The ceremony dedicated to launching the commercial operation of the fifth power generating unit at the Hrazdan Thermal Power Plant (TPP) took place today in Armenia (near Hrazdan). The Gazprom Management Committee Chairman Alexey Miller took part in the event.

The command to start up the power unit was given by Russian President Vladimir Putin and Armenian President Serzh Sargsyan via video link from Gyumri.

The fifth power unit at the Hrazdan TPP will make it possible to meet the growing power demand in Armenia and neighboring countries.

Alexey Miller and ArmRosGazprom Director General Vardan Arutyunyan, in the presence of both Presidents, signed a contract for Russian gas supply to Armenia from 2014 to 2018. According to the document, Gazprom will annually provide Armenia with 2.5 billion cubic meters of gas and its price will be determined by a price formula linked to the pricing mechanism for natural gas in Russia.

Russian Energy Minister Alexander Novak and Armenian Energy and Natural Resources Minister Armen Movsisyan signed an intergovernmental Sales and Purchase Agreement for ArmRosgazprom's shares and the company's future activities. After the deal is complete, Gazprom's stake in ArmRosgazprom will increase from 80 per cent to 100 per cent.

“Our strategic cooperation with Armenia is a vivid example of how it's possible to effectively build up the long-term and mutually beneficial partnership. Our direct engagement in the Armenian power market, meaning the whole value chain, gives some undoubted advantages to the Republic. This includes adequate supplies of natural gas at a fair price, investment in modern power generating capacities, development of the power generation sector and creation of new jobs. I am confident that our successful cooperation will be on a strong track,” said Alexey Miller.

Background

The fifth power generating unit (480 MW) at the Hrazdan TPP is equipped with state-of-the-art gas turbines. The fifth power unit produced 1.9 billion kW of electricity during its pilot production period from January 2012.

Armeniadoes not produce natural gas and the country's power generation sector is totally reliant on gas imports. Gazprom Export delivers gas to the border with Armenia where it is purchased by ArmRosgazprom. In 2012 Gazprom delivered 1.7 billion cubic meters of natural gas to Armenia.

Incorporated in December 1997, ArmRosgazprom is focused on natural gas supplies to the Armenian market. In addition, the company transports, stores, distributes and sells natural gas as well as upgrades and expands gas transmission and underground gas storage systems in the Republic of Armenia.

In March 2006 Gazprom and the Government of the Republic of Armenia signed a 25-year Agreement identifying the strategic principles of Gazprom's participation in gas and power projects in the Republic of Armenia. The document provides for an increase of Gazprom's ownership stake in ArmRosgazprom via an additional share issue. As a result, Gazprom acquired an 80 per cent stake in ArmRosgazprom. The funds received from the share issue were allocated for purchasing and constructing the fifth power unit at the Hrazdan Thermal Power Plant as well as gas infrastructure facilities in Armenia.