Thursday, July 28 2016 17:23
Naira Badalian

Iran to export gas to Georgia via Armenia: Tentative deal has been signed

Iran to export gas to Georgia via Armenia: Tentative deal has been  signed

ArmInfo. Iran has signed up a miniature tentative deal with a Georgian purchaser for gas sale, which is hoped to be in effect this year with the passage of Iranian  gas through Armenian soil, Iran's Minister of Petroleum Bijan Zangeneh said after the meeting with Armenia's Minister of Energy and Natural Resources Levon Yolyan, IRNA news agency informs. 

According to the Iranian Minister the Armenian party had come for talks on Iran's call for transit of gas to Georgia with a proposal for formation of a new organization. "Of course, Armenia is not a major consumer but can open an important way for Iranian gas exports and in this field there has been agreement between the two sides",  the IRNA quotes Iranian Minister as saying. As a result of the meeting it was also stated that the party to purchase gas from Iran, which has thus far been Yerevan thermal power plant, is changed and the contract for gas purchase of the power plant from Iran is transferred to a new organization. He noted that through this organization, the upcoming direct gas sale agreements and gas transit to other regions from the country will be possible.

Currently Iran supplies gas to Armenia for thermal power plants.  For export of 1 cm of gas to Armenia Iran receives 3 KWh of power in exchange.  The Iranian Minister said that the amount has now risen to 3.2 kilowatts per hour of electricity.

To recall, Armenian-Iranian gas pipeline was opened in 2007.  The two countries signed a gas and power barter deal in 2004 for a period of 20 years. The capacity of the gas export pipeline is about 2.3 billion cubic meters annually and based on a deal between the two sides, Iranian exported gas will be consumed by electricity  generation power plants and instead Iran will import electricity from Armenia. Currently Iran supplies 370 mln cubic meters of gas to Armenia annually. In the future when two new units of thermal plants in Yerevan and Vanadzor are put into operation the supplies may reach 1.2 bln cubic meters. Earlier in January, Head of the National Iranian Gas Exports Co Ali-Reza Kameli said that Iran is negotiating on gas supply to Georgia via Armenia. The supply may total 300-500 mln cubic feet daily. The main consumers will be the electric power plants in Georgia. 

Meanwhile, a lot of experts expressed opinion that the project of supply of Iranian gas to Georgia via Armenia may be not welcomed by the Russian side, as Russia considers Iran a competitor on the gas market. However, there were experts who considered that this project does not pose any serious threat to Russian interests as the matter concerns insignificant amounts of supply. If the project envisaged Iran's enter to European market the Russian side would oppose the project implementation. But Iranians themselves have stated that this route for entering European market is not reasonable and is not being considered. Moreover, the expert group has stated that the capacity of Armenian-Iranian gas pipeline is not enough for amounts of Iranian gas necessary to enter the European market. 

Considering these reasons and the fact that currently only 20% of capacity of the pipeline is used Gazprom has a problem of return on its investments. Consequently, Gazprom is interested in maximum use of the pipeline and is not going to hinder the project on increasing the export capacities of Iran-Armenia gas pipeline.

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