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Gazprom Increasing its Stake in ArmRosgazprom to 100%

Source: www.gulfoilandgas.com 1/16/2014, Location: Asia

Alexey Miller, Chairman of the Gazprom Management Committee and Armen Movsisyan, Minister of Energy and Natural Resources of the Republic of Armenia signed today in the Gazprom headquarters a Sales and Purchase Agreement for 20 per cent of ArmRosgazprom's shares. The document was signed in furtherance of the intergovernmental Agreement between the Russian Federation and the Republic of Armenia.

As a result of the deal, Gazprom's ownership stake in ArmRosgazprom was increased to 100 per cent. The company will be named Gazprom Armenia.

“This deal fully complies with the spirit of strategic cooperation between Russia and Armenia. Gazprom has been successfully cooperating with Armenian partners in many areas and for many years. We have implemented large-scale projects both in main gas transportation and power generation. But above all, Armenia has achieved a major socially important result – we reached the gasification level of 96 per cent.

Another key area of our cooperation is the NGV sector. Armenia has even more CNG filling stations than Russia. We all have something to learn from our Armenian colleagues.

“Gazprom has always been and will remain a reliable partner for Armenia,” said Alexey Miller.

Armenia does not produce natural gas and the country's power generation sector is almost fully dependent on gas imports. Gazprom Export delivers gas to the border with Armenia where it is purchased by ArmRosgazprom. In 2013 Gazprom Group supplied Armenia with 1.96 billion of natural gas.

Incorporated in December 1997, ArmRosgazprom is focused on natural gas supplies to the Armenian market. In addition, the company transports, stores, distributes and sells natural gas as well as upgrades and expands gas transmission and underground gas storage systems in the Republic of Armenia.

In March 2006 Gazprom and the Government of the Republic of Armenia signed a 25-year Agreement on Gazprom's participation in gas and power projects in the Republic of Armenia. The document provides for an increase of Gazprom's ownership stake in ArmRosgazprom via an additional share issue. As a result, Gazprom acquired an 80 per cent stake in ArmRosgazprom. The funds received from the share issue were allocated for purchasing and constructing the fifth power unit at the Hrazdan Thermal Power Plant (TPP) as well as gas infrastructure facilities in Armenia.

In December 2013 the fifth power unit (480 MW) at the Hrazdan TPP was brought into the commercial operation. The said unit operated in a pilot mode from January 2012 and produced over 2 billion kWh of electricity.

In the same month the Russian Energy Ministry and the Armenian Energy and Natural Resources Ministry signed an intergovernmental Sales and Purchase Agreement for ArmRosgazprom's shares and the company's future activities. The document provides for increasing Gazprom's stake in ArmRosgazprom from 80 to 100 per cent.

Gazprom and ArmRosgazprom signed a contract for Russian gas supply to Armenia from 2014 to 2018. According to the document, Gazprom will annually provide Armenia with 2.5 billion cubic meters of gas and its price will be determined by a price formula linked to the pricing mechanism for natural gas in Russia.

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Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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