Armenia needs to diversify energy import trends, embarking on deeper economic cooperation with Georgia - UN expert  

Hripsime Hovhannisyan

We are now eye-witnessing the end of a grand era whose foundations were laid in September 2003 as Russia and Saudi Arabia moved to ink a strategic cooperation deal which deepened in 2014, a period when the OPEC+ format was actually developed, Ara Marjanyan, UN National Expert on Energy Issues, said Thursday, commenting on the record low plunge on the international oil market.

"We are now eye-witnessing the realities of revoking the grand transaction. This is a very interesting period that leads us to the mid-1980 - when Saudi Arabia launched a major strike against the USSR under the United States' guidance," he said in an interview with Tert.am.

Admitting the possibility of drawing parallels between the past and the present, the expert noted at the same time that the periods are marked by "essential differences".

"Russia's share in the total carbohydrate export portfolio is now really essential. In the mid-1980s, it used to be predominantly oil. Presently, natural gas is of a significant importance," he said, predicting a very painful but not "not a particularly deep impact" on Saudi Arabia.

As another crucial moment, the expert pointed out to the depreciating Russian Rouble, avoiding any worst-case scenario freocast. "The Russian economy may, in a sense, make the political situation tense, but it will not be catastrophic," Marjanyan said.

In his words, the Brent oil prices will re-establish their former $50-$60 per barrel rate. "That's in the interests of both Russian and US shale manufacturers," the expert noted.

Evaluating the impact on Armenia, he predicted both positive and negative aspects, highlighting the changing petroleum prices and the expected Russian transfers as implicit factors.

"But there is also a positive moment," Marjanyan said. "The point of balance in the financial-economic oil sector is shifting from LUKOIL to Rosneft or, in more personalized terms, from [Vagit] Alekperov to [Igor] Sechin. That's geopolitically very advantageous to Armenia."

Amid the current volatilities on the international oil market, the expert said he expects the world's superpowers to strengthen their capacities, pushing the weak to diversify their economic potential.

"Diversification is very important also for Armenia," he noted. "Armenia needs to diversify the trends and regimes of its energy carrier exports and be more flexible with partners. The economic cooperation with Georgia and the Armenian presence in the Georgian seas must be raised on the most serious and deepest levels - whether in the form of economic zones or otherwise."

The UN expert also stressed the importance of raising the landlocked countries' status in collaboration with Mongolia and Ethiopia (especially against the backdrop of the global coronavirus pandemic).

" 'Landlocked countries', including Armenia, are in a very vulnerable state due to natural and man-made disasters. Hence it is important for landlocked countries themselves to raise this particular issue. Armenia must be proactive, and I call upon our foreign and health ministers to find the time in this very tense period to push ahead with the issue," he added.

Agreeing that the plunge in the global oil prices have affected also Azerbaijan, the expert noted that the country earlier too faced problems after the Azeri-Chinak-Gunesh oil mining peak.

"Azerbaijan is increasingly losing its oil mining potential, as we have been observing the shortage of oil revenues in the past couple of years," he said, predicting a deepening crisis.

 Meantime, Marjanyan noted that the export of natural gas may gain an increasing importance for the country against the backdrop of the expected oil shortage.

"Strategically, the export of Middle Asian hydrogen to Turkey and Europe is of a great significance for Azerbaijan. Those projects are gaining importance for the country. Armenia must keep the delimitation of the Caspian Sea under spotlight, cooperating with Iran and Russia to prevent Azerbaijan from pplahing a transit country's role for the shipment of fuel in the Middle East region," he added.