Armenia says its price of US$110 for Russian gas will remain fixed until end of 2008

Armenian Finance and Economy Minister Vardan Khachatrian said that Russia's Gazprom state monopoly had agreed to freeze the price until Jan. 1, 2009, in return for Armenia transferring control of an electricity power generating unit for almost US$250 million (?197 million).

He also said that Yerevan was in talks with OAO Gazprom over the sale of ownership rights to the Armenian segment of a planned pipeline bringing Iranian gas to the country, which is due to open later this year.

Gazprom this week said it plans to charge Tbilisi US$230 (?180) per 1,000 cubic meters of gas, compared with the US$110 that it pays now, ratcheting up economic pressure against Moscow's small, pro-Western southern neighbor.

Georgian Prime Minister Zurab Nogaideli said that the sharp price rise was obviously political because other ex-Soviet nations were paying far less.

On Saturday, Nogaideli said that Georgia would not agree to pay such a high rate because it was not commercially justified. "We are not going to pay an non-market price," he said.

Energy Minister Nika Gilauri said Friday that talks were taking place with Azerbaijan, Iran and Turkey to secure alternative supplies of gas. Analysts in Georgia warned of a repeat of the gas war between Russia and Ukraine at the start of this year when Gazprom cut off supplies.

That stoppage, amid fierce negotiations over a higher price demanded by Gazprom, was seen as punishment for Ukraine's pro-Western policies. Ukraine, which finally agreed to pay almost double at US$95 per 1,000 cubic meters, has since managed to limit the increase for 2007 to US$130 after Russian-leaning Prime Minister Viktor Yanukovych took over as head of government in the wake of his party's success in March polls.

Neighboring Belarus faces a fourfold rise in gas prices to US$200, although Gazprom is believed to be willing to compromise if the country hands over 50 percent of the state pipeline through which Russian gas transits to western Europe. The Associated Press

/The International Herald Tribune/