Today a Gazprom delegation headed by Alexey Miller, Chairman of the Management Committee, paid a working visit to the Republic of Armenia and held a meeting with Serzh Sarkisyan, Armenian President and Tigran Sarkisyan, Armenian Prime Minister.

In the course of the meeting the parties noted that the cooperation in the gas area was very successful and the ArmRosgazprom joint venture was expanding its operations and was starting to prepare for the entry into the financial market for the IPO purposes.

The parties discussed matters related to the signing of a new contract for gas supply to Armenia and reached the accords that the contract would be a midterm arrangement with a price formula and the switch to European prices would be implemented just like in Russia in 2011.

At the same time, the gas price will be changed gradually given the high level of the strategic cooperation and the reinforcement of Gazprom’s positions in Armenia due to a bigger stake in ArmRosgazprom.

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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. Gas is delivered to the border with Armenia by Gazprom export (Gazprom’s wholly owned subsidiary); at the border gas is purchased by ArmRosgazprom. Over 2007 Gazprom provided Armenian consumers with 2.05 bcm of natural gas.

On March 31, 2006, Gazprom and the Government of the Republic of Armenia signed a 25-year Agreement identifying the strategic principles of cooperation in the gas & power sector of the Republic of Armenia. In accordance with the Agreement, until January 1, 2009 the price of Russian natural gas for the Republic of Armenia is USD 110 per 1,000 cu m. The Agreement stipulates ArmRosgazprom’s acquiring from the Armenian Government the fifth power generating unit of the Razdan CHP (Razdan-5) and a range of gas facilities in Armenia. The deal execution will result in Gazprom’s obtaining a qualified majority in ArmRosgazprom.

ArmRosgazprom was incorporated in December 1997. Gazprom, Armenia’s Energy Ministry and ITERA owned 45, 45 and 10 per cent respectively in the company. Gazprom’s share in ArmRosgazprom has grown to 67.94 per cent as part of the two out of the three planned phases of the investment stage of the project (after the acquisition of additional shares in ArmRosgazprom in November 2006 and April 2008).

ArmRosgazprom’s major business is natural gas supply to the Armenian market. In addition, the company transports, stores, processes, distributes and sells natural gas as well as upgrades and expands gas transmission & underground gas storage systems in the Republic of Armenia.