IRAN-ARMENIA GAS PIPELINE WILL BECOME A REALITY SOON
However, the pipeline will not have a transit function yet.
The construction works of the Armenian segment of Iran-Armenia gas pipeline started on November 30. It should be reminded that the start construction works has been postponed several times. If the construction works comply with the planned schedule, Iranian gas will be supplied to Armenia already in 2007. The investments are expected to be recompensed in nine years.
«Sanir» Iranian company will carry out construction of the first 42km long Meghri-Qajaran segment. According to the agreement reached during the visit of the president of Iran Mohhamad Khatami, the Iranian party will fund $30 million. The issue of contract of the second phase of the pipeline is still not settled. The second phase is estimated $90 million. As for the construction of the Iranian part of the pipeline, the construction works are carried out as scheduled. The cost of the Iranian segment is $110 million.
Construction works are already under way, but the Russian "Gasprom" still hasn't given any answer about its participation in the project. "Gasprom" doesn't say "no". The interest of the Russian company in the Iran-Armenia pipeline is obvious. But things have gone no further than elaboration of technical-economic justification of possible investments. It should be reminded that during his visit in Yerevan, the vice- president of "Gasprom" Alexander Ryazanov stated that the payback dates are a bit above the norms accepted by "Gasprom". "Gasprom" prefers short-term investments. In other cases, political decisions are usually made. Conflicts between commercial and political interests are always solved in favor of political interests. It is worth mentioning that conflicts of that sort are quite common. Things were like that in spring when "Gasprom" vice-president opposed to the Prime Minister Michael Fradkov, who claimed that Moscow intended to supply Russian gas to the third world markets through Armenia.
It is quite obvious that Moscow delays its answer due to political considerations, although Russians do not have any grounds for anxiety concerning the perspectives of Iran Armenian gas pipeline. The Russian gas will not be forced out from Armenian market by the Iranian gas, as the latter is nearly twice as more expensive. The Iranian gas will just ensure Armenia's energetic safety. It is known that the Iranian gas will be processed into electricity, which will be supplied back in its full capacity. The local consumer will receive gas from Iran only in case of interruptions in the Russian gas supply. As for the concerns about the plans of Iran to enter the western market, it is already evident that the Armenian pipeline will not have transit functions. This became clear when it turned out that the diameter of the pipe would not exceed 700mm. A pipe with such a diameter will not allow pumping enough gas needed for transit.
Nevertheless, the gas pipe brought to the Armenian border is 1.5m in diameter. It means that Teheran does not exclude the possibility of widening the diameter of the Armenian pipeline in future. However this information should not alarm Russians. It should rather encourage them because Moscow has too little resources to prevent the plans of Iran concerning the outlet to European markets. If Iranian gas is meant to enter Europe in one way or another, it would be much better for Russia if it passed through Armenia. In Moscow they realize it and perhaps this is why they don't refuse to participate in the Iran-Armenia gas pipeline construction project.
There are many alternatives to the Armenian route. At the end of summer, during negotiations held between the first vice-president of Iran Mohhamadreza Aref and the prime minister of Turkey Redjeb Erdoghan a preliminary agreement was reached concerning Iranian gas transit through Turkey. Besides, the gas pipeline passing through Azerbaijan is currently being restored. After restoration, the Iranian gas will get to Georgia already in spring. After this, the project of laying a gas pipeline along the bottom of Black Sea to Ukraine will again become relevant. It is estimated that the transit pipeline Iran-Europe will cost $5 milliards.
