Armenia faces potential gas price surge to European levels if duty-free Russian regime ends

A Russian economic expert has warned that Armenia could face significant price increases for natural gas if the country loses its preferential trade agreement with Russia. Nikolay Gaponenko, an associate professor at Russia's Presidential Academy of National Economy and Public Administration, told TASS that gas prices could rise to European market levels if Yerevan loses its duty-free regime for gas, petroleum products, and rough diamonds. The expert characterised such a loss as "a direct path toward higher fuel prices, rising costs across the entire economy, and a tangible blow to households."

Armenian Prime Minister Nikol Pashinyan has indicated he is not concerned about potential price increases, a position Gaponenko interprets as an attempt to consolidate support among pro-European voters and signal a symbolic break with Russia. However, the expert emphasised that the European Union currently lacks rapid mechanisms to replace the Russian energy preferences Armenia currently enjoys, and that promises of Western investment compensation remain speculative. "The promise that Western investment will quickly compensate for these losses looks like a bet on future revenues that do not yet exist, while the immediate costs are inevitable," Gaponenko stated.

The underlying issue stems from a 2013 bilateral agreement between Armenia and Russia that provides gas, petroleum products, and rough diamonds without export duties on preferential terms tied to domestic consumption. On May 27, Russia's Foreign Ministry Spokeswoman Maria Zakharova announced that Russia had notified Armenia of a potential denunciation of this intergovernmental agreement should Yerevan join the European Union. Gaponenko characterised the situation as economically risky for Pashinyan's government, arguing that if prices rise before alternative financing channels become operational, citizens and businesses will ultimately judge the policy's viability. He concluded that gas prices have become "an extremely risky instrument of election campaigning" for the Armenian leader.