to the order of the Government of the Russian Federation, the Ministry of Energy of Russia will supply duty-free to Armenia 155 thousand tons of gasoline, 155 thousand tons of diesel fuel, 10.2 thousand tons of jet fuel and 2.2 thousand tons of liquid oil paraffin under the indicative balance for 2020. At the time of the conclusion of the agreement, OPEC + agreements were still in force, but now that the world oil prices have fallen, even the price that is being offered seems already too high. A similar pricing applies to the gas price, which for Armenia in 2020 is $ 165 per 1 thousand cubic meters.
Meanwhile, when oil prices have fallen by half, the difference between the two types of pricing becomes lower, and taking into account BTU (British thermal units) corresponds to approximately $ 105 dollars per thousand cubic meters.
It is curious that Gazprom, the main supplier of gas to Armenia, is already minimally sensitive to fluctuations in oil prices. According to the latest official data released in early February, only about 30% of the company's sales in Europe are oil-linked. And soon after that it became known about a 40% reduction in gas prices for Bulgaria (probably this revision was accompanied by a transition from oil indexation to exchange prices). Thus, we can now say that a drop in oil prices will have a minimal effect on Gazprom's revenue.