Excerpt from Vasak Tarposhyan report by Armenian newspaper Ayots Ashkar on 25 January headlined "Gas war continues"

During their recent meeting the Russian and Armenian presidents failed to reach an ultimate agreement on the price of gas supplies. The resolution of the issue has been postponed until March.

The Russian media have been spreading rumours recently that Russia demands a greater share in the energy sector of Armenia in exchange for delaying for one year an increase in the price of gas exported to Armenia. In particular, they refer to obtaining 45 per cent of shares in the Iran-Armenia gas pipeline. Although these reports have been officially denied, the possibility of this happening is still there, especially if we take into account that Russian has considerably expanded its share in the energy sector of Armenia. At present, at least 80 per cent of the Armenian energy sector either belongs to Russian companies or is managed by them.

[Passage omitted: the newspaper described the conditions on which the Sevan-Razdan Cascade hydroelectric power station, Razdan power station, and the Armenian power distribution grids were handed over to Russia, as well as the conditions on which a Russian company has assumed control over the financial management of the Armenian nuclear power plant]

Russia uses the increase in the price of gas as a trump card to control the Iran-Armenia gas pipeline which may become a serious rival to the Russian gas in the future. Russia understands this very well and for this reason it is trying to secure 45 per cent of shares in the gas pipeline.

Incidentally, Gazprom's share in the privatization of the Armenian gas grid was just as much at the initial stage of the process but it was later expanded and the company currently has a controlling interest in HayRusgazard. In return for this deal, Armenia used Russian gas for several years, but the proceedings from the sale, that is 150m dollars, have been lost forever.

Russia seeks to use the same scenario in this case by first trying to obtain part of shares of the Iran-Armenia gas pipeline, but this is unacceptable. If Armenia is to give 45 per cent of shares in the gas pipeline in exchange for keeping the price of gas at the same level for one year, this cannot never be justified as the same problem will re-surface in a year. Naturally, it is more profitable for Armenia to retain its share in the Iran-Armenia gas pipeline even as the price of gas imported from Russia increases. The experience of countries which have seen Russia increasing the price of gas exports to them shows that these countries did not collapse.

But this does not at all mean that the Iran-Armenia gas problem may not be discussed in the context of raising the price of gas. On the contrary, it could be even advantageous for Armenia if in return for giving up shares in the project Armenia gets a real opportunity to become a transit country for exports of gas to Europe. Russia used to be the only opponent of this idea. In these conditions, we have no problems with giving up part of the gas pipeline shares to a Russian company especially given that part of the Armenian gas grid already belongs to Gazprom.

Will Russia agree to such an option? There is no doubt that this may be the best resolution for this "gas war".