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Armenia: Contemplating Life As A Regional Electricity Exporter

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  • Armenia: Contemplating Life As A Regional Electricity Exporter

    ARMENIA: CONTEMPLATING LIFE AS A REGIONAL ELECTRICITY EXPORTER
    Haroutiun Khachatrian

    EurasiaNet
    Oct 31 2008
    NY

    Armenia may have no energy sources of its own, but the country stands
    potentially poised to become a major exporter of electricity in the
    South Caucasus and beyond, analysts say.

    The role is not entirely novel. In Soviet times, Armenia exported
    electricity to neighboring Soviet republics and to Turkey, noted Sevak
    Sarukhanian, an analyst with Noravank, a Yerevan think-tank. After
    1991, "the consumption of electricity inside Armenia declined sharply
    due to the change in industrial capacities, so it is not surprising
    that Armenia seeks the chance to sell power it its neighbors,"
    Sarukhanian said. Areas of Iran, Turkey and Georgia that border
    Armenia are all energy-deficient, he maintained.

    The new Iran-Armenia pipeline has already raised expectations about
    Armenia's ability to export consistently high levels of electricity
    within the region, although details remain outstanding.

    In recent years, Armenia has exported electricity to two of its
    neighbors, Iran and Georgia, but these exports were relatively small
    in volume and irregular in nature. Exports to Georgia have primarily
    targeted the predominantly ethnic Armenian Samtskhe-Javakhetia region,
    and could vary from 600 million kilowatt hours in one year to zero
    in another, according to the Armenian Ministry of Energy and Natural
    Resources.

    Next year may prove a turning point. A September 15 report from
    Armenia's Ministry of Energy and Natural Resources claimed that
    an agreement on exporting electricity Turkey was reached during
    Turkish President Abdullah Gul's September 5 visit to Yerevan. [For
    background see the Eurasia Insight archive]. Armenia's state-owned
    power exporting company, and the Belgian company UNIT Group, which is
    involved in electricity distribution and power generation in Turkey
    and Romania, signed the deal, according to the ministry. The exports
    would reportedly start next year.

    Within Armenia, the main question is whether or not Turkey would allow
    such imports. Turkey closed its land border with Armenia in 1993 in
    solidarity with its ally, Azerbaijan, during that country's war with
    Armenia over the separatist Nagorno-Karabakh region. [For background
    see the Eurasia Insight archive].

    Officially, however, no Turkish embargo on Armenian imports exists. But
    while such a "regulation" does not exist, "[o]n the other hand,
    ? companies have to get export and import permission, and the general
    understanding is that they would not be given such permission in
    [the] case of Armenia," commented Professor Mustafa Aydin, head of
    the department of International Relations at Ankara's Tobb University.

    Aydin believes, however, that the UNIT Group must now be seeking
    such permission from the Turkish government, in conjunction with
    the aforementioned export agreement. UNIT Group could not be reached
    through the company email or phone numbers posted on its website.

    At a September 24 public discussion on energy issues, Armenia's energy
    and natural resources minister, Armen Movsisian, stated that the UNIT
    Group is working on solving existing problems, and the export deal
    will be enacted in the coming months. The UNIT Group intends to import
    at least 1.5 billion kilowatt hours of power next year, and later,
    even more, the Armenian ministry said in its September 15 report.

    If this materializes, Armenia would need to increase regular
    production of electricity by some 25 percent, up from recent annual
    production levels of 6 billion kilowatt hours per year. That number may
    increase still further; on October 5, Iran reportedly began importing
    electricity from Armenia in exchange for natural gas. An affirmation
    from Armenia's energy ministry that it "does not yet have a need"
    for the gas, however, has put a question mark over the extent of any
    electricity exports to Iran.

    Meanwhile, work continues on diversifying Armenia's power-generating
    capacity and enhancing its reliability as an exporter. ArmRosgazprom
    Director Karen Karapetian has announced that the company plans to
    complete work on the fifth, unfinished section of its Hrazdan thermal
    power plant, Armenia's largest such facility, by early 2010. This new
    section will be more efficient and consume less gas than the existing
    four sectors, which are more than 30 years old.

    One specialist, however, has expressed concern about the chances
    for the plant's modernization, however. Economist Tatul Manaserian,
    a former National Assembly deputy, believes that modernization may
    be delayed as Gazprom, the Russian energy company that is the main
    shareholder in ArmRosgazprom, struggles to contend with the emerging
    international financial crisis. "Gazprom has many projects in Russia,
    and I am not sure that the Armenian station will be given priority,
    in case of financial problems," Manaserian said.

    The planned construction of a new nuclear power plant could add to
    that diversification. Manaserian expressed greater optimism about
    Russian investor participation in that project, given its strategic
    importance. The proposed plant, with a capacity of 1,000 megawatts,
    is expected to be built in the city of Metsamor, 40 kilometers west
    of Yerevan. It will have a capacity of at least 1,000 megawatts,
    as opposed to the 407 megawatts of the existing nuclear power plant,
    long a target for outside criticism.

    Editor's Note: Haroutiun Khachatrian is a freelance writer based
    in Yerevan.
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