(Note - During a news conference last Friday, Iranian Ambassador to Armenia Mohammad Reisi hinted that Iran could negotiate selling natural gas to Armenia as low as $100. Reisi added, however, that the Armenian government has never officially sought to negotiate  with Tehran over large-scale gas supplies.)

The recent revelation that Armenia owes Russia U.S. $300 million for natural gas washed over the public like a cold shower.

For the past two years, Minister of Energy and Natural Resources Armen Movsisyan kept saying that negotiations were on-going with Moscow over the price of the gas.

But as to what was being negotiated remains a mystery, since, as we have seen Russia hiked the price unilaterally.

When asked by Hetq about the $300 million debt, Government Chief of Staff Vatche Gabrielyan sent us an explanatory statement signed by Minister Movsisyan, noting that the arrears were accumulated during the period April 1, 2011 to July 6, 2013. Allegedly, the price of gas to local consumers hadn’t gone up, but the price had exceeded $180 at the border. The statement also notes that the debt was owed by HayRusGazArd to Gazprom Export.

HayRusGazArd Statistics

It seems that HayRusGazArd wasn’t aware that it owed $300. In a statement appearing on the company’s website (February 28, 2011), it says that the presidents of Armenia and Russia had agreed to keep the price of gas unchanged during 2011.

Sadly, HayRusGazArd hasn’t yet published its annual financial reports for 2011 and 2012. Is this intentional? However, the consolidated financial reports for 2011 and 2012 appear on the company’s website. Reading them we learn that as of December 31, 2012, the company had accumulated 57.4 billion AMD of commercial and credit debt – around $145 million. We also learn that that most of the debt, $90 million) had be amassed prior to January 1, 2011. Thus, HayRusGazArd’s financial records do not reflect the $300 million debt. Furthermore, it shows that the company accumulated the debt before the hike in the gas price.

State Revenue Commission Statistics

In the foreign trade reports published by Armenia’s State Revenue Committee (SRC), we see that the price of imported gas had gone up as of 2011. These statistics were the basis for our questions to Minister Movsisyan, to which, he answered that negotiations were continuing.

According to the SRC’s reports, Armenia imported 1.59 billion cubic meters of gas in 2011 from Russia at $198.4 per 1,000 cubic meters; in 2012 – 1.91 billion cubic meters at $232.4 per 1,000; and in the first half of 2013 – 1 billion cubic meters at $253.5.

If we assume, for the moment, that HayRusGazArd paid $180 at the border, then, in 2011, Armenia accumulated $29.4 million in debt; in 2012 – $100.1 million, and $79.7 million in the first half of 2013.

In all, from April 1, 2011 to July 1, 2013, $209.2 million in debt was amassed, of which about one-half in 2013.

In other words, the SRC figures also do not substantiate the news of the $300 million debt. However, if we add to this the current credit obligations of HayRusGazArd, we wind up with more than $300 million.

Thus, Armenia is compensating HayRusGazArd for its debt, which is the product of the company’s profligate expenditures.