Gazprom Buys a 40-kilometer Section of the Iran-Armenia Gas Pipeline

Official Yerevan no longer conceals the fact that it is carrying on negotiations with the Russian state-run Gazprom Company over the selling of the 40-kilometer-long Agarak-Kadjaran segment of the Iran-Armenia gas pipeline currently under construction. When I asked him about it on April 21 st , Armenian Foreign Minister Vartan Oskanian said, "I don't, frankly, have an answer to that, I know there are discussions, negotiations over it. This pipeline doesn't even exist yet; we are talking here about selling something that doesn't exist. But today we should talk about who is going to build it, who is going to pay for the construction. I believe the ongoing negotiations are about this. You will, naturally, ask that if they pay for it and build it then they will, possibly, own it as well. Perhaps, but I am not negotiating myself and I don't have all the details at the moment, because the matter is in a fairly vague state; however, if you're asking the specific question of whether I rule out the selling of the Iran-Armenia pipeline to Gazprom or not - of course, nothing can be ruled out."

A press-release posted on Gazprom's official website on April 6 th stated that in addition to the 5 th Energy Unit of the Hrazdan TPS the company would also buy from the Armenian government the first 40-kilometer section of the Iran-Armenia gas pipeline. The same day, Armenian Energy Minister Armen Movsisyan denied this information, and the next day the press release on the Gazprom website was altered to contain no references to the pipeline. In its April 7 th issue, the Russian daily Vedomostiwrote under the heading "Gazprom settles down in Armenia" that the arrangements had been made on buying the 40-kilometer section "but the agreement is not in its final form yet."

Economist Andranik Tevanyan noted that should the information about selling the 40-kilometer-long section of the Iran-Armenia gas pipeline to Russia be confirmed, Armenia's energy security would be seriously endangered.

"Not because Russia is the buyer itself but because it's one buyer. If 80-90 percent of Armenia's energy resources belong to Russia and that includes both the system of energy generation and the systems of its distribution and supply, in that case Armenia will depend only on one center and any talk about alternative energy sources will henceforth become meaningless and, as a matter of fact, the idea of the Iran-Armenia gas pipeline will become meaningless as well, because the idea - considering its strategic significance - was meant not only to guarantee the energy independence and security of Armenia and to become an alternative source, but also to play an important transit role. We will be deprived of this if the deal is made,' Tevanyan said.

Iran analyst Aram Shahnazaryan stressed that since Iran presently has strained relations with the West, and with the United States in particular, over its nuclear program, it has no time to pay serious attention to the Iran-Armenia gas pipeline.

"Naturally, the Iranians would not wish for such a thing to happen since they have long-term objectives to transit gas to Ukraine and Europe via Armenian territory, which intertwines with the economic interests of Russia. At the moment Iran cannot react in a negative way and is compelled to somehow accommodate itself to this, for it is greatly dependent on Russia. But if Iran doesn't get from Russia what it has anticipated, they might raise the issue, which will be detrimental to Armenia. In the long-term it will harm Armenia's interests because it would otherwise have a lot to gain as a transit country," Shahnazaryan said.

We remind you that on February 14, 2006, Minister of Foreign Affairs of Iran Manouchehr Mottaki unexpectedly visited Yerevan. It has now become clear what it was that caused Iran's uneasiness and prompted it to all of a sudden send its Foreign Minister to Armenia. At the Oskanian-Mottaki joint press conference, the Armenian foreign minister declared in an aggressive tone, "No one has the right to interfere in the construction of the Iran-Armenia gas pipeline."

When we reminded Oskanian about recent publications in the Russian press according to which Moscow had exerted pressure on Yerevan and Tehran to decrease the diameter of the gas pipeline from 1,200 millimeters to 711 millimeters, in order to prevent it from becoming a transit pipeline and from harming Russian gas interests, the foreign minister emphasized that pipeline construction is being carried out based on an Armenian-Iranian bilateral agreement, and "third countries cannot influence or exert pressure on us." In his turn, Mottaki noted that he fully shares his Armenian counterpart's view and added that the Iran-Armenia gas pipeline "is not aimed against any one."

Vardan Oskanian is, perhaps, the only Armenian official who acknowledges that Armenia has no serious resources for maneuvering in the realm of energy policy. At his April 21 st press conference, the foreign minister advised considering the selling of Armenia's energy enterprises as "a mixture of the desirable and the possible.Of course, it would be desirable that some of the enterprises be kept in Armenian hands, that Armenian businessmen buy them, and another portion be, perhaps, bought by a European country. But probably it was not possible or no interest was expressed and it turned out that there is a slight Russian tilt," Oskanian said.

Other officials present the deal as though it was made taking into consideration the difficult social situation of citizens of Armenia and that it stemmed from the national interests of Armenia. The fact is that Armenian authorities, who have a serious deficit of legitimacy, are compelled to submit to the Russian gas-attacks, since it is Russia that backs them, often pointedly, when they find themselves in odd situations.

Of course, besides the lack of legitimacy there also exists the objective factor: Armenia has no relations with two of its four neighbors - on the west, Turkey continues its hostile policy and keeps the Turkish-Armenian border closed, and what is more Armenia has handed the defense of the border over to Russian border guards; on the east our neighbor is Azerbaijan, with whom our borders are not only closed but also mine-strewn. Under such conditions it is very hard to conduct foreign policy emanating from Armenia's interests even without the government's legitimacy problem.

The Russian newspaper Nezavisimaya Gazeta wrote in its April 19 th issue that Gazprom had already acquired the 40-kilometer section of the Iran-Armenia gas pipeline. Moreover it hinted that beginning in 2009 Gazprom would sell the blue fuel to its strategic partner, Armenia, not at the current price of $110 but at $160 per 1,000 cubic meters. Incidentally, articles have appeared in the Russian press saying that Russia is planning to buy the Vorotan hydroelectric power station. This is the only important energy-producing enterprise in Armenia that has not yet been sold to Russia.

EU-Armenia: Shut Down the Nuclear Power Plant

On April 20 th the European Union Troika delegation headed by State Secretary of the Austrian Foreign Ministry Hans Winkler arrived in Armenia. At a press conference the next day Hans Winkler stated, "The EU is interested in the closing of the Armenian Nuclear Power Plant."

"The Armenian Nuclear Power Plant (NPP) is technically worn out and does not meet international security standards. On the other hand, the EU recognizes that the issues in question are the sovereign right of any country and respects the right of each country to choose the type of energy which meets bests its capacities and interests," Hans Winkler said. In his words, the EU Troika delegation did not discuss the prospects of building a new NPP with Armenian authorities since "it is not within the EU competence."

This attitude on the part of the EU is hard to understand. The fact is, the Europeans urge us to shut down the NPP that provides for 40 percent of Armenia's energy requirements, but do not offer anything in return. Or rather they offer 100 million Euros, when building a new nuclear power plant would require at least 800 million Euros.