Money is not going to be a problem, because the demand for Iranian gas in Europe increases year by year, which is also promoted by the recent political processes in Ukraine. Western power engineering specialists accept that people living in Eastern Europe will have to celebrate Christmas without light and heat, since the conflict between Moscow and Kiev may bring to the closure of the pipeline. As is well known, one third of gas going to Europe passes through the territory of Ukraine. Creation of alternatives to this source of energy supply is one of the most topical problems for Europe. Many members of Russian government realize that sooner or later the alternative will be created and the Iranian gas will go to northwest, but the thing is in which way will it go to northwest. In current conditions the Armenian route is the most acceptable for Moscow. Russia's presence in Armenia will enable to control the situation to some extent. Thus it would be quite logical if the Russian government ordered "Gasprom" to participate in the construction of Iran-Armenia gas pipeline.
Construction works are already under way, but the Russian "Gasprom" still hasn't given any answer about its participation in the project. "Gasprom" doesn't say "no". The interest of the Russian company in the Iran-Armenia pipeline is obvious. But things have gone no further than elaboration of technical-economic justification of possible investments. It should be reminded that during his visit in Yerevan, the vice- president of "Gasprom" Alexander Ryazanov stated that the payback dates are a bit above the norms accepted by "Gasprom". "Gasprom" prefers short-term investments. In other cases, political decisions are usually made. Conflicts between commercial and political interests are always solved in favor of political interests. It is worth mentioning that conflicts of that sort are quite common. Things were like that in spring when "Gasprom" vice-president opposed to the Prime Minister Michael Fradkov, who claimed that Moscow intended to supply Russian gas to the third world markets through Armenia.
It is quite obvious that Moscow delays its answer due to political considerations, although Russians do not have any grounds for anxiety concerning the perspectives of Iran Armenian gas pipeline. The Russian gas will not be forced out from Armenian market by the Iranian gas, as the latter is nearly twice as more expensive. The Iranian gas will just ensure Armenia's energetic safety. It is known that the Iranian gas will be processed into electricity, which will be supplied back in its full capacity. The local consumer will receive gas from Iran only in case of interruptions in the Russian gas supply. As for the concerns about the plans of Iran to enter the western market, it is already evident that the Armenian pipeline will not have transit functions. This became clear when it turned out that the diameter of the pipe would not exceed 700mm. A pipe with such a diameter will not allow pumping enough gas needed for transit.
Nevertheless, the gas pipe brought to the Armenian border is 1.5m in diameter. It means that Teheran does not exclude the possibility of widening the diameter of the Armenian pipeline in future. However this information should not alarm Russians. It should rather encourage them because Moscow has too little resources to prevent the plans of Iran concerning the outlet to European markets. If Iranian gas is meant to enter Europe in one way or another, it would be much better for Russia if it passed through Armenia. In Moscow they realize it and perhaps this is why they don't refuse to participate in the Iran-Armenia gas pipeline construction project.
There are many alternatives to the Armenian route. At the end of summer, during negotiations held between the first vice-president of Iran Mohhamadreza Aref and the prime minister of Turkey Redjeb Erdoghan a preliminary agreement was reached concerning Iranian gas transit through Turkey. Besides, the gas pipeline passing through Azerbaijan is currently being restored. After restoration, the Iranian gas will get to Georgia already in spring. After this, the project of laying a gas pipeline along the bottom of Black Sea to Ukraine will again become relevant. It is estimated that the transit pipeline Iran-Europe will cost $5 milliards.
Money is not going to be a problem, because the demand for Iranian gas in Europe increases year by year, which is also promoted by the recent political processes in Ukraine. Western power engineering specialists accept that people living in Eastern Europe will have to celebrate Christmas without light and heat, since the conflict between Moscow and Kiev may bring to the closure of the pipeline. As is well known, one third of gas going to Europe passes through the territory of Ukraine. Creation of alternatives to this source of energy supply is one of the most topical problems for Europe. Many members of Russian government realize that sooner or later the alternative will be created and the Iranian gas will go to northwest, but the thing is in which way will it go to northwest. In current conditions the Armenian route is the most acceptable for Moscow. Russia's presence in Armenia will enable to control the situation to some extent. Thus it would be quite logical if the Russian government ordered "Gasprom" to participate in the construction of Iran-Armenia gas pipeline.
