The Messenger, Georgia
Dec 31 2004

Iran and Armenia begin building gas pipeline

Russian newspaper Promishlenie Vedomosti reports that after more than
10 years negotiations and agreements Armenia and Iran have begun work
on a 141 km gas pipeline linking the two countries. The preliminary
cost of the project totals USD 210-220 million.
Starting from 2007, Armenia will receive 36 billion cubic meters of
Iranian "blue fuel" over the following 20 years, and in return for
this they will pay for it with their energy. According to experts,
the Armenian-Iranian gas deal satisfies both countries.
Armenia will have an alternative source of energy in two years and
with this will increase its energy security. Having its own fuel and
energy resources, Armenia receives the gas only from Russia, but as
analysts note, the gas pipeline through Georgia is in a very bad
technical condition and needs serious repair and modernization.
Teheran, meanwhile, hopes that the implementation of the gas project
will give it the possibility to play a stronger role in the South
Caucasus. Iran has better political and economic relations with
Armenia than with other Caucasus countries and hopes that the
pipeline will be continued to Georgia.
This would also give it the possibility of transporting gas via the
pipeline to the Black Sea and Ukraine and from there to Europe,
allowing it to become an important player in the European energy
market. Needless to say, the Russian newspaper writes, Moscow sources
say that the Russian administration is far from delighted at the
prospect of a new competitor in the European market, where it
effectively enjoys a monopoly position.
President of Armenia Robert Kocharian was referring to Russia's
monopoly when he stated recently that the transit of Iranian gas to
Europe through Armenian is connected with "certain difficulties." The
diameter of the Iranian-Armenian gas pipeline will be of such a size
that it will be impossible to send a huge volume of "blue fuel" from
Iran for further transportation to third countries.
The inability to export vast quantities of Iranian gas has caused
strong Moscow support for the project, with Deputy Chair of Gazprom
Alexander Riazanov saying the gas giant will help construct the
pipeline. "The technical-economic substantiation of the future gas
pipeline Iran-Armenia is already ready," he says, and in Yerevan it
is believes that Gazprom may finance the second stage of the project.