Gazprom's Headquarters has hosted today a working meeting between Alexey Miller, Chairman of Gazprom's Management Committee and Karen Karapetyan, Director General of ArmRosgazprom.

The parties discussed the implementation of the Agreement on the strategic principles of cooperation between Gazprom and the Government of the Republic of Armenia. Special attention was paid to the purchase and rehabilitation of the fifth power generating unit of the Razdan CHP with the view of ensuring efficient gas-fired power generation in Armenia.

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On April 6, Gazprom and the Government of the Republic of Armenia signed a 25-year Agreement identifying the strategic principles of cooperation in the gas & energy sector of the Republic of Armenia.

The Agreement stipulates ArmRosgazprom acquiring from the Armenian Government the fifth power generating unit of the Razdan CHP (Razdan-5) and a range of gas facilities.

Provisional purchase and sale agreements are to be sealed before April 14, 2006, with network ownership rights to be transferred before January 1, 2007.

The parties will join efforts to rehabilitate and create the integrated network complex Razdan-5 to be managed via a single center, as well as to construct an up to 140 MW gas-powered turbine unit. Further operation of said facilities will help reduce power generation-related fuel costs. The Agreement also provides for the opportunity of exporting electricity to be produced at Razdan-5.

The deal execution will result in Gazprom taking a qualified majority in ArmRosgazprom.

In accordance with the Agreement, until January 1, 2009 the price of Russian natural gas for the Republic of Armenia is 110 US dollars per 1,000 cubic meters.

Armenia does not produce natural gas and the country’s power generation sector is totally reliant on gas imports.

Gazprom resumed natural gas deliveries to Armenia in June 2003 and, at present, is the only supplier of gas to the Republic. Gazexport, a Gazprom 100% subsidiary, delivers gas to the Armenian-Russian border, where gas is purchased by ArmRosgazprom. Over 2005 Gazprom provided Armenian consumers with 1.7 bcm of natural gas.

The ArmRosgazprom company was incorporated in December 1997. Gazprom, the Armenian Energy Ministry and ITERA own 45%, 45% and 10% of ArmRosgazprom’s stake, respectively.