Armenia faces up to $400 million annual cost to replace Russian gas if joining EU

Armenia could face annual costs of up to $400 million to replace Russian gas supplies if the country joins the European Union, according to energy experts. Alexey Belogoryev, research director at the Institute of Energy and Finance, outlined the financial and logistical challenges Armenia would encounter in securing alternative gas sources.

The primary obstacle is not merely the price of gas but finding viable replacement suppliers. Potential alternatives include direct supplies from Iran, Azerbaijan, or Turkey, or transit of Azerbaijani gas through Georgia—all of which present either significant costs or political risks for Armenia. Iran represents the only politically acceptable option, having supplied gas to Armenia since 2009 through a barter arrangement for electricity. However, even if Iran could provide the additional 2.2 to 2.5 billion cubic meters annually that Armenia needs, developing the necessary transportation infrastructure would require at least three years and hundreds of millions of dollars. Gas from Iran would cost $280 to $350 per 1,000 cubic meters, potentially double Armenia's current Russian supply price.

Armenia's economy is heavily dependent on gas imports, with approximately 96 percent of households relying on gas for heating, cooking, and hot water. The country produces no natural gas domestically and imported 2.3 billion cubic meters from Russia in 2025, delivered via Georgia through Gazprom Armenia, which holds a monopoly on the domestic market. The 2013 agreement between Armenia and Russia provided duty-free and preferential-term supplies, with Russia currently offering gas at $177.50 per 1,000 cubic meters—a price that Belogoryev notes is essentially the cost of supply with minimal profit margin.

Russia has warned that it would terminate the gas supply agreement if Armenia joins the European Union. The Armenian Parliament passed legislation in March 2025 to initiate the country's accession process to the EU, though any membership requires a referendum. Moscow views this development as the beginning of Armenia's withdrawal from the Eurasian Economic Union, which is incompatible with EU membership. Energy experts suggest that for Armenia, maintaining the status quo in gas supplies over the coming five to ten years would be economically prudent, as no alternative supplier can match Russia's current pricing.