Comprehensive Assistance: Russia Begins Deliveries of Gasoline and Diesel Fuel to Armenia and Nagorno-Karabakh

2023-10-06 19:47:35

Deliveries from Russia of an additional 15,000 tons of gasoline and 20,000 tons of diesel fuel have begun as part of comprehensive assistance to Armenia and the Armenian population of Nagorno-Karabakh. The press service of the Russian Foreign Ministry reported this on October 6. Earlier, on September 24, the Armenian authorities banned the export of gasoline and diesel fuel outside the country, and before that, on September 21, the Russian government introduced a similar ban due to the rise in prices that had continued since the spring.

Additional deliveries, as the Russian Foreign Ministry explained, began “in response to an appeal from the leadership of Armenia” and in accordance with the intergovernmental agreement of December 2013. “The country has almost chosen the one approved for the current year (indicative balance of volumes of fuel and lubricants supplies. – Vedomosti”). The autumn-winter period is ahead. Russia’s support will be very timely and useful,” the Russian ministry said in a statement.

The agency notes that this initiative was launched “despite the introduction on September 21 by the government of the Russian Federation of a temporary ban on the export of commercial gasoline and diesel fuel from our country.” At the same time, both Russia and Armenia are members of the Eurasian Economic Union (EAEU). The members of this association were not affected by the ban on exporting fuel abroad, as follows from the decree signed by Prime Minister Mikhail Mishustin, but deliveries could only take place within the framework of indicative balances (supply volumes agreed upon by the countries).

The intergovernmental agreement between Russia and Armenia dated December 2, 2013 (came into force on July 24, 2014) “On cooperation in the supply of natural gas, petroleum products and rough natural diamonds to the Republic of Armenia” provides for duty-free supplies of diesel fuel and gasoline “volumes of domestic consumption approved as part of indicative balances,” which take into account fuel requirements previously agreed and calculated by Yerevan while prohibiting the re-export of these volumes to third countries.

The agreed supply plan from Russia to Armenia for 2022 was 155,000 tons of gasoline and the same amount of diesel fuel. At the beginning of December 2022, Armenia reported that the indicative balance had been agreed upon, but did not provide specific import figures, and the Eurasian Economic Commission also did not update the data

Vedomosti sent requests to the Russian Ministry of Energy and the Eurasian Economic Commission (EEC), participating in the coordination of the indicative balance, about the specific amount of previously agreed supplies for 2023, the situation with Armenia exceeding the balance and about possible negotiations on updating its value.

Since oil is not produced or refined in Armenia, the country receives the entire volume of petroleum products needed for the economy from abroad, mainly in transit through Georgia, recalls Sergei Kondratyev, deputy head of the economic department of the Institute of Energy and Finance.

According to him, in 2022-2023. The demand for petroleum products in Armenia has increased significantly. “Obviously, among the reasons for the high demand is an increase in economic activity in the region and an increase in sales at gas stations near the border with Georgia, where fuel prices are higher,” Kondratiev believes. As a result, Yerevan chose the quota under the intergovernmental agreement ahead of schedule and now needs additional supplies.

He noted that Russia is a large, but not the only supplier of petroleum products to Armenia. Thus, in January-July 2023, 307,000 tons of petroleum products were supplied to Armenia, incl. 77% from Russia (235,000 tons). Greece (8%) and Iran (8%) are also major suppliers. In January-July, Russia supplied Armenia with 106,000 tons of AI-92 gasoline and 34,000 tons of high-octane gasoline, as well as 69,000 tons of summer diesel fuel and 26,000 tons of off-season diesel.

Kondratiev does not believe that the problems that have arisen in Armenia are related to restrictions on fuel exports from Russia, since supplies are regulated by an intergovernmental agreement. “But if import volumes exceed, permission from the Russian government is required to update these volumes,” the expert noted.

Director of the Energy Development Fund Sergei Pikin also agrees that the ban on fuel exports from Russia is not related to internal problems in the Armenian fuel market. However, he admits that the current decision on additional supplies of gasoline and diesel above quotas to Yerevan is largely political. According to Pikin, this follows from the fact that, at a minimum, it is announced by the Ministry of Foreign Affairs, and not the Ministry of Energy or the EEC, and this action is not market, but rather humanitarian, contrasting with the accusations of Armenian Prime Minister Nikol Pashinyan against Russia in connection with the events in Karabakh and the influx of refugees from there into Armenian territory. Thus, it is no coincidence that the Russian Foreign Ministry, in a message about additional supplies, also added details of humanitarian assistance to the Karabakh Armenians “for the near, medium and long term,” which includes basic necessities

“At the same time, it is obvious that the almost monopoly position of one of the fuel suppliers for Armenia has political implications,” the expert concludes.

